I had breakfast this morning at the Hotel Okura with Jack Wadsworth and Thierry Porte of Morgan Stanley. Thierry is the President of Morgan Stanley in Japan and Jack used to be President of Morgan Stanley in Japan in the 80's and was the Chairman of Morgan Stanley Asia before he retired and started a venture capital firm with his son Chris called Manitou Ventures. (He is still Honorary Chairman of Morgan Stanley Asia) In the 70's, Jack kicked off the high-tech IPO business by doing the Apple Computer IPO.

When you get Jack and Thierry together they can represent the history of Japan's relationship with foreign investors in Japan from the 80's to the present. Thierry's one of the people who knows Japan's problems the most, but is still trying to fix Japan's problems and encourage foreign direct investment. He's also on the board of the American School in Japan, the last place I ever graduated, and does a lot of work in the community in Japan.

The cool thing about Jack is that he loves entrepreneurship and technology and really "gets it." He recently joined Pixar's board, bringing him full circle with the Steve Jobs who he took public at Apple and who is CEO of Pixar. Jack is interested in Asia and has found some great partners in China and Taiwan, but is still looking for the "Kleiner Perkins" of Japan. Of course WE are the Kleiner Perkins of Japan, but there is no Steve Jobs in Japan. We talked about the lack of entrepreneurs in Japan, the lack of smart VC's and the problems we face in Japan. The valuations for Japanese companies are much higher now than their equivalents in Silicon Valley because Japanese VC's are still rushing to put money into the few good companies in the market and are cranking up the valuations and spinning things out of control. It's quite sad. We're now looking a lot more to Silicon Valley for new deals because of the quality of the entrepreneurs and the intelligence of the other investors in the market.

I give investment bankers a hard time, but Jack and Thierry always make me think again because of all of the value they've added to Japan.

9 Comments

There is this sort of stereotype (or maybe rather archetype) in American geek circles about Japanese otaku, obsessively designing weird next-generation technology in their darkened rooms in between chatting about pop stars and fighting off their social anxiety disorder...a sort of Gibsonian model of what Japan's technology culture is like.

In America, we have these folks too, and they tend to be the ones who start the successful tech companies...but I get the distinct impression that the same is not true of their Japanese counterparts.

Why not? Where does the difference lie? Is it that Americans are more socially conditioned to see innovation as a way to make money? I'm surprised by this dichotomy, and absolutely fascinated.

Joshua, I know exactly what you're talking about, and I heartily agree. One only needs to stroll through Akihabara to witness the technological advancement over the US alongside the complete lack of entrepreneurial spirit. I think a lot of it has to do with the individual's cultural upbringing. I don't want to get into a nature/nurture debate, but from what I have observed and experienced, Japanese families do not try to push their kids into more social activities as much as American families do. That is not to say Japanese families don't feel they wish their kid would go out more often, but just that even when they might, they don't feel compelled as much to encourage their kids to. There is also the stereotypical general lack of involvment on the part of the wage-earning father. Combine this with the general attitude of downplaying the desire for overabundant material wealth, and you have yourself a formula for just being self-content and getting on with life.

Remember, this is a culture built on maintaining harmony, even when not doing so is more beneficial in the long run.

But there is hope, and things are a changin'. It may just take a few more years :)

I've been watching Japan and living in the country on and off since 1961. The one constant comment I have heard all that time is "Japan is changing, it's just going to take time." Ha.

As I've said on this forum before, I firmly believe Japan will not significantly change without a catastrophe or an impending catastrophe that all can see. Today is bakumatsu all over again, only there are no black ships to bombard Hakata or young shishi warriors to conduct the revolution (and remember that their rallying cry was SONNO JOI, up with the emperor, out with the foreigners).

Who knows, maybe North Korea will become the black ship we need.

Charlie

Jack was commenting over breakfast how much the students in China are changing over the years he's been teaching there. A great deal of his focus was on education. My problem with dealing with education is that you have to deal with the Minsitry of Education...

Maybe you're right Charlie, but the catastrophe will come anyway, so I want to at least try and hope that we can cause change ourselves.

The bottom line, I think, is that despite the fact that the economy has been in a pit for the past 10 or 15 (is anybody really counting any more?) years or so, the majority of people are still very comfortable.

On one level, that's a good thing, of course. No reason to push destitution on people.

On another level, though, that means that there is no real impetus for change. Things will have to get a LOT worse before they get better, methinks.

Charles, for someone who's been in Japan on and off for over 3 decades, do you really think there has not been a lot of change? Even in the past 10 years Japan has changed substantially. I never did say for the better. I said change.

People have been saying the same thing about China for possibly as long. "China is the next economy", "China is the new frontier". Then people started saying the same thing you just did. Things have finally persisted badly enough in Japan for the surrounding Asian nations to steal some of the limelight. It didn't take a bombshell.

Catastrophies are simply catalysts; they speed up what's been happening. Executing change in this country is particularly difficult because of the pillars that have been built to form this nation since WWII. That doesn't mean the chipping away hasn't begun. Catastrophies are the easy way out, but argueably the more painful.

One only needs to sift through photos and video footage of Harajuku and Yoyogi park from the past 10 years to see nothing but the obvious. I'm still recovering from my shock after having returned recently after an 8 year hiatus overseas.

Gladwell's Tipping Point also makes a wonderful case for not giving up -- the biggest shifts often start with the smallest seeds. Once again, just a little more patience please :)

In what Matt describes, of course Japan has changed. When I came here in the '60s, no self-respecting Japanese girl would wear a bikini. Go to Harajuku now. Lots of change. Kids once respected their parents (or at least sent through the motions). Now they refer to their mothers as kusobaba. Lots of change. Work was once an honorable pursuit. Now young people's objective seems to be instant gratification. Another change. But what Joi was talking about . . . societal and political change at the basic levels, has not occurred, or I don't think it has. Old men still rule the world, and there are a lot more of them now (who am I to talk). I hope young lions like Joi can make a difference. I don't want to pour could water on his efforts. But . . .

Charlie

So, I've been lurking on Joi's Blog for about a month. The question of when will the "necessary" change happen in Japan, has been one that really really interests me. This is where I take a fairly radical stance.

Japan has gone through tremendous change seemingly overnight in their history, specifically the Meiji Restoration. Currently Japan is languishing under some major problems, the aging population, and poor economic choices in the past to name my top two. The younger generation is distancing itself farther from the traditional ways then the generation that came before it. It was also interesting to discover how the younger college students are dissatisfied with their options in working life.

Then I encountered the opinion that Japan needs to change but it won't for a very long time. I find this hard to believe. Plant the seeds that life can be different and if it takes off then help roll the ball but every time you say "it's not going to change for a while" you kill the seed and plant the ball firmly in place.

So, yeah I'm waiting for the next Meiji, I just hope I'm there to see it.

-Mark
(I am no expert about Japan, I've spent one year there as a student in Nagoya, and I got a B.A. in East Asian Studies Japanese so I've lived Japan for the past 5 years...not that it means anything.)

Fundamental change in government might help considerably, but unfortunately requires someone with vision to implement it. This is a fundamental weak spot for Japan. Firstly, its leaders have little or no grasp of the nitty-gritty of the issues that the country faces, since they have no organisational capacity to study the problems in detail and come up with well analysed potential solutions. I watched this process from the inside for 15 years. Problems arise "out of the blue" because no one is analysing what is going on, and then there are half-baked badly thought out knee-jerk responses, because no-one really understands the issue when they come up with the response. Hence the endless shift of policy, and a PM who for example recently announces a policy, then changes it, then again and again and again, often on TV!

Secondly, there is the more serious problem that no-one seems to care to set up an organisation to thoroughly understand the issues. Japan seems to really believe that ignorance is bliss and that everything is and will be OK, so let's just pour some more concrete!

It is worth remembering that Meiji put an end to a social system that had been out of date for at least 150 years! but just kept soldiering on. We foreigners love to talk about Meiji, but I think we forget just how long that took in coming!

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