The most disconcerting thing about Masayoshi Son at the announcement of SoftBank’s quarterly results was not the record-breaking $23bn loss, the promise of ferocious cost-cutting or even, two days later, the historic selldown of the company’s stake in Alibaba.
It was how much he looks and sounds like the 65-year-old chief executive of a Japanese company: a conservative cash-hoarder in full protective mode, wary of the future and wearily trimming dreams to reflect the here and now.
Over the years, with rocket-fuel panache and confidence, Son the transformational dealmaker and Vision Fund founder has done everything to avoid this perception. When set against almost every other large Japanese company, he has been more aggressive in his bets, more creative in his use of debt and more committed to selling investors on the idea that his Big Picture is the biggest and most picturesque in the market.
Son, uniquely for Japan, had the knack of turning vision into an asset class. The question he will have to answer — on behalf of vision-peddlers around the world — is whether that particular alchemy survives a prolonged tech rout, higher interest rates, inflation and disruption or only ever works in a bull market flooded with cheap cash. These are very early days, but the signs are not good.
Son’s presentations, with all their deliberately anti-tradition aplomb, have complemented his efforts to stand apart from the rest of corporate Japan. Any company can stick stratospheric sales projections on a Power Point slide: Son’s is the only one that can, to a sage nod from analysts, throw in a telepathic dog or an artist’s impression of how we will cuddle one another in the distant future.
But last week’s presentations were all mud and no stars. In front of the media, he adopted the agreed choreography of Japanese CEOs in a bind: chastened acknowledgment of previous hubris and a prominent show of battening down the financial hatches.
To analysts and investors, the message of risk aversion was even stronger. Repeatedly, Son answered questions by referring to SoftBank’s “defensive mode” and its emphasis on piling up and retaining cash. Parts of the company’s vast debt will naturally mature, he noted, and be paid down during this phase. Overprotectiveness, he said in a striking break with the image he has fought so hard to sell, is an accusation worth wearing to ensure survival. If, as some suspect, this is all rather more of an act than a true change of character, it is an impressive bit of misdirection.
“It’s definitely heavy rain,” concluded Son, every bit the dispirited unicorn-hunter. “How deeply will the rain damage our asset value? We don’t know. Therefore, we cannot take too much risk.”
Defence. Survival. Cash. Indefinite risk aversion. The problem with these words, when spoken by a Japanese CEO, is not their necessity in the face of clear and present danger. Although he provided reassurances that his vision remained unchanged, Son knows better than anyone the direness of the situation his mighty Vision Fund technology portfolios are now in, and how extensively global events and markets could continue to annihilate fortunes. He highlighted China, where SoftBank still sees big opportunity but has been forced by a variety of factors to turn particularly cautious.
The problem, as great swaths of corporate Japan have spent decades demonstrating to the fundamental cost of innovation, entrepreneurialism and the broader economy, is that defensiveness and cash-hoarding can become unshakeably addictive in the longer term. For many, the collapse of the 1980s bubble was the crisis that started the habit; for others it was the financial crises of 1997 or 2008. The current “correction” could well join the list of traumas that cause Japanese companies permanent loss of risk appetite.
The alarming thing, therefore, is the spectacle of Son both deploying the language of “ordinary” Japanese CEOs and entering their drear philosophical domain — however justified it is for SoftBank right now or how temporary it ultimately proves. Son told analysts that he can “convert into offence mode very quickly”. Japan needs that to be true.
The stakes here are much higher than SoftBank’s survival. Japan clearly does not need every CEO to nurture and sell visions like Son. But it definitely needs a decent crop of those that do. Japan will become less likely to generate such a crop the longer Son is seen cowering. The next months will be critical: a tug of war between Son’s natural addiction to risk and Japan’s addiction to its avoidance. For the moment, Son has made himself look predictable; history, though, suggests that is exactly when he is most unpredictable.