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Published: August 28, 2006

 
 

The Ambassador from the Next Economy

Most venture capitalists invest on behalf of pension funds, endowments, and other deep-pocketed clients. Because they can be personally involved in only so many companies, and because their funds are typically large, they tend to make big bets on fairly established enterprises, often in the multiple millions. And since they must show a positive return within the life of a particular fund, they look for deals with a clear exit strategy, preferably a public stock offering. In contrast, Mr. Ito invests very early, when just a few thousand dollars can make a significant impact, and he says he is less concerned with business models and IPOs than he is with creating something of value to society, whether that is fostering “one-to-many” publishing on blogs or facilitating global virtual communities through chat rooms or multiplayer online games.

“I’ve found that when I focus too much on where the money is, I end up finding fairly shortsighted opportunities,” Mr. Ito says. “But if I focus on looking for people that I like and looking for things that I intuitively feel excited about and just focus on helping those things, then I end up with the best returns.”

An Open Source Life
Most of Mr. Ito’s portfolio companies adhere to the Open Source Initiative, meaning that the underlying source code to the software is freely available and adaptable. But open source is also an apt metaphor for Mr. Ito’s life and work style. When a reporter asks about his whereabouts for the next few weeks, he immediately offers a copy of his computer’s calendar file. His cell phone number is on his blog, so literally anyone can call him; his political writings are published on a wiki so readers can and do edit his content; and although there is no law requiring disclosure of the kinds of private investments Mr. Ito makes, he makes them all public. Maintaining such openness is his way of gaining legitimacy in the world’s eyes without the burdens of authority, but there is a downside. He is too frequently distracted and as yet has not made himself wealthy, he says, noting that he still cannot live off the income from his investments alone.

Of course, not everyone gets through to Mr. Ito, who says that he responds to only a fraction of the calls he receives. Just as a well-regarded programmer’s bit of code is more likely to be integrated in the next iteration of Linux, entrepreneurs or activists with standing in the global online community are more readily granted an audience with Mr. Ito.

“Joi’s very straight,” says Vint Cerf, the chief Internet evangelist at Google, chairman of ICANN, and coinventor of the TCP/IP protocol. “You don’t get any impression that he’s maneuvering. He’s candid, and he’s respectful. In a world of highly political issues, it’s really refreshing. He often provides very useful and practical advice. But he has an idealistic streak, which conflicts with the pragmatic, and I think that causes him a bit of internal turmoil.”

That turmoil was evident in Mr. Ito’s first major step into the political limelight — at the annual Japan Dinner at the 2002 World Economic Forum, held that year in New York instead of Davos, Switzerland. Attending that meeting were such eminences as Nobuyuki Idei of Sony; Yotaro Kobayashi, chairman of Fuji Xerox; Kakutaro Kitashiro of IBM Japan; and Sadako Ogata, the United Nations high commissioner for refugees. Mr. Ito dominated the discussion, blaming the risk-averse establishment elders gathered in the room for Japan’s moribund economy, as the Webzine Slate reported at the time. “The problem with ‘destroy and rebuild’ [the rhetoric then coming from the more radical reformers in the country] is that everyone immediately focuses on the rebuild part,” Mr. Ito said. “What we need to do is just destroy.”

 
 
 
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Resources

  1. John Seely Brown and Douglas Thomas, “You Play World of Warcraft? You’re Hired!” Wired, April 2006: Extols fantasy role-playing games as leadership training. Click here.
  2. Joi Ito, “World of Warcrack,” Wired, June 2006: Tribute to Blizzard Software’s “glimpse into our future.” Click here.
  3. Joichi Ito’s Web site: Features “Where is Joi” plus an exhaustive CV, a Flickr site of photographs, two blogs, and links to the Web sites of the various organizations where Mr. Ito works and plays. Click here.
  4. Mizuko Ito, Daisuke Okabe, and Misa Matsuda, editors, Personal, Portable, Pedestrian: Mobile Phones in Japanese Life (MIT Press, 2005): Essays about the virtual community sparked by keitai (communications devices) in Japan, coedited by Joi Ito’s sister.
  5. Lawrence Lessig, The Future of Ideas: The Fate of the Commons in a Connected World (Random House, 2001): The cofounder of the Creative Commons argues for an Internet that balances intellectual property law with public domain protections.
  6. Christopher Vollmer, John Frelinghuysen, and Randall Rothenberg, “The Future of Advertising Is Now,” s+b, Summer 2006: How marketers can thrive in the kind of environment that Joi Ito’s life foreshadows. Click here.
  7. Creative Commons Web site: Clearinghouse for open source approach to copyright and intellectual property dilemmas, with Joi Ito on its board. Click here.
  8. For more business thought leadership, sign up for s+b’s RSS feeds. Click here.
 
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