Is Masayoshi Son a genius or a hubristic dupe chasing overpriced deals that imperil SoftBank? While the year ahead may render an answer, let’s applaud the audacity of a man doing more than perhaps any other to rekindle Japan’s animal spirits.
Son, after all, is the poster child of what Prime Minister Shinzo Abe hoped to achieve with his Abenomics reflation scheme. The 60-year-old Son is taking risks. He’s discarding the groupthink that deadened Japan’s innovative mojo. He’s generating fresh growth and wealth. He’s putting the Japan brand back on the global radar screen, and doing so almost single-handedly.
Son’s breathtaking $9 billion lifeline for Uber, Silicon Valley’s most viral company of the moment, is as out of character as corporate Japan bets get. The gamble capped off a year in which Son’s $100 billion Vision Fund changed the face of venture capitalism, firing cash, seemingly scattershot, at ride-sharing outfits, satellite builders, office managers, chipmakers, robot designers, indoor farmers, you name it.
I’ll leave it to investors, and fate, to sort out whether Son is Japan’s Warren Buffett or a reckless deal-maker committing corporate suicide. But part of me wishes Abe would offer Son an economic czar role in his administration to re-energize the structural reform aspect of Abenomics.
Japan is benefiting from a global growth and stock boom. The longest run of growth since the mid-1990s owes more to strong global demand and epic Bank of Japan easing than success in loosening labor markets, altering tax dynamics, increasing productivity or supporting startups. Even the most bullish of Nikkei investors can’t make a good case that Finance Minister Taro Aso is up to the job of reinventing the economy. And how many Japanese could, with all due respect, name top economic officials Hiroshige Seko or Toshimitsu Motegi?
Along with external forces, Japan’s growth is largely a product of financial steroids: the world’s largest public debt burden and easiest monetary environment. To produce organic domestic demand-led growth, Abe must deregulate industry in ways for which Japan Inc. doesn’t appear ready. After all, 2017 was less the year of “new Japan” — Son as the world’s top venture capitalist — than old habits. The parade of quality-control scandals from Kobe Steel to Nissan Motor to Toray Industries raised valid questions about whether the Nikkei’s nearly 20 percent surge in 2017 ran ahead of improvements in corporate governance.
Abe could ask Son to chair an advisory panel to prioritize and devise ways to enact structural changes. Son might demure, of course. He’s plenty busy making spending sprees dating back to Sprint Nextel in 2013 and chipmaker ARM in 2016 work, never mind 2017’s aggressive forays into a smorgasbord of industries. But who better than Son to help Abe reanimate Japan’s animal spirits as China invests hundreds of billions of dollars to become an innovative and financial powerhouse?
Don’t forget the brain trust over at Keidanren (Japan Business Federation), you might counter. And granted, the main business lobby could do worse than tapping (reportedly, at least) Hitachi Chairman Hiroaki Nakanishi as its next leader. Hitachi has done better than most to stay relevant in a dynamic environment. But the optics of Keidanren replacing a 74-year-old president with a 71-year-old fits with a certain stereotype of Japan Inc. conservatism.
Again, Son still must prove there’s firm logic — and profits — behind his divergent purchases and faith in the so-called singularity. That’s when artificial intelligence trumps human ingenuity. What Tesla billionaire Elon Musk fears is the “biggest existential threat” to humanity, Son views as an epochal opportunity. Perhaps, but in the short run, Son must show how dominating the ride-sharing space gels with his $3.3 billion bet on money-manager Fortress Investment. That goes too for financing giant investments in renewable energy with cash from Saudi Arabia’s Crown Prince Mohammed Bin Salman, whose wealth derives from the dominance of fossil fuels.
Investors are hoping Son pulls another Alibaba out of his hat. His reputation as a cagey investor started with a $20 million bet on Jack Ma’s dream of building a Chinese e-commerce juggernaut. That 2000 wager is now worth roughly $130 billion, earning Son one of the greatest returns in venture capital history. Son still must prove Alibaba wasn’t a fluke.
Even so, there are few more potent case studies, if any, for how Tokyo can shake a staid corporate culture. Unlike Japan’s bubble boom years, when overseas acquisitions were more about vanity than market share, Son is positioning his conglomerate for where the world is actually heading, not where Japan Inc.’s septuagenarian set would prefer.
If Abenomics wants risk-averse chieftains to thrive, give workers raises and defeat deflation, it must have a good story to sell. Saying “Japan is back” would get far more traction if Abe enlisted the help of visionaries working to make it happen.
Based in Tokyo, William Pesek is the author of “Japanization: What the World Can Learn from Japan’s Lost Decades.”