Masayoshi Son, CEO, SoftBank strong believes that 21st century belongs to India because Indian people are smart, they speak English, the country has more percentage of young population.
According to him 21st Century will see an information revolution bigger than the industrial revolution.
SoftBank has already invested over USD 2 billion into India in one year out of the promised USD 10 billion in 10 years and going forward would seriously accelerate further investments, said Son in an interaction with CNBC-TV18’ Shereen Bhan at the Start-Ups India Movement in New Delhi.
On a lighter not, he said while investing into Start-Ups in India he mainly looks into the eyes of the entrepreneur on whether they are sparkling, then the field he is operating in, the passion he has, what themes they are looking at, whether the business has a potential to grow etc. Feelings and instincts too play a vital role in reaching an investment decision, he added.
“This is the beginning of the Big Bang in Indian Start-UP space,” he said.
After five to ten years of starting the business the focus should be on customer satisfaction.
Speaking about the positives of investing in India, he said it is one of the few countries along with China that has a huge domestic market to fight challenges.
He is confident that over passage of time artificial intelligence would surpass human intelligence in many domains.
When asked what India should do to accelerate growth, he said there needs to be give maximum attention to infrastructure, mobile connectivity, electricity etc.
Below is the transcript of Masayoshi Son’s interview with CNBC-TV18’s Shereen Bhan.
Q: You decided to plot each of those 40 business ideas of yours on that matrix, correct me if I am wrong but this is what I remember reading, that on that matrix of yours the number one measure was that you need to fall in love with the business and stay in love with that business for the next 50 years or so. The other measure was that the business should be unique and you did not want to do something that somebody else was doing. One of the other crucial measures was that you wanted to in a period of about 10 years be at least the number one player in that business in Japan. The fourth I believe was that you wanted to pick a business where the category itself would be growing to the next 30-50 years, you did not want to choose a sinking ship. How much of this still rings true today?
A: Those are very important matrix I always keep in mind. We are investing into many companies. Whenever I invest I look at the eyes of the entrepreneur and I look at the field that they are challenging, are they unique, do they have a passion, do they have a great theme and is the market itself supposed to be growing? Those are the things I still check.
As I was starting my own company, when we invest we look at the company with that matrix.
Q: When you looked into the eyes for instance of Kunal Bahl or you looked into the eyes of Ritesh Agarwal at OYO Rooms, what did the eyes tell you? What made you want to put money into those businesses?
A: The eyes were sparkling.
Q: The last chat that you and I had when you visited India in 2014 and you made that big announcement that Softbank has the ability, the will and the capability to invest at least USD 10 billion if not more into India over the next 10 years. Do you continue to believe in that vision and that ability or do you believe that given the current global environment, given the current domestic environment, given where valuations are today you may rescale?
A: If I rescale I would only scale up.
Q: So, what would USD 10 billion become?
A: I don’t know but at least in the last one year we have already invest almost USD 2 billion. So, if I have said USD 10 billion in 10 years, I have already done USD 2 billion in one year, so that is overpacing and I think we would accelerate. More I know about India, every time I visit here I get even more excited, more convinced that this is the country 21st century.
Q: What are you most excited about in India and you have said this in the past that you want to participate in India’s hockey stick sort of growth as far as the economy is concerned, similar to what you did in China. What excites you most about India today?
A: People are smart 800 million next generation over 35 year old, IT, their English speaking, the largest democracy country in the world, all these things make me believe that 21 century is this country.
Q: When we spoke last about valuations, you said that you are not concerned about valuations in India and since then we are actually seeing valuations in the start-up ecosystem correct quite a bit specially over the last 12-18 months. You also said that we currently are in an investment phase in India and so we should not get too perturbed about the fact that these companies, a large majority of these companies continue to make losses. It is not the stage for harvesting. When will the stage for harvesting be? What do you see as the timeline because a lot of these businesses now pre IPO stage, a lot of these businesses nearing that 10 decade mark and you have often spoken about how Alibaba made losses in the first 10 years, when do you believe that we now need to start focusing much more as far as unit economics is concerned, much more on the path to profitability which perhaps hasn’t been the case so far.
A: I would say for 5-10 years from the start profit or balance sheet is not most important, it is the customer accumulation, it is the business model, it is the customer satisfaction and the system – the overall business model that should be created and get the momentum.
When you get enough momentum, when you get enough scale, active user base then things start to make sense in profitability. Of course you have to have the mind from the beginning what would be my end result or end business model.
10 years from now when we have enough scale, what would be the business model, how do we make the returns, those business models should be created from the beginning in mind. However if you hurry too much then it is like catching fish, you jump too quickly, the fish goes away.