David Senra (0:00)

Akio 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 Akio, as did James Dyson, as did Steve Jobs and Jeff Bezos. And a few months ago I was spending time with John Mackey, 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 100 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 greatest founders constantly emphasized 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 a 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 130 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 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 spending and how doing so can give you a massive competitive advantage. Akio 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 costs. 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 believed 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 40 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, Akio Morita, then just 25 years old. Today that company is one of the most powerful and respected multinational corporations in the world. Sony and Akiya Morita is its outspoken founder. That is an understatement. The Sony story is one of consistently high quality merchandise and phenomenally successful marketing strategies masterminded by Merida, who realized he would have to create the markets for Sony's unprecedented products. Morita's striking departure from the traditional Japanese business practice of making decisions by committee led to the spectacular success of Sony. So that is an excerpt from the inside cover of the book I want to talk to you about today, which is made in Japan. Akiya Morita and Sony. This book was published all the way back in 1986 and the Re I I did I first read it, I don't know, probably five, six years ago and made a podcast about it. I think it's episode 102. 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 a bunch of founders, the Japanese electric electronic industry founders from the 60s and 70s. The book is called we were Burning. And what is so fascinating is how many founders in that book talked about studying Akio and Sony and how that influenced them and gave them the confidence to start their own company 20 to 30 years later. And that's actually how I first discovered Akio because I was reading about Jeff Bezos and Steve Jobs and they would mention the influence that Akio and Sony had and you really use them as a model for their own company. So I just want to go through. It's absolutely amazing how influential and how many other founders that have then in turn, you know, influenced millions of other founders and you can actually track a lot of their ideas back to ikea. So this is something that Jeff Bezos said many, many years ago. And what he learned from Akio and how it influenced the building of Amazon. Bezos says, right after World War II, Akio Morita, the guy who founded Sony, made the mission for Sony that they were going to make Japan known for quality. And you have to remember this was a time when Japan was, was known for cheap, copycat products. And Morita didn't say we're going to make Sony known for quality. He said we're going to 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 his second autobiography when he was in his 70s. And listen to what he said and what he learned from studying Akio Morita. Think of the Walkman. So the Walkman is one of Sony's most successful products. We'll talk a lot about that. That came from Akio. His own company tried to fight Akio and tell him, no, this is never going to work. Winds up selling like 400 million units, one of the most successful consumer products of all time. And so this is what James Dyson when he was studying Akio and Sony, what he realized, he goes, think of the Walkman. His company didn't want to do the Walkman because it wouldn't record audio. Akio Marino 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 Akia Morita from because he talked about admiring the fact that they didn't do make me too 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 visited Sony and met Akio when he was, when Steve was early on and he, and he loved the uniforms that all the Sony employees were wore. And so he asked Akeo, like, who designed these? Wound up being, I think the guy's name is like Izzy Miyake 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 going to jump into Akio's story because it's unbelie how Sony starts, you know, after 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 going to call it? Macman. Because he was so inspired by Akio'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 fascinating. So I want to start. It's very fascinating where the book is published in 1886, 40 years after World War II. And yet where does Akio choose to start his life story to tell his autobiography at this time? I think he's his late 60s when he, when he writes this book and he decides to start it with his response 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 going to see a couple things here that's going to jump out that's really important that are tied directly to the success of Sony, in my opinion is the fact that Akio had immense, from a young age, immense self confidence. So he 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 20s, you have an understanding because you have a 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 Dell episode I did last week, please listen to it. It might be one of the best episodes that I've ever made. I think it's going to be the most popular episode I ever made. There's something in Michael Dell's story. Everybody knows, you know, 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 19 years old, you know, Akio's not much older here, right? Saying, I don't know why I was optimistic at the time when, you know, complete devastations around me. We'll get into the details of just the environment that he's building Sony, and 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, when he's having this argument with his dad, like, what do you want to do with your life? He's like, I want to compete with IBM from my dorm room with a thousand dollars. And Michael Dell said, was I little full of myself at 19? Sure I was. I think you have to be to do anything important. Let's go back to Keo. When I first heard of the atomic attack on 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 going to sound crazy to Americans today, but at the time Ford actually built it was the world's largest integrated factory at the time, spread across 2,000 acres. And the facility was able to produce virtually every component 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 AIO had that kind of 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 firestorm. They killed 100,000 people in a few hours. All of Japan's major industrial cities had been charred wastelands. This is where this is again. This is a year. The. The year after this is when he's going to start Sony. In 1945, you would see depressing heaps of Blackened remains. The blackened remains were the homes of literally millions of Japanese. And then yet again, he's going to hit us. Very surprising. When you read this book one, he's like, he's got a huge personality. He really likes to talk. I don't, there's another way to say he likes to talk a lot of shit and it's really fun to read. And he'll give you opinion 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, but he also, it's also surprising because as you're reading he's talking about this and you're like, just imagine, you know, you shouldn't just read through these books quickly. Try to sit there and put yourself in that position. Imagine being 24. Imagine, you know, living your whole life in Japan and you just see this. 100,000 people die in a few hours. There's no. The industry is 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, 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 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, the right set of skills at the right time. Okay, then he tells us about his childhood. So Akio is from an extremely wealthy family. He had, his family had a 300 year old family business. They created and brewed sake and other alcohol. He was supposed to be the 15th generation heir to the family fortune. Okay, there's actually a lesson about, about focus in here. I was born the first son in the 15th generation heir to one of Japan's finest and oldest sake brewing families. The Morita family had been making sake for 300 years. Now here's the problem. They were very prosperous. There's going to be two generations above his father. That almost caused the family to go into bankruptcy. And this is the lesson about focus. His dad's going to wind up saving the company. Unfortunately, the taste of a couple generations of Marita family heads was so refined, 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 Morita 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 this 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 because 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 I last read this book. And now because 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 a lot of similarities between Akio and Dell in this, in the sense that he's like, well, you know, for 15, for 13, 14 generations, up until this point, the Morita family business was run by somebody in the Marita family. Obviously you're going to care about it. Has your, your, your name, your aunt, 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. He could have lost control of the company with his name on it. And they're like, 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 Dale said something was excellent. He's just like, I don't want to start another company. This company is my name on it. I'm going to care about this company after I'm dead. I think there's a lot of similarities to that. When you, when you look at these, these multi generational family businesses, especially the Merida, is 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 how they built the businesses, you know, 50, 100 years before you even alive. So they messed up by, by essentially outsourced, 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 did not carry the responsibility of the generations. And that's exactly how it's framed for, for Akio 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 Morita family fortunes. No outside manager could be counted on to do that for him. So when Akio'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 Akio is born, the family is wealthy again. And he talks about this openly. He says, I never had to know probation 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 the other wealthy Japanese families. And in fact, the. The richest family in Japan at the time was the Toyotas. They lived like, 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, you know, the fruits of the labor of the. And the compounding of 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 him about the business decisions of previous generations. And this is 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 of my father. So from an early age, Akio is going to with his dad. They go to the family office, they go to the breweries. By the time Akio is 10 or 11 years old, he is actually sitting in on board meetings of the family business. Now. He loves his family. He's fascinated in business, but he. That wasn't his obsession. He finds his obsession, his obsession. Very similar to Michael Dell 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 Akio'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, to play back recorded 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 electronic devices that he could use. And so making radios was actually becoming like little ham radios was becoming a very popular hobby in Japan. So he says, I began to buy books about electronics and I subscribed to all the magazines that contain all the latest information about sound reproduction in radio. And that's exactly what Michael Dell did for computers. That would be about 40 years later than when Akio'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 he graduates high school, his dad expects him. You're going to go to college and you're going to study business, you're going to study economics. And Akio's like, no, I think it's already obvious he's unmanageable. You're not going to 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 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, determin, I am determined, or the phrase I am determined or determination is, is said, repeats it over and over again From a young age till all the way up until, you know, he's building Sony. It's constantly repeating, I'm determined, I'm determined. I was very determined. So my father was disappointed that 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 Akio 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 out to college, he's still doing in the Navy. He said I had built an alarm clock he's still tinkering which is attached to my radio and was set to wake me up every morning at 6am 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 that 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 it meant they could afford western goods almost. They had a Ford car, their dad was, was driven around in a chauffeur, by a chauffeur in a Buick. They had a General Electric products from General Electric, from Westinghouse. They admired the tech at least in his side his family they admired American ingenuity and technology. So now he's like oh shit, we're in big trouble. We just bombed the country that seems to be superior to us in technology. Knowing about America's technology I was concerned that a mistake had been made. So beginning of the war because he's in the Navy there this actually inadvertently is going to lead him to meeting his eventual co founder. This genius engineer who's 13 years older than Akio. This guy named Abuka Keo 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 such. They're trying to figure out how to to create heat seeking missiles. And one of the civilians in the group was this brilliant electronic engineer. And at the time Yuri also had his own company which is very fascinating to Akio. His name is Masura Obuka. So he's talking about the fact that he's got this, he's in a group with these other genius engineers from the army, from the Navy and the civilian sector. One of them obviously being a Booka. And he, he was young and he says I was 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 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 she's like, oh, we're just going to like mass produce a bunch of cheap copycat products. Like no, we aimed for the high end right from the 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 10, 20 times by now is the. The Defiant Ones about Jimmy Iovine, Dr. Dre, Eminem. It's, it's a fascinating documentary that HBO put out. It's four part documentary. I watch it over and over again. All kinds of fascinating people in there. Bruce Springsteen, Tom Petty. But that kind of personality type, that defiant one, it made me think as I'm, as I'm reading Akio, the same thing that, the same time that's playing in the background, I was like, oh, he is a defiant one. The way I would define is 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. So it becomes obvious by this point that Japan is not going to win the war. And there's talks that the Navy might order us to commit mass suicide. And Akio 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 talks about this intense ideology that they had that, that Akio thought was ridiculous. The, the commanding officer like yells at him, he's like, well, you know you're going to be court martialed and you'll be punished if you don't do it. And aio's thought was, you guys are all going to commit mass suicide. Who's going to be left to punish me? It was like an obvious thing. Like that's obviously not true. So the war ends. This is when the Americans are going to occupy Japan. And this was remarkable. Like, you know, the Japanese emperor, they never spoken directly to his people, this is the very first time they actually ever hear his voice. In fact, AIO 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 hide your and direct your gaze elsewhere. Again something that Akira just would not do. But I think the advice that the Emperor gives to the Japanese people after the war is actually really, I think it applies to any difficult challenge. So it says the Emperor, who up and now had never been spoke, had never spoken directly to his people, 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 Akio is going to 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 ideology because it turns your brain to cabbage. It turns your brain to cabbage. And so Akito says that his family avoided this like they were surrounded by, by fanaticism and by, you know, people saying, like, we should go down to last man, like we'd rather extinguish the country of Japan than lose a war. So he says 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 death. 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. Now this is one of the most inspiring parts of the entire book. If you think about the conditions in Japan right before Akio founds Sony. Many 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 7 million people remained into the city. Only 10% of the city's streetcars were running. There was 60 buses in running condition and just a handful of automobiles and trucks in the entire city. Hospitals were short of everything. Department store shelves were empty. And there's also almost no food. In fact, when they decide, hey, we're going to start a new company, and his co founder, Buka is the first, the person that decides to start the company first, they're like, why you, Matt? Why are you trying to make electronics? You should try to make food because food was so scarce. It's so crazy. So Akio talks about his future co founder and this is something that you and I talk about over and over again. You must, you absolutely must find and work, find the best people you possibly can and work with them. And Akio realized like, oh, this is very similar to like Steve Jobs realizing Wozniak. He said something like, Wozniak had like more talent than like 50. You could play like 50 average engineers in Wozniak would outperform all of them. There's an element of that with Akio just thinks that his co founder, you know, is the most brilliant engineer alive. And he was already. Buko was already running a company out in like the countryside. It was the Japan Measuring Instrument Company. He's going to quit doing this and move to Tokyo to start what's eventually going to turn to Sony. But Akio tells great stories about Bukin and he just talks about this guy's mind is like unlike anybody else's. So he gives an example to us here. He's like, okay, well he has like 1500 employees already. They're making these small mechanical elements that control the frequency of radar devices. These devices have to oscillate at exactly 1,000 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 1000 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 is going to make some very smart decisions. First, he's going to 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 is very obvious in the book is like when you. They're forced to design with constraints, 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, let's say, hey, there's already a 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. Since shortwave receivers, these are, these are little radios everybody had in during the war because they would broadcast like updates in 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 them anyways, but now it's not illegal. So now we can actually start making products for this. So 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 Buka designed a shortwave adapter, 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. The employees that Abuca had at the time would literally have to buy. They'd 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 comes very, very popular. So they are 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 Akio does not hide the fact that without a Buka, there would be no Sony. So what Akio does that's really smart. And I think in line with his personality and who he was as a person, he senses an opportunity. He does not wait. He jumps on it immediately. So he wrote to Abuka. He writes him a letter, said I want to 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 that things were pretty tight and that 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 Akil was doing at this time, his old physics professor at university. There was a drastic and dire need for physics instruction. And so Akio, 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 your payroll. I can, I'm going to work, I'm going to teach during the day and work with you. And then I can just live on my salary from my teaching job. Now what they go and do, and this is very common in like Japanese culture is they go, they, they have to ask his dad, a booker and Akio go and talk to Akio's dad, right? Because a book, he realizes how valuable he is going to be for the company. They're going to want to be in co founders for this. They have to get essentially get permission from his father. Buga told my father about the new venture. Now this is very fascinating and this is again talks about. Remember Akio 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 have great memories. And I think one of the most important things is his father knew his son. His father knew his son. And this will make sense in one second. Abu told my father about the new venture, what they hope to accomplish and that I was absolutely needed for the new business. And his father said, tells a Booka, I expect him to succeed me as head of the family and take over the family business. Keo's 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 are going to do what you like best. He knew his son. He knew his son. That's one of the best things that he could have ever done for his son. So this is the early. And he's gonna, they're gonna wind up helping. Cause they go to his dad, Akio's dad for loans. They wind up, he winds up loaning him money. They convert that money into, 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, work workspace in an old bombed out building and a company of misfits. I don't know why this, like, it brings like tears to my eyes. It's just funny. This, this section, this section's going to be funny. So our new company was not sending 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 now. This is what I mean about self confidence. This is what I mean about I kind of knew who they were from a young age and what they wanted to do. And they knew from the beginning we're going to build differentiated products. They wanted to be high quality innovators really. When you get to the section of the book, 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 going to do something completely differentiated, I'm going to do it better than anybody else in the world. There is an element of pride and self respect and competitive drive to do what they're saying that is implied in what they're saying. And even if they don't say, their actions express what's important to them. They want to do something truly unique. They want to do something truly special, which Sony may not be like that today, but undoubtedly for the first four decades it was that, it was its leader, it was completely innovative, so it says. Ebuka 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 that 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 going to do the best with the Opportunities in front of us is how I read this part of the book. Now another thing, always do your best work even in terrible working conditions. We talk 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. American forces had taken over the Japanese Broadcasting company and they need this new technical equipment. They need mixing units and other studio and broadcasting equipment. Okay, Buka knows how to build all this. He had previous experience this. So they submit a bid on a contract to do this for the Americans. So they're going to 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're like, what the hell is going on here? And then they tore it after they ordered them the bid. So it says. When the General saw our shop, he was taken aback by how primitive 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, 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 in 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 decide to build a tape recorder. That in turn leads to another important insight, that they're going to build their entire company around. So 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 AIA and Abuka are engineers. They're like, oh, we build a great product, customers will come. And 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 Akio is going to become obsessed with marketing and advertising. So I had no experience in merchandising or salesmanship. It never occurred to Abuka or me that there was any need for this. Abu believed 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 demonstrations on the street and everything. And people are like, oh, that's kind of cool. But, you know, it's kind of a toy, and it's really expensive. Like, I'm not sure why I would buy that. Definitely not going to 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 that 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 stenographers because so many people had 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 realize is the tape recorder would be very effective to record all this, instead of having somebody needs to type it right away, right? We were able to demonstrate our machine for the 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 Akio and 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 going to 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 miniature miniaturization and compactness was something that was very important to Japanese culture. And so Akio is going to have this idea for what he calls a pocket radio. You can almost see this is almost like a precursor to the Walkman and then in turn is the precursor to, you know, Steve Jobs on 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, you know, he's a very quick learner. This, this showmanship and marketing genius that Akio 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 our art rolls into neat scrolls. We set as our goal a radio small enough to fit into a shirt pocket. Not just portable, I said, but pocketable. Now we like the idea of a salesman being able to demonstrate how simple it would be to drop it into a shirt pocket. Problem is, the product they make was slightly bigger than a standard men's shirt pocket. And that gave us a, 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 made 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 understate or overstate rather how important advertising, promotion and set and educating the market is for these new products to Akio 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 for other companies that don't put much 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 get traction. They're developing the ability to not only create new products, but also market them. And Akio decides, hey, I'm going to go all over the world and I'm going to visit other companies and factories and I want to learn from them and I want to 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 Philips. It was my first visit to Philips 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 Dr. 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 going to change the image of Japanese products as 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, one of the astonishing things in the early days of Sony, 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 Akio 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, who we would not grow to be the kind of company that Buk 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 affluent market. And that means a rich, sophisticated country. And I'm going to get to this in a little bit. But Akio takes a very drastic measure 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. This guy is incredible. I'll get there in a minute. I want to 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 the market before you release the product. There's a lot of great ideas in here that I think, you know, are timeless. Marketing is really just a form of communication. In the traditional Japanese system for distributing consumer products, the manufacturers are kept at arm's length from the consumer. Direct communication with the consumer is all but impossible. That is not good enough for Akio. We realized from the beginning that it would not serve the needs of our company and its new advanced technology products. Okay, so they want to set up their own stores. They're going to 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 our enthusiasm for our products and our ideas that we had. Going to sound exactly like the reason. If you think about the, the rationale that Aquio is demonstrating, we're probably in the late 1950s, early 1960s. 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 going to 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 going to hand them off to people that don't give a shit. No, not good enough. Not going to 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 going to sound a lot like Steve Jobs. Going to sound a lot like Edwin Land. It's going to 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 grabbed it. And everybody's saying it was a shitty idea to begin with and you're going to sell 400 million units. 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 market research, we refine our thinking on a product and it's used 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 going to aim straight for the top, we're going to innovate, we're going to have high prices, we're going to have big margins, we're going to be the best marketers, we're going to educate the customer and we're going to 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 would put like boom boxes on their shoulders and stuff. You'd see movies like in New York City, you know, back in the 80s. I bring that up because it was obvious, like what, what is that person doing? That person is carrying something. It's like £15. He's carrying around with him because he wants his music to travel with him. Everybody was listening to music at their homes, in their bedrooms. You're taking these giant 15 or 20 pound steroids around with you. What does that tell you? There's clearly a demand here. Just no one has done it yet. That seems kind of odd, right? So he's got his own co founder, one of the genius engineers, the person that invents 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 was, 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 around 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 Buga's complaint set me into motion. I ordered our engineers to take one of our reliable small cassettes, 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 going to 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 going to do this with headphones. So now I just took out the recording unit and took out the speaker. What happens? I just made it miniaturized, which means you could carry it. Replace them, the 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 pushback that he's getting. Of course they will. They're already, 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 recording 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 going to 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. And it's why I kept bringing up to you what did Nolan Bushnell, who mentored Steve Jobs, who, who helped shape Steve Jobs, thinking, you know, he hires Steve jobs when he's 19. What do you say? Says only the arrogant 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, your new product, your new 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 him like this stupid. No one's going to 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 idea 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 Akio in his autobiography is that if you know why you are doing what you're doing, hard decisions become a lot easier. So he says, I turned 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 is 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 of Bulova like the radio so much that their purchasing officer said, we definitely want these. We'll take a hundred thousand units, 100,000 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 Bulova name on the radios. So yank off your Sony name. You're going to make manufacturer, make it, but you're going to put it on our. We're going to 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 50 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, 50 years ago, your brand name was just as unknown as our name is today. I am here with a new product and I am now taking the first step for the next 50 years of my company. 50 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 because I watched a documentary from one time and same thing, he had no money. He's like living in this like studio apartment with the train running over him. They just have a mattress on the floor. It's him and his wife, who he's still married to, 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 Bloomingdale's, if 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 has 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 an original equipment maker for other companies. Like I'm here to take the steps to, to build a lasting and enduring brand. And takes a lot of courage to do that. In this case, Akio just turned down an order for a hundred thousand units which was worth several times the total of his company. But again, if you Know the why. Your why just makes the why behind what you're doing just makes all these decisions easier to make. They're difficult to time. But understanding is like, hey, this is where we're going and we're not going to deviate from that. Another thing that's from the very beginning, we're going to be the best. We're going to aim straight for the top. This is something 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. 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 seeker 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 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 of theory. So his kids are young at the time. His wife was a massive supporter of him. So they literally come over and I think he's the only one that speaks any English. His kids have to learn English. They're going to school where, you know, they're the only Japanese people there. His wife, you know, has to build a social circle where she, she doesn't even speak the language. He's not exaggerating. 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. The way I would describe this is David Ogilvy has this great line where he says only first class business and that in a first class way. I think Akio 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 salesman 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, that showroom was enormous. And he's like, okay, if I want to do the same thing in, in New York, where do I go? He's like, well, if I want to reach the people who had the money to afford to buy our high priced 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. So talks about quality and high prices over and over again. Abu and I knew we were, 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 deem unreasonable, you know, expectations. And he applies it to himself, his kids, applies it to his business, applies it to maintaining physical 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 I 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 fact that other institutions and people held him to a high standard. He wound up matching that, that standard. That gave him in turn gave him confidence. And so he's looking around, he's like, well, Japanese schools have gotten soft. I'm in America. He says most American schools are way too permissive. So he winds up sending his son to a very strict boarding school. So he, he lives like his own philosophy. He, he thought it was 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, not single, the most memorable idea that I've never forgotten. You know, when I read this book for the first time 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 Oga who was a vocal arts student at Tokyo University and he was testing and a fan of the early Sony products back in 1950. So he would test their very first audio tape recorder. And Akio says, I had my eye on Nerio 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. Our first machine was rather primitive. We invited him to be a paid critic even when he was still in the school. His ideas were very challenging. He. This is, this is what Nariya 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, Nerio, who starts out as a paid critic, is now the president of Sony. Another thing Akio preaches is he spent a lot of times with the, especially as it gets older with the youngest Sony employees. He would have dinner with him every night, he'd surround himself with them. They're obviously the ones that lead him to like the latest technology as 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. Just like if you're going to work in a job that you hate, you're going to wind up getting to your life and hitting 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 other times, like 50 of the time you're awake, you hate what you're doing. How do you, how, how's it possible you're gonna get in your life like, oh, I had a great life. It's just impossible. Nobody can live twice in the next 20 or 30 years. The brightest Period of your life. You only get it once when you leave the company 30 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 know, 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 he says, 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 is 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 ask 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 difference where most of his competitors, he thought he had an advantage because they essentially manage for, like next quarter. And he was fine making investments that'll pay off five, 10 years in the future, especially around marketing and advertising and launching of a new product. Like, if he. He does a great job and invests a lot of money into making the. Educating customers about the product, making more people aware of 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. 5, 10 for 5, 10, 15 years think about not only how much money they'll buy in other products for a company, but how many other people they tell about the company. Which, Right. It seems like 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 err on the short term. So he says the world of business has some, 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 10 years, not just the immediate return. They wind up, this goes on for a while in the book and they have, they keep fighting the, the, the Sony president and Akio keeps fighting about the law, the advertising and marketing plan for this new product. So they weren't fighting about this for quite a while. And then Akio can't sleep one day and just calls him in the middle of night and he goes, I finally said, if you're not going to spend a million or $2 million 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, you know, if they just said, oh, we're going to make the Sony Walkman and maybe the walkman's successful for 10 years, 15 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, we need to harness technology. You can't fight against it. Like we, it's a phenomenon that we have to utilize. There's nothing we can do once new technologies develop. We can't just dig our head in the sand 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 over and over again. And so the way that a Keo would educate customers about a new product was actually inspired by a very old Japanese tradition. I'm going to attempt to pronounce this. You know how it goes with this, with meme pronunciation, Nemo washi. Okay. The thing that educating customers and nemo washi 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 over a period of time, bit 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 tree. Advertising and promotion for a brand new innovative product is just as important. Another line from the book that can serve as a maxim. 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 and private offices in 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. This is going to sound exactly what Steve Jobs said when he came back to Apple. By the way, Akio 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 Steve Jobs biographies right before he comes back to Apple. This guy named Gil Amelio is the, is the CEO 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. 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 asked him to come and visit and help them. You know, you took a, you built one of the most successful like manufacturing and technology companies. You know, in the war torn ashes in Japan, we may Be poorer countries as China in the 1970s, Soviet Union in 1970s. Can you help us do it? And his whole point is he knows if people are serious about the work that they're doing, because if you actually care about the product that you're making and the company you're building, then you stay in the details. And it's obvious when you don't stay in details. So he takes this tour in 1974 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 going to 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 Edmund Land 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, building of that intersection. And he's like, Russia has this, all this, like, history of great art. If you have art and you have technology, why do you not combine then to come up with some wonderful things? He's essentially describing what they did at Sony. And one thing that, one of the things that he repeats over and over again that he think gave them 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 mo tai ni. 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 is considered 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 looked 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 re studied all forms of power consumption at Sony, in our factories and 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 mined in countries far away, which is transported to Japan at great expense and is produced in furnaces that use gas and coal from other faraway 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 cabled 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 reading the book. If you buy the book using the link that's in the show notes on your podcast player, you'll be supporting the podcast at the same time. Also leave a link down below. Make sure you're on my personal email list. I email the top 10 highlights for every single book I read. That's available@davidsonrer.com and you'll find it down below. That is 386 books down, 1,000 to go and I'll talk to you again soon.