#386 Akio Morita: Founder of Sony

Transcript from https://podmenti.com/t/1a6633b22737e9fc

Akeo is a great example of this maxim that all of History's greatest founders studied history's greatest founders. Phil Knight, the founder of Nike, studied Akeo.
As did James Dyson, as did Steve Jobs and Jeff Bezos.
And a few months ago I was spending time with John Mackie, who's the founder of Whole Foods.
John also relentlessly studies the great founders that came before him.
And it was during one of our conversations that John told me
One of the craziest things that anyone has ever said about the podcast. He had listened to over a hundred episodes before we met, and he told me that if founders existed when he was young.
That Whole Foods would still be an independent company.
That since the podcast and all of History's Great Founders constantly emphasize the importance of controlling expenses.
that he would have actually put more of a priority on it, especially
during good times, during boom times. I think it's very natural
For company and for human nature.
To just not watch your costs as closely.
because everything is going so well. This is actually something that Andrew Carnegie noticed over a hundred and thirty years ago.
Carnegie would repeat this mantra over and over again. He said, Profits and prices are cyclical.
Subject to any number of transient forces of the marketplace.
Costs, however, could be strictly controlled.
And any savings achieved in costs were permanent.
This is something that I was talking about with my friend Eric, who's the co founder and CEO of Ramp.
Ramp is the presenting sponsor of this podcast. I've gotten to know all the co founders of Ramp.
And I spent a ton of time with them.
They all listen to the podcast and they've picked up on the fact
that the main theme from the podcast is on the importance of watching your costs and controlling your spend.
And how doing so can give you a massive competitive advantage.
Akeo said that this is something he did naturally, that he was taught that wasting resources was a sin. He starts Sony in a burned out department store in war torn.
Tokyo.
They actually have to buy the materials they need to make their first products on the black market. They had very little funding.
And so they were forced to watch every single
Penny.
That is a main theme for Ramp. The reason that Ramp exists is to give you everything you need to control your spend.
Ramp gives you everything you need to control your cost. Ramp gives you easy to use corporate cards for your entire team.
Automated expense reporting and cost control. There is a line in Andrew Carnegie's biography that says cost control
became nearly an obsession.
Sam Walton.
believe that this was fundamental to his success in building Walmart.
In fact, in his autobiography, Sam wrote, Our money was made by controlling expenses. You can make a lot of different mistakes and still recover if you run an efficient operation.
Or you can be brilliant.
And still go out of business if you're too inefficient.
Ramp helps you run an efficient organization. Make history's greatest founders proud.
By going to ramp.com. Go to ramp.com.
to learn how they can help your business today. That is ramp.com.
Forty years ago, a small group gathered in a burned out department store building in war devastated Tokyo.
Their purpose was to found a new company.
Their optimistic goal was to develop the technologies that would help rebuild Japan's economy.
In this gathering was a young engineer.
A Kia Marita.
Then just twenty five years old.
Today.
That company is one of the most powerful and respected multinational corporations in the world, Sony.
And a Kia Marita.
Is it outspoken founder? That is an understatement.
The Sony story is one of consistently high quality merchandise and phenomenally successful marketing strategies masterminded by Marita.
Who realized he would have to create the markets.
for Sony's unprecedented products.
Marita's striking departure from the traditional Japanese business practice of making decisions by committee led by
To the spectacular success of Sony.
So that is an excerpt from the inside.

of the book that I want to talk to you about today, which is made in Japan.
A Kia Marita and Sony.
This book was published all the way back in nineteen eighty six.
And the re I I did it I first read it.
I don't know, probably five, six years ago.
Uh, and made an uh podcast about it. I think it's episode one oh two.
But I recently went to Japan for the first time and
Before the trip, during the trip, and then on the way home I was reading this book.
about the Japanese uh but a bunch of founders, the Japanese electric
Electronic industry founders from the sixties and seventies.
Uh, the book is called We Were Burning.
And what is so fascinating
Is
How many
founders in that book talked about studying a Keo
And Sony.
and how that influenced them and gave them the confidence to start their own company.
twenty to thirty years later.
And that's actually how I first discovered
A Kyo because I was reading about
Jeff Bezos and Steve Jobs, and they would mention the influence that Akeo and Sony had.
And you really use them a as a model for their own company. So I just wanna go through
It's a absolutely amazing.
How influential
And how many other founders that have been in turn
you know, influenced millions of other founders. Uh and you can actually track a lot of their idea back to Akeo. So this is something that Jeff Bezos said many, many years ago, and what he learned from Akeo and how it influenced the building of Amazon.
Bezo says right after World War Two, Aquio Marita, the guy who founded Sony, made the mission for Sony.
That they were gonna make Japan known for quality.
And you have to remember this was a time when Japan
Was known for cheap
Copycat.
Products.
And Marita didn't say, We're gonna make Sony
known for quality. He said we're gonna make Japan
Known for quality.
He chose a mission for Sony.
That was bigger.
Than Sony.
And so when we at Amazon talk about being Earth's most customer centric company, we have a similar idea in mind. We want other companies to look at Amazon and see us as a standard bearer.
For obsessive focus on the customer.
as opposed to obsessive focus on the competitor.
Here's what James Dyson James Dyson wrote a s his second autobiography.
When he's in his seventies.
And listen to what he said and what he learned uh from studying a Key Merita.
Think of the walkman. So
The Walkman is one of Sony's most uh successful products. We'll talk a lot about that. That would that came from a Keo. His own company tried to fight a Keo and tell no, this is never going to work.
Winds up selling like four hundred million units.
One of the most successful consumer products of all time.
And so this is what James Dyson, when he was studying a Keon Sony, what he realized, he goes, Think of the walkman.
His company didn't want to do the walk through because it wouldn't record audio.
A Kio Marito brought out a tape recorder that didn't record. It played music only.
His own company.
Thought it was completely mad.
But that is brilliance.
That takes balls to say I'm going to bring out a product that doesn't do what people think it's going to do.
But it's going to enlighten their lives.
And then Phil Knight.
Founder of Nike. This is what he said.
Like most companies, we at Nike had role models. Sony was one of them.
Sony was the apple of its day.
Profitable.
Innovative.
efficient and it treated its workers
Well.
And so Steve Jobs
was actually the first person I learned about a Camarita from.
'Cause he talked about admiring the fact that they didn't do make me two products.
That they charge.
high prices, but they were the best products in the world. He loved their marketing.
Uh he in fact the same person, you know how Steve would wear that black turtleneck?
he visit Sony and met Akeo when he was uh when Steve was really young and he and he loved the uniforms.
that all the Sony employees w uh war.
And so we asked the key, like who design these it wound up being I think the guy's name's like Izimiaki or something like that.
And so Izzy's the one
that designed Steve's black turtleneck that you know he made famous he had like a hundred in his closet he'd wear every day. But there is one funny story I read in a Steve Jobs story, and then I'm gonna jump into a Kyo's story'cause it's unbelievable.
How Sony starts.
you know, after the the the devastation.
Literally the lowest point in probably Japanese history, right after the atomic bomb is dropped and the war ends.
But Steve Jobs when he was building the IMAC.
He
was coming up with a name. He didn't have a name. And so he was walking around. He's like, you know what, we're gonna call it Mac Man because he was so inspired by Akeo's product walk walkman. And so everybody around Steve was like, This is a terrible idea. Please don't do this. And so eventually, you know, he he corrected course on that.
And and picked IMAC, which again is a much more elegant and better name, but I just thought it was really f uh fascinating. So I want to start. It's very fascinating where the book is published in eighteen eight six.
Forty years after World War Two.
And yet where does Akio choose to start his life story?
To tell his autobiography at this time.
I think it's his late sixties when he when he writes this book.
And he decides to start it.
Вит респонс.
to hearing about the atomic bomb dropped in Hiroshima.
And at the time he's in the Navy.
He had already graduated with a physics degree.
And we're gonna see a a couple of things here that's gonna jump out that's really important.
that are tied directly to the s success of Sony, in my opinion, is the fact that Akio had
immense from a young age, immense self confidence.
She says I was having lunch with my Navy colleagues when the incredible news of the atomic bombing of Hiroshima arrived.
As a technical officer just out of college with a degree in physics, I understood what the bomb was and what it meant to Japan.
And to me.
The future had never been more uncertain.
Okay, so imagine if you were in his shoes, you're in your early twenties.
You have the understanding'cause you you you have a physic physics degree. What just happened.
The fact that Japan has never up until this point lost a war.
Most people would be terrified. Listen to his response.
And only a young man could be optimistic, yet I had confidence in myself and in my future.
Even then.
If you have not listened to the Michael Dow episode I did last week.
Please listen to it.
It might be one of the best episodes that I've ever made. It I think it's gonna be the most popular episode I ever made. There's something in Michael Dell's story. Everybody knows, you know, the the the brand name, but they didn't understand the story that's really resonating with people.
And one of my favorite things that Michael Dell said at nineteen years old, you know, Akeo's not much older here.
Right.
I don't know why. I was optimistic at the time when
You know, complete devastations around me.

the in the environment that he's building Sony in it's unbelievable.
And yet I had confidence in myself and in my future even then. And so what did Michael Dell say? You know, we need to teach
having this argument with his dad, like what do you want to do with your life?
It's like I wanna compete with IBM.
For my dorm room with a thousand dollars, and Michael Dell said.
Was I little full of myself at nineteen.
Sure I was.
I think you have to be.
to do anything important.
Let's go back to Key.
When I first heard of the atomic attack on Hirosh Hiroshima, it struck me that American industrial might was even greater than we realized. It was simply overwhelming.
I should have been prepared for it.
I had seen a film on the construction of the Ford Motor Company River Rouge complex in Dearborn, Michigan. Now it's gonna sound crazy to Americans today.
But at the time
Ford actually built.
It was the world's largest integrated factory at the time.
We spread across two thousand acres.
And the facility was able to produce
Uh virtually every component for for
A car from raw materials to final assembly.
And so when he's I think he was in high school, when he was watching videos
on what they were able to create in the industrial might that America had back then.
And this is the realization that Akeo had that that kinda terrified him.
Japan had no integrated manufacturing like that at the time.
I had seen the terrible results of conventional firebombing even before the atomic bomb. I was in Tokyo when the incendiary bombs whipped up a firmind.
They killed one hundred thousand people.
In a few hours.
All of Japan's major industrial cities had been charred.
Wastelands. This is where this is again, this is the year the the year after this.
is when he's gonna start soning.
In Norty Five
You would see depressing heaps of blackened remains. The blackened remains.
We're the homes of literally millions
Of
Japanese.
And then yeah, again, he's gonna hit us the very surprising
Uh w when you read his book.
One, he's like he's got a huge personality. He he really likes the talk.
I don't there's another way to say it. He likes to talk a lot of shit.
And it's really fun.
Uh to read.
And he'll give your opinions on all kinds of stuff, like how he raises his kids, to the hollowing out of American industry, to the difference between the what what the Japanese do right, what they do bad, he'll travel all over the world.
And meet you know, the Chinese and the Russians, it's like you're doing it wrong. He's just very funny guy. But he also it's also surprising because as you're reading
He's talking about this and you're like, I could just imagine, you know, you you you shouldn't just r
Read through these books quickly.
try to sit there and put yourself in that position. Imagine me twenty four, imagine, you know, living your whole life
in Japan and you just see this, hundred thousand people die in a few hours.
There's no ind the industry's completely wiped out. Millions of homes are gone. And yet he says, I don't mind saying that even then I felt somehow
I had a role to play.
In the future of Japan.
I didn't know how big a role
it was going to turn out to be.
So
And he goes back in life.
Or it goes back in time, okay?
So at that point
Young person in the Navy.
physics degree, knows he wants to play a role in rebuilding Japan, thinks he's the right person with right so skills at the right time. Okay.
Then you can tell the world shout it.
So Akeo
is from an extremely
wealthy family.
He had his family had a three hundred year old
family business. They created and brewed sake and and other alcohol.
He was supposed to be the fifteenth generation heir to the family fortune, okay?
There's actually a lesson about f about focus in here. I was born the first son in the fifteenth generation heir to one of Japan's finest and oldest sake brewing families. The Marita family had been making sake.
For three hundred years.
Now here's the problem.
They were very prosperous.
There's gonna be two generations above his father that almost
cause the family to go into bankruptcy. And this is the lesson about focus. His dad's gonna wind up saving the company.
Unfortunately, the taste of a couple generations of Reader family heads was so refined that
They spent all their time collecting art and antiques. As a result, the business suffered.
Because they pursued their artistic interest and decided to put the family business in other hands. They relied on hired outside managers to run the Marita company.
But to these managers, the business was no more than a livelihood.
And if the business did not do well, that was to be regretted.
But it was not crucial to their personal survival. So
I love the idea. You know, I've talked to you about this over and over again. I think it's really important to reread books. Reread books that are really important to you.
'Cause the words on the page don't change, but you have changed. Like think about all the stuff I have read and learned.
And you've done you've come along with me on this crazy ride.
you know, in the last five years, since the time
Uh I last read this book and now'cause I just spent you know two weeks studying Michael Dell and reading both the books that he wrote.
There's a lot of Dell that jumps out to me. There's like a lot of similarities in between Akio and and Dell in this.
In a sense he's like well
Yeah. For fifteen for
thirteen, fourteen generations up until this point.
The Marita family business was run by somebody in the Marita family.
Obviously you're gonna care about it.
uh has your y your your name, your and your family's tied to it.
I think about when Dell was having all these problems and he wanted
He was trying to take the company private back in 2012, 2013. It was a real big struggle. Um, he could have lost control of the company with his name on it. And they're like, Well, I don't get it, you're already rich.
Why do you care?
Like, why don't you just go, you know, on the beach in Hawaii or if you don't want to do that, start another company. And Dell said something that was excellent. He's just like
I don't wanna start another company. This company has my name on it. I'm gonna care about this company after I'm dead.
I think there's a lot of uh similarities to that when you when you look at these f these multi generational family businesses.
Excuse me.
The Maritas like the other ones I've studied.
They teach you from the time their kids are really young.
about the ancestors and the decisions they made and and how they built the businesses, you know.
fifty, hundred years before you were even alive.
So they messed up by by essentially outsourcing outsourcing the management and then they're like, Hey, we're rich, let's just go buy art and antiques and do all this other stuff. That has nothing to do with the business.
And so said they do not carry the responsibility of the generations, and that's exactly how it's framed for for uh Akeo and his father.
And so that is when the business fell into my father's hands. As the first son of the family, he was faced with the immediate task of bringing the company back to profitability and restoring the Marita family fortunes.
No outside manager could be counted on to do that for him. So when Akeo's dad
inherits the business and it's his turn to take over.
The business on brink of bankruptcy.
Okay. Now his dad does turn around the business, so by the time that a Keo is born
The family's wealthy again.
And he's he talks about this openly.
He says I'd never had to know privation as a child. We were a rich family.
And when he means rich family, he means like
Huge house, which is very rare in Japan.
our own tennis courts, we had staff, we had butlers, we had chauffeurs, we lived in the best neighborhood with uh the other wealthy Japanese families. In in fact the the ri the richest family in Japan at the time was Toyotis.
They lived like uh across the street.
And his
Parents would prepare him from a young kid.
as a young child to say, hey, you're going to you're enjoying the the you know, the fruits of the labor of the and the compounding of uh past generations and
When your father can no longer do it, you're expected to take over as the first son. My father and
My mother and father were grooming me to carry on as the heir to the family business. I was taught about my ancestors from early childhood.
So they would teach them about the business decisions of previous generations.
And this is the what he would take away from studying his ancestors. Tenacity, perseverance, and optimism are traits that have been handed down to me through my family genes.
My father was determined to give me a business education starting very early.
He was a warm and generous father.
He spent all of his leisure time with his children. I have many fond memories.
So from an early age.
A Key is going to with his dad.
They go to the family office, they go to the breweries.
By the time a Kia is ten or eleven years old.
He is actually sitting in on board meetings of the family business.
Yeah.
He's
Loves his family, fascinated in business, but he that wasn't his obsession. He finds his obsession. His obsession is very similar to Michael Dow.
Is the fact that he's obsessed with electronics.
There's all these like hobbyist and amateur ways.
to create your own homemade electronics for the very essentially the first time in history, at least in in uh in a Kido's life.
And so one of Akio's relatives was this amateur engineer.
And he built his own electric phonograph. So you know, so a way to to rec uh to play back recorder music.
He just couldn't believe that his he was able to like take these parts, buy these parts
and then learn how to do this basically himself and like to make amateur
uh electronic devices that he could use.
And so making radios is actually becoming like a little ham radios.
was becoming a very popular hobby in Japan.
So he says I began to buy books about electronics and I subscribe to all the magazines that contain all the latest information about sound reproduction and radio. This is exactly what Michael Dell did.
For computers.
That would be about
Forty years later.
than Winakia's doing it in Japan for essentially radio.
Soon I was spending so much time on electronics that it was hurting my schoolwork.
I was devoting nearly all my after school hours to my new hobby. I had to teach myself because the subjects I was really interested in were not taught in school in those days. I became so engrossed
In my electronic tinkering.
They almost flunked out of school.
So by the time you graduate high school
His dad expects him, You're gonna go to college and you're gonna study business, you're gonna study economics. And Akeo's like, No.
I think it's already always.
He's unmanageable.
You're not gonna be able to tell this guy to do anything that he doesn't want to do. And so he'd already started studying physics in high school and he just completely fell in love with it.
And so he says, uh this is also the age when he realizes that he has higher levels of determination than most other people.
I don't think there's a Kindle version of the book, or else I would have bought it just to search to find out how many times
The word
you know, determine I am determined or the phrase I am determined or determination.
Is uh is said.
Repeats it over and over again.
From a young age until all the way up until you know he's building s Sony.
It's constantly repeating, I'm determined, I'm determined, I was very determined. So
My father was disappointed that I did not choose to study economics. He expected me to assume my role in the family business. He believed that physics would eventually only be a hobby.
But Akeo said that he wanted to study physics because he wanted to know why things worked.
So he had an obsession with physics, he had an obsession with electronics.
After
he graduates with his physics degree, he goes into college, but he never stops tinkering. This tinkering that started from when he was a young young boy. He's doing it to a high school, he's doing it to college. He's still doing it in the Navy.
He said I had built an alarm clock, he's still tinkering, which was attached to my radio and was set to wake me up every morning at six AM. I remember very clearly the morning when my alarm clock turned on my radio and I heard the announcement that Japanese forces had attacked Pearl Harbor.
I was shocked. I remember thinking this was a dangerous thing.
I had grown up believing the West was somehow superior in technology.
Knowing about America's technology, I was concerned.
That a mistake had been made. Remember, this is all connected.
The fact that he grew up
in a wealthy family mean that meant they could afford
Western goods. Almost
They had
a Ford car.
their dad was was Jerry Round in a chauffeur by a chauffeur in a Buick.
They had a general elect uh products for general electric.
From Westinghouse, they admired
The tech at least in his side and his family. They admired
American ingenuity and technology. So now he's like, Oh sh shit, we're in big trouble. We just bombed the country.
That seems to be superior to us in technology.
Uh, knowing about America's technology was concerned that a mistake had been made.
So
Beginning of the war.
Because he's in the Navy.
They're
this actually inadvertently is going to lead him to meeting his eventual co founder, this genius engineer.
Who's thirteen years older than a Kyo, his guy named Abuka.
Key is assigned because of his physics background. There he's this on the special group project that's composed of researchers from the army, navy, and civilian sector. And and essentially they're trying to figure out how to uh to create heat seeking missiles.
And one of the civilians in the group was this brilliant electronic engineer and at the time you already also had his own company.
Which is very fascinating to Akeo.
His name is Msuro Obuka.
So he's talking about the fact that he's got this he's in a group with his these other genius engineers from the army, from the navy, and the civilian sector, one of them obviously being a Buka.
And he's he was young, and he says I was a merely a recent university graduate, but I was
Cocky.
This is goes back to this.
He does not hide the fact that he thought, you know, he was special from birth.
That he has a role to play.
And that, you know, he could keep up with the very best. And this goes the reason I keep hammering this is because one, it takes a cocky person, in my opinion, or a very self confident person to start a business in a burned out department store.
Right, they literally would have to have umbrellas at their desks because when it rained
The water would fall onto their desks.
Okay.
You have no resources when you're doing that.
And then
It's not like just like oh we're just gonna like mass produce a bunch of cheap
copycat products. Like no we're we aimed for the high end right from the g get go.
In fact, while I was working on the outline for this episode, in the background, one of my favorite documentaries of all time that I've watched I don't even know how many times, maybe ten, twenty times by now, is the the the Defiant Ones.
about Jimmy Iveen, Doctor Dre, M. It's it's a fascinating documentary that H VO put out. It's a four part documentary.
I watch it over and over again.
All kinds of f fascinating people in there. Bruce Springsteen, Tom Petty.
But
that kind of personality type, that defiant one.
It made me think as I'm uh as I'm reading Akeo the same thing I that the same time that's playing in the background, it's like oh he is a defiant one. The way I would define it's like that's the same kind of person who'd think they can build a great company from the ashes. Literally.
They can build a great company from the ashes.
Ashes. Uh so it becomes obvious by this point.
Uh that Japan is not gonna win the war.
And
There's talks that the Navy might order
us to commit mass suicide.
And
Akeo goes and tells his commanding officer that he will not obey that order.
And he says an officer in the Navy should never have said such a thing to his superior
But it just had to say it.
And what was really
Like it it talks about this intense ideology that they had that that Akea thought was ridiculous.
the the commanding officer like yells at him. He's like, Well, you know, you're gonna be court martialed and you'll be punished if you don't do it.
And Akeo's thought was You guys are all gonna commit mass suicide, who's gonna be left to punish me?
It was like an obvious thing, like that's obviously not true.
So
the war ends. This is when uh the Americans are gonna occupy
Japan.
And this is remarkable. Like you know, ch the Japanese
Emperor. They had never spoken directly.
to his people. This is the very first time they actually ever hear his voice. In fact Akeo talks about that
He would travel around the country.
And if like his motorcade passed by, you were expected as a citizen. You couldn't even look at him. You're not allowed to look at him. You're supposed to turn and like hijre.
and and direct your gaze elsewhere. Again, something that Key just would not do.
But I think the advice that the Emperor gives to the Japanese people h after the war is actually really I think it applies to any difficult challenge.
So says the Emperor, who up and now had never been spoke had never spoken directly to his people, told us that told us the immediate future would be grim.
He said that we could pave the way for grand peace for all generations to come, but we had to do it by enduring the unendurable.
And suffering what is insufferable.
He urged Japan to look ahead.
Unite your total strength to be devoted to the construction for the future.
And he challenged the nation to keep pace with the progress of the world. So
Unite your total strength to be devoted to the construction of the future.
and keep pace with the progress of the world. That's exactly what Akeo's gonna do with Sony. That's really what jumped out to me.
Now, one of my favorite quotes I think Charlie Munger's the wisest person I've ever come across.
One of my favorite things that he ever said was that you need to avoid intense ide ideology because it turns your brain to cabbage.
It turns your brain to cabbage.
And so
Akeo says that his family
avoided this. Like they were surrounded by peop by fanaticism and by you know
people saying, like we should go down to the last man, like
We'd rather be able to do it.
extinguish the country of Japan than lose a war. So
says it our family had avoided the fanaticism that seemed to grip so much of Japan's youth in those days, the worship of the Emperor and the idea of a glorious.
In Japan, we often talk of a psychological climate or atmosphere.
That sometimes occurs and which seems to sweep people up
Into like minded activity.
As though everybody is breathing the same special kind of air. Now he's saying that happens in Japan.
We know that happens everywhere.
You just have to be very careful. Avoid a tense ideology. It turns your brain into cabbage.
Yeah.
This is one of the most inspiring parts of the entire book.
If you think about
The conditions in Japan
Right before
Kiel.
Found Sony.
Many c cities looked as though there was nothing more to bomb.
Flimsy houses, shops, and factories made of wood and paper had burned like dry tinder.
Under a shower of firebombs.
In Tokyo, less than half of the pre war population of seven million people.
remained into the city.
Only ten percent of the city's street cars were running.
There was sixty
Buses.
In running condition.
And just a handful of automobiles and trucks in the entire city.
Hospitals were short of everything.
Department store shelves.
We're empty. And there's also
Almost no food. In fact, when they decide, hey
We're gonna start a new company.
And his co founder, Bucca is the f the person that decides to start the company first.
They're like, Why you m why are you trying to make electronics? You should try to make food.
Because food was so scarce. It's so it's so crazy.
So a Kyo

his future co founder, and this is something that you and I talk about over and over again, you must.
You mu absolutely
Must find.
And work. Find the best people you possibly can.
And work with them.
And Akeo realized like oh
It's very similar to like Steve Jobs realizing Wozniak. He said something like Wozniak had like more talent than like fifty
You could play like fifty average uh engineers in Wozniak would outperform all all of them.
There's an element of that.
With a a Kyo just thinks his co founder
You know, is the most brilliant engineer
Alive.
And he was already h uh Buco was already running a company out in like the countryside.
It was the Japan measuring instrument company. He's gonna quit doing this and move to Tokyo to start
what's eventually gonna turn to Sony.
But
Akeo tells great stories about a Buka and and he just talks about
This guy's mind is like any uh unlike anybody else's.
So he's he's he gives an example to us here. He's like, Okay, well they're you know, he has like fifteen hundred employees already.
They're making these small m mechanical elements that control the frequency of radar devices.
These devices have to oscillate at exactly one thousand cycles per second.
And Abuka had the ingenious idea of hiring music students.
Who had a fine sense of pitch.
To check the accuracy of the elements.
against a simple one thousand cycle tuning fork. I mentioned this story as an example.
Of the freshness.
And inventiveness of his mind.
Which so impressed me.
And made me want to work with this man.
And so the prehistory of Sony is Abuka's gonna make some very smart decisions. First he's gonna move to Tokyo.
Second, he works on what interests him.
And then third, the very first product.
He finds a way to add features to a product that a lot of people already have. You know, they're
One thing that that's very obvious in the book is like when you
They're forced to design with constraints. You they are forced
on a company level, on an individual level, a company level, and a country level to be
Resourceful.
And I think the idea of j let's say, hey, there's already product that's out there. Can we add features to this kind of jump starts?
You know, our distribution.
And so it says Abuka had a very intriguing idea.
Some short wave receivers. These are
uh these are little radios of everybody had in during the war.
because they would broadcast like updates on the war. Okay, so one it's just like
They're not expensive.
And they're essentially ubiquitous in Japan, okay?
Shortwave receivers were strictly prohibited during the war.
A keen interest had developed in listening to shortwave broadcasts.
Now that it was no longer illegal, okay, so you had this like black market, underground, everybody had him anyways.
But now it's not illegal, so now we can actually start making products for this. So the the the install base is already there, right?
Because the radio was very important for hearing air raid warnings and getting other information during the war, people had taken very good care of their radios.
But they could only receive regular AM broadcasts. So BUCA designed a shortwave adapter.
S something that could be attached to any standard radio.
Very simply, and would convert the unit to a shortwave reception.
The conditions in which he did this is incredible.
There's almost no
Inventory anyway.
So you have to
Sc the employees that are book ahead of time.
We'd literally have to buy
They have to go to the black market to buy the tubes that they need.
To make this
adapter, the shortwave adapter.
They start making them, the product immediately becomes very, very popular.
So they're doing this in Tokyo in an empty and bare old building building set among the rubble and devastation, the burned out homes and shops of the once prosperous downtown area of Tokyo.
Abuka started
The Tokyo.
Telecommunications research.
Laboratories. This is the company that's going to turn into Sony.
And Akeo does not hide the fact that without a Bukha there would be no Sony.
So
What a Kyo does that's really smart.
And I think in line with his personality and who he was as a person, he senses an opportunity and he does not wait. He jumps on it immediately. So he wrote to Abuka, he writes him a letter, said I wanna help him with his new business and would support him any way I could.
He wrote back immediately inviting me to come see him and a new company, but he told me

And then he was paying people out of his own pocket.
And he was looking for funding.
I need to back up and tell you one thing.
What Akea was doing at this time.
His old physics professor at university.
There was a drastic and dire need.
For
Physics instruction.
And so a Keo
his job right now while he figures out what to do is he's teaching physics at the university. So he's like, Hey don't worry, you have trouble meeting me
Meeting of payroll.
I can I'm gonna work, I'm gonna teach during the day and work with you.
And then I could just live on my
Salary from
Uh my teaching channel.
Now
what they go and do, and this is very common in like uh Japanese culture.
Is
They go they ha they have to ask his dad
A Buka and a Kyo go and and talk to
Okay was that.
Right,'cause a Buka th they he realizes how valuable a key is gonna be for the company they're gonna want to be and co founders for this.
They have to
Get p essentially get permission from his father.
Booge told my father about the new venture. Now, this is very fascinating. And this is again talks about
Remember Keyo mentioned earlier?
I have
Great memories of my father. His father's long since passed away by the time he's writing his book. I have great memories of my father. He was a great father
His job seriously, he made our family wealthy again. And then when he wasn't working, he was spending time with us, and we just had great memories.
And I think one of the most important things is
His father
New.
His son.
His father knew his son.
And this will make sense in one second. And Buka told my father about the new venture, what they hope to accomplish, and then I was absolutely needed for the new business. And his father said
Tells a book.
I expect him to succeed me as head of the family and take over the family business.
Kio sitting in on this meeting, okay?
But
If my son wants to do something else
He should do it.
He looked at me and smiled.
You're gonna do what you like.
Best.
He knew.
His son.
He knew his son. That was one of the best things that he could have ever done for a son.
So this is the early And he's gonna do they're gonna wind up helping'cause they go to his dad, Akeo's dad, for loans. They wind up c he winds up loaning him money, they convert that money into uh into equity, and then his dad's gonna make a lot of money.
on the Sony stock.
This is very fascinating. The early days of Sony.
No money.
W work workspace? In an old bombed out building.
And a company of Misfits.
Th I don't know why this like it brings like tears to my eyes. It's just funny w w this this section this section's gonna be funny.
So our new company was not setting any records for financial success in those days. Yeah, no shit.
When some of my relatives came to see me, remember I was from a rich family, okay?
When some of my relatives come to see me, they were so shocked by the shabby conditions that they thought I had become an anarchist.
They could not understand how if I was not a radical I could choose to work
In a place like that. I don't know why that makes me laugh.
Yeah.
This is what I mean about self confidence, this is what but I mean about
You kinda knew who they were from a young age and what they wanted to do.
And they knew from the beginning.
We we're gonna build differentiated products.
Uh, they wanted to be high quality innovators. Really when you get to the section of the book
the the personality type we're dealing with here. You think of Steve Jobs at Apple, think of Edwin Land at Polaroid. Edwin Land's personal motto for God's sake was don't do anything somebody else can do.
I don't even know if they ever explicitly say this, but when when you have somebody saying, Hey, I'm gonna do something completely differentiated.
And they do it better than anybody else in the world.
There is an element of pride and self respect and competitive drive.
Two
to what they're saying, that it's implied in what they're saying.
And even if they don't say their actions express what's important to them.
They wanna do something truly unique. They wanna do sh something truly special, which
Sony may not be like that today, but undoubtedly for four the first four decades it was that. It was its leader. It was it completely innovative.
So it says Abuka and I often spoke of the concept of our new company as an innovator, a clever company that would make new high technology products in ingenious ways.
Merely building radios was not our idea of the way to fulfill these ideas. And so that's the important part.
You might not be able to get there from from the very beginning.
So they're essentially building radios. They're adding they have this little adapter that goes on to other things.
the an existing product. But you have to get started somehow.
And I think that's really important. It's like this is we know where we're going, but we're gonna do the best with the opportunities in front of us, is is how I read this part of the book.
Yeah.
Nothing.
Always do your best work, even in terrible working conditions.
We talked about this over and over again, you and I talk about this over and over again.
That opportunity handled well.
will unlock leads to unexpected opportunities.
So
The Americans
They need they're they're putting out, you know, they're coming to Japan, they're essentially controlling everything for the time being.
They they're starting to put out
all like requests for things that they need built.
And the occupation of American forces
uh had taken over the Japanese uh broadcasting company and they need this new technical equipment, they need mixing units and other studio and broadcasting equipment. Okay. Buga knows how to build all this. He had previous experience with this. So
They submit a bid on a contract to do this for the Americans.
So they're gonna get a bid to build this mixing unit, okay? Now there's something really funny that happens.
The general has to go and actually tour your factory or your offices.
And they were like, What the hell is going on here? And then they tore it after they ordered them the bit. So says when the general saw our shop, he was taken aback by how prim it was. He shook his head.
We were this tiny unknown company working in very primitive conditions. He was concerned about our terrible building. He was so concerned about a terrible building that he recommended we keep buckets of sand and water around the place in case it caught fire.
When the equipment was delivered, everyone marveled at its quality, especially the skeptical officer, who was still puzzled by the fact that a new small company
And a makeshift factory could produce such a high technology product.
We were able to obtain further jobs because of the breakthrough in trust we made on that first job by demonstrating our quality. And even more important, when they deliver this mixing unit to the Americans.
They spot a tape recorder.
For the very first time.
And they immediately realize it's obvious, like wait.
Tape recorders are that's superior technology to a wire recorder.
So they decide to build
They decide to build one. They decided to build a tape recorder.
That in turn leads to another important insight that they're gonna build their entire company around.
So w one of the things that that Steve Jobs admired so much about
Sony was their marking.
How impressive their marking was.
And that was a skill they had to learn because
both a key and a bo Abuka are engineers. They're like, Oh, we build a great product
Customers will come.
Obviously that's not true.
They build the best tape recorder.
But the tape recorder flops.
And so this is when they learn a very important lesson.
you must know and then find your target customer and a KO is gonna become obsessed with marketing and advertising.
So I had no experience in merchandising or salesmanship. It never occurred to Ubuka or me that there was any need for this.
Abuka believes strongly that all we had to do was make good products and orders would come.
So did I.
We both had a lesson to learn. We were engineers and we had big dreams of success. We thought in making a unique product.
We would surely make a fortune.
I then realized that having unique technology and being able to make unique products were not enough to keep a business going.
You have to learn to sell the products. And to do that, you have to show the potential buyer the real value of what you're selling.
I was struck with the realization that I was going to have to be the merchandiser of our small company.
And so at the beginning they try to sell the tape recorder just like normal people.
Like they'll do d demonstrations on the street and everything and people are like, Oh, that's kinda cool.
But you know, it's kind of a toy.
And it's really expensive. Like I I'm not sure why I'd buy that. So definitely not gonna spend that much money on it.
And he realized like oh I need to find people that have a problem to solve.
And then they'll understand.
the value immediately. He says I knew that to sell our recorder we'd have to identify the people and institutions
they would be likely to recognize the value in our product. It wouldn't be a toy for them, it'd be a tool.
There was an acute shortage.
of stenograфers
Because so many people have been pushed out of school and into war work.
Until that shortage could be corrected, the courts of Japan were trying to cope with a small overworked core of court stenographers.
And so what they realized is the tape recorder would be very effective.
For to record all of this instead of having somebody needs to type it right away, right? We were able to demonstrate our machine for the Japan Japanese Supreme Court and we sold 20 machines.
Instantly.
Those people had no difficulty realizing how they could put our device to practical use.
They saw the value in the tape recorder.
Immediately.
And so one thing that was very consistent with a Kyo and Abu Abuga
was the fact that they were always on the lookout for developments of new technology made by other people and how they could take advantage of that.
So they followed the work of Bell Labs, for example, very closely.
And when the transistor was invented, they realized oh, this is gonna help us make
A lot of these devices that exist.
And we can actually make them smaller and they thought they had an advantage because
Miniaturi miniaturization and compactness was something that was very important to Japanese culture.
And so Akeo's gonna have this idea for what he calls a pocket radio.
You can almost see this almost like a precursor to the Walkman and then and then in turn is the precursor to, you know, Steve Jobs and the iPod.
The idea you can have a thousand songs in your pocket is what obviously Steve said.
In their case is like you have a radio that fits in your shirt pocket and you see this
Yeah, he's a very quick learner. This this showmanship and marketing genius that a Kyo starts to develop.
We can make a very small radio powered by batteries. Miniaturization and compactness have always appealed to the Japanese. Our boxes have been made to nest.
Our fans fold.
Or art.
Rolls into need scrolls.
We set as our goal a radio small enough
to fit into a shirt pocket.
Not just portable, I said.
But pocketable.
No.
We like the idea.
Of an a salesman being able to demonstrate how simple it would be to drop it into a shirt pocket.
The the the product they make.

than a standard men's shirt pocket and that gave us a pr uh g gave us a problem. So what do you do when your pocket size radio
doesn't fit in a pocket. You make the pocket bigger, of course.
We came up with a simple solution. We had some shirts for our salesman.
With slightly larger than normal pockets, just big enough.
to slip the radio into. Now
There's something in this also story that I think is really important for people to understand.
Products don't compete, companies do.
Products don't compete, companies do.
So there's an American company called Regency that put out a pocket radio.
A few months before ours, but the company gave up without
putting much effort into marketing it. So
I can't I can't uh understate.
Or overstate rather.
uh how important advertising, promotion and set and and and educating the market is for these new products to Akeo is.
He will literally threaten to fire people if they're if they don't listen to him, if they're not spending the budgets he wants to spend.
When he launches new products.
And so this idea is like he has the kind of disdain

uh effort into marketing.
And so
This this American company called Regency, okay.
They had the radio, they had the market to themselves for a few months.
Uh the company gave up without putting much effort into marketing it.
as the first in the field they might have capitalized on their position and created a tremendous market for their product as we did.
But they apparently judged mistakenly.
There was no future in the business and gave it up.
So a few years into Sony, they're starting to tr get traction.
They're developing the ability to not only create new products but also market them.
And
A kill decides, hey, I'm gonna go all over the world.
And I'm gonna visit other companies and factories and I wanna learn from them.
And I wanna pull out one thing that he found really, really inspiring, which is
At the time, one of the most successful companies in the world was Phillips.
It was my first visit to Phillips that gave me a new insight.
It was a surprise to me to find the great Phillips of my imagination situated in a small town in a small corner of a small agricultural country.
I was taken with the thought
That a man born that's doctor Phillips.
I was taken with the thought that a man born in such a small out of the way place could build such a huge, highly technical company.
with a fine worldwide reputation.
Maybe I thought.
We could do the same in Japan. So this is
Now he starts understanding the why behind Sony.
Okay.
We're gonna change the image.

At the time they were thought of poor quality. It's exactly what Jeff Bezos said earlier.
They were copycats of low quality.
In fact, the one of the astonishing things in the early days of Sony
the the reputation of poor quality for Japanese products was so well known.
That
In the early days, Sony would print.
made in Japan as small as possible on its products. So sometimes it was
So small you couldn't even read what it was.
And so another thing that Akira realizes that's really smart is
If I want to
Make products known for quality.
I need to target an affluent
audience that can actually afford
to pay for quality.
And so he says the Japanese company must export goods in order to survive.
It became obvious to me that if we did not set our sights on marketing abroad.
We would not grow to be the kind of company that Book and I had envisioned.
We wanted to change the image.
of Japanese goods as poor in quality. And if you're going to sell
High quality expensive product.
You need an influent market.
And that means a rich, sophisticated
Country.
And I'm gonna get to this in a little bit, but Akeo takes a very drastic meas when he realizes
Oh, America is so important to the future of our company.
that I'm going to move at the drop of a dime my entire family there. I have to to be able to sell to Americans, I have to understand them. So therefore I have to live like an American. This guy is incredible.
I'll get in a minute.
I wanna go back to this because he talks about something over and over again. Marketing is just communication.
So you have to be able to communicate directly. He does not like intermediaries. He doesn't want anybody in between him and his his end customer. He talks about why this is so important. He talks about the importance of laying the groundwork of very slowly educating uh the market before you release the product.
Th there's a lot of great ideas in here that I think, you know, are timeless. Marketing's really just a form of communication. In the traditional Japanese system for distributing consumer products, the manufacturers are kept at arms length from the consumer. Direct communication with the consumer is all but impossible. That is not good enough for a Keel.
We realized from the beginning.
That it would not serve the needs of our company.
And it's new advanced technology products. Okay. So they wanna set up their own stores.
They're gonna go direct to the consumer.
If we're separated by a third or a fourth party.
They simply would not have the same interest in or enthusiasm for our products and our ideas that we had.

Exactly like the reason
If you think about the the rationale.
that Akeo is demonstrating. We're probably in the
Late nineteen fifties, early nineteen sixties. It sounds exactly if you go back and read
Steve Jobs thinking when he wanted to do the Apple stores.
Exactly it's the same kind of thinking.
They they arrive at the same exact conclusion.
It's like wait a minute, other people are gonna sell the products like we give our
our heart, our soul, our blood, our sweat, our tears, all of our life, energy and our time to developing products. I'm gonna hand them off to people that don't give a shit.
No, not good enough. Not gonna happen.
We had to educate our customers to the uses of our products. To do so, we had to set up our own outlets and establish our own ways of getting goods into the market. And he's got some great ideas about that, which we'll get to in a minute. Now
One thing that's really, really important.
Again, it's gonna sound a lot like Steve Jobs gonna sound a lot like Edwin Lann.
Sound a lot like James Dyson. No market research.
The public does not know what is possible.
We do.
I mean think about the walkman. That market was just sitting there. Somebody could have other grabbed it.
And everybody's saying it was a shitty idea to begin with.
And you're just gonna sell four hundred million units. It's and it's incredible.
So
The reason that's also beneficial that you don't have to wait on the market research. What if the market doesn't exist? What is there to research? He trusts in his own judgment, his taste.
And the skill set that he has.
And
What would happen is none of his competitors
They were like kind of copycats and follow-ons. So he winds up creating the market and then having the market to himself for a very long time.
Our competitors would take a very cautious wait and see attitude while we market and develop a new product. In the early days, we would often have that market to ourselves for a year or more before other companies.
Would be convinced that the product would be a success, and we made a lot of money.
having the market all to ourselves.
We have to keep a premium on innovation. This is a
Something that him and Abuka talked about from day one. Our plan is to lead the public with new products rather than ask them what kind of products they want.
The public does not know what is possible, but we do. So instead of doing marker research
We refine our thinking.
On a product.
And its use and try to create a market for it by educating
And communicating with the public. Do you see how everything he says is interacted?
We're gonna aim straight for the top.
We're gonna innovate, we're gonna have high prices, we're gonna have big margins, we're gonna be the best marketers, we're gonna educate the customer and we're gonna go direct.
Everything works together. As an example, I cite
A product surely everyone knows of.
The Walkman.
This idea took shape when a buca came to my office one day.
with one of our portable stereo tape recorders.
Okay.
So he's carrying around this like heavy thing, which sounds funny now.
Remember people who would put like boom boxes on their shoulders and stuff? You'd see movies like in New York City, you know, back in the eighties. I I bring that up because it was obvious. Like what what is that person doing?
That person is carrying something's like fifteen pounds. He's carrying it around with him'cause he wants his music
To travel with him.
Everybody was listening to music at their homes, in their bedrooms.
You're taking these giant fifteen or twenty pound stairs around with you. What does that tell you?
There's clearly a demand here.
Just no one has done it yet. That's seems kind of odd, right?
So
He's got his own co founder, one of the genius engineers of f the person that invents the the products.
And this guy has like some, you know, half baked solution to this problem. I got this
Big ass.
Tape recorder.
I can record things, I can play things.
And then we have these big ass headphones.
And you know, if I this is the way I take away I take around my music.
On its face that makes no sense.
Clearly like there's a demand here, right?
And so it says he looked unhappy and complained about the weight of the system.
I asked him what was on his mind. He explained, I like to listen to music, but I don't want to disturb others. And then I can't sit there by my stereo all day, right? Because it's not portable.
So this is my solution. I take the music with me, but it's too heavy.
A bugus complaint set me into motion. I ordered our engineers to take one of our reliable small cassette tape recorders and strip this is the important part where people thought.
No one would want it.
Strip out the recording circuit.
I'm not recording anything. We're not gonna record anything on it.
Because the recording circuit makes it bigger.
I needed to make it smaller. This is just very logical, clear thinking.
And then take out the speaker.
Because you're gonna do this with headphones. Now I just took out the recording unit and took out the s the speaker. What happened? I just made it miniaturized.
Which means you could carry it.
Replace them the s recording circuit and the speaker.
With very lightweight headphones, which they also had to invent.
Okay. Now here's the crazy thing. Everybody gave me a hard time.
It seemed as though nobody liked the idea.
Will people buy it if it doesn't have recording capability?
I don't think so. That's the that's the the pushback that he's getting.
Of course they are.
They're already finding
these half baked solutions to the problem where they just want to take their music with them.
This is really, really smart.
on what he did here.
He goes, This is his response.
Millions of people have bought car stereos and they don't have according capabilities.
I already told you.
They're they're not recording anything in the car. Millions of people bought this. Isn't that a little weird?
So you you tell me they would only do this if they're in the car? No, of course not.
They would take it with them.
And I think millions will buy this machine.
Now he gets the prototype back. I thought we had produced a terrific item.
And I was full of enthusiasm for it, but our marketing people were unenthusiastic. Think about how many people are just telling them over and over again, this is not gonna sell.
But I was so confident.
This is why
I kept mentioning his self confidence and the fact that he called himself cocky.
This is these are his words, not mine.
This is why it's so important.
It jumped out at you over and over again if you read this book.
It's why I kept bringing it up to you.
What did Nolan Bush know?
Who mentored Steve Jobs, who did
Who helped shape Steve Jobs
Thinking, you know he hires Steve Johnson at nineteen. What do you say?

are self confident enough to push their ideas onto other people.
What did Edwin Land say?
That when you create a new product
People think, Oh, I gotta push it through
Staunch opposition. He's like, No.
It's gonna be staunch indifference. No one's going to give a shit.
You have to push you have to be the one pushing through.
Your new product, a new
uh invention.
do indifference. You have to make people care about them.
Every single step of the way, from his engineers to his marketing people.
To asking people around and like this stupid, no one's gonna buy it.
This is why it's so important. He says so, but I was so confident.
That the product was viable, that I said I would take personal responsibility for the project.
He used his unusual levels of self confidence to push past
All the naysayers in his own
Company.
I never had a reason to regret the regret it. The I to Dia took hold, and from the very beginning, the Walkman was a runaway success. My point in telling the story is simple.
I do not believe that any amount of market research
could have told us that the Sony Walkman would be successful.
Another lesson from a K in his autobiography.
Is that if you know why you're doing what you're doing, hard decisions become a lot easier.
So he says, I turn on a chance to make big profits. The buyers thought I was crazy, but even though our company was young and I was inexperienced, time has shown that I made the right decision.
So he's going and he's he's demoing this product.
This one of these radios that the early days of Sony that they're making.
And it's this giant company called Belova.
says the people below like the radio so much that their purchasing officer said, We definitely want these. We'll take a hundred
Thousand.
units.
One hundred thousand units, I was stunned. It was an incredible order worth several times.
The total capital
Of our company.
He told me there's one condition.
We have to put the Bolova name on the radios.
So yank off your your Sony name.
You're going to
mate manufacturer make it, but you're gonna put it on our we're gonna put our name on the product.
That stopped me.
I had vowed.
that we would not be an original equipment maker for other companies. We wanted to make a name for our company on the strength of our own products. We would not produce radios under another brand name.
When I would not budge, he got short with me.
Our company name is a famous brand name, and it's taken over fifty years to establish. No one has ever even heard of your company.
Why not take advantage of ours?
I understood what he was saying.
But I had my own view.
I said.
Fifty brand name
was just as unknown as our name is today.
I am here.
With a new product.
And I'm now taking the first step for the next fifty years of my company.
Fifty years from now, I promise you.
That our name
will be just as famous as your company name is.
Today. He never even considered it.
One of my favorite episodes I've ever done. I found this like really old biography of Ralph Lauren.
And one thing that's that I think the reason I wanted to read about Ralph, uh'cause I watched a documentary from uh uh one time.
And same thing. He had no money. He's like living in this like studio apartment.
with the train running over'em. Uh they have just have a mattress on the floor. It's him and uh the uh his wife
He's still married to this day.
He starts out making ties. That's the very beginning of the Ralph Lauren Empire and he goes and meets I think Bloomingdales, if I'm I remember correctly. And they're like, We love these ties, these are incredible, we've never seen any designs like this. We'll have this big giant order. You know, this guy's no money time, so it's like literally life saving amount of money.
And then they're like, Great.
Love to do this. Oh.
By the way, Ralph Lauren, like take take that off.
and put on, you know, our house brand.
And Ralph says no.
Even when he had no money.
And he's like I'm not I'm not being in a
Original equipment maker for other companies.
Like I'm here to take the steps.
to to build a a a lasting and
And during Brand.
And takes a lot of courage to do that.
This case.
A Kio just turned down.
ha an order for a hundred thousand units, which was worth several times
The total cap
uh capital of his company.
But again, if you know the why.
Your why it just makes the why behind what you're doing.
Just makes all these decisions easier to make. They're difficult at the time, but
Understanding it's like hey, this is where we're going and not gonna deviate from that.
Another thing that's from the very beginning.
We're gonna be the best. We're gonna aim straight for the top. This is something they they talk about over and over again. We were not interested in producing low quality goods just to make money.
What I had in mind was class and high quality.
Uh, later on he talks about, you know, we wanted to be Sony Sony we viewed Sony as a pioneer.
Sony is a pioneer. It never intends to follow others. The company will always be a seek of the unknown. That is a great line.
The company will always be a seeker of the unknown.
The road of a pioneer is full of
Difficulties.
Next thing he does, I already mentioned this earlier.
America is very important to our company, so I'm going to move there.
I needed to know more about Amer how Americans lived and how they thought. I realized that my future would depend on the United States.
I would move my family to the United States and experience the life.
Of an American
Now
Sony winds up being the first Japanese company to sell their stock.
In the United States.
So he says, I realize what a disruption this move would be for my family, but I'm a believer in the total immersion.
Theory.
So his kids are young at the time.
His wife
was a hu a massive supporter of him.
So they literally come over and
I think he's the only one that speaks.
any Engl English. His kids have to learn English. They're going to school where you know, they're the only Japanese people there.
His wife, uh, you know, has to build a social circle where she she doesn't even speak the language. So he's not exaggerating when he says I'm a big believer
In total immersion.
Theory.
He then takes an idea that worked in Tokyo and he's going to
Import it into New York.
Well the way I would describe this is David Ogby has this great line.
Where he says only first class business.
And that in a first class way.
I think a Kyo would agree with that.
So he had opened a showroom
in the Ginza district in Tokyo. Remember he was talking about earlier, it's like I don't want people, you know, we put blood, sweat and tears into making these products.
I don't want people
In in between us and our customer.
I'm just not interested in that.
So he opens a showroom in the Ginza district in Tokyo where potential customers could try out the products with no salesmen around.
And it winds up becoming like a massively
popular place for people to like
to gather and to hang out.
he talks about like the advertising value of that
Shirt showroom was enormous.
And he's like, Okay, if I want to do the same thing in in New York, where I go. He's like, Well, if I want to reach the people who had the money to afford to buy our high price products.
Then Fifth Avenue is obviously the place to find them.
So he takes the idea from the Ginza district and he does it on Fifth Avenue.
Now something that this is important because something that he repeats throughout the book.
It is our policy.
To charge a premium for our products.
We at Sony have always been fanatics about quality. She talks about quality.
And high prices over and over again.
Abuka and I knew we were uh we were after quality
above every single
Thing.
And he knows to be the very best, to go after the highest quality. You have to be
an an extreme person with un unreasonable what many people will d deem unreasonable
You know expectations.
And he applies it to himself, his kids.
Business.
Places to maintaining physical and and mental discipline. This was very interesting.
So he says when I attended school, discipline was very strict and this included our physical as well as our mental training. Our classrooms were very cold in the winter.
We didn't even have a heater.
And we were not allowed to wear extra clothes.
In the Navy.
I was indoctrinated into hard training. In boot camp every morning we had to run long distances before we could get our breakfast.
In those days I did not think of myself as a physically strong person.
Yet under such strict training I found I was not so weak after all.
And the knowledge of my own ability gave me confidence in myself.
that it did not have before. It is the same with mental discipline. Unless you are forced to use your mind, you become mentally lazy and you will never fulfill your potential.
And so he's talking about the schooling that he had.
the the fact that other institutions and people held him to a high standard
He wind up matching that that standard that gave him in turn gave him confidence.
And so he's looking at it's like well Japanese c uh schools have gotten soft.
I'm in America, he says most American schools are way too permissive. So he winds up sending his son
So
He he lives like his own philosophy he he thought is beneficial.
For his own life and then he passes on obviously to people inside Sony, but also to his family. Now
I did come across one of these this is the single
Best idea. The most memorable idea.
That I've never forgotten, you know, when I read this book for the first time.
Uh, five years ago that I think is can be applicable to anybody else.
And that is hire a paid
Critic.
So
He finds this guy named Naria Ogre.
who was a vocal arts student at Tokyo University.
And he was testing and a fan of the early Sony products back in nineteen fifty. So he would test
their very first audio tape recorder.
And Akeo says I had my
I on Nio.
because for all for a bunch of years because of his bold criticism of our first machine.
He was a great champion of the tape recorder.
But he was severe with us because he didn't think our early machine was good enough.
He was right, of course, but
Our first machine was rather primitive.
We invited him to be a paid critic.
Even when he was still in school.
His ideas were very challenging.
He s this is this is what Nurea said that he was trying to do with Sony.
He says a ballet dancer needs a mirror to perfect her style her style.
Her technique.
A singer
Needs the same.
His criticism and taste was so valuable that at the time the book was published.
Nereo.
who starts out as a paid critic.
Is now the president of Sony.
Another thing A Keo preaches is he spent a lot of time
with the y especially as it gets older. With the youngest Sony employees. He would g have dinner with them every night.
He'd surround himself with them. They're obviously the ones that lead him to like the latest technology as he he gets older.
But he also like genuinely cared for their well being and didn't want them to stay at a company where they didn't believe in the mission or they they weren't happy. And I think
This is just this is advice that he would give to younger people and I think it's just excellent. It's just like
you're gonna work in a job that you hate, you're gonna wind up getting to end in your life and hating your life.
You know, let's say you only work eight hours a day, like a normal schedule.
That's still
Half.
of the time that you're awake. If you sleep for eight hours, you work for eight hours, you get eight out of the time. Like fifty percent of the time you're awake, you hate what you're doing. Wha how do you how how's the posture you're gonna get 10 in your life?
But go ahead and great life, just impossible.
Nobody can live twice in the next twenty or thirty years is the brightest period of your life. You only get it once. When you leave the company thirty years from now,
And when your life is finished, I do not want you to regret that you spent all those years here. That would be a tragedy. I cannot stress this point too much, that it is your responsibility to yourself. The most important thing in the next few months is for you to decide whether you will be happy or unhappy here.
He learns a few things through spending time with all these young people in the company. And he actually found a unique way to at this point, Sony's a massive company. You have tens of thousands of employees. It's just impossible for him to know everybody like he did in the early days.
And so he found a unique way to identify bad managers.
So I used to have dinner with many young lower management employees almost every night and we would talk until late.
And so he's having this conversation one night and this person
Keys him in on the fact that
he has a blind spot that he needs to fix. Before I joined this company, I thought it was fantastic.
It's the only place I wanted to work, but I work for this section chief and he represents the company.
But he is stupid.
And everything I do or suggest has to go to this guy.
I'm very disappointed that this stupid section chief is Sony as far as my career's concerned.
This was a sobering thought for me.
I realized there might be many employees in our company with problems like this and we should be aware of their dilemmas.
I started a weekly company newspaper.
Where we would advertise job openings in other parts of the company.
This and then we made it possible.
For employees to apply to those other jobs confidentially.
Why is that so smart? We've had many cases when we discovered a manager was inadequate.
Because so many people working under him.
Asked to be transferred.
We learn a lot by listening to our employees.
Wisdom is not.
The exclusive possession of management.
And then he talks more and more about his management philosophy.
He talks about the the difference where most of his competitors he thought he had an advantage because they they essentially
Manage.
For like next quarter.
And he was fine making investments that'll pay off five, ten years in the future.
Especially around marketing and advertising.
and the launching of a new product, like if he he does a great job and sp and invests a lot of money into m making the educating customers about the product.
Making more people aware of uh the product's existence.
It may look like he's spending a lot of money now.
But if you can turn these people into fans and customers of your company five, ten, fifty for five, ten, fifteen years, think about not only how much money they'll buy in other products for your company, but how many other people they tell.
About the company which
Right.
It seems like th that should be obvious, but if you actually look at and he talks about this a lot.
If you actually look at the behavior of people, like they're so short, it's just so natural for them to to err on the short term.
So he says the world of business has some peculi has some peculiarities. The remarkable thing about management is that a manager can go on for years making mistakes that nobody's aware of.
This is because management is an elusive thing.
It cannot be judged by next quarter's bottom line.
Managers can look good.
On the bottom line.
But at the same time, they could be destroying the company by failing to invest in the future.
A Sony president was reluctant to spend the money on promoting a new product. He said if we spent a lot and it didn't bring in enough sales, we would lose money.
I told him over and over again.
You must consider the return that comes in five or ten years, not just the media return.
They wind up th this goes on for a while in the book and they
H they keep fighting.
The Sony president and Akey keeps fighting about the laun the advertising and marketing plan for this new product.
Uh so they went fighting about this for quite a while and then Akeo can't sleep one day and just calls them in the middle of night.
And he goes, I finally said, If you're not gonna spend a million or two million dollars in this campaign in the next two months, I'm going to fire you.
My argument again and again.
was that by saving money instead of investing it
in the business you might gain a profit
On a short term basis, but in actual fact.
You are cashing in on assets that have been built up in the past. And so that is why they're constantly
Yeah, if they just said, Oh, we're gonna just make the Sony Walkman
And maybe walk in successful for for ten years, fifteen years, eventually they know they're in a technology business.
The technology they can't stop it, he talks about over and over again.
He he would teach his manager, he's like, Listen, we're har we need to harness technology.
You can't fight against it. Like we
is a phenomenon that we have to utilize. There's nothing we can do. Once new technology is develop, we can't just dig our head
In the sand uh uh it like put our head in the sand.
We have to learn the new technology and then we have to use it to invent new products. So he talks about it over and over again.
And so the way that a Kio would educate customers about a new product
was actually inspired by
A very old Japanese tradition.
I'm gonna attempt to pronounce this. You know how it goes with this with mean pronunciation.
Nemowashi, okay.
The thing that
Educating customers.
And Nimawashi.
Both have in common.
Is time.
One must prepare the groundwork among the customers before you can expect success in the marketplace.
It is a time honored Japanese gardening technique to prepare a tree for transplant for transplanting.
By slowly and carefully binding the roots of
Over a period of time.
B
By bit.
To prepare the tree for the shock of the change it is about to experience.
This process called Nimawashi
Takes time and patience.
But it rewards you.
If it is done properly,
With a healthy
Transplanted.
Treat.
Advertising and promotion for a brand new innovative product.
is just as important.
Another line from the book that could serve as a maximum.
You need to air condition your factories before your offices.
If Japanese clients come into an office of a new company and see plush carpet in private offices and too much comfort.
They become suspicious that this company is not serious.
That it is devoting too much thought and company resources to management's comfort.
And perhaps not enough to the product or potential
Customers.
Steve Jobs said when he came back to Apple, by the way.
Uh Akeo says that is exactly my sentiments. The investment should go into those things that relate directly to the product.
Too often I found in dealing with foreign companies that such superfluous things as the physical structure and office decor take up a lot more time and attention.
And money.
That they are worth, in fact.
There's a great line from one of uh Steve Jobs' biographies.
Right before it comes back to Apple, this guy named Gil Amelio.
Is
The
is the CO of Apple. And so it says Steve Jobs believed that Emilio had maneuvered himself into the gig by positioning himself as a turnaround expert. And then this line from Steve just makes me laugh.
But how can he be a turnaround expert?
When he eats his lunch alone in his office with food served to him on China.
That looks like it came from Versailles.
Okay.
This also speaks to again the the directness, the clarity of thought.
And the self confidence that Keo had.
Once Sony's really successful.
all these countries ask them to come and visit and help them.
You know,
You took a
you built one of the most successful like manufacturing and and technology companies.
you know, in in the the war torn ashes in Japan.
We may be poorer countries, it's China in the nineteen seventies.
Soviet Union, nineteen seventies. Can you help us do it?
And his whole point
Is he knows if people are serious about the work that you're doing, because if you actually care about the product that you're making and the company that you're building.
Then you stay in the details.
And it's obvious when you don't see the detail. So he takes this tour in nineteen seventy four.
to the Soviet Union.
And because they're like we want to work with Sony, can maybe you move some of your manufacturing here.
And he looks at the place, this is just not gonna happen. In Japan, this is what he told him. In Japan, we use our top talent and our best brains and spent years seeking ways to increase increase the efficiency and productivity of even such a simple thing as a screwdriver. We have racked our brains and made detailed studies and experiments to decide just what is the exact and precise temperature.
for soldering iron in each particular application.
You do not make any such effort here.
There appears to be no need to do it.
Because no one
seems to care. And so he gives them
Really good.
advice and it's exactly what Edwin Lann from Polaroid built his career off of and what Steve Jobs learned from Edwin Land.
It's the combination of art and technology, of liberal of liberal arts technology, of building at that intersection. And he's like
Russia.
Okay.
Has this
All this like history of great art.
If you have art and you have technology
Why do you not combine them to come up with some wonderful things? He's essentially describing what they did as Sony.
And one thing that one of the things that he repeats over and over again
that he think gave them a a great advantage. You know, he he's not positioning the book.
as like, look, we had to deal with all this crap, we had to
build Sony and you know burned out department store.
He actually thought that designing a constraint and being forced to be resourceful
on an individual company and country level was a huge advantage.
Because most of his competitors are so wasteful.
So you can think about what he's about to say here is like being wasteful is the opposite of resourcefulness.
One of the most significant value concepts that we have cherished from ancient times is this term pronounced
Moat.
Thai knee.
It is a key concept.
One that may help explain a great deal about Japan, the Japanese people, and our industry.
It is an expression that suggests that everything in the world is a gift from the creator.
And that we should be grateful for it and never waste anything.
We Japanese feel that all things are provided as a sacred trust.
And are actually only loaned to us.
To make the best use of.
To waste something.

A sin.
We have developed this concept that goes beyond mere frugality or conservation.
It is a religious
concept the wasting of anything was considered shameful and virtually a crime.
We have always had to practice conservation for survival.
We have learned how to be efficient.
We look at all of our factory operations and our products and made design changes where we could save even small amounts of energy.
We have also restudied all forms of power consumption.
At Sony in our factories and in our f in our offices.
And in our products.
When you were told from childhood
That the metal object that you hold in your hands comes from an iron ore mine in countries far away.
Which is transported to Japan at great expense.
And it's produced in furnaces that use gas and coal from other far away places. Such objects seem very
Valuable.
I am reminded of the American expression. There's plenty more where that came from.
We have no such
Expression.
We must all learn how to be more skillful.
We must learn new technologies to survive.
We must always create more opportunities.
And he does a great job of showing that we can identify and create opportunities just with the right perspective in our mind. It's exactly how he started Sony, if you think about where we started the podcast at.
I am reminded of the story of the two shoe salesmen who visited an underdeveloped country.
One cable to his office.
No prospects of sales because nobody wears shoes here.
The other salesman cabled
Send stock immediately.
Inhabitants barefooted.
And desperately need
Shoes.
And that is where I'll leave it for the full story. Highly recommend.
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And I'll talk to you again soon.