Meet the Man Behind the Largest Private Investment Fund

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How do you lose most of your wealth in the dot com bust and then rise from the ashes to become one of the 100 richest people in the world? Good question.

Meet Masayoshi Son, the 59-year-old head of Softbank, an investment company that raised $100 billion last year alone for its Vision Fund.

In watching Mr. Son interviewed by Carlyle group co-founder David Rubenstein, it’s hard not to like the man.

Here’s a guy who at age 16 hounded McDonald’s founder Ray Kroc’s office with phone calls asking for just a few minutes of his time simply because he wanted to see him in person.

When nothing came from the phone calls he decided to go to the office in person because the plane ticket was cheaper than his phone bill.

He met Mr. Kroc and the fire in his belly was ignited.

But how can investors pile $100 billion in the Vision Fund knowing that almost all was lost by Mr. Son in the past?

It takes either a lot of guts or, in my view, so much excess cash in the world needing a place to go that “hey, who cares, it’s only money.” You can thank your central banks.

The largest investors in the Vision Fund put up a combined $60 billion: $45 billion is from Saudi 31-year-old deputy crown prince Mohammed bin Salman (MbS) through the state investment fund (note he’s the buyer of the da Vinci painting “Salvator Mundi” for a cool $450 million), and $15 billion from the state investment funds of Abu Dhabi.

Other investors include Apple, Qualcomm, Taiwan’s Foxconn, Japan’s Sharp to name a few. As a side note, it’s reported Google is doing a deal with MbS to create a technology hub to ween the country off its oil addiction.

Must be nice to be a prince and an oligarch.

Some of the pieces that I picked up in Mr. Son’s deal: His investors’ money is locked up for twelve years. He keeps 20 percent of the profits above an 8% threshold, and receives an annual management fee ranging from 0.7 percent to 1.3 percent. $44 billion of the capital raised will be categorized as preferred stock, or debt, that will pay 7% per year. Good luck with that.

Initial investments include the ride hailing app company Uber, broadband through One Web (satellites), and co-working through the firm We Work Cos.

Feels to me like a game of let’s throw other people’s money at the wall to see what sticks. This is gambling, not investing, by a man who has lived and died already. Is this the steady hand you want managing your money?

“We only live once, so I want to think big. I have no intention of making small bets,” the 59-year-old entrepreneur told investors in May. “My life really starts from here.” Easy for him to say.

The David Rubenstein Show: Masayoshi Son

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.

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