Rethinking Competitive Advantage by Ram Charan
Author:Ram Charan [Charan, Ram]
Language: eng
Format: epub
Publisher: Crown
Published: 2021-04-06T00:00:00+00:00
How Funders Shape Ecosystems and Competitive Advantage
Most of the sprawling ecosystems that are emerging have been driven by business leaders, such as Amazonâs Jeff Bezos, Alibabaâs Jack Ma, or Baiduâs Robin Li. But a few capital funders are playing a crucial role in shaping the competitive landscape by connecting the pieces.
In 2017, Masayoshi Son, the head of SoftBank Group, a massive Tokyo-based holding company he founded, saw the opportunity to give promising start-ups in the late stages of development larger sums of money to get them to so-called unicorn status (a billion dollars in market value) sooner. He had done it before, most notably turning his initial investment of $20 million in Alibaba into more than $5 billion at the time the company went public in 2014. He created SoftBank Vision Fund and rounded up a whopping $100 billion from the likes of Saudi Arabian sovereign wealth and hedge funds.
Vision Fundâs large size had people wondering whether all that money could be deployed effectively, and how. That turned out not to be a problem. By 2019, the fund had invested all of the $100 billion across a range of companies including Uber, Arm Holdings, WeWork, Flipkart, and GM Cruise, and Masa Son had begun talking about raising another round of investment capital. (He did have an enormous loss in his investment in WeWork in 2019, which caused significant embarrassment and raised doubts about the viability of a new fund.)
But Masa Son is not just a large-scale passive investor. He is an architect of large-scale ecosystems. His stake in a company includes the intention to influence it, make connections between it and other similar companies, sometimes to combine it with another company. In pursuit of his vision, he alters the competitive advantage of other companies.
SoftBankâs moves in the area of mobility demonstrate a broad and farsighted view of how the pieces can come together in ways that create greater value sooner.
Moving forward requires seamless connections among multiple systems and technology platforms, taking advantage of the latest technical developments, meeting a range of consumer preferences, and processing massive amounts of data to improve the outcomes of things like autonomous driving. Masa Son seems to be assembling the pieces of an extensive mobility ecosystem that can meet these requirements. As reported by Reuters in April 2019, SoftBank has placed âa $60 billion bet in more than 40 companies in a bid to steer the $3 trillion global automotive industry.â
In 2014 SoftBank, along with Alibaba, took a stake in the Chinese ride-hailing company that is now Didi Chuxing. It also has stakes in Uber, Ola (Latin Americaâs version), and Grab (Singaporeâs version). Partnerships with other players, including automakers Toyota, Honda, and GM, and a $2.5 billion investment, along with Hondaâs commitment of $2.75 billion, in GM Cruise reveal an even higher aim.
These investments are not intended to act as stand-alone companies but rather to help each other. A joint venture between SoftBank and Toyota called Monet Technologies (Monet is short for Mobility
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