Masayoshi Son Bet Billions on the iPhone—3 Years Before It Existed

The following is adapted from Gambling Man, my new biography of Masayoshi Son. As the Japanese founder and CEO of SoftBank, “Masa”—as he is known to friends and rivals alike—is probably the most powerful mogul of the 21st century who is not a household name. He was born in 1957 and grew up on the western island of Kyushu. Barely 5’5″, invariably dressed smart-casual, he lived for several years in California. Though his charm is legendary, he is easily bored. Visitors to his cavernous office in Tokyo, with its Putin-sized long table, can be given five minutes or two hours.

Masa has been a software distributor, a dotcom investor, and a broadband and mobile phone operator. Now, through the SoftBank Vision Fund, he is the world’s largest venture investor. In the past two decades, he has invested in or controlled assets worth $1 trillion. This past December, he met with Donald Trump and pledged to invest $100 billion in the US.

There are a lot of stories about Masa (some told for the first time in the book): how he bankrolled Alibaba, China’s internet colossus, after a six-minute speed-dating session with Jack Ma; how he personally supersized hundreds of Silicon Valley startups; how he recruited ex-Googler Nikesh Arora with a $320 million remuneration package signed on a napkin. But my favorite might be this: how Masa plotted with Steve Jobs to take the iPhone global.

At the turn of the 21st century, Masa was the richest man in the world—for three days. After the dotcom crash, he lost 97 percent of his wealth. But he never abandoned his techno-optimism, launching a new broadband service in Japan under the Yahoo brand. His dream was to connect a mobile-phone operator to Yahoo broadband. That way, Japanese consumers could access data, images, and messages all on one digital device. The missing piece was a breakthrough consumer product to compete with his archrival, NTT Docomo, the dominant incumbent in Japan and the most valuable company in the world by market capitalization. The man who supplied the answer was his old friend Steve Jobs.

The relationship between Masa and Jobs was a special one. Both were autocratic mavericks who possessed buckets of self-belief and an uncanny ability to anticipate the future. Both had a deep understanding of aesthetics, technology, and consumer behavior. Masa’s office in Tokyo once had 50 different telephone handsets mounted on a wall, allowing him to study each feature before deciding on SoftBank’s own product design. Masa loved to quote Jobs’ famous line from Apple’s 1997 Think Different advertising campaign: “The people who are crazy enough to think they can change the world are the ones who do.”

Masa first encountered Steve Jobs in the mid-1980s at the annual Comdex trade fair in Las Vegas. Sometime in the summer of 1998, they had their first serious conversation under a cherry tree at the Woodside, California, home of Larry Ellison, boss of the Oracle software group and a fellow Japanophile.

Ellison’s home was in fact more like a village, a compound of intricately fashioned wooden houses modeled after a Japanese emperor’s palace. The 23-acre estate took almost a decade to design and build, including a lake and a waterfall operated by an on-off switch. All the buildings were constructed without nails and had mud-plastered walls designed to withstand a 7.3 Richter-scale earthquake. In total, Ellison’s homage to Japanese culture and history was worth around $70 million.

The talk around the table that day was about crazy internet valuations in the stock market. But Masa and Jobs were more interested in what would happen after the dotcom bubble. “I said that I was focused on the internet—and he agreed the internet was the future,” Masa says. Both men grasped that a paradigm shift was coming. Movements in the Nasdaq were one thing; the advent of the networked world, in which Apple played a leading role as innovator and SoftBank the part of investor and operator, was quite another.

Apple was, by then, one of the world’s most valuable companies, with a suite of smash-hit products from Mac laptops to the iPod. Like Masa, Jobs was paranoid about rivals stealing his ideas. No Apple project was more top secret than the iPhone, the touchscreen smartphone that would sell billions and revolutionize personal communications.

By Masa’s account, on a visit to California, sometime in the summer of 2005, he showed Jobs his own sketch of a mobile-enabled iPod that had a large display and used the Apple operating system. The new device, he predicted, would be able to process data and images. Jobs pooh-poohed the idea but could not resist dropping hints about the iPhone.

Jobs: “Masa, don’t give me your shitty drawing. I have my own.”

Masa: “Well, I don’t need to give you my dirty piece of paper, but once you have your product, give it to me for Japan.”

Jobs refused to reveal any more detail, but Masa spotted the flicker of a smile on the Apple boss’s face. After pressing him further, Masa wangled a follow-up meeting at Jobs’ Tudor-style country home in Palo Alto. At that meeting, Masa claims, Jobs agreed in principle to give SoftBank exclusive rights to distribute the iPhone in Japan. “Well, Masa, you are crazy,” said Jobs. “We have not talked to anybody, but you came to see me first. I’ll give it to you.”

Nothing was written down. There was no discussion of price or volume. Just a gentleman’s agreement, based on the assumption that Masa would have the financial wherewithal to build or acquire a mobile phone business. “It was super confidential. I never saw the product before it arrived in Japan [in 2008],” Masa claims. “Steve never even told me the name.”

The tale has a mythical quality. It assumes Jobs gave his word a full three years before Apple launched the iPhone in Japan. Yet that very promise may well have given Masa the confidence to buy Vodafone Japan, the British-owned “also-ran” that used football icon David Beckham in its marketing campaign. This was a highly leveraged deal—the biggest to date in Asia—but Masa gambled that he had a game-changing product in the pipeline. Whatever the precise chronology, Masa pulled off the distribution deal of the century, which enabled him to build a profitable consumer business in Japan, massively enhancing the SoftBank brand.

On March 17, 2006, Masa clinched his $17 billion deal to buy Vodafone Japan. Two weeks later, Jobs flew to Tokyo, where Masa challenged the Apple boss to uphold his end of the deal. “You didn’t give me anything in writing, but I made a $17 billion bet based on your word,” he said. “You had better feel a tiny bit of responsibility.” Jobs laughed and said, “Masa, you are a crazy guy. We will do what we discussed.”

In the spring of 2006 Masa was in an almighty hurry. Mobile phone users in Japan would soon be free to transfer their telephone numbers to rival operators. Unless SoftBank came out with a compelling new offer on price or product, it risked losing hundreds of thousands of customers to NTT Docomo and the number-two operator, KDDI.

Steve Jobs was also racing against the clock. Three years earlier, he was diagnosed with a rare form of pancreatic cancer, but he’d delayed opening his body for surgery, and the cancer had spread to his liver. From the day of his operation in October 2004, he knew he was living on borrowed time. In public, he insisted to colleagues and investors he was cured. In private, he was more focused than ever, devoting every hour to two secret projects, the iPhone and a new tablet computer called the iPad.

A paper cut collage of a first generation iPhone

Apple launched its first iPhone, with low-capacity 2G technology, in the US in the summer of 2007. The device was incompatible with the more advanced technologies being used in Japan. For that reason, Japanese telecom giants saw Apple more as a designer and manufacturer of personal computers and music players. They couldn’t imagine the Americans producing a game-changing new consumer product in their space. By contrast, Masa grasped that Steve Jobs was about to become the disruptor-in-chief as faster technologies became ascendant not just in Japan but around the world.

In November 2007, the boss of AT&T, distributor of Apple’s 2G iPhone in the US, gave the game away. Speaking at the Churchill Club, a business event in Silicon Valley, Randall Stephenson let slip that Apple’s next iPhone would be 3G compatible. From then on, even as more than 2 million American consumers enjoyed a groundbreaking experience on a brilliant screen with a flick of their finger, the industry was abuzz with rumors of Apple’s next-generation product.

Within weeks, NTT Docomo’s CEO, Masao Nakamura, held talks with Jobs at Apple’s Cupertino headquarters, followed by Masa himself. This suggests that the exclusive iPhone distribution deal may not have been as watertight as Masa thought, though he later claimed that he was in regular touch with Jobs, exchanging ideas on features for the new iPhone. “I created all the characters, the emoticons that went in the iPhone,” he says. “I gave him many ideas.”

(The claim is breathtaking, but Masa has always had an artistic bent. He is a decent amateur painter in the early Impressionist style. He also has a fine grasp of consumer behavior. How far Jobs listened to his Japanese friend is another matter.)

Both Masa and Docomo were desperate to get their hands on the new 3G-enabled product that was tri-band, operating on multiple networks and therefore capable of being rolled out all over the world. Docomo’s mobile phones operated on a 2-GHz network in Japan’s cities. Once in the countryside, where mobile phone towers were less prevalent, mobile users would flip to a more reliable “platinum band” 800‑MHz service. There was one drawback: NTT’s dual-band network had to be tested thoroughly to ensure the switch-over worked smoothly. The risk of a delayed iPhone rollout was therefore serious.

Because risk-averse Japanese regulators favored incumbents, SoftBank had to settle for the inferior 2.1-GHz spectrum, whose advantage was that it was single-band and nationwide, and therefore did not require a switchover.

Technology mattered, but personal chemistry counted even more. “There was a deep connection between Masa and Steve Jobs,” says Ron Fisher, SoftBank’s man in the US, who attended several meetings between the two men. “Jobs understood that when you are trying to change consumer behavior in a place like Japan, you need a maverick.”

On June 4, 2008, Masa announced that SoftBank would sell the iPhone, confirming he had beaten Docomo to the punch. The following month, SoftBank began distribution in Japan. By September 2011, when SoftBank lost its exclusivity over the iPhone, its market share had grown to 23 percent, up from 17 percent at the point when the mobile business was acquired from Vodafone. Steve Jobs’ decision to stake all on SoftBank was vindicated, but the success also pointed to Masa’s ability to scale up rapidly, overcoming a maze of logistical, regulatory, and marketing obstacles.

Thanks to the iPhone, Masa established SoftBank Mobile as the number one operator in Japan. This was the springboard for his acquisition of a controlling stake in Sprint in 2013, which later merged with T-Mobile, creating a third force in the US telecoms market. Along the way, he reverted from mobile operator to global tech investor. He snapped up Arm Holdings, the UK-based advanced chip designer, and tried to merge it with Nvidia, now the world’s most valuable company. Nvidia founder Jensen Huang remains a good friend and likes to remind Masa that he sold his 5 percent stake in 2019, missing out on an Alibaba-sized deal of a lifetime.

Masa’s passion now is artificial general intelligence, whose impact, he believes, will exceed the microchip, the internet, and the mobile phone. “I have to be in this revolution,” he told me in our last interview in Tokyo. “I have to participate.”

In the summer of 2024, SoftBank invested $500 million in OpenAI. Before that, the Financial Times suggested that Masa was ready to put up $1 billion to develop “the iPhone of artificial intelligence” in partnership with Sam Altman and Jony Ive. This would be the first consumer device in the age of AI. If the vision comes off—and never write off Masayoshi Son—it would be a fitting legacy to his friendship and collaboration with his mentor-collaborator Steve Jobs.