Yoshiaki Sakito

Tell me where you were before livedoor.
After I got a master's degree from Keio University in 1983, I joined Sony and was assigned to the international marketing section. There I was in charge of helping get new Sony products into the market. We were especially trying to find possibilities for picture-based telecommunications, which I thought had big potential. When we started, it was almost impossible to send pictures through a phone line, or do videoconferencing, but now it's a common thing. It's amazing. I ended up spending most of my time with business development at Sony.

At around the age of 30, I joined Bain & Company as a consultant. It was like being in business school. Consultants need to become familiar with various kinds of business strategies in a short period of time, as well as with many industries. After about two and half years at Bain, I joined Walt Disney Japan, where at first I was in charge of starting up a mail-order business. At that time, there were no Disney Stores in town, and not many places to get Disney products, so it became a big hit. We got about 10 times more than the regular purchase rate in mail order.

I was also involved in book publishing, game software, and CD-ROMs. CD-ROMs were hard -- the disc-reading speeds were slow then, and nobody really wanted to use the things. But we had to sell them, so we went to NEC to have ours bundled with their best-selling PC. We had a long and tough meeting -- one lasted from 9 a.m. till 7 a.m. -- but we finally convinced them to have our disc bundled with their box.

Around that time, I realized the Net was a better business -- the content of CD-ROM cannot be changed, but content on the Internet can be. I thought Disney Japan needed to get into the Internet business and decided we should have a Web site. But in 1996, the company wasn't even connected to a network. I had to sign up for the ISP myself and apply with JPNIC for the names disney.co.jp and movies.co.jp. In the US, getting a .com domain is easy, but in Japan it takes forever. People Stateside thought I wasn't doing anything, because everything was so slow here. Even after we got our site, there was nobody in the company who knew about the Internet.

I tried very hard to explain how important online business would be, but they decided they couldn't spend too much money on the Web.

At that time, AOL Japan asked me to join it as general manager of content. It was a real Net company, and I was attracted to that. I joined in January 1997, and the service was supposed to get started on April 15, meaning we had to prepare all the content in a few months. At the end of the year, several magazines chose us as one of the top content providers. The following year, AOL asked me to look after the marketing side as well, and I became a VP in content and marketing. But AOL Japan was a joint venture between Mitsui, Nikkei, and AOL, so the decision making was very slow. I felt that wasn't my style. Last year I was asked to be president of livedoor.

How did livedoor get established?
Our holding company, livedoor Group, was established in the US by Conrad Yun. The main purpose of the company was to set up a free ISP in Asia, starting in Japan. Actually, livedoor Group was first registered as X-stream Asia, and the Japan side was registered as X-stream Japan. X-stream came from X-stream Network in England, which provides the software for livedoor.

But we wanted to make an original brand, so when we got an investment of $30 million from Newbridge Capital in San Francisco, we renamed the company from X-stream Japan to livedoor Inc. And then the holding company became livedoor Group. It's the other way around -- the holding company changed the name after its subsidiary. So the Japan side got livedoor Inc., and we are not livedoor Japan. Some people in Japan think livedoor is an American company, but livedoor Group in the US is just the holding company, and all the business is handled in Japan now.

Hyper Net went out of business. Were people waiting for this?
Yes. About 10 other free ISPs emerged after we did, but most of them only have about 20,000 to 30,000 users so far. We started our service at the end of November last year, and we got 300,000 users in the first six months. Then we started the TV ads this May and got about 100,000 users in just a month. So we are expecting to get 1 million users by year's end.

At first we were targeting people who were already online -- the software had to be downloaded from the site, and we didn't have enough staff to help new Web users. But now we can accept the new users as well.

Our service became famous, and the TV ad made it even bigger. We now distribute CD-ROMs at HMV and Matsumoto Kiyoshi [a big drugstore chain]. And don't you think our domain name is cool? Many people like livedoor.com -- it's simple, neat, and easy to remember.

Why do you think Hyper Net failed?
It came into the market too early. The Internet users four years ago were thought to be geek types, and it was very difficult to get advertisements. Their ads occupied about half the screen. The service had some technical problems, and at that time there was no one to support venture companies, no VCs to put money in startups, and they had to go around to the banks to get loans. Fortunately, we got a huge investment. But it's still been an incredibly hectic year.

The revenue is from the ads, right? How long do you think it will take to become profitable?
It's hard to say. If we think about overall cash flow, it may take about three years for us to become profitable, but if we look at individual months, we'll probably be making enough money in the next year or so.

But we can't really tell what's going to happen in three years. Maybe in five years, there will be no concept of an Internet service provider anymore. And for us, a free ISP is just the beginning -- we'd like to become a company that serves everything on the Internet.

We'd like to think about other types of businesses based on the users we have now. For example, in the United States, people have to calculate their own tax, so Internet-based services on personal finance or consulting is very common. We would like to do that kind of thing -- offering services that would benefit our users' daily life.

Actually, I think it's difficult to differentiate all the free ISP services out there. Right now we have the branding, and that helps a lot -- but it isn't enough. We need to keep thinking about other business models.