'The Money Trap': How a surfeit of capital created own troubles at SoftBank

The author paints an elaborate portrait of Masa. At one point the world's richest man, he also held the dubious distinction of having lost the most amount of money until surpassed by Elon Musk

The Money Trap: Grand fortunes and lost illusions inside the tech bubble

Author: Alok Sama

Publisher: Pan Macmillan

Pages: 293 

Price: Rs 496

In 1983, while pursuing a bachelor’s degree in Mathematics from St. Stephens College, Delhi, the author of The Money Trap receives career advice from a friend of his father who taught statistics at Wharton. The latter suggests he should do an MBA in Finance. “Americans are scared of maths, we (Indians) are good at it,” is his pitch. Alok Sama, whose ambition then is to solve Fermat’s last theorem, accepts his counsel and flees the India of Licence Permit Raj and shortages.
 

He joins Morgan Stanley, where he slogs 16 hours each day during the week and another 16 over the weekend. He sets up its offices in Hong Kong and Mumbai. Many early morning flights and late night conference calls later, he is anointed managing director. But when the internet bubble bursts and his biggest client goes bankrupt, he is forced out. “They come for you when the bonus pool is tight,” he writes.
 

In 2014, his friend Nikesh Arora (earlier chief business officer at Google where he reportedly earned $51 million a year), gets married. Mr Arora has recently joined SoftBank (on an annual package of $73 million). After the wedding, Mr Arora invites the author to join SoftBank. As Mr Arora puts it, he wants someone in the room when deals are being struck whom he can trust. Mr Sama accepts. This autobiographical account is primarily about his stint at SoftBank.
 

By then, SoftBank’s early investment in Alibaba (which is about to list) has paid off big time. Selling its stake could give founder Masayoshi Son (Masa to those close to him) a war chest of $50 billion.  The reader gets a glimpse of the opulent lifestyles of top-notch dealmakers. Messrs Arora and Sama fly in a private jet (named Viper), as does their boss (the latter’s is bigger, faster, and flies farther). Masa serves La Tache to esteemed guests, a wine that auctions for more than $5,000 a bottle, and so on.
 

The reader also gets an insight into how deals are struck and opinion moulded. When Masa decides to take over British chip designer Arm Holdings, the SoftBank team anticipates that the government may resist a foreign takeover of one of its crown jewels. So, it pitches the acquisition as a vote of confidence in Britain, where sentiment is low in the aftermath of Brexit. Adroit handling of the media, the bureaucracy and the government ensures the deal goes through without a hitch.
 

The author paints an elaborate portrait of Masa. At one point the world’s richest man, he also held the dubious distinction of having lost the most amount of money (when the Internet bubble collapsed) until surpassed by Elon Musk in 2022.
 

Masa has big, brazen goals. Once he has a company in his crosshairs, he is relentless. During the Arm Holdings takeover, he learns its chairman is holidaying on a boat in the Mediterranean. Masa enquires if a helicopter would land on his boat.

Thankfully, the chairman agrees to meet on terra firma at a sea resort in Turkey. Istanbul has just witnessed a major terrorist attack. Nonetheless, the SoftBank team flies into Turkey because nothing must be allowed to get in the way of a deal. In 2016-17, Masa persuades the Saudi and UAE governments to provide money for his Vision Fund. Altogether he raises nearly $100 billion, an unheard-of sum.
 

Icarus-like, those who fly close to the sun must be prepared for the inevitable fall. Nikesh Arora becomes the target of a smear campaign but manages to survive it. Alas, Masa reneges on their agreement to step down from the chief executive officer’s position on turning 60, so Mr Arora quits. Mr Sama stays on. In due course, he, too, becomes the target of a similar attack. This time the bullet finds its mark. Masa, who is raising money for the Vision Fund, asks Mr Sama to step away from the fund. “I was dispensable, the Vision Fund was not,” is Mr Sama’s remarkably rancour-free comment. His last hurrah at SoftBank is the Sprint-T Mobile merger.
 

A surfeit of capital creates its own troubles. With $100 billion to invest and not enough tech targets, Masa sprays money on dubious companies. Some of the promoters turn out to be charlatans, some have ideas that are too futuristic, while others flounder against entrenched competition. Words of caution to Masa regarding some of the more improbable investments fall on deaf ears. Many of his bets turn out to be duds. But a couple that do well help him bounce back.    
 

After quitting SoftBank, the author pursues a course on writing. It definitely helped because he has produced an account that is both witty and deep. The book is spangled with finely crafted sentences and its pace matches a Mario Puzo novel. One hopes he has more stories to tell. Michael Lewis, Malcolm Gladwell and company had better watch out.