To invest in OpenAI, will Masayoshi Son risk everything for AI for the last time?

Original source: Future Science and Technology Power

Author: Neil Xue Liang

Image source: Generated by Unbounded AI ‌

There is an impressive twist to Son’s image and his approach. Son is not tall and has a gentle appearance. He looks like an ordinary old Japanese man (even though he is of Korean descent). When he speaks English, Son often speaks very slowly and with a thick Japanese accent, which makes him almost like an English speaker. As a beginner, he doesn't look like the kind of person who took economics and computer courses at the University of California, Berkeley. Even when describing the most ambitious vision, Son is slow and has few big emotional fluctuations, so you It could even be said that he doesn't enjoy the spotlight and the stage that much.

In fact, after announcing that he would step down from his company SoftBank in the middle of last year, Son really went into hiding for several months, just like every retired old man.

Nothing has anything to do with the word "leadership". However, as the richest man in Japan for many years (and even the richest man in the world for a day), the funds at Masayoshi Son's hands were once so huge that he could influence the global technology and venture capital market. , and the aggressive investment style like a gambler has even been described as single-handedly creating inflation in the global primary market.

Of course, this was before the failure of the Vision Fund, and we can now regard the successful listing of ARM in September as a landmark turning point, which means that Masayoshi Son can finally get out of the shadow of failure and once again implement his crazy adventurism ALL IN strategy.

This may be his last gamble.

Screenshot of SoftBank Vision Fund official website

Failure ALL IN Philosophy

Son’s favorite stories include taking five minutes to decide to invest in Alibaba, injecting $100 million into Yahoo when it only had 15 people, and taking 45 minutes to convince a Saudi prince to invest in the Vision Fund launched by him. 45 billion US dollars invested – worth an average of 1 billion per minute.

These stories are romantic to the point of being horrifying, because behind them are almost astronomical flows of money, but Son made his decision very quickly.

ALL IN, a word that has been overused now, was first used to describe Masayoshi Son.

Different from his gentle appearance, Masayoshi Son is an intuitive investor. He values the feeling of contacting people in a very short period of time. When Son was proud of his success, this intuition was mythologically transformed into a golden finger. It is full of Eastern Zen and indescribable mysteries, and because of its drama, it is full of the unrestrained and heroic passion of Westerners. This fits Son’s identity: a third-generation Korean immigrant who is incompatible with Japanese society, and a third-generation immigrant in California who is incompatible with Japanese society. Asians who received higher education and made their first pot of gold.

Based on this ALL IN philosophy, Son's career reached its peak in 2016. That year, he spent US$32 billion to completely privatize ARM. This action took only two weeks from finalization to completion. In order to smoothly obtain 100% control, Son even made an irresistible offer to the ARM board of directors. : The acquisition price was as high as 43% higher than ARM’s market value at the time.

The reason for this is just because Sun Zhengyi had a very brief conversation with ARM CEO (the conversation was even held at a party). He believed that ARM’s simple instruction set architecture has a near-total monopoly on mobile chips. It will have great growth potential in the future.

The following year, Masayoshi Son established the Vision Fund with a total value of nearly US$100 billion. In addition to wealthy tycoons like Saudi Arabia, who are not short of money, there are also a number of technology companies including Apple. It continued to implement Son's ALL IN philosophy and tried to use intuition to copy the success of Alibaba and Yahoo. However, the development of all things eventually went in a direction that Son did not want to see.

ARM's revenue has never improved, and its annual net profit is only one-sixtieth of the purchase price. WeWork, which was expected to become the next Alibaba, fell like a meteor. The investment that Son Zhengyi decided on in 28 minutes ultimately cost him US$12 billion. The financial conditions of the Vision Fund and SoftBank Group have deteriorated rapidly, with a loss of 6 trillion yen in six months in 2022. The Vision Fund's losses amounted to tens of billions of dollars, so much so that in recent years SoftBank almost sold Alibaba shares to fill the holes - his best-known and best investment brought him a 3,000-fold return.

The ALL IN policy has systematically failed.

Screenshot of SoftBank Vision Fund official website

It turns out that Son's intuition is not always accurate. For example, when acquiring ARM, Son claimed that ARM's revenue would grow fivefold in five years. Facts have proved that this prediction was completely wrong. ARM's revenue growth was only 65%, which was even lower than the growth rate of the entire market.

Son's confidence originally came from ARM's monopoly position, but ARM's monopoly position is extremely disproportionate to its actual income. Its income mainly comes from licensing fees. However, when ARM was seeking market position in the early stages, it set the fee rate to an unreasonable low level. Incredibly, ARM only gets 9 cents per chip on average. In contrast, the patent fees Qualcomm charges on devices like the iPhone once reached $20.

Another well-known failure case is the social application IRL. The Vision Fund led the second round of investment totaling US$170 million to this startup founded in 2019. However, in fact, 95% of its 20 million monthly active users are robots.

There are many such examples. Most of the hundreds of companies that Son has invested in have failed to meet expectations. However, unlike the general 80-20 rule, Son’s ALL IN investment style, with the support of huge funds, is actually equivalent to affecting the entire market. The market placed bets and exerted huge leverage. Due to the influence of many negative factors such as geopolitics, inflation, sluggish demand, etc., the ALL IN strategy ultimately failed completely.

From Son of God to Tokugawa Ieyasu

The legendary halo that the ALL IN strategy brought to Masayoshi Son quickly transformed with its failure into an all-out attack on Masayoshi Son’s adventurous and reckless style. This even spawned a subculture in Japan aimed at attacking Masayoshi Son— —The identity of Korean-Japanese people has traditionally been subject to various explicit or covert discriminations by mainstream Japanese society, and Son’s personal style has formed a sharp opposition to conservative Japanese culture.

So why is Masayoshi Son so desperate and obsessed with the ALL IN strategy like a gambler?

In essence, Son is a businessman with extremely high talents. It is said that when he was 16 years old, he determined his development direction after reading the best-selling book by McDonald's Japan President Fujita. Masayoshi Son, who was still a poor boy at the time, made dozens of calls to Fujita for help. Finally, Fujita gave He gave Sun Zhengyi two suggestions that changed his life and destiny: go to the United States to broaden his horizons and study computer science.

Son did all of this.

From this, we can see that his character has absolute execution ability on the one hand, and on the other hand, behind this execution ability without thinking and discrimination, there is an opportunism that does everything possible and takes matters into account.

When he first arrived in the United States, Sun Zhengyi was thinking hard about invention ideas every day. In his opinion, this was the fastest way to make money at that time. After thinking of more than 200 ideas, Sun Zhengyi finally applied for a patent for one of them and sold it for 1 million. I sold it to Sharp for US dollars and made my first pot of gold.

Although this widely circulated story must have been embellished in various ways, we can still see from it that Son’s result orientation has always been very clear, that is, making money. As for the process, or whether it is a career he likes, Son seems not to care that much.

This leads to the fact that Masayoshi Son’s career map, that is, the business scope of SoftBank Group, is actually a hodgepodge. Almost no one can tell clearly what SoftBank’s main business is. Masayoshi Son can acquire the exclusive rights to sell the iPhone in Japan. The telecommunications industry can also invest in various high-tech technologies from the sharing economy to chip companies. SoftBank’s English softbank, also known as software bank, originally represented Sun Zhengyi’s business of selling software in bulk, which was still a good business in the 1990s. , but in order to broaden sales, Sun Zhengyi also founded a computer magazine.

Everything is about making money first.

This opportunism is one reason for the emergence of the ALL IN strategy, because it is obvious that the ALL IN strategy has the highest return. Sun Zhengyi, who has tasted the sweetness of Yahoo and Alibaba's bet, can't stop implementing this philosophy, just like a real gambler.

He even had the experience of going from extremely rich to impoverished and then back again. When the Internet bubble burst in 2000, the market value of Son's SoftBank Group fell by 99% from 200 billion. Even under such circumstances, Son did not give up.

The experience of successfully dealing with the Internet bubble prevented Son Zhengyi from adjusting the strategy in time when the Vision Fund first encountered problems. On the contrary, during the earnings call held after a huge loss of 10 billion U.S. dollars, Son compared himself to someone who was not Jesus, the Son of God, is understood by people. He firmly believes that the current difficulties will soon pass. In other words, the ALL IN strategy is worth sticking to.

However, the dilemma did not end.

Although Sun Zhengyi has excellent strategic vision, firm belief and the courage to risk everything at critical moments, there are still many things that are beyond his control, such as the epidemic, geopolitical changes and inflation. With the Vision Fund's losses continuing to show no signs of shrinking, Son finally had to face failure.

Last summer, Masayoshi Son showed a portrait of Tokugawa Ieyasu to global analysts during an earnings call. This painting depicts the tragic situation after Tokugawa Ieyasu's defeat in the Battle of Mikatahara in 1573. Takeda Shingen's fierce offensive made Germany Tokugawa Ieyasu was so frightened that he became incontinent and even planned to commit suicide by seppuku. It is said that this painting was painted by Tokugawa Ieyasu himself in order to remind himself not to forget this painful lesson.

Masayoshi Son felt the same way. While he apologized to everyone and reflected on his rashness, he used this painting to encourage himself and everyone else - Tokugawa Ieyasu successfully ruled the entire Japan 25 years after his failure in the Battle of Mikatahara.

However, three months later, Son dramatically announced his retirement in another earnings call. He said SoftBank will shift to the so-called "defensive mode" and he will reduce his involvement in specific operations.

In other words, the gambler decides to quit. Many people feel that it was from that moment that Son fell from the altar.

But fate once again played a joke on everyone. In the same month that he announced the so-called defense mode, chatGPT was born.

Last Bet

In 2010, SoftBank released a PPT called Vision for the Next 30 Years. In this somewhat crude PPT, Masayoshi Son described the development context of human society in his mind for the next 300 years. One of the core points is , the information revolution will enhance people's happiness, and the way to achieve this is through the extremely rapid increase in CPU performance - it will eventually surpass the human brain, and this kind of computer is the product of the automatic combination of data and algorithms, which is artificial intelligence.

This line of thinking shapes the vision of the Vision Fund: to change the world through truly disruptive technologies for the future.

Therefore, you can think of the Vision Fund as Son's gambling table, but if you gamble for a long time, you will lose. One side of ALL IN is ALL WIN, and the other side is ALL LOSE. In the end, Son has to stop.

However, the emergence of Masayoshi Son and chatGPT, who made the decision to withdraw from daily operations, seems to be the perfect climax of a wonderful drama: on the one hand, it is the vision that Son finally decided to give up after struggling, and on the other hand, it is the artificial intelligence that finally made it through hard work. Seeing the vision of the dawn, they complement each other and form a very sharp contrast.

So the gambler came out again. More than half a year after declaring that he would no longer speak at financial reporting meetings, Son expressed confidence that the defensive stage has passed and now is the time for a full-scale attack, and the large-model track represented by chatGPT is the undoubted direction. .

Son, who is familiar with the style of painting, said with a smile that he uses chatGPT almost every day and has established a close relationship with Sam Altman, the CEO of openAI.

AI does seem to be a good investment opportunity for Sun Zhengyi, or you can also call it a gambling target.

After the listing of ARM, the stock price surged by 25%. The market value of about US$65 billion helped Sun Zhengyi raise nearly US$5 billion in funds. The loans obtained after the ARM equity in SoftBank was pledged and the liquidity it originally owned allowed Sun Zhengyi to raise funds. It has an investment quota of approximately US$60 billion, which is enough for Sun Zhengyi to intervene in any AI arms race.

Coincidentally, ALL IN is even an investment strategy that is very suitable for the needs of the AI field. Training large models is an area that requires quick decisions and huge budget investment. Even owning ARM is an advantage for Son. As large model training is gradually completed, inference work is bound to make use of the computing power of edge devices, and ARM has a monopoly in this field.

Rumors appeared almost on the first day of ARM’s listing on September 15. The Financial Times quoted people close to Masayoshi Son as saying that SoftBank was considering investing in key companies in the AI field such as openAI or Graphcore. To a certain extent, this is also the time for Son to correct his mistakes. In 2017, SoftBank once invested in Nvidia and was once its fourth largest shareholder. However, in 2019, Son liquidated all Nvidia stocks. We all know the subsequent development of Nvidia. .

According to Son's own statement, his ideal is to retire at the age of 60, so SoftBank's entry into the game can be seen as the last and biggest gamble for this madman and adventurer.

For the sake of AI, he ALL IN.