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Man On A Mission


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Man on a Mission

Oki Matsumoto wants to tap Japan's individual investors with online broker Monex

If you trust your first impression of Oki Matsumoto, you're likely to be misled. The soft-spoken 36-year-old with a shy smile comes off like a daydreaming librarian--not the president of Japan's fastest-growing online brokerage, Monex Inc. Despite his bookish manner, Matsumoto is a man on a mission. He's out to make investing in Japanese stocks more accessible to a nation of people hungry for U.S.-style returns. That's why he's building a business based on an affordable commission of $9.25, top-flight mutual funds, and quality research. And unlike most Japanese brokers that fawn over older, wealthy clients, Monex seeks young beginners eager to turn themselves into junior Warren Buffetts. "It's a dream of mine to make the Japanese markets more democratic," says Matsumoto.

Such a goal might sound hollow from a blue-suited Japanese company president more concerned about board members than consumers. But Matsumoto--who prefers chinos, sweatshirts, and loafers without socks--sometimes seems as much a creature of Silicon Valley as Tokyo. His dozen years as a trader at Salomon Brothers and Goldman, Sachs & Co., where he became the youngest Japanese partner ever at age 30, has earned him a reputation as a big thinker who leaps at ideas that ultimately become conventional wisdom. Example: He made a name for himself developing promising markets for derivatives and asset-backed securities that other Japanese brokers are now copying.

Given Matsumoto's resume, it's no surprise that in less than one year in business, Monex has emerged as Japan's fourth-largest online broker, trailing only Nomura, Daiwa, and E*Trade Japan. And with accounts growing 15% per month, it's expanding twice as fast as the market in general. Monex's 80,000 clients are the most active in the industry, with 30% of them trading at least once a day.Price war. He's up against some giants, though. Japan's Big Three brokerages--Nomura, Daiwa, and Nikko have yet to seriously pump up their online businesses. With 50 online brokers fighting for a piece of the action, a price war late last year drove down commissions by an average of 60%, to less than 1% for large blocks of stock. Analysts expect the weaker players to start dropping out soon. To avoid ending up a victim, Matsumoto has added heft to his site by selling Vanguard Group and Dai-Ichi Kangyo Asset Management mutual funds. The latest: Clients can access their accounts on NTT DoCoMo i-mode cell phones. He's also counting on his appeal to small investors to win a bigger share of the market.

Matsumoto isn't just talking big about spreading the wealth--he's betting his company's future on it. To get shares of Monex into the hands of small investors, Matsumoto auctioned 60% of the 150,000 new shares to retail clients and priced the stock at an affordable $417 per share, less than 10% of the average initial public offering price in the last year for Internet companies. "We've got to change the way companies go public or we'll never see Japan's capital markets developed," says Matsumoto. The IPO was an unqualified success in a weak market: The company's shares surged 51% on the first day of trading and are now trading at about $742, 78% above the IPO price.

Success is nothing new to Matsumoto. After graduating from the law department in Japan's most prestigious school--Tokyo University--Matsumoto joined the breakneck world of Salomon Brothers. That was in the go-go late 1980s. It was an unusual route to take: Typically, law-department grads go to work for the government or for blue-chip manufacturers. But Matsumoto was anxious to use English and work for a global company.

After learning the bond-trading business, he jumped ship for Goldman, where he quickly rose to head the company's fixed-income department. It was a shock to others when Matsumoto abruptly quit two years ago. "Most people thought he was nuts," says former colleague and mentor Jacob Goldfield--mainly because he would have scooped up quite a windfall when Goldman later went public.

Matsumoto's gaze was fixed on the Net. He foresaw a tremendous opportunity for online trading sites because the government was set to deregulate trading commissions last October. He first proposed an online trading site to Goldman, but the firm passed on the idea. That's when he decided to forge one on his own.Impressive backers. It's a testament to Matsumoto's diplomatic skills that, rather than hold his defection against him, Goldman opted to invest an undisclosed sum in Monex. And Goldman is just one of a handful of impressive backers that Matsumoto rounded up--including J.P. Morgan, the Soros Group, and Sony. Matsumoto found a kindred spirit in Sony Corp. CEO Nobuyuki Idei when the two first met in late 1998 at a posh Ginza-district restaurant. Idei says he was impressed with Matsumoto's vision and "great personality." Sony was an original investor in Monex and still holds a 30.9% stake. The two companies are planning still-secret joint financial projects.

Matsumoto works hard cultivating the loyalty of customers and employees. A perfectionist who labors 18 hours a day, Matsumoto reads 500 e-mails daily, including all customer inquiries. Twice a month, he holds a "town hall meeting" with his staff. At the last one, he told employees to start taking vacations--even though he hasn't had a day off since he left Goldman.

His concern for the little guy came early. His father, Tokuya Matsumoto, a book editor, taught him to admire General Douglas MacArthur, who governed Japan after World War II and brought such reforms as women's voting rights and land redistribution. Later, when Matsumoto was at Goldman, mentor Goldfield taught him about U.S. markets and the importance of the individual investor. "Oki's wanting to make the markets more democratic is not just pure business," says Goldfield. "He wants to help Japan do better."

First he's got to make Monex a winner. Observers say he's got what it takes. Says a friend from Goldman, Jun Makihara, who now runs one of Japan's largest incubators: "The Okis of the world will lead Japan into the 21st century. They're out there, but you can't see them." Now you can. /By Ken BelsonReturn to top


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