Matthew Partridge: What is your book, The Money Trap, about?
Alok Sama: It’s a memoir of my six-year journey as the president and chief financial officer of SoftBank Group International, working for SoftBank founder Masayoshi Son. Son is an absolutely fascinating character in the world of technology and finance, and the best way to understand Masa is to take his self-description of himself, as “the crazy guy who lives in the future”, at face value. Although he’s been characterised as a compulsive gambler, if you live in the future and you’re making big bets on something that you’ve already seen in your mind, there’s not a lot of uncertainty associated with that.
Matthew Partridge: You quote Son as saying “in the fight between the crazy man and the smart man, the crazy man will always win”. What does he mean by that?
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Alok Sama: Son is a big fan of investing in companies led by true visionaries, and many of them are seen as crazy. In the case of Alibaba, one of his greatest successes, he put in money after meeting Alibaba co-founder Jack Ma, who at the time only had a very rudimentary idea of what he wanted to do, and in fact ended up doing something completely different. Son bet on the man, rather than the idea, which is what he means by the crazy guy always wins.
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Matthew Partridge: Son has had some major successes, but also some major flops, most notably WeWork.
Alok Sama: Son has had some flops, but he is humble enough to admit it when he goes wrong. When it came to WeWork, he was honest enough to say that he blamed himself more than WeWork’s CEO and co-founder, Adam Neumann. And when it comes to investing in technology, he got the big calls spectacularly right: chipmaker ARM has made more than $100 billion in profit for SoftBank; Alibaba, $72 billion.
Matthew Partridge: Do you think there’s anything that the average entrepreneur or investor can learn from Son’s career?
Alok Sama: Son really is one of a kind, and is the sort of person who is easy to admire but impossible to emulate. But people can copy his resilience – the way he has bounced back, first from the collapse of his net worth when the dotcom bubble burst in 2000 and also from his more recent stumbles. But Son also demonstrates the danger of hubris. If you’ve had a great run in the market, then it’s easy to think that you’re invincible. That’s when you really need to be cautious, as your moment of maximum comfort is your moment of maximum vulnerability.
Matthew Partridge: AI boosters like Son think that AI is going to save humanity, while “doomers”, such as Elon Musk, think AI threatens our existence (and therefore needs to be tamed). At the end of the book, you declare that there are still some things computers won’t be able to do. Are you still sceptical about AI?
Alok Sama: My views on this are evolving daily because I play with ChatGPT and other large language models (LLM), and it’s scary how quickly these machines are evolving. For example, I’ve been periodically testing their ability to deal with humour and irony, and over time, the answers have become much more nuanced and much more human-like. AI is great at learning to do things, or even refining them, if they have been done before – and in many cases can do so better than humans. I have never felt safer in a car than I have in a self-driving Waymo.
That said, all these machines work by predicting what pixel or what word or what letter comes next based on analysing what came next before, which is a process that precludes originality. So, I still do not believe a machine is capable of doing something that is completely new.
Matthew Partridge: Do you think that we are close to artificial general intelligence (AGI, or computer self-reasoning), or is that still some way off?
Alok Sama: I’m not even sure that AGI can be properly defined. I think that we’ve already passed the loose definition of the Turing test, which is whether a machine can impersonate a human effectively. But it doesn’t really matter either way, as AI is a massive productivity tool moving at warp speed and changing everything we do, with the exception of manual tasks, like being a plumber.
Matthew Partridge: Are there going to be any losers from AI?
Alok Sama: It certainly will be disruptive and disorientating, and it’s not just call-centre workers that are vulnerable. As recently as five years ago, we used to think computer coding was an essential skill, but LLMs are getting pretty good at coding. But generally, it will make people more efficient. In the early days of the internet, everyone was worrying about whether it would make people redundant, but we adapted, with new jobs and business models. Similarly, I would never bet against human ingenuity, and we will keep reinventing ourselves. We always do.
So, while there will still be doctors and lawyers, lawyers will rely a lot less on paralegals and doctors will rely a lot less on old-fashioned machines. After all, machines can read X-rays better than humans can now. So, everyone will be a whole lot more efficient.
Matthew Partridge: Do you think that the AI companies are overvalued? Is there a bubble?
Alok Sama: It’s important to distinguish between public markets and private markets. The fact that people can raise billions, or tens of billions, from venture capitalists without even a proper business plan, or tangible product, is evidence of excess. However, if you look at Microsoft, Google and Meta, the valuations aren’t silly.
During the internet bubble in 2000, Cisco, which provided the infrastructure and plumbing for the internet, was valued at over 200 times earnings at its peak. By contrast, Nvidia, which had a stronger competitive position than Cisco ever had, is growing faster and is valued much more reasonably. Nvidia’s revenue and profit growth have outpaced its share-price growth.
Matthew Partridge: In the book you note that a lot of Indian entrepreneurs now are actually setting up their own companies in India. Has Silicon Valley lost its competitive advantage?
Alok Sama: When I left India in the 1980s, it was still characterised by socialism and bureaucracy (the “license Raj”), which made it impossible to start a firm. But things have changed dramatically. India also benefits from the fact that you don’t have a lot of pre-existing infrastructure, which can, paradoxically, slow down change. So, rather than being loath to give up malls, people can move directly to e-commerce. Likewise, there isn’t any credit-card penetration. As a result, the move towards using digital payment is quite seamless.
When it comes to cutting-edge technology, whether it’s AI or quantum computing, the action is still in the Valley, to a lesser extent. There’s a lot going on in the UK, with some interesting firms coming out of the Cambridge and London university ecosystems, with DeepMind (which emerged from the latter) eventually being bought out by Google.
Matthew Partridge: While the UK has produced a lot of interesting start-ups, it’s had a problem turning them into much bigger companies. Do you think this matters for the UK, and if so, what should the UK government do to address this problem?
Alok Sama: I think as long as we continue to invest in the educational ecosystem and let nature take its course, you’ll have bright minds coming up with interesting companies, and the capital will come. It doesn’t have to come from the UK – it can come from the US, China or even the Middle East.
Matthew Partridge: The re-election of Donald Trump marks a resurgence in economic nationalism. Do you think that is here to stay?
Alok Sama: America is critical to the global economy and thus impossible to ignore. However, the European and British approach of being pragmatic, realising that they need the US as a big trading partner and as a source of technology and defence, and adjusting accordingly, is the most sensible course. Countries shouldn’t moralise; they must deal with it.
Matthew Partridge: How should investors deal with everything going on, including tariffs and AI?
Alok Sama: There are no shortcuts to investment success. So I think that using index funds and exchange-traded funds (ETFs) is the best way to go, for two reasons. If you’re buying the market, whether it’s the S&P 500 or a global index, it is heavily skewed towards technology anyway, so you’re getting plenty of exposure to that. And every company will benefit from AI. It’s a productivity tool and it means margin expansion across the board. So you will benefit from that even if you’re not directly invested in a tech company. Stick with ETFs and be in it for the long haul.
Alok Sama is the former president and CFO of SoftBank Group International. He is the author of The Money Trap: Grand Fortunes and Lost Illusions Inside the Tech Bubble, now out in paperback. He is available for speaking engagements via Champions Speakers.
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