Nikesh Arora: Ex-Google Executive takes SoftBank into Global Markets with Investment in Asian and Indian Tech
Nikesh Arora, newly named COO and President of SoftBank Corp, is taking the Japanese telecoms and technology giant into global markets with investment in Asian and Indian tech.
Nikesh Arora paid $135 million by SoftBank making him one of the world’s highest paid executives
Nikesh Arora, who in 2014 left a position as one of Google’s top ranking executives to take the position of Vice Chairman at telecoms and technology giant SoftBank Corp and CEO of its newly formed Internet and Media division, made the headlines earlier this year when it was announced he had been paid $135 million for the year ending March 2015. The record setting figure easily topped Japan’s previous executive compensation record of $8.3 million (paid to Nissan’s Carlos Ghosn). It also made Arora one of the world’s highest paid executives.
At the same time, SoftBank announced Arora’s promotion to President and COO and named him as legendary SoftBank founder Masayoshi Son’s potential successor. Describing him as a peer to Bill Gates, Steve Jobs, and Jack Ma, Son said: “He’s 10 years younger than me, and he has more abilities than me.” “The last nine months I’ve spent with him have made me sure of that”. While Son has no plans to retire yet, it seems clear that he is betting on Arora to push his company ahead.
A decade at Google
The self-proclaimed “restless” Indian-born Arora – graduate of the Institute of Technology, Varanasi – moved to America aged 22 with $100, two suitcases, and a pair of white socks (something he remembers vividly). He studied a Master in Finance at Boston College and an MBA at Northeastern University, then started his career at Fidelity Investments, where he held a variety of management positions in finance and technology, ultimately serving as Vice President of Finance.
“Restless” again, Arora next moved to Germany (unable to speak a word of the language) to join Deutsche Telekom. In the years following he founded T-Motion PLC (mobile multimedia subsidiary of T-Mobile), and ascended to CMO of T-Mobile Europe.
In 2004, Arora changed tack. Leaving telecoms, he joined Google where, over a decade, he climbed the ladder to top management, finally serving as Senior Vice President and Chief Business Officer, responsible for partnerships, marketing, global sales, business development, and customer activities. He is also credited with profitably expanding Google’s ad markets.
During this time, Arora showed good investment instincts, proposing several moves that would have proved lucrative for Google: he advocated the acquisition of LoveFilm which was later acquired by Amazon, and suggested the acquisition of Netflix which at the time had a market cap of roughly $3 billion compared to its current $25.5 billion.
Reportedly hard-working, hard-driving, bright, and extremely accomplished, he also has a reputation for being abrupt or pushy: he says he just wants to get things done.
Growing SoftBank in global markets
He was poached by Son in 2014 to implement and manage SoftBank’s growth into global markets.
Since Son founded the company in 1981, when he bought Vodafone Japan, SoftBank has grown in dominance, much in thanks to early bets on Alibaba in 1999 (now a $73 billion stake) and Yahoo Japan (a 40% stake now worth around $8-$10 billion), and exclusivity on the iPhone in Japan. But while SoftBank is Japan’s third-largest wireless operator with a market value of about $82 billion, significant investment is needed to compete with the rest of the world.
Betting big in Asia and India
To accomplish this, Arora’s growth strategy is focused on acquiring large minority stakes in privately-held established businesses and supporting them to sale or IPO. Rather than compete with VCs investing millions in early-stage companies, Arora is investing $100 million plus.
He comments: “We believe that it’s less crowded in the large-check marketplace”. “It is bigger bets in businesses where we believe they are beginning to exhibit trajectory, potential to break out and become a leader in their space.”
Arora is particularly interested in the significant growth regions of Asia and India, where he sees room for local companies (equipped to tackle local problems such as language, culture, and environment) to dominate where Silicon Valley’s Googles, Facebooks, or Twitters have failed. SoftBank plans to invest $10 billion in India alone.
Investments so far include $1 billion in Korean etailer Coupang, $250 million in a Southeast Asian Uber, GrabTaxi, and $90 million in Indian property site Housing.com, along with leading a $627 million investment round in Indian online marketplace Snapdeal and a $210 million investment round in Ola, an Indian Uber.
A personal bet on SoftBank’s future
Arora is also faced with the challenge of making Son’s 2013 $22 billion acquisition of wireless network Sprint profitable. In the third quarter of fiscal year 2015, SoftBank wrote down $2.1 billion of the investment. This – combined with slowing growth potential in China (affecting Alibaba stocks), and Japanese Prime Minister Shinzo Abe’s comments about the nation’s mobile phone rates being too high – has seen SoftBank lose $16 billion in market value (September 2015).
But declaring his confidence in SoftBank and his strategy, Arora has announced plans to buy a huge 60 billion yen ($483 million) worth of the company’s shares.
“This is a large transaction for me, and involves taking an enormous risk in my life once again”. “However, I am extremely confident about the future of the SoftBank group and the long-term objectives that we have set out.”