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Nov. 1, 2004 – The occasional social blunders were expected. The frequent moments of shared laughter were not. But the successful alliance of partners as seemingly mismatched as an American nanotechnology startup and a Japanese firm require the same foundations as a good friendship: mutual interests, respect, patience and trust.
At least, that was the experience of nanotube manufacturer Carbon Nanotechnologies Inc. (CNI) of Houston and trading company Sumitomo Corp. of Tokyo.
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More than three years after their initial meeting, Sumitomo feels well positioned to be the Asian supplier in the potentially huge market of carbon nanotubes, according to Shinji Aoki, a manager at Sumitomo and the corporation’s liaison with CNI.
CNI, in turn, can piggyback onto Sumitomo’s sales, marketing and established relationships with Asian customers in electronics, materials and other industries that could use nanotubes.
“Japan and the Far East are an important market for carbon nanotechnology,” said Ray McLaughlin, CNI’s chief financial officer and Aoki’s counterpart at CNI. McLaughlin and Dan Colbert, a CNI co-founder and former vice president, decided soon after the company’s incorporation in 2000 that it needed an Asian partner. “We needed to align ourselves with someone who knows what they’re doing.”
At the same time, Japanese corporations interested in nanotechnology were looking west because much of the innovation originated in the United States, Aoki said. He focused on nanotubes while on a six-month program at Massachusetts Institute of Technology, and when he returned to Japan recommended CNI.
At the time, CNI was one of only a few companies positioned to make a highly functional type of nanotube in volume.
“We needed some high-potential partner like CNI,” Aoki said. Among Sumitomo’s selling points: “We have a big pocket for investments.”
Early this year, Sumitomo and CNI jointly announced an exclusive marketing and distribution agreement and a financial investment by Sumitomo. McLaughlin wouldn’t say how much funding CNI received. But the announcement culminated a long developing and occasionally frustrating experience that required patience and perseverance.
“Sumitomo is a big company,” Aoki said. “It takes time to get authorization. That was a big hurdle for us, for both myself and CNI.”
Getting to the partnership stage took some cultural give-and-take and continued focus on long-term goals, McLaughlin said.
“You have to be open-minded to the other side,” he said. “You have to understand there is another mindset. … The Japanese are very thorough and tedious and I’m not. I had to be willing to do it their way with the understanding that I will get where I want to be.”
Aoki helped steer McLaughlin and Colbert through the corporate structure at Sumitomo in Japan and accompanied them on trips to potential nanotube users. But even with Aoki’s guidance it proved difficult to negotiate the hierarchical mazes of other companies.
“We’d be talking to a tech person, and we wouldn’t realize until six months later that he’s not going to make things happen,” Colbert said. “We found that while it is important to talk to the tech people, it is more important to talk to the people who have authority to make things happen.”
Colbert said that what appeared to them to be a slow pace of negotiation allowed Sumitomo to become comfortable with the relationship. Once it had reached that level of mutual respect and trust, Sumitomo became and remained a stalwart supporter in Japan and South Korea.
“It took time and we made mistakes, but Sumitomo helped us immeasurably,” said Colbert, now the chief technology officer with the venture capital firm NGEN Partners. “They gave us counsel, and took so much onto themselves. There was no opportunity for us to fall on our faces.”
A willingness to get to know would-be Japanese partners on a social as well as professional level is critical, said Herb Goronkin, who orchestrated joint programs between Motorola and Japanese government-industry consortiums.
Formerly a vice president at Motorola Labs, he now assists startups and government programs in the United States and Japan as president of Technology Acceleration Associates.
“They need to know that you are a human being and have things in common,” said Goronkin, who now speaks Japanese after an estimated 50 trips there. “Have dinner with people. Sit on the floor and have a beer.”
Slowly built relationships will help sustain the inevitable faux pas. For Colbert, it was the use of a French-Belgian term in a toast at a dinner party. The term resembled a Japanese profanity. “We had enough of a relationship built up, and wanting to have that relationship, everyone laughed at it.”
Aoki and other Japanese polyglots had some jokes with McLaughlin, too. After they heard his Texas drawl, they determined that he didn’t really speak English.