Entrepreneur Association of Tokyo 4th Anniversary!
"An Entrepreneurial Story from Japan"

Yoshito Hori
Dean, Globis Management School
Managing Partner, Globis Capital Partners
Hori-san is currently the Managing Partner of the Venture Capital (VC) fund Globis Capital Partners and also the Dean of Globis Management School, therefore being one of the only people in the world who can describe himself as a Venture Professor .

After working for Sumitomo Corporation, Hori-san went to Harvard Business School and earned his MBA. Unlike his studies in Japan Hori-san really enjoyed his time at Harvard and it had a strong affect on his entrepreneurial spirit. Upon completing his MBA he returned to work at Sumitomo corporation, but soon left to start his own business school that ran practical business classes at night time for busy Japanese professionals. His aim was to bring the infrastructure of people, knowledge and capital together to enable innovation creation and a quality business education environment.

Therefore at age 30 with no credentials, but with an audacious dream and $8000 Hori-san started Globis Management School (GMS). Before launching the school、Hori-san conducted his market research using questionnaires given out to people in his networking circles. Once he established that there was a need for the business training he offered classes at a discount and competed with the well established universities by offering a full money back guarantee. In the beginning his apartment doubled as his office and to save on printing costs he photocopied materials for the original 20 students.

GMS soon expanded into corporate education and now educates many upcoming leaders from Japan's biggest companies including Toyota,Sony and Canon. GMS then took their accumulated knowledge of business into publishing and released a series of books about business and management which have sold over one million copies.

Four years after he started the business school Hori-san felt he had enough credentials to set up a VC fund which he did with around $5 million capital that he secured from other entrepreneurs and owners of large corporations. The fund has since returned more than seven times net to its investors. In 1997 Hori-san was approached by APAX to become partners in a joint VC operation in Asia which became APAX Globis partners and managed around $180 million of capital raised from all over the world.

Following deregulation in 2006 GMS was given the　license to issue MBAs and consequently became a Graduate University. In 2004,　GMS was ranked the number three business school in Japan above other universities such as Waseda. Hori's vision for Globis is to become the number one business school in Asia and in pursuit of this goal GMS now offers MBA courses in English.

Hori-san’s five competitive advantages of Japan.
1. A fully developed infrastructure for Broad Band Internet and mobile phones.
Broadband internet connection costs in Japan are amongst the lowest in the world and mobile internet technologies are rapidly
improving as well.

2. Strong technology basis.
Many of the worlds leading edge technology and mobile components are coming from Japan including optical fibre, digital animation, gaming, consumer electronics, home computing and robotics.

3. Favourable IPO environment.
The number of companies going public in Japan is greater than that in the USA. One reason for this is that Japanese investment bankers are more willing to do an IPO for lower fees as they see their profits coming in the future rather then upon listing.

4. Drastic changes in public mentality.
The belief in lifetime employment and seniority programs are changing and the best and brightest people aren't working for big corporations anymore. Moreover, skilled engineers are leaving big companies to work for new technology ventures and young entrepreneurs are starting companies like Rakuten and Mixi

5. Superb return on investment
There is no VC bubble in Japan. The economics of Demand and Supply is good. Making us possible to make good return. (1st Fund : 7 out of 13 investee companies going public. Already returned 7X cost. 2nd Fund: Already returned the cost invested in 1999-2002.)

Q and A
What type of knowledge can be acquired from business school?
Before I went to business school I had never thought of starting a company. Business school gave me a lot of inspiration from other entrepreneurs such as Bill Gates who came on campus. Also being surrounded by people who wanted to become entrepreneurs created a strong business culture and an environment for brain storming sessions about business. On top of that I didn't know how to manage a company before and business school teaches you about marketing, finance, accounting, organizational behavior and management etc.. Management is so complex, and in order to understand what is the essence you must be able to analyze and look at things from many dimensions such as the customer, accounting, employee’s perspective etc. so you can come up with lots of options and different action plans.

This doesn't mean that if you don't get an MBA you won’t be successful. It's not difficult to be so-so, but if you want to be a billion dollar company you have to use some kind of business science or formula to drive the company into its next dimensions. Many of the people who are achieving amazing results are from an MBA background and the ratio of success favours those with business school training. Several of my class-mates and other Harvard graduates have become CEOs or the founders some of Japan's most recent successful businesses.

What are the qualities a company needs to go public?
One threshold for an IPO is that the company has revenues of about $10 million, with profits of around $2 million, so it's not that difficult. But in order to get a good market capital growth should be more than 30% per year and you must think about the strategy and business model etc..

What are some common mistakes that entrepreneurs make?
There are so many reasons why a company may be unsuccessful, but often the problem is the lack of capability of the Entrepreneur. Great entrepreneurs will be able to raise capital without any problem, so a lack of capital will suggest the Entrepreneur isn't great. In order to raise capital you have to keep on improving your skills at communication, attracting good people and team building. Great entrepreneurs can do this and they can also find the special opportunities. Judging people can be the toughest thing, but on the other hand people are always the most valuable asset.

How did you raise the initial capital for your business school?
I started with $8000 capital but I never had any outside investors. I borrowed some capital from my friends but that is all. Right now we own about 95% of GMS so we don't have to go public. We could make lots of capital gains by going public, but instead we have decided to become the number one business school in Asia and concentrate on quality of education rather than share price and cash flow indicators etc..

What is a definition of entrepreneurship?
For me entrepreneurship must have some kind of innovation. It doesn't have to be technology, it could be a new business process, product innovation or HR management system. You also must believe in infinite possibilities; There is an open sky and that you can do anything you want. You must have a big audacious dream that will excite lots of people.　Also you must make a decision in advance to do something, you can’t just think about it or plod along and try to do it.

People thought I was crazy to start out with $8000 and try to create a university, but I did it. If you have a strong vision it will energize you and excite you, and I'm happy to spend all of my energy and intellectual capacity to reach my goals because in order to become the number one business school in Asia I also have to become the number one dean in Asia.

How do you manage to run both business (VC and Dean of GMS)at the same time?
Becoming a venture capitalist from being an entrepreneur was not easy because I had to adjust myself. As an entrepreneur you think that you can help all the companies grow if you were the CEO in charge. It was hard to learn to adjust and take a back seat and let the CEOs run the companies.

In terms of my energy and time, I divide it between the Business School and VC Fund evenly. We have the unfair advantage of the business school which attracts great entrepreneurs who may go on to start companies and partner with Globis VC. Not only this, but I also manage my family (five children), sports and other hobbies. To do this requires dedication and balance and you have to learn to do things in parallel and allocate your time smartly.

Summary written by Timothy Coghlan. email: timkyo@gmail.com


June 11, 2007 (Monday)
Yoshito Hori
Chairman & CEO of the Globis Group