Book rewiew: "Gambling Man - The Wild Ride of Japan’s Masayoshi Son"

Content:

This was clearly one of my "must read" books in 2024. The author, Lionel Barber, is the former editor of the financial times and as such clearly has access to people who might have otherwise not spoken to a more unknown journalists.

The book goes back to Masa-son's very humble roots as part of the Korean minority in Japan which clearly was not an easy childhood. His father earned the first money by breeding pigs in their garden in a "slummy" area in their hometown. The father seems to have been quite an entrepreneurial character himself, moving into "loan sharhing" and then into Pachinko, low scale gambling game very popular in Japan. Similar to Masa later, his father used risky leverage and often risked it all to win. In any case, the family got decently rich with these gambling halls.

Before setting out on his own, Masa got the advise from another successful Japanese business man to focus on computers and to learn English. So Masa set out to go to the US. He showed remarkable math skills but very soon began to think of ways to make money.

His first business, a Noodle shop on campus had to close because of "creative accounting" issues. His first successful venture was a pocket "speech sythesizer". By developing this product he once forgot actually his appointment for the marriage ceremony and his (future) wife had to go home unmarried at that day.

His early partners on the speech syntheziser felt bertrayd, because Masa kapt almost all of the 1 mn USD he received from a Japanese company for himself.

After going back to Japan, he set up a Software distriubution company for PC software (Softbank) which was just starting of in Japan. However, after 2 years ge got very sick (liver) but later somhow recovered. In his early years, Masa successfully identified many trends and capitalized them often via JVs in Japan with US partners. He was also succesfully creating a relationship with Bill Gates early on and distributed Microsoft's producst in Japan.

Following the implosiuon of the Japanes miracle in the early 90ies, Masa had to bail out his father who had speculated in real estate and lost all his money. In the meantime he also managed to IPO Softbank which clearly was not easy. Very early on, Masa became the "wheeler-dealer" that he is still to this day, byuing and selling companies all the time. He also was very insensitive to valuations early on when he really wanted a business for whatever reason.

His acquisition boom was fueled by ultra cheap JPY loans from Japan's banks. Masa was relatively slow to understand the impact of the internet but then made his first move by investing into Yahoo via Ziff, a publishing house he acquired for 2 bn USD earlier. Again, he massively overpaid (around 10x of what Sequoia paid just weeks earlier). Only to top that up a few weeks later for a larger stake. As Yahoo hesitated, he came up with his future "signature move" and threatened to invest a hge amount into Yahoo's then biggest competitor Excite. He also forced them to create a Japanese JV with Softbank.

Based on this blueprint, Masa muscled his way into more startups such as E*Trade, Morningstar etc. and successfully rode the wave of internet companies in the 1990ies. The underlying profits of the companies were not relevant, only that the stock price of these holdings would rise.

Thise rise was intercepted briefly by a whistle blower case in 1997, claiming that Masa and Softbank manipulated share prices and kept debt off-balace sheet in non-consolidated vehicles. It was pretty obvious that financial engineering was one tool in Masa's toolbox, but nothing serious came out of that.

Shortly before the bubble burst, Masa made his best invement ever: Buying 30% of Alibaba for 20 mn USD. Back then, Alibaba was an early stage startup with almost no revenues, but as always, Masa didn't care because he "could smell the money" in China.

Masa bacame one of the wealthiest men in the world in 2000, only to lose almost everything in the Dotcom crash. But once again, Masa reinvented himself, this time as a Telecom entrepreneur and operator, culminating in buying Vodafone Japan which he managed to turn around with the help of an exclusive agreement to sell the first Iphones in Japan. And then only to survive another near death experience during the GFC.

After the GFC, he then hired two guys, Rajeev Misra and Nikesh Arora who should be instrumental in making Softbank into the largest "Tech growth" investor the world had ever seen. What happened next (Vision Funds, WeWork etc.) is quite well known.

Summary & Recommendation:

Overall, the book is a very detailed record of Masa Son's career so far. He clearly is a unique character, on the one side he did identify a lot of the big trends in the last 30-40 years, on the other hand he is a reckless gambler and is not shying away using any dirty trick to get his way.

My favorit part of the book is where he tries to sell the Vision Fund to Warren Buffett, who, unlike many other older businessmen did not for one second fell into Masa's charms. The meeting was very short.

As Barber is a Journalist by training, the book reads less like a Michael LEwis book and is more "reporter style", on the other hand, he seems to know a lot about Japan and I like a lot how he manages to explain events in Japan over the past 40 years as the background for Masa’s rise.

I can definitely recommend this book to anyone remotely interested in Softbank and Masa Son, especially as he just reappeared together with Sam Altman and Larry Ellison in front of President Trump to promise 500 bn in AI investments, just before DeepSeek hit:

This venture contains everything from Masa's playbook: Coming in late, and trying to back the obvious winner with a shitload of money.

In the past this sometimes worked, sometimes it didn't. Let's see how this one will work out. Maybe Lional Barber can add a new chapter in a few years time.

As mentioned above, the book is worth reading, both if you are interested in Masa Son and Japan.