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SoftBank’s Son ’embarrassed’ by track record as Asia rivals zoom by

Written by Nikkei Asia Published on   6 mins read

Billionaire says his group’s growth pales beside US and Chinese companies.

TOKYO — Hardly a day goes by without news of SoftBank Group chairman and CEO Masayoshi Son. The global technology investor is convinced that the future belongs to artificial intelligence, but he is also dissatisfied with his performance today and what he sees as a lack of drive in the Japanese business world.

In a 90-minute interview with Nikkei Business magazine, Son spoke with passion about his dreams and regrets.

Q: You have been looking at many companies abroad. What do you think of Japan’s business environment today?

A: It’s extremely dire. The biggest problem is that entrepreneurial spirit is fading compared with the days before and after World War II, or at the end of the Edo period. Some say that it’s OK if Japan settles for a small but beautiful country. I say that businesses are doomed once we begin to think like that. A balanced contraction is still just a contraction. Which would be fine if things could stay contained within Japan, like during the isolationism of the Edo period.

Meanwhile, the world is changing rapidly. The U.S.’s technological evolution marches on, China is now a giant, and Southeast Asia is expanding quickly. But young businessmen here in Japan are no longer interested in venturing overseas. The number of students studying abroad has also plunged. Japan’s businessmen have become herbivores, and they lack vitality. I think education and ideology play a significant role in this.

Until the 1980s and the ’90s, Japan was a global leader in electronics. It has since lost all of that momentum, and the number of fields where Japan leads the world has shrank. There’s just a handful left, in parts and autos. It is as if Japan has completely faded away as a technological leader.

At the same time, China was once considered a producer of cheap knockoffs of Western and Japanese items. But now it is one of the world’s top players in terms of technology and has far surpassed Japan. I think this is a huge problem in terms of Japan losing its competitiveness.

Japan also used to be the top player in semiconductors but has since completely lost that position. In that sense, Japan’s economy has seen zero growth, especially in the last 30 years, which is an extremely bad place to be. Aiming for a small peace in a small village is fine, but then you get left behind by the rest of the world. I feel that Japan could end up as an island nation completely forgotten by the world.

Q: It is becoming more difficult to name Japanese business leaders who are globally successful. How do you view yourself?

A: I am still far away from achieving results, so I’m embarrassed and flustered. I strongly feel that I have not done enough when I compare myself with the growth of American and Chinese companies. There were times when I was jealous of the size of the American and Chinese markets, but now there are many companies from smaller economies like Southeast Asia that have the fire and are growing rapidly. Japanese entrepreneurs, myself included, cannot make excuses.

Q: Why do you think Japanese people no longer hunger for success? Are they already too satisfied?

A: At one point, Japan’s businessmen were working so hard that they were criticized for it. Such voices have almost convinced the public that it is a virtue not to work. The rise and fall of Japan’s bubble economy also spread this image of debt and investment as evil things. Semiconductors, for example, are a capital-heavy industry, but investments screeched to a halt. In other words, people became exhausted with the very act of maintaining a competitive attitude, and such views have spread to society as a whole.

Back during the internet bubble of the 2000s, a young entrepreneur came under the spotlight and was heavily condemned for saying that you can buy anything with money. Young people were finally looking interested in a growing industry, but this scared everybody away. Instead, Japan’s most-sought-after occupation became civil servant. I’m not saying working for government is bad. Still, if that is the most popular option, and if young people stop entering growing industries, then that automatically means that industry as a whole stops growing.

Q: Yahoo Japan, a SoftBank unit, has decided to acquire online fashion retailer Zozo. Is Japan unique in its negativity toward entrepreneurs, like Zozo founder Yusaku Maezawa?

A: There’s long been this kind of resentment common in closed societies. When young people succeed in the U.S., they are praised for achieving the American dream. In Japan, they are criticized as upstarts and viewed as something vulgar. They are called impertinent for succeeding young.

Q: So you think you’re still partway through your journey. What is your ultimate goal?

A: Right now, I’m focusing on building a group of strategic holdings rather than growing my own business. Through the Vision Fund, I’m gathering like-minded entrepreneurs and vastly expanding our influence with a “cluster” strategy. Under the umbrella that AI is the source of growth, we are building up the group. We have only just started, but I feel this has enormous potential.

Q: So this cluster will lead the world in AI?

A: Yes. The world is undergoing a rapid change in industrial structure. Amazon.com has completely eclipsed Walmart in market capitalization. Walmart is still trying hard, but other companies focused on brick-and-mortar stores are going under one after another. It’s the same with news media.

Those that focused on print quickly lost ground to companies like Google and Facebook. The internet is leading to a changing of the guard worldwide, especially in retail and media. As a bigger trend, I believe that we’ll enter an era where AI will disrupt every other industry. There have already been shock waves, but when AI disrupts the remaining industries, the impact will surely be far greater.

The industrial revolution enhanced parts of the human body: hands and feet, eyes, ears, mouth and so on. I believe that while that was about enhancing muscle, the information revolution is about expanding the workings of the brain.

The functions of the mind can be divided into two categories: knowledge and intelligence. The internet revolution was a revolution in knowledge. We can now search for information without rote memorization. I think the revolution in intelligence is coming.

As for which type of work adds greater value, physical labor earns no more compensation than the wages paid for it. Workers engaged in mental labor earn higher wages on average. But within that category, people who use their intelligence, who think more than others to come up with deep insights and create new things, earn far more than those who use their knowledge.

I believe that the time will come when rather than just put normal human intelligence to work, people will produce more effective results with insight and predictions made with the help of AI. Japan should go forth into that era as its last chance. This is probably Japan’s final remaining chance to turn its fortunes around. The problem is that authorities, such as the government and teachers, don’t fully understand that.

Q: You’ve met with U.S. President Donald Trump and South Korean President Moon Jae-in. Will you not lobby the Japanese government?

A: I used to be on Japanese government advisory committees and the like, but I think it’s tough if the politicians who make the final decisions don’t have a strong awareness of the issues. If we don’t have a climate where society as a whole celebrates entrepreneurs, politicians won’t do anything. As long as internet-related startups are still regarded as shady, the more that’s said about them, the worse that impression will get.

Q: In other words, it’ll become better not to say anything at all.

A: What happens is that people like me head overseas to make money. One can achieve quicker results having constructive dialogue with entrepreneurs in the U.S., China, Southeast Asia and India.

Q: Once your AI cluster strategy is complete, what will your relationships with companies like Amazon and Google look like?

A: Companies that took the lead in the era of the personal computer didn’t stay there in the internet age. Similarly, we don’t know whether companies that flourished in the internet age will succeed in the age of AI. For example, they may not necessarily succeed in industries like medicine, transportation, construction and real estate. New young heroes will appear one after another in the new era. I am placing my bets on that.

This article first appeared on Nikkei Asian Review.


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