Today, Works Applications publicly offered its stock on the JASDAQ over-the-counter- market. The opening price was 2.51 million yen against a public offering price of 1 million yen. I am very pleased.
I first encountered Works Applications (hereafter referred to as "Works") back in March 1997. At that time, I frequently posted comments on an Internet forum run by Nifty called FBINC, which was dedicated to business creation. The forum's sysop invited me to participate in a cyber-interview in which I had to answer all questions posed to me within a fixed period of time. Over 24 hours, questions would be posted on the forum from various locations, transcending differences in time and space. The questions had to do with all sorts of topics, such as venture capital investment criteria, strategies for successful ventures and the methodology behind an entrepreneur's decisions; I stayed up all night answering them.
Masayuki Makino (currently CEO of Works) read my answers in cyberspace. Mr. Makino founded Works along with Mr. Takashi Abe (currently COO) and Mr. Yoshiro Ishikawa (currently CTO) on July 24, 1996. Their founding philosophy was to promote the equipment of Japanese corporations with information technology by developing diversified, higher- performance, better-quality business software at lower prices, in a similar way as general hardware products. At that time, the company primarily focused on enterprise resource planning (ERP) software packages for human resource management. With COMPANY as the product name, Mr. Ishikawa was in charge of software development, Mr. Abe headed sales and marketing, and Mr. Makino oversaw overall product planning and management. Works started with these three founders as the core, along with a small number of outstanding engineers who had earned their trust.
Unlike the Internet bubble era after 1999, venture capitalists basically did not invest in newly established companies at that time. Some years later, Mr. Makino told me of the time, "I believed Mr. Hori of GLOBIS, who passionately discussed ventures in a cyberspace interview, would probably understand what we were trying to do. If GLOBIS had said no, there would have been no one else to turn to." With this thinking in mind then, Mr. Makino sent me an unexpected message to the email address I had used in the cyberspace interview. I forwarded his message to Mr. Kariyazono and asked him to look into it. This was in March 1997.
At that time, Works had just started with eight employees. Makino, Abe and Ishikawa were in their early 30s and appeared to be a young, ambitious entrepreneur group. Our investment research went smoothly, and in August 1997, we underwrote most of the new capital before any other venture capital, investing 29 million yen in Works. Mr. Kariyazono took the post of part-time executive director to offer management advice and support for recruiting. I regularly met with the three executives, too. We discussed the focus of management, sales and marketing methodologies, techniques for establishing an organization, business management and so forth. They incorporated some of the ideas from these conversations into their operations.
In 1998, we invested an additional 60 million yen, for a total of 89 million yen in Works alone from the Globis Fund No. 1, which had only 540 million yen at the time. After deducting the management fees, the amount available for investment was a little over 400 million yen. We invested 20% of the remaining amount solely in Works, and this was a big risk for us.
In addition, a little over 350 million yen was invested from the Apax Globis Partner Fund (Globis Fund No. 2, created at the end of September 1999). After October 1999, a Works board of directors meeting was held monthly, and we provided advice on organizational development during the growth stage and the formulation of a strategy and also introduced personnel. I myself participated on several occasions. Despite occasional disagreements, we gave our frank opinions and made constructive decisions.
Net sales and profits were always on target as forecast by the management, and Works achieved sales of 100 million yen for the first fiscal year, 250 million yen for the second fiscal year, slightly less than 500 million yen for the third fiscal year, and 1 billion yen for the fourth fiscal year. At the end of June 2001, sales reached 2 billion yen, with ordinary income of 400 million yen. With more than 200 employees, Works became No. 1 in ERP software in terms of personnel. This was a tremendous achievement.
When I visited Works with our investors in April 2001, Mr. Makino said, "Without GLOBIS, Works would not exist as it does today. We are very grateful to GLOBIS." As a venture capitalist, this remark was among the most gratifying things I had ever heard.
GLOBIS' venture capital business has the vision of creating many global companies based in Japan, following the example of Sony and Honda. We hope that Works will become a thriving global business, even surpassing SAP and Oracle in the future.
Congratulations to Works on your JASDAQ listing. This is a new start. Let's keep up the good work.