Ellison’s home was actually more like a village, a cluster of intricately designed wooden houses modeled after a Japanese emperor’s palace. The 23-acre property took almost a decade to design and build, including a lake and waterfall that are controlled by an on-off switch. All the buildings were constructed without nails and had mud-lined walls designed to withstand a 7.3 magnitude earthquake. In total, Ellison’s homage to Japanese culture and history was worth about $70 million.
That day, there was talk around the table about crazy Internet valuations on the stock market. But Masa 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,” says Masa. Both understood that a paradigm shift was coming. Movements in the Nasdaq were one thing; the arrival of the networked world, in which Apple played a leading role as innovator and SoftBank as investor and operator, was something else entirely.
By then, Apple was one of the world’s most valuable companies, with a range of high-end products from Mac laptops to iPods. Like Masa, 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 Masa’s testimony, during a visit to California sometime in the summer of 2005, he showed Jobs his own sketch of a mobile iPod that had a large screen and used Apple’s operating system. He predicted that the new device would be able to process data and images. Jobs liked the idea, but couldn’t resist hinting at the iPhone.
Jobs: “Masa, don’t give me your crappy drawing. I have mine.”
Masa: “Well, I don’t need to give you my dirty piece of paper, but when you have your product, give it to me for Japan.”
Jobs refused to reveal more details, but Masa saw a hint of a smile on the face of the Apple boss. After pressing him further, Masa rejected a follow-up meeting at Jobs’ Tudor-style farmhouse in Palo Alto. At that meeting, Masa claims, Jobs agreed in principle to give SoftBank exclusive rights to distribute the iPhone in Japan. “Well, Masa, you’re crazy,” Jobs said. “We didn’t talk to anyone, but you came to me first. I’ll give it to you.”
Nothing is written down. There was no discussion of price or quantity. Just a gentleman’s agreement, based on the assumption that Masa will have the financial means to build or buy a mobile phone business. “It was super confidential. I never saw the product before it arrived in Japan [in 2008]”, claims Masa. “Steve never told me his name.”
The story has a mythical quality. It is assumed that Jobs gave his word a full three years before Apple launched the iPhone in Japan. Yet it was this promise that may have given Masa the confidence to buy Vodafone Japan, the British-owned company that used football icon David Beckham in its marketing campaign. This was a high-grossing deal—the largest ever in Asia—but Masa gambled that he had a game-changing product in the works. Regardless of the exact chronology, Masa struck the distribution deal of the century, allowing him to build a profitable consumer business in Japan, massively enhancing the SoftBank brand.
On March 17, 2006, Masa entered into a $17 billion deal to purchase Vodafone Japan. Two weeks later, Jobs flew to Tokyo, where Masa challenged the Apple boss to do his part. “You didn’t give me anything in writing, but I bet $17 billion based on your word,” he said. “You’d better feel some responsibility.” Jobs laughed and said, “Masa, you’re a crazy guy. We will do what we talked about.”