A Revolutionary In Disguise
If you want to make a Japanese investor wince these days, just utter one dreaded word: Nasdaq. After all, the gyrations of the U.S.-based, tech-laden exchange in recent weeks have generated plenty of collateral damage to dot-com shares all over Asia, especially in Tokyo. On Apr. 17, Japan's Nikkei 225 average fell 7%, its biggest one-day decline since 1987.
You'd think the broad sell-off in Japanese Internet shares over the past seven weeks would give Tatsuyuki "Ted" Saeki pause. He's president and CEO of Nasdaq Japan, which is rushing to launch its exchange come June. But Saeki isn't the sort to get rattled by market lurches. He has his eye on a bigger prize: to deliver a death blow to Tokyo's backward financial system and free up capital to seed startups that will build the new Japan.
Saeki isn't your typical self-effacing Japanese executive. When I caught up with him last week, he launched into an unsolicited account of his career triumphs during a three-decade-plus stint at IBM. One highlight: He doubled the consumer market share of IBM personal computers to 10% in the Asia Pacific region. He had a secure, high-level job at Big Blue and figured he would ride out his career there.
`INTO A DITCH.' Then, Softbank Corp. founder and fabled Internet investor Masayoshi Son rang and offered him the job of Nasdaq Japan chief last year. Softbank, Nasdaq in the U.S., and a group of other financial backers wanted to start a Japanese version of the exchange and made their plans public last June. "He told me he wanted to change Japan and that we should work together," recalls Saeki. His superiors at IBM, however, told him: "Don't throw a 35-year career into a ditch," he says with a laugh.
Truth is, Saeki had grave doubts about jumping ship. He had first gotten to know Son years earlier, when Son was a budding entrepreneur running a mix of businesses such as computer trade books, the Comdex trade shows, and a software-distribution business in Japan. Son used to call Saeki at IBM Japan all the time, pitching ideas and joint ventures and just brainstorming. "He was very sticky," he says of Son.
But there was something about Son that Saeki admired. In a big, established company like IBM, things tend to move glacially. Son is a relentless dealmaker. He met Nasdaq chief Frank G. Zarb at a U.S. Embassy cocktail party in late 1998. Zarb had spent months flying into Tokyo and sounding out established brokers like Nomura Securities Inc. about launching a Japanese Nasdaq but had gotten nowhere. When Son heard that, his dealmaking synapses started firing, and the outlines of a Nasdaq Japan fell together in a matter of months.
Saeki also admires Son's approach to staying on top of the ever-mutating world of digital technology. Instead of making a few billion-dollar acquisitions, Softbank has spent some $3.8 billion since the mid-1990s taking minority equity stakes in 300-plus Net companies in the U.S. and Asia. He has partnered up with the strong players like Yahoo! Inc. and helped them move overseas.
SUICIDE. Son's backing, though, creates another problem for Saeki. He will need to prove that Nasdaq Japan won't turn out to be just a high-tech piggybank for Son. The worry is that, in return for Son's financial backing, Softbank's 300-odd equity partners in Japan and the U.S. will use the new exchange to cash out of their investments. They might also get preferential treatment for listings on the exchange. No way, says Saeki. Doing that would be suicide for the new venture, he says.
Another hitch is that Son and Zarb probably don't have the backing of Tokyo officialdom. "Son pissed them off. The Ministry of Finance didn't like the way we announced our exchange without their approval," Saeki says. Still, Saeki isn't concerned. He thinks that ultimately, Nasdaq Japan will be a platform for 24-hour trading that will connect Japan's most promising players to the global capital markets.
In the past, making that connection hasn't been easy. The participation of global investors would be far higher if Japan had better financial reporting and disclosure standards. Saeki believes Nasdaq Japan will change that by requiring its companies to open up to win the confidence of domestic and global investors alike. That's a tall order, but if it works, Japanese companies may finally begin to emerge from the financial Dark Ages.