DND Director, Visiting Professor Professional Graduate School, Management of Technology Tokyo University of Agriculture and Technology
〜That's the way to go 〜『文庫のための長いあとがき』の余韻。
〜That's the way to go 〜The Lingering Aftereffect of "A Long Postscript for the Paperback Edition"
The three keywords that are certain to transform the venture world of Japan are said to be:
EXIT Strategy; (experiencing a life or culture that enjoys) muddling through (unknown terrain towards an unforeseeable future); and tenaciousness (of an odd one still working at it where others have given up in vain).
What do the words EXIT Strategy, muddle through, and tenaciousness bring to your mind? They may ring a bell if you have ever experienced
living in that vast area or have read about it, or if you are making a
living off a university-based venture business. Here's the clue: "a
bright and sunny rural district"---a well-known 'cluster'-name in
the U.S. ---and here's what happens there:
~Where a team of ordinary people can procure capital 'you need not return
even if you fail' as investment from venture capitalists or angels, and
without having to borrow a cent, can grow rapidly to list stocks on the
market or be an utter failure. Not having to emphasize that it is a 're-challengeable
system' as you have no debt and thus is only natural to try and try again
if you fail. And when you do succeed (go public, sell one's firm) the wealth
will be distributed accordingly under a fair rule to all those who took
the risk and not just to the founder or a few investors."
The Quintessence of the Silicon Valley Spirit
Did you catch on? The answer is 'Silicon Valley.' The above is an excerpt from the postscript of the recently published paperback "The Silicon Valley Spirit" (Chikuma Paperbacks) of Mochio Umeda, the author of "The Theory of Web Evolution." Albeit it is the paperback edition under the new title that is 'recent'; the original book, "How I Had Been Changed by Silicon Valley" (Shincho Publishing, Co.), was a five-year compilation of the "Letters from Silicon Valley" written 'once a month' for magazines from '96 to '01. It has been ten
years since the first "Letters," five years since the compilation was published, and now a new 60-page
chapter has been added on as "A Long Postscript for the Paperback
On the paperback cover was this description:
"~'I wanted to see with my very eyes what was about to occur in Silicon Valley. To have a firsthand experience of industry revolutionizing.' In October of 1994, the author who immigrated to the Valley witnessed everything from Net revolution and collapse of the Bubble to transformation of the Microsoft Empire and birth of Linux and Google. This is a long-awaited paperback of the masterpiece that thoroughly conveys the gratifying bonding of technology, management and investors and its underlying: 'optimism that delights in changes'."
Quite a promo, don't you think? Mr. Umeda states in his own 'preface for the paperback edition':
~It may be good to bear in mind that it was in the ruins of the 'net-bubble collapse' of Silicon Valley that the monstrous Google, which brought about the revolutionary changes in the net and information world, was bred. There is only one part in this book where the yet anonymous Google turns up. What was at the center of our attention, and in our minds, affecting us (including myself) each and every moment when Google was still conceiving the future behind the scenes? If we were to look back into the recent past and read into it, I believe we would be certain to kindle our imagination that somewhere in the world the bearers of the next generation are envisioning a future completely different from ours."
The allure of Silicon Valley is in its business climate that gave birth
to Google nurturing a venture-oriented economy. It is vital to fully grasp
its essence, making it into a tenacious stronghold in our society---Mr. Umeda's account is full of conviction
throughout, sending out strong messages at every niche and corner of his
book. This is not just about what goes on across the sea; indeed, we need
to know that it is the weak points of our country that are being exposed.
The Business Climate That Bred Google
Well then, this Google. The 1973-born co-founders of Google, Larry Page and Sergey Brin, is said to have met at Stanford University in the summer of 1995. Both had mathematicians as their fathers, both majoring in computer science, and both appeared to have remarkably strong mathematical interests in everything.
And so, during the five years between '96 and '01, absorbed in the research
they "loved so much" of mathematically "analyzing the huge
graphic structure spanning the whole net," they devised an algorithm,
PageRank, which relies on the structure of links between web sites to determine
the ranking of an individual site. And eventually the whole computer system
they created develops into the Google 'search engine.' But what is interesting
is that they appeared to have no idea muddling through this process what was to be the end-result of their research!
Another episode: In '98 the two leave the university to start a business because the supply of parts to build the PC system or the infrastructure supporting the network bandwidth within the university could not meet the demand when the worldwide web sites increased. And who should come along then, but Andy Bechtolsheim, the co-founder of Sun Microsystems, Inc. On hearing what they had to say, he writes them an on-the-spot check for a hundred thousand dollars! It is mind-boggling, at their first meeting, then and there, for a hundred thousand dollars! The environment geared for venture start-ups appears to be fundamentally different, but what is this difference?
As Larry and Sergey with the hundred thousand dollar seed money in hand started up Google in September of '98, the door to their business appeared to have opened for them on its own as if by magic.
Well now, the Google stock Andy obtained in return for the hundred thousand
dollar investment ended up becoming a few hundred million dollars at the
lowest estimate, Mr. Umeda states. And the Google stock Stanford University
obtained in return for granting Google exclusive possession of the technology
developed by the two during their graduate years was sold for three hundred
thirty-six million dollars in the winter of '05. This is the kind of success
model that we want at the EXIT of university-based ventures, don't you think, Professor Morishita *?
What does it take for it to happen? Maybe that's the key to university-based
venture support. Take the advice to heart that nothing is born from the
unfounded criticisms of 'preferential treatment.'
'The Silicon Valley Spirit' is said to imply: the merit system in a competitive society; anti-establishment sentiment; not totally being immersed in enterprises of the old economy; the pioneering spirit; optimism based on technology; daring achievement; and the mind-set of enjoying it all amusingly.
Intel in the '70s; Apple, Sun Microsystems, Oracle in the'80s; Cisco System, Yahoo, e-Bay in the '90s; and now Google in the 2000s. Mr. Umeda indicates that the factors that mold 'the Silicon Valley Spirit' also form the business climate common to Silicon Valley businesses, which, through 'destructive creativity,' has become worldwide enterprises out of nil. Indeed, I am convinced completely of 'the Silicon Valley Spirit' Mr. Umeda imparts and am already restless to be there. I long for Silicon Valley… should I just 'go for it'?
That's the way to go!
Here's another episode. As "MUSE Associates" founded by Mr. Umeda is in its 10th year this spring (of '06), he 'muses':
"The Silicon Valley folks, when told (that it's been 10 yrs), smile and without saying anything offer me their hands. They don't ask me anything and take it for granted that if things were not going well I would have quit long time ago. Their 'blitheness' is encouraging."
He further pours out: "It is a 'small accomplishment'; but still, it is pleasing to be acknowledged by others." Quite heartwarming, I'd say, imparting us a good feeling.
He also reminisces:
"In retrospect, just your ordinary real estate, furniture or carpet
store person, both men and women, all told me 'That's the way to go,' when they found out that I had started up my own business. You
wouldn't believe how encouraging that was for me. That was, and still is,
the Silicon Valley Spirit.
'That's the way to go.' Indeed, this is an encouraging phrase. What exactly is this Silicon Valley
Spirit anyway? Does it or does it not exist in Japan? I think it does.
And I can identify with it. Leaving my job with an annual salary of twelve
to thirteen million yen to start up a company and setting sail with no
idea of future prospects, I feel it quite keenly. Especially in this late
autumn *…hmm..., maybe I'm just feeling in need of company…?
Professor Naotoshi Yamamoto's Belonger Theory
In a recent round-table talk of Journal of Industry-Academia Cooperation, Professor Naotoshi Yamamoto of Waseda University School of Business, and former Consultant, Management of Technology, Stanford Research Institute (SRI) Group, has referred to the difference in the in-house venture startups between U.S. and Japan. Introducing a coined word 'belonger,' he stated that: "Essentially, it means those who belong to the organization (omitted), those who do not take risks. There are very few among them who have confidence in themselves." He presented an interesting data that 40% of the total U.S. employees were belongers; whereas at least 80% of the Japanese employees were. Although a bit less than what it was before, it is still twice that of the U.S.
He described the attributes of the belongers by citing an example that corroborates Mr. Umeda's experience:
~For example, in Japan, if you were to try to sell yourself with a business card of a venture business, no one would take you seriously as you would only be 'a nobody.' But just the opposite occurs in Silicon Valley. Everyone carries a business card with just their name on it as an independent individual. Since no one would know your company name, printing that you are a CEO would be meaningless. In addition to Silicon Valley, this is also true for Hong Kong and China. But in Japan we judge people by their company name and position, not by their own name."
Quite true, rings a bell. It's often said that this is the case, but hasn't it improved somewhat? Why such a difference, I wonder?
Mr. Yamato contends that: "It is the mentality that is fundamentally
different." Maybe it is not in our blood to have the attitude of 'That's the way to go!' Having our roots deep in the past national isolationism; the islander
mentality; organization-ism; or as the saying goes: 'The pile that sticks
out gets driven in?"
The Next Step from Google and the New Challenge
Back to Mr. Umeda's book. On the one hand, expressing his zeal for "Google 'tenaciously' powering up its 'search engine';" on the other, he notes the fact that at its launching there had been no inkling whatsoever that Google would eventually become a business model. He asks: "What are we to learn from this?" He goes on to advise us that: "It should bring to our mind that with many presently making desperate efforts for the Web2.0 era, there are bound to be 'the young who are to be the next Google' pioneering the Web3.0 era, who have completely differently ideas from everyone else."
We should believe in and have expectations for the next generation no matter how incomprehensible their challenges and ventures might be, and with a 'happy-go lucky' blithe optimism, encourage them warmly along. That is the 'mature style' of Silicon Valley and the quintessence of 'the Silicon Valley Spirit,' he stresses.
Kiyoshi Kurokawa's 'Ohzumonization' Makes the Headlines!
Mr. Umeda's quite inspiring "Long Postscript for the Paperback Edition" was introduced by Professor Kiyoshi Kurokawa, the Cabinet's Special Adviser and the Chairman of the Innovation 25 Strategic Council. I believe there might be some hidden strategic tips for the Innovation 25 Strategic Council within this Silicon Valley Spirit, but what did you make of it?
According to today's paper, Professor Kurokawa has been appointed chairman of the "New Health Frontier Strategic Expert Group Council" as well. We will have to be healthy to come up with strategies for Innovation 25, so I hope there will be synergistic effects by linking the two.
Professor Kurokawa's newly updated DND column is on "The Ohzumonization of Universities," which made the front page headlines of Nikkei Shimbun as well. It introduces the comments of Joichi Ito (one of the "The World's 100 Most Respected Japanese")' in Justin Fox's The Curious Capitalist blog. So have a look at this site also.
DND's Site for "Policy Dialog on Innovation 25" is a Hit!
Our new DND series "Policy Dialog on Innovation 25" was launched simultaneously with the start of the Innovation 25 Strategic Council. Losing no time, venturous and speedy responses were received from Masahiro Hashimoto, NEDO Director General of Policy Planning and Coordination Department; Yuji Furukawa, Professor of Tokyo University of Agriculture and Technology Graduate School; Yuko Harayama, Professor of Tohoku University and Member, Council for Science and Technology Policy; and Ryuichi Morishita, Professor of Osaka University Graduate School and founder of AnGes MG, LLC, and others, who presented their diverse views on the long term strategies for 2025. We have the first series on-line, which is enjoying wide popularity. I am quite pleased that this DND series has been well-received and is among the top ranking search sites for Innovation 25 Strategic Council.
*i Professor Ryuichi Morishita, Division of Clinical Gene Therapy, Osaka University Graduate School of Medicine, and founder of AnGes MG, LLC, is one of the contributors of this site.
*ii When the original Japanese article was written.