Worth £50m by his 30th birthday, Takafumi Horie was the brash whizz
kid with a finger in every pie, from space travel to politics. But
this week investigators raided the offices of his online empire,
sending markets into freefall. Justin McCurry in Tokyo and Oliver
Burkeman trace his rise and fall
Thursday January 19, 2006
The Guardian
It was already dark on Monday night by the time investigators in
sombre suits and overcoats swept up to the front entrance of Roppongi
Hills, a deluxe business and residential complex in the centre of
Tokyo. What was happening, if looked at in one way, was nothing less
than a showdown between two cultures - the old Japan and the new -
and the event got the attention it deserved, thanks to the presence
of several television crews, tipped off in advance by the Tokyo
district public prosecutor's office. As the cameras followed, the
investigators raided the offices of Livedoor, a hugely successful
internet company, and then, elsewhere in the same complex, the
private apartment of Livedoor's owner, a chubby, flamboyant 33-year-
old entrepreneur named Takafumi Horie. Within 24 hours, the sequence
of events sparked by the raid had closed the Tokyo stock exchange, as
panicking investors raced to get rid of technology shares,
overloading the exchange's computers. By yesterday, the Tokyo market
was in full-scale turmoil as the prosecutors' criminal investigation
widened, and the ripples were being felt around the world.
The Livedoor empire stands accused of violating securities laws,
spreading false information about takeover bids in 2004, to hide
losses and boost the company's share price. But even Takafumi Horie's
nickname provides a clue that the conflict is about more than this.
In the bureaucratic, rigidly hierarchical world of the Japanese
boardroom, an ordinary executive would never be considered cuddly or
approachable enough to be nicknamed after a popular children's
television character. But Horie, known as "Horiemon" - a pun on
Doreamon, a chubby blue cat with magical powers - is anything but
ordinary.
In a country that craves consensus, Livedoor, the firm he founded at
23 with a 6m yen loan, having dropped out of Tokyo University, has
polarised the Japanese business world. To his supporters, Horiemon
personifies the ambition, spiked with a little abandon, that is
exactly what the country needs to adapt to rapidly changing global
economic realities. His detractors are appalled for many reasons.
First, there's his style: Horie is famous for attending press
conferences in a T-shirt and jeans, spurning the regulation suit; he
drives a Ferrari, dates models since he got divorced, owns a
racehorse - named Horiemon, naturally - and appears regularly on
television gameshows. Then there are his methods of business.
Livedoor has grown so rapidly thanks to an aggressive policy of
hostile takeovers, a phenomenon virtually unknown in Japan, where the
traditional expectation is that revenues should be generated by
sales, not swallowing other businesses. His approach to mergers and
acquisitions has been compared, by one Japanese professor of
business, to professional wrestling. The title of one of Horie's many
books on entrepreneurialism makes matters plain. Its title is Earning
Money is Everything: From Zero to 10 Billion Yen, My Way.
Livedoor, a Yahoo-style internet portal offering everything from an
online department store to a job agency and an email service, is so
popular with young Japanese consumers that it made pre-tax profits of
11.2bn yen (£55m) in the year to September 2005. But the
multimillionaire at its helm attracted little attention until 2004,
when he tried to buy the troubled Kintetsu Buffaloes baseball team,
an attempt quickly terminated by the gerontocracy that is the
Japanese baseball establishment. In a retort that proved it was not
necessarily just his business credentials, but his personal style,
that was so distasteful, the Buffaloes ended up being sold to another
up-and-coming internet firm, Rakuten.
But Horie appeals to young Japanese and horrifies their elders for
exactly the same reasons. The generation that visits chatrooms and
portals and has never studied the market pages of the Nihon Kezai
Shimbun, the financial daily, swoons over his unimpeachable belief in
his own abilities, and sneers at the old-school backslapping indulged
in by their hero's opponents. Asked last year by the Wired magazine
journalist Brian Ashcraft why he had dropped out of university, Horie
said: "Didn't Bill Gates drop out of Harvard to start Microsoft?"
Like Gates, Horie's ambition made itself plain early on. He grew up
in Yame, Fukuoka prefecture, on Japan's southernmost island of
Kyushu, a region with a tradition of non-conformism and which,
tellingly, has produced its fair share of entrepreneurs and
celebrities. But his father was an ordinary salaryman. Perhaps it was
the slavish devotion to stuffed-suit bosses that convinced the young
Horie that he was only ever going to be subservient to one person:
himself.
Briefly, in his late teens, it looked as though he might opt for the
conventional route to the top. He won a place to study literature at
Tokyo University, the most prestigious university in Japan and the
nurturing ground for generations of high-ranking bureaucrats and
politicians. But that appears to be when Horie started to acquire his
rebellious streak. Ditching plans to major in religion, he dropped
out - but not before he and a few friends had started up a web firm,
prophetically named Living on the Edge. His exposure to the internet,
then still in its formative days, had given him an unshakeable faith
in the digital media revolution to come. He now claims to have been
the only person he knew at the time who had an email address printed
on his business cards.
If Horie's disdain for the niceties of Japanese corporate protocol
weren't enough to horrify the establishment, his naked ambition
certainly was. Modesty is not a concept close to his heart. He takes
long business trips in a private jet; his love of good food and wine
is obvious from the paunch that, despite regular workouts at the gym,
is clearly visible beneath his designer T-shirts. Furthermore, he has
always been an astute massager of media egos, making himself
available to reporters - even after his offices were raided - and
never failing to provide an incendiary soundbite for the benefit of
his enemies. "All evils come from aged business managers," he once
declared, promising to "kill newspapers and television" in his
efforts to make Livedoor into an all-encompassing media empire.
Whether its architect is exonerated or ends up in court, the Horie
effect has already shaken Japan's complacent, self-satisfied
corporate structure to its core. His bid last year for Nippon
Broadcasting Systems, the radio arm of Japan's biggest and arguably
most conservative media conglomerate, failed, but not before he had
gone far down a route most executives had hitherto feared to tread.
Horror greeted the news in February 2005 that he had acquired a
controlling stake in the media firm by exploiting a loophole in
Japan's securities law - trading out of hours, acquiring his stake
without the company even realising.
While supporters hailed his ambition, the broadcaster's many media
cheerleaders poured scorn on the upstart with the spiky hair who
sneered at the financial traditions on which Japan had built its
postwar success. The involvement of the American investment bank
Lehman Brothers merely added fuel to the fire.
By acquiring a controlling stake in NBS, Horie would have gained a
big say in the running of a television channel, several magazines and
the Sankei Shimbun, by some distance Japan's most rightwing
broadsheet newspaper. The paper's response to this prospect was
delivered with the venom it usually reserves for teachers' unions and
North Korea.
"Our readers, our columnists and history wouldn't forgive him," the
newspaper thundered. A weekly magazine even equated him with the
leaders of Aum Supreme Truth, the doomsday cult behind the fatal gas
attack on the Tokyo subway in March 1995.
During the heady days of his takeover bid, it seemed impossible to
avoid Horie, female assistant in tow, as he appeared on one chatshow
after another to talk up his bid and bad mouth his detractors. For
many people, the accusation of being "un-Japanese" would have been
too hard to take but Horie, tellingly, wore that charge as a badge of
honour. "I don't really perceive myself as being typically Japanese,"
he said in an interview with CNN after last September's election. "In
a way, I feel I'm a citizen of the world. A universal person."
The takeovers were unsuccessful, but Horie was unbowed. By the end of
last summer, the rebel who once boasted he had no interest in
politics was persuaded by a fellow maverick, Prime Minister Junichiro
Koizumi, to run on a reform ticket in the general election. After a
private discussion, during which the premier reportedly treated his
fellow believer in post office privatisation "like a son", he signed
up to become one of Koizumi's "assassins" - a band of hand-picked,
invariably young men and women from outside politics who supported
his plans to push through controversial plans to privatise the post
office and its multi-trillion yen assets. ("I do want to become prime
minister," he said later, about his long-term political ambitions.
"But it's all right if I'm not, as long as a good, brilliant person
gets the position.")
Horie was dispatched to rural Hiroshima prefecture to take on Shizuka
Kamei, one of the most formidable politicians in postwar Japan, a
former head of the national police agency with the rhetorical
delivery and ruthlessness of a dalek. (Horie campaigned in a black T-
shirt sporting the word "Revolution".) It is a measure of Horie's
popularity that, while Kamei emerged the winner - by 110,979 votes to
84,433 - his nose had been badly bloodied by a novice he had
dismissed as "a curiosity for people to gawk at".
Having administered a two-fingered salute to the business and
political establishment, Horie now wants to defy the laws of gravity.
Last month, he announced plans to send people into orbit on a
spaceship modeled on the Russian TKS spacecraft. With typical
modesty, he called the mission "Japan Space Dream - A Takafumi Horie
Project".
In Horie's youthfulness, his geekishness, and his unswerving belief
that the internet represents not just a convenient tool of commerce
and information but a passport to a bright new digital promised land,
it's easy to see the parallels with Gates: behind the naked ambition
there lies a philanthropic streak, albeit one that if successful will
earn him and his firm a vast sum of money. His biological development
fund is, he said, behind attempts to come up with a "green bug" - a
single-cell algae that provides nutrition when exposed to carbon
dioxide and water. In pill form, he says, it could provide a short-
term solution to hunger in the devloping world.
There's certainly little doubt that he shares the Microsoft founder's
ambition, but his quest for media domination has led others to
compare him to Rupert Murdoch. Horie is unimpressed: he's much more
ambitious than that. "People ask me if I am another Rupert Murdoch,"
he said at a news conference in Tokyo. "Rupert Murdoch is the
chairman of a media conglomerate. But we are planning to become a
media, IT and financial conglomerate."
Uncharacteristically, a more contrite side has emerged in the past 48
hours. On Tuesday, the day after investigators raided the offices of
Livedoor, he did something few can remember him doing, at least
publicly: he apologised. He has also put on hold plans to release a
CD, and there is speculation that the scandal might even force him to
resign as Livedoor president. If found guilty of manipulating his
company's share price, he faces up to five years in prison.
Some have privately voiced the suspicion that Horie is getting his
comeuppance at the hands of an establishment that, by its own
admission, has looked on in horror as he expanded his digital media
empire. The vultures have been circling for some time, and last night
they seemed to be going in for the kill. Even his erstwhile allies
were jumping ship. "The LDP did not officially either field him or
informally endorse him," the secretary general of Koizumi's party,
Tsutomu Takebe, was at pains to stress.
Horie has said that his only requirements in life - in addition to
making money - are food, sleep and sex. None ever seemed to have
posed him much of a problem. But it seems a fair bet that he is
getting less sleep these days.
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