Softbank: Visionary Entrepreneurship in Japan

1
Softbank Visionary Entrepreneurship in Japan

• Maria Metzger
• Xiuping Li
• David Harelick
• David Grosof

2
Agenda

• Size
• Makeup
• Recent News
• Leadership
• Early History
• Middle Ages
• Strengths
• Issues
• Emerging Market Strategy
• Conclusion

3
Size

• Worth approximately 18BB
• 300 companies and affiliates

4
Makeup

• Financing value chain
• Hotbank
• Softbank Capital Partners
• 1.25 billion later-stage fund.
• Softbank Venture Capital (SBVC)
• 2 billion under our management
• US Venture Managers
• Rieschel on the West Coast
• Charley Lax in Boston

5
Recent News

• Cisco invests 1BB in a Softbank fund
• Cisco to purchase back Japanese subsidiary
• Raising 4BB for broadband buildout
• Fighting the entrenched NTT

6
Leadership

• Masayoshi Son, CEO (43)
• Sons share of Softbank is worth apx. 7 billion
  
• charismatic, visionary
• born in Japan, of Korean ancestry
• immigrated to the SF as a teenager
• University of California at Berkeley
• made his first million inventing a multilingual
  pocket dictionary and translator
• Sold to Japan's Sharp Corp
• named Forbes Businessman of the Year in 2000

7
Dawn of Son

• Son Founded the Softbank Corp in 1981 in Japan
• Established product-distribution channels for PC
  and game software
• JV with Novell, Cisco Systems, and Microsoft
• Late 80s/early 90s, entered many new IS markets
• publishing, network services information
  delivery
• Went public in 1994
• Son retaining gt 50 percent of the equity

8
Son Rises

• Made many strategic acquisitions
• Ziff-Davis' worldwide exposition business
• Comdex
• Ziff-Davis Publishing Co. itself
• 2 cost of capital from Japanese Banks
• arbitraging the higher P/E rates of Japanese
  companies
• Early Venture Investing
• MediaBank Corp. - 1994 JV with NTT
• video on demand and Internet services in Japan
• Early investor in Yahoo!
• CyberCash ETrade Group Inc.

9
Strengths

• Focused on Internet content and services
• Ignored hardware and never challenged the big 3
• Microsoft, Intel, Cisco
• Lower-risk porting of US-style business models to
  other markets

10
Issues

• Value fell 90 Between 2/00 and 12/00
• 49 stake in Nippon Credit Bank
• one of Japan's most corrupt badly managed
  banks
• risky assets of 35 billion
• Mitigant Government backing
• Launched Nasdaq Japan during tech-stock slump
• Japanese broadband access initiative is weak
• A few years ago Softbank in financial distress
• threats of delisting, loan calls, accounting
  irregularities
• Poor investments
• Kingston Technology, Ziff-Davis, 3-D chat, etc.

11
Emerging Market Strategy

• Telecom infrastructure in emerging markets
• Partnering with the World Bank
• strong government relationships
• Leveraging their Netbatsus conglomerate power
• Immaturity of their capital markets
• importance of politics/regulation
• Partnering with Murdochs News Corporation in the
  UK, Australia, New Zealand and India

12
Conclusion

• Working hard to open Japan's ossified capital
  markets to a new generation of entrepreneurs
• They entrepreneurs may transform the Japanese
  economy
• Even if Softbank fails, the genie has been
  unleashed

13
Haikus

• Softbank is new way
• A stone thrown into a still pond
• Soon Nippon reshapes.
• New kid on the block
• Old boys are nervous and scared
• Information Rules.