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August 26, 2009


How I Became a Company President at 15 Years Old

iemochisan.jpg Copyright JFS

Lecturer: Kentaro Iemoto, President and CEO of Clara Online, Inc.

Today, I would like to discuss the diversity that we are currently aiming for at Clara Online, Inc., with regard to both the successes and the remaining problems.

Providing internet hosting is our company's main activity. Clara is a venture company that has been in business for 12 years and currently has about 100 employees in total. Unlike larger and more traditional companies, we do not micromanage our employees; instead, we rely on individuals to make decisions that help the company operate smoothly. This is important in the context of the rest of my talk.

The Boy Who Used to Play Baseball and Who Pinned His Hopes on Business

First, I would like to talk about the establishment of the company. When I was a child, my dream was to become a professional baseball player; however, I developed a brain tumor, and a complication during surgery left me paraplegic. My dream was shattered and I was filled with despair, but then I discovered online computer services. Because so few Japanese around my age used e-mail at that time, I used my PC to make international friends, making full use of my bad English. I was 13 or 14 at this time.

Through this experience, I started to find a new way to maintain contact with a society and to create an IT-related job for myself. I established a company when I was 15 because I wanted to prove that I was living my life and to have greater contact with society through job, rather than out of a desire to make money.

I established the company in Nagoya where I was born, but moved the headquarters to Tokyo four years ago. The company has subsidiaries in Singapore and Taiwan and has sets up data centers in Shanghai and Kuala Lumpur.

About 30 percent of the employees at the domestic unit of Clara Online, Inc. are non-Japanese, and if overseas branches are included, 40 percent of its employees have non-Japanese nationality. These employees have a wide range of nationalities, coming from 12 countries, including Singapore, Taiwan, China, Malaysia, Philippines, Indonesia, Russia and France.

I am often asked why I hire people with foreign nationalities, but the reality is that we could not meet our needs by hiring only Japanese. When the company started, it was difficult to find people who would work for a 15-year-old company president. I asked a professor at a local college for help, and he introduced me to a Polish student who was looking for a job. So, I asked him to come work for my company, and since then, the number of foreign employees has continued to grow.

Who Are 'Foreigners'?

Within five or six years after the company was established, we got used to having foreign employees, feeling that we did not need to only hire Japanese. However, we experienced many problems.

First, we had problems finding housing, particularly when the company was still in Nagoya. In one case, I took an employee who was from another country to a real estate office, and we experienced obvious black looks. In Tokyo where there are many non-Japanese people, we had fewer problems; however, when I took a Greek employee to a real estate office in a downtown area, they rejected us immediately. Unfortunately, these problems are still common. I think this comes from a lack of understanding.

Personally, I do not use the word "foreigner". Instead, I use "people who have foreign nationality" or "people from other countries", depending on various viewpoints, such as their nationality, their native language or the language of their home country, or which country they have mainly lived in.

My wife is a third-generation Korean who has lived in Japan for her whole life. She cannot speak Korean, and only speaks Japanese. However, as she does not have Japanese nationality, she is not Japanese, and as she is not planning to become a Japanese citizen, and so she will be always be Korean.

Companies in Japan do not know how to treat such people. From this point of view, Japanese companies are typically out of their depth. This is why foreign job applicants living in Japan send their resumes with aliases similar to Japanese family names, and we have even seen this at Clara.

Dealing with Social Differences

Another problem was related to our evaluation system. I tend to speak very frankly, but I soon realized that it is very difficult to work with people who have different social systems. For example, people from Eastern Europe or the former Soviet Union, who have very different social systems from Japan, have a far different work ethic. In Japan, employees tend to be evaluated based on the results they produce. However, in my company, some employees feel that if they complete their assigned tasks, the results do not matter. This gap in "common sense" led to difficulties in staff evaluation.

To solve such problems, we had to improve communication. If you simply assume that we can understand one another, when you deal with those from different cultural backgrounds, misunderstandings are common. Implicit knowledge does not work. One needs to clearly express what one wants to say, and to confirm that others really understand. That is the key to good communication.

You may think that this takes time and money; however, in companies where people of various nationalities work together, it is vitally important. A company can only grow if everyone is working together, and this is more important than short-term costs.

Meaning of Diversity

I have been thinking about the meaning of diversity, and I have reached the conclusion that it is about cultivating a culture that respects communication. Because we have to communicate, such a culture was created at our company, resulting in strengthening the organization.

As we have many foreign employees, we are sometimes considered to be a leading company for diversity. However, we always ask ourselves if we have really been successful in generating diversity, and we try to identify and solve problems. Employees who have foreign nationalities account for 30 percent in our staff, but this is meaningless unless the organization is strong.

In the business world, every organization has a hierarchical relationship divided into sectors or divisions, leading to gaps in the organization. Even in our company of a hundred employees, there are four ranks from the top to the bottom; board members, general managers, department directors and field staff. Gaps in communication between the top and the bottom can therefore appear, for example, some staff may feel that the president does not understand the feelings of the field staff, while the president may feel that it is difficult to convey his thoughts to the field staff.

As our company does not necessarily work with implicit knowledge from the beginning, we tend to talk a lot, even while walking. We continue to express our thoughts and to listen to the ideas of others. This is our natural way to communicate. As we talk more, I hear opinions from field staff, while field staff can quickly get my opinions and thoughts. Although this may not be the most direct route for information flow, I believe that it is an effective way to deal with diversity and to strengthen the organization.

Japanese Language Barrier

Based on current Japanese society, the country will not be a leader in diversity for some time. As most Japanese are unfamiliar with diverse societies, it is difficult for them to understand the concept. In fact, the first time I experienced anything resembling a diverse society was when I purchased a company in Singapore in 2006, and I have since traveled there often. About 70 percent of Singaporeans are of Chinese origin, but many people from other countries work there, and many languages are used. In fact, 20 percent of the current population of 4.8 million has foreign nationality.

The Singaporean government promotes the acceptance of employees with foreign nationality, but at the same time, issues fines when the ratio exceeds 50 percent. This is an inconsistent policy. Our office in Singapore has a 50-50 mix of Singaporean staff and other foreign nationals.

Looking at how they communicate, we found that English is spoken with various accents. The president, who is from China, speaks English with a strong Chinese accent, while the Russian lead engineer speaks English with a Russian accent. In addition, the person in charge of sales, who is from Indonesia, speaks English with yet another accent.

I realized that English is widely accepted for communication, as is Chinese, which is used widely in and around China. On the other hand, Japanese is not very widely spoken outside of Japan, and despite having regional dialects, is relatively homogenous. I think a lot of Japanese people feel odd when they hear Japanese spoken with unique intonation or accents, particularly when it is spoken by people whose first language is not Japanese. For example, although many people from Tokyo can understand dialects from Tohoku or Osaka, they may have trouble understanding Japanese spoken with a Chinese accent. Unless this changes, companies will never be able to have diverse staffs.

'Virtual immigration' has Started

In Japan, immigration policy does not have a clear direction. However, I believe that "virtual immigration" has already started. For instance, in convenience stores or family restaurants, people whose first language is not Japanese are more commonly working. Before the government has devised clear policies, this trend has begun in places that are ready to accept it.

Although I spoke about Singapore, the situation there is not necessarily ideal, as the Singaporean government strictly regulates the flow of foreign nationals, acting as a type of valve. The government maintains clear controls, for example, by regulating the percentage of foreign employees and by canceling visas when employees do not perform adequately, because they have promoted diversity for national benefit.

We have been attempting to create a strong company with individual power within the organization. I believe that employees are not of fluctuating value, but rather, a company cannot operate without a truly diverse staff.

Unless more venture or medium-sized companies begin hiring more multinational employees and expand their business opportunities, instead of hiring foreign staff to fill specific job roles or to meet specific requirements for national policies, true diversity in Japan will never be realized.


In 1997, Kentaro Iemoto established Clara Online, Inc., a server hosting company at the young age of 15. Despite his youth, which was the subject of both praise and criticism in the media, Mr. Iemoto succeeded in making the business successful due to his managerial talent. Clara Online is now known as one of the oldest server hosting firms in Japan. He was named as one of Newsweek's "100 Leaders of the New Millennium" in 1999.