Son used the million to start a company to import the Space Invaders arcade video games and place them throughout the Berkeley campus. After graduating with a B.A. in economics in 1980, Son founded an Oakland-based computer company called Unison which is now owned by Kyocera. These early ventures taught Son valuable business lessons but didn't seem to have been particularly lucrative.
In 1981 Son kept a promise to his mother and returned to Japan. He started Softbank, Inc to distribute software and computer-related publications to service the demand created by the emergence of small computers. Son put up $80,000 in savings and went to apply for a bank loan. The bankers were leery about lending to a young entrepreneur, especially one of Corean ancestry. Some even made oblique references to his ancestry by remarking on the oddness of his surname. “Okay, I'm a Corean, so what,” shot back Son in exasperation. He did eventually obtain a $1 million loan from Dai-Ichi Kangyo Bank.
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As one of the first sources of venture capital for Jerry Yang's (far right) Yahoo!, Softbank once owned 37% of Yahoo! shares.
Son began renting booths at trade shows in an effort to persuade Japanese software makers and publishers to let Softbank distribute their products. Most ignored him, preferring to sell directly to retailers. Even phone calls offering to display titles for free generated little interest. With his back to the wall, Son took a desperate gamble. He approached an Osaka company that was opening a PC superstore and offered to ship every software package available in Japan. He got the order and managed to complete the bootstrapping by convincing his non-existent suppliers to sign on.
Other difficulties sprang up to keep Softbank's future dicey. A Dai-Ichi scandal forced the bank to call in risky loans. Among them was Son's. Softbank survived the crisis only because Son convinced Industrial Bank of Japan to release emergency financing. On its heels came an even more serious setback. An advanced case of hepatitis forced Son to be hospitalized from 1984 through mid-1987. Employees struggled to keep the company together with only strategic direction from Son.
“The company tried to keep it secret,” recalled Kazuya Watanabe, president of Novell Japan and a longtime friend. “But everyone knew he had great difficulties.”
Once Son was healthy enough to return to work, he began building alliances. The most important was becoming Microsoft's Japanese distributor after it severed ties with a troubled Ascii Corporation. Son took a 25% stake in Novell Japan. He even entered into a joint venture with Pohang Steel to launch Softbank Korea. These new relationships gave Softbank the clout to become Japan's leading software distributor.
By the late 1980s Son was enough of a honcho to challenge the Japanese legal system. Determined to become a citzen without taking on a Japanese surname, he and his new wife, a Japanese woman, worked out a legalistic ploy. She began the process by changing her surname to “Son”. Because Mrs Son was of unquestioned Japanese lineage, “Son” was entered into the national surname registry as a Japanese surname. When Masayoshi applied for citizenship, he was able to point to his wife and argue that since “Son” was a surname belonging to a Japanese by birth, it was in fact a Japanese surname and he shouldn't have to change his name. The ploy worked. Masayoshi Son became a Japanese citizen before the birth of his two daughters, ensuring that they too would be Japanese citizens. Son's campaign to retain his Corean name made him a celebrity with Coreans everywhere.
By 1991 Softbank was taking in over $500 million in annual revenues, putting its value at a billion dollars. Son owned 60%. The Japanese media began recognizing Masayoshi Son as the most successful of an aggressive new generation of freewheeling Japanese new-age entrepreneurs. What few recognized was that Son was at heart a publisher rather than a distributor. Though the bulk of Softbank's revenues was derived from distributing software made by other companies, it also published Japan's leading computer magazines. They could — and often did — recommend specific software products, giving Softbank the power to make or break software lines in Japan.
Son wanted more of that power, especially over the American software giants who controlled the gloal software industry. For years he had admired the Ziff-Davis publishing empire from which Softbank was licensing the right to publish Japanese editions of PC Magazine and other computer-related periodicals. For several years Son courted the reclusive Ziff family, even taking his wife and two daughters with him on a hot-air-ballooning expedition in Aspen with Bill Ziff and Ziff-Davis executives despite his fear of heights. When Ziff put the company on the auction block in 1994, Son thought that the Ziff family would accept his bid of $1.6 billion. Instead Ziff sold 94% of the company to an investment banking firm for an all-cash bid of $1.4 billion. Son did come away with Ziff-Davis's trade shows for $202 million. It wasn't the coup he had dreamed of, but it was enough to put him on the map as an international computer industry player. A year later Son succeeded in buying Ziff-Davis from its new owner for $2.1 billion.
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