Masa’s first fund was tiny: about $300,000. Years later, he raised $98.6 billion, the largest venture fund in history.

How he grew to become the world’s largest technology investor is the subject of the new book Gambling Man.

Skipping the Line

Masa didn’t operate like Sequoia or Kleiner. Those firms raised money and invested it, growing gradually. Masa was too impatient for that.

He borrowed massive sums against SoftBank’s assets, such as the Comdex trade show. Being in Japan, he was outside the major networks in technology. But he had an advantage the Americans didn’t: access to dirt cheap loans in yen.

Masa piled on loans from Japan’s top banks, then invested that money in startups.

Meeting Jack Ma

In 1999, Masa met a young Chinese entrepreneur named Jack Ma. Ma was working on a quirky idea: an online yellow pages.

He called it Alibaba.

If you’ve been investing in startups for a while, you probably see the potential here.

Yellow pages can match buyers and sellers of anything. Ma had a chance to stand in the middle of commercial flows and rake off a percentage for himself.

This was a huge opportunity.

Placing the Bet

What convinced Masa wasn’t so much the details of the market or the product. It was his assessment of Ma as a man.

“[Masa was] drawn to the hungry look in Ma’s eye, the ‘animal smell’ of a fellow underdog.”

Masa judged Ma correctly. Ma was incredibly ambitious and energetic — a lot like Masa himself.

The online yellow pages were a hit. Later, Alibaba launched Taobao, Alipay, and a host of other businesses.

The company is worth over $300 billion today on the public markets. Masa bought 30% of the company in 2000.

This is likely the greatest investment in the history of venture capital.

The Dot Com Crash

All that leverage made Masa a fortune when times were good. But during the dot com crash, Masa’s financial picture grew dire:

“Within eleven months, as the dot-com bubble popped and SoftBank’s share price slumped, Masa lost 96 percent of his paper wealth.”

Masa sold assets for whatever he could get. The fire sale provided enough cash to keep his head above water, barely.

This scare would’ve broken a lot of people. But Masa was undeterred.

“‘I used to be the richest guy in the world. I lost 99 percent of my money,’ Masa said, ‘but I am coming back.’”

Don’t Call It a Comeback

Bit by bit in the 2000’s, Masa began to regain his wealth.

But debt continued to plague him, and he was broke again by 2008. His debt exceeded his net worth, which was primarily in SoftBank shares.

No matter how grim his balance sheet looked, Masa wouldn’t stop taking big swings.

He made prescient bets on Asian startups Grab, Didi and Coupang, netting big gains. There were also some duds, including billions lost on WeWork.

In 2016, Masa did his best deal since Alibaba: the acquisition of British chipmaker ARM.

7 years later, SoftBank took ARM public. By then, its chips were in heavy demand for processing AI workloads,

With its 91% stake at IPO, Masa and SoftBank have scored a gain of around $80 billion.

Wrap-Up

Masa is a man who takes big swings.

When he loses, he loses big. When he wins, the sums boggle the mind.

What kind of VC brings home $80 billion? Only Masa.

People love to poke fun when he takes another giant loss. But that’s part of his business model.

Masa’s tiny first fund makes me feel a lot better about my little “fund.” It’s right around the same size as his was! We all have to start somewhere.

On the whole, Masa’s approach isn’t for me. It isn’t for most people.

I don’t want to leverage myself to the hilt and risk bankruptcy. I wouldn’t be able to sleep at night.

But the world needs a Masa or two. A crazy risk taker who just wants to believe.

Gambling Man is a fascinating story. If you invest in startups, check it out!

More on tech:

Gambling Man: Masayoshi Son (Part One)

Liftoff: How Elon Musk Built SpaceX

Super Pumped (Part One)

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