IIJ’s David faces down NTT’s Goliath

Business Opinions - April 5th, 2002
Henry Scott Stokes

by Henry Scott Stokes

As all the world knows, Japan experienced an extraordinary burst of creativity in the period just after World War II. That was apparent in the fantastic Kurosawa movies of that era, and it showed on the corporate front with the sudden upsurge of Sony, Sharp, Casio, Honda, Canon and others. Now, half a century later, a new genera­tion of companies is coming rapid­ly to the fore.

How so? Part of the explana­tion is that established firms cannot always easily respond to the chal­lenges that arise. They find it hard to get their heads around radically new technology. They go only so far—this applies even to Sony and Toyota—and then they surrender. They will give some money to an entrepreneurial ally they trust and let him get on with it.

Enter Koichi Suzuki, 54. My impression is that this hotshot entrepreneur—I met him for the first time the other day at his office in the Takebashi section of Tokyo—is going to be a major force for change in Japan, assum­ing that his luck holds, and given his high-level support from Sony and Toyota and the banking com­munity here and overseas.

His story may be simply told. Ten years ago—inspired by early reports of the advent of the Internet and convinced that it would change the world—he set everything else aside and created his company Internet Initiative Japan (IIJ). Suzuki-san is now ready, having built up an IIJ group workforce of about 1,000 people— including 500 engineers—to take on his major competitor, namely NTT, in a battle to become the leader in bringing the Internet and all its mechanisms to slow, old cor­porate Japan. To do so Mr. Suzuki maintains a close eye on the U.S.

Part of his reason for going there all the time, he explains with a grin, is to get in a few rounds of golf with friends. That is one way he relaxes from the ardors of play­ing David to NTT’s Goliath. At the start of an interview, he walked me over to a shelf where he keeps photos of his golfing companions. “This is Sergio Garcia,” he said, pointing to a smiling youth.

Behind his disarming cheeriness, I sensed a man of tremendous purpose, an impatient, hard-driv­ing human being. And how could it be otherwise, one may ask? Telecoms is a deeply strategic industry these days. The whole world has come to understand that you cannot fight a war without telecoms.

They have been crucial to con­flicts in the Balkans and in Afghanistan. Someone who knows the field well—and some of his friends credit Mr. Suzuki with being the top telecom innovator in Asia—is rare. Senior U.S. intelli­gence experts who come to Japan, I am told, head straight for Mr. Suzuki’s downtown Tokyo office.

This is what he tells visitors in a nutshell: Suzuki-san maintains that the events of Sept. 11 last year helped to catalyze a growing conviction in the telecom world in America that the industry requires an entire new infrastructure. The same may go for Japan.

Here, moves are afoot to strengthen a new telecom infra­structure based on optical fiber systems. With IIJ setting the pace on the Internet, the group is the prospective winner in this field— not NTT. Within the group, work on the optical fiber systems is performed by Crosswave Communications, an IIJ affiliate in which Toyota and Sony have substantial holdings.

“It is the opportunity of a life­time,” Mr. Suzuki told me.

“I am the one who has to do this. Fortunately, given the relative­ly small size of Japan compared with the United States—Japan being just the size of California— we do not need very much money to do the job.”

How much is required? Basically, ¥20 billion ($153 million at ¥131 to $1). This is the additional funding Mr. Suzuki needs over the next couple of years to strengthen that new fiber optic net­work being reinforced in Japan by Crosswave Communications. Mitsui Sumitomo Banking Corporation, a lead banker for the IIJ group, has taken on a mandate to gather the funds needed.

I was curious. Did that mean the money is in the bag? Pretty much, Suzuki-san responded to my question. But I gathered from the look on his face that the matter remains to be tied up.

It’s a tense time for him. He is a little overweight. He is also a pack-a-day man.

Our conversation drifted to the subject of Japanese literature. My companion rose to his feet, went with rapid strides to a book­case and extracted a volume from his edition of the collected works of Natsume Soseki, the foremost nov­elist of modern Japan.

“Do you know Soseki?” he asked. “Do you know Bochan?” he asked, naming one of Soseki’s best-known works. He flipped open the tome and showed me samples of the turn-of-the-century writer’s essays on English poetry— Wordsworth, Keats. Suzuki-san’s enthusiasm was infectious. 1 began reciting the opening lines of Coleridge’s Kubla Khan.

“In Xanadu did Kubla Khan

“A stately pleasure-dome decree…”

Suzuki-san all but burst into a dance, waving his hand in time.

After I had left him, I had a chance to gather my thoughts— and consider what really is going on over there in Takebashi. The heart of IIJ—and the “chaotic” world of the Internet, to use Mr. Suzuki’s expression—is its engi­neers. To hear Suzuki-san talk about them, they are his great asset. Nothing else compares. Money is relatively of secondary importance.

“Not one engineer left us last year,” he told me proudly, as if this was by far his biggest achievement in 2001. Keeping his corps d’elite of 500 engineers in the group happy—many of them, no doubt, are highly strung, Internet-con­nected types—is the big challenge. These people are at the heart of the “corporate culture” of the IIJ group.

“During the day he spends all his time meeting visitors in the office,” says Junko Higasa, IIJ’s PR person. “At night, he keeps open house at his home for the engi­neers,” she adds.

It is an attractive image—the boss who invites his engineers to make his house their own. This, in fact, is how IIJ works as a compa­ny. Mr. Suzuki knows all his men by name. Suzuki-san has a formi­dable reputation as a self-educated techie, Japanese friends told me.

Is he also a great manager? I am not sure. I think he takes after Soichiro Honda—someone he knew when he was very young, and greatly admired. He runs his com­pany as an engineer might, paying attention chiefly to the technology. A remarkable man.