A few days ago, SoftBank supremo Masayoshi Son plonked down a cool $840 million on two companies in India — $627 million in fast-growing online retailer Snapdeal, and $210 million in Uber-competitor, home-grown Ola Cabs.
He was also in the country to announce that this is no isolated event; he plans on shelling out around $10 billion over the next 10 years on Indian startups. The 57-year-old founder of SoftBank also plans on meeting with 15 to 20 startups to assess their potential.
Below is the gist of an interview that he gave to Mint newspaper that explains why India is now his favourite destination for investments, and how he plans on pursuing deals in the country.
Mobile powering up
Son said that since mobile internet is exhibiting scorching growth here, thanks to low-cost smartphones, there will be a wave of opportunities for companies to reach and offer solutions to a huge mass of customers.
Previously, SoftBank was keen on globally focused Indian companies like inMobi, which has achieved tremendous growth. But now, his focus is exactly the opposite — Indian startups focused on the domestic market. Son's reasoning is that India has a key advantage, with English being widely spoken. It also has what he thinks is the best engineering talent in the world.
Another advantage, along with English speaking, is the country's software capabilities. Even in Silicon Valley, the best software engineers are Indians, he said. The combination of the two can be wildly effective; after winning locally, these companies can spread their wings globally.
10 in 10
When Son invested in Alibaba, he adopted a strategy of spending 10 minutes each with 10 companies, and plans on doing the same in India.
Patience is key
When Mint pointed out that Snapdeal has burned far more cash than it has churned in terms if revenue, Son replied that Alibaba was a chronic loss at first — making operational losses for 10 long years. Only in the last three was it able to get into the black, and this year it booked several billion dollars in net income. Focus on building the platform and the business, Son said, and the rest will come.
India is inexpensive
Son actually thinks that India is a bargain. He expects its GDP to be amongst the top two in the world. So from a long-term perspective, "you can almost close your eyes and still make an investment and still make a great return", he said.