ECN331-1_F Jasmine GattenEntrepreneurship 09/02/2015

Takahiko Naraki, The Three Million Yen Entrepreneur

If you were Takahiko Naraki, would you have done the same thing or differently? How?

Vocabulary: Yuugen-gaisha = a Japanese limited liability company (LLC) Juku = preparatory school for exams and advanced learning, also known as a cram school Jin-myaku = human network or personal connections Shushoku-katsudou = Japanese custom of having all new employees apply and later enter as a group at the same time every year to increase cohesiveness and provide an environment for company training Karoshi = death by overwork

Takahiko Naraki Owner of B.I.P. Limited (BIP) June 2003, hospitalized due to collapsing from stress-related seizure July 1997, formed BIP as a yuugen-gaisha by raising the legally-required 3 million of startup capital from friends and family, (2). BIP timeline: International Trade Juku = cram school 2001, Internet-delivered marketing concept Extensive jin-myaku; attended many business mixers Its not what you know, its who you know Next Generation X (NGX) Browser SP Browser SP was formed through a verbal agreement between Mr. Takayanagi of Affiliate Company, Mr. Ishikawa of E.X. NetCom (KK) Inc., and Takahiko; the software would be marketed to customers of Affiliate Tool for shushoku-kasudou; connecting job-seeking students to student-seeking companies Large corporations were paying to use, such as NTT, Mitsui & Co., Tokyo Marine; generated revenues for Affiliate of 480,000 to 880,00 per year per customer depending on features purchased; BIP only received 25% of share revenues Early 2003, SuperX Worked directly with E.X. NetCom to develop next generation of NGX Included Macromedia Flash Web publishing technologies in an application service provider (ASP) format; now available on mobile format? now use video and other multimedia features and included an administrative interface for customers to better manage their SuperX applications Interest in high-tech venture; focus on new technology-based business model; emergence of Internet in Japan around 1997; NTT DoCoMo Naraki believed that with the popularity of DoCoMo and increased usage of dial-up and broadband Internet services, he could leverage his experience in sales and advertising to create a product that would deliver personalized content over the Internet to mobile phones in a new way, (2). Sufficiently skilled at Web site development; built prototype ver. Next Generation X (NGX); delivered over Internet by Web browsing software, not mobile phones Push marketing; different from toolbar addons since it was a desktop application; Dentsu, worlds largest advertising company, expressed interestdid pilot project involving World Cup soccer Different from U.S. marketing concepts since there was a mutual agreement between the company and Japanese consumers regarding the use of personal information; customer relationship management (CRM) No real revenue until around September 2003 when BIP received about 7.8 million from Affiliate for NGX; Takahiko worked a part-time job, with full-time responsibilities, at a catalogue sales companypaid 300,000 yen per month No employees at BIP; worked with staff from Affiliate or E.X. NetCom Acted more in the role of intermediary, bringing together companies and relationships from Narakis personal network For financial management, Naraki outsourced his bookkeeping to a Nagoya-based accountant because he was too busy. He had few regular costs and, because of the nature of his business, he used no promotional advertising beyond business cards, (6). No formal business planprepared proposals on a project-by-project basis; neglected day-to-day management of company Company bankruptcy to be avoided at all costs Not looked upon favorably in Japan Money is generally borrowed from friends and family guarantors? 71% by men in 2001 committed suicide Double that of U.S. N. American entrepreneurs often failed at least once in their business careers, accepting it as a learning or growth opportunity Optionswho to choose? Affiliate: stronger alliance promised revenue growth E.X. NetCom: bigger partnership continued technical development BIP: become self-sufficient marketing expertise and SuperX project Didnt want additional shareholders in the business b/c he didnt want to shoulder even more responsibility for other peoples money (friends and family) Didnt want outside investors who might try to manage him or change his vision; didnt want his business judgment to be compromised by outside investors, (7) Bank financing perennially low interest rates in Japan, hovering around 0% for many years, meant that business loans could be extended at rates as low as 2% as long as there was a personal guarantor other than Naraki, (8). Japans regulated business environment, including rules against preferred shares and employee stock options before 1998, made venture capital or angel investors a rare commodity in the country, (7). Shinkansen: Nagoya Tokyo (appox. 90 minutes)

Should he continue to run BIP when it clearly was having a negative effect on his health? And if he did continue, how should he expand and finance his vision for the company? (8).