Japan is being treated to a juicy spectacle as two of its richest and most innovative entrepreneurs brawl in public over Internet market share and visions for the future. But what’s most important about the fight between Masayoshi Son and Hiroshi Mikitani is the example it’s setting.
The two men have much in common. They are self-made billionaires who founded game-changing technology companies ― Son with mobile-phone carrier SoftBank Corp., Mikitani with e-commerce giant Rakuten Inc. Each is his company’s largest shareholder, fully fluent in English (a rarity in corporate Japan) and U.S.-educated (Son at the University of California at Berkeley; Mikitani at Harvard University). Both are married with two kids. Both make splashy investments in overseas Internet companies (Son in Alibaba Group Holding Ltd.; Mikitani in Pinterest Inc.). Both are sports nuts who own baseball teams.
Son and Mikitani are also the faces of New Japan and unapologetic critics of Japan Inc.’s clubby, insular ways. They oppose nuclear power, a stance that puts them in direct conflict with the ruling Liberal Democratic Party and Japan’s powerful business lobby, Nippon Keidanren.
Above all, both share a passion for change and are the kind of creature Japan needs more of as it tries to end a 20-year funk. As they mix it up and make headlines around the globe, they are adding some much-needed energy to Prime Minister Shinzo Abe’s revival plans.
Their latest tiff was instigated by Son, who is also chairman of Yahoo Japan Corp. Son eliminated fees that the search and shopping business had charged for online stores, a direct challenge to Rakuten, Japan’s largest Internet shopping mall. Rakuten’s model is based on charging businesses such fees to operate shops on its site; by contrast, Yahoo Japan is a portal and retail site that gets more than half its revenue from advertising. Son figures lower fees will increase market share and, eventually, ad sales.
Japan’s conservative business culture is somewhat aghast by the budding price war: At one point, investors had wiped out as much as $4.3 billion in both companies’ market values. Japan Inc. has always encouraged carving up territory and staying out of each other’s way. When rifts emerge, they’re handled over whiskey and secret handshakes. How could Japan’s second- and third-wealthiest men scuffle publicly like this? The indignity!
But Son and Mikitani are showing young, would-be entrepreneurs that they can be more than docile, corporate drones in dark suits mindlessly working their way toward retirement. They are injecting competitive juices into an economy that’s known all too little. They are, by example, inspiring contemporaries to take risks, think globally and act in the best interests of shareholders.
Theirs isn’t the perfect rivalry. A better one would pit New Japan against the old guard. The last time that happened in a widely publicized way didn’t end well for Internet guru Takafumi Horie of Livedoor Co. In 2007, the 35-year-old Horie, an outsider in corporate Japan, was locked up for accounting irregularities, though his real crime seemed to be speaking out against Japan Inc.’s blinkered ways.
Contrast his fate with that of Tsuyoshi Kikukawa, on whose watch a $1.7 billion fraud at Olympus Corp. resulted in an 80 percent plunge in market value and global shame. The scrappy, brash, T-shirt-wearing Horie went to prison for engaging in practices that are widely employed in Japan accounting circles. And Kikukawa, as Japan Inc. as an executive can be? He got a suspended sentence.
Still, there’s great value in having the two faces of Japan’s new guard locking horns. More fights like this would have executives looking over their shoulders, unable to hide behind the cross-shareholding arrangements that kill competition, the poison pills that breed complacency and the insularity that stifles rapid growth.
Does “Abenomics” deserve some credit for this Son-Mikitani spat? I would argue the opposite. Sure, their businesses are benefiting from the first two phases of Abe’s revival plan: monetary and fiscal pump-priming. But these innovators are taking phase three ― shaking up Japan’s staid business culture ― into their own hands. Abe would be wise to respond to their impatience by getting on with deregulating the economy.
Last month in New York, Abe cited the example of Gordon Gekko, villain of Oliver Stone’s 1987 film “Wall Street,” as part of his Japan-is-back marketing blitz. Yet reclaiming the vibrancy Japan once enjoyed means balancing the nation’s preference for stability against Gekko’s “greed is good” mantra. Japan’s economy is still focused too much on job protection from the top down and not enough on job creation from the ground up.
For all their differences, Mikitani and Son personify the kind of visionary and unconventional leadership Abe hopes to inspire. Mikitani wants to be the world’s next Jeff Bezos, the Amazon.com founder who is now rescuing the Washington Post. Son, meanwhile, is expanding globally with his acquisition of U.S. wireless provider Sprint Corp. As these two titans face off and roil the claustrophobic confines of Japanese society and business, they’re giving Abenomics just the boost it needs.
By William Pesek
William Pesek is a Bloomberg View columnist. ― Ed.
(Bloomberg)
