Softbank Visionary Entrepreneurship in Japan Maria Metzger Xiuping

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

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

Size ¬Worth approximately $18 BB ¬ 300 companies and affiliates

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

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

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

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 80 s/early 90 s, entered many new IS markets – publishing, network services & information delivery ¬ Went public in 1994 – Son retaining > 50 percent of the equity

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 – Media. Bank Corp. - 1994 JV with NTT • video on demand Internet services in Japan – Early investor in Yahoo! – Cyber. Cash & E*Trade Group Inc.

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

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.

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 India

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

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.