Inside the Baffling World of Masayoshi Son's Presentations
(Bloomberg) -- Masayoshi Son’s last earnings briefing was among his most somber in recent memory. The usually irrepressible billionaire opened by comparing the devastating impact of the coronavirus outbreak to the Great Depression. Son went on to explain why his SoftBank Group Corp. had just posted the biggest losses in its 39-year history. The company’s $100 billion Vision Fund lost almost $18 billion writing down the value of portfolio companies, including WeWork and Uber Technologies Inc. Then came this slide.
Son may have been trying to make a point that while some of his investments are likely to fail, others will emerge stronger from the crisis. But the graphic drew ridicule in the press and on social media. It didn’t help that a few hours later he lamented about being misunderstood, like Jesus Christ.
His proclamations may be easy to laugh at, but they belie a serious shortcoming: Son is having a hard time communicating his message. When SoftBank was largely a domestic player, audiences in Japan were used to his eccentric style — from declarations about curing human sadness to SoftBank’s Pepper robot reading out financial results. But in recent years, global investors have tuned in — only to be baffled or worse by Son’s presentations.
“That kind of quirkiness used to contribute to Son’s charisma. But the legendary investor halo he once had above him has slipped and now these things are working against him,” said Justin Tang, head of Asian research at United First Partners in Singapore.
The inner circle at Tokyo headquarters was taken aback by the harsh reception last month, but people familiar with Son's approach say it’s not going to change any time soon. They claim it reflects the billionaire’s personal taste, with an aim to give clear themes in presentations, using simple representations he thinks any person can understand. Son likes to use metaphors to make difficult concepts more accessible, with at least one slide that he reckons captures the broad message. In February, that meant a slide with the words “Tide is turning’’ and an image of the ocean. In May, it was the Great Depression analogy. This week, he’ll deliver his next big theme at SoftBank's annual shareholders meeting.
Son, 62, is closely involved in making the slides. He has a team of about a half a dozen up-and-coming SoftBank employees in their late 20s and early 30s responsible for drafting the presentations, according to former staffers. They collect his pronouncements throughout the year to use as fodder for drafts that Son carefully vets, sometimes making last-minute changes that send the staff scrambling.
Indeed, the Valley of the Coronavirus was no aberration. Son has been defying PowerPoint conventions for years. What follows is a brief overview of his unconventional efforts.
Son built SoftBank from a PC software distributor into a global conglomerate by taking on debt to pay for daring acquisitions. He has always struggled to persuade investors to credit SoftBank for its investments in technology startups, with its stock chronically trading at a discount to the value of its shareholdings. Over the years, Son has tried various visual metaphors to convince investors his company is undervalued. In November 2014, he used Aesop's fable of the goose that laid the golden eggs.
“SoftBank is a goose with more golden eggs in its belly, even if it’s too early to bring them to the market,” Son explained to reporters and analysts at the briefing. “SoftBank is currently valued less than the sum of its golden eggs.”
Four years later, the “goose premium” failed to materialize and Son took a different approach, relying on the raw power of mathematics.
The formula is the 25 trillion yen ($234 billion) value of SoftBank’s assets at the time minus 4 trillion yen in debt, far from being equal to its market capitalization of 9 trillion yen. The stock was trading at a 50 percent discount to the company’s own sum-of-the-parts calculation that includes the domestic telecoms unit, Alibaba Group Holding Ltd., U.S. carrier Sprint Corp. and Yahoo Japan Corp.
Last November, SoftBank reported its first quarterly operating loss in 14 years after taking a $4.6 billion charge for WeWork, whose spectacular implosion led to a $9.5 billion rescue package from the Japanese company. Son took to the stage to defend the investment and sketch out a very “hypothetical” path to profitability.
In February this year, one quarter after the meltdown at WeWork triggered a record loss for the Japanese company, Son came up with another riddle — one intended to drive home how an object can look very different depending on perspective.
He urged investors to focus on SoftBank’s shareholder value, which would include its stake in Alibaba, rather than operating profit, which is swayed by share price fluctuation in investments like Uber. “The only measure by which SoftBank, an investment company, should be evaluated by is whether shareholder value rises or falls,” he said.
Son often starts his presentations by asking the question: What is SoftBank? While the answer has continued to evolve over the years, some things remain constant: a sense of a grand social mission and his obsession with being No. 1.
The billionaire portrays himself as a true believer in the information revolution, a proponent of the so-called singularity—the notion that one day computers will mesh with human brains and bodies. Son calls on these ideas whenever he needs to give context to his latest adventure.
Son thinks no industry is safe from seismic, technological change and only the strongest will survive. That’s why he has sought to present SoftBank as dominant from the time when it was anything but.
But Son reserves his weirdest and most sentimental ideas for SoftBank’s annual shareholder meetings.
Most of Son’s predictions about the future of technology are still many years ahead, but some have already come true. SoftBank’s operating profit did reach the 1 trillion yen mark in fiscal 2013. Last year, it marked a different record – a 1.35 trillion yen loss.
©2020 Bloomberg L.P.