Masayoshi Son, SoftBank, and the $100 billion blitz on Sand Hill Road

Two years ago, Masayoshi Son, chief executive officer of SoftBank, sat in a Gulfstream jet high above the Arabian Gulf, en route to meet with potential investors in a new fund that would invest in technology startups. He was going through his presentation with Rajeev Misra, a key lieutenant, when something stopped him.

One of the slides included the proposed size of the fund: $30 billion. The figure would make the Vision Fund, as Son had named it, about four times the size of the largest venture capital fund ever created and bigger than any private equity fund in history.

Son stared at the number for a moment. Then he deleted the three and replaced it with a one and another zero. “Life’s too short to think small,” he told a stunned Misra.

When Son came to the $100 billion slide in his presentation a few hours later, the prospective investors—executives from a state-owned fund in the Middle East—laughed. Son didn’t, continuing his presentation as if nothing had happened. “He didn’t miss a beat,” recalls Misra, now the fund’s CEO.

SoftBank’s Vision Fund would gather almost $100 billion, including $45 billion from Saudi Arabia’s Public Investment Fund, as well as capital from Apple Inc., the government of Abu Dhabi, and others. “One hundred was a simpler number,” Son says during a September interview at the Tokyo headquarters of SoftBank Group Corp., a sprawling conglomerate that includes an enormous Japanese mobile phone carrier (also called SoftBank), a leading chipmaker (Arm Holdings Plc), and a majority stake in Sprint Corp., the U.S. wireless carrier.

As an investor, Son has been prescient. He was one of the earliest backers of Yahoo! and then teamed up with the dot-com-era darling to launch Yahoo! Japan, a property that wound up being much more valuable than its parent. In 2000 he put about $20 million into Alibaba Group Holding Inc. That stake is now worth roughly $120 billion.

But the Vision Fund is something new: An all-out blitz on the heart of Silicon Valley venture capital, Sand Hill Road. In less than a year since the fund first began making investments, it has already committed $65 billion to acquire big stakes in Uber, WeWork, Slack, and GM Cruise. Son tells Bloomberg Businessweek that he plans to raise a new $100 billion fund every two or three years and will spend around $50 billion a year. For perspective, in 2016, the entire U.S. venture capital industry invested $75.3 billion, according to the National Venture Capital Association.

Son’s audaciously large bets have astonished and confused Silicon Valley, where even the most respected venture capitalists have found themselves outmaneuvered by a relative newcomer. The standard VC playbook involves making small, speculative investments in early-stage startups and adding funds in follow-on rounds as those startups grow. SoftBank’s strategy has been to put enormous sums—its smallest deals are $100 million or so, its biggest are in the billions—into the most successful tech startups in a given category. If the local VCs are freaked out by this, the startups seem to love it. SoftBank has given them the equivalent of an all-you-can-eat buffet of foreign investment dollars. “You think they can’t eat anymore,” says Jules Maltz, a partner with IVP, a Sand Hill Road firm. The entrepreneurs “cram it in, put it in their pockets, take doggy bags, whatever.”

The tech industry has seen deep-pocketed outsiders before, but SoftBank is operating at a scale never attempted. That’s driven valuations up, making it difficult for traditional firms to put together enough capital to get into the hottest deals. SoftBank, according to a partner at a major Silicon Valley firm, is “a big stack bully,” a poker term referring to a player with a pile of chips so huge that competitors are afraid to get in the game.

The situation has sent firms scrambling to adapt. Sequoia Capital is raising funds worth $12 billion to stay competitive when bidding on big, late-stage deals. That’s up from about $1.7 billion during a similar period five years ago. Sequoia’s longtime rival, Kleiner Perkins Caufield & Byers, has gone in the other direction, announcing in mid-September that it was breaking up. Four partners, including one of the firm’s stars, Mary Meeker, are leaving Kleiner to start a firm focusing on big bets. The remaining partners will concentrate on earlier, smaller deals. Kleiner’s Ted Schlein has attributed the split in part to a massive amount of capital being invested in startups. He didn’t mention SoftBank by name, but there was little doubt which big stack bully he had in mind.

To most people outside the venture capital industry, Son’s reputation stems less from his big thinking and more from his big spending. In late 2012, shortly after SoftBank announced plans to buy a majority stake in Sprint, Son paid $117.5 million for an enormous Italianate mansion in Woodside, Calif. At the time, it was the most expensive home purchase in U.S. history.

Son says he bought the estate because he doesn’t like hotels and needed a comfortable place to stay when he comes to Silicon Valley. And then, as if to prove that a man with a $117.5 million crash pad can still be a man of the people, he tugs at his gray wool sweater. “I always wear Uniqlo,” he says, referring to the low-cost retailer whose founder sits on SoftBank’s board. Then he lifts his pants leg to show off a stitched brown loafer. “This is a $50 shoe,” he says. Next he pulls at his shirt collar. “This is also Uniqlo. It’s fantastic!”

Son’s upbringing was, in fact, modest. He grew up on the southern Japanese island of Kyushu and was bullied as a child, because his family had come from Korea. Son’s father supported the family through an endless series of ventures that included selling bootleg liquor, raising pigs, and running pachinko parlors. The family adopted a Japanese surname, Yasumoto—a common decision in a country where foreigners face discrimination—but when Son returned to Japan after studying economics at the University of California at Berkeley, he started using his Korean name. “He didn’t want to hide from who he was,” says Hong Lu, Son’s first business partner.