Dennotai Co., Ltd. -- students get the Net
By Noriko Takezaki

Yusuke Tanaka

Cutting-edge Internet technology, English ability, and an evangelist-like approach have emerged as the three sacred Grails for venture company success in Japan. Firms that have found the three are starting to rock Japan's conservative business climate, and they're starting to enjoy more opportunities than even just a couple years ago. One such company is Dennotai, a venture formed by eight Tokyo Generation X'ers, helped out by some dozen part-time undergrad and grad students. Dennotai is no lemonade-stand operation; the founders are aiming at no less than developing and promoting their own WAP (wireless application protocol)-related software applications for Japan's booming cellular phone market.

The applications being developed by Dennotai are based on HDML -- Handheld Device Markup Language, a programming standard proposed by the former Unwired Planet (now renamed Phone.com) -- which serves as the basis for WML (Wireless Markup Language), a component of the WAP protocol being developed by the WAP Forum. This is no small stuff; The WAP Forum was established by major mobile players, including Motorola, Nokia, Ericsson, and Unwired Planet (UP), and compliant software can expect to enjoy widespread deployment (read: great sales) when 3rd generation mobile telephony comes to the world. (See "Third Generation Mobile: Three Groups for 3G" in the April 1999 CJ -- Ed.) HDML technology has been adopted by Japan's DDI and IDO phone companies for their Internet-connected cellular phone services EZweb and EZaccess, which were successfully launched early this year. Clearly, the Dennotai kids are on to something.

A meeting of minds
Dennotai originally started as a joint university students' Internet circle (club) in 1995, comprising students from Tokyo's Keio and Aoyama Gakuin Universities. Club members first encountered HDML when UP's vice president of marketing, Ben Linder, visited Japan two years ago. Dennotai's president, Yusuke Tanaka, met Linder through a common friend, and the two agreed to work together to promote non-PC applications based on UP's technology for the Japan market. Since then, Dennotai has also approached DDI and IDO to enlist their support for HDML-based services, which would compete with NTT DoCoMo's compact HTML technology standard -- a standard that the telecom giant intends to deploy with its i-mode service. In addition to the two telecom carriers, Dennotai has been dealing with major Japan companies, including Hitachi, Sony Communications Network, Nihon Victor, and the Mitsubishi Research Institute. The upside of all this activity is that Dennotai's 1999 revenues should hit the JPY100 million mark.

"Our strategy is to enter a field where the conservative nature of business has traditionally prevented the acceptance of new ideas, and to exploit and sell our unique ideas on an evangelist basis," says Tanaka, still president of Dennotai, though he's barely halfway through his third decade. "Establishing relations with the WAP Forum was an interesting opportunity for us. This business has been worth developing because the mobile market is global, and competitive telecom carriers in Japan, like DDI and IDO, are willing to accept new technology and new ideas as a way to beat NTT DoCoMo."

Working with WAP
For promotion of WAP-related technology in Japan, Dennotai organized WAP-NET last year as a research and investigation community focusing on WAP-related technologies and on services and contents based on WAP. Dennotai's aim was to serve as mediator between the WAP community in the US and Japan players, making full use of Dennotai's accumulated WAP expertise, as well as members' English abilities. At first, Dennotai alumni didn't realize how much of an advantage these two factors gave. For the 20-somethings who have grown up in the global Internet boom -- even in Japan -- Net technology know-how and English knowledge are skills acquired quite naturally. "We were surprised to discover that being able to use English for business is still something rare in the Japanese market," says Tanaka.

One headache, however, is the widespread speculation here that the DDI and IDO WAP-related services don't stand a chance against NTT DoCoMo's i-mode. "However, the WAP Forum includes some of the world's major telecoms and open specifications" states Tanaka, with optimism. Nonetheless, Dennotai has changed marketing strategy this year, from WAP-centric to WAP and i-mode, showing a quick grasp of the principles of hedging. The company has released new software, including Webpage Tool and network games, which are compatible with both the WAP-based EZweb and EZaccess services and NTT's i-mode.

Cash flow woes -- not
For now, the company enjoys strong support from the Ministry of International Trade & Industry (MITI), as part of the ministry's measures to nurture and promote Net-based venture companies. Although free from cash worries now, Tanaka and company are considering accepting some initial investment from as-yet-unnamed VC sources, and he has indicated a willingness to discuss M&A offers from any quarter. "We are not a traditional Japan SE that tries to stick to their own technology and territory," says Tanaka. "Internet business has been growing quickly and the Net business climate has been changing quickly. Why should we follow the way things were done in the past?" Clearly, the kids from school are learning how to graduate to the Internet big times.

Dennotai Co., Ltd.
3-30-13-101, Ebisu,
Shibuya-ku, Tokyo 150-0013
Tel: +813-5447-7108
Fax: +813-5798-7621
http://www.dennotai.co.jp

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