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ABOUT JOHN COOGAN:
I am the co-founder of http://soylent.com and http://lucy.co, both of which were funded by Y Combinator (Summer 2012 and Winter 2018).

I've been an entrepreneur for the last decade across multiple companies. I've done a lot of work in Silicon Valley, so that's mostly what I talk about. I've raised over 10 rounds of venture capital totaling over $100m in funding.

I work mostly in tech-enabled consumer packaged goods, meaning I use software to make the best products possible and then deliver them to the widest possible audience. I'm a big fan of machine learning, python programming, and motion graphics. 

OTHER VIDEOS:
Why Facebook is Spending Billions on the Metaverse - https://youtu.be/QvZSdDC9rWo
The Only Reason SpaceX Works (Gwynne Shotwell) - https://youtu.be/K1xWaua-nLI
Peter Thiel’s Big Bet on Space Manufacturing - https://youtu.be/1FNQ108h8iM

CONTACT:
You can get in touch with me via Twitter: https://twitter.com/johncoogan
Thanks to Mateo Szlapek-Sewillo for help with scriptwriting, fact-finding, and overall storytelling! https://www.simplespeaker.net/

Disclaimer: This video is purely my opinion and should not be regarded as a primary source. I am not a financial advisor and this is not a recommendation to buy or sell securities. Always do your own due diligence.

In 2017, Masayoshi Son convinced someone to invest $45 billion into his SoftBank Vision Fund.

What can his eagerness to invest tell us about the Vision Fund?

And what did Masa say to convince him to invest so much money?

Today, the insane story of the rise and fall and rise and fall of Masa Son's SoftBank and the Vision Fund.

There are 2 kinds of people when you make a mistake.

1 kind of people don't want to admit that you have made a mistake.

And those people try to make all kinds of excuse.

I would rather accept my stupidity, my ignorance, so that I can learn.

the 11th of August, 1957, in a city in the southeast of Japan called Tosu.

If you think Son is an unusual Japanese family name, you're right.

Masa is a third generation Za'anichi Korean, the name given to people of Korean descent whose families came to Japan during the colonial period.

Za'anichi Koreans are the second largest ethnic minority in Japan, but many, like the Son family, were discriminated against.

Masa grew up in the kind of poverty that is totally unrecognizable from his wealth today.

His childhood home was a shack illegally built on land that was owned by Japan National Railways.

Masa's father scraped together a living for the family by raising pigs and chickens on this tiny parcel of land.

Eventually he started an illegal sake business.

The business was successful, and the family was able to buy a car and move to

a new neighborhood closer to better schools.

Masa's energy and eagerness to learn were obvious from a young age.

His business career began after he met his idol, Den Fujita.

Now Den Fujita was a fascinating guy in his own right.

His main claim to fame was bringing McDonald's to Japan.

After first eating 1 of their burgers in 1967, Den became obsessed.

He believed that if Japanese people eat McDonald's hamburgers and potatoes for thousands of years, we will become taller, our skin will become white, and our hair blonde.

He overcame deep skepticism that McDonald's would ever succeed in a country like Japan and built a network of thousands of restaurants.

Masa was captivated by Den's ambition and his ability to bridge Japanese culture and Western culture.

Den urged Masa to study English and learn about the rapidly emerging computer industry, and to do so in America.

Massa had a burning desire to overcome adversity and elevate his family name to the position he believed it deserved.

Later, when he was an established entrepreneur, Massa's colleagues would cite his outsider complex as a key to understanding his approach to investing.

At the age of 16, Massa decided he wanted to move to California.

And he told his family he was going by himself.

us and going all the way to the United States, she asked in disbelief.

It's a bunch of barbarians who live in that country.

He knew his son had a strong will, and that he

This was his decision, no 1 was going to change his mind.

So he knew the best thing he could do was to provide him with some money.

There was a Catholic university there called Holy Names College, which had a special program for foreign students to learn English.

Because he'd already spent 3 months as a freshman in Japan, Masa entered high school as a sophomore.

After 1 week, he was promoted to a junior.

After half a week of being a senior, he took an exam and graduated.

Masa Sohn graduated from an American high school in a language he had been learning for only a few months in 2 weeks.

He returned to Holy Names College for his freshman and sophomore years, they were actual years this time, before transferring to Berkeley to study economics.

But he didn't forget the advice of his idol, Den Fujita, so he made sure to also take some computer science courses.

For many people, college is a time to learn about yourself and meet other people.

But for Masa, college was an opportunity to try out the hundreds of different business ideas his relentless mind had come up with.

Inspired partly by Den and partly by his own reading, Sohn became convinced that computer technology would define the next commercial revolution and that it would yield him his fortune.

Masa decided he would generate 1 entrepreneurial idea a day.

1 of those ideas would wind up making Masa his first million.

But he needed some experts to create a prototype.

Massa chose the simplest way to achieve his goal.

He looked through the faculty directory, found the names and details of some microcomputing staff, and convinced some of them to form a project team with him.

You should already be getting a sense of how good he is at convincing other people to do stuff for him.

He told them he didn't have any money, he was 19, but that they shouldn't worry.

After Massa got the money for his patent, he would pay them.

Massa sold a patent to Sharp electronics for a translating device.

Then Masa did what a lot of suddenly rich 19-year-olds would have done in the late 1970s.

He imported a bunch of Space Invaders video arcade machines.

He rewrote the software on the machines and installed them across the Berkeley campus, in restaurants, dorms, and cafeterias.

That idea made him another million dollars.

Before he graduated, Masa started a game software company called Unison World, which he would eventually sell for almost 2000000 dollars.

But first, Masa did something unexpected.

He moved back to Japan to start another company.

For a year and a half, he just did research and made business plans.

He lived off the income he had made in America, but eventually Masa's family grew concerned.

It didn't look like he was doing anything.

He was just reading and writing things down.

But like an iceberg, most of the action was going on underneath the surface.

Massa developed more than 20 measures of success to guide his thinking.

His most important 1 was that he should fall in love with his business for at least 50 years.

That way, he would stick with it even when times were tough.

He took a big sheet of paper and drew a matrix with all of his ideas and scores and comments for each.

Then he picked the best 1, the personal computer software business.

Satisfied with his choice, Masa called his new company SoftBank.

I think founding and building SoftBank in Japan rather than America is 1 of the most fascinating decisions Masa Son made in his entire career.

Sure, Japan was home, but it had lots of unhappy memories.

Masa was determined to go against conventional wisdom, and he had unshakable self-belief.

He believed SoftBank was destined to become a global success.

Therefore, he believed it should be based in Japan.

Because even though it would be harder to get the business off the ground, being based in Japan would make it easier to win the loyalty of his employees.

Japanese workers, Masa claimed, put in longer hours and stayed with their employers for decades.

What they lacked in originality, they made up for in commitment to continuous improvement.

Masa compared this slightly stereotyped view to American workers, who he believed were more likely to jump ship to the next opportunity in a heartbeat.

It's almost impossible to imagine someone making that decision or using that reasoning today.

Founders base software companies in America for 2 reasons, access to capital and access to talent.

When Masa made his decision more than 40 years ago, the software industry was tiny compared to today, but he was also reasoning on totally different principles.

By 1981, Masa had 2 part-time employees and a small office.

1 day he brought in a couple of boxes and stood on them to give a speech to his team.

"'You guys have to listen to me, ' he said, "'because I'm the president of this company.

In 5 years, I'll have $75 million in sales.

I'll be supplying a thousand dealer outlets.

We'll be number 1 in PC software distribution.

According to Masa, these 2 guys both quit on the spot.

A year and a half later, SoftBank was supplying 200 dealer outlets.

Well, like so much of Masa's career, success was forged from failure.

just a couple of months old, he reserved a booth at a consumer electronics show in Tokyo.

He made sure that it was as big as the booths that big-name companies like Sony and Toshiba had.

Masa called all the software vendors he knew.

He told them that he was going to pay for all the collateral and that they could set up in his booth for free.

A few weeks after the show, he received a call from Osaka.

The guy on the phone said he was starting a big PC shop and that he needed software, and he asked Masa to come to Osaka for a meeting.

Was this Yet another example of him defying conventional wisdom?

"'Do you know my company?' he asked Masa.

"'It's called Joshin Denki.'" Masa said he didn't, but he figured that he should ask around.

He still knew some guys high up there from when he sold them his patent while still a Berkeley student.

They immediately told Masa to go to Osaka.

When the representative from Joshin Denki called back, he threw Masa a life jacket.

Oh, our president is actually coming to Tokyo for some other business.

You could meet him." Masa met with the president of Joshin Denki.

The company already had some software and a direct channel with some vendors, but it needed more.

Masa said, if you want to do business with me, you'll have to break off those relationships.

If you want to succeed with PCs in Japan, it's my way or the highway.

We just heard that Masa didn't even have the money to travel to Osaka to meet with this guy.

This is his only solid lead, and he's setting the terms?

I have very little money, he said, and very little business experience.

Masa freely admitted that the president of Joshin Denki probably had more knowledge and more experience than Masa did.

But he said, I will dedicate all my time and effort, all my energy, my entire spirit exclusively to PC software.

If I do that, who do you think will be more of a specialist a few months from now?

If you want to be the number 1 PC dealer in Japan, you have to find the number 1 guy in software distribution.

I have no evidence, but I strongly believe in myself.

I'll admit it, I think this is a genius pitch.

Masa didn't want to fake his knowledge, his experience, or his list of clients.

So he opted for the approach that was already becoming his signature style.

Faith in himself and infinite optimism about the future.

The president gave Masa exclusive purchasing rights for all of Joshin Denki's PC software.

If you thought you recognized Masa's pitch that got his foot in the door with Joe Shindenki, then you'll definitely recognize his follow-up.

Because it's the first real example we have of Masa's son applying the thinking that would come to sum up his approach to investing.

Masa said to the president, I will get you every software product.

If you want all the software, you'll have to pay for it.

it won't sell, but you'll make up the loss because word will spread that you have the biggest range.

When he said this, Masa was looking into the future.

He had total belief that computing technology would become widely used, which meant that overall, investing in software made sense.

Even if some of the products flopped, as an overall asset class, it was a great investment.

Remember, Masa became convinced that software was the future while at Berkeley.

He may not have had all the evidence on hand, but he had the most important thing, belief.

Masa went around to department stores and electronics stores.

He'd ask executives if they'd heard of Joshindenki

and if they knew why the company was the biggest PC dealer in Japan.

The answer, according to Masa, was that they used SoftBank for their software procurement needs.

Within a year, SoftBank's monthly revenues went from $10, 000 to $2.3 million.

He could have cashed out and not worked another day in his life, but his ambition burned too bright, And his belief in himself and the future was too strong.

He went back to America, this time to conquer it.

At this point, SoftBank was 15 years old and worth billions of dollars.

So why did he move to Silicon Valley, a place with dense networks that were hard to crack for

And he believed he was the person who would capture it.

The future he saw was built on top of the first wave of the dot-com bubble.

Today, we remember the bubble because of how spectacularly it popped.

The dot-com bubble inflated for 2 reasons.

1 was the increasing popularity of the internet.

The release of early browsers like Mosaic, coupled with the emergence of Windows as the default home operating system, meant that more and more people were surfing the web.

Between 1990 and 1997, the share of American households with computers increased from 15% to 35%.

Computer ownership went from a luxury to a necessity, and lots of companies were poised to take advantage.

Masa Soh knew all of this because in 1994, SoftBank had bought the trade show division of a company called Ziff Davis, the leading organizer of computer conferences

He described the acquisition as a way to get a map and a compass for a voyage into the center of the booming technology industry.

In early 1996, with his map and compass in hand, he strode into Yahoo's new office in Mountain View and proceeded to casually take the Silicon Valley arms race to a whole new level with a $100 million bid for a 30% slice of Yahoo.

At the time, top-flight venture partnerships usually raised around $250 million.

There was just no way any 1 investor would put 40% of their resources into a single $100 million wager.

But Masa wasn't playing by anyone else's rules.

After sitting in silence for a while, Jerry Yang, 1 of the co-founders, said he was flattered but he didn't need the capital.

Jerry, Massa quickly replied, everyone needs $100 million.

Yahoo needed to build its business and put its product in front of more consumers.

The normal path for a young company looking to raise millions of dollars was to go public, but here came Masa casually offering the kind of investment that usually required an IPO with none of the complicated public ownership.

He was ready to shake hands then and there.

Yahoo's founders and Mike Moritz of Sequoia Capital needed some time to respond.

Masa's offer was tempting, but Yahoo was already working with Goldman Sachs on an IPO, and if Goldman Sachs made good on their prediction, a public listing would value the company twice as highly as Masa's offer, and make them all a lot richer.

Masa sensed that the deal was on the verge of slipping out of his grasp, so he upped the stakes.

So he asked the men on the other side of the table from him what Yahoo's main competition was.

Then he said to the founders, if I don't invest in Yahoo, I'll invest in Excite and I'll kill you.

And it showed that Masa understood something important about internet-enabled startups.

In most industries, there would be only 1 winner, so the investor who could write a $100 million check could choose who won the race.

Just like the Godfather, Masa made Yahoo's founders an offer they couldn't refuse.

They decided to take Masa's money, but to also proceed with an IPO.

Its share price closed at 2 and a half times higher than where it began the day.

Windfall with a dizzying spree of investments.

He barely paused to separate the trash from the treasure.

It's believed that between 1996 and 2000, SoftBank invested in around 250 internet startups.

An average of about 1 per week, 10 or 20 times as many as the average VC fund.

He raised a new fund focused exclusively on late-stage companies, the precursor to what is today called growth investing.

He launched Japanese subsidiaries of soft bank portfolio companies, like Yahoo and E-Trade.

He raised funds in South Korea, Japan, and Hong Kong.

He partnered with Rupert Murdoch to invest in Australia, New Zealand, and India, opened venture offices in Mexico, Brazil, and Argentina, it's estimated that Massa's son increased his personal wealth by about $15 billion in the second half of the 90s.

Massa didn't care about alpha, the premium an investor earns from the appreciation of an individual asset.

He was all in on beta, the yield from just being in the market.

And so long as the tide was rising, it was lifting all the boats.

He combined 1 central insight, the surging popularity of the internet and the wave of startups it created, with massive scale and a ruthless determination to get what he wanted.

He wasn't deterred by paying extremely high prices.

They deployed capital more carefully, but they didn't make as much money as Masa.

In January of 2000, a little-known Chinese entrepreneur was desperate for more capital.

His name was Jack Ma, and his company was called Alibaba.

His bank, Goldman Sachs, was hesitant about investing more.

The bosses instructed Shirley Lin, the leader of their Asia-focused private equity arm, to try and find outside investment for Alibaba and a bunch of other Chinese startups.

Lin spoke to her colleague, Mark Schwartz, the chairman of Goldman's Asia Pacific division.

"'Which company is most desperate?' he asked Lin.

"'Alibaba is very, very desperate.'" It wasn't long before Masa was in Beijing, meeting with local tech entrepreneurs.

Masa took an immediate liking to Jack Ma.

The 2 shook hands on an investment, and Masa whispered some advice.

So the pair met again, this time in Masa's Tokyo office.

Shirley Lin, the biggest incumbent shareholder, was there too.

She suggested that SoftBank invest $20 million for a 20% stake, valuing Alibaba at $100 million, 10 times what she and her co-investors had paid 3 months earlier.

She might have thought this was just an opening gambit, the first step in a delicate dance of haggling over a deal.

That's part of it, but that's not the whole picture.

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How SoftBank Lost $70 Billion