'Learn to fail elegantly' says Creative Commons CEO, Joichi Ito
- 17 December 2010
- From the section Business
Serial entrepreneur and investor Joichi Ito believes in perseverance.
"Every single company I did failed," he says of his first ten years as an entrepreneur and investor.
But despite a number of setbacks, he has since launched or invested in a string of successful technology companies.
His venture capital fund Neoteny Labs looks for opportunities in Asia and beyond. And Mr Ito is also CEO of Creative Commons, a non-profit organisation which has the goal of "making it easier for people to share and build upon the work of others, consistent with the rules of copyright".
Joichi Ito was born in Japan and educated in the US. While studying at the University of Chicago, he became involved in the city's club scene.
"I was learning a great deal just working and hanging out in the nightclub," he recalls. "I realised that in the sort of working-class community of the nightclubs there was a lot of very interesting stuff going on… The communities, people caring for each other."
The discovery prompted him to question the value of this studies. He says the "homogenous group of students focused on one thing" meant that he "[wasn't] really learning very much and it wasn't particularly exciting."
"People and communities and networks are what I'm interested in," he explains.
After leaving university Mr Ito worked as a DJ and then a journalist but says he "switched quickly" to technology entrepreneurship once he realised that "the internet was really all about connecting people."
As a venture capitalist, Joichi Ito is very specific about the type of companies he invests in.
He favours businesses operating in areas where patents are not always necessary, such as the internet. According to Mr Ito, the high costs of patents mean that smaller companies can rarely afford them, leaving them at risk of being sued.
He believes that even the ownership of one patent is no protection when faced with a patent litigation from a larger corporation possessing many patents in that area.
"Patents are like land mines," he says. "In an area where I see lots of patents, I'm going to be careful about any company in that space."
He has chosen to invest in online services such as Twitter and Flickr and says that online success is more about exploiting the flexibility of networks to promote a product than it is about the product itself.
He gives examples of two companies he didn't invest in which are successful: "YouTube had a relationship and it figured out how to connect into MySpace… PayPal figured out a way to connect into eBay… It's strategic."
Freedom to create
Joichi Ito is critical of modern ways of communicating ideas.
The CEO of Creative Commons believes the many tools in place to protect creators often act as barriers to future innovation.
"There are certain benefits to copyrights and patents and providing an incentive for people to invest in research. But at the same time… most ideas actually increase in value as they're spread." The internet is symbolic of this according to Mr Ito.
"If you look at the Internet from a technical perspective…you have the network and then you have the web," he says. "They're based on these open standards that allow interoperability and people to participate without asking permission, people to innovate without asking permission. "
"And they've created explosions of innovations for things that we couldn't anticipate."
He says the aim of Creative Commons is to make it easier for people to collaborate. "It's a tool that allows you to legally use copyright without having to hire a lawyer each time to craft a contract when you're trying to share" .
Joichi Ito was an entrepreneur before he started investing. He says modestly, "we only talk about our successes but there are probably ten times as many failures that I've started."
But Mr Ito believes the setbacks were crucial to his success as an investor. "I think it's essential for any investor to have been an entrepreneur. I think it's important that you understand that perspective."
One of the most important lessons he learnt was to fail "elegantly."
In fact the angel investor now spots employees from ailing companies. "People who have survived failures are just…worth their weight in gold," he explains.
"Whenever I see a company fail, the first thing I do is I go in and I look for those people who did a good job through that failure and I immediately recruit them."
And Joichi Ito is used to looking for opportunities in places where others might not look.
"I believe in serendipity," he says. "If you plan everything you can't be lucky."