CIO — LOVE AND DOTCOM DREAMS were in the air when Jim Moliski attended his former classmate Richard Chen’s wedding in the summer of 1999. During a break in the reception, Chen, who had gotten his MBA with Moliski at the University of California-Berkeley, brought up the idea of starting an e-mail marketing concern in Japan. Moliski was all ears. He had just made a tidy profit by selling a U.S.-based dotcom he had founded to handle direct e-mail messages to consumers for other companies. Although Japan was still in a nasty recession, Moliski and Chen wanted to provide the same services there and were excited by studies showing the exploding number of Japanese consumers going online. But Moliski, a Florida native, hadn’t counted on Japan’s distinct economic
and cultural landscape. Right from the start, Moliski and Chen had trouble attracting the right people to work at their startup, called OptoMail. Japanese workers are famously loyal to their employers and wary of working at startups. Infrastructure was also an ongoing issue; it took more than six months to get high-speed Internet access in the OptoMail office, and telephone service was exorbitant. Office space is outrageously expensive (rent for OptoMail’s 15-person Tokyo office is more than $10,250 per month). And e-commerce has not yet taken off (Japanese consumers are leery of online fraud, and most don’t use credit cards anyway, preferring cash and wire transfers to pay for purchases). To top it all off, the large Japanese companies Moliski and Chen are targeting for e-mail marketing seem to prefer doing business with companies they already know.
"You have things good in the United States, believe me," says Moliski, 33, who spends half his time in Tokyo and half in Berkeley, Calif., meeting with the U.S. parent companies of potential Japanese clients.
Like Moliski, many online entrepreneurs are learning that the overseas climate can be harsh?or at least one heck of a learning experience. It’s not so much that money is a problem?although funding is always a great challenge. A bigger problem is that other countries have much lower rates of Internet penetration than the United States (see "Level of Internet Penetration," this page). Half of the U.S. population is estimated to have Internet access, compared to only 12 percent in Japan, just over 30 percent in western Europe and not even 5 percent in Latin America. Infrastructure problems are largely to blame. Most foreign countries do not have high-speed Internet access and are plagued by antiquated phone lines. Even pricing systems can be a problem. In Japan, for example, telephone customers are charged for every call; there is no such thing as free local calls, so people tend to curb their Internet usage.
