The second day was dawning and I woke early because of jet-lag, so I began writing my blog and checking my email. I had breakfast with a partner from Apax at 7 and then got a lift from him to the meeting site.
I arrived at the conference at 8 and, like yesterday, participated from the very first session. I have never engaged completely, diligently in a conference—from start to finish—as I did at this one. Even when things got boring and my mind was worn out, I made sure I stayed with it right until the end. I had specifically come to Silicon Valley for this conference, so there would be no excuses. I was bent on learning as much as possible from this.
All the conference sessions were held in one location, so I would be able to participate in everything. There were some scheduling clashes. Entrepreneur presentations under the title, "CEO's Pitch," were held in a separate smaller venue. During a session on China, a topic which I already knew what would be discussed to some extent, I slipped out of the main hall to catch a glimpse of CEO's Pitch. A mass of people was packed into the small venue; I was surprised at how popular it was.
These CEO presentations were far richer than in Japan. CEO's from companies in their expansion stage with a given level of sales came onto the stage. People I assumed to be venture capitalists were eagerly listening. When I think about it, to make a presentation in a place like this provides such a good opportunity to increase the recognition of a company.
Many of the companies originated in the U.S. If you're not known in the U.S., you essentially don't exist at all, so U.S. entrepreneurs conduct very aggressive PR and communications efforts. They try to stand out as much as possible, using newspapers, magazines and, recently, blogs. Even if you manage to get recognized to some extent and make enough money, ultimately, you still have to either sell or take the company public (Initial Public Offering). Either way, the key is being well-known. Most of the entrepreneurs participating in the CEO's Pitch are from strongly performing companies that have received venture capital (VC) investment; yet, all of them had to clear the preliminary rounds of review to get this far.
That said, the CEO's Pitch was presented under severe constraints. Each company had only 12 minutes. They had to complete their formal presentation in just five minutes, and then they were stopped to field a question from each of three persons on a panel of judges. Then, if there still was time, questions were entertained from the general audience. At 11 minutes, 30 seconds, the judges rendered their verdict, based on a possible score of five for each of three criteria: (1) Marketability (2) Marketing, and (3) Overall Image.
The judges scores on these three criteria were added together and the top three presentations were to receive a commendation before the closing ceremony of the conference. At this point, every participant (including the webcast audience) would be given one minute to make a pitch (presentation). Under this system, anyone could become better known in one leap.
I observed the pitches of three companies, and they were rather quick and interesting. One entrepreneur started out by saying, jokingly, "I believe in what I'm doing and really don't like being evaluated in front of other people. To be honest, this is the last thing I wanted to be doing, so I hope you all give me a break."
I think the central theme running through this conference was openness. Three different sessions included the word in their titles: "Open Media Network," "Open Source" and "Open Web." Here's my brief summary of concepts that kept coming up in the discussions.
(1) Open Source, Open Standards
(2) Open Content
(2) Open Media Revolution
(1) Regarding Open Source, Open Standards, this term was coined a long time ago, and so it was nothing really new, although there were some interesting perspectives, which I'll touch upon. In this session, COO and President of Sun Microsystems Jonathan Schwartz gave a presentation, followed by a panel discussion moderated by a venture capitalist from Kleiner Perkins Caufield & Byers.
The flow of the discussion went like this: "the top three companies (Microsoft, Oracle, SAP) earn 75% of all profits in the software world, with the top 15 companies accounting for 85% of profits, making it an oligarchic industry. All companies generating profits are making the software available as open-source. However, on the other hand, other companies are aggressively proceeding with creating more open-source software to win customers. In this situation, where a gap is evident, how to make a profit is a vital issue.
(2) Open content refers to abandoning copyrights for content and allowing content to be freely distributed via the Internet.
A charismatic entrepreneur named Mark Cuban vigorously extolled the virtues of this approach. Mark founded Broadband.com and then sold it to Yahoo! for nearly 600 billion yen. He now manages a video content distribution company called HDNet while also managing a pro NBA basketball team, so he's the prototypical entrepreneur. This notion of open content really ignited heated controversy, with a raging debate between Silicon Valley and Hollywood.
(3) The Open Media Revolution is primarily concerned with blogging. Nowadays, everyone can be a part of the media by just starting a blog. The debate was around how to make a profit in a time like this, and what the world would be like in five or ten years.
One word that kept coming up was "disruptive." Literally it means a "discontinuous reform" and it is a concept heralded by HBS Professor Clayton Christensen. I hear the word, "disruptive," discussed all over the place. It really seems to express the spirit of American entrepreneurs.
"It's not really worth doing small. Let's look at a global level for major projects that could follow in the footsteps of Yahoo! and Google. To do this we must create a discontinuous revolution, and we need a revolutionary concept that makes current businesses into clichés." With this idea in their minds, it was impressive to hear everyone having discussions from the perspective of what this concept really means and what kind of innovation is required while keeping an eye on the future.
This echoed what I myself had said at the New Industry Leaders Summit (NILS), when I had urged Japanese entrepreneurs not to rest on their laurels, but to think big and to think globally. (Refer to Column: NILS—the Place of Learning)(Japanese)
I was disappointed by two things at the conference. One was the discussion about wireless technology. Silicon Valley is the worldwide center of technology, yet you still cannot access the Internet on a mobile phone there. Japan is storming ahead with wireless technology and so this panel offered nothing new for me.
Another disappointment was the discussion on China. It seemed everyone wanted to discuss China, but in such general terms. People talked about the market being large and growing, and that there were many outstanding personnel in science and technology, but none of this resulted in any concrete discussion. In other words, in terms of both China and wireless technology, you got the sense that people were having very general conversations without having any real idea of what they were talking about; this was entirely unsatisfactory.
At the end of the second day, I was dropped off at the hotel by friends I had met at the conference. I had learned so much that I felt like a student all over again. I had listened all day to discussions in English about technology, with panelists all talking very fast. There were moments in the rapid pace of their technical discussions in which my mind just couldn't process fast enough and started shorting out; but overall I was able to fully participate in both days.
I want to continue investing through our Globis Capital Partners with the determination to create the next Sony or Honda. We have already produced Works Applications, the No. 1 company in the area of ERP, and GDH, the No. 1 company in digital animation. Both are now expanding into global operations.
I really want to continue creating companies with the ability to transmit Japan to the rest of the world. There are many companies in which we have invested that could follow these two; I really sense that they have huge potential. More importantly, though, I won't be satisfied until we turn out 50 or even 100 venture companies that are capable of creating entirely new industries. These are the kinds of entrepreneurs I want knocking on the door of GLOBIS.
"Entrepreneurs of Japan, don't rest on your laurels. Think big and think globally!"
July 21, 2005
Palo Alto Hotel