Sunday, 24 July 2016

What do you do after making 44% per annum for 18 years?

There are many great venture capital investors out there but I haven't seen anyone who was come close to Masayoshi Son's returns of 44% per annum over 18 years. Masa is the CEO and founder of Softbank in Japan. His biggest win was investing $20m in Alibaba when it was a startup. At the time of Alibaba's IPO this investment was worth $58 billion.

Masa's investment style can be described as getting ahead of trends. He has benefited from the shift to mobile. His next bet is on the internet of things buying Arm Holdings a UK based developer and licencor of semi conductor technology.

On the Arm acquisition conference call he explained how he made his returns.

"So, people ask me how, Masa, did you do that? And people tell me it was lucky incident. But to me, if I can answer only one key factor, one thing in common that I always make investment is that I always make investment at the beginning of the paradigm shift. I never chase from the backward. I always go at the front of the edge of the paradigm shift. So in my last 40 years, okay, the PC started, PC internet started, PC broadband started, mobile internet started, okay. So, to me everything was internet. It was all getting connected and I invest at the every beginning of paradigm shift.

Now going forward what will happen in the next decade? Every 10 years, the big paradigm shift comes then what is the next 10 years, okay, next 20 years and so on. I say biggest paradigm shift that's coming is that internet is going to get connected, not just PC, not just mobile, but everything else. Everything else will be interconnected, so that is Internet of Things in today's terminology. So that paradigm shift is really happening from here on next 10 years, big-time. It's going to explode and in 20 years, 30 years, it's even going to more-and-more accelerate. Today 10 device per population are having Internet Of Things that is smartphone and tablets or PCs. But in 40 years from now, 1,000 devices per population is going to get all connected, that's my view. That's the view I kept on saying the last few years."

Masa believes Arm Holdings chips will be the biggest beneficiary of the internet of things with a track record like his it's a view worth listening to.

Note Decisive has no position in Softbank. The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.