Joi Ito's conversation with the living web.

Just watching the news. The CEO of Life Live Door and 3 others have been arrested. The TV is flooded with this news.


All I can say that the moment is two things.

First, if Horie is convicted for this it's a pretty loud message that even Japanese young business people can't make waves in Japanese business. (Basically another nail being hammered down.) So there isn't really a chance for foreigners to believe they have a chance either.

Yes, I know that he if is convicted it will be because he was held accountable for the misconduct of his company and justly so. My question is would there have been the scrutiny if he hadn't tried so hard to shake up the market and apply non-Japanese business methods with foreign financing?

Secondly, it's remarkable in the news coverage that every previous reference to Horie, the anchor always mentioned him as Horie-Shacho (Company president Horie, a fairly honorific way to address a person by using their title). Now once he has been arrested, they refer to him as Horie-Yougisya (criminal suspect Horie). This is a fairly common practice in Japan but I think it's commentable that a white collar criminal suspect has the same title as murders. It just shows how seriously even indictment is in Japan; you are stripped of your respectful honorific title and lumped with the murders.

Joi, in light of Mr. Horie's fate, are you rethinking your practice of accepting directorships and other advisory positions for dozens of companies you don't know the first thing about? Looks good on the resume, I guess.

Rabbit: I don't accept directorships of companies I know nothing about and as you can see from my last post about personal guarantees, I take responsibility for those companies and people I decide to support.

Sunrunner: Yougisha simply means "suspect" so it is entirely appropriate.

I think you should look at Horie's position before you blame the system for his situation (and compound it with the nail-hammered-down cliche or the accusations of racism). Irrespective of his ability to gain positive PR, as the head of a public company he has a basic responsibility not to mislead investors.

There are hundreds of foreign companies that are doing fine in Japan, many with foreign financing (Shinsei and Reneault/Nissan being but two examples) and many entreprenuers both inside and outside Japan who have shaken things up without resorting to misleading investors.

The message to would-be entrepeneurs is not that they shouldn't make waves, but that they should be wary of trying to fool the market.

Only Johnny's Jimusho members are not called yougisha by the media. They are above legal constraints.

Jeremy, nice... what was it they used when Goro hit that policewoman with his car? "Inagaki-member"? What a joke...

As with Horie, you get the feeling that even though the public purported to love the guy, there is a certain level of jealousy that permeates Japanese public life, so they're even happier to see the guy fall.

Maybe it's offtopic, but i just wanted to say, that it's really interesting to read everything this with comments... You discuss here a lot of interesting things on different news =). Thanks for that =)

cam: Yeah, I think there is a lot of jeering and cheering going on right now at Horie. It's a bit disgusting.

This has been, in my mind, a very slow-moving trainwreck. Livedoor has created little-to-no value on it's own as a portal. Investors didn't see that- they only saw the numbers moving up by acquisition. They were blinded by the media hype that surrounded Horie and his almost daily appearances on national media.

Why Horie would think that any fraud would not be found is beyond me. To be so closely scrutinized by the national media and to be committing fraud is the most dangerous game of hide-and-seek to play. Why? Makes no sense.

If the Japanese Internet sector in general is tarnished by Horie and Livedoor, which some say it has, and I would generally agree, that is the greatest shame of all for the rest of the marketplace who are working honestly and diligently to bring Japan into the modern Internet.

CEO of "LIVEdoor", not "liFedoor".

Joi: You may know the elevator spiel for all the companies you've been involved in, but I don't think you know the down-and-dirty details of their finances to the extent you should. My original point was that doesn't your role tend to be as a sort of window-dressing director/advisor added for publicity and promotion purposes, rather than for corporate governance purposes? And thus doesn't the Livedoor situation make you think a little?

Mark: You're right that "yougisha" is not particularly meaningful. It's just like attaching the word "alleged" to reports on people arrested in the U.S. Japanese just tend to use a lot of titles. Athletes are So-and-so-senshu, for instance.

I think the media is blowing the Livedoor shock a little out of proportion. As Gen says, LIvedoor, the portal, is a pretty minor net property, and it's hard to figure out exactly what the hell the company did to be so prominent. And fudging the P/L statement is a big no-no, if that can be proven. But the acquisition transaction itself was not clearly illegal. Using a fund is fine. Buying a company with a fund is fine. Having the fund sell the company to a subsidiary is fine. Even announcing that as an acquisition is probably okay: the ownership did change. Corporations are legal persons, and when you sell from one to another, that's a real change in ownership. There are certainly legitimate reasons to transfer such a company to subsidiary ownership. The gray area is whether they clearly lied about the nature of the sale and concealed the nature of the fund's ownership. But this is a gray area, not a black and white area. It hinges on a close examination of the facts. This would be a hard one for prosecutors to win in the U.S. Pre-trial arrests would not be made. Defense attorneys in the U.S. would want a jury trial in this kind of case, since juries tend to find the legal details of why this kind of thing is illegal hard to grasp on a gut-level. The way it works in Japan, however, Horie is as good as convicted. The time to defend yourself in Japan is when you first hear of an investigation, directly to the prosecutors, humbly and with hat in hand. I think Horie and company knew about this for several weeks at least, and they missed the chance to avoid being arrested.

Even if you are right about reliability of the present owner of the company, which you are a Director of, the company may change the owner. You and your family are liable of the problem potentially for ever, which the new owner may cause.
Only way that you may be able to do to be responsible for your action, assuming that you will be successfull and your family will inherit something from you, is for you to change the government and change the stupid and repressive law.

Rabbit: I would consider myself slightly more active than just window dressing, but point taken. I do realize there is a risk when I take roles, but my point is that I don't take roles where I don't trust the executive, board or operations of an organization. I don't think I'm on the board of any companies that "I don't know the first thing about." Stuff like this Live Door thing have been going on forever and isn't really anything new. That's the other reason that this event hasn't really caused me to rethink any of the roles I have taken or plan to take.

m.i. : Yes. There is risk, but the risk is part of my work. However, I agree with you and have been working hard to try to change society and government in Japan to make it easier to create, operate and manage businesses in a clean and transparent way.

Eeeeeeeek what's what?!

Creative Commons TOP DOWN?????????

Hey Joi - not 'LIfe' door...
'Live' door is the dirty company's name!
(Or, this blog = fiction...?!)


Yet I don't know who you actually are, anyway...


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