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A senior banker in Tokyo recalls introducing Son on stage at an event five years ago, and the room was immediately taken over by the presentation’s first slide: a horse on the left, a Ferrari on the right .
“Which one do you want me to bet on?” the SoftBank founder challenged the audience with a very concise self-introduction. This has nothing to do with horses or Ferraris, but it is part of the image that Son has cultivated: a futurist-cum-gambler for whom the stakes seem dizzyingly dualistic and who, through a supernatural level of belief, Can’t understand why anyone would bet with him. Although the market often does this.
In the later stages of becoming a billionaire, many holders of the billionaire title will work to fashion another word (“philanthropist,” “collector,” “lunar globetrotter,” etc.) by which they are remembered. For Son, the accompanying nickname has always been absolutely central. Billionaire status seemed to work for him only with the addition of the word “visionary.” But that term might miss the point: perhaps a better approach might be to present yourself as a brilliant engineer of luck.
Today, Son’s visionary label is under particularly intense forensic scrutiny: perhaps more than ever. The stakes are higher, but the gambler himself (66) is older and his record (WeWork, Oyo, Greensill and the Vision Fund have suffered consecutive quarters of losses) is less perfect. The direct cause of the intense scrutiny is this week’s initial public offering (IPO) of British chip designer Arm, which is due to close on Wednesday and the shares will trade for the first time on Nasdaq on Thursday.
SoftBank acquired the British company in 2017 for $32 billion and has since made it central to its grand vision for artificial intelligence – believing that AI (as a catch-all term) will allow SoftBank Achieving an ambitious goal: “Domination of the world”. The lengthy process of selling Arm shares, which would leave Son’s SoftBank still with an overwhelming 90% stake and value the company at more than $50 billion, is intriguing enough on its own. But now it’s poised to become even more so, as part of the larger mystery of Son’s current and future bets on artificial intelligence.
As a public company, Arm faces two distinct and daunting tasks beyond the technology role it may play in Son’s vision. The first is primarily financial – analysts are increasingly suspicious that Son is gearing up for an unknown, AI-focused mega-deal that would once again redefine SoftBank. He’s famous for going big. Why would AI change its strategy when it looks like it might transform humanity?
Analysts said that because Arm is a listed company with a market valuation, Son could theoretically use SoftBank’s remaining stake in the company to obtain more than $25 billion in additional financing from banks and other sources. Combined with SoftBank’s existing cash and borrowings, this could provide Son with more than $65 billion in deal capital.
In its financing role, Arm will in part replace Alibaba, the Chinese e-commerce giant in which Son is a ground-level investor and whose shares (now mostly sold by SoftBank) have underpinned SoftBank’s regular Dependent leverage. .
But Arm’s heavy lifting can also be psychological. No matter how his record changes, Son has built an all-important visionary image around a series of wildly successful bets – Alibaba being the most valuable. He has had other recent successes in his portfolio, but investors say he needs a more high-profile move to maintain his reputation.
If, after the IPO, the market pushes Arm toward the astronomical valuation that Son seems to truly believe in its value, he may sell more shares and enjoy vindication. Better yet, he might think that Arm’s IPO has reopened the market for companies with AI stories to go public, and then start preparing them to go public. If it falls off, he can pull out the face of the misunderstood genius that seems to get him through his bleak times.
The reality of Son’s visions – no matter how grand they appear in his predictions of life 300 years into the future – is that they are limited by aggression, flexibility and strict luck management. If you make a life-or-death bet every five years, you need a lot of luck; make five every year, and the odds change. In fact, he’s made huge bets on horses and technology products like Ferrari through the Vision Fund. In the coming weeks we will reveal which of these Arms.
leo.lewis@ft.com
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