When Katsumi Iizuka personally assumed in 2001 the 2.4 billion yen debt that his failed personal computer firm had accumulated, few would have expected him to make a comeback.
In 2003, Iizuka created byd:sign Corp., a venture to assemble and sell low-price flat-panel TVs for the domestic and overseas markets.
“I couldn’t get a feeling of satisfaction with Akia,” Iizuka said, referring to his failed PC venture. “I wanted to a second chance at creating a business with huge potential.”
Iizuka believes his venture can penetrate the global market as cathode-ray tube TVs are replaced by their flat-panel brethren, including liquid crystal display and plasma TVs, over the next five to 10 years.
Tokyo-based byd:sign has expanded quickly. Sales skyrocketed to 5.6 billion yen in 2005 from 470 million yen in 2004. This year, the goal is 15 billion yen. The firm does not disclose profits.
“I wouldn’t say our results were miraculous, but we’ve achieved an unexpected performance,” Iizuka said.
One major reason for the sales boom is that Iizuka has been able to draw on the business knowhow he learned the hard way at his failed Akia Corp.
He was also once president of the Japan unit of U.S.-based Dell Inc.
After leaving Dell in 1995, Iizuka founded Akia in Tokyo in 1996 to make and sell low-price PCs. Success came fast: Annual sales reached 12.7 billion yen in 1997.
Then came a serious setback in 1998. Akia was forced to stop selling PCs using Apple Computer Inc.’s Macintosh operating system when Apple decided to restrict its OS license to just one company in Asia.
“At the time, we were shifting our business focus to producing more Mac-clone PCs because it could bring two to three times more profit than making PCs based on (Microsoft Corp.’s) Windows,” he said.
Making matters worse, inventories increased rapidly due to a problematic maintenance system and Akia faced a management crisis.
To revive the PC venture, Iizuka did a deal with Casio Computer Co. in 1999 to move Akia into a joint venture with Casio, in which Casio held the largest stake.
In the end, he had to shoulder Akia’s debts — 2.4 billion yen — as the joint venture could not turn a profit.
Iizuka paid off the debts by 2003 by selling his Dell shares and working as a consultant to a number of different companies. Eventually, he was able to venture into TV manufacturing.
Byd:sign, like Akia, uses a “fabless” business model, which makes it possible to sell products at low prices. Key components are procured from companies in Taiwan, South Korea and Japan and a maker in China assembles the products.
To avoid a repeat of past failure, Iizuka has taken measures to minimize risks for the TV firm. For instance, to keep inventories down, about 80 percent of byd:sign’s products are made to order. Akia produced its PCs before taking orders.
The TV venture has only 30 employees, while the PC venture had 120 at its peak.
And unlike Akia, byd:sign entered the U.S. market before advancing into the domestic market, where powerhouses like Sharp Corp., Sony Corp. and Matsushita Electric Industrial Co. hold sway.
“It’s difficult for a venture to be successful in Japan,” Iizuka said. “I knew the U.S. market well because I had worked for U.S. (IT) companies for more than 20 years. I also knew that American consumers would buy products (by a venture) if they find value. So we entered the U.S. first.”
About 60 percent of byd:sign’s sales in 2005 came from the U.S.
Iizuka is using other tactics to achieve success. He buys discount flight tickets for economy class seats and stays in cheap hotels whenever he goes abroad, whereas he used to ride business class and stayed in luxury hotels.
“We need to save as much as we can to develop new products,” he said. “It was hard to accept (the new business-travel style), but I’ve gotten used to it.”
Another way the venture saves money is by not running any ads except on its own Web site.
Byd:sign has set aggressive goals — cracking the top five TV makers in Japan and the global top 10 — in five years.
To help achieve these goals, it plans to enter China in 2007 and South America in 2008, Iizuka said.
It won’t be easy.
Shigehiro Tanaka of BCN Inc., a market research company in Tokyo, said that major domestic manufacturers hold a 98 percent share of the TV market in Japan, making it difficult for a venture like byd:sign to carve itself a bigger slice of the pie.
“Japanese consumers prefer national brand products. So (byd:sign) can find more customers overseas,” he said. “In Japan, it might find limited customers such as households that want to buy a second or third TV set at a low price.”
Japan has not been forgiving of people who have failed at business, and making a comeback is difficult. Iizuka believes his success stems in great part from the network he nurtured over the last 20 years.
“I have a lot of friends (around the world) who have supported me in procuring key components and building sales channels in the U.S. Without these connections, I couldn’t have started up this business,” he said. “I hope (byd:sign) will have major success and build solid bases around the world to continue this business.”
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