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Local champions must script the India story: SoftBank founder Masayoshi Son [Tech News] [Times of India](Times of India Via Acquire Media NewsEdge) SoftBank founder and chairman Masayoshi Son talks to TOI about creating and losing wealth, the huge opportunities created by the IT revolution, and what India must do to cash in. You were worth $78 billion during the first dot-com boom, then you lost almost $70 billion during the crash and now you've made a lot of money again. How has that affected your attitude towards risk and life? I've had ups and downs but always been excited about the information revolution. Since the day I started SoftBank, I've believed that the information revolution is the biggest that mankind has experienced. It started with the PC and evolved into Internet. When you have a long-term vision, the market's reaction to share prices is a minor change. People over-react. They overshoot to the sky during good times and to hell during bad times. The number of Internet users being served by our companies never went down in any single year - it always went up. I was convinced we were on the right track. It's like a shadow. You stand on the field, the size of the shadow changes. The height of the man standing in the middle doesn't. Sometimes people's reflections and views change, but who cares. For three days in 2000, I was richer than Bill Gates. Every week I'd wake up and I was richer by another $10 billion. I wondered why people talk to me ... is it because they want to be my friends or because they've seen the numbers in the papers. I started thinking where should I donate this money. It was a bigger headache than making money. Before I could work out a solution, God gave me one. Our share price went down 99% (laughs). I got more excited now. I could focus on the actual business. Japanese Internet infrastructure was very poor then, there was no mobile Internet. Japan was one of the most expensive countries for Internet and connectivity was slow. Government-owned NTT had 99% market share. It was against the law for us to compete with NTT. I banged the table in front of the PM and said Japan needs change. I felt I was doing something good for the country and its people. That made me happy. I was fighting for deregulation, I had no idea I'd go into the infrastructure business. I lost a billion dollars every year for four years. 'Oh God Why did I say deregulate,' I cursed myself (laughs, slaps forehead). We almost went bankrupt but that was a happy time. I was fighting every day. The true value of life is not a symbolic number of dollars but the happiness and excitement you feel every day. What did you discuss with PM Narendra Modi on Monday? We talked about his vision for digital India and how strongly I support that vision ... We listened to his passion to improve India, which we'll support. Digital India is one way we can contribute, that's our focus area. I gave him the example of Alibaba and how it's become such a big player in China in 10 years. Today, Alibaba provides 25 million jobs, there are 8 million merchants in the Alibaba ecosystem, each has a minimum of 3-4 employees - the CEO, his wife and his assistant, that's 24 million employees created from zero. One million truck drivers deliver Alibaba products every day and 5 billion packages a year - that's the size of all US industries. Almost 99% products sold are manufactured in China - so on the supply side there would be another 25 million jobs. The size of demand Alibaba created is $500 billion this year and it's growing 40% every year. In the next few years it'll be a trillion dollars. That's half of the size of India's GDP. Many think online commerce is niche and not part of normal people's lives. The reality is that in China it's becoming half the size of India's GDP. I mentioned these examples, and Mr Modi went 'Wow!' His belief in digital India and 'Make in India' is right. Digital India will be an important factor and the country can leapfrog on the information highway. It may not be able to do so on the automobile highway because that is something that takes time and is expensive but it can certainly do so on the information highway. Could India's consumer Internet story be as big as China's in a decade? I think so... You've announced your intention to invest $10 billion in India. Would most of it be in the digital space? In the next ten years we wish to invest on that scale. We have the financial ability and preparation in that direction but it's up to each opportunity. If there's no company then we cannot invest. It depends on the situation. India is growing very quickly and with the digital India vision I believe there will be that much of an opportunity but we have to see how it goes. You announced two deals with Snapdeal and Olacabs amounting to almost $1 billion. Snapdeal is fighting a fierce battle with Flipkart and Amazon, Ola is battling Uber. You're investing in the number two or three in the industry. What are you betting on in these two companies? I think Flipkart follows the Amazon model and Snapdeal is the Alibaba model. They are similar but different. The Amazon model is one big merchant with very few affiliates. Almost 80% of what they sell is their own inventory. So it's like one big retailer. In Alibaba's case, it's a bunch of small merchants. SoftBank Corp vice-chairman and SoftBank Internet and Media Inc (SIMI) CEO Nikesh Arora (who was also present) adds: In India, it's not clear what direction e-commerce would take. E-commerce is between $5 billion-8 billion (or not even there) in a $2 trillion economy. In China, it's $500 billion in a $10 trillion economy. E-commerce has reached 5% in China but is sub 1% in India. If you look at it directionally, there's still so much room to grow and even if there are three players slugging it out it's one-third share of a very large market. We're not clear which will be the long-term model here. We've our preference, that's why we've put the money there (in Snapdeal). What about Olacabs, it's up against the most-valued privately held company Uber? Local champions should be the champion in the long run. In the service industry, it's more culture and local passion-dependent. Bollywood stars are all local stars (laughs). You'd be happier if they're local champions. It's not just in the online industry. Look at your media, it's full of local champions. Rupert Murdoch or Disney are not the kings here. Early on in China I was asked why SoftBank isn't coming in directly. I said we respect local cultures and believe young local entrepreneurs must be captains. It's all about local merchants, local goods, local culture. We'll be a signi?cant shareholder with some in?uence in strategy but not a controlling shareholder. Products can travel globally much more easily than services, which is more related to people, customs and pride of the nation. We should be a good friend and supporter. That's my philosophy. That way we've less friction. There's no point pretending we know everything because we really don't. You acquired mobile-services provider Sprint in the US. Is there a possibility of you looking at mobile network operators or telecom infrastructure in India? There are enough players here. I don't think we can contribute much. Our focus here will be only on Internet. We believe you are meeting a group of Indian entrepreneurs during your visit? I'm speed dating some Indian entrepreneurs later (laughs). That's how I met Jack Ma (Alibaba founder). He was among 20 entrepreneurs I was meeting for 10 minutes each. I'm meeting 10 of them here. Nikesh and his team will meet another 15. The broader message is that if we believe India will be among the top economies of this century, if you believe in the long-term point of view, then valuations (which may vary 15% or 20%) are irrelevant in the conversation. What matters are good entrepreneurs and ideas making good businesses, I'm not good at making a 30% return, I'm good at making 10x or 100x or zero (laughs). (c) 2014 Bennett, Coleman & Company Limited |