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Joichi Ito is the founder and CEO of Neoteny (www.neoteny.com), an IT investment and operating company. He has created numerous Internet companies, including PSINet Japan, Digital Garage, and Infoseek Japan. In 2000, he was ranked among the "50 Stars of Asia" by Business Week and commemorated by the MPT for supporting the advancement of IT. Appeared on Professor Mitsuru Iwamura's show on Asahi News Star. Mr. Iwamura was the former head of research and policy at the Bank of Japan and he is currently teaching at Waseda University. Mr. Iwamura is famous for having started the digital money experiment at the Bank of Japan and for being an expert in cryptography, payment systems, statistical economics, and privacy. As always, the discussion with him was very interesting. We talked about the nature of money, especially in the context of the Net. Many people make the mistake of thinking that money actually has value. Actually, money does not have value in itself. The only reason one takes money in exchange for something is because one believes that someone is willing to exchange something of value for that money in the future. Money as it exists today is not redeemable for anything of value from the issuer. Historically, it was during the industrial revolution that almost everything became "for sale." Linux and other things now show us that maybe money can't buy everything and that forms of non-money exchange will become more and more important as the cost of collaboration and value exchange continues to be driven down by the Internet. One of the key areas of focus for policy makers and businesspeople should be in the gateway between the economy and the non-economy value creators.
Was invited, along with several other entrepreneurs, by the minister of the US Embassy, Mr. Christopher J. La Fleur, to meet David R. Andrews, legal adviser to the US State Department. We talked about the future of Japan and what the US can do to help Japan move forward. I think we all concurred that the US should urge Japan to deregulate and adopt best practices and investor protection to help foreign investors make investments in Japan. Corporate governance, or the lack thereof, is a critical issue for foreign investors and will hurt the growth of the capital markets in Japan. US pressure on this issue is essential to increase the speed of change.
Met the famous Jack Wadsworth, chairman of Asia for Morgan Stanley. Jack is famous for having done the Apple IPO, and someone who I am happy to have focusing on Asia right now. We discussed the risks in the Japanese markets and the job we have ahead of us in educating investors and analysts. I think Jack will be one of the people the Japanese government will look to for advice on how to help build real exchanges and open up the markets to real public investors.
Had dinner with Jun Makihara of Goldman Sachs, Ernest Higa of Higa Industries, and Merle Okawara of JC Foods who is now president of eBay Japan. I met Jun for the first time, and was very impressed by his mellow yet sharp personality. I guess it is these people who create the real blue chip image of Goldman Sachs. Jun's father is the chairman of Mitsubishi Corporation. He is bilingual, famous at Harvard for his comedies, and really the kind of balanced bicultural person that we need more of in order to take Japan into the new economy. Merle defines the bicultural woman entrepreneur, and her move to head eBay Japan was surprising but made a lot of sense. Ernest, among other things, owns Domino's Pizza in Japan, the primary provider of nutrition for the new economy. As the discussion shifted between English and Japanese, I realized that being bicultural in Japan was more important than ever before.
Participated as a board member of a study group meeting at the Economic Planning Agency on increasing intellectual property in Japan. Not really sure why the EPA is focusing on intellectual property, but I guess the more agencies who we can convince to focus on increasing intellectual property rather than just widget factories, the better. I talked about, as always, the importance of supporting the development of free software.
Paid my taxes. Found out that I couldn't pay my taxes from Citibank because they are not a part of the Bank of Japan network. I wonder who to complain to about this. Generally pissed off about paying so much to the government, I went to be on a panel at a Minshuto symposium. On the panel with me were Susumu Fujita, president of Cyber Agent, Makoto Naruke, president of Microsoft Japan, Sachio Senmoto, founder of DDI and currently CEO of eAcccess, and Sakihito Ozawa of the Minshuto party. Fujita-san announced that he was going to be doing an IPO the next week and that he was going to publish on the day of his IPO a book called Japanese Dream. We all slammed the current froth and speculation in the market and talked about the importance of prudent investors and solid management.
The discussion turned to what we wanted from the government. I'm not sure if they picked tax day for this symposium on purpose, but it was fresh in my mind when I told the audience of journalists and politicians that the only reason I was paying taxes in Japan was because I liked the culture and the food. If it weren't for these I probably would have moved to the US a long time ago. In the information age, I told them, one can do business from anywhere. If they are going to keep getting paid taxes, I told them that they had to give us better service at a lower price and had to think of people and companies as customers. I also told them that they needed to become younger, study more, and be less arrogant. Senmoto-san wrapped up the panel by saying, if they didn't do that, it was "No way" for the Minshuto party. Yukio Hatoyama, the spokesperson for the Minshuto, was quite impressive on his wrapup and promised to be young, smart, and more service oriented. It will be interesting to see whether the Minshuto can really become the new economy party.
Had dinner with several Liberal Democratic Party politicians and complained about the stupid laws designed to prevent companies from cheating, laws that assume we don't have any corporate governance, like real boards. These laws are now making it extremely difficult for startups to move quickly. The politicians I spoke to promised to push to change these laws. It is clear that the LDP has all the power, but it probably has no real ability to change anything because of its size. On the other hand, the Minshuto party doesn't have enough power. I guess the only thing I can do is push everyone. I never thought I would have to get so involved in politics just to do business in Japan.
Participated as a board member of the Science and Technology Agency's Information Technology Security Study Group. They probably set this up because they got so much heat for being hacked. I think it is a good opportunity for them to help increase security awareness at universities since they will be merging with the Ministry of Education. Also, I think that the separation between technical and non-technical people is so huge in Japan that the policies are usually discussed in a technology-stupid environment. I urged the STA to force more technical people to learn law and economics and participate aggressively in policy discussions so we get smarter bills.
Was interviewed by an MPT study group setting up their new research institute and once again told them exactly what I told the EPA and the STA. I wish these ministries would talk to each other more instead of doing everything in parallel and competing for turf.
Met with IBM's Net Gen team. IBM has put together a team to work on targeting Internet startups for financing, partnership, sales, outsourcing, et cetera. Generally large corporations and startups have a very hard time making contact and maintaining relationships. I think this is IBM's attempt to meet us half way. I think the issue is going to be whether these "Net Gen teams" can filter the companies with potential from the walking business plans.
Met with GE. GE, like IBM, is interested in meeting us half way. Jack Welch has told all the GE business units to "webify," and it looks like GE will be looking in part to venture businesses to help them with this. I think this is a great opportunity for leveraging the assets that GE has built in Japan over the last 100 years.
Had lunch with a team from Goldman Sachs. It looks like they are pretty serious about the Japanese market. We all agreed that the current Mothers market is frothy and dangerous. I think all prudent capitalists want the market to slow down a bit and focus on fundamentals. Having said that, I am still very optimistic about the next three years or so.
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