Long-term Passion for the Business:

Masayoshi Son underlines the importance of loving your business and staying committed to it for a prolonged period, such as 50 years. This emotional connection serves as a motivating force, especially during challenges.

Uniqueness in Business:

Son insists that the business idea should be unique. He avoids investing in ventures that are mere replicas of existing businesses, emphasizing the value of differentiation.

Market Leadership:

Another criterion is the business’s potential to become a market leader within 10 years, at least within Japan. Son believes that achieving a leading position is critical for long-term success.

Long-Term Market Growth:

Son also focuses on the future growth prospects of the industry category itself, suggesting it should be set to grow for the next 30 to 50 years. He aims to avoid “sinking ships,” or businesses that don’t have a future.

Entrepreneurial Characteristics:

In addition to business metrics, Son looks at qualitative aspects like the eyes of the entrepreneur, searching for visible passion and commitment. These indicators often validate the entrepreneur’s potential to fulfill the key principles mentioned above.

Real-world Examples:

When asked about specific instances of his investments, such as Kunal Behl or Ritesh at Oyo Rooms, Son stated that their eyes were “sparkling,” emphasizing that the entrepreneur’s passion and vision were clear indicators that encouraged him to invest.

Consistency in Application:

Despite the years, Masayoshi Son states that these criteria remain vital today, not just for starting a company but also for investing in others. He continually applies this mix of principles to assess investment opportunities.

Investment Scale in India:

Masayoshi Son emphasizes that SoftBank is committed to investing in India, stating that if any re-scaling occurs, it will only be upwards. He mentions that they’ve already invested nearly $2 billion in the past year, which is ahead of their initial 10-year, $10 billion commitment.

India’s Attractiveness:

Masayoshi finds India to be the country of the 21st century. The factors contributing to this vision include India’s young population, IT prowess, English-speaking community, and democratic governance. These elements make him believe that the 21st century belongs to India and its startups.

Investment Philosophy and Timing:

When investing in startups, Masayoshi looks at customer acquisition, business model, and customer satisfaction over immediate profitability. He argues that profitability will come when a company gains enough scale and active user base. This perspective aligns with his belief that businesses should not be too hasty in pursuing profit, comparing it to “catching fish”—too quick a move and the opportunity slips away.

Investment Decision-Making:

Son uses both data-driven metrics and personal instincts when making investment decisions. He talks about “looking into the eyes of the entrepreneur” as part of his evaluation process. While initial screening by his team does occur, the final decision is influenced by instincts and emotions, much like “falling in love.”

Investor Responsibility:

He acknowledges that investors can sometimes push companies to scale prematurely. However, he emphasizes that investments should be made intelligently. In his view, the companies SoftBank has invested in India are spending their capital smartly.

Focus on Domestic Market:

Masayoshi notes a shift in SoftBank’s investment strategy in India. Initially, they were focusing on Indian companies with a global outlook. However, he believes that the time has come for the Indian domestic market to offer sufficient scale, comparing India’s trajectory to China’s economic growth over the last decade.

Profitability and Business Models:

Masayoshi underlines the importance of establishing a solid business model from the get-go. While immediate profitability isn’t the main focus, he believes that a business should have a clear path to profitability in the long term, ideally after it has achieved significant scale.

Valuation and Market Correction:

Son is not overly concerned about market valuations in India. He asserts that the Indian startup ecosystem is in an investment phase, and it’s not yet time for “harvesting.” Companies, he suggests, should be focused on growth at this stage, rather than immediate profitability.

Local Versus Global:

Masayoshi Son emphasizes that local Indian companies like Ola and Flipkart have an edge against global brands like Uber and Amazon due to their understanding of local culture. In sectors like e-commerce and ride-sharing, understanding the way people live, talk, and enjoy life is crucial for success. Son argues that local entrepreneurs have a huge opportunity to become champions in their market.

Global Companies’ Limitations:

Global companies can scale easily in hardware and core technology areas without major changes. However, in sectors that require a deep understanding of local culture and consumer behavior, they often have a model that needs adaptation. The global companies have to go through layers of hierarchy for decision-making, which makes them slower in response, providing a window for local startups to take the lead.

Market Size Matters:

Son highlights that the size of the domestic market in India gives homegrown startups a unique advantage. Unlike smaller countries where local startups may struggle to compete against global companies, India’s large domestic market provides a robust opportunity for local startups to fight back.

Investor-Driven Consolidation:

Regarding the question of potential consolidation in the Indian startup ecosystem, Son believes investors shouldn’t force such moves. While he acknowledges that bringing power together in some instances makes sense for greater success, he also emphasizes that each entrepreneur should be allowed to grow according to their own vision and passion.

Future Trends:

Son predicts that in the coming months, the Indian market will see more new startups emerging rather than consolidating. He indicates that the current economic conditions should not necessarily be compared to previous downturns like those of 2001 or 2008, suggesting that each period is unique in its challenges and opportunities.

Market Realities:

Masayoshi Son believes that every year and market is different, but especially for India, he feels this is the beginning of a “big bang” of great market happenings. His view suggests a bullish outlook on India’s startup ecosystem, saying this period is not just a blip but a foundational phase for the market.

Long-Term Vision on AI:

Son has a 30-year vision concerning the advancement of artificial intelligence (AI). He predicts that in the next three decades, AI will surpass human intelligence on many fronts. He foresees computers having one million times faster calculations, more storage, and quicker communications. Such advancements will result in dramatic shifts in both business models and lifestyles.

Business Models in the Age of AI:

Son asserts that future businesses should be capable of collecting and analyzing large volumes of data. He advocates for the use of deep learning and other advanced computing techniques to disrupt traditional business models. His focus is not just on companies that create technology but also on those that apply these technologies to disrupt existing marketplaces effectively.

Investment Focus:

When asked about the sectors SoftBank would likely invest in, Son states that it’s not merely about backing companies that create AI or virtual reality technologies. His investment focus is on businesses that use these tools to disrupt existing business models across different sectors. He envisions these disruptors as the big winners in the long term.

Role of Government in Startups:

Masayoshi Son emphasizes that the government should act as a facilitator, rather than a regulator, for startups. He criticizes licensing requirements as they can hinder innovation and act as a bottleneck, especially when those granting licenses are not well-versed in new technologies.

Infrastructure Challenges:

Son points out that startups are often limited by poor infrastructure. In India, he identifies specific areas of concern: mobile broadband and electricity. He argues that startups cannot handle these massive capital-intensive challenges, and therefore, the government should address them to support entrepreneurial growth.

Timeline for Indian E-commerce IPOs:

Son feels there’s no urgency for Indian startups to go public. According to him, becoming a public company can shift the focus to quarterly results, which might distract from long-term strategic goals. He suggests that a span of 5-10 years might be more appropriate for companies to consider IPOs.

Approach to Money and Failure:

Son views money as a means to an end, not the ultimate goal. His focus is on customer satisfaction and innovation. Regarding failure, he underlines the importance of commitment and responsibility. A leader should be prepared to be the last person on a sinking ship and should have the resilience to come back from crises.

Risks and Investment in Startups:

Son warns that Indian startups are at risk of losing focus due to large investments. Just because they secure a big check doesn’t mean they’ve made it. He advises entrepreneurs to not mistake investments for actual success.

Choice Between India and China:

Although asked to choose between India and China for startups, Son sidesteps the question, indicating that he supports both countries.

This summary provides insights into Masayoshi Son’s views on various aspects crucial to startups, particularly in the Indian context.