Can Nikesh Arora Make Softbank the Berkshire Hathaway of Tech?

He came in as vice president of Google’s European operations in 2004, with big plans to expand that division from $800 million in revenue to $4 billion in five years. Meeting that target would mean demanding accountability from Google Europe’s relaxed, collegial salespeople. They had been riding a rocket ship of growth but had no idea how much revenue they could expect to make each month, week, or day. Arora insisted on predictable, measurable results from his team, which he says “traumatized” them at first. He also talked co-founder Page into relaxing his famously centralized hiring protocol so Arora could staff up more quickly. Eric Schmidt, then Google’s CEO, says Arora’s moves signaled the start of a “federating” of Google as it transitioned from a U.S.-centric search engine into a global powerhouse. Google Europe hit $8 billion in revenue in five years, doubling Arora’s initial projection and increasing its share of Google’s overall revenue from 25% to nearly 50%.

Arora also created analytics tools that spat out daily reports on the health of the European business, something the rest of the company eventually adopted. The tools helped Arora spot the 2008 financial crisis early, alerting the mother ship that something was amiss and enabling Google to adjust spending ahead of a slow quarter. That was invaluable, Schmidt says: “After that I decided anything Nikesh wanted to do, I wanted to do as well.”

Among the things Nikesh wanted, and got: He advocated killing Google’s practice of giving commissions to agencies that worked with advertisers, a hardball move that prompted Martin Sorrell, the powerful head of advertising agency WPP, to label Google a “frenemy.” (Arora says, “I will not pay you to bring me my existing customers,” adding, “We never looked back.”) He staged a Las Vegas retreat for 15,000 salespeople—uncharacteristically flashy for Google—where he donned an Elvis costume for his speech. He warned employees that he would personally bail out anyone who got arrested; nobody liked the idea of a jailhouse visit from Arora, so none was required. Arora hadn’t become Googley, colleagues say, but Google had become more like him.

In 2010, Arora relocated to Mountain View, Calif., to become chief business officer, responsible for Google’s entire $29 billion in revenue. His pay package, higher than that of the founders, became as legendary as his temperament. Employees and outsiders regarded him with a mixture of awe and fear, describing him as ruthless, brash, and sharp. (Arora admits he may have been “insensitive” and “less patient” back then.) When I ask Andy Rubin, founder of mobile operating system Android, whether Arora was intimidating, he quips, “You mean the guy that’s in charge of all the money coming into the company? You have to kinda listen to what he says.”

Minutes into our first meeting, Arora tells me how my story will go. “You’ll learn a lot of stuff, you’ll decide to write some of it and decide not to write some of it,” he says. “I have some enemies, as you will discover. I don’t suffer fools. In fact, I’ll be surprised if you don’t find any.” Enemies were found, but those who talked with Fortune all insisted I include the fact that Arora worked to win their respect. Take Michael Kassan, a prominent media consultant who worked on an antitrust campaign against Google in 2009. “When you’re really good at something, you earn the right to be a bit of a peacock,” Kassan says of Arora. “He could be a peacock.” Still, he adds, “Nikesh and I started out as adversaries, and we became friends.”

Google prides itself on encouraging differences of opinion—and in hindsight, as Arora admits, his opinion wasn’t always right. Management didn’t listen when Arora argued against buying Android, which now powers over 80% of the world’s smartphones. After the deal, Arora emailed Schmidt, saying, “What’s the point of asking my opinion if it’s not going to matter?” Arora pitched management on acquiring Netflix in 2009, when it was worth less than $3 billion (today it’s at $50 billion), but he also led Google’s failed bid to buy Groupon for $5.75 billion in 2010—a bullet dodged. Still, Arora’s successes far outweighed his misfires. Schmidt gushes that Arora is “the finest analytical businessman I’ve ever worked with.”

Arora had chances to leave during his decade at Google. Yahoo and Skype discussed CEO roles with him, but when he looked at those assets, he says, he didn’t see how he could fix them: “My view is if you take something, you gotta make sure you can succeed in it.” But he did meet the person who would eventually lure him away. While pursuing a search deal between Google and Yahoo Japan, he got to know that company’s chairman—Masayoshi Son of SoftBank.

Arora’s 2014 wedding, billed by Indian gossip pages as “the Indo-U.S. business wedding of the century,” wasn’t just packed with celebrities. All of Google’s top brass flew to the Italian coast for it, including Page, Schmidt, and Brin. Two weeks later, the out-of-nowhere news broke: Arora was leaving Google for SoftBank. The only people in the tech community who didn’t seem surprised were Son and Arora. As Arora tells entrepreneurs today, “Anytime you can predict your trajectory, you should change it.”

At the height of the dotcom bubble, Masayoshi Son had grown so rich on his tech investments that figuring out where to donate his billions had become a headache. By February 2000, SoftBank, the software company he founded in 1981, was worth $160 billion, more than Toyota. For three days, Son was richer than Bill Gates. But then, as he likes to tell it, “God gave him a solution” to the money conundrum—SoftBank’s shares dropped 99% as the dotcom bubble burst.

That wild stretch exemplifies the dizzying highs and dramatic lows that make SoftBank fascinating to watch—and a gut-wrenching ride for its investors. In 2006, SoftBank took on $10.3 billion in debt to acquire the ailing Japanese arm of Vodaphone, subsequently turning it into Japan’s most profitable mobile carrier. And in one of history’s most successful venture investments, Son wrote a $20 million check to a tiny Chinese e-commerce startup called Alibaba in 2000. The stake is worth $61 billion today. On the other side of the ledger there’s Son’s $22 billion deal to acquire Sprint in 2012. The idea was to merge the U.S. telecom with T-Mobile, but that fell through, and SoftBank has been stuck holding the money-losing, fourth-place mobile carrier ever since. Investors have punished the company for it, with SoftBank shares down more than 25% since their late-2013 peak.

Eric Schmidt, executive chairman of Google (R), holds up his book with Nikesh Arora, Google chief business officer, at the annual Allen and Co. conference in Sun Valley, Idaho Photograph by Rick Wilking — Reuters

In the eyes of critics and fans alike, SoftBank is essentially a collection of Son’s bold bets and high-stakes gambles, ranging from Sprint, Alibaba, and Yahoo Japan to Supercell, a successful Finnish gaming startup, along with a portfolio of more than a dozen other subsidiaries. For many people who know the company, Son is the company. SoftBank has always been “just Masa,” says Sunil Mittal, CEO of Bharti Airtel, India’s largest telecom conglomerate, and a former SoftBank board member. “It’s Masa, Masa, Masa … That man has superhuman being in him.”

Son, 58, says he plans to retire sometime in his sixties, and he thinks Arora is the guy who can duplicate his magic. Arora’s initial mandate at SoftBank was to invest in Internet and media companies, but after just nine months Son promoted him to president and named him the likely successor. Now the two of them discuss SoftBank’s strategy almost every day. Arora became a “representative director,” a Japanese designation that means he can represent the company in transactions, which Arora says “sent a signal internally that I was not just some foreigner who was going to run the international business.” Son views the CEO transition as a gradual hand off. “He’s already acting as my counterpart and my partner,” Son says. “Even after he becomes the CEO, I also have to support him in many, many ways.”

In a sign of solidarity, Arora in August bought $483 million worth of SoftBank stock, alongside the company’s $1 billion share buyback. It was a headline-grabbing move, but it’s Arora’s least favorite topic to be asked about. “It puts the focus on the wrong thing,” he says. Publicly, Arora has called the purchase both a bet on his company and a way to maintain his own appetite for risk, since it required taking on personal debt. Talking with Fortune, he explains it’s not actually that much of a risk, since he owns his house and cars and has enough money to send his kids to college. Worst-case scenario, SoftBank falls 50%, and he loses half of his principal. He can earn that back with his salary over the next few years.

SoftBank and Arora are buying shares at a time when the company is undervalued by many measures. The company’s holdings in publicly traded Sprint, Yahoo Japan, and Alibaba are worth $84 billion—or $22 billion more than SoftBank’s own $62 billion market cap. Even if you assign a 20% discount to those assets (typical for holding companies, given the taxes involved in selling the assets) and take into account SoftBank’s hulking debt, it appears investors are assigning no value to its $38 billion telecom businesses, its controlling stake in the wildly profitable Supercell, or its booming portfolio of startup investments. (And don’t forget baseball’s SoftBank Hawks!) Jefferies analyst Atul Goyal has called SoftBank’s stock “grossly mispriced.” In August, a CLSA analyst declared, “The shares are just too cheap.” Of course, SoftBank’s debt makes many investors think it’s cheap for a reason: It’s carrying $96 billion, a legacy of all those acquisitions, and SoftBank’s debt-to-equity ratio, at over 100, is staggeringly high. That didn’t stop Son from exploring a $67 billion management buyout of SoftBank over the summer, according to reports; it would have been the largest buyout in history and, of course, inflated the debt load.

Arora suspects SoftBank’s stock is undervalued because of the struggles at Sprint, coupled with concerns about Alibaba and slowing growth in China. His big-picture job is to smooth out SoftBank’s performance while adding more transparency to its financial reports. He’s injecting more rigor into the company’s investment strategy, and cleaning up the portfolio with some divestitures. There are cosmetic fixes too, like adding the word “Group” to the company’s name in July to signify the new portfolio-of-tech-winners approach. If the transition is successful, investors will see SoftBank Group as a way to access the best high-growth tech companies around the world. Silicon Valley VCs like to boast that a basket of investments in startup “unicorns” (private companies worth $1 billion or more) will outperform the S&P 500, even if some of them fail. SoftBank has actually created a global basket of unicorns—the company holds sizable stakes in six of them.

Right now, adding to that basket dominates Arora’s calendar. As chief deal doer, he lives in a jet, popping around the globe from SoftBank’s U.S. home base in San Carlos, Calif., hunting for new investments and checking on existing ones. (On the eight-day trip to India that I joined, Arora made five stops, darting from Delhi to Bengaluru, back to Delhi, to Mumbai, and to Varanasi for a college commencement speech.) Arora shut down SoftBank’s early-stage venture fund because he doesn’t want to compete with Silicon Valley VCs. Rather, he wants to invest in VCs’ success stories after they break out. So he’s writing big checks—all the way up to $1 billion each for Korean e-commerce site Coupang and U.S. lending startup Social Finance. There are also the “Ubers of” Southeast Asia, China, and India, in which SoftBank has invested a respective $350 million, $600 million, and $400 million. (For context: The average late-stage deal in North America in 2015 was around $50 million.)

Arora has assembled a team of 15 to hunt for deals and advise portfolio companies, including former LinkedIn executive Deep Nishar, Baer Capital Partners founder Alok Sama, venture investor Marissa Campise, and ex-Google execs David Thevenon, Jonathan Bollock, and Liane Hornsey. Like Arora, Nishar and Sama were born in India, where SoftBank has been especially active and where the startup scene over the past year has turned white-hot.

There is a thick wooden door between Nikesh Arora and a sweaty mess of entrepreneurs and journalists. Arora has just delivered a keynote speech at Delhi’s TiECon entrepreneurship conference, peppered with Hindi jokes and advice that listeners should buck cultural pressure to “settle down”—his version of Steve Jobs’ “Stay hungry, stay foolish.” A trail of eager audience members has followed him across the Taj Palace Hotel like a Pied Piper of venture capital, only to find this door blocking their way.

Behind it, a select group of 20 entrepreneurs each get to pose one question to Arora. I push my way in in time to hear Vani Kola, the venture capitalist who organized the meeting, tell the founders how lucky they are to spend time with Arora. There are selfies inside too. Arora furrows his brow at one fan’s clunky Nexus 4. “Get a new phone,” he says. “You’re a startup founder. You need to know the latest.”

Around the time Arora joined SoftBank, Masayoshi Son decided that India was the next big growth opportunity, and Son tackled investing in the region in his usual swashbuckling style. He approached Kunal Bahl, founder of fast-growing e-commerce startup Snapdeal, with an unheard-of offer to invest $1 billion for a majority stake. “Don’t worry about your board,” he told Bahl. “Just take the money.” The board, unwilling to give up so many shares, turned him down.

SoftBank Chairman & CEO Masayoshi Son and group President & COO Nikesh Arora attend the company’s special lecture in Tokyo, Japan on October 22, 2015.Photograph by Shingo Ito — AFLO

Arora had to explain to Son that business doesn’t work like that in India, where it’s important to develop a sense of trust and personal partnership with investors. Then Arora spent three weeks convincing Snapdeal to let SoftBank invest. The board agreed, on a smaller scale—$620 million for just over 30%. Bahl says Arora was “absolutely critical” in sealing the deal: “He was able to make [the investment] real and highly substantiated, and give comfort to our existing shareholders.”

Arora and Son returned to India a few months later for a whirlwind, coffee-fueled series of meetings with 43 entrepreneurs over two days. They picked two more companies to back: real estate site Housing.com and Ola Cabs, the Uber of India. Later they gave $90 million to the 22-year-old founder of Oyo Rooms, a budget hotel startup. Now SoftBank, previously little-known in India, gets named in the same breath as DST and Tiger Global, the two most active late-stage dealmakers there. “You can write a check, and we can tolerate you,” says Kola, a Snapdeal board member through her firm, Kalaari Capital. “But goodwill is something that has to come from the heart, and that is something [Arora] has done.”

As he navigates India, Arora seems delighted to be back, donning a Nehru jacket while other male executives wear Western-style sport coats. On the trip that Fortune joined, he left an event’s dinner early after seeing the menu. “They’re not even serving Indian food!” he explained in near disbelief. “When I come to India, I want to eat Indian food.”

At SoftBank’s portfolio companies, Arora says, he’s instilling long-term, Masayoshi Son–style thinking. He asks young executives to plan for a 10-year horizon, while teaching what he learned about scaling a web business at Google. Arora has personally interviewed CFO candidates for three portfolio companies, and his partner Nishar has helped recruit top execs for several others.

Arora is also forging connections within SoftBank’s portfolio. He introduced Snapdeal’s Bahl to Alibaba founder Jack Ma, which led to Alibaba investing in Snapdeal. Now the two companies share insights—Alibaba execs advised Snapdeal to build more technology for their sellers, for example. Likewise, Didi Kuaidi, the Uber of China in which SoftBank and Alibaba are both large shareholders, recently invested in Ola Cabs. Arora is at the center of this web, and portfolio company CEOs are effusive in their admiration. “He’s more like a friend than an investor,” says Bhavish Aggarwal, CEO of Ola.

When Arora meets with founders, he knows what he wants to discuss, and it’s probably not on the CEOs’ Power-Point deck. “You get two slides in, and he’s off on another thing,” says Kunal Shah, who sold his payments company, FreeCharge, to Snapdeal in April. Arora says that’s a test: Any founder who insists on walking you through every one of his slides isn’t adaptable enough to change course at a startup. He doesn’t get into granular tactical advice, like how much to spend on advertising, but if he did, he’d probably tell founders to cool it. During the October trip, his warnings about out-of-control spending made headlines in India’s biggest newspapers—though not on the front pages, because those were covered by massive Snapdeal ads.

There are limits on how much SoftBank will pay in its deal frenzy—in the U.S. or abroad. Arora passed on joining a funding round that valued Snapchat, the hot messaging app based in Los Angeles, at $16 billion. To double SoftBank’s money—a weak return in venture capital—Snapchat would have to go public at $32 billion, and Arora is skeptical that Snapchat, which expects $100 million in revenue in 2015, could justify that price.

Yet even without investing, Arora has given Snapchat a boost. When CEO Evan Spiegel was preparing to meet potential advertisers for the first time, he went to Arora’s house to show him a presentation he had made on loose-leaf notebook paper. Arora flipped through the pages, turned the notebook over, grabbed a Sharpie, and drew up a plan for what Spiegel should actually do, from simple things like asking to use early ads in case studies to big-picture sales tactics. “I probably came off like a 12-year-old,” Spiegel says. “He’s been really honest and direct with me … about the reality of building an ads business.”

The drive to teach and shape entrepreneurs energizes Arora, and it comes with a heavy sense of responsibility. Yes, the potential returns on SoftBank’s investments are huge, but it’s important to Arora to believe that they’re also the right strategy. Doing something for the wrong reasons, he says, goes against how he was raised. When he was young, his father, a judge advocate general in the army, was transferred to a faraway city for three years because he took a stand against a higher-up at work. That lesson on sticking to one’s principles is “somehow subconsciously deeply ingrained in me,” he says. His father now suffers from ALS; during this visit to India, he’s in the hospital, and Arora’s voice briefly wavers as he talks at a small dinner gathering about his father’s strong will. It’s the only time in a week’s worth of public appearances that a crack shows in Arora’s larger-than-life public persona.

But such moments of vulnerability are brief, especially since the public is always waiting. After an awards event in Bengaluru, Arora finds himself pulled in front of a videocamera with a giant boom mic and blinding light. A crowd of reporters, entrepreneurs, and hangers-on assembles until there are several rows of people waiting to meet him, ask him a question, push a business card into his hand. As he walks toward his next engagement, three photographers with loud paparazzi shutters surround him with clackclackclackclacks. Arora is talking with Kola, the Snapdeal board member. They are trying to find a time to meet; they settle on the car ride between Arora’s speaking engagements the next evening. His entourage takes a few steps and then must stop and wait, because more reporters and entrepreneurs and hangers-on have approached Arora, writing down what he says, handing him business cards. He is the center of attention. This must be home.

This story has been extended from its original online version.

For more features from Fortune’s Investor’s Guide, click here; for more online Investor’s Guide coverage, click here.

A version of this article appears in the December 15, 2015 issue of Fortune with the headline “The Tech Empire Builder.”

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