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The media is excessively fond of simple labels to define the ethnic and cultural backgrounds of people helping shape Japan's Internet. Thus, Softbank's Masayoshi Son becomes a "Japanese-Korean," and Cybird's Robert Hori is "Japanese-American." But 38-year-old Joseph Kim, CEO of US B2B giant Internet Capital Group's new Japan subsidiary, defies simple tagging. Kim was born in Korea and spent portions of his childhood in Japan and the US, and he has since lived, worked, or studied in Japan, Europe, Hong Kong, and New York. Attending elementary school in Sapporo in the 1970s, Kim wasn't aware of any differences between himself and the Japanese kids; during high school in Los Angeles, he fit right in with California's cool, Asia-savvy culture. Kim's back in Japan, and he brings a wealth of experience to ICG from previous consulting stints at McKinsey and H&Q Asia Pacific, as well as time spent as a venture capitalist, an investment banker, and a fund manager. Now, as he tries to position ICG Japan as the No. 1 player helping connect Japan's established technology companies with new ventures, he'll need all his multicultural skills to bridge cultural gaps. Not the gaps between national cultures, but the gaps in business culture between the venerable tech conglomerates and the new Net startups. Indeed, Kim thinks that nations like Japan and Korea are remarkable for their similarities and hopes to find high tech ventures serving both. Daniel Scuka spoke with Kim at ICG Japan's new offices in Tokyo.
What brought you to ICG?
I started out in the early 80's at McKinsey, working in New York, Tokyo, and other Asian offices. Later, I joined First Boston, and I've spent most of my career working in M&A, venture capital, and investment banking. Three years ago, I started feeling that Japan was a huge opportunity for technology investing, and I started building an investment portfolio in Japan. I joined ICG because I think a corporate structure is much stronger than a VC fund structure for the kind of investment [required]. With all the things that we can do, we [see] a very different set of investment opportunities than otherwise; we operate a business, we buy businesses, we do what we can to enhance businesses. It's almost a philosophical point of view: building businesses is done much better operating as a business than operating as a fund manager.
Have you seen a qualitative difference between tech investing done as a business like ICG versus that done by a fund?
ICG's global annual IRR is some 70 percent over four or five years. Our strategy is particularly relevant for Japan. It allows us to be long-term, strategic partners with other companies, which is very important here. It allows us to build ventures together with other corporations, and it allows us to build an operating team for the long-term. There are also deal-specific advantages, like being able to use stock as well as cash to make an investment.
Is Japan a tough market?
Japan is by far the most important market. Not getting Japan right means you haven't won in Asia. More importantly, in technology and IT for the next five to 10 years, if you don't win in a big way here, you're not going to win globally. In that light, I think Japan stands in a very different light than other markets in Asia. It isn't necessarily more difficult, but it is quite different. [It's] different in terms of how to build businesses, where the technologies are, how to build business models around those technologies and around [specific] practices. But going to Korea or going to China would also be different.
Did anything surprise you here, coming back after several years?
No large surprises. Clearly, even after a lot of development in the past few years and the significant increase in entrepreneurial activity, entrepreneurship is still difficult in Japan. The infrastructure doesn't exist to really support the independent companies that are starting, and it's much, much more important to penetrate the traditional business systems and processes here than in the US. For a lot of reasons, ventures and startups have a much tougher time than in the US or even than in Korea.
What experiences shaped you the most?
I think your first work experience shapes the way you look at business issues quite a bit. I started out as a management consultant, so I tend to take that approach -- looking at problems, breaking them down, and synthesizing an answer. The greatest influence on me has been working with companies in various stages as a venture capitalist; working with young companies; working with companies going through the transition from being entrepreneur-driven to becoming an established business; watching companies [work] through management issues. So probably the last five years have been key.
What are your goals with your job at ICG?
I think there is a real opportunity to be in the space between very established, traditional Japanese technology companies and new ventures. The two groups aren't really able to interface very well together, so being able to play a role in bridging that gap is a very exciting challenge. For ICG, it will also be very profitable. Personally, I enjoy being able to work with managers who wish to create new corporate cultures in some of these new businesses -- that's a lot of fun. I also think that, at least in North Asia, there's going to be significant economic integration over the next 10 years, and being part of that is a very enjoyable exercise for me.
What's an example of those gaps between the established tech players and the ventures?
As a new venture, you can't come into the Japanese economy and establish credibility very easily -- or establish strategic relationships and penetrate the distribution channels. So much of that is very much in the hands of large companies. On the other hand, as new technologies allow new businesses to develop, some of the larger enterprises face the difficult challenge of launching new business models within their existing structure or culture. As a result, ICG's focus in Japan is very different than in the US.
In the US, there are significant numbers of startups that have great technologies or great people and that go out to build businesses. They have a lot of support available, including capital, outsourced services, and others. Also, [there are] lots of customers. Those support systems and that ability to get at customers are much more difficult in Japan, and so we have unique opportunities to work with established companies and to work with ventures to help get them access to the kind of support they need -- which would be much more widely available in the US. We can also use some of our strategic relationships and alliances
to help [the ventures] access channels and important customers. That's a very important role that we can play -- serving both constituents.
Who bears watching in Japan's Internet space?
Masayoshi Son. Softbank is a force, and
he's been driving some significant change.
I hope to see more strong entrepreneurs like him.
Who do you admire?
I admire Edwin O. Reischauer, one of my professors. I remember a lot of discussions I had with him talking about regionalism, differences between Korea and Japan, and historical issues. He's a proponent of the idea that these two cultures, these two economies, are bound to a greater integration at some point. For me, he is one of the deepest thinkers about East Asia and the United States. I think one reason why both Koreans and Japanese are so insistent that their respective cultures are so different is that they are actually not that different -- there's so much commonality in the language, culture, and history. A lot of the regulatory and other barriers between the two are already falling by the wayside, and we're seeing more startup activity looking to build markets in the two countries.
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