"I believed that the internet industry is for genuine. So, we kept on investing (in net companies)"

Masayoshi Son is the original maverick of the internet space. He is also its biggest investor. After all, how many people can claim to have invested $3 billion (Rs 13,500 crore) into some 800 internet companies, continuing to bet on something that others had long given up on? Then, the President and CEO of Japan's SoftBank Corp. hasn't lost any money. He has made some $7.5 billion (Rs 33,750 crore) on exits, and the holdings in the listed companies in his portfolio are currently worth $22 billion (Rs 99,000 crore). Much of that (and maybe more) will flow to his hands over the next few years as more companies (one estimate is 20 a year) in the portfolio make initial public offerings. Son, now 48, is currently busy with his next big bet-an internet Protocol (IP) TV project. Dubbed TV Bank, it will bring all major TV channels together on the internet and deliver video content over broadband. Son was in India recently to rope in the country's leading TV channels to his TV Bank project. Between meetings in Delhi, a highly unassuming Son found time to talk to BT's Sahad P.V. Excerpts:

What is the purpose of your visit to India?

I am working on my next big venture. It's called TV Bank (an IP TV project that will deliver television on broadband). We will provide a platform for all major TV channels in the world and integrate their content on the internet.

When do you expect to launch this venture?

We will have the commercial launch by end of March next year. We have started the beta test in Japan.

What exactly is TV Bank? Are you planning to become a Google for the video content industry?

Yes. That's my wish, to become a Google for TV over the internet. We will have several TV channels on the internet. It will have the live streaming of sports, news, entertainment and so on.

How many TV companies have you talked to?

We have talked to most of the TV channels in Korea, Taiwan and Japan, and they have agreed to provide content. Major Indian news channels have also agreed, so have the Chinese. As for the US, we are in the last stage of negotiations. We are also talking to some major European and South American channels. We have a very good start.

How much money are you investing in this business?

The size of the money is not that big for a company of our scale. What is important is the technology. We are the first company to provide live streaming of TV content. Many channels can be watched simultaneously-on demand.

"We have made returns of $30 billion on a $3-billion investment. It's not bad. Who else has made better returns?"

What, according to you, is the next big bet in the internet space?

This is it.

There is Web 2.0 revolution going on, and a lot of money is chasing internet deals. At the same time, there is a view that Web 2.0 is a bubble. What is your opinion?

I don't think it's a bubble. There is a difference between Web 1.0 (the first dotcom rush during 1998-2000) and Web 2.0. The former had reached a peak (in valuations, although the companies were not making money). Then the share prices crashed. But now most of the internet companies are making money. If Web 1.0 valuations had a very high multiple, today's multiple is very reasonable. It is a very promising industry. Several years ago (in 2001), BusinessWeek magazine had done a cover story on me saying that I was the last believer of the internet (laughs). I was actually proud of it. Many people, especially in the investment community, became very sceptical about the internet. But I did not lose confidence. I believed that the internet industry is for genuine. It's going to grow and it has a high potential. So we kept on investing (in internet companies).

People would have learnt a lot of lessons from Web 1.0, the bubble that burst. Which of these have the Web 2.0 companies taken to heart?

Of course, during Web 1.0, anybody who had a dotcom suffix got money. Premium valuations were given to those dotcom companies who had businesses only on paper. That could not sustain. A company should have a strong business model with a strong execution plan. Then the company is for genuine. Only the number one in each segment of the internet industry would be truly successful. Not every average company can be a winner. It's just like any other industry.

So would you say that it's back to conventional business logic-revenues, profits? And that eyeballs do not matter?

Yes. But, eyeballs, of course, are very important. If you have a strong business model, then those eyeballs can be monetised. Mere hype will not work.

We had made an investment of about $3 billion into 800 internet companies. And we got $7.5 billion back in cash (returns), while we are holding about $22 billion in public stock. So, we have made about $30 billion (Rs 1,35,000 crore) on a $3-billion investment. It's not bad.

"We may be able to repeat some successful partnership models we have in Japan or China in India"

Who else has made better returns from Web 1.0? I think we would have made the highest returns from the internet investments. There was criticism when the net bubble burst. People said that SoftBank was just hype. Today, we are a survivor of the internet crash. Most of our (portfolio) companies are making profits. And they are growing very quickly. This $30 billion is out of 40 IPOs. In the next 12 months, we expect to have another 30 IPOs. And, we would be having at least 20 IPOs every year for the next five years.

What are the entry barriers in content related internet businesses? After all, this is a business model that can be replicated easily.

It's just like any other business. The #1-normally the first mover-company would be very successful. The #2 would be less successful. The #5 would just break even. So, you have to be the #1. For me, the thumb rule is that I will pick up only the #1 company in each segment. I am not interested in #2 or #3. I am not a low-cost picker. I would rather pay a high price for the #1 company than pay a lower amount for the #2 or the #3 one.

How do you look at the Indian market? Are you looking at any opportunity here beyond those in the content side?

About six or seven years ago, I had made an investment of $30 million (around Rs 130 crore then) into some internet companies in China. Now they are worth $2-3 billion (Rs 9,000-13,500 crore). We may be able to repeat a similar thing in India.

Are you looking at any opportunities closely in India? Are there any exciting companies?

We may be able to identify some interesting companies locally. Or we can create some joint ventures. We may be able to repeat some successful partnership models we have in Japan or China in India. Whatever we have done in Japan we could repeat in China successfully. So, why not in India?

Would SoftBank be looking at software opportunities in India?

Not really. We are focussed on the internet.

How much do you hold in Yahoo! now?

We have very little today in Yahoo! US. In Yahoo! Japan, we own 42 per cent. Yahoo! Japan is unlike Yahoo! US. In Japan, we are a combination of Yahoo! plus Google plus eBay plus Amazon. We are #1 in each field. In auction, we have an 80 per cent market share. In search, we are four times bigger than Google. We are #1 in shopping. So it's not just in portal, we are #1 in all the other businesses. Besides Yahoo! Japan, we own E*Trade Japan, which is #1 in electronic trading in securities. We also own the company that is #1 in online gaming (GungHo Online Entertainment) in Japan. We have many #1s. We have 500 internet companies in Japan only. So, some of those models could be replicated in India.

How do you monitor these companies? We have heard it's a Genghis Khan inspired management structure. A team of 10 people managing each business...

In the internet industry, speed is everything. We have to be quick. So, if the decision-making has to come up to my level, it will get slow. So, I divided management into several groups. One group focuses on the financial side, one on the media side, the other on technology and so on. Under each group, there are many companies. So, SoftBank at once became purely a holding company, not doing any operations. Then we created a middle holding company for each group. The middle holding company decides investment for each group (so the company has a three-tiered management structure). And the CEOs of the holding companies report to me. But, five years ago, when we invested in the broadband infrastructure business (Yahoo! bb), I myself became the operating CEO. For that, we made $1 billion (Rs 4,500 crore) investment every year. It was a big investment. I am a crazy guy. I couldn't accept one megabit per second (mbps) or 2 mbps speed provided by operators in Japan then. NTT was providing only 1.5 mbps. I couldn't accept it. I started with 8 mbps. Immediately after that I started 16 mbps, 24 mbps, 50 mbps and so on. Now we provide over 1 GBPS (gigabits per second).

I am a crazy CEO. I suffered a loss of $1 billion every year. Our share prices crashed. Our market cap went down to as low as $2 billion (Rs 9,000 crore). My net worth also went down dramatically. I had to even sell some shares to pay my personal debt. The banks were after me asking me to pay some of my loans back. I had to sell 15 per cent of my holdings.

What is the earning situation now? Are you making money?

SoftBank is back to the market cap of $25 billion (Rs 1,12,500 crore). I still own 33-34 per cent of it. Our revenue is $10 billion (Rs 45,000 crore) a year. We have started making money again. Our shares have bounced back.

You have exited a few Yahoo ventures recently...

We have exited Yahoo! UK, Yahoo! France, Yahoo! Germany and Yahoo! Korea, where now Yahoo! has 100 per cent ownership. Yahoo! China is combined with our Chinese operations. So we sort of swapped. But they paid us $0.5 billion (Rs 2,250 crore).

Was that a good deal?

Yes, because we were not getting any dividend from those businesses.