Selling digital content is becoming a viable business in Japan, and if preliminary results are any indication, the key channel may be the cellular telephone rather than the personal computer.

Bandai says it has signed up more than 180,000 users for its 100-yen-per month 'Itsudemo Kyarappa!' service that delivers popular character images to iMode handset users on a daily basis. Bandai also has 100-yen-per month fortune-telling, matchmaking, and other services, and a combined total subscribership of more than 220,000. The company claims revenues of more than $285,000 per month for these pure services (essentially zero cost of goods) and very low distribution expenses - primarily a 9% commission paid to NTT Docomo for billing and fee collection.

Meanwhile, WNI Weather Information says it has won more than 35,000 subscribers to its 100-yen-per month weather information service. If so, the company is taking in revenues of more than U.S. $33,000 per month from the service.

The use of cellular telephone handsets as a delivery mechanism makes it possible to reach consumers who are waiting for trains, walking on the street, sitting in cafes or restaurants, or otherwise unable (or uninterested) in receiving data via personal computer. Portable handsets overcome the time, place, and opportunity barriers to delivery, since location is essentially irrelevant to the user. They also provide the extraordinary convenience of carrying an ultralight receiver (i.e. telephone handset) in the pocket - no bulky laptop, no setup required.

What distinguishes the Japanese content offerings compared to those in the U.S., in my mind, is the focus on entertainment, fun, and, well, for lack of a better word - frivolity. In the U.S., we're used to paying for the Wall Street Journal Online or Hoover's Online, but not for images of "Hello Kitty" to be sent to our cell phones. The popularity of Bandai's services, in particular, underscores the very different demographic/psychographic segments being served, and the distinctive pop psychology that successful marketers in Japan grasp so well.

That said, more practical, business-oriented services are growing rapidly, too. Sanwa Bank already has more than 20,000 subscribers to its iMode-based online banking service, and says that by the end of the year this number will surpass its base of subscribers who use conventional PCs to do online banking...

Last month we enjoyed conversations over lunch and by e-mail with Allen Miner, former president of Oracle Japan and founder/president of SunBridge, a venture capital firm focused on Japan-specific Internet start-ups. Allen is an extremely gracious host and offers powerful evidence for the notion that "nice guys finish first." Be sure to say hello to Allen at the JIR subscriber party October 20.

- You spent ten years in Japan as Oracle Japan's founder and employee number one. Of all the things you learned about Japan during that time, what stays with you most today? What learnings from those days guide your thinking as you move forward into your second career as a venture capitalist?

It wasn't anything about Japan per se, but something more universal, maybe a truism: ultimately people are all that really matter. Great co-workers and great customers. I'm often asked about corporate structure (distributor vs. direct, large trading house vs. small venture business partners), about the right balance between global strategies and programs and a purely local approach, etc. My answer is that macro issues like these don't really make much difference. What does matter is (1) the quality of the people you rely on and work with day to day and your willingness to trust and support them to run the business as they see fit, and (2) your willingness to treat your Japanese customers like gods, to listen meekly and serve faithfully.

Early on, I saw plenty of opportunities lost, customers annoyed, and employees discouraged by headquarters micromanagement. I've been guilty myself sometimes. On the other hand, the trust that Oracle's top management placed in Sano-san (Oracle Japan's president from 1990) and what he made of that trust were truly remarkable. It led to some pretty wild ideas, like hiring a dog, filling the office with plants and fish and curvy tables, and spending most of each year's marketing budget on a single grandiose event. It also meant that Oracle Japan sells primarily through channels in a company famous for its aggressive direct sales culture and that we focused only on database at a time that Oracle was trying to break into the enterprise applications business. The outcome of it all was that Oracle Japan went from #3 to a dominant #1 position in the database market and grew into a 1,300 employee $500M company, the most profitable division in Oracle.

We apply that same philosophy when investing. Especially in the early stage, the details of the business plan: the idea, the strategy, the analysis, the financial forecasts are far less important to us than the people. Do we like them, do we think we can trust them to make the right decisions, to be flexible and adaptable? Do they seem likely to really listen to and learn from their customers. Ideas, strategies, analysis, forecasts--they matter, but people make the difference.

One other favorite learning: Japan is "the land of $100 melons." You've seen them, Tim, the wooden-boxed, gift-wrapped, beautifully textured musk melons sold in specialty fruit gift shops. I always knew Japan was an expensive place to live, but for the longest time, I couldn't figure out why anyone would pay $100 for a melon when the $25 ones taste just as good. Figured it was just one of those Japanese mysteries that a "gaijin" would never understand. But once when I was looking for an interesting visual metaphor to use in a presentation I got to thinking about how much care went into the growing and selection of the best melons on the farm, into producing a flawless vein structure and elegantly shaped stem, about how carefully they were packed and shipped to the city, how carefully placed and packed in a handsome wooden box then beautifully gift wrapped at the shop to be given as gifts to people you care about. Japan may be the land of high prices, but it is also the land of caring and quality. To truly succeed there, I think you need the caring of a melon farmer. If you have it, the Japanese will recognize, appreciate and reward you for it.

- Tell us about your activities and goals at SunBridge. Are you actively looking for new investments? If so, what kind of companies/business plans attract you?

SunBridge hopes to contribute in some small way to bringing the U.S. and Japan closer together. You know, increase mutual understanding. We try to combine the best of Silicon Valley venture capital practices--e.g. active involvement with our portfolio companies by the SunBridge principals who are well-connected veterans of the Japanese technology and Internet industry (vs. the financial-industry background typical of many Japanese VCs) - with what we see as the greatest strength of Japanese business, namely the ability to engage in long-term, synergistic, committed corporate relationships. We are actively looking for new investments where we can make a meaningful contribution based on our industry experience and where there are clearly identifiable synergies with other companies already in our portfolio. We want to help create and evolve a self-sustaining, value-enhancing, business ecosystem.

We are focused just on the Internet and just on the Japanese audience, so that needs to be the focus of any company we invest in. We made our first investment in May, a 10% stake in Japan's only pure-play (=no bricks and mortar) Internet bookstore honyasan.co.jp. Our second portfolio company is Insight Technology, who we think are the best team of high-end Oracle database engineers to be found anywhere in Japan. There are hundreds of front-end Web design boutiques in Japan today who lack experience with large-scale back end systems, and hundreds of large system integrators whose focus is not exclusively on the Web. We hope to build Insight into the premier high-end Internet system services company in Japan and probably the core company in the SunBridge ecosystem. Already honyasan and Insight are working closely together, helping one another and learning from one another. Currently we are looking at several interesting opportunities in eCommerce, Media/Community, and Web Services. Some are U.S.-based companies targeting Japan, most are Japan-based startups.

- What do you want to hear from entrepreneurs that you usually don't?

We'd love to have entrepeneurs tell us what desire, what passion, what fundamental motivation drives them. Why does he or she really want to start a company? What is the true reason, deep-down, inside. Is it the financial payoff? Is it a passion to create? to serve? to become famous? Business plans and proposals never get this personal but if we knew what the entrepeneur *really* wanted it would be so much easier to gauge the likelihood of creating a successful business, and to know how we can help achieve the personal goal, too. Unfortuately, I think very few people understand themselves well enough to even know the honest answer to this question, let alone be able to share something so personal. If we're lucky, we just kind of figure it out as we struggle along together and hopefully there's a good fit between what we love and what we do. What's my deep motivation? I'm not sure I know the answer... Maybe it's to teach.

- You've achieved financial success far beyond what most people aspire to, even in their most ambitious dreams. How has this affected your personal outlook on life and work?

Interesting question. Of course, it's wonderful to have enough money to know (in your mind, if not in your heart) that you can do just about anything you'd like to (including investing in Japanese Internet startups) but I think our basic values and outlook on life are pretty much fixed by the time we're teenagers. After that, I don't think having money or not having it changes us in any fundamental way. Growing up in a lower-middle-class, close-knit, large Utah Mormon family has a lot more to do with my outlook and self-image than wealth ever will. Camping, reading, and visiting with family and friends are still my favorite recreation. I'd still rather drive a "good-value" car like my Toyota than the Mercedes and BMWs that are ubiquitous in California. I'd rather live in a nice middle-class suburban neighborhood than a city penthouse or a country mansion. I'd rather have my children go to good public schools than competitive private ones. I think my personality and outlook are still basically midwestern and middle-class.

When I think about whether having money ever changed my perspective, I remember a time I went grocery shopping shortly after joining Oracle at a salary of $36,000/year. I noticed that I was buying food (I think it was a bottle of Newman's Own salad dressing) just because it looked good without paying any attention to the price. First time I think I'd ever done that. Later I surprised myself by spending more than $40 on a pair of shoes for the first time--the Bally's were just too comfortable to resist. I bought a Honda Accord (new, not used) then moved closer to the office because I was afraid that commuting miles would wear it out too quickly. There are other, later moments, room service in a fancy hotel, a family vacation in Hawaii, a somewhat overdone Japanese wedding, but most of my vivid memories of feeling well-off are from those first few months as a salaried employee at Oracle. If SunBridge is successful, maybe I'll celebrate by treating myself to a $100 melon sometime.

Just when I was thinking how impractical it would be to operate a Web-based grocery delivery service in Japan, one pops up. Cocodes (get it?), located at , launched September 27 with an offer of next-day, direct-to-the-home delivery of hundreds of different grocery items and sundries. Payment is possible now by cash COD, and Cocodes says it will accept credit cards soon.

I just finished telling a Seattle audience how logistically complex and relatively expensive direct-to-the-home delivery is in Japan, and how those restrictions are shaping the future of business-to-consumer e-commerce distribution around points of convergence (POCs) - namely, convenience stores, train stations, and so forth. I stand by that opinion, and look forward to seeing it challenged by ventures such as Cocodes.

Enjoyed a whirlwind visit to Atlanta, Georgia last month, where I caught up with buddy Rick and got a glimpse of the future of "Web-on-cellphone," U.S. style. Might be a good idea for those now doing conventional Web pages to add HDML and WDML to their skill sets...

You are cordially invited to attend the second annual Japan Internet Report (JIR) subscriber party in Tokyo on Wednesday, October 20, from 6:30 p.m. 'til late at the Aoyama Diamond Hall, directly above Omotesando Station. As mentioned in my message the other day, this year we would like to trim the loss a bit, and are therefore asking for a 6,000 yen per person contribution. This includes heavy pupus (that's Hawaiian, pronounced "poopoos," for "snacks") and drinks. Please respond to me directly (tim@jir.net) with your name, organization name, telephone number, and number of people committing to attend. We would like to get an accurate count of committed partygoers to make sure that everything goes smoothly.

So far we've had over 50 committed responses and I think we may wind up with as many 100 attendees. Last year's party was a lot of fun, and not just because of the serious schmoozing that went on. This year attendees will have the chance to mix and mingle with people from organizations such as American Export Network, Bear Stearns Japan, BMW Japan, Citibank, Computing Japan Magazine, Digitized Information, Dresdner, FedEx, Global Online Japan, ING Barings, iJapan, Japan Market Engineering, J.P. Morgan, Lands' End Japan, LINC Media, the Los Angeles Times, NCR Japan, Nippon Venture Capital, Primark Japan, PSI Japan, SunBridge, TKAI, Turnip Communications, Veritas, and many others. The particulars are:

Wednesday, October 20, 1999 6:30 pm
Aoyama Diamond Hall
B5 Exit of Omotesando Station
Telephone 35467-2111
RSVP to tim@jir.net

We will send e-mail to all confirmed partygoers a week or so before the event with room specifics, etc.

Hint: A number of us will be there from 6:00 pm or so, so come early if you want to get a head start on the schmoozing. Also: Valuable Sponsorships available for providers of door prizes - see FAQ below.

- What will be the official language of Super JIR Rock Jam Tokyo '99 Schmooze & Booze Spectacular?

There is no official language, because mostly we are going to schmooze and booze, not listen to boring speeches. Let me emphasize that this will be a casual, Western-style cocktail party with the purpose of meeting as many people as possible as quickly and efficiently as possible, and having a great time while doing so. There will be no Japanese-style party rituals, save for some short formal comments by a few attendees. Those making formal remarks during the event can speak in whatever language they want to, although I strongly recommend either English or Japanese.

- I would like to invite some Japanese colleagues who do not speak English. Will this be worthwhile for them?

That depends mostly on 1) their comfort level in an unstructured, Western-style cocktail party, and to a lesser extent on 2) their willingness to speak Japanese with foreigners. As to 1), there will be quite a few Japanese nationals attending, so it's a question of partygoing style rather than language. As to 2): Believe me - and I think I speak for most non-native speakers who've worked hard to develop a high level of Japanese language ability - it is extremely refreshing and pleasant to meet Japanese nationals who are interested in and willing to engage in real conversation in Japanese (let me add that most of the foreigners attending speak Japanese well or extremely well). We welcome anyone of any nationality, regardless of language ability, as long as they have 1) a sincere interest in the Japanese Internet, and 2) the ability to fork over 6,000 yen.

- Will there be door prizes this year?

We would greatly appreciate any donations that some of the more well-heeled attendee companies might be able to provide. Let us know your prize ideas, and we'll work out a Valuable Sponsorship. E-mail me or call Aki at 33465-7069.