It’s been three years since its launch but the SoftBank Vision Fund still continues to astound with its relentless appetite for funding startups and a penchant for making investments at hefty valuations.
Seemingly unfazed by concerns over its ties with key backer Saudi Arabia, it recently made a $1.46-billion investment in Singapore-headquartered ride-hailing major Grab. Its hectic dealmaking spree has seen it invest close to $70 billion already, SoftBank Group Corp chairman and CEO Masayoshi Son said in a recent interview with CNBC’s David Faber.
In a wide-ranging conversation, Son spoke about the rationale behind his (thwarted) attempt to invest substantially more in WeWork, holding on to the investment in Alibaba, reports of discord between his deputies and why the Vision Fund is betting big on artificial intelligence (AI).
FABER: You know, I did a lot of reading about many of the stories about you and Softbank of late and the Vision Fund. Somebody was quoted as saying there is no one on the planet in a better position to influence the next wave of technology than you. Not Bezos, not Musk, but you in part because of the risk you’re willing to take, the money you have at your disposal, and a lot of other things. Do you agree with that?
SON: Well, no, I’m just– a small start-up.
FABER: Come on. With over $100 billion at your disposal, you’re not a small start-up. You don’t think that you have– an ability to influence significantly sort of where technology is going?
SON: Well, I’m excited– to be part of it. Things are happening without me. But–still I would like to support entrepreneurs with– who has a dream and passion. Technology is evolving very quickly. So if I can be– a good– facilitator or supporter, I will be very excited to do so.
FABER: You know, when you talk about technology evolving quickly, you’ve been at this for some time, since the early 1980s. Give me a sense as to how much or more quickly things are evolving than they had ten, 15, 20 years ago.
SON: You know, last 30 years– three things matter in our industry. The computing CPU power, the size of memory, and communication speed. Those three things have — improved a million times, a million times each of them. So it’s a huge– impact in technology and lifestyle and society. But I say from here on, what will be the speed of– improvements another million times? Another million times in computing power? Another million times in size of memory and communication speed? So it’s not slowing down at all. I think that power of computing would make– artificial intelligence– really come to truth and– you know, many of the– forecasting– prediction– manipulation of– robotics with– smart intelligence, all those things are coming.
FABER: Right. And that’s been a focus of yours I know in terms of where you’re investing. I think you’ve said AI will be the biggest revolution in human history.
FABER: Bigger than anything we’ve seen?
SON: Much, much bigger.
FABER: And why?
SON: Because, you know, under us there are many living beings. But mankind has been the best, most– smart and powerful– affect everything on the Earth– with the premise that mankind has the smartest intelligence. But finally mankind has invented by ourself something could be smarter than ourself in many aspect.
So, you know, mankind invented tools. The tools made cultivation for the farming and so on. But there was the premise that mankind brains always smarter than the tools that we control. That’s why we were controlling them. Finally the tool maybe becoming smarter than ourselves. So that means whatever we have been using tool for industrial society– paradigm– a big paradigm shift is happening. And everything should be redefined. The way we have been using the tools, the way we have been living– productivities, all those things. Every industry will be redefined.
FABER: So we’re in the early stages still of that.
SON: Beginning. Just the beginning.
FABER: But we’re moving more quickly than we had. And to your point about a million times. So if AI is going to become a million times more powerful than it is right now– I can only– well, it’s hard to imagine. How do you see? Or what do you see when you look forward 20 or 30 years? I know you have the 300 year vision. But even just 20 or 30 years from now when it comes to this view you have.
SON: Well, within 30 years– definitely– things will be flying. Things will be running much faster without accident. We will be living– much longer, much healthier. So the disease that we could not solve in the past will be– cured.
FABER: And that will be thanks to AI?
SON: Yes. Of course, definitely. So the disease– there are many disease like cancer and so on– which we could not help millions of people’s life. The cancer would no longer become– the disease that we should be afraid of. Because of the artificial intelligence, it will solve–the issues that we could not solve.
FABER: You believe that.
SON: I believe totally.
FABER: And do you believe that’s within our lifetime?
SON: Yes. Yes. Definitely. I don’t know who– whose lifetime. But– in the next 30 years, I definitely think that– it’s happening. The– we have the mobility with– automobiles and– so on. But there were lots of accident. Millions of people die because of the accident. That would no longer be the case. Autonomous driving, autonomous flying– distribution of the goods– and food, all those things. Today we are– driving ourselves. That would no longer be the case. So that– AI would make the transportation– to cause zero accident at the end.
FABER: All right. But– so this world that we’re– that you think a great deal about where people are no longer getting sick and they’re no longer dying in car accidents. So they’re conceivably living far longer. But what are they doing all day? Are– what is work going to be in this world if the machines are smarter than the people?
SON: There will be always– new jobs, new excitement people can still come up. People would be having, you know, art– music, entertainment– creative jobs, talking like we are doing right now, you know, communicating among the people. We are helping each other. We discuss each other. We–get– curation by other people saying, “Hey, this is nice food to have. Let’s go eat,” you know. All those things– would be– exciting, more human-like, more human-like jobs. That– will always come up.
FABER: Because you know of course that there’s a debate about AI.
SON: I know.
FABER: I mean, Elon Musk for example– is very concerned that it will be used not for good but for perhaps evil. Or that we’ll get to a point where the machines control us, our robot overlords. You don’t think that?
SON: I’m [an] optimist, okay. There will always be an issue. There always has been an issue. But we– mankind is smart enough. We always try to adapt to the new situation. You know, only 100 years ago, just 100 years ago, the occupation, the jobs, 90% of the workers’ job was farming. And today in advanced countries like U.S., Japan right, it’s only 5%. Only 5% of the people’s job is– farming today. But just 100 years ago, 90% of the job of the human was farming.
And even as of today, I was amazed that– just last year I was talking– chatting with the Indian people. And in India, as of today still, 90% of the job of the people are worker, I mean, they– farmers. So today 90% of the job in some country is– still farmer. 100 years ago– 90% of job in U.S.– Japan– some of the countries in Europe were still farmers. 90% now became 5%. Now when it become 5%, what happened to the job? People still have many other exciting job, creative job. So I think– there will– would be always–
FABER: But–the world you’re describing is one in which as you said earlier, the human brain was still superior. The world that you’re seeing in the not too distant future, that no longer would be the case. So how can we know?
SON: Well, we can still, you know, create things. We can still enjoy. We can still– try to sell something, try to design something. Try to communicate– with other people. Just a certain job, you know, that– people do not that much enjoy. But we have to do it just to live, just to earn the income to eat food and– live in the house and wear the clothes. We have to have some income– just to live. And for that purpose– many of the people were doing the jobs, not necessary enjoying it. They had to work to live. And those have to work to live would be– many of them would be replaced by more efficient solution which is a smart robot, robot with intelligence. Okay. So– that we can shift to more, you know, exciting things.
You know, in Roman empire, Roman citizens, they were so rich, so rich that they didn’t have to do—primitive jobs. Because they had servants. They had many other– you know, people to support the Roman citizens. What did the Roman citizens do? Did the Roman citizens become all sad that they lost job and they lost things? And– did they have a sad life? No, they enjoyed. Because they got the free wine, free bread-
FABER: You forgot about the bath salts.
SON: –free bread. And– free entertainment in coliseum, you know, free music, and free bath, and water. So– the society– became so rich that they provide those basic income things that they needed. And what did they do? They still discussed. They still debate. They talk about politics. They talk– do the education, entertainment. You know, they – talk about what next, you know– a new frontier that they should go after. So they understood. They were still enjoying. They were still excited. And they were still increasing their success.
FABER: So when AI is ascendant and its intelligence exceeds our own, and robots are all over the place, you and I are gonna be relaxing and havin’ a good time.
SON: Good time. Great time. And– still discussing many things.
FABER: We will?
SON: Yes. And–
FABER: Hopefully doing an interview still. Who knows?
SON: Yeah, yes, definitely. Definitely. And these are important jobs.
FABER: Just so– I–want to move on. But– this world, do you see people having a uniform income? You know, there’s been some discussion about that in this country. That we’re going to have to pay people who no longer have the jobs that are taken by AI and robotics.
SON: I think basic income concept could be interesting. So– there will be a basic income that people can have to make living. But then on top of that, there would be– still be– competition to get more, richer life. Competition to get– more excitement– and so on which will be a driving engine for innovation and evolutions. But– you know, simple stuff like– creating the meat and creating the vegetables– you know– catching fish, all those simple stuff would be done by– smart robots.
FABER: By machines.
SON: By machine. Smart robots, okay, they would be helping us so that basic income stuff– will be provided. You know, because there will be renewable energy. Cost of electricity become almost nothing, almost as cheap as the air or, you know, sunshine.
FABER: Hopeful then we’ve conquered climate change too if we’re all renewables. But we’re running out of– time there.
SON: We should do that. We should definitely do that. Our company is becoming, like– the second largest or largest renewable energy provider. So I am seeing– a decline of cost of electricity dramatically– exponentially. And it will almost become like the cost of water. You know, it will become so accessible. When the electricity cost be– energy cost becomes so cheap, and that will provide the power– to do– to function the smart robots. Then harvesting things– would be almost costless. So the foods that we have to eat become almost costless, okay. And the house– houses would– become much, much lower cost, affordable for anyone to have nice living house, very, very low cost. And those construction, again, would be done by smart robots, okay. So the basic stuff that we need become so lower cost of anybody– only us can have basic, you know–
FABER: Much better standard of living–
SON: Yes, much, much better standard of living.
FABER: –for many people.
SON: Yes, for most people.
FABER: So this world that you’ve described and your ideas about how we’re going to get there, what of your investments whether at Softbank or within the Vision Fund best encompasses sort of this view? What– of the many names– companies that you own a piece of or all of do you feel sort of best reflects and benefits from the world that you seek?
SON: All of– the 70 companies that we have invested in in the last year and a half with the Vision Fund– they are all AI-centric, okay. They’re all using the power of AI– for the evolution. And they’re fantastic companies. Uber is having– you know, a IPO maybe soon. And–
FABER: Pretty exciting, am I right? By summer most likely it sounds like.
SON: I wouldn’t say when. But– very soon– it seems to be. And– the Guardant Health already had an IPO a few months ago. Many– companies– are going to have IPO in the next– two, three years.
FABER: But what links the companies across the Vision Fund is AI.
SON: Yes. That’s the only one thing. That’s the only one thing I’m focused now. So we are investing $100 billion just on one thing, AI.
FABER: Even though it’s across many different industries.
SON: Right, yeah.
FABER: So it may be autonomous driving.
SON: Yes. And– construction with A– power of AI, hotel with the power of AI. Medicals with the power of AI. You know, communication with the power of AI.
FABER: How does WeWork– how does WeWork fit into that with the power of AI?
SON: So many people still think it’s just– realistic– one of the sharing office.
FABER: Yeah, but they buy–
FABER: They buy real estate. They lease it out. And that’s good–
SON: That’s not– my view, okay. My view, it’s a working– community, okay. So Facebook– when Facebook came, people did– still did not understand the power of Facebook. People thought it’s just a bunch of photo and text that introducing people. That’s not the case. It is a community. It’s a graph. The relationship of– friends and families– and– additional friends that you have never met, okay, become friends through the power of internet.
But now– in the office space, there were not that kind of– the graph of the workers in the office, if you are different company people. But now with the– WeWork– with– almost half a million– members right now, they have the community graph. So if you are– a start-up company for example and have– wish to provide a new product, you need the designing of the product. You need the packaging. And pack– also packaging need the designing. And– you need an accountant. When you start shipping product– you need lawyer for patent application. So you need many things. That’s outside of your own employees’ expertise that you want to get. But throughout– WeWork membership, they can help each other. They can come in the same office, share from New York, from Boston, and meet and help each other among WeWork members. And– with the power of AI– can recommend, “Hey, by the way, you have– if you’re looking for design of the package, there’s another member in the WeWork office next building. And you may want to have a meeting– at the next beer party on Friday night.” So that kind of recommendation can be done.
Like– Amazon is giving you recommendation, next product to do as shopping, with your shopping history– and with your interest– it gives the recommendation with the power of AI. So if the recommendation of the product can be done with the power of AI, the recommendation of meeting the other people within the– WeWork membership can be done. So it will be much more productive, much more enjoyable. So even the beer party become more productive and fun.
FABER: So it’s– about the community and the growth of that community–
FABER: –that is going to be the key to their revenue growth I guess. Because they’ll somehow participate or take a piece of those transactions, I would assume.
SON: Yes. And while you are increasing productivity and excitement, at the same time, cost of the office expense goes down on the average, like, 40%. So, from CFO point of view, and CEO point of view– it’s great to have 40% reduction in cost. And at the same time, employee’s satisfaction of the work place increased dramatically, like, 30% increase in– happiness of working place. It’s beauty on both sides.
FABER: But right now, they’re losing money.
SON: Accounting wise. Okay, because they are growing so quickly and they’re investing into the CapEx, right.
SON: But– it’s recurring revenue. It’s an ongoing recurring revenue. It’s like a subscription. You know the subscription of– magazines or a newspaper and now Netflix. Netflix is still losing money, but the value of the company is tremendous compared to other media companies.
FABER: It is based on the ability to continue to attract subscribers. That’s their value at this point.
SON: Yes. Subscriber growing and you know, recurring. And so the initial investment is just an initial investment. And Facebook was losing money even post IPO for a while. Once they start making money, it’s dramatic. Because the basic cost of the– customer acquisition or innovation is– not that growing exponentially. It’s almost flat. So initial cost is high and almost flat. But the revenue from the recurring subscription grows exponentially.
FABER: Well beyond what it costs to lease all that space?
SON: Of course, of course.
FABER: I mean, they’re already the largest, I think, tenant in London, New York, and Washington DC.
SON: Yes. So, we also started the WeWork in Japan. And in Japan, in just one year already profitable. Already profitable. It’s amazing.
FABER: Right. Did you want to invest more in WeWork?
SON: Of course. Of course.
FABER: Were you disappointed you were not able to or that some of your investors, this has been reported, tried or succeeded perhaps in saying, ‘Don’t invest as much as you want’?
SON: Well, I still want to invest more. And I want to increase. Some of my investors said, ‘Masa, are you sure? You get too excited and too much concentration into one company. Don’t go too far too much.’ But I– I still– you know, I’m so excited. And, if I could increase, I would like to increase.
FABER: You would. Even–
SON: Yes. Of course.
FABER: I mean, I think you’re over $8 billion that you have invested.
FABER: How important is the relationship between, and the conversation that goes on between you– and your largest investors in the Vision Fund? PIF in Saudi Arabia, I think it’s Abu Dhabi. Do they have influence over you in terms of what you choose or your team chooses to invest in?
SON: Well, basically we make the investment decision, okay. We are 100% of the investment committee members. So, we have the contractual rights, and we are exercising that. But of course, they– they were the believer of my first vision and the dream. We have to respect that, okay. So, we communicate with them quite often. They support us very well. We are very happy and satisfied with the relationship. I would like to honor that. But– actual investment decisions, and the activities with the companies, are by ourselves.
FABER: But in the case of WeWork– and this has been reported– you seem to indicate, they did have a voice in saying, ‘Slow down.’
SON: To some extent. There’s a contractual limit that beyond $3 billion per– portfolio company– there is consent that we have to get.
SON: But after $3 billion, okay, we have 100% rights to have sole decision making between our investment committee which is 100% Softbank members.
FABER: Now you’ve spoken about starting another Vision Fund.
SON: Well, it’s too early. We still have money– a lot of money that–
FABER: Yeah, where are you in terms of the investment of the– I think you’re at $100 billion or $98.6 billion. How much has been invested?
SON: We’ve invested probably $70 billion or so, $65 billion, $70 billion, around that range. But we have– the banks who are wishing to support us for extending, you know, leverage, because the value of our asset has grown. And many of them are– are having IPO– with a mature of the value. So that– the banks are willing to– support us.
FABER: So you’ll have conceivably you’ll have access to even more capital beyond $100 billion—
SON: Yes. Exactly.
FABER: –with that kind of financing based on the asset increase.
SON: Yes. Exactly. Exactly.
FABER: When do you see being done? I mean, do you have a sense as to when you sort of will have finished investing from whatever capital is available?
SON: Well, we have to see, you know. We have to see how many more exciting opportunities come at what pace. But whenever– the fund one investment is– done, there are lots of interest that I am receiving that they would like to invest into our next investment.
FABER: You think you could do it again?
SON: Of course.
FABER: Raise another $100 billion fund?
SON: I wouldn’t say what is the size. But– I’m– I’m getting a lot of– inbound calls that they– they would like to come into our — new investor into us.
FABER: And– and what about those who way, ‘Well, what really, you’ve– you’ve inflated the value of a lot of companies’? That has been one of the key sort of– things that’s occurred as a result of having this enormous pool of capital. What do you say to those who argue that?
SON: Well, at least our return on the investment is very, very good. I’m very excited with the very successful return on the investment. So, some people may say, ‘Well, Masa, you paid too much.’ But, still our company’s value is growing very quickly after our investment.
FABER: Well, you’ve already realized some returns. I mean, the Nvidia trade was a very good one. It was a trade though, not really an investment. You didn’t own it very long. Flipkart got sold to Walmart.
SON: Yes. We have to sell some to harvest when they get mature. But then we reinvest to the new opportunities. That’s how the investment– any investment company has to function.
FABER: And what are you seeing out there? I mean, you– we’re in California now. You’re nearby in Woodside. I know you have a lot of companies that come through and present to you. Are you seeing a lot of opportunities right now?
SON: Very, very exciting opportunity. Every day, new opportunity is coming to us.
FABER: And management teams, you feel like could get it done? I mean, what’s the most important thing for you when you make a decision about a business? Is it– is the person running the business, the founder? Or is it the business plan itself?
SON: It’s a mixture of total, okay. So, the business model have to be exciting model. You know, disruptive new models. Make people say, ‘Wow, that’s definitely important.’ And the– total accessible market– for that product or service has to be big enough. The track record of growing the customer base, the user base, has to be growing exponentially. We’re not investing into the early stage. Vision Fund is investing only a size above $100 million.
FABER: So, it’s typically later stage given–
SON: Yes, later stage.
FABER: –the value is large.
SON: So, most of the venture capitals– prepare for us. And– they– they invest ahead of us at the early stage, mid stage. We are focused on later stage. That we– we support that to their growth, right. So, at our stage, we already have enough data of the actual customer– I mean, the customers increasing and our business model is getting proved that it is a successful model. And they’re growing to absolute number ones. So those are the ones that we are focused to– put –
FABER: Around the world of course, I’ve asked you about a couple of what are U.S. companies at this point. But, in China you’ve been very active.
SON: Yeah, China–
FABER: DiDi and a number of others. You just did a deal this week with Grab, I think it was–
SON: Yes, yes.
FABER: I mean, these are enormous numbers you’re putting out there.
SON: Yeah. Even DiDi. alone, we’re investing $1.6 billion or something as the additional investment to our earlier round. So, we’ve put — maybe twice and this is maybe the third round that we are investing. And– it’s just for additional, you know– injection of capital, ourselves. One ticket is $1.6 billion or something.
FABER: But they’re consuming a lot of capital, these companies–
FABER: They’re not making money yet. I mean, the ride-hailing industry–
FABER: –is not profitable.
SON: No, but they are growing so quickly. So, there, the margin, pay grade, is 20% or more. So, it’s actually very reasonable, very profitable business. It’s just that they’re growing so rapidly that a customer– initial customer acquisition cost, the creating infrastructure, those are the initial investment. But–
SON: –the– the margin pay grade has proven very, very healthy.
FABER: On Uber– do you think that the rise of autonomous is going to make the business even more profitable? I’m talking obviously many years from now. But I’m still curious as to your thoughts, gives our earlier conversation. Does Uber become a more profitable company when it no longer has a driver, even though somebody’s going to have to own the car?
SON: Yeah, yeah. I definitely think so. The– as I said, autonomous driving is coming, no matter what. Okay? That’s a technology. That’s a destiny of where technology is going to drive us. When the autonomous driving comes, the cost of providing the service dramatically gets– you know, more efficient. So, it will provide the network of service which people would have much lower cost and no accident, or tremendously reduced accident. I shouldn’t say zero accidents for a while. But it will dramatically reduce the rate of accident compared to human driving accident. I think that will be definitely coming very, very soon. And– so, lower rate of accident and lower cost and more reliable, you know, timing of coming and arriving. All those things will be coming.
And the network effect, that you have a scale of cars, so that the cars comes to pick you up as quickly as possible. When you have so many cars in the network, that reaching to yourself becomes so quicker, right. So, that kind of network effect is needed. That means you have to have a scale. You have to have a big market share. And that’s why we have, number-one market share company in every country around the world.
FABER: And do you see yourself wanting to be a long-term shareholder of Uber? I mean, you mentioned an I.P.O. is coming. There will be an opportunity there for you to monetize some of your stake in the public markets. Will the Vision Fund do that?
SON: I would like to own as long as possible. Of course, it all depends on the share price. Sometimes share prices go too high, too quickly. Then we have to harvest a little bit. But it all depends on the market conditions. But, do I believe the company is going to grow exponentially? I definitely believe so.
FABER: And you’re happy with the management now, I would assume?
SON: I am very respectful to Dara, for his new management. Very, very smart. Very well-balanced.
FABER: What do you mean by well-balanced?
SON: No, no. He can– he can be very offensive to– to increase the– the business, and he can also be very, you know, cost-efficient. The employees– you know, more hours, and so on. So, I respect Dara. But at the same time, I also have to– you know, mention I respect– Travis tremendously. He’s one of the best– you know, entrepreneurs. He’s a pioneer, you know. When you have to pioneer a new– new frontier, you have to have an energy, the passion, and out-of-the-box thinking. He’s an aggressive– he’s one of the best, okay–
FABER: Would you see supporting him in– in some of his potential new ventures?
SON: I would love to. It all depends on the price. But I– I tremendously respect him also.
FABER: I want to talk a bit about SoftBank itself, which we haven’t really gotten to. How much time are you spending, running SoftBank versus thinking just about the investments for the Vision Fund, or even for– for SoftBank itself?
SON: Well, so what is SoftBank, okay? Until just a year and a half ago, I– I have been a CEO of running operating company. Operating company, main operating company, was telecom. Okay? Mobile telecom company selling iPhones and Android phones, connecting network, servicing customers. So, I was a CEO– direct CEO of operating company. So, I spent 97% of my mind and time into running operations. 3%, I kept investing. But now, I am opposite; 97% just purely running investments and 3% taking care of the rest of the operations. So–
FABER: The Vision Fund is– is what? Is it, like, a hedge fund? One in 20? Or is that– is it 1% management fee and 20% of the profits? How does– what’s the fee structure?
SON: Yes, something like that. Similar.
FABER: Although, you have 40% of it, or $40 billion, roughly, is paying a 7% preferred return.
FABER: And the $60 billion in equity of which you guys, SoftBank itself, contributed, what, $28 billion or something–
MASAYOSHI SON: Yes. Yes. So, SoftBank Group owns close to 49% and– of the equity. And the partners and the management own the rest. So– we– we are extremely happy with the structure that we created.
FABER: You are?
FABER: But you have to come up with 7% on $40 billion every year, right?
SON: We are doing much better than 7% in return on the investment. So, our return on equity is tremendously good, you know. Much better than simple– teens of the– you know, returns.
FABER: Of the S&P even. But I mean, you’ve said, I believe, that you’ve had a 44% I.R.R. since 2000. Is that accurate?
SON: Yeah, something like that. Yes.
FABER: You think you can maintain that kind of rate of return with the Vision Fund?
SON: So far, so good. So far, so good. I am competing with my own track record. So, so far the Vision Fund return is within that range.
FABER: Why are you so willing to take so much risk, and have been, even though you had what people would describe as a near-death experience, so to speak, 19 years ago?
SON: Because I’m a believer. I am definitely a believer of– the technology. Some people don’t like technology as an investment thesis. I love, I believe in the technology.
FABER: I mean, you’ve said that you want SoftBank to be the company that makes the most contribution to human evolution.
FABER: That’s a pretty big statement.
FABER: Do you believe you can actually fulfill that?
SON: I would like to make it happen.
SON: By empowering the new forces coming, you know. These new, young entrepreneurs, in my view, they are Jedi. Okay? The young Jedi coming out of school and they start, you know, learning how to fly. And some of them already jumping to fly. I enjoy having them create– you know, new lifestyles for — and saving a lot of difficulties that mankind still facing, like incurable disease, that people are still dying today– as of today, or accident. They’re still suffering as of today.
Our young Jedi will save people from those things, or unnecessary hard work, sweating work. Those would be, you know, no longer needed. That kind of thing is coming with our family members that’s joining into our–
FABER: I mean, I like the way you describe the future. Although I mean, you are optimistic, you admit yourself.
SON: Yes. Yes.
FABER: Before we sort of wrap things up, Masa, back to– to SoftBank itself; just a couple of questions there. There’s been some criticism that– you buy things at SoftBank and then transfer them to the Vision Fund at an inflated valuation. How do you respond to people who say that?
SON: That is not totally– that is totally not the case. That is a fact that– that the group of the companies that we have incubated, because the Vision Fund was– took some, you know, eight months, nine months, to prepare. During that time, I warehouse and invest out of SoftBank balance sheet, and then transferred, when the timing became ready. The group of assets that we transferred, after we transferred, the value appreciation is tremendous. So, there may be one or two assets that– we reduce the value of the fair market value of the company. But the vast majority, and as a total package, it is big return on investment. And you ask to our investors, they are extremely happy with the return on the investment.
FABER: Something like Arm, I guess, you still– the Vision Fund owns some of it and SoftBank still owns, as well. Correct? But you own 100% of it overall?
SON: Yes, yes. SoftBank did 100% acquisition of Arm and our– L.P. partners, investment partners. They strongly insisted that they want to have at least 25%. They–
SON: Because they believe that ‘Masa, you have such a great-looking company. Share some.’ I said, no, no. This is asset we bought 100% ourself. And that was already before Vision Fund. I want to keep it. And they said, no, no, let us have some. So– they said they want to own 50%. I said, no, no, no, I cannot do that. So, I shared 25% of Arm and– it was a public company. And paid–
FABER: Right. You– you paid a 43% premium, I believe–
SON: Yeah, I paid, yeah, over 40% premium, which I am very happy that I still got– was able to acquire at that price. So, it’s preparing I.P.O. again– in maybe next five years– within next five years. By–
FABER: You take Arm public again?
SON: Yes, yes.
FABER: That’s the plan?
SON: Yes. By that time, I think the appreciation in value will be very substantial. So– if, you know– if there was an opportunity that I could get 100% back, I am– I am a happy buyer.
FABER: You love that company? You see– because it fits your vision, that everything will have a chip in– or chips in it and be interconnected?
FABER: And within Softbank itself, just in terms of the leadership–
FABER: –how do you see it? You know, there’s been some reporting of clashes of personality between Marcelo, Rajeev. Is that true? And–
SON: No, no.
FABER: –do you welcome that? Is that a positive thing in some way or–
SON: No, no. They are good guys, they are good friends, and good partners. Of course– once in a while, there’s a difference in opinion. But– but me and them– between them or other management. But, you know, always good to have a little bit of healthy competition or tension because that way, we work harder, you know, for any organization, any family members. But they are both very good partners and, you know, happy family. Happy family.
FABER: So, you’re happy with the team that you have in place right now?
SON: Of course, of course.
FABER: And finally, let’s end on– the greatest investment maybe that was ever made. You know what that is. Alibaba.
SON: Oh, yeah, yeah, Alibaba, fantastic.
FABER: You’ve– you’ve– you’re going to monetize any more of that?
SON: I would like to own as– as long as possible. It’s still growing 40% a year in revenue. And the profit will continue to you know, skyrocket. So–
FABER: You believe that? You believe the growth potential for Alibaba just continues unabated for years to come?
SON: I– I am totally a believer.
FABER: And Jack, no longer being sort of at the helm— does that matter? Does Jack Ma’s kind of departure, I mean, from the company make a difference?
SON: No. Jack is– will still remain as the– the largest individual shareholder. SoftBank still remains the largest company holder. And we are good partners, good friends. Jack still, you know, guide the– Daniel and the management, the direction. And Jack has been, you know, tutoring or mentoring the team. So, I think that Jack will continue to be important visionary to help management whenever they need advice. He’ll always be there. But Jack, for a long time, he was telling me– that, you know, his– his style is to let the people under them, young people– rise and grow– as quickly as possible so that he would not have to do day-to-day. And he can still think philosophical, the direction–
FABER: Right. He was– he was an educator.
FABER: And he kind of likes that idea. The two of you seem to have similar vision; optimistic visions of where the world is going.
FABER: –I would assume you have some interesting conversations.
SON: Yes. He’s a fantastic guy, a fantastic friend, fantastic partner. I see him face to face almost every month, even now.
FABER: You do? You see him as much–
SON: Yes, yes.
FABER: –as once a month?
SON: Yes. Once a month, at least, once in two months. We chat all the time, not just business. We’re great friends.
FABER: And you can assure me that the A.I. future you see, Masa, is going to be a good one? We’re not going to just become slaves to the robots?
SON: No, no. Good ones.
FABER: Well, listen, I appreciate you taking time. Thank you.
SON: Thank you very much.
This interview has been reproduced with CNBC’s permission.