The Price of Yokohama Electron

Song Gazuki, the chairman of Softbox Group and Japan’s richest ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠man, possessed an almost animal instinct when it came to investing.

Over the years, he had met countless investors and entrepreneurs. Each had their own philosophy, goals, and style. And yet, to his surprise, the young man sitting before him was strangely difficult to read.

Song Gazuki asked in a calm voice, “Why do you think I’ll sell Yokohama Electron?”

Han Miru explained his reasoning. “Because you need the money. The Insight Fund is currently invested in more than four hundred startups around the world. Only a tiny fraction of them are profitable, and the rest won’t survive unless they secure additional funding.”

The last ten years had been a golden age for startups.

Companies that hadn’t earned a single yen and were drowning in losses were often assigned staggering valuations.

For a long time, the formula for startup ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠success had been simple: endure the losses and seize the market first. What made that possible was massive investment capital.

All it took was a convincing business pitch at a conference, and millions of dollars would pour in.

The Insight Fund had poured enormous sums into companies like that.

Once those companies no longer had to worry about survival, they stopped trying to turn a profit and focused instead on flooding the market with cash to dominate it.

The media had even gone so far as to say, “Companies backed by the Insight Fund have become addicted to spending.”

But the collapse of Workspace and the bankruptcy of Lex had changed the mood across the industry.

Investors had started to coldly reassess whether these companies could ever actually make money later on, and whether they had enough stamina to make it that far.

There were more than a few companies that would go under immediately without fresh capital. In the current market, if the Insight Fund tried to unload those businesses, it would be lucky to recover even ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠half of what it had invested. In the end, if he wanted cash right now, he had no choice but to sell a company that was worth real money.

That company was Yokohama Electron.

Song Gazuki let out a bitter smile. “To be honest, I’ve been investing for decades, and I’ve never faced a crisis like this.”

Last quarter’s losses alone had reached three trillion yen. That was Softbox Group’s loss; the actual losses suffered by the Insight Fund exceeded fifty billion dollars.

But the real problem was what came next. If he failed to cleanly contain this situation, an even greater crisis would be waiting down the road.

Song Gazuki took a sip of tea and said, “I’ve always thought about the future. That’s why I drew up a life plan at the end of my teens.”

Han Miru nodded. “I know.”

The chairman’s fifty-year life plan was famous. He would make a name for himself in his twenties, secure at least one hundred billion yen in war funds in his thirties, take his shot in business in his forties, and build one trillion yen in revenue by his fifties. Then, in his sixties, he would hand the business over to his successor and retire.

“The plan I made became reality exactly as written. There was only one exception.”

“Yes. You failed to retire.”

He smiled faintly. “I had originally planned to announce my surprise retirement on my sixtieth birthday. I’d already prepared a successor for the role. But just before it happened, I canceled the retirement. The reason was simple: I got greedy again.”

“You said that artificial intelligence marked the start of a new paradigm.”

“I defined the key words of the future as ABC: Artificial Intelligence, Big Data, and Cloud. Just thinking about the future they would create was enough to keep me awake with excitement.”

Watching from the sidelines was no longer enough. He wanted to seize that future with his own hands. So he put off retirement and burned even brighter than before.

Before investing in startups, he had formulated an AI-centered strategy. The idea was to place Softbox at the core and build an ecosystem by organically linking together the top companies that would dominate the future.

But in the end, that strategy had failed completely.

The companies he acquired never generated much synergy with Softbox, and he failed to connect them organically as well.

And then another company appeared that executed the exact strategy he had imagined perfectly.

That company was Continue Capital.

It placed Snow Crash at the center and organically linked together its portfolio companies, including Blackwood International, Legend Games, Block Games, Prisoner, and O'Connor Burger.

Snow Crash’s AI and cloud infrastructure fused with each company’s big data and created an immense synergistic effect.

As a result, Blackwood International expanded beyond hotels into high-end home-sharing, while Legend Games and Block Games rose as powerhouses in ESD and cloud gaming.

Prisoner introduced a new CG technology, and O'Connor Burger used all sorts of data to develop new menu items and expand its locations.

Just what, then, was Snow Crash worth now?

If he had gotten his hands on Snow Crash, he wouldn’t have sold it for a trillion dollars.

Snow Crash was the company he had wanted most of all. If he had been able to buy it, he would have sold everything he owned to do it.

And yet…

Continue Capital had acquired it.

By his estimate, the purchase price had been only about twenty billion dollars.

How had they managed to buy so cheaply a company whose founders had said they wouldn’t sell it even for one hundred billion dollars?

Later, when he learned the truth, he slapped his knee and groaned.

Why hadn’t I realized that?

When Snow Crash first began to stand out in the industry, he had gone to Silicon Valley and met Alex Preston and Rolf Buchi in person.

He had studied computer science and even founded a venture company, so he knew programmers better than most.

And yet, during that first meeting, something about Rolf Buchi had felt off.

There was no doubt that the man was a genius. But he had quietly questioned whether Buchi was truly the kind of genius capable of creating Minerva, a world-class AI program.

If he had only dug a little deeper at the time, he might have done exactly what Continue Capital had done: found the family of the program’s actual developer, secured the patent rights, and then acquired Snow Crash. He had missed a once-in-a-lifetime chance.

Was the one who noticed it David Lockhart… or the man sitting right in front of me?

Everyone paid attention only to David Lockhart; few people really knew much about Han Miru. The first time he became aware of Han Miru’s existence was because of the unprecedented incident that had shaken Japan—the escape of Chairman Samara.

He had heard that one of Continue Capital’s co-CEOs had been in Japan at the time, so he looked into Han Miru. And what he discovered surprised him.

While David Lockhart rarely left New York because of his daughter, Han Miru was always on the front lines of investment.

What did that mean?

At that moment, it struck him like lightning.

Could it be that Representative Lockhart is just a kagemusha, and that Han Miru has been directing every investment all along?

During Japan’s Warring States period, the daimyo of each region were constantly under threat, and they lived with the fear that if they died suddenly, their entire power base would collapse.

So they chose a look-alike and had him serve as a double. That was a kagemusha—a shadow warrior.

Then the real daimyo is Han Miru?

Song Gazuki knew instinctively that his guess was right.

If that was true, then the young man before him had accomplished in just a few years what he himself had failed to achieve over decades.

I wasn’t wrong.

AI, Big Data, and Cloud were clearly changing the world.

It was just that the one who had seized that future wasn’t him.

What if Continue Capital had never existed?

Would PIF have brought in investment, and would the Insight Fund have continued to thrive without problems?

No one could know that. But at the very least, it wouldn’t have collapsed this quickly.

“Come to think of it, some of the startups the Insight Fund wanted to invest in were backed first by Rush Fund. ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠And every one of those investments turned out to be a huge success.”

Han Miru put on an expression of mild surprise. “Is that so? I suppose our eyes for good companies must be pretty similar.”

Song Gazuki could tell the words were false.

He had probably sensed the Insight Fund’s strategy and moved one step ahead of it.

“If it’s not too much to ask, I’d like your advice on the Insight Fund.”

“Am I qualified to give advice?”

“Anything you have to say will do.”

Han Miru thought for a moment, then spoke. “Then I’ll say this. You’re familiar with the Battle of Mikatagahara, aren’t you?”

That drew a surprised look from Song Gazuki.

“Of course.”

“Tokugawa Ieyasu, driven by a warrior’s pride, ignored the pleas of his retainers, left his castle to fight, and was defeated by Takeda Shingen, forcing him to flee. There are even stories that he was so terrified he soiled himself on horseback. But he reflected on that defeat, worked to ensure he would never repeat that mistake, and eventually seized the entire country.”

“You really know your Japanese history.”

Han Miru smiled. “I studied a little before coming. Your judgment wasn’t wrong. But if you chase only a grand vision in a straight line, the risk of total annihilation is enormous.”

It felt as if someone had snapped a light on in his mind.

The observation was so accurate it was as though Han Miru had looked straight into his heart.

“Annihilation? Are you saying the Insight Fund could be annihilated?”

“Yes. The Insight Fund currently has around four hundred companies in its portfolio. If you try to save all of them, you won’t be able to avoid annihilation. You need to separate, with absolute cold-bloodedness, the companies that can be saved from the ones that can’t.”

“……”

It was painful to hear, but it was the truth.

Song Gazuki nodded. “All right. Let’s talk about Yokohama Electron. If we were to buy it, what kind of price are you thinking?”

The key to acquiring a company was always the price.

The seller wanted to sell for the highest possible price, and the buyer wanted to buy for the lowest possible price. A transaction was simply the point at which those two sides met in the middle.

“At around the current share price, wouldn’t that be appropriate?”

“What about the control premium?”

“Yokohama Electron is bound by all sorts of regulations. Even if you acquire it, you can’t access the technology, and you can’t intervene in management. You can’t even change the CEO, and replacing a single board member would be difficult. If you can’t exercise control, does a control premium really mean anything?”

“Then why are you trying to acquire it?”

“Because I think it will make money.”

“If you formally announce a sale, there will be plenty of firms interested in buying Yokohama Electron, even if Continue Capital isn’t one of them.”

“But there won’t be many that can actually buy it.”

The world’s third-largest semiconductor equipment company was not something you could buy just because you wanted to, and it was not something you could easily sell just because you wanted to.

First, you had to get Japan’s approval. Then you had to pass approval from the other relevant countries as well.

“And if you sold on the open market, the share price would fall, so you’d have a hard time getting fair value for it.”

Price was determined by supply and demand.

The more buyers there were, the higher the asking price would rise. But as Han Miru had said, the number of places that could buy Yokohama Electron was limited.

“We intend to secure a majority stake. To do that, we’ll not only acquire the Insight Fund’s holdings, but also buy shares in the market.”

◇◇◇◆◇◇◇

I left Softbox headquarters and got into the car.

Then I called David right away.