Softbank: Visionary Entrepreneurship in Japan

1. Softbank: Visionary Entrepreneurship in Japan Maria Metzger Xiuping Li David Harelick David Grosof

2. Agenda • Size • Makeup • Recent News • Leadership • Early History • Middle Ages • Strengths • Issues • Emerging Market Strategy • Conclusion

3. Size • Worth approximately $18BB • 300 companies and affiliates

4. Makeup • Financing value chain • Hotbank • Softbank Capital Partners • $1.25 billion later-stage fund. • Softbank Venture Capital (SBVC) • $2 billion under our management • US Venture Managers • Rieschel on the West Coast • Charley Lax in Boston

5. Recent News • Cisco invests $1BB in a Softbank fund • Cisco to purchase back Japanese subsidiary • Raising $4BB+ for broadband buildout • Fighting the entrenched NTT

6. Leadership • Masayoshi Son, CEO (43) • Son’s share of Softbank is worth apx. $7 billion • charismatic, visionary • born in Japan, of Korean ancestry • immigrated to the SF as a teenager • University of California at Berkeley • made his first million inventing a multilingual pocket dictionary and translator • Sold to Japan's Sharp Corp • named Forbes Businessman of the Year in 2000

7. Dawn of Son • Son Founded the Softbank Corp in 1981 in Japan • Established product-distribution channels for PC and game software • JV with Novell, Cisco Systems, and Microsoft • Late 80s/early 90s, entered many new IS markets • publishing, network services & information delivery • Went public in 1994 • Son retaining > 50 percent of the equity

8. Son Rises • Made many “strategic” acquisitions • Ziff-Davis' worldwide exposition business • Comdex • Ziff-Davis Publishing Co. itself • 2% cost of capital from Japanese Banks • arbitraging the higher P/E rates of Japanese companies • Early Venture Investing • MediaBank Corp. - 1994 JV with NTT • video on demand and Internet services in Japan • Early investor in Yahoo! • CyberCash & E*Trade Group Inc.

9. Strengths • Focused on Internet content and services • Ignored hardware and never challenged the big 3 • Microsoft, Intel, Cisco • Lower-risk porting of US-style business models to other markets

10. Issues • Value fell 90% Between 2/00 and 12/00 • 49% stake in Nippon Credit Bank • one of Japan's “most corrupt & badly managed banks” • risky assets of $35 billion • Mitigant: Government backing • Launched Nasdaq Japan during tech-stock slump • Japanese broadband access initiative is weak • A few years ago Softbank in financial distress • threats of delisting, loan calls, accounting irregularities • Poor investments • Kingston Technology, Ziff-Davis, 3-D chat, etc.

11. Emerging Market Strategy • Telecom infrastructure in emerging markets • Partnering with the World Bank • strong government relationships • Leveraging their Netbatsu’s conglomerate power • Immaturity of their capital markets • importance of politics/regulation • Partnering with Murdoch’s News Corporation in the UK, Australia, New Zealand and India

12. Conclusion • Working hard to open Japan's ossified capital markets to a new generation of entrepreneurs • They entrepreneurs may transform the Japanese economy • Even if Softbank fails, the genie has been unleashed

13. Haikus • Softbank is new way • A stone thrown into a still pond • Soon Nippon reshapes. • New kid on the block • Old boys are nervous and scared • Information Rules.