UMEBAYASHI: I would like to ask a question of the U.S. side. When venture companies in the United States grow very large, what happens to them? Are they any different from conventional large companies? I feel that there must be something, some philosophy, that would make you different from other conventional big businesses.
HOSILYK: That's an interesting question, and it touches on a lot of the issues that we have been talking about. Should our company become very large, I think we will be the same as any other large company. However, it's important to understand the motivations behind venture capital-funded companies. In Alpha Micro's case, for example, the management is judged by quarterly results. What profits did the company make for the quarter, and how much did that increase the value of the stock? After all, why do venture capitalists invest in a company? To obtain equity at a reasonably low price, to have the company grow in size very rapidly; to have the equity appreciate very much, so as to be able to sell their stock and make a large amount of money.
I recently had a discussion till 2:30 in the morning here in Japan trying to explain why we don't give dividends in companies in the United States. The reason is that dividends are bad from a tax standpoint. So we look only for capital growth.
I think this answers your question.We are a venture capital-funded company. We want to grow very rapidly. The investors want to be able to sell their stock and recoup their original investment, plus a large profit. At that point, the company becomes a normal publicly traded company like any other -- and it has all the problems of any other large company.
NAGAMORI: If I may speak again, we started our company from zero, and we want to grow it into a big and stable company. In Japanese society, a smaller business cannot remain small or medium-size over the longer term. Big businesses come into our markets very aggressively, even small markets, in order to improve their profits. Only a very limited number of smaller businesses that really have their own, shall I say, captive market can remain small. So, of necessity, you have got to make your company big.
There is an expression "small is beautiful," and I am against that idea. Companies have to grow. For the larger they grow, in Japanese society, the easier it becomes for Japanese smaller businesses to operate in this community, because of relations with banks and so on. The smaller you are, the more unstable you are. Over the long term, venture business is too risky, too unstable. So I think you have to try and grow your company -- develop your company as quickly as possible, and then, think about the next stage.
MAKINO: I, too, would like to make my company a big company. But does that mean that inevitably we will introduce the same inflexible methods as other large companies? No. I believe there could be more flexibility as we grow larger; larger companies have more people, more human resources. The real question is, Are we going to be able to have some impact on the new market or society? If we are, then maybe we have to introduce some new tools from the outside in managing the company. Maybe we might have to spin off, so that we would become a group of companies, rather than be coming a big company under one roof.
KATO: I'm not sure about the flexibility of big companies. Let's say we have a brave samurai in a big Japanese company who would like to express his entrepreneurship, or intra-preneurship, as you put it these days. And let's say he challenges. Unfortunately, however, he fails. What happens? He loses his career in the big company. All right, let's say he succeeds -- does he get rewarded? Not necessarily. The bosses, the senior manager, or the president will reap all the credit, not he. This happens a lot in Japanese large companies, this is still the structure, the organizational setup we have in Japan. Consequently, for the next 10 years or so, you won't find strong entrepreneurial counterattacks by big business on small business. Japanese venture businesses are going to enjoy boom days in the near future. But in the long run, 10 years from now, with the coming of those changes I mentioned in traditional management practices, then I would guess that the larger Japanese companies are going to be a lot tougher than their American counterparts.
INC.: Do you think there's any hope that through this sort of networking we can blend the strengths of the two systems?
NAGAMORI: From now on, instead of thinking American or Japanese, we ought to think globally. Being involved in the world business for the past 10 years or so, I really feel that we should not be limited to the Japanese perspective or the American perspective. When we try to sell in the United States, we must bring products Americans want to buy. But if we think that because the Americans accepted these products then we can sell them to the Russains, we would be wrong. We have got to produce products that the Russians want to buy. And I think that through this sort of process, people in different parts of the world will tie up with each other. And by doing so, we would also be able to expand American venture business, Japanese venture business, and venture businesses in other parts of the world.
PANZER: I think it is inevitable that in 5 years, 10 years, 15 years, even 50 years hence, we are going to see a breaking down of national boundaries, more and more blending of cultures. As people work together in joint ventures, you sit across the table, maybe on the same side of the table, you take off your jacket, you roll up your shirt-sleeves, and you develop friendships, you get to know the individual. And naturally, you are going to see a merging of different approaches.
