I flew four hours south from Manaus, which lies on the banks of the Amazon, to the Galeao-Antonio Carlos Jobim International Airport in Rio de Janeiro. From Rio, I flew north to Los Angeles by way of Panama City. This was an inefficient travel route that made me suspect I was flying over Manaus twice. But my travel agent said this route was the only way for me to reach Los Angeles in time for a speech I was scheduled to deliver at the first session the next morning.
I arrived in Panama City after eight hours in the air. Before landing, I got a good look at the Panama Canal. I was surprised at the many modern buildings that crowded Panama City. Next, I flew north to Los Angeles. This second flight took me another eight hours. Security checks for passengers bound for Los Angeles were strict, perhaps because Osama bin Laden had just been killed. In a painstaking operation, several workers opened every item of carry-in baggage at a boarding gate.
Finally, I arrived at the Los Angeles International Airport. From the Airport, I took a cab to my hotel. Traveling an expressway with five lanes in each direction, I absent-mindedly wondered what would happen to such a motorized society once oil runs out. Naturally, electric vehicles will replace gasoline-fueled cars before that happens. But I wondered where we would turn for energy once there are no more fossil fuels. We need policies that look ahead to the future. We must consider them calmly, without emotion.
The taxi arrived at my hotel in Beverly Hills, Los Angeles, while I was pondering this question. Twenty-six hours had passed since I checked out of my hotel in Manaus. It was already past 1 a.m. in Los Angeles. The flights from Manaus were long indeed. To attend the morning session starting at 6:30 a.m., I decided to wake up before 6 the next morning after taking a nap for three to four hours.
Let me explain here about the Milken Institute Global Conference, in which I was participating. In my view, this conference ranks with the Clinton Global Initiative held simultaneously with the United Nations General Assembly in New York in September and the Technology, Entertainment, Design (TED) Conference held in the Los Angeles Bay area as one of the three biggest conferences held in the United States each year.
The Clinton Global Initiative mainly targets political leaders and NGO members. The TED focuses on speeches by visionaries. The Milken Institute Global Conference by contrast gives the impression of a “major think-tank festival,” attended by specialists from diverse fields. Participants number more than 3,000, with speakers topping 400. One hundred or so sessions are held at this conference. They range widely in their content.
The Milken Institute Global Conference runs for four days. The first day is devoted to private sessions, which draws some figures of considerable prominence. Sessions of varying kinds occupy the following three days. This conference is basically U.S.-centric in spite of its “global” title. Almost all panelists are from the United States. That aspect does make the meeting easy to understand, though.
We can feel the good old American “culture of debate” at this gathering, because so many people are from the United States. Thanks to that culture, we can enjoy intellectual stimulus at a considerable level at the Milken Conference. I had been asked to take the platform at a Conference session on the third day, which was scheduled to start at 8 a.m. After taking active part in another morning session from 6:30 a.m., I went to the waiting room for platform speakers at the session from 8 a.m.
The session in which I had been asked to participate was titled “Investing Asia.” Other platform speakers included the Thai Trade Representative, a top Singaporean monetary authority official, and the Asian representative for Apollo Management. My role was to inform the audience on the situation in Japan and share my views on investment in Asia in general. I spotted some famous investors in the audience.
The moderator for the session was a Forbes journalist who had previously served as a CNN newscaster. I found it easy to speak at the session because I knew her well. I thought the audience responded quite well to what I said. Later, I found in a tweet made by Kotaro Tamura that session participants on the floor called me one of “Japan’s valuable global elite.” Tamura tweeted, “Many of my friends gave rave reviews to his speech, which I missed because it was delivered at a session in the early morning.”
Readers can watch a video of this session, including my speech, on the Internet (Milken Institute Global Conference 2011 – Investing in Asia: .
Note: I think readers can skip the opening section before my contribution because the video is rather long. Please refer to my speech memos attached at the end of this column for an outline of my speech.
After the session on Investing Asia, I chatted with other panelists at a coffee shop for about an hour. Next, I went to the waiting room for the panelists about to take the platform for the Japan session to say hello. I exchanged greetings with people like Board Chairman Teisuke Kitayama of Sumitomo Mitsui Banking Corporation, Allen Minor, and Kotaro Tanaka.
I also took part in a session on “social media,” which overlapped the Japan session. Idealab CEO Bill Gross was by far the most interesting speaker among the panelists at this session. Gross was the only one on the panel who showed up in his “uncool” suit and necktie, while other speakers appeared wearing jeans and no necktie to create an atmosphere “suitable for the occasion.” But Gross made some amazingly interesting remarks that put him way ahead of his group.
“Social media has just begun to show its potential,” maintained Gross. “People are spending increasing amounts of time on social media when we look at the time they allocate to newspapers, magazines, radio programs, TV programs, the Internet, and social media (deliberately viewing the last two separately). Social media will continue to evolve because it is an extremely powerful tool.”
“Until now, we have made profits by shortening inventory periods or increasing turnover rates. Going forward, we need to focus on knowledge, instead of inventory. In the past, we have gone through a process of trial and error on a massive scale to listen to the opinions of our customers. But now we can hear their opinions with their real names and social graphs continuously on a real-time basis. How to process and interpret that knowledge and data, including customer opinions, will be the key to success in the future.”
“The ability to ‘listen’ will be essential. We’ll enter an age of ‘listening organizations’ that listen to customer opinions. I run the risk of being misunderstood for saying this, but social media is like Wikileaks in the hands of all employees. Enhancing organizational transparency on the assumption that all information will be disclosed is important. Organizations must undergo an evolution themselves.”
“Until now, ads were simply a nuisance to customers. But customer recommendations and opinions have begun to function as megaphones in place of advertisements with the emergence of social media. The recommendations and opinions of friends and other respected individuals are affecting the thinking and purchasing behavior of more and more people.”
“Tweets function as blind carbon copies to the whole world, in addition to text messages sent to a large number of specified individuals. We must amplify useful opinions, and anticipate and curb unhelpful ones.”
“The way venture companies operate will change going forward, too. They will become able to reach markets all over the world in an instant. The concept of a ‘marketing budget,’ which we have used until now, will disappear. Venture companies will be able to reach millions of people in the twinkling of an eye. They need no marketing. Venture companies are finding themselves in a new environment where they can manufacture good products and expand their sales through word of mouth. Companies now can increase their customers from zero to 1 million faster than ever before in human history.”
“Social search is still unsatisfactory as a function. Search using an algorithm is not enough. Under the circumstance, information, such as who rated something good, is more important than information search itself.” I found these and other statements Bill Gross made sharp and extremely interesting.
Stimulated more than I had expected, I raised my hand from the floor. I added three perspectives, which the panelists had not mentioned, to the discussion of social media as an opinion from Japan.
(1) Social media was the most effective means of confirming safety in the period immediately after the earthquake, when mobile and fixed-line phones were not working. Some companies in Japan have started to require their employees to use Twitter and Facebook in recent months because entries and comments on these media enable them to confirm the safety of their workers.
(2) Social media proved their value as a source of news and information. Newspapers were too slow to cover what was happening. TV broadcasts did not offer a sufficiently broad range of information. The Internet could not deliver the right information to the right people by itself. Under these circumstances, Twitter functioned as a medium of information, as well as an important source of information.
(3) Social media played another major role by enabling people to encourage each other. Many people in great shock turned to social media for hope. Social media helped them to encourage each other and overcome the difficulties.
After I made these remarks, someone tapped my shoulder gently. When I turned around, I found an elderly woman. She had walked up to me to say, “Thank you for sharing that information.” Her words filled me with emotion.
I found the lunchtime panel discussion equally interesting. Individuals who had occupied top security and intelligence positions in the United States and Britain, including a former NATO supreme commander, an ex-director of the M16 British intelligence bureau, and a former deputy CIA director, took the platform as panelists for this session that looked into “global risk.” A CNBC newscaster moderated their discussions. Starting with Osama bin Laden, the panelists exchanged their views on topics including the situation in the Middle East and conditions in China.
The following statement at the session impressed me the most. “Politicians in countries, including the United States and Britain, are becoming populists, acting nationalistic and turning inward in spite of the fact that global cooperation is more important now than ever before. They are moving away from international cooperation. Neither the G8 nor the G20 is functioning. That’s the most disturbing problem.” Statements like this clearly demonstrated the high level of U.S. and British intelligence agencies.
After lunch, I attended a session that discussed “Nuclear Energy after Fukushima” as its theme. Choosing a session to attend was a tough job because about ten sessions were taking place simultaneously, just as in Davos.
Let me introduce some of the statements that impressed me at this session.
“The number of fatalities per terawatt (1 million megawatt) is 161 for coal power generation, 36 for oil power generation and 0.1 for nuclear power generation, respectively. Nuclear power is overwhelmingly the safest choice among the power sources that can serve as a base load when we think about safety.”
“The accident in Fukushima prompts me to wonder if we should stop making cars just because a car accident made us realize they were dangerous. I don’t think we should. I think we will keep using cars by making them safer.”
“Countries that are now focusing on nuclear power are emerging nations such as South Korea, India, China, and Russia.”
“The media are covering events in a way that is too one-sided. The great majority of people who lost their lives did so as a result of the tsunami, but media are trumpeting the horror of nuclear power only. What they are doing is outrageous. I must say the media is showing a remarkable lack of balance.”
“We have an uneven distribution of oil, with most of it in parts of the world that are the least stable. Just think about how much the United States has spent on protecting the Strait of Hormuz. France has increased its reliance on nuclear power generation to 80%, based on its policy following the oil crises in the 1970s.”
“No trustworthy source of alternative energy that can substitute for nuclear power has been discovered. A hundred years ago, nobody would have thought that nuclear power was feasible as an economical and revolutionary form of energy. Without nuclear power, the entire planet would be like a ‘smoking area.’”
In the meantime, public opinion in the United States appears to be shifting in an antinuclear direction. This dilemma and the question of how to deal with public opinion seem to be tormenting policymakers in the United States, just as it is their counterparts in Japan. As a participant from Japan, I offered my personal opinion on that point from the floor, like others were doing. But I’m not sure if I could explain properly what I wanted to communicate. I realized the need to train myself so that I could give more clear and concise explanations. Nothing comes without training, I realized.
As I had anticipated, the sessions exhausted me. I decided to go back to my hotel room and take a rest. While taking a shower, the power in my room went out. My first thought was: “al-Qaeda counterattack.” But it seems that power was down throughout Beverly Hills Country. With nothing to do in the darkness, I went to sleep. Japan enjoys uninterrupted power supply in practically all conditions except for earthquakes. I thought that we must be grateful for the stability of power supply in Japan.
I had a breakfast meeting with an investor from 7 the next morning. I was able to win the investor’s understanding by offering a summary of the situation in Japan. With a sense of fulfillment, I returned to my room, and went straight to the Los Angeles International Airport.
I looked out from a taxi window. As usual, the sky over Los Angeles was blue. I realized at that point that I had not stepped out of the hotel during my stay there. Appreciating the blue sky, I relaxed in the backseat.
I closed my eyes, thinking back on my long journey. I felt as refreshed as the clear blue Californian sky.
May 5, 2011
Yoshito Hori
Written on a flight back to Narita
Notes I Referred to During My Talk
Milken Global Conference May 3rd , 2011
Investing in Asia
1. Eight Disasters
1) Earthquake of magnitude 9.0
2) Tsunami of 15 m—37 m at Miyako
3) Fukushima radiation—Four reactors in a Level 7 accident
4) Supply chains issues
5) Power shortage
6) Damage to the reputation of Japanese products
7) Economy: Bankruptcy and unemployment
8) JGB solvency risk
2. Lessons of History
1) Great Kanto Earthquake in 1925. Four years later, in 1929, a banking crisis in Japan.
2) Kobe Earthquake in 1995. Three years later, in 1998, the financial crisis, with the failures of Yamaichi, LTCB, and NCB.
3) Great East Japan Earthquake in 2011. What’s next????
3. Economy short-term – Bad
1）Automobile Sales
March 2011 Down 37% from the previous year
April 2011 Down 51%!!
2) GDP Growth
1Q 2011 – 0.8%
2Q 2011 -1.5% ???
4. Economy Opportunities & Threats Will Be Determined by the Japanese: Reconstruction Demand—Competitiveness—Change—Spirit—Awakening!!!
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