The Gaijin Club

(Being a foreigner in Japan) is like being a black guy back home. Only there are less of us. - Dennis Haysbert as "Hammer" Dubois in the movie Mr. Baseball

The sideways glance. The slight nod. The brief eye contact. These are the subtle "secret handshakes" that fellow non-Asians pass while in Japan, or pretty much any Asian country.

Japan's population is over 99% ethnic Japanese. South Korea is over 99% ethnic Korean. Taiwan is 98% Chinese or Taiwanese. And so on throughout Asia, so non-Asians stick out like sore thumbs. And not only do the natives notice it, but these countries are so homogeneous that even we visitors notice it when a non-native is around.

So when two Westerners see each other, there is the immediate bond, but also the questions: Is he also here on business? Is she a tourist? Does he live here? Does she speak the lingo? But the bond is immediate, and if in a restaurant, bar or lounge, conversation is easy to strike up since there is the bond of we're outsiders here. (This little fact is what made the link-up in Lost in Translation so believable).

And people from the same country have an even closer bond, and you can tell with a pretty high accuracy what country someone is from just by looking at them. How? Believe it or not, the stereotypes of looks and dress are incredibly accurate (which is why they are stereotypes):

Europeans never match. Something about "fashion" out of Milan or Paris dictates that ties don't match suits. And their shoes are a dead give away they're from the Continent since European men seem as fussy about shoes as American women. Europeans also have the strangest tastes in eye glasses. Their casual wear, however, is of better quality than anyone else's, so some white guy walking down the streets of Japan with a $600 cashmere cardigan tied around his shoulders is almost certainly not an American.

British are wrinkled and dishelveled. Always. Whether in a suit or casual, they look like they just slept in their clothes, even if they just put them on. This is a curious stereotype considering Seville Row, James Bond and Prince Charles, so those nicely dressed chaps must stay in Hong Kong and off the "tech circuit" (I don't run into a lot of finance types).

Americans are heavier set, carrying a few extra pounds than everyone else (I like to think it is a sign of our prosperity). While American professional dress is better than the Europeans (we match, after all), Americans seem to think "casual dress" means beach attire, and we have really become the slobs of the world when out of a suit and tie (myself excluded). Americans (and Canadians) also are the only ones where goatees are still in style.

Canadians look like thinner Americans. Our sloppiness seems to have snuck north of the border.

So fellow citizens have no problems finding each other out over here, but even then, the shared status of being a Gaijin (or Gwilo in China) puts all non-Asians into a single club when over here.

The Art of Waiting in Japan

If I had a dime for every minute I have waited on a Japanese train platform, I'd be a rich man.

When you're selected to go on your first business trip in Japan, there is the excitement of going to a foreign country, seeing a different culture, and honing your skills in international business. This is all true, but there is one thing that veterans of Japanese travel forget to mention: it takes a long time to get anywhere over here and you end up doing a lot of waiting.

Let's take yesterday. I met my local sales guy/guide/interpreter at our Tokyo sales office at 8am and we returned to the same area for dinner around 7pm. In those 11 hours I had one meeting with one customer that lasted 2 hours. The other 9 hours were spent in every form of ground transportation available in Japan: subways, Shinkansen (bullet train), taxis, and of course, walking. And there was a lot of waiting in one spot for each of those. There may be exceptions to this rule, but since I started doing business in Japan in 1998, this has been pretty standard, and other people who have done sales and meetings here tell me the same thing.

Just arriving here takes waiting. You get off a 12 hour flight and are through customs and just want to get to your Tokyo hotel and get some sleep. Guess what? Taking a "limousine bassu" or Narita Express (fast train) to downtown Tokyo will add at least 1.5-2 hours to your trip.

So, what do you do? You do the same things the locals do while they're waiting, and here is what I observe, by order of frequency:

Sleep - By far the number one thing Japanese do while they are traveling and waiting. They sleep on subways, trains, in waiting areas, in coffee shops, sitting down, standing up, I have seen it all.

Read - You see a few novels, but you see a lot of comic books. Not the kid action hero ones you remember from your youth, but 3-4 thick tomes that usually have a lot of violence and sometimes sexually explicit material (called manga). Actually, seeing men reading "real" pornographic material in public isn't uncommon, and at those times you just have to remember that cultures are different.

Wireless Internet - It is frowned upon to talk on a cellphone in a train or subway, but you will see a large number of people clicking away on their cellphones, using the internet. When cellphone internet usage exploded in Japan, U.S. vendors got excited about this service. What they forgot is that a majority of Americans aren't stuck on trains and platforms for hours at a time with nothing to do, so the penetration rates in the U.S. never even remotely approached usage in Japan.

Work - In the world's second largest economy that has a reputation of breeding workaholics, you would expect to see a lot of working, but it is actually rare. If you do see it, it is usually pen and paper, and rarely to you see someone on the Shinkansen whip out a notebook computer and go to work.

Strike up a Conversation - Extremely rare. An Eastern European friend told me about being on a plane that was grounded for a few hours in Poland and within 30 minutes everyone on the plane was talking, arguing politics, and telling stories to the total strangers next to them. This is definitely a cultural thing and not common in Japan

As for myself, I always have a novel handy when I leave my hotel for meetings in Tokyo and always bring several with me so I don't run out of material.

There's No Venti In Japan

Ah, back in the country that gave my blog its name. I've been here around 20 times, although this is my first time back in over two years. I'm actually staying in an area I know very well - Shinjuku - so that I know where a Starbucks is close to my hotel (as well as some fine restaurants).

I love the Japanese culture and people, but they can't make a cup of coffee to save their life. It took an American chain to come here and show them how it's done. (yes, their culture has been based on tea, and our tea technology is vastly inferior, as is our toilet technology).

The Starbucks in Japan, and all over Asia (I actually went to two in Korea and have been to one in Taiwan before) are pretty much the same as the ones in the U.S. - the layout, interior, the aprons, everything (Editor: that's why they call it a chain).

The one thing that the Japanese Starbucks didn't bring over with them is the American beverage portions. You find out over here that Asians either don't drink a lot of fluid, or Americans are a lot more thirsty. If you get a drink on a plane, it is served in a 4 oz. dixie cup. If you get a drink of water at a restaurant, you might get a "huge" 6 oz. glass that takes two swallows to deplete. And there is definitely, absolutely, no Venti sized coffee portions in this part of the world.

There is one exception to the beverage portion rule in Asia: alcohol. If you ask for a Kirin "Ichiban", you get a 20 oz. bottle instead of the typical 12 oz. bottle. In fact, pretty much all the booze over here can be supersized if you ask for it.

Selling Internet by the Slice

Here I am in Seoul's Incheon airport patiently waiting for the THREE HOUR LAYOVER my idiot travel agent scheduled. The good part is that there is a coffee shop here that sells internet time by the hour.

I have never tried the Starbuck's wireless services, but from what I can tell, you have to go through a process to sign up, and maybe even do a monthly billing thing (can anyone verify this?). Here, you walk up to the counter and buy a "card" that has a password. You hook up via wireless and enter the password on the card and you are on-line! A little clock pops up telling you how much time you have left. No sign up. No hassles. And at $3 an hour, a darn good deal.

I thought I would be doing limited blogging on my trip, but with S. Korea being one of the most connected, wired countries in the world, I should have known that getting on-line here would be pretty easy. Curious to see how I do in Japan and Taiwan.

For those of you transiting through Incheon, the internet cafe is hard to find and not advertised - I actually stumbled on it by mistake. It is on a "mezzanine" level right above International Arrival Gate "E". Not something you are going to casually see from the check-in level on the third floor.

This IS One Way to Provide Internet Access in a Hotel Room

I am out of the fancy business hotel in Seoul and down in one of the "smaller" cities in the south of the country: Gwangju. (It has 1.5 million people compared to Seoul's 10 million).

I am now in a Holiday Inn level room, but it DOES have internet access: there is a complete desktop computer in the middle of the room with internet. It is housed in a special locked security desk, so I can't yank out the internet cable and plug it into my own laptop, and the wall connection isn't standard.

I suppose I could figure out a way to get into the desk it but am too jetlagged to bother. After all, it does serve my basic internet needs, although all the menus in Explorer and Windows are in Korean, as is the keyboard when I toggle a switch: ㅡㅑㅅ초 디ㅣ ㄲ댤디 .

At one point a "chat" window opened up on my screen in Korean. Just think, I might have had a date for the evening if I had known how to respond...

Tradeshows: Are They Worth It?

Question from David by email:

Do you have much experience with tradeshows and events? These events are about $5k each. What are your thoughts of sending a pre and post show mailer to the attendees for these events?

The mailings cost about $3. Would you recommend this for a startup?

My advice: do the tradeshow, skip the mailers.

First, the mailers: Unless your show is incredibly industry and participant specific, 95% of the mailers are going to reach people who aren't interested in your company or are the wrong people (i.e. your customer's director of sales). And the 5% who might be target customers and the right person within the company probably toss out the mailer along with all the other mailers they get before/after the trade show (I know, I have been on the receiving side of many of these).

Unless you are a consumer product company, you probably know who your potential customer base is, and it probably represents less than 100 companies. A more effective way to do mailers is to acquire a specific mailing list of these customers, keeping the number of mailers you send out and your costs to a minimum, instead of blanketing an entire trade-show list. However, my experience with non-consumer mailers is that the response/lead rate doesn't justify their expense.

On trade shows: in general, I find them very worth while, but how you do them depends on what your goals are and how the trade show is organized:

Market/Industry Data Mining - I find trade shows helpful for just seeing what is going on in an industry, so I always get a general pass and "walk the floor", look at demos, and get people in various companies to let me know what they are doing and planning. You'd be surprised on how many potential customers/partners you stumble into this way.

Booth - Getting a booth is sometimes worthwhile, IF you have something to demonstrate and if your target customers are walking the floor. If you don't have a demo, it really isn't worth it to send Biff and Bill to stand around in a booth and hand out brochures.

Private Booth/Hotel Suite - I personally like this approach IF you have a demonstration AND you know who your target customers are. In this case, telling your potential leads that you have a PRIVATE demo piques their curiosity and allows them to set a time, allowing your customer to manage his time at the show more effectively and allowing you to have the right people in the room (nothing is more frustrating than having a "whale" wander by your open booth and not having the right people there to glad hand him). It also keeps your competitor's prying eyes away from what you are doing.

I have seen companies do all three at the larger trade shows like the Consumer Electronics Show (CES) and Comdex, but this obviously depends on what you have ready to show and your budget.

How to Like High Oil Prices

It's simple to like high oil prices: own oil wells! (well, percentages of some, which I will go into below) And when oil prices go up, the checks from oil wells go up much more than what you pay at the pump.

The basic problem is that people are unfamiliar with how to do this, and then there is the problem of acquiring these investments.

First, I'll list several different ways to have ownership in an oil well:

Royalties - This is the best type of ownership to have and the hardest to get. As the name implies, this is a percentage of everything that comes out of the oil well, without any burden of the costs to manage, operate or maintain the well (as with anything, there are taxes on it). Royalties are usually given to the land owner where a company is going to drill a well, but the oil company drilling the well usually carves out a percentage or two for itself.

Working Interest - This is ownership in a well where you get a percentage of everything that comes out, but you pay a percentage of the monthly operating expenses to maintain and operate the well (including taxes). This is usually a pretty good deal, but if the well operating costs are high, or if oil prices are too low, you may find yourself paying out more each month than you are getting in. So you end up rooting for higher oil prices.

The benefits of a working interest is that if the well's total costs exceed its total income in any given year, those excess costs can be written off your ordinary income. The downside is that your liability as a working interest owner is unlimited. If the well needs a major overhaul, you may see bills that are much larger than you ever expected.

Limited Partnership - This is a structure that most people are familiar with since it is also used for other investments. There is a general partner who overseas the investment with limited partners who have no say in the operations. The downside in the investment is typically limited to the original investment.

So these three investment options are fairly straight forward and may appeal to some investors. The problem is getting into these investments. You can't call your broker and ask him to pick up a few oil royalties for you.

These types of investments are largely sold by small oil companies and operators, and only to "qualified individuals". In other words, the average person on the street couldn't qualify as an investor by SEC regulations, so the way in is to know someone in the business who can get you in on a deal (which is more or less how I got mine).

There are also a LOT of unscrupulous people and companies who have used these types of investments to scam people. Whether it was selling 500% of a deal, selling interest in wells that weren't drilled or in production that didn't exist - it has all been done. So even if you are qualified, you have to know that the people and company you are dealing with are honest.

In addition, these investments are incredibly risky. While I have all three of the investments above, I'm not mentioning the two dry holes I was involved in. This risk can be mitigated by buying existing production rather than investing in new oil wells. In essence, by buying production you are buying a bond that will fluctuate on oil prices, but there is still the risk that the production will go dry before it has paid off the investment, that oil prices will go down, or that Kerry will nationalize U.S. oil production (hey, it happened in Mexico).

This means the average investor has basically one way to hedge his portfolio against rising oil prices: buying stock in oil companies. This, however, has its own pitfalls. While ExxonMobil has appreciated 20% over the past year, Shell didn't due to accounting irregularities, which has punished the stock.



So the best bet is to buy a basket of oil stocks in order to hedge your finances against rising energy prices (there are also energy indexes, commodities, futures, and other options, but I am trying to keep it simple).

Where's the Copy Editor?

The FBI interrogated a beheaded man? That is what this actual headline reads over at Fox News:

FBI grilled beheaded man in 2002 as part of Moussaoui probe


Actually, it reads like they had a BBQ.

Update: I get results? The headline now reads: Berg's Final Days Still a Mystery;
FBI grilled him about Moussaoui link

Navel Gazing for Career Advancement

I am sure there are some helpful hints here, but my jaded, sardonic view of the world found it bordering on self-parody.

Improving Me - Your Site to Self Improvement!

May I suggest the articles on "Let Go of the Clutter" and "Choose to be Happy"?

I Made an Accurate Prediction?

I predicted (or wished) that Yahoo would increase mail storage as a response to Gmail.

They're doing it.

Hat Tip: Techdirt

Google Taking the MS Route on Blogger

I take a lot of flack for using Blogger, but there is just a certain amount of inertia after being on this service for over half a year. Besides, for just about anything Blogger lacks in functionality, there always seems to be an outside company/vendor/person willing to take up the slack. For example, my comments are provided by Haloscan, my RSS feed is provided by Feedburner, and so on.

Blogger upgraded its service this weekend and besides a different look for the editing screens, comments are now provided (I'll decide later whether to convert over or not). I bet over time more and more of the outside services provided to Blogger users will eventually be pulled into the service itself (exception: RSS feed since Google has put their bets on Atom).

This is similar to what Microsoft did with its operating system. All sorts of little pilot fish fed off the morsels left behind by MS, but over time the MS shark ate the pilot fish, absorbing more and more of the third party functionality into its OS.

I am not making a judgment call since it is a perfectly viable business plan to provide "one stop shopping" to customers. It is just interesting to watch, especially as Google nears it IPO.

Just In Time Marketing

Many people are familiar with Just in Time, or JIT, manufacturing. This is the strategy of having manufacturing materials show up at the assembly plant "just in time" to start the manufacturing process. For the manufacturer, it means holding less inventory and requiring less space for holding that inventory, thus releasing cash for more useful endeavors. JIT is now practiced by the vast majority of the world's manufacturers. I have even seen assembly sites where the manufacturer's supplier has warehouses on-site, with the components being moved less than 100 feet from the supplier to the manufacturer- the manufacturer is billed only after the component or raw material is moved that 100 feet.

Interestingly enough, it seems that Samsung doing something analogous in cellphone product development, sort of a Just in Time Marketing (a Google search of the term finds a few consulting companies using the name and a few "internet" marketing schemes, but I don't find this very obvious phrase being used in the way I am about to describe).

As noted before, cellphones are becoming as much a fashion accessory as communications tool. This makes the success of any given model hard to forecast. Samsung's strategy is thus to do the following:

1. Design as many models as possible

2. Do a limited production run for each model, shipping enough out to the channel to give consumers a "taste"

3. See which models take off

4. Quickly ramp into mass production the winners.

5. Don't create any more of the losers, selling off any inventory at fire-sale prices.

This strategy turns the standard product development process on its head. The typical electronic development cycle requires all sorts of volume forecasts, ROI (return on investment) analyses, bidding from suppliers, setting up the assembly line, and several other major steps. In this case, Samsung is borrowing a page from the fashion industry, putting as many designs out there as possible, even if it means eating the cost on the losers.

Unlike the fashion industry, however, there are vast capital expenditures, complicated components and other complications with creating a cellphone. This means that Samsung had to create a supply chain that is somewhat different than the standard manufacturing flow:

1. Common "Base" Design - Similar to different car lines using the same chassis, Samsung has to require that all phones have a "base design" that each model has in common. This means all the basic communication "chips" in the phone and how they are connected are the same between the different lines, creating a common supply chain for about 75% of each phone, no matter what its external design may be.

2. Quick Design Cycles - For this strategy to work, Samsung has to constantly put new models on the market, meaning it has cellphone design cycle is measured in months instead of half-years and longer for many of its competitors.

3. Flexible Suppliers - While the suppliers in the "base" design have a fairly steady demand forecast (some models will succeed and some will fail, but the overall volume will be fairly constant), those suppliers who supply the "non-base" features like cameras, GPS or other non-standard options have to contend with the possibility of being designed into a flop, meaning no further demand from Samsung, or the phone becoming a home run and having to immediately ramp to millions of units a month. While this might not sound like a big deal in theory, it is a very big deal in practice. If a vendor has to be able ramp to mass production immediately, the manufacturing capacity has to be reserved or inventory built. If the Samsung product is a flop, the result is idle capacity or excess inventory - something that can end careers. Obviously, this forces suppliers to be flexible and creative in supporting Samsung, which can be a differentiating feature in sales negotiations.

Strategically, this allows Samsung to try many different designs since this strategy has failure built into it. A possible extension of this strategy is "semi-custom" phones. Consumers can custom order a PC from Dell today, so why not allow consumers to specify the design and specifications of their cellphone?