Entrepreneur: Turbulent times breed innovation

by Alex Martin

Growing up in California in the 1970s as the child of issei, William H. Saito recalls how his father imported math textbooks from Japan and insisted he study them extra hard to gain an edge over others.

Every night after a long day’s work, Saito’s father, a chemist, would look over the answers to the various problems he had assigned to his son in the morning. They were several grade levels above U.S. standards.

By the time Saito entered junior high school, his math teacher called his parents to tell them he was beyond the scope of their math curriculum.

His teacher instead suggested that Saito try his hand at operating “this newfangled computer thing,” advice Saito’s parents diligently followed by collateralizing their home to get a loan for a PC, which was still relatively rare and expensive in the early 1980s. It changed their son’s life.

On Wednesday, the World Economic Forum was to name Saito, who is credited for developing the world’s first biometric authentication standard for technologies such as fingerprinting and iris recognition, as a member of The Forum of Young Global Leaders, a community consisting of elite international representatives in various fields, including business, government and academia.

The title, given to around 200 people under age 40 around the world every year who have demonstrated their commitment to serving society, is another addition to Saito’s impressive list of accolades he has received over the years as the embodiment of a successful entrepreneur in the computer age.

Saito, 39, now lives in Tokyo following his decision to move to Japan after selling the company he founded when he was 20 years old, California-based I/O Software Inc., to Microsoft in 2004.

“I felt it was very important to give back to the society here that helped me get to where I was, and basically support the young generation and cut them a break,” Saito said during a recent interview with The Japan Times.

Today, Saito, CEO of Tokyo-based technology consulting firm InTecur K.K., works as an adviser to various entrepreneurs and governments worldwide, while also spending time helping out startups and teaching at universities, including Keio University Shonan Fujisawa Campus, the National Graduate Institute for Policy Studies (GRIPS) and Tokyo University of Agriculture and Technology.

As an authority on information security policy and entrepreneurship, he also spends a chunk of his time traveling to various countries to attend conventions and seminars.

Looking back, Saito recalls how his teenage years coincided with the period of Japan’s bubble economy, when many U.S. firms were interested in entering the Japanese market. One of the jobs he landed during this time was translating U.S. software applications into PC 98 standards, the norm in Japan at the time.

After entering college when he was 16, Saito continued to work from his dorm as a programmer for several companies, including Japanese giants NEC, Toshiba and Sony, and launched I/O Software in 1990.

The company went on to develop the first Windows-based videoconferencing software, which was later licensed to several companies that created products around this technology. I/O also developed the first biometric authentication standard for technologies such as fingerprinting and iris recognition that was licensed to more than 160 companies worldwide, and integrated in the latest version of Microsoft Windows.

“We became this company that was strong in encryption, and on how to protect valuable data such as one’s personal fingerprint data,” Saito said. His pioneering work was recognized in 1998 when Saito was named Entrepreneur of the Year by Ernst & Young, Nasdaq and USA Today.

His association with various Japanese corporations also gave him an opportunity to brush up and improve his Japanese, a language he is now fluent in but never studied at school.

“During the time I had my company I probably went to Japan over 100 times on business trips, and that was how I developed my Japanese . . . so all my Japanese is really OJT (on-the-job training),” he said.

While admitting he is still more comfortable giving speeches and presentations in English, Saito’s Japanese ability allows him to communicate directly with the Japanese government when advising officials on topics such as innovation, entrepreneurship and education, and when helping out various Japanese startups and entrepreneurs.

And through his experience in dealing with Japanese corporations and the bureaucracy, Saito said he has observed several factors that may be curbing Japan’s global competitiveness.

“I talk a lot about Japan in a pretty harsh tone, and a lot of people ask me why the hell am I still in Japan,” Saito said. “But it’s great to be in Japan because its most valuable natural resource is its brain power; it’s the intellect, the knowledge to be able to be innovative, and it has a long history of doing so.”

He added, however, he believes Japan in the past 10 to 20 years has lacked the passion to execute ideas, what he called the “last-mile problem.”

Saito said that compared with other nations, Japan has the infrastructure — the universities, the educated workforce, the scientists — components that take decades to build and are necessary in converting raw innovation into products and globally recognized companies.

“If you think about it, Japan has done all the hardest of things, so what’s left is that ‘last mile’ . . . what Japan and its youth lack is a clear vision as to why they are there and what they can look hopeful to,” Saito said.

He acknowledges that the sluggish economy and revolving-door politics have cast a shadow over the nation, but such times are when innovation happens.

“In a sense there is a lot of pessimism and there is a lot of turmoil and there is a lot of uncertainty, but that is why I am putting so much effort in this day and age, because the great companies, the great innovations, the great disruptive technologies come out in these times, and Japan is that perfect breeding spot right now,” he said.

Saito said one of the tasks he undertakes here is connecting different innovative technologies to different industries to find a match, something Japanese seem to have trouble doing because of their tendency to focus only on their own fields.

Saito has invested in a dozen Japanese startups, and gives scholarships to several students each year whom he thinks show promise, although last year the parents of both students refused the grants, believing their children would be left behind by the pack when it comes to finding a job.

Saito said such attitudes, backed by recent statistics showing how the number of Japanese students studying abroad is declining, is hurting Japan in the long run.

“Japan doesn’t have enough global input because of its lack of people going overseas and learning different cultures, its reluctance to speak English, its reluctance to bring in foreigners to make it a more heterogeneous society, even at least in companies,” he said.

But Saito still firmly believes the Japanese system is capable of creating successful and innovative companies, if the right support is there.

“I’ve created and spun out a number of very successful companies, and the last two years have been gangbusters and the most profitable ever,” Saito said. “So when people say, ‘Oh God, this sucks, finances are down’ or ‘Sales are down,’ I have no idea what they’re talking about.”

Ever the innovator, Saito said his main task now is to bring the vibrancy and entrepreneurial spirit back to Japan while looking for the next big thing to be a part of.