Asia's Boy Wonder of the Web

Clara Online founder Kentaro Iemoto overcame illness and creditors to become one of the region's most most watched CEOs, at age 24

Three years after starting his Web hosting company, Clara Online, Kentaro Iemoto was on the verge of bankruptcy. He'd been given an ultimatum by his creditors: raise $250,000 within two weeks or risk going belly-up. That kind of business threat would unnerve the most driven entrepreneur—Iemoto was an 18-year-old high school grad at the time.

Remarkably enough, Iemoto quickly rounded up 20 investors, secured the quarter of a million dollars, and averted bankruptcy. That's quite a drama for someone so young, but Iemoto had by that point faced down and survived life-and-death struggles of the kind that really matter. After all, Iemoto founded his company while in a hospital where he had undergone surgery for a brain tumor months earlier. He was 15 then—and it was unclear whether he'd ever walk again.

Today, Clara Online is on firm financial footing and growing, thanks to the driven Iemoto, now 24. A company with only $5 million in revenues, it's attracting an A-list of customers. Japanese fast-food chain Mos Burger, the Boston Consulting Group, and video game maker Sega Sammy (SGAMY) are among the companies that store their data on Clara's 20,000 Linux-based servers. So far, Iemoto has set up six data centers in Tokyo, Nagoya, Osaka, and Seoul, Korea.

New Generation

In September, Clara finalized its acquisition of a tiny tech company in Singapore. So how can a small outfit like Iemoto's go shopping? Believe it or not, Iemoto wants to build the largest Web hosting service in Asia. "We're expanding in Taiwan, China, Korea, and Singapore," he says. "And from Singapore we'll move into Southeast Asia."

A jovial self-professed serial blogger, Iemoto belongs to Japan's Web 2.0 generation. These tech-savvy twenty- and thirtysomethings run social networking sites and tech incubators with fantastic rates of growth and well-heeled venture capitalist backers.

And you can find these types all over Asia. Iemoto and other young high-tech entrepreneurs were finalists in a Asia Best Entrepreneurs Under 25 online special report published in August (see, 8/21/06, "Asia's Young Entrepreneurs").

Division of Labor

Clara has been growing about 15% to 20% a year, which is somewhat modest compared to other high-tech startups. But execs who know Iemoto regard him as the real deal—and see his company as future IPO material. "He's not only a good leader but his company also has top technology for servers," says Yoshito Hori, founder of Apax Globis Japan Fund Ltd. Partnership, which poured over a $1 million into Clara in January.

In fact, Iemoto was one of his country's early backers of a now-fashionable computing concept: virtualization. Typically, computer servers are each assigned a specific function or application. As the amount of data grows the number of servers multiplies. But virtualization lets servers share the load so applications and data get shifted to idle computers or sections within computers, making more efficient use of their capacity. That means machines can be in different locations and still work in concert with each other to keep applications running smoothly.

Of course, Clara isn't alone in this territory, and Iemoto could have a scrappy fight if Web hosting providers such as 1&1 of Germany and HostWay of Chicago try to crack the Asian market. But he remains optimistic about his chances. If he succeeds, Iemoto's young life will have had one heck of a dramatic story arc.

No Time to Waste

Raised in Japan and Soviet-era Poland in a family of academics, Iemoto wanted to be a pro baseball player. He gave up on that idea at 11, when he was diagnosed with a brain tumor. He spent all but two and a half months of junior high school lying in a hospital bed.

To stave off boredom, he whizzed through books on ancient Chinese and Japanese history, built his own computers, and wrote software for a database.

Soon, he was freelancing for several different PC magazines, writing features about the Net and computer product reviews.

Doctors removed the tumor in 1996, but there were complications and the operation left him unable to walk. Doctors told him he'd spend his life in a wheelchair. Depressed, Iemoto found an escape in computers and the Internet. At 15, with $9,000 of his savings, Iemoto and a buddy started Clara Online after discovering a growing need for computer servers that would offer low-cost virtual backroom support for corporate PC networks.

"I Bowed My Way"

The two precocious teens were resourceful. They built their own servers from off-the-shelf parts, lugging them aboard bullet trains from their base in Nagoya to data centers in Tokyo and Osaka. As their customer base grew, so did their staff. But without a business plan or budget, they quickly burned through their money. Iemoto's status as Japan's youngest-ever CEO didn't help matters. "Early on, I was doing lots of media interviews and I got cocky," says Iemoto.

With creditors after him for $250,000, Iemoto begged for loans from would-be investors. "I bowed my way to solvency," he says. Even after a group of investors rescued him, money remained so tight that Iemoto got a part-time job at a convenience store near the office. The extra $500-$600 a month from his daily 6 a.m. to 9 a.m. shifts improved his cash flow, he says.

It's the sort of experience that has forced Iemoto to grow up quickly. Says Jitsuko Miyazaki, CEO of Haru Design Consulting: "When I first met him several years ago I was shocked at how mature he was."

Learning to Have Fun

He's also got a progressive approach to management that's unusual in Japan. Iemoto, who is younger than almost every one of his 38 employees, says he prefers a flat corporate structure that lets his staff feel more personally invested in their work. A new baby has also made Iemoto consider work-family issues for his staff: They all have the option of taking annual childcare leave.

Iemoto credits Virgin CEO Richard Branson's autobiography, Losing My Virginity, for showing him the way. "It taught me to make sure that work stays fun," says Iemoto, who's back on his feet again after a year of intensive rehab.

Not Stopping Now

Fun isn't how most people would describe Iemoto's day. Arriving a few minutes late for an interview at his office near Tokyo's harbor, he has spent the morning in Nagoya for meetings with customers and staff. Later, he'll do dinner with a business partner before heading home where he'll post a late-night report of the day's activities on his blog. "It gives my customers an idea of the work this company does," he says. Until recently, he was also squeezing in full-time courses at Keio University.

Iemoto doesn't expect the punishing pace to let up. Clara, which already offers server hosting services in English, Japanese, and Korean, will soon add Chinese and Arabic along with a few other languages. Within a year, Iemoto predicts his company will list on one of Japan's small-cap bourses. Hardship, it seems, hasn't blunted his ambitions one bit.

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