How a new generation of entrepreneur is forging the face of New Japan


The FT’s David Pilling refers to them as a pack of rebels – Japanese entrepreneurs that have shaken up business practices in Japan. “Confident, internationally minded, brash, even flash, they have founded enterprises and wielded business techniques – the hostile takeover, merit-based pay, cut-throat competition and unapologetic self-promotion – that are alien to Japan’s postwar corporation-as-family culture (see FT link).”

Among them are Rakuten’s Mikitani, Uniqlo’s Yanai and Monex’s Matsumoto. In the center of the pack is GLOBIS’s Yoshito Hori. Hori is the Managing Partner of GLOBIS Capital Partners and President of GLOBIS University. Beacon Reports met with Hori to ask what difficulties he and others like him face as they buck the system and forge the face of New Japan.

Beacon Reports: Great entrepreneurs like Mikitani and yourself are considered mavericks and not part of the establishment. What challenges did that present for you during your ascent and to younger Japanese wishing to pursue an entrepreneurial career?

Hori: I started to entrepreneur in 1992. I was the first person with an MBA Degree (from Harvard) to do so in Japan. Before that nobody had tried. Mikitani started after me.

Before me, most MBA holders went into consulting, investment banking or became CEOs and senior managers of multinational corporations. Therefore, I was the first to entrepreneur.

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Many people told me that, in Japan, failures are punished. They also told me that, if you start and fail, you will be personally bankrupt. Then, most Japanese did not entrepreneur as it seemed too risky. So I conducted research on the failed companies using data from TEIKOKU DATABANK’s bankruptcy reports.

My research revealed there were common elements in the companies that failed. I found entrepreneurs of failed start-ups were either lying, trying to escape responsibility, speculating or ignoring the good advice of others. I realized that Japan might not be punishing failures — they may just be punishing the attitude of entrepreneurs or leaders who happened to fail.

I also discovered that Japan punishes the attitude of success.

In a country that practices “bushido” (the samurai code of chivalry) it’s not the dimension of success or failure that matters, it’s more the attitude of the entrepreneur that counts. In Japan, people think that others must be sincere, well-mannered, open-minded good listeners and learners. I didn’t find anyone failing or being punished that had that kind of character.

So I thought to myself, that if I had that kind of attitude, I could succeed in Japan. Holding the belief that Japanese society does not punish failure, I was able to start my own venture with only $8,000 in capital. Since then, I have not faced any major difficulties in starting a company.

Beacon Reports: Had you failed early on, would it have been a different story?

Hori: It’s difficult to imagine a “what if” scenario. Running a venture capital firm, I failed so many times in investing. I’m seeing many people fail and go bankrupt. The same principle applies — good companies with good attitudes never go bankrupt; they get acquired beforehand. Even though they may lose money, they get acquired because many firms want “the team”. It is those with bad attitudes that fail.

Many people think that Japan is a country that punishes failure — I don’t agree. It’s a country that punishes people with bad attitudes. Period.

Beacon Reports: What percentage of your alumni go on to entrepreneur and what percentage succeed/fail?

Hori: Ten percent or more of our graduates go on to entrepreneur. One start-up company, Nobot, exited by selling to KDDI for a not-too-bad $20 million. Another start-up, Positive dream persons, now employs 500 people. Yet another was sold to Tokyu Group with great capital gain. Its founder and CEO is starting up another venture called 01Booster, which is an incubator-accelerator company. So they’re quite a few successes. I don’t know any that have gone bankrupt.

Beacon Reports: Are you saying the success rate of Japanese start-ups is greater than those in the US?

Hori: I’m talking about our alumni. The definition of success and failure of our alumni is different from the success and failure of VC investments. About ten of our alumni have gone on to successfully entrepreneur (30 or 40 when you include those that have joined as COO or CFO).

GLOBIS also manages VC investments. Our success and failure ratio is about the same as other top tier VCs. Our first fund returned eight times net to investors. So a $1 million investment has become $8 million in profit. One company we invested in, GREE, has returned 97 times its original investment. It was a phenomenal success.

Beacon Reports: As the owner of a VC firm and a top Japanese MBA program, your vision extends beyond that of GLOBIS investments and alumni. What are you seeing from within the wider entrepreneurial community?

Hori: I believe Tokyo is becoming the next Silicon Valley. Ron Conway, the American “super angel” investor from the Valley, said to me that New York is becoming the next Silicon Valley. I said to Ron, “I thought that Silicon Valley was not transferable.” But he said, “New York was becoming like one.” That inspired me to think Tokyo was becoming like one too as there are quite a few great companies coming out of Japan.

To understand what is happening in Japan today, consider these four questions:

Who is the second youngest billionaire in the world? (The first is Facebook’s Mark Zuckerberg.) The second youngest is Tanaka of GREE. His company is much more profitable than Facebook. It’s making $1 billion profit.

Who is the most successful female IT entrepreneur in the world? The answer is Tomoko Namba. She is the youngest female billionaire in Japan. Her company, DeNA, is one of the largest Japanese mobile social network and mobile game companies with about $2 billion in revenue.

Who has broken the record for the youngest person to list their company on the first tier of the Tokyo Stock Exchange? His name is Taichi Murakami of Livesense. He’s only 25 years old. His company is making $20 million in revenue and $10 million in profit.

Who has created the best business school in Japan combined with a VC firm? It’s GLOBIS. You don’t find that in the US, you don’t find that in the UK. You don’t find that anywhere. It’s proof that Japan is entrepreneurial.

Beacon Reports: Still, if you don’t mind, I’d like to probe a little bit.

Hori: That’s fine.

Beacon Reports: Most Japanese people I know have not started their own businesses …..

Hori: I think you’ve met the wrong people, when you consider Mikitani, Namba and myself. Take another example, Iwase. His start-up, Lifenet Insurance, IPO’ed in March. It has become the second or third largest company on the Tokyo Stock Exchange Mothers. Iwase is only 36 years old. You have to meet younger people than yourself, otherwise you will suffer myopia — a typical view of Japan which is not applicable to Tokyo today.

There are two Japans — Old Japan and New Japan. Old Japan is domestic, slow and bureaucratic. It is stable and risk-averse. New Japan is entrepreneurial, IT savvy, global, speedy and risk-taking. The two Japans are totally different and they coexist side by side. Japan’s lack of growth for the past 20 years doesn’t mean that there’s been no growth. It means there is a combination of a declining Old Japan and an increasing New Japan. The total is stagnant. But if you only look at it from the side of Old Japan, it’s boring. If you see it from the other side, it’s exciting. What I’m saying is that you should see the brighter, more exciting side of Japan.

Beacon Reports: Aren’t the VC and angel markets smaller here?

Hori: Yes, they are smaller.

Beacon Reports: How does that fit into what you are saying — that start-ups created by dedicated, serious entrepreneurs in Japan don’t fail?

Hori: It’s simple. Japanese companies use less capital to be successful. Nowadays, because of the Internet, low cost start-ups are becoming possible. Murakami did not need venture capital. GREE raised only $5 million, of which only $1 million was from VCs. The rest came from KDDI and Recruit, and so forth. Yet GREE is much more profitable than Facebook or Zinga. On the other hand, US start-ups use much more capital. It doesn’t mean there is a lack of venture activity here. Japanese companies simply use less capital.

Beacon Reports: Aren’t youngsters in Japan today terrified of entrepreneuring? After all, it seems a long way to fall.

Hori: No they’re not. If you go to Rakuten, Cyber Agent, DeNA, GREE, Softbank and other such firms, you will see the best and brightest from Tokyo University working there. Afterwards, they become entrepreneurs. GREE’s Tanaka, for instance, used to work for Rakuten. He became extremely successful. And there are more people joining GREE — if you talk to those in second or third tier management, they quickly start their own companies.

Beacon Reports: What do you see is the future of Japan’s venture capital and angels markets?

Hori: The future is obvious — more venture capital and business angel money will flow into Japan. The number of funds will grow as a result of the new young generation. Today the old, incumbent institutional VC companies are failing. But if you look at the independent entrepreneurial-minded incubator/accelerator VC firms, they’re increasing.

So there are quite a few things happening here. Change is happening now.

Yoshito Hori is Managing Partner of GLOBIS Capital Partners and President of GLOBIS University. Between 1996 – 2006 GLOBIS Capital Partners raised three funds totaling more than $ 500 million. It invests in developing companies with strong potential to become global mega ventures. The Graduate School of Management at GLOBIS University was founded in 2006 and has grown to become one of the top ranking and largest management education institutions in Japan.

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2 comments to “How a new generation of entrepreneur is forging the face of New Japan”
  1. Richard

    Good hearing from you. It was a very interesting article to read.
    Personally, I feel that success factor of Mr. Hori was as follows

    1) He was successful at negotiating HBS to allow him to deliver their content in
    some form of license agreement.
    2) His business model worked, such as raising equity capital at startup phase,
    moving from school to publishing then to VC.
    3) His PR strategy with Nikkei.
    4) His recruiting, team building, carisma and thought leadership.

    Interestingly, few core members were LBS graduates working at his VC.

    The biggest part is from passion to make things exciting.
    Another reason is from strong goal orientation to be #1 B School in APAC.



    PS Hope to see you tomorrow at the VB VC event

  2. Great story! It seems the majority of the successes are in the entertainment industry though. There is a very strong demand there, and being his age, familiarity with video game culture seems second nature – but what about investments in more significant industries? Where does he stand on augmented reality, green technology, space exploration, etc?

    It seems like … if you look to similar VCs like Musk and Thiel … they have very ambitious goals. What are some of his?


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