Information Processing: DEALMAKERS
JAPAN'S HOTTEST ENTREPRENEUR HITS THE U.S.
Last fall, Japanese software mogul Masayoshi Son was in Morgan Stanley & Co.'s New York offices. He had just signed off on his proposed $1.6 billion bid to buy Ziff-Davis Publishing Co. when the news broke that Ziff had already accepted a slightly lower offer from investment bank Forstmann Little & Co. The Morgan bankers were stunned, but Son soon broke the gloom with a burst of laughter. Rallying his troops, within hours he put together a successful $202 million offer for another piece of Ziff--its trade-show division.
The quick comeback is vintage Son (rhymes with lone). The 37-year-old son of Korean immigrants is Japan's hottest entrepreneur. In just 13 years he has built his Softbank Corp. into Japan's biggest software wholesaler, with expected revenues of nearly $900 million this year. The largest chunk, some 52%, comes from reselling other companies' packaged programs to retailers. Son is also Japan's leading publisher of high-tech magazines, including a Japanese version of Ziff's PC Week. Taking his company public last summer, Son watched his own 70% stake grow to $2.1 billion.
GETS THINGS DONE. Now, disdaining his homeland as a computer backwater, he has fixed his gaze on the U.S. "We have to be a major player in the major market," he declares. Son won't tip his hand on coming deals, but he could go after other tech publishers or trade-show organizers, such as Boston-based Interface Group Inc., which stages the yearly Comdex electronics show. Interface officials declined to comment.
Son has already forged some hefty alliances with U.S. computer giants. He owns 26% of Novell Japan Ltd., the booming Japanese subsidiary of America's top network software supplier. Softbank resells over $15 million a year worth of Novell's operating systems and also handles nearly 30% of Microsoft Corp.'s hottest applications, such as Japanese versions of Windows and Word.
American luminaries including William H. Gates III are happy to hobnob with Son because he gets things done. Last year he played midwife to a sweeping alliance centered on Cisco Systems Inc. in San Jose, Calif. Cisco is a top supplier of PC network gear. With help from Fujitsu Ltd. and Toshiba Corp., Son is pushing Cisco's designs as a common Japanese standard. "He's an aggressive guy with lots of friends," says Cisco Japan's marketing manager, Shinichi Maeda.
The new world of networked multimedia has also caught Son's eye. Last April he plunked down $300,000 for a 60% stake in a joint venture with Nippon Telegraph & Telephone Corp. The goal: to acquire rights to digital movies and other software and deliver them to 10 million Japanese homes over telephone lines. But the venture could face tough competition from a dozen or so similar Info Superhighway efforts in Japan, including an alliance of NTT and Microsoft.
Son's drive to succeed may stem, in part, from his roots as a Korean, which in Japan spells second-class citizenship. His father was a squatter in Tosu City on Kyushu, Japan's southernmost major island. The family shack still stands, says Son, bearing the block address 0: "Even today, the Japanese government does not want to admit it was a residence."
TEAM SPIRIT. Never perfectly at home in Japan, Son moved to California at 16. He earned an undergraduate degree in business from the University of California at Berkeley and made his first million dollars on a venture that imported used Invaders video games from Japan--all by the age of 19. His second million came from an electronic dictionary he developed with a Berkeley professor and sold to Sharp Corp.
Despite Softbank's rapid growth, Son has kept the entrepreneurial spirit alive. Early on he formed workers into teams of 10, each with its own profit-and-loss statement that's updated daily. The reward for success: salaries up to $400,000. Still, all but two of his top staff came aboard without discussing pay. "It's not my style to buy people with cash," he says. "I talk about my vision, and they share my passion."
Son has made his share of blunders. In 1991 he lost $10 million over six months in a botched online shopping venture. Detractors also question his finance skills. Son says he had lined up 10 Japanese and 3 U.S. banks as key lenders for his Ziff-Davis bid. But a banker close to Ziff says Forstmann got the nod because of doubts about financing the Softbank offer.
Knowing that wholesalers like Softbank could get cut out of distribution, Son is plunging into CD-ROMs and other electronic media. He's also leveraging his publishing fortunes and powerful foreign allies in a bid to make waves overseas. Not bad, for one who started out at 0.By Larry Holyoke in Tokyo