Japan's SoftBank Announced on Friday that it will raise at least $108 billion for a new investment Fund called Vision Fund II, according to foreign media reports.In an interview at SoftBank's Tokyo headquarters, founder and chief executive Masayoshi Son talked about using the Vision fund to keep up with the era of ai disruption, how to keep the SoftBank Group alive for 300 years and the current problems SoftBank faces.In the interview, Masayoshi Son has a serious face and rarely relaxes.
Keeping up with the era of ai disruption requires real focus, he explains."Artificial intelligence has passed the stage of academic research and is now in the stage of practical application," he said."It will be widely used."If I were to name three areas where AI is going to revolutionize in 10 years, they are business models for companies, healthcare and transportation."
Over the past two years, vision funds worth nearly $100 billion have been making big bets in these areas, hoping to ride the wave of The Times.SoftBank's investments include U.S. ride-hailing giant Uber, office-sharing startup WeWork and Bytedance, among others.
"Unicorns [unlisted companies valued at more than $1bn] are emerging.We can monetize investments faster than in the early days of the Internet, "said Mr Son."I have confidence."
But critics say vision funds are emblematic of the tech bubble.But Mr Son's confidence in ai's potential is built on a career that has been used to betting on big technology trends.
"When the Internet revolution started more than 20 years ago, people asked me similar questions.But what happened in the end?The Internet has penetrated into every corner of our life.The same is true of artificial intelligence.The world won't get tired of AI."
"Those who call the current tech environment 'bubble' and 'dangerous' tend to be those who don't understand technology.For those of us, we are at the crossroads of the technological revolution and historical opportunity.During the Internet revolution, some warned that the Internet was a "glass cave."They must be embarrassed to look back on it now."
"The average big IT company trades at about 30 times earnings.But their profits are growing at 30 per cent a year, and multiples will fall to a dozen within two years.IT's similar to manufacturing in Japan, so you can't say IT companies are too expensive.Indeed, manufacturing may be overvalued, given its low growth potential in five years' time.It all depends on the time frame of your assessment."
SoftBank's own share price also highlights the gap between Mr Son's futuristic vision and the market's sceptical view.SoftBank's market capitalisation, at Y12tn ($110.4bn), is less than half the Y27tn it holds in various companies.
"The market expectations will eventually catch up with and surpass SoftBank's fundamental strength.I'm very patient with this.One could argue that SoftBank's mobile business has come of age.But if the fund business is successful and generates high returns, I think the market will be more comfortable.Starting next year or so, I expect an initial public offering almost every month from a portfolio company."
A successful transformation into an investment company will be key to ensuring SoftBank's survival for 300 years, which is Mr Son's long-term goal.
"The vision fund is the basic approach.It will invest in and be a major shareholder in a group of companies leading the information revolution that will continue to lead for 300 years.The different companies invested in would incentivise each other and create synergies.We will "graduate" companies with slower growth and bring in growing companies.This harsh environment allows [the group] to grow and survive."
The vision fund is also an effort by Mr Son to allay concerns about SoftBank's future.The 61-year-old has yet to announce a successor.
"Once an ecosystem of growing companies is established, SoftBank will continue to grow even after I leave.I've been thinking about picking a successor."Candidates can come from within the company, but there are people in the portfolio companies that vision funds invest in."
Mr Son's aggressive dealmaking strategy has also raised concerns about SoftBank's debt.But Mr Son says he has a set of risk-control rules.One is to keep the group's loan-to-value (LTV) ratio below 25 per cent of the value of its stake, which means it can survive by selling shares even if they fall in value by three-quarters.Another option is to hold cash equal to the value of bonds maturing in the next two years."I'm not worried at the moment because LTV is below 15 per cent.We're in a comfort zone."
"Going into development means going on the offensive.Not being proactive is the biggest risk.Because we are always on the offense, we are also more defensive than a typical company.You can cut off three-tenths of a lizard's tail and it will grow back.But any more would mean cutting off the lizard's organs and the lizard would die."