Trying To Implement a New Economic System (Part 1)

Masa Nakatsu, Co-Founder and CEO of Orb, Inc., has been researching currency systems for over 15 years, including during his college days. While he was working as an investment management advisor in New York, he recognized some of the problems associated with currency systems and decided to try solving them by becoming an entrepreneur. He went on to work as a product manager at Seven-Net Shopping and founded Musavy, a content curation venture in Silicon Valley. He founded Orb after gaining experience in Business Development at Groupon, and working as the Global RTB Team APAC Director at Citero.

Masa, why did you decide to become an entrepreneur?

Masa: Back in my college days I developed a strong interest in financial systems. I decided to major in Economics, and spent a lot of time researching economic crises and bubbles with the intent to discover the mechanics behind them, but I couldn’t nail it down in 4 years. So, I decided to continue the research on my own while working in the financial industry to gain access to the most up-to-date information, with that I stepped into the world of investment. I seized an opportunity to become an Investments Management Advisor at the New York branch of the company I worked for, and I started to see the deeper causes of these kinds of crises while interacting with Wall Street investors. 

What caused the financial crisis?

Masa: There are two main causes. The first one is due to a gap between the current financial system that mediates money and real economic activity. Real economic activity is a financial system based on various resources such as food, fuel, and other basic necessities. In nature, the value of anything will eventually be zero. However, the current financial system – as well as economic system, works by distributing currency globally, and the money in circulation increases as interest rates and official bank rates rise. With extreme competition built into the system that demands “non-stop revenue flow,” stock prices skyrocket creating a huge gap between the current financial system and real economic activity. This is what caused the economic bubble to burst.

The second cause is funding raised through bonds. There are two types: one is credit, or bonds, a transaction where the actual payment is postponed; another is a debit transaction where the actual payment is completed immediately. The former is based on debt. The lenders conduct business expecting the money to be returned, but because they take on the risk of non-payment, it creates an unfavorable situation for real economic activity. I soon became convinced that these issues could be solved by creating a new economic system that corrects these divisions.

Was becoming an entrepreneur always something you had in mind?

Masa: Yes. My grandfather was an entrepreneur who started a flute manufacturing company in his 20s. My father told me that the company had a 50% market share in Japan at the time. They even managed to export flutes to countries like Taiwan. As a kid, I thought that I might become an entrepreneur, a politician, or a scholar, so that I could contribute to society when I grew up. However, I found that becoming a politician requires a lot of behind‐the‐scenes negotiations, and it would be tough to continue researching as a scholar, so my options narrowed to becoming an entrepreneur.

Tell us about your career path after you came back from New York.

Masa: To gain the skills necessary for starting a business, I worked as a product manager for Seven-Net Shopping, and took part in business and systems development for 2 years. I worked closely with the president, and I was able to learn a lot from him about the hidden difficulties in creating a new business for the company. It helped me to realize my vision of starting a business.

After that, I worked on various website consulting jobs while preparing to start my own business. I founded a company for content creation in Silicon Valley in 2010. I chose Silicon Valley because it was the mecca for starting up global ventures, the home of Google and Facebook. I had to close down the company after 2 years but I learned many important lessons from that experience.

What kind of things did you learn?

Masa: First of all, VCs in Silicon Valley are extremely rational. If there are multiple entrepreneurs pitching similar ideas, it makes sense to invest in the one that has the highest potential for survival. So, investors tend to invest in entrepreneurs who have completed their college education and gained life experience mainly in the US, and have developed strong networks in the US. I realized that it would be extremely difficult to win their business as a Japanese citizen, who has had no experience studying or living in the US.

That made me think deeply about “how to make a business founded in Japan globally successful”. This is the principle I started Orb with, the second company. I realized that it’s important to develop a data-driven business strategy, and I referred to case studies from Criteo, a company famous in the Ad Tech industry. For example, I found that it’s important to carefully select which pitch competition to attend to protect your business ideas from being plagiarized. This is one way of controlling your information.

Also, after the business starts to get on track, it’s important to hire someone who can play a vital role in expanding to the North American market to make the business successful there. I think many companies in Japan are struggling with this, as they don’t have the know-how.

What did you pay attention to the most for recruiting?

Masa: In order to encourage excellent talent with a global perspective to join your company, it’s important to present your company’s vision. This could be something like “the society we are aiming to create with our business,” as well as the ideas behind it, in a way they would find attractive. Currently, there are 3 non-Japanese employees working for Orb. When I was hiring them, I focused on the things that they would get excited about, speaking directly to the sweet spot where their interests and vision lie.

Continues in Part 2