Asiaweek.com | A Brave New World

NOVEMBER 24, 2000 VOL. 26 NO. 46 | SEARCH ASIAWEEK

John Stanmeyer.
"Our generation will take over and carry on," says one young Net entrepreneur.

A Brave New World
Japan's young webheads are battling Japan Inc. and ingrained attitudes to forge a new economy

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It's lonely on the outside. For young Japanese technophiles, surging past the old economy into the brave new economy is often as frustrating as it is exciting. "Entrepreneurs successful in information technology or Net businesses are still heretics," says Ogura Kazuhiro, 25-year-old founder of Horizon Digital Enterprise, a company that builds Linux-based computers for corporate clients. But for the first time in 50 years, this rising generation of tech-savvy entrepreneurs at least has the chance to challenge the corporate orthodoxy that dominates the Japanese economy. "We are lucky to be living in this era," Ogura says.

Ogura's elders couldn't disagree more. Establishments never embrace change — and the Japanese business community is the mother of all establishments. The openness of the new economy promised by the Internet strikes fear across the mahogany board tables of Japan Inc., threatening the cozy existence of stodgy, old economy companies.

Little wonder then, that Japanese upstarts find it hard to raise capital even from self-described venture capitalists. But somehow good ideas find backers. Take Cyber Agent, an Internet advertising company that is the brainchild of Fujita Susumu. After a slew of banks rejected his pleas for money, the 27-year-old Fujita convinced various relatives and friends to underwrite the needed $7 million. Started with just one colleague, Cyber Agent now has a staff of 140 and recently became the first Japanese Internet advertising company to launch an initial public offering. "It is very hard for Japan to become a pioneer in I.T. business," Fujita says, noting that playing the Net game by traditional rules is a formula for disaster. If corporate Japan wants to get in on the Web action, Fujita says, it must leave behind the outdated model of Japan Inc.

Old economy veterans, however, aren't the only ones shunning Japan's netrepreneurs. During the Internet boom of the late 1990s, startups had little difficulty attracting newly minted university graduates with the lure of stock options and instant wealth. But since the dotcom bubble burst earlier this year, crashing share prices have scared away the Japanese twentysomethings. "Many young Japanese still believe that it is best to land a job at a big corporation," says Ogura.

Attracting qualified personnel now is proving nearly as difficult as raising capital. "Every one of us is having a hard time winning good staff, particularly when the company has not gone public yet," says Cyber Agent's Fujita. To attract talented but skeptical prospects, Fujita offers above-average compensation, a comfortable working environment and fringe benefits such as health insurance, which few startups can afford.

Japan's tech trailblazers, like their American counterparts, have created social groups to foster networking so that they can help each other deal with the financial and managerial challenges they all face. In central Tokyo, trendy Shibuya is host to regular meetings of the "Bit Valley," a non-profit organization which brings together young Web entrepreneurs. "We have things in common and can share views and problems," says Takano Ken, 25, who launched Three Pro, a company that provides support services to PC users online. The Bit Valley get-togethers offer the chance both to gripe and to celebrate with newfound friends. And as befits the global nature of the Internet, some Bit Valley members are connecting with counterparts in Taiwan and the United States.

But Japanese webheads also want to build bridges to corporate Japan, because at some point the establishment will have to change if the Japanese economy is to reclaim its global standing. "I'd like to win solid recognition for our services so that people will stop categorizing us as 'new ventures by young people' forever," says Takano. He and his peers are convinced the Internet is here to stay — and Japan Inc. had better get used to it. "It is wrong that the old people keep controlling industries in their vested interests so no one else knows what's happening inside," says Fujita. The transparency exemplified by the Internet economy, he adds, will be the cyber wave of the future. "Cracks are widening in the old businesses, exposing institutional exhaustion," he warns, "It's our generation who will take over and carry on." The battle cry has been sounded.

By MARIA CHENG and MURAKAMI MUTSUKO Tokyo

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