Masayoshi Son has a long history of zigging where others zag. His SoftBank made a fortune as a Japanese software reseller, then he made well-timed investments in Yahoo Japan and Yahoo itself. His more recent investments follow no set pattern: Sprint is a possibly also-ran U.S. cellular network, and ARM is an extremely expensive microchip designer.
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Now the billionaire Japanese entrepreneur of Korean descent—if you know anything about Japanese business culture you understand how unusual Son is right there—is at it again. SoftBank announced Wednesday it is buying the hedge fund and investments-strategies firm Fortress. It is Son’s second major investment move of late, his first being the partnership he forged with a Saudi Arabian sovereign wealth fund to invest $100 billion in technology companies.
It’s a curious strategy. It’s not like technology companies lack financing options right now. Tech concerns from three kids in a garage to megacaps like Microsoft readily can find capital that runs the gamut from “angel” venture capital to high-grade debt. For his part, Son seems to be flitting about a bit. He hired and fired the ex-Google honcho Nikesh Arora to run this effort. He has flirted with the new Trump administration, very likely an effort to revive his efficiencies-producing dream of merging Sprint with T-Mobile in the U.S.
Yet with his Fortress buy, Son may again be showing good timing. The firm has $70 billion in assets, but the value of its holding company is down considerably from its IPO. That’s because hedge funds are in a slump, their performance having been easily bested by Bogleian passively invested index funds. As has been the case so many times before, Son may see something the rest of us are missing.
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Suggested reading part 1. If you’re interested in digital disruption I highly recommend this detail-rich profile of the next-generation leader of The New York Times. The spirit of experimentation there is simultaneously exciting and frightening.
Suggested reading part 2. My colleague Leigh Gallagher has published her new book, The Airbnb Story. Talk about digital disruption! Buy a copy here.
BITS AND BYTES
Airbnb is projecting massive profits for just three years from now. Sources close to the home and apartment sharing company tell Fortune's Leigh Gallagher that its business plan anticipates earnings (before interest and taxes and depreciation) of around $3.5 billion annually by 2020. That's a 3,400% increase over what Airbnb made last year, and it's bigger than the bottom line of many Fortune 500 companies. The numbers, not previously public, come from Gallagher's new book about the startup. (Fortune)
Warren Buffett's company just made a lot on Apple stock. Berkshire Hathaway began buying in early 2016 and nearly quadrupled its stake during the fourth quarter. The conglomerate now owns more than 1% of Apple, and those shares have gained $1.1 billion since the beginning of this year. (Fortune)
Toshiba may have to sell most of its chip business to save itself. The Japanese conglomerate previously said it would unload a stake in its successful flash memory division, up to 20%, to offset the huge writedown from its nuclear operation. It's now considering a plan to sell it outright. (Reuters, Bloomberg)
Google finally lets outsiders try out its internal database. The search giant is finally opening up Spanner, a technology that could help companies keep data consistent across multiple machines and multiple data center locations. For example, a retailer might use it to ensure a synchronized view into product inventory information. Spanner will be vitally important as Google steps up its cloud services competition with Microsoft and Amazon Web Services. (Fortune)
You can now watch Facebook videos on a bigger screen. After weeks of rumors, the social network released an app that runs on widely used set-top boxes, including Apple TV and Amazon Fire TV. The release comes amid chatter that Facebook is striking deals with music publishers and could hint at changes to come in how Facebook pays publishers for live video advertising. (Reuters, Recode, Fortune)
THE DOWNLOAD
Europe's data privacy rules could give AI a global headache. Companies experimenting with artificial intelligence technologies may find it challenging over the next few years, as they expand their operations in Europe. That’s because by May 2018, tough new European Union rules related to the General Data Protection Regulation (GDPR) will come into effect and could pose problems for companies that rely on gathering and processing user data for their businesses. Fortune's Jonathan Vanian reports on the implications from the annual RSA cybersecurity conference in San Francisco.
Also, Microsoft President Brad Smith used his keynote there to call for a "Digital Geneva Convention"—one that protects citizens from the fallout of cyber attacks between nations.
Plus, why businesses should treat corporate cyber security protection just like any other disaster response plan, complete with occasional mock drills to see if they really will work.
Welcome to the era of great data center consolidation. "Friends don't let friends build data centers," said Charles Phillips, chief executive officer of Infor, a business software maker, about two years ago.
His remark—which launched a flood of T-shirts—came at an Amazon Web Services conference in April 2014, when he announced that Infor would move all of its IT operations into AWS data centers—and out of its own. Since then, a slew of other software companies—including Box, Salesforce, NetSuite, Tableau, Workday, and SAP—have all announced plans to use a public cloud (like AWS) as a deployment option for their own software. Fortune's Barb Darrow explains the rationale.
WATCH FOR IT
Don't expect an upside surprise from Cisco. The networking equipment giant will report results for its quarter ended Jan. 28 after the market closes Wednesday, and analysts anticipate another revenue decline. In the aftermath of the November election, CEO Chuck Robbins warned that political uncertainty was weighing on sales. (Wall Street Journal)
IN CASE YOU MISSED IT
Apple's Services Exec Throws Cold Water on the Idea of Buying a Big Media Company, by Don Reisinger
Delayed Tax Refunds Pose Latest Threat to Wireless Industry Sales, by Aaron Pressman
How Dating Site eHarmony Uses Machine Learning to Help You Find Love, by Polina Marinova
Why the Acorns Investing App Encourages Users to Splurge Here and There, by Jen Wieczner
This Top VC Says Amazon Is Set to Rule the FinTech Game, by Jeff John Roberts
ONE MORE THING
Samsung wants to take the catwalk digital. The tech giant has been a low-key regular at New York Fashion Week. This year, it's experimenting with footage that shows how virtual reality could play a future role in showcasing and selling new collections. (Fortune)
This edition of Data Sheet was curated by Heather Clancy.
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