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FOUNDED FIRM AS 17-YEAR-OLD

Young CEO breaks through corporate age barrier

by Hiroko Nakata

With a single click, you can view the 3-D image of a sedan or a sports car on a Web site of global automakers like Honda and Nissan. With another click, you can change the color and model, or even rotate the vehicle.

This is no longer only possible on PCs. Turn on a state-of-the-art mobile phone, key in the right sequence and you can also make 3-D objects pop up on the screen.

This technology has made Yappa Corp., an information technology startup, grow stunningly fast.

“Yappa had no track record, no brand power and no experience. So we needed to have something other companies didn’t,” Yappa Chief Executive Officer Masahiro Ito told The Japan Times in a recent interview.

“That’s when I started thinking about what makes us different from others, and at the time I thought of technology. That’s what led us to search for good technology,” Ito recalled in a high-rise building that looks down on JR Tokyo Station.

What surprises people is not just the new 3-D technology the young company has commercialized, but the age of its CEO, who is unusually young in a country where teenage entrepreneurs rarely prosper.

Ito, 24, was a 17-year-old high school student when he established Yappa in December 2000.

Despite his family background as the son of the former president of a well-known Japanese meat processing firm, Itoham Foods Inc., the young CEO said he initially did not dream about going into business. Indeed, he studied neither business nor economics at school.

“This may be hard to believe, but I didn’t plan on starting a company at first. I was just extremely thrilled with an interesting (business) idea, and decided to choose (to start a company) rather than go to college,” he said.

The idea the 17-year-old Ito came up with was to start an online marketing research business on mobile phones. But the company’s main business soon began revolving around a 3-D technology owned by an Israeli company.

The technology was new because it created 3-D images for the masses, rather than high-tech professionals. Up until then, 3-D technology had been primarily used by manufacturing companies in the computer-aided design of new products.

Yappa tied up with the Israeli firm in 2001 and acquired it in 2002.

What made Ito different from many high school students in Japan was his educational background, which consisted largely of attending international schools. Because of his mother’s desire for him to become proficient in English, he went to a school taught in English from kindergarten.

Asked if this experience affected his decision to launch his own business, Ito said: “One thing that can be said is that the international school had an educational approach that fostered having students find something that would make them happy.” He added that education is an area that Japan may be deficient in.

Nevertheless, the world can often be a harsh environment for a promising young entrepreneur.

One day, Ito received a business order from a medium-size company that would have been worth hundreds of million of yen. He made a contract with the firm, which required Yappa to swiftly make a capital investment to expand the business.

But two days before Yappa was supposed to receive payment from the client company, it canceled the deal without any warning.

Yappa might have gone under due to a lack of cash flow, but Ito fortunately found companies that extended financial support to his company and managed to survive the crisis.

Yappa now has 70 employees and more than 200 corporate clients, a sales estimate of ¥1.3 billion and a ¥300 million to ¥400 million operating profit forecast for the business year to June 30.

Key events in Masahiro Ito’s career

2000 — Sets up Yappa Corp.

2001 — Ties up with Israeli company 3Di to launch online 3-D services.

2002 — Buys out 3Di and acquires its intellectual property and patents.

2004 — Sets up a branch in Paris to expand marketing in Europe.

     — Ito awarded the 29th Young Entrepreneurs Award by business magazine publisher Keizaikai Co.

2005 — Opens a branch in New York to start marketing in North America.

Backed by branches in Paris and New York, as well as in Israel, orders from abroad — including the United States, Brazil, England and Norway — account for one-third of its overall business for the business year.

Ito expects orders from abroad to grow further and account for two-thirds of his business in the next business year to June 30, 2009.

Yappa’s major client companies are no longer automakers. In this business year, about 60 percent of the business has been mobile phone-related, he said.

The range of clients is widening from mobile phone makers and carriers to any digital gadget makers related to display screens.

“What we are doing now is to create ‘user interfaces’ that would improve usability for cell phone users,” Ito said.

In the next business year, Ito forecasts sales to reach nearly ¥2 billion and turn a ¥600 million operating profit.

Asked why the country lacks young entrepreneurs like himself, he ventured that it is probably the side effect of the country’s education — where students are excessively pressured to go to high-ranked schools and universities.

“I don’t think there is any issue with trying to get into a good university or company,” Ito said. “I just think that in Japan the number of young people who have the goal of setting up their own company is low,” he said.

“If Japan wants to see more entrepreneurs in the future, schools need to show students that starting a company is one of their options as a goal,” he added.

In this occasional series, we interview entrepreneurs whose spirit may hold the key to a more competitive Japan.