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

Ellison’s home was actually a village, a compound of intricately fashioned wooden houses modeled after a Japanese emperor’s palace. The 23-acre estate took nearly a decade to design and build, which includes a lake and a waterfall operated by an on-off switch. All buildings were constructed without nails and had mud-plastered walls to withstand a 7.3 Richter-scale earthquake. In total, Ellison’s tribute to Japanese culture and history was worth about $70 million.

The talk around the table that day was about the internet craze in the stock market. But Massa and Jobs were more interested in what would happen after the dotcom bubble. “I said I was focused on the Internet — and he agreed that the Internet was the future,” Massa says. Both realized that a paradigm shift was coming. Movement in the Nasdaq was one thing; The emergence of the network world, in which Apple played a leading role as inventor and SoftBank as part investor and operator, was quite different.

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

According to Massa’s account, on a trip to California sometime in the summer of 2005, he showed Jobs his own sketches 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 couldn’t resist dropping hints about the iPhone.

Job: “Masa, don’t give me your dirty pictures. I have my own.”

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

Jobs declined to divulge any further details, but Massa could see a smile on the Apple boss’ face. After pressing him further, Massa held a follow-up meeting at Jobs’ Tudor-style country home in Palo Alto. At that meeting, Massa claims, Jobs agreed in principle to give SoftBank exclusive rights to distribute iPhones in Japan. “Well, Massa, you’re crazy,” Jobs said. “We haven’t talked to anyone, but you came to see me first. I’ll give it to you.”

Nothing is written. No price or volume was discussed. Just a gentleman’s agreement, based on the assumption that Masa would have the financial means to build or acquire a mobile phone business. “It was top secret. I haven’t seen the product before it came to Japan [in 2008]” Masa demanded. “Steve didn’t even tell me the name.”

The story has a mythical quality. It is estimated that Jobs made his promise three years before Apple launched the iPhone in Japan. Yet that promise may have given Massa the confidence to buy Vodafone Japan, the British-owned “lazy-run” that used football icon David Beckham in its marketing campaigns. It was a highly leveraged deal—the largest ever in Asia—but Masa gambled that it had a game-changing product in the pipeline. Regardless of the precise chronology, Masa closed the distribution deal of the century, enabling him to build a profitable consumer business in Japan, greatly enhancing the SoftBank brand.

On March 17, 2006, Masa sealed its $17 billion deal to buy Vodafone Japan. Two weeks later, Jobs flew to Tokyo, where Massa challenged the Apple boss to keep his end of the deal. “You didn’t give me anything in writing, but I bet $17 billion on your word,” he said. “You can feel a little responsibility.” Jobs laughed and said, “Masa, you are a crazy man. We will do what we discussed.”