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Land of the Wireless One

A bi-weekly column with timely, relevant and possibly irreverent insight into the BC technology industry.

Something Ventured:
June 8th, 2001


By Brent Holliday
Greenstone Venture Partners

"I've got your picture,
I've got your picture,
I'd like a million of 'em around my cell "
The Vapors, Turning Japanese

Your intrepid tech reporter has crossed the big pond to Japan for a 5-day stay in Tokyo and Kobe. I was invited as the keynote speaker to the Think Canada trade mission for early-stage Canadian wireless companies. The entire show was done by the Canadian Consulate in Tokyo and it was well attended with over 120 members of the Japanese investment industry and/or corporate development arms of large Japanese multi-nationals.

I'd like to share with you some of my experiences and help you and your company understand how to take advantage of a federal government that is committed to helping your business increase its exports in technology based businesses.

First of all, Japan is not scary for the average uni-lingual Canadian hick. The people are the most polite in the world and most understand English or the second language of the gaijin business traveler, charades (Pictionary works well too). Watching three of us try to order dinner in a side street restaurant must have looked to an outsider like Party Game (everyone under 34 missed that last joke). In all seriousness, Japan is very friendly for those accustomed to North American culture. Here are some minor, but notable differences:

· They drive on the wrong side of the road like the Brits

· Contrary to the popular 80's song, domo arigato is not "thank you" and shortening it to just domo enlists blank stares or giggling. Arigato gozaimasu is the proper way to thank the bellhop/waiter/taxi driver etc. (Note to self: send the Styx Fan Club a nasty letter)

· Everyone is thin. There are no Denny's, Pizza Hut or Jack in the Box. Correlation?

· Business is conducted frustratingly slowly because the Japanese are unfailingly polite and listen so well in meetings only asking questions later after everyone relaxes over beer and sake. You must have a well-trained liver to accelerate business in Japan. If you are a one drink drunk, this is not a good place for you.

· If you are over 6 feet tall, one word: duck.

· Like the Swiss (or maybe the Swiss are like the Japanese), everything runs on time and it runs well. The transportation system is second to none in the world. If the Japanese transit workers went on strike, the economy would cease.

· If you were to ever ask Ridley Scott what his inspiration was for the setting of Blade Runner, just walk the streets of Shinjuku (part of Tokyo). It is clean, but the neon, the bustle and the narrow streets and tall buildings of every shape give it an alien city look.

· Japan is one big reason the tobacco industry might be a safe investment these days. The restaurants and trains do have non-smoking sections, though.

The reason that eight companies and I were invited to Japan was to talk wireless. This country is obsessed with cell phones. How obsessed? You have NO idea. You will not believe it until you see it. Quick, count how many people you know in North America with WAP enabled phones or any other way to reach the Internet. Now how many of those actually use the service to a) receive/send instant messages b) receive/send e-mail c) find information (weather, stocks, restaurants, movies) d) transact anything e) listen to MP3s f) play games interactively... in colour. Since WAP services are actually used by 0.5% of the North American people that have cell phones, I'm guessing you said nobody that you know. If you are between 15 and 34 in Japan, you did all of those things in any given train ride or on any given street corner because 90% of the people in that age group have an I-mode enabled phone. Before we even get to the absolutely cool things that you can do with I-mode in North America, they are releasing Java phones in Japan this summer for even more possibilities. They are two cool revs ahead of us.

Most of what I have talked about is consumer oriented. The cellular phone companies make it fairly inexpensive to use packet data (Internet and messaging) for the end user because they charge by the kilobit. If you don't want to use it, you don't pay. Now, the Japanese business man, with at least 45 minutes each way on a train commuting everyday, is getting more productive with e-mail. Soon, access to corporate data and documents will be rolled out. Now I know that you are wondering about the tiny screens, but it is truly amazing what they can cram onto these screens now. Also, the kanji script is space effective, so Japanese writing is compressed when compared to ours. Did I mention the colour screens? Animation, photos and video coming soon. A Canadian company, Plazmic out of Toronto, has all of its business in Japan and is rolling out a downloadable Java app that is like Shockwave for a cell phone. The demo blew me away.

We are miles behind the Japanese in wireless usage, but a few companies in Canada seem to get it and they are giving it to the Japanese. I have a big suggestion for any Canadian company in the wireless business with applications for cellphones or PDAs: get to Japan fast. Call the Canadian consulate in Japan and have Avi Salsberg set you up with the movers and shakers in the industry (more about the Foreign Affairs gang later). It only makes sense to sell to a ready market and learn all you have to about it before the rest of the world catches up. There are three main reasons that the Japanese have come to lead the world in wireless innovation (and these might be instructive in understanding how long it will be, if ever, before North America catches up):

1. The Japanese have a gadget culture. They love electronics.
2. They travel to and from work on trains, creating lots of down time while they are moving. Thus, wireless works extremely well.
3. The Internet charges for wireline dial-up are exorbitant because they do not have free local calling. The result is 29% of Japanese have a PC at home, while 60% of Canadians do.

Eventually, we will have mobile devices (and networks) in North America that will be similar in function and form to those already populating Japan. But we need to look to the Japan experience and learn from it while it is happening. We also need to be aware that standards set in Japan (I-mode, for example) may become world standards because they are driving adoption. If you are in the business of wireless hardware, software or services, you need to make platform choices. Make sure that you understand the Japanese platforms and standards, as well as those in Europe.

As for doing technology related business in Japan or any other major city in the world, look no further than the Canadian Department of Foreign Affairs. They have dedicated people, like Avi in Tokyo, that network with all of the top investment sources and corporate partners in order to serve you and your technology company. On this particular trip, it was wireless companies that were presenting to an assembled throng. As I go to print, each of these companies has had at least five one on one meetings with Japanese investors or corporate partners/customers. These private meetings came after all day sessions where each company presented for 20 minutes.

While the group responsible for providing the service of setting up meetings (usually at the beautiful Canadian Embassy) is your government, they can't serve everyone. Avi and his gang need to know that you are a company that has met with some scrutiny and usually won't be able to help you unless you are at the revenue stage and/or have some institutional investment (VC or corporate) in your company.

The Canadian Foreign Affairs machine is really amazing. The United States, with its huge captive market, is not aggressive on the export side at all. Many other G7 countries (UK, France for example) have aggressive promotions about their exporting industries, but I have not seen the level of effort in making connections and relationships like the Canadians have been doing. Take advantage of our international network. It is not as scary entering a foreign country to do business when you have someone working ahead of you, for you, making all of the necessary preparations.

Letters From Last Time –

First, some kudos from last time:

I am a lawyer with experience in the wireless software start up world here in Vancouver. You have bang on described my experience in terms of trying to persuade clients what not to do when getting their start ups launched. I don't understand why people insist on going ahead with their "funny" deals, but they do. It becomes tiresome for a guy like me to try to persuade them not to do those things. It is great when someone who is not a lawyer says the kinds of things you have in this article, so... Thank You. I am going to frame it.

Frederick Margel

Hi Brent,

You may remember me saying that I've no desire to be a businessman, yet I'm learning more from your columns than I ever did from the books available. Sometimes a plank in the head is necessary to get a point across.

Roger Brown

Brent,

I enjoyed your article last week. I think that it offered some of the best advice I have seen recently...

Greg Celmainis

Brent - I love the part about what NOT to do in financing a start-up. Dave Wedge and I see a lot of friends and families come in with tons of small shareholders and have heartburn over it. Very tough to undo if they get to us with that kind of share structure. It's one thing to hear it from us. It's another if you sing it. Thanks!

Lee Lau

Brent, your article could not have been better-timed. Yesterday here in Nanaimo, I sat in a meeting with tech business owners, several start-ups, and four Industry Canada reps from the Information & Communication Technologies Branch in Ottawa and Victoria. They were on a fact-finding mission to see how Industry Canada could better help Canadian businesses.

Bottom line from the entrepreneurs' perspective was they needed more financial support. From my perspective however these entrepreneurs need to be more business-sophisticated. You were bang-on that the company must have a strong management team - this is a huge problem in communities outside of Victoria and Vancouver, where our inventors (usually near-to-exiting resource-based companies), struggle to locate and hire business managers willing to apply years of experience for less-than-stellar pay.

I will be distributing your article to a few colleagues today.

Marilyn Hutchison

Now, a letter taking some issue with my thesis on management from the same column:

Hi Brent,

I'd like to offer you a slight revision to your "issue 1" regarding startup in your May 25th T-net article. It's "leadership, leadership, leadership" that is missing. The problem is that we have too many people that think that they are capable of being an executive without understanding what it means to be a leader. That is, most do not comprehend the significance between leadership and management. If anything, there is a glut of "managers" in Vancouver and a severe lacking of leaders - hence the lack of market focus and market understanding. The sign of a poor management team is that it can't self assess itself to realize that they are lacking leadership and consequently fail to hire it or yield to it if someone in their organization demonstrates it. It's a sign of maturity. You mentioned companies like Creo. It succeeded because it understood that it takes good leadership, first, to succeed. That's why it was able to re-invent itself.

Mark Heieis

I definitely see your point and would augment what I was saying about domain knowledge, intimate customer knowledge and experience at building products or services for the same market that the start-up is entering. Leadership is what gets you beyond the product development stage and helps you build a company. Leadership is what it takes to make the tough decisions when changes in the road occur. I probably needed to be more clear, but I was referring to the earliest stages of company formation and the teams that decide to work together to build something new. That is where the anchor companies and the experience that people gain from working for them come in very handy. Thanks for your letter. Seems hypocritical, yes. I was part of a TV show on Brain Drain a couple of years ago and one of the prominent speakers was an SFU professor. He was lamenting the brain drain while at the same time being sympathetic to the individual that was looking for opportunities and wealth elsewhere. While there is something to be said for offering market-driven services (if they all want to leave, then we might as well help them), I think most of us would like energy spent on what would make them stay or come back to Canada once they are down there. Thanks for the great heads up.

What Do You Think? Talk Back To Brent Holliday

 



Something Ventured
is a bi-weekly column designed to supplement the T-Net British Columbia web site with some timely, relevant and possibly irreverent insight into the industry. I hope to share some of the perspective and trends that I see in my role as a VC. The column is always followed by feedback (if its positive or constructive. I'll keep the flames to myself, thanks).

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