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A senior banker in Tokyo recalls introducing Masayoshi Son on stage at an event five years ago and how instantly the room was captured by the first slide of the presentation: on the left side a horse, on the right a Ferrari.
“So which do you want me to bet on?” the SoftBank founder challenged his audience with a perfect brevity of self-introduction. This was not about horses or Ferraris but it was part of the image Son has crafted: a futurologist-gambler for whom the wagers seem blindingly binary and who, through preternatural levels of conviction, cannot fathom why anyone would bet against him. Even though the market has often done just that.
At a later stage of their billionaire-hood, many holders of that title will devote themselves to chiselling out the other word (“philanthropist”, “collector”, “lunar circumnavigator” and so on) by which they will be remembered. With Son, the accompanying epithet has always been absolutely central. The billionaire bit only seems to work for him if the word visionary is attached. But that word may be causing people to miss the point: better, perhaps, might be to present himself as a pre-eminent engineer of luck.
Today, Son’s visionary tag is under a particularly fierce forensic examination: perhaps more so than ever before. The gamble is bigger, but the gambler himself (66) is older and his record (WeWork, Oyo, Greensill and the successive quarters of Vision Fund losses) less perfect. The immediate cause of the intensified scrutiny is this week’s IPO of the British chip designer Arm, due to complete on Wednesday, with the shares making their trading debut on Nasdaq on Thursday.
SoftBank bought the UK company in 2017 for $32bn, and has since then identified it as core to his great vision on artificial intelligence — the faith that AI (as a catch-all term) will allow SoftBank to fulfil no less an ambition than to “rule the world”. The long run-up to the Arm share sale, which will leave Son’s SoftBank with a still overwhelming 90 per cent equity position and is set to put a valuation of more than $50bn on the company, has been intriguing enough in itself. But it is now primed to become even more so, as part of the great enigma of Son’s current and future bets on AI.
As a listed company, and quite apart from whatever technological role it may have in Son’s vision, Arm has two distinct heavy-lifting jobs ahead. The first of these will primarily be financial — part of what analysts increasingly suspect are Son’s preparations for an unknown, AI-focused mega-deal that will once again redefine SoftBank. He has made his name by going big. Why would he change strategy just as AI looks like it might transform humanity?
With Arm as a listed company that has a market valuation, Son could in theory use SoftBank’s residual holdings of it to secure more than $25bn in additional financing from banks and other sources, say analysts. When combined with SoftBank’s existing cash and borrowings, that could provide Son with a dealmaking war chest of more than $65bn.
In playing that finance-raising role, Arm would to some extent be replacing Alibaba — the Chinese ecommerce giant in which Son was a ground-floor investor and whose shares (now largely sold off by SoftBank) underpinned the leverage on which SoftBank so regularly depended.
But Arm’s heavy-lifting job may also be psychological. However chequered his record, Son has crafted that all-important image as a visionary around a number of epically successful bets — of which Alibaba was the most valuable. He has other more recent successes in the portfolio but, say investors, needs a humdinger to keep the reputation fresh.
If, post-IPO, the market pushes Arm up towards the sky-high valuation that Son seems truly to believe it is worth, he may sell more stock and bask in vindication. Better yet, he may decide that Arm’s IPO has reopened the listings market for companies with an AI narrative, then set about prepping them for market. If it falls, he can pull the misunderstood genius face that appears to have carried him through bleaker times.
The reality of Son’s visionary powers — however grandly couched in predictions of what life will be like 300 years in the future — is that they are hedged with aggression, flexibility and rigorous luck management. If you make one make-or-break bet every five years, you need to be lucky; make five every year and the odds change. In practical terms, and through the great many wagers placed through the Vision Fund, he has taken substantial bets on the tech equivalents of both horses and Ferraris. The next few weeks will reveal which of those Arm is.