Back to Contents of Issue: September 2001

The president of XML developer Infoteria hopes to lead Japan's software developers out of a rut.

by Kyoko Fujimoto

Computers weren't all that common when Yoichiro Hirano was born, in 1963. But he had engineering inclinations as early as elementary school. Before he ever touched a computer, he loved making hardware such as radios and game machines. When he experienced software engineering, about the time he entered high school, he was amazed at what he could do without changing the circuits (like he had to do when making hardware). That was his first experience with a computer, and soon he couldn't get enough. He entered Kumamoto University and majored in engineering, but freshman classes didn't even allow him to use the keyboard to do programming. The computers used at school were ancient models, and he soon stopped attending those classes. Instead, he spent most of his time at the "MyCon Club" (MyCon -- my computer -- was the word used for personal computers at that time) and ended up quitting school to make the club into a real business. That's when his entrepreneur career began.

But entrepreneurialism wasn't all peaches and cream at the start. His first business failed, so he went to train himself at a different company, waiting for a chance to start another business. Opportunity came along in the form of XML (eXtensible Markup Language) technology, which enables data transmissions between different apps in different formats. Hirano saw the potential of XML and created a new company around it in 1998. Infoteria is a provider of software and development tools for XML technology, as well as solutions for XML-based software. Associate Editor Kyoko Fujimoto met with "Pina" Hirano (Pina is his nickname from his school days) at his office in Shinagawa, and asked about his background, his companies, and how he feels about the tech venture scene in Japan.

Tell us about your first company, Carry Lab.
MyCon Club was already making some money developing software before we turned it into a real company, Carry Lab, in 1983. It was quite successful. The word processing software we developed became a big hit in '85, and we were making lots of profit -- actually, more than we do now! But basically we were just developers and didn't know how to run a company, so we had to invite other people to sell the products. But the sales group and the engineer group started having different opinions, and all the engineers, including myself, left the company in '86. The company still lasted for a few years selling previously released products, though.

And you went to Lotus Japan after that?
Yes. We all went in different directions, and everyone else got a job as an engineer. But I decided to learn something besides engineering, because I wanted to start a company again and didn't want to go through the same thing as what happened at Carry Lab. I set a training period for myself of three years to do other things, though I actually thought about becoming an engineer again. I knew many people through my previous job, and many invited me to come on board, but all the companies wanted to hire me as an engineer, of course. Mr. Kikuchi, the president of Lotus Japan at that time, was the only one who accepted me as a non-engineer. So I went to the marketing division at Lotus.

And you ended up spending 11 years at Lotus instead of three. Didn't you think about staying there forever?
I wanted to start my own company again, so I wasn't thinking of staying there forever. It was fun working at Lotus, though. I didn't think I would have much ability to do anything other than engineering, but marketing was quite interesting for me, partly because I also knew about engineering and could use my knowledge in a different area. But I thought the company had become too big, from about 40 people when I joined to more than 500, and the management style certainly changes in big companies. Then I learned about XML technology, so it was good timing. Even before XML technology came out, I had always thought about the importance of different software being able to communicate with each other. When XML came out in February 1998, I thought that could be "it." So I started Infoteria with Yoshiyuki Kitahara, then the chief engineer at Lotus, in September '98.

Now with Infoteria, you've released several packages using XML technology. Are there any competitors?
In the US, there are some that are making packaged software [using XML technology], but in Japan there are none. Most of the software companies in Japan don't make packages anymore. There used to be a lot that made software packages, but many software companies from overseas started coming into the Japanese market in the '90s, and they dominated the market.

Why is that? Are Japanese engineers not good enough?
Actually, there are many good engineers in Japan. The problem with Japanese companies -- and also the problem with Carry Lab -- was that we didn't have a good funding system, and this situation made it impossible for us to invest in future products. In Carry Lab, the opinion of the engineers was that it was important to develop new products for the coming year, which contradicted the opinion on the sales side that making a daily profit to live on was the priority. Making a daily profit means developing exactly what a certain customer has ordered -- like many system integrators do. You can be sure that the customized software will sell, because you develop it after you get the order. But if you do that all the time, you can't make a software package of your own. The engineers and sales team at Carry Lab didn't reach a compromise with each other's opinions and broke up in the end, but many companies that compromised at some point went in the direction of providing solutions for clients, and focused on customized software. I believe almost 70 to 80 percent of Japanese software companies make money that way now. They have good technology, and there are many good engineers out there, but it's the Japanese society which makes it hard to beat gaishi companies.

So you think the funding system is a big problem in Japan?
Yes. When I was at Lotus, I saw many American colleagues just leave the company and start up their own businesses. Some didn't go well, but they don't seem to get depressed about that, and soon start another one again. Those guys always find investors from somewhere. There are many angels and VCs in the US, and starting up a new business seems so easy. I think that's one reason why Silicon Valley is so alive.The Japanese software industry also used to be quite active about 15 years ago -- they not only made applications, but also worked on OSes and languages. But now most companies only work on the software that their client tells them to. What's worse, we don't have trouble making a profit that way in Japan. If Japan's economy wasn't so big, all those software companies wouldn't be able to live on only that. But we are in a developed country, and there is high demand in that field. Sadly, that's one reason why there are very few software companies trying to make their own packages.

I'm also worried about the government's IT policy. They seem to protect IT industry these days and they may start trying to help us out by granting a subsidy, like they did with the agriculture industry. If that happens, software companies would make efforts to try to get the money from government rather than developing good software, because it's easier than making software and not knowing if it will sell. I would say that's the agriculturalization of the software industry. The industry becomes less and less competitive, then the government might start saying, "No more Oracle or Lotus in Japan! We need to protect Japanese software companies!" like they did with safeguards in agriculture. This may be an exaggeration, but the government's trend is surely going in the direction of protecting the industry.

How can the software industry in Japan get revitalized again?
I really feel we need to succeed, so others can be inspired by us. I want other people in Japan to feel "if Hirano can do it, I can do it, too." When I started the company, many advised me to do it in the US, because it's easier to go global from there than from Japan. But I wanted to do it in Japan for that reason. We now have a branch office in Massachusetts, home of the W3C (World Wide Web Consortium), so we hope to go global from there.

Besides revitalizing the market, what is your mission for Infoteria?
The reason we are doing XML is to aim for all systems to be able to communicate regardless of which OS or applications they use. This is very important as Internet use becomes more widespread. And what we as Infoteria need to contribute most to is the B2B area. We want to prove that we can do B2B with a small number of people if we make use of the new system. Any company can do it if there are many people, but we want to prove that our system works even though we don't have many people working here. We will become big with a small number of people -- that's our challenge.

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