The most disconcerting thing about Masayoshi Son at SoftBank’s quarterly earnings announcement wasn’t the record $23 billion loss, the promise of fierce cost-cutting or even, two days later, the sale. history of the company’s participation in Alibaba.
It was how much he looked and sounded like a 65-year-old Japanese corporate CEO: a conservative hoarder in full protection mode, wary of the future and wearily carving out his dreams to reflect the here and now. .
Over the years, with panache and rocket fuel confidence, Son, the transformational negotiator and founder of Vision Fund, has done everything to avoid that perception. Compared to nearly every other major Japanese company, it has been more aggressive in its bets, more creative in its use of debt, and more committed to selling investors the idea that its Big Picture is the biggest and most picturesque in the world. market.
Son, unique to Japan, had a knack for turning vision into an asset class. The question he will have to answer – on behalf of vision peddlers everywhere – is whether this particular alchemy survives a prolonged technological rout, higher interest rates, inflation and disruption or not. only works in a bull market flooded with cheap money. These are the first days, but the signs are not good.
Son’s presentations, with all their deliberately anti-traditional aplomb, complemented his efforts to stand out from the rest of Japanese companies. Any company can stick stratospheric sales projections on a Power Point slide: Only Son’s can, at a wise nod from analysts, add a telepathic dog or an artist’s impression of how we we will cuddle in the distant future.
But last week’s presentations were just mud and no stars. In front of the media, he adopted the agreed choreography of Japanese CEOs in a dead end: a chastened acknowledgment of prior hubris and a high-profile show to batten down the financial hatches.
For analysts and investors, the risk aversion message was even stronger. On several occasions, Son responded to questions by referring to SoftBank’s “defensive mode” and its emphasis on accumulating and holding money. Parts of the company’s vast debt will naturally mature, he noted, and will be repaid during this phase. Overprotection, he said in a stark departure from the image he fought so hard to sell, is an accusation worth bearing to ensure his survival. If, as some suspect, it’s more of an act than a real character change, that’s an impressive misdirection.
“It really is pouring rain,” concluded Son, a despondent unicorn hunter. “How much will the rain damage the value of our assets? We do not know. Therefore, we cannot take too many risks.
Defense. 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. While he has assured that his vision remains unchanged, Son knows better than anyone the seriousness of the situation in which his powerful Vision Fund technology portfolios currently find themselves, and how global events and markets could continue to destroy fortunes. He pointed to China, where SoftBank still sees great opportunities but has been forced by various factors to be particularly cautious.
The problem, as much of Japanese business has spent decades demonstrating the fundamental cost of innovation, entrepreneurship and the economy in general, is that defensiveness and hoarding can become unrelentingly addictive. long-term. For many, the bubble bust of the 1980s was the crisis that started the habit; for others, it is the financial crises of 1997 or 2008. The current “correction” could well join the list of traumas which cause Japanese companies a permanent loss of appetite for risk.
The alarming thing, then, is the sight of Son both deploying the language of “ordinary” Japanese CEOs and stepping into their dreary philosophical realm – however justified it may be for SoftBank at the moment or how temporary it ultimately turns out to be. Son told analysts he could “go into offense mode very quickly.” Japan needs this to be true.
The stakes here are much higher than SoftBank’s survival. Japan clearly doesn’t need every CEO to nurture and sell visions like Son. But it certainly needs a decent harvest from those who do. Japan will become less likely to generate such a harvest as Son cowers. The next few months will be critical: a showdown between Son’s natural addiction to risk and Japan’s addiction to risk avoidance. For now, Son has made himself look predictable; history, however, suggests this is exactly when he is most unpredictable.