The Cover Story Marcelo Claure - I'm Ed Hammond with Bloomberg News, and thank you so much Marcelo Claure of SoftBank for joining me for this "Bloomberg Businessweek" Conference. Marcelo, you're a man of several hats. Every time I talk to you, you seem to be very, very involved in a lot of different things across different companies at different stages of their development. What is taking up most of your time right now? - Combination, first is we're living potentially in some of the most exciting times as it relates to tech disruption and equity investing, or growth equity investing. So at the speed that SoftBank is investing, you know, we always have a lot of different things going on. Also, WeWork is an important part. I took over WeWork, it's gonna be close to 1 1/2 years. So we've been undergoing a massive transformation at WeWork, and the launch of our Latin American Fund, who, you know, I always had the hypothesis that it was gonna be Latin American's time, so we've been doing a bit of that, launching the Miami Initiative, which is, I think Miami's on fire, and like anything else, it requires capital, it requires support. So I've been spending some time in Miami, and then we have a lot of different investing company, a lot of operating companies. We have satellite companies, we have energy businesses, we have robotics businesses, and also you got to add that we're investing about a billion dollars a week in eco at SoftBank. So yeah, there's always exciting things going on in the field that we operate. - Let's just start with SoftBank. Results have obviously just come out from the company, somewhat disappointing for investors who had, I guess, expected more buybacks. But talk to me longer term. What are the opportunities that you guys are seeing in the market? We know you had a fantastic pandemic. SoftBank invested very well, very early in the pandemic and saw huge returns because of that. Now, as we shift into what appears to be this sort of next chapter of returning to normal, I wonder where you see the ability to capture that same kind of growth. - And first is, you know, I think SoftBank results were our best results so far. They were the best results that any Japanese company has ever posted, $47 billion in profit, which I think it's exceptional. I mean, nothing has really changed. We've been saying the same thing for the last three years. We've been saying that we're in the middle of undergoing probably one of the most important revolutions in human, mankind. You're starting to see that pretty much every single industry vertical as we know it is gonna be different five years from now. It's gonna be massively disrupted. So we're looking for those companies that are the innovators, the disruptors, the ones that are changing industries, and those that are basically, I would say, redefining the way we live, the way we work, the way we play. And when you invest in those companies, you really don't care about short-term results, right? We're not one of those companies that are looking, hey, is this, can we buy something cheap that we can two X in a year, or two? That's not our style. Our style is we're gonna invest in those disruptors that those companies are gonna be worth 10 times, 100 times in the next five to 10 years. So that's always been the way we invest, and you know, so far it's proven right. I take you back through memory lane, you know, a year, year and a half ago, everybody was doubting. SoftBank was doubting the Vision Fund, and God, what a difference a year has made. I mean, I think the combined IRR of the Vision Fund is, I think, at 43, 44%. The IRR for the Latin American Fund is 62%, and so far the theory behind it, or the way we're investing is proving right. - Talk to me about the LATAM business, 'cause obviously that's a place close to your heart, and an area where I know you're very focused in terms of the future of investment. What are the opportunities there, and how does it sort of relate to what SoftBank is doing elsewhere in the world, and the kind of markets it's wanting to go into? - So I like to look at LATAM first, and say the size, right? Latin America's GDP is two times the size of India. It's two times the size of Southeast Asia, and it's only half of China. So therefore Latin America has the size. Secondly, Latin America is behind in some, call it, tech indicators, you know, say maybe, I would say like five years from China. So it's nice to invest in a place where you've seen a lot of these business models already been successful in India, in China, in the US. So you know, we had a plan, and we had a 5 billion fund that was supposed to be, it was gonna take five years to deploy it. Pretty much the 5 billion is fully committed. The IRR so far is 62%. We're investing in all sort of companies from infrastructure to logistics to health tech to prop tech to irrigation pretty much. And there's so much disruption happening in Latin America that, you know, we think that quality of the entrepreneurs and their potential is very large. So we've been spending a lot of time in basically looking at these Latin American entrepreneurs who are similar business models to others, and you know, I mean, so far, so good. - When you're deploying that kind of capital, and as you said, that very high rate of return, surely there's a call to invest more. Is this something we're gonna see happen? Are you gonna grow that fund? - We think that there is great opportunities ahead in Latin America. So you know, we don't have a mandate in the group that says we got to deploy this much capital in any region in the world. What we do is we look at exceptional entrepreneurs, exceptional founders that are disrupting parts of the economy that are quite large, and in Latin America, you're seeing a lot of FinTech disruption, I mean, because credit has been so scarce to the traditional consumer, I mean, to get a home, sometimes you got to put 30, 40% down payment, which makes it very hard for the middle-class to actually own a home. When you look at the largest cities in Latin America, the amount of real estate ratio compared to mortgages is so large, they're pretty much very, very few real estate assets that are being financed. I mean, there's a lot of things that are broken in Latin America that technology is fixing. So therefore when you have that size, first is we needed to go learn. So we've been doing this for two years, and you know, we're gonna continue to invest in Latin America, as we're gonna continue to invest in the US, in China, and India. We've be doing a lot of investments in Europe, lately. You know, Masa announced a couple of investment, European investments, in the last earnings call, so you know, we're a global investor, and we're gonna bet behind great entrepreneurs, regardless of what part of the world they're in. - Let me just ask, Marcelo, as a sort of practical matter when you're deploying that kind of capital, and you're talking about over the past two years obviously spending a lot in Latin America with those kind of growth prospects in mind, when you do that with the overlay of the pandemic, and therefore with the kind of companies that have benefited, the kind of technologies that has, you know, they may go on to succeed anyway, but it sort of supercharged them. I wonder how you look through an individual event like the pandemic, and say these are the things we want to invest in that in five years, 10 years, 15 years are gonna continue to have that growth, rather than just be the ones for the next whatever it is, year, 18 months, two years of the pandemic are able to harness the potential. - I mean, all the pandemic has done, it has accelerated something that was gonna happen in the next three to five years, right? I always like to remind ourselves that the internet mainly disrupted two industries, right? The internet disrupted advertising. You have Facebook, you have Google, and the internet disrupted retail. You had the emergence of e-commerce. But really nothing else was massively disrupted, right? We still ate the same way. We still shopped the same way for food. And the pandemic, it forced us to basically digitalize pretty much everything that we do, right? So the pandemic digitalized e-commerce a lot more. I mean, today you get your food delivered to your home. You get your groceries delivered to your home. You get the, you know, your late night ice cream delivered to your home in less than 20 minutes. You know, pretty much everything you've learned how to order online. You know, can you really go back? Can you go back to retail store, and walk in, and see if they have your size, and be waiting? No, I mean, you've learned how to shop on Amazon today for your clothes, or wherever you shop, and it really works.