The Entrepreneur's Choice

At a get-together after my speech the other day, someone asked me: "When you see fellow Harvard graduates like Mr. Mikitani of Rakuten and Ms. Tomoko Namba of DeNA thriving with their companies already on the stock exchange, don't you feel the urge to do the same thing yourself?"

No doubt about it, Mr. Mikitani is flourishing. He was actually two years behind me at Harvard Business School (HBS). I was already involved in ventures while he was still studying at HBS. After he returned to Japan he would often come over to GLOBIS to hang out. When the weather was nice we used to enjoy lunch in the sunshine of an open-air café at a gym. At that time, both of us were pretty carefree. Mr. Mikitani subsequently started Rakuten, Inc., had it listed, and then went on to purchase Infoseek, MyTrip.net, DLJdirect SFG Securities (now Rakuten Securities, Inc.) and is now the owner of Vissel Kobe professional football team, and the Rakuten Golden Eagles professional baseball team. I suspect most of the people reading my blog are well aware of his outstanding accomplishments.

Ms. Namba on the other hand, was one year ahead of me at HBS and we studied together on campus at about the same time. I say we studied together, but at Harvard the difference between first and second year students is as distant as heaven and hell. Once you get through the rigorous first year, the second year is relatively less intense and compared to freshman, second year students appear somehow more mature. Ms. Namba was a second year student. During my first year, since I intended to be completely devoted to my studies, I didn't even own a car. I remember one day in winter, the second-year Ms. Namba and her friend, who appeared to be far more relaxed, invited me to go skiing for the day. I don't know why I was invited, but I just remember being in the car with two second-year women; they were riding in the front with me in the back, making for a rather funny scene. I can't remember now, maybe it was because they thought I looked like somebody who had time despite being a first year student or because I just couldn't say no to Ms. Namba's articulate way of speaking, but I think I went skiing with them more than twice. I have fond memories of how cold the ski slopes were in New Hampshire.

Both Mr. Mikitani and Ms. Namba are now presidents of publicly listed companies. I believe they have personal assets exceeding 400 billion and 230 billion yen, respectively. On the other hand, I was the first person with a Harvard MBA to take up the challenge of ventures, and my company has not yet been listed, meaning that I obviously don't have much money and do not enjoy the fame of being the manager of a listed company.

"I would be lying if I were to claim I didn't feel that urge," I answered frankly to the question at the beginning of this column. But I also said, "However, we decided not to go public and are not expecting to boost our personal assets. Needless to say, we don't dream about owning a baseball team. We want to do other things, you see."

"We see our mission as nurturing a large number of brilliant personnel. We want to turn out the second generation of venture companies, the next group of Sonys and Hondas that drive corporate reform and release outstanding knowledge. We want to offer opportunities through human resource consulting for talented personnel to really shine. We'd rather emphasize quality over quantity. Instead of maximizing shareholder value, we are committed to maximizing creation and change in society. In this context, we really know where we are going."

So there I was, answering the question as if I were trying to convince myself. These were my true feelings. After getting past a certain level of anxiety, this was the road I had chosen as an entrepreneur. (Refer to column; 5/15/01 "What Is a Company's Raison d'Etre? Part 2")

One of the management strategy lecturers at GLOBIS once taught me: "Strategy is all about letting go." In my opinion, strategy is all about making choices. That is, in order to choose something, you have to let go of something else. I can either choose to take the company public and maximize shareholder value, or forgo taking the company public and instead pursue what I think I want to do.

I think that creating a company with an ordinary profit of 100 billion yen and maximizing market capitalization is in itself fantastic. I myself have always told the managers of companies in which I invest that once external investment has been received, the manager is responsible for maximizing market capitalization. When you as a manager accept capital from an external investor, you have to make a critical decision: receive capital from outside and set your mission as maximizing market capitalization or continue without external investment and be free to do whatever you want.

If you take the company public, you could realize capital gain for your stock and you would be thrust into the limelight as the manager of a listed company. If you choose this option, you will be procuring external capital, and since you will be expected to maximize stockholder value, you may not be able to do exactly what you wanted to. If you decide not to take the company public, you may not become rich and you may not make a name for yourself. However, you will be able to pursue what you want to. The trade off is the fact that you can only operate within the limits of your own capital.

We discussed this in GLOBIS for two or three years. The result was that we decided not to go public, and instead chose a road that would allow us to do what we wanted to. Fortunately in our case, most of our stockholders are staff members, and so to a certain extent, decisions were made fairly freely. Furthermore, rather than optimizing market capitalization, we as educators are concerned with nurturing good personnel, and as a partner to companies, we intend to help them achieve strength. Also, as venture capitalists we want to create companies that break through into the next generation, and in order to realize all of these aims, we work vigorously everyday, alongside like-minded colleagues in pursuit of our vision. This is really fun and rewarding.

In choosing this road, we have also relinquished the path of becoming rich and flashy. On the other hand, we had no concerns about having to maximize shareholder value. You can get by without the emotional rollercoaster of the daily stock quote, you don't get caught up in the takeover wars of acquiring TV station, and you don't have to shave your head and apologize to fans when your baseball team is on a losing streak. :-P

What you do have instead is a clear vision, such as aiming to become the No.1 business school in Asia or creating the next Sony or Honda, and you can push forward on a daily basis toward making this vision real.

I continually remind myself of one thing. "I will always strive to banish the craving to become rich, the desire to become famous, the hunger for power and influence." If you have any of these desires, they take over and you will lose sight of what you really want to do. If you have money, then you may want to buy something (a company or a baseball team). If you are famous, then you will want to continually strive to heighten your fame by appearing in the mass media more often. If you have authority, then you will always seek to use and hold onto it. I just can't help thinking that you ultimately end up losing sight of what you want to do, and at that point, your management vision becomes blurred. I think this is why people try to buy baseball teams or horse-racing tracks or TV stations.

Once you've cast aside the desire to be rich, famous and powerful, what's left? I think you discover that what is left is what you really want to do. Casting aside sounds easy, but in reality it's not. It requires real discipline and spirit. I cannot in all honesty say that I've completely thrown these desires away. I really wish that I could.

In my case, having gotten rid of these desires as much as possible, I have managed to get back to my origins as described in "My Personal Mission Statement." That is, we built GLOBIS to achieve our original stated vision of driving change and creativity throughout society by developing people, capital and knowledge, and we are now able to continue doing this as our mission.

Every day we meet students and strive to turn them into good business leaders. We meet managers of client companies and do everything we can to help them become even stronger organizations. We conduct research and share our findings to disseminate new management knowledge to Japanese companies. We meet daily with venture entrepreneurs who represent the future of Japan, and as venture capitalists we think and act together in a solid direction. We deliver careers that are worth doing to people seeking careers and a meaningful life. This is what we do everyday.

And I love this job. The people I work with are fabulous; the students, clients and venture entrepreneurs, investors and candidates are all wonderful people. Our vision is clear, and we thoroughly enjoy what we have to do everyday solely to manifest change and creativity in society.

Yet there is the persistent public perception that a manager has not earned his title until his company has gone public. Conventional wisdom still leans toward Mr. Mikitani and Ms. Namba, and this is easy to understand. The truth is I am very different and frequently misunderstood, which can be tough. This is why I often have to field questions like the one that opened this column.

You can't take money and fame to the grave. I would like to place greater value other things in life, such as living without worrying about what others think and being able to follow my own beliefs.

I guess it's not bad to occasionally have a unique entrepreneur like me around in an era in which having money means you can buy anything.

May 29, 2005
At home in Sanbancho
Yoshito Hori

Mr. Yoshito Hori established GLOBIS Management School in 1992 and GLOBIS Capital Partners in 1996. In 2003, GLOBIS started its original MBA program which, in 2006, received accreditation from the Japanese Ministry of Education and gained “university” status. GLOBIS started a part-time MBA program in English in 2009 and a full-time MBA program in English in 2012.

A Harvard MBA graduate and former Sumitomo Corporation employee, Mr. Hori founded the Entrepreneurs’ Organization (EO) Japan Chapter in 1995 and became the first board member from Asia in charge of Asia Pacific region in 1996. He also served on the World Economic Forum (WEF)’s New Asian Leaders Executive Committee and Global Agenda Council on New Models of Leadership, as well as the Harvard Business School Alumni Board from 2005 to 2008. Currently, Mr. Hori is a board member of the Keizai Doyukai (Japan Association of Corporate Executives), and serves as co-chair of WEF’s Global Growth Companies.

In 2008, he launched the G1 Summit – a Japanese version of the WEF’s annual Davos forum. This led to the foundation of G1 Summit Institute in 2013, which Mr. Hori serves as Representative Director.

Just days after a huge earthquake struck northeast Japan in March 2011, Mr. Hori launched Project KIBOW to support the rebuilding of the disaster-affected areas. The following year Project KIBOW was incorporated as the KIBOW Foundation, which Mr. Hori serves as Representative Director.

An avid enthusiast of the Japanese game Go since age 40, Mr. Hori has been Director of the Nihon Ki-in (Japan Go Association) since June 2013.

Since October 2013, Mr. Hori has hosted a weekly TV program in Japan called Nippon Mirai Kaigi (Japan Future Conference). He has authored several books including Visionary Leaders who Create and Innovate Societies, Six Dimensions of Life, and My Personal Mission Statement.

Mr. Hori received his BS in Engineering from Kyoto University and his MBA from Harvard Business School.

He is an avid swimmer and enjoys spending time with his family, especially his five sons.

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