Keep Drawing Until the Prize Appears

"The “lottery box strategy” behind investing in Yahoo! The “lottery box strategy” is actually extremely simple! Never give up before winning, that’s all. For example, you attend a cultural festival and encounter a lottery game, costing 100 yen per draw. You win a game console if you hit the jackpot, but you leave empty-handed if you don’t. You spend 100 yen to draw once, but unfortunately, you don’t win, and you don’t have extra money to try again. If it ends here, your goal of “winning a game console” is not achieved and you might complain: “What bad luck!” But, if a generous relative happened to pass by and said: “I’ll give you money so you can keep drawing until you win!” If the relative gives you 1,000 yen or 2,000 yen, you can draw 10 times, 20 times, or even more. If the game is fair, you’ll surely win eventually."

"“Keep drawing until you win!” By now, you might not find anything special, but in fact, this strategy is based on a business theory called “real options.”"

"Recently, everyone knows about SoftBank’s investment in China’s e-commerce Alibaba. SoftBank invested 2 billion yen in Alibaba’s second year of startup. Subsequently, Alibaba grew rapidly. In 2014, Alibaba was successfully listed on the New York Stock Exchange, and as one of the shareholders, SoftBank gained 8 trillion yen in profits. Fourteen years after the investment, the profit expanded by 4000 times."

"For example, in 1995, he invested $2 million in America’s Yahoo! (then 200 million yen). The following year, a joint venture was established with Yahoo! JAPAN. Note that Yahoo! America formally established the company and started its business in March 1995, and SoftBank decided to invest in the company in November of the same year. That is to say, shortly after Yahoo!’s inception, the president saw its value and made a decisive investment decision. As everyone knows, Yahoo! has become one of the world’s largest search engines, and Yahoo! JAPAN has an overwhelming advantage as a portal site in Japan. Today, as the leading shareholder of Yahoo! JAPAN, SoftBank has an off-balance sheet profit of 1.2 trillion yen. The 200 million yen initially invested in Yahoo! is just a tiny fraction of today’s return on profits."