Maverick Korean Japanese tech entrepreneur Masayoshi Son is in “advanced” talks to have his Softbank buy Sprint Nextel, according to a knowledgeable sources cited by the Wall Street Journal
If consummated, the deal would put a price tag of $12 billion on the struggling US mobile phone service. However, Sprint has declined to comment on the deal, calling it a “rumor or speculation”, not unusual during the late stages of buyout talks.
Sprint lags far behind AT&T and Verizon in its wireless customer base but has been aggressive in building out a 4G LTE network. That makes it particularly attractive to Son who has had a history of pushing the envelope in his business strategies as a tech entrepreneur since his early days as an arcade-game operator while studying at UC Berkeley.
Sprint had been seen as seeking a merger with T-Mobile, MetroPCS or other small carriers after T-Mobile’s announcement last week of a bid for MetroPCS. A merger with Softbank would serve much the same purpose of creating economies of scale in bargaining with mobile handset makers like Apple and Samsung. Softbank is Japan’s number three wireless company but was the first to carry Apple’s iPhone.
Softbank also recently announced that it will expand its own LTE network by buying Japan’s eAccess. In 2006 it acquired Vodaphone’s Japan subsidiary.
For the past quarter century Son has been Japan’s most dynamic tycoon. That status goes beyond his estimated net worth of $9 billion based on his interest in Softbank, which operates Japan’s most profitable mobile phone carrier which posted profits of $37.5 billion for the 2010 fiscal year. It’s his willingness to work from the outside in, as an outsider seeking to change the stagnant culture of corporate Japan.
Son’s family has lived in Japan for two generations, but because he is of Korean-Chinese descent he had to fight for every opportunity. He came to the U.S. to finish high school at age 16, then studied engineering at Berkeley. To help pay for his education, he started a company to place game machines throughout the campus and on other college compuses. He also managed to patent a translation system and sold it for around $1 million.
He set up Softbank in the 1980s as a software distributor. It soon became a distributor and local agent to U.S. software firms like Microsoft. Son had the Silicon Valley ties and foresight to take a 40% stake in a nascent Yahoo! By the late 1990s Softbank was worth $180 billion, partly due to the swollen value of Yahoo!. The dotcom crash of 2000 wiped out 98% of its market cap and nearly bankrupted Son.
Since then Son has refocused Softank into a telecom firm that has greatly eroded the monopoly once enjoyed by NTT, Japan’s formerly state-owned telecoms operator. The staggering amounts of debt Son pild on to scale up his operations to take on NTT attracted much scorn for 15 years from Japan’s corporate establishment. But Son is having what apears to be the last laugh. Not only did Softbank report record profits of $37.5 billion for fiscal 2010, Son is emerging as the dragon-slayer taking out old-line monopolies like NTT and Tepco.
Masayoshi Son was born August 11, 1957 in Tosu on the southern Japanese island of Kyushu. He was the second generation to be born in Japan, but under stringent naturalization laws, he was still a Korean citizen. As a first step toward obtaining citizenship, his family had taken on the Japanese surname Yasumoto. Nevertheless, young Masayoshi suffered intense prejudice.
“When I was in kindergarten, some kid hit me in the head with a stone,” he recalled. “It hurt me emotionally, and I decided to try to hide my identity.” Repeated encounters with Japanese racism throughout his life filled Son with what he would later call “the blackness inside.”
Masayoshi’s interest in business was sparked at an early age by a father who owned a small business. Business offered a path around many of the social and economic barriers imposed by institutionalized racism. Even banks routinely denied loans to people with Korean surnames.By the time Son was 16, he showed an unusual degree of initiative and perseverance. He sought an interview with one of his business idols, McDonald’s Japan president Den Fujita. After many refusals, Fujita finally relented and agreed to the meeting and advised the persistent young man to learn English and study computer science.
Son lost no time. He was only 16 when he left for South San Francisco to live with family friends. After two years of high school, he got into the University of California at Berkeley. He didn’t follow Fujita’s advice strictly. Son majored in economics, but he did enroll in several computer science courses. He was 19 when he saw a photo of a microchip in a magazine article. He cut it out and carried it with him, convinced that computer technology was the future.
Deciding that the way to wealth was to invent a device incorporating the computer chip, Son disciplined himself to come up with at least one idea every day. He conceived a pocket multilingual translator and developed it sufficiently to secure a patent. He then sold the patent to Sharp for one million dollars. Sharp incorporated the patent into its highly successful Wizard line of PDAs.
Son used the million to start a company to import the Space Invaders arcade video games and place them throughout the Berkeley campus. After graduating with a B.A. in economics in 1980, Son founded an Oakland-based computer company called Unison which is now owned by Kyocera. These early ventures taught Son valuable business lessons but didn’t seem to have been particularly lucrative.In 1981 Son kept a promise to his mother and returned to Japan. He started Softbank, Inc to distribute software and computer-related publications to service the demand created by the emergence of small computers. Son put up $80,000 in savings and went to apply for a bank loan. The bankers were leery about lending to a young entrepreneur, especially one of Korean ancestry. Some even made oblique references to his ancestry by remarking on the oddness of his surname. “Okay, I’m a Korean, so what,” shot back Son in exasperation. He did eventually obtain a $1 million loan from Dai-Ichi Kangyo Bank, helping him turn Softbank into a major Japanese distributor and publisher.
