INSIDE EYE

American road kill on Japanese information superhighway (Part 2)

Hidaka doesn't take his eyes off the stage, but he's clearly able to focus on my query. He mentions how Yahoo! is losing ground to upstarts such as Goo and predicts that it won't even be in the top five of Japanese search engines three years from now, unless there's a strategic change. "It still tops the hit meter in Japan, but it's nowhere near being a cash generator. Masayoshi Son seems to be busy playing the money game rather than running his existing businesses," Hidaka says. But, I assert, Son is Yahoo! Japan. He owns the puppy, he's attached his identity to it.

"Stupidest mistake Yahoo! ever made, giving him the brand in Japan," Hidaka says, finally allowing his eyeballs a break from the stage. He turns to look straight at me as he finishes off his shot, "Yahoo! Japan doesn't need Son-san, they need a marketing manager."

Hidaka gives away his big secret with that remark. He has a reputation as an easy touch for hi-tech and Net VCs. But what they don't know is that Hidaka won't pony up for anything that doesn't have a solid marketing plan backed by focused management, which will run the shop lean and mean, at least at the start. Hidaka is very reluctant to put money in any of Son's businesses, but, of course, at least for now, Son doesn't need Hidaka to arrange any financing. Hidaka's free consulting advice for Yahoo! Japan: To avoid a major yahoo booboo, be the first to offer free Net access in Japan!

I ask Hidaka about WebTV, as a tall and gangly Australian hostess approaches to refill his drink. He waves his hand in dismissal, and the Ozzie mistakenly believes the Buddhist imbiber is shooing her away. He calls her back and apologizes with a trace of Brooklyn in his "I'm sorry." The brush-off was intended for WebTV, which Hidaka believes has had way too much trouble finding someone savvy enough to make it a viable business in Japan, not to mention its lack of appearance on the radar screen of Internet consumer marketing in Japan.

"WebTV's masters finally had to turn to ol' Sam Furukawa, meaning there's no one at the helm here solely dedicated to making it fly," Hidaka says. "Where's their Japanese marketing? When are the overseers back in Dulles, Redmond, and Silicon Valley going to lose the cocky attitude that whatever model works at home is going to work in Japan?" Hidaka's words of wisdom for Web TV: To avoid a sticky entanglement or a fatal bite from another spider, mate with a TV manufacturer, preferably Hi-tachi or Matsushita (as Sony is getting ready to make love to another foreign arachnid.)

It's going to be a much tougher market for the Americans in the months ahead. Hikari Tsushin and interQ are gathering force like a typhoon coming up from south of Okinawa. NEC is staking its entire reputation on tripling the size of Biglobe. Sony's goal is no less than being the dominant synergistic force tying hardware, software, and online together.

That's where our conversation is when Hidaka and I come up for some fresh air and hit street level in Nogizaka. We bump into Ira Hata, now running iPass in Japan.

"Ah there's a digital sage," he says, reaching out to shake Hata's hand with only the slightest weave after five shots in 90 minutes. "Tell me something I should know," says Hidaka to Hata. Both are smiling as if they are sharing some inside joke. "Who's going to be first to offer free ISP service in Japan and when?" says Hata. Hidaka doesn't miss a beat.

"And you know and you're not going to tell me," Hidaka says, with the first detectable slur of the night. "You got that right," says Hata. "I smell road kill," says Hidaka with a slight nod to his waiting driver as he climbs into the shotgun seat of his Range Rover.