Nine-Filter Gauntlet Before Any Business

“Based on this idea, Son continued to explore what business to pursue for a year and a half. Every time he came up with an idea and developed a business plan, he applied “Nine Conditions” to filter it. The “Nine Conditions” were as follows: [Condition One] Once a business is undertaken, it cannot be stopped halfway. Therefore, it must be a sustainable business. [Condition Two] Naturally, it must be a profitable business. [Condition Three] It must be a growing industrial sector. The industry structure itself must not be in a recession or decline. [Condition Four] It must be a business that can become the core of a future corporate group. [Condition Five] It must be a business that cannot easily be imitated by others. [Condition Six] It must be a business that doesn’t require large capital investment. [Condition Seven] It must be a business that is useful to society and contributes to societal development. [Condition Eight] It must be a business that one can engage in interestingly. [Condition Nine] If you undertake it, you must absolutely become the number one company in that field. If you can’t become number one, don’t even start.”

““Since it rained today, there were few customers.” “Since the weather will likely be good tomorrow, I’m sure things will go well.” This is what was said. Having heard such words from his father since childhood, Masayoshi Son keenly felt, “It’s not good management to be swayed by whether it’s sunny or rainy in a single day. I won’t run businesses that are influenced by external conditions like the weather.” However, the technological innovation of the digital information industry, in other words, changes in external conditions, is rapid. Trends come and go quickly, and even if a hit product is explosively successful, its lifespan is extremely short. But Masayoshi Son was firmly determined not to get deeply involved in being constantly chased by the development of such new products. Therefore, Masayoshi Son reached the conclusion, “I won’t rely on a single product with large hits or misses. I want to create a company that provides infrastructure with less fluctuation in trends.” Infrastructure, as defined by the word, is the social and industrial foundation, and is more of a base. If likened to the transportation network of traditional industrial society, it corresponds to general roads and highways. On highways, the installer collects fees from drivers at toll booths. Masayoshi Son must have thought, “By providing infrastructure, let’s become the toll booth of the digital information industry.” That way, hit products of the moment would have to rely on the infrastructure held by SoftBank, and SoftBank itself could stably grow. ◆ Narrowing new businesses through “Nine Conditions” Based on this idea, Son continued to explore what business to pursue for a year and a half. Every time he came up with an idea and developed a business plan, he applied “Nine Conditions” to filter it. The “Nine Conditions” were as follows: [Condition One] Once a business is undertaken, it cannot be stopped halfway. Therefore, it must be a sustainable business. [Condition Two] Naturally, it must be a profitable business. [Condition Three] It must be a growing industrial sector. The industry structure itself must not be in a recession or decline. [Condition Four] It must be a business that can become the core of a future corporate group. [Condition Five] It must be a business that cannot easily be imitated by others. [Condition Six] It must be a business that doesn’t require large capital investment. [Condition Seven] It must be a business that is useful to society and contributes to societal development. [Condition Eight] It must be a business that one can engage in interestingly. [Condition Nine] If you undertake it, you must absolutely become the number one company in that field. If you can’t become number one, don’t even start. After thoroughly investigating, they focused on the wholesale of packaged software for personal computers. This was the only business that met all the conditions. Masayoshi Son finally saw light at the end of the tunnel that seemed to have no exit. Since returning home, Masayoshi Son continued to employ two part-time employees hired during the market research period and launched the business. This was effectively the founding of “Japan SoftBank” (now SoftBank) as a wholesaler of packaged software for personal computers. It was a start that was unimaginably humble compared to today’s “world SoftBank,” with just two desks. ◆ Establishing “Japan SoftBank” In September of 1981, Masayoshi Son established “Japan SoftBank” (with a capital of 10 million yen) and started the wholesale business of packaged software for personal computers. Among the people he met at a seminar in Fukuoka, there was someone who had created “Management Comprehensive Research Institute Co., Ltd.” on a corner of Japan TV Street in Ichigaya, Tokyo. Masayoshi Son invested 50% with this company to establish a new company. The headquarters was just renting a room at the Management Comprehensive Research Institute with two desks. Masayoshi Son was appointed as the representative director.”

“START WITH TRIP REPORTS For more than a decade, Eric held his weekly staff meetings on Mondays at 1 p.m. In many ways, these meetings were pretty much like any other staff meeting you might have been to. There was an agenda, check-ins with everyone around the table, people surreptitiously checking email and texts . . . all the usual stuff. Eric did one thing different from the norm, though: when everyone had come into the room and gotten settled, he’d start by asking what people did for the weekend, or, if they had just come back from a trip, he’d ask for an informal trip report. This was a staff that included Larry Page and Sergey Brin, so often the weekend report included kiteboarding tales or updates from the world of extreme fitness, but it also could skew toward the more mundane: Jonathan’s daughter’s latest soccer achievements, or engineering lead Alan Eustace’s score on the golf course.* Sometimes, if he had just returned from a business trip, Eric offered his own report, putting a Google map on the screen with pins dropped on the cities where he’d visited. He’d go city by city, talking about his trip and the interesting things he’d observed. While this conversation seemed impromptu and informal at first glance, it was a part of a communications approach that Bill had developed over the years and improved in collaboration with Eric. The objectives were twofold. First, for team members to get to know each other as people, with families and interesting lives outside of work. And second, to get everyone involved in the meeting from the outset in a fun way, as Googlers and human beings, and not just as experts and owners of their particular roles. Bill and Eric understood that there’s a direct correlation between fun work environments and higher performance, with conversation about family and fun (what academics might call “socioemotional communication”) being an easy way to achieve the former. Later in the meeting, when business decisions were being discussed, Eric wanted everyone to weigh in, regardless of whether the issue touched on their functional area or not. The simple communications practice—getting people to share stories, to be personal with each other—was in fact a tactic to ensure better decision making and camaraderie. “At first I thought it was really weird,” Dick Costolo says of the trip report practice, which he also learned from Bill. “But when I started doing it and seeing it in practice, wow, it really makes a difference. The whole dynamic of the meeting changes, you get more empathy, a better mood.” Dick tells the story of how he attended the staff meeting of a CEO he was mentoring, and the meeting started with hot topics and issues—no social talk whatsoever. “It really hit me in the face how jarring that was. I couldn’t tell how well the team worked together and connected.””

“START WITH TRIP REPORTS TO BUILD RAPPORT AND BETTER RELATIONSHIPS AMONG TEAM MEMBERS, START TEAM MEETINGS WITH TRIP REPORTS, OR OTHER TYPES OF MORE PERSONAL, NON-BUSINESS TOPICS.”