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 $18BB  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 $1BB in a Softbank fund  Cisco to purchase back Japanese subsidiary  Raising $4BB+ 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 80s/early 90s, 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 –MediaBank Corp JV with NTT video on demand and Internet services in Japan –Early investor in Yahoo! –CyberCash & 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 and 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.