Report No.6
*****************************************************
Japan Entrepreneur Report No. 6 April 2003
*****************************************************
- Three kinds of companies
- Solving mobile marketing problems with BeTrend
- Japan venture capital group to tour U.S.
- Entrepreneur Association of Tokyo to hold first event
- Bits and bytes
*****************************************************
Three kinds of companies
Last month the Venture Capital Club here in Tokyo invited me to
give a talk along the lines of "a U.S. perspective on Japan's
entrepreneurial environment." Since I was to give the talk in
Japanese, I decided to focus on two points informed by personal
experience: 1) the difference between U.S. and Japanese attitudes
towards corporate acquisitions, and 2) expressing one's personal
values in the form of a business.
In Japan, the typical attitude toward someone who sells his
company seems to be like that toward a father who sells off family
heirlooms to pay gambling debts: pity on a failure deserving to
be dogged by shame for the rest of his days. In large part, that's
because well-publicized acquisitions in Japan are, in fact, often
the outcome of failure rather than success.
But this attitude also arises, I believe, from a limited view of
the nature of corporations here in Japan. Years ago, Jim Collins,
who wrote the business best-seller Built to Last, showed that
there are at least three distinct categories of companies that
differ in fundamental ways.
First are the "Built to Last" companies, such as Sony, Intel and
Toyota (in my talk I called these "Class One" corporations).
These firms outlive the founders to last a very long time, have
significant social missions/roles and commensurately serious
social responsibilities, and of course boast highly scalable
business models.
A second category comprises "corporations as disposable
injection devices," as described by Collins (for my talk I called
these "Class Two" firms). Class Two firms have scalable business
models and may well outlive the founders, but their lifespans are
limited. They are often created for the purpose of
commercializing a single product or service. Hotmail, for
example, could not last indefinitely offering one free service.
It made much more sense for Hotmail's offer to be incorporated
into a larger set of Internet services, namely those provided by
Microsoft. For a Class Two company, acquisition by a larger
entity is often a natural and desirable consequence of success.
A third category Collins calls "company as platform for a genius"
(in my talk I referred to these as "Class Three" firms). Under
this model, the company is essentially a group who supports the
genius or charisma of one outstanding individual. Without that
individual, the business is unlikely to survive. Many sole
proprietorships, smaller consultancies, and service firms fall
under this category.
In my talk, I laid all of this out in order to make three points.
First of all, most of us are simply unable to build Class One
corporations, no matter how hard we try. We just aren't in the
same class as Akio Morita or Gordon Moore or Shoichiro Honda.
Therefore we need to be honest with ourselves when getting ready
to start a company. We have to understand the type of corporation
we are truly capable of building, and make our plans accordingly.
And our investors, if any, need to understand and agree with our
decisions.
Second, there's absolutely nothing wrong with building a Class
Two or Class Three corporation. These companies make enormous
economic and social contributions. Let's face it: Class Two and
Class Three corporations make the world go 'round. In Japan, for
example, 99 percent of all corporate entities are "small
companies" with fewer than 300 employees or less than 300 million
yen in paid-in capital. These firms employ 80 percent of the
entire workforce. Yet most are Class Two or Class Three
corporations.
Finally, if the life of a Class Two or Class Three corporation
is limited, and acquisition is one consequence of success, the
attitude toward buyouts in Japan needs some serious rethinking.
Acquisition by another entity can be a natural and desirable part
of the entrepreneurial lifecycle. Think of an acquired company
not as a firm whose life has ended, but as one that is undertaking
a new phase of growth in a continuing cycle of entrepreneurial
life.
The second point of my talk, about expressing one's personal
values in the form of a business, was covered in detail in the
February issue of JER (www.japanentrepreneur.com/200302.html),
so I'll hold off on repeating myself here.
I'm happy to say the talk went well, and I'd like to believe that's
because the thinking was somewhat fresh to the audience, not
merely because the listeners were dumbfounded to hear a 190
centimeter tall, dirty-blonde foreigner speaking reasonably
coherently about business in Japanese. Most people here are no
longer stupefied that foreigners can adequately speak their
language. Now, if they could start thinking more flexibly about
the relationship between entrepreneurship and acquisitions...
*****************************************************
Solving mobile marketing problems with BeTrend
Many believe the phenomenal growth of Internet-enabled cellular
telephone usage in Japan has created a new mobile marketing
services sector of enormous size. In fact, the business of
"mobile marketing" per se is worth only about five billion yen
annually, or approximately U.S. $42 million, say industry
insiders. That's only three percent of the size of the yearly
fee-for-service content market, which is worth some 150 billion
yen, or approximately U.S. $1.25 billion, according to the same
sources. Why?
The reasons are twofold and related. First, until recently e-mail
was the only practical form of getting marketing and advertising
messages to mobile phone users. But the volume of spam that floods
mobile networks each day is now overwhelming. Spam reportedly
accounts for an astonishing 80 percent of all mail transmitted
daily via NTT DoCoMo's i-mode service. On heavy days, that's 800
million spam e-mail messages.
Second, consumers are completely fed up with spam. They complain,
with good reason, that they pay packet fees to receive unwanted,
unneeded e-mail messages that annoy them during the day and wake
them up at night. This has forced carriers to adopt anti-spam
filtering measures that carry the unfortunate side effect of
eliminating as much as 20 percent of legitimate bulk e-mail
transmissions. This is effectively ruining the business of
legitimate e-mail advertising and keeping the fledgling mobile
marketing sector from growing to its full potential.
BeTrend (www.betrend.co.jp) is a Tokyo startup dedicated to
saving -- and growing -- the mobile marketing services segment.
BeTrend developed "BeatCast," a Java-powered marketing platform
that neatly solves e-mail marketing problems and effectively
satisfies the needs of consumers, carriers and advertisers alike.
Following a recent interview, BeTrend President Hideaki Inoue
explained that BeatCast, which is offered on an ASP basis, allows
all sorts of content (text, graphics, images, audio) to be push-
and pull-delivered to a mobile telephone using the always-on
"desktop" Appli feature built into most newer handsets. From a
consumer's standpoint, the system takes most of the pain out of
mobile marketing. Once a subscriber has opted in, there's no
longer need to send e-mail messages, and BeatCast reduces packet
fees to between 0.3 yen and 0.5 yen per 250 characters, compared
to 1.1 yen to 2.1 yen per 250 characters for regular i-mode, J-Sky,
and EZweb mail, according to Inoue.
Daniel Scuka, who conducted the interview, describes the
technology better than I can. Best of all, his video lets you
view BeatCast in action. Have a look at
<www.wirelesswatchjapan.com/vp/56.shtml>.
*****************************************************
Japan venture capital group to tour U.S.
Ten delegates from the Japan Venture Capital Association
(www.jvca.jp), Japan's first-ever national venture capital
industry group, took off to the United States yesterday on a study
tour to learn about educational and professional training
programs dedicated to improving the skills of people working in
the venture capital industry. The purpose of the tour is to meet
with people who may have insights as to how to best accomplish
that goal.
The group, led by SunBridge CEO Allen Miner, will kick off its
itinerary by participating in a meeting of the National Venture
Capital Association in New York April 30 and May 1. Starting May
2 it will be in Boston for two days to visit the MBA schools of
Harvard University and Babson College and learn about venture
capital-related curriculums. The group plans to meet with
several venture capital firms on both coasts and finish up its
tour with a stay in Silicon Valley from May 4 through May 9.
Allen and the delegation will be busy, but will have some open
time slots here and there. If you'd like to try catch up with
them on the road in the U.S., please drop Minako Marushima a line
at <marushima@sunbridge.com>.
*****************************************************
Entrepreneur Association of Tokyo to hold first event
The brand spanking new Entrepreneur Association of Tokyo will
hold its first event on Monday June 2 at the City Club of Tokyo
-- pretty snazzy digs. The evening event is open to all, and will
be an excellent opportunity to meet with like-minded
entrepreneurs and aspiring entrepreneurs, according to organizer
Dave Mori. See the Association's Web site at <www.ea-tokyo.com>
for more details and signup information.
*****************************************************
Bits and bytes
When a dozen U.S. staff members from Google go on a whirlwind tour
of Tokyo, including the SunBridge Venture Habitat, it's not hard
to figure that the company is cooking up big plans for Japan. Word
on the street has it that Google is one of the three hottest
Silicon Valley firms for which U.S. investment banks are
scrambling to secure underwriting rights for IPOs later this year.
The other two are SalesForce.com and Crystal Decision. If I were
a young, technically-savvy marketing professional with strong
bilingual skills (including reading and writing) and was looking
to work in the international Internet space right now, I would
be knocking down Google's Japan office doors here in Shibuya...
Last week SunBridge celebrated the third anniversary of its
founding here in Japan. In step with this milestone, the company
is making available a plain language overview of operations to
date, including some promising investment results. The PDF
format document can be viewed at
<www.sunbridge.com/pr/overview.pdf>.
The Venture Support Network (www.dreamgate.gr.jp) is now online.
One of many initiatives by the Japanese government to encourage
entrepreneurism, the Web site will from July start offering a
service whereby questions posed by entrepreneurs and aspiring
entrepreneurs will be answered online within 24 hours, according
to the Ministry of Economy, Trade and Industry, which
commissioned the development of the service. The subject of a
query can range from tax issues to fund procurement to procedures
involved in creating a corporate entity. A team of 100 CPAs and
other professionals will respond, according to a spokesman.
*****************************************************
Unsubscribe instructions
To unsubscribe from Japan Entrepreneur Report, visit:
<http://www.japanentrepreneur.com/unsubscribe.html>
*****************************************************
Tim Clark
Senior Fellow
SunBridge Corp.
Voice 813.5459.0765
Fax 813.5459.0629
clark@sunbridge.com
*****************************************************
Copyright 2002-2003 Tim Clark
Reproduction in whole or in part without express written
permission is prohibited, but feel free to pass along or quote
with URL (www.japanentrepreneur.com).
<< Archive | Page Top | Home
Copyright © 2002-2005 Tim Clark All rights reserved
