GlobalEdgeTalk

Michimasa Naka on Investment Banking, Japanese Culture and Being An Optimist

July 01, 2020 Alex Romanovich
GlobalEdgeTalk
Michimasa Naka on Investment Banking, Japanese Culture and Being An Optimist
Chapters
1:50
The decision to go the entrepreneurial route
6:24
The balance between entrepreneurship and family
9:37
A positive approach to life
15:14
COVID situation in Japan and USA
23:52
The unpredictable economic war
31:54
Advice to new generation of entrepreneurs
GlobalEdgeTalk
Michimasa Naka on Investment Banking, Japanese Culture and Being An Optimist
Jul 01, 2020
Alex Romanovich

Please welcome our guest for this episode of Global Edge Talk — Michimasa Naka. Michimasa Naka has over 20-years of investment banking and global markets experience, most recently as Deputy President and Head of Global Investor Sales for Citigroup Global Markets Japan Inc. Listen to his incredible journey now!

Support the show (https://www.patreon.com/globaledgetalk)

Show Notes Transcript Chapter Markers

Please welcome our guest for this episode of Global Edge Talk — Michimasa Naka. Michimasa Naka has over 20-years of investment banking and global markets experience, most recently as Deputy President and Head of Global Investor Sales for Citigroup Global Markets Japan Inc. Listen to his incredible journey now!

Support the show (https://www.patreon.com/globaledgetalk)

Alex Romanovich (00:02):
Hi, this is Alex Romanovich, and welcome to GlobalEdgeTalk. Today is June 22nd, 2020, and we are very privileged to have Mr. Michimasa Naka, Naka-san from Tokyo, Japan. Hello, Naka-san.

Michimasa Naka (00:18):
Hey, Alex.

Alex Romanovich (00:20):
I'm going to briefly introduce you. And then we will start the conversation. As I explained to you, GlobalEdgeTalk is about entrepreneurs. It's about people who became entrepreneurial or used to be entrepreneurial or were entrepreneurial to begin with, they're on the edge, they have the edge, and that's exactly what we're going to talk about. You've had a very, very interesting career and you continue to amaze everybody who was involved with you, with your energy, with your savvy advice. You started your career with the Salomon Brothers, which was later acquired by Citigroup, spent over 20 years with Citigroup as a general director for Japan. Later on, you've founded Storm Harbour Securities, which was a boutique exchange securities firm, correct? And then as of recent you've also made a number of investments and you are now also with the Broadway, Broad Capital.

Alex Romanovich (01:28):
I'm sorry, there's not a Broad Capital, it's Broadwalk Capital, I'm sorry. And you're all over the world making investments, supporting a lot of entrepreneurs from Tokyo, from Japan, that's where you are, that's where your family is. So let's talk more about you and your philosophy and so forth. So with that career, you started with very large financial, global financial institutions. How did you decide to become more entrepreneurial and sort of after 20 years you decided to go the entrepreneurial route, what sort of prompted that? Tell us more.

Michimasa Naka (02:09):
Well, thank you for the question. So, as you said, I joined the company called Salomon Brothers which I would say end up being Citigroup is a lot of mergers, but even within Salomon Brothers, I was very lucky to be in the fixed income trading department which was a very profitable group within the company. And I was since my background is engineering so I was very lucky to be in the position of making and also creating that new system, new trading mechanism, program trading, derivatives, securitizations all of those new technologies because we are always ahead of the market, you need to be a little bit smart to make money.

Michimasa Naka (03:18):
And I was so excited to be in that position. And especially our Japan team was doing very well even within the all Citigroup globally. So I was very proud to lead the number one team globally. And I did enjoy doing that, but we all know about this Lehman thing which was, to be honest, I think it was a little bit too much over what we call like financial technology, too much leverage new type of securities. And I think that that may be little bit too much to grow up our financial market, right? And after that, to be honest, it was terrible. I mean, I was a co-CEO of Japan and I was asked to cut more than 70% of people, right?

Michimasa Naka (04:28):
Even though we are doing the same thing because of this parent companies share price, which you may know that the share price went down from 50 to 1 which is in the current. So, because they also after that changed the such. So now I think I see the group used to be like a 500 in the current. I guess that's the share price, which went down to 10, right? So, it is a scary time. Well, I'd rather than cutting like 70% to 80% of people, which most of them I hired, I think it was a time to move on and I think Citigroup was a little bit surprised to hear, but this was my decision and I always had a dream to create some my own company. And I thought that was a time to start, which actually was at the age of 45, which I started my own company.

Alex Romanovich (05:49):
You look amazing. I thought you are 46 at the moment right now. So when you say it was at the age of 45, and this was a while ago, it's incredible, but we'll talk about that as well. We'll talk about the health and wellness and longevity because you and I met intersected at the sort of wellness intersection, right? And digital health and wellness. You travel all over the world. I see, I follow you on social media. You are in Singapore, you're in Hawaii, you're in New York, you're in Boston. You're in Dubai, you're all over the place. How do you balance this amount of travel? And we'll talk about COVID and coronavirus and how that impacted you, but how do you typically balance this with your commitment to a number of companies and also your personal commitments to your family? I always see lovely daughters, by the way, congratulations on the recent graduation. And you're a proud father and it must be difficult for them too, not see you sometimes for weeks and weeks. How do you balance this?

Michimasa Naka (06:59):
Well, that's a good question. So let's talk about before COVID, right? So before COVID, I used to travel about 20 times a year which is almost twice a month, right? And usually our trip is very short. So it's either one night or two nights, so I don't really stay long in each places, except the vacation. So vacations, which I usually go with my family. So that's where I spend like one week or two weeks in certain places. Obviously Hawaii is our favorite place. So you can see lots of pictures and videos from Hawaii, but also we are doing business in Hawaii as well. So sometimes Hawaii is also not only vacation but also we do business. So let's say Hawaii is both a vacation and a business.

Michimasa Naka (08:07):
And the other places which I tend to go, which is New York. I usually visit there like once or twice a year, almost every year in the last 20 years, and Europe for certain cities and some big cities in Asia. As I told you, twice a month, which is few days, so probably more than you expect, actually I am with my family. So even though I travel a lot, so I think it wouldn't be too much issue and also we are a family, we communicate very often through in Japan we have SMS call LINE which is very convenient. We have a family LINE, so we communicate every day, and even though my elder daughter is now working and she's in a different city, so we don't see her every day, but still, we communicate. So I think I'm very happy to have a great family and we communicate even though we are apart.

Alex Romanovich (09:37):
You're an optimist, you always smile, and I always see you with a big smile on your face. What drives you? Why are you such a positive person when so many different things that taking place and yet nothing seems to phase you, nothing seems to take you down?

Michimasa Naka (10:02):
Within my life, of course, there was so much sad things happen, crises. And that especially on the financial market, where we had the Lehman, we had the IT bubble, we had the Japan bubble and I experienced all of those in the last 30 years, and always I have a lure of some that we can take over those crises. And I said that crisis ended up being the biggest chance on business, especially on business, right? So, I think that for some reason I have a kind of personality to enjoy. I wasn't enjoying the crisis, but I enjoyed the innovation and I enjoyed the new things. And always if there's something big thing happening in the world, always there's a something for the chance. If you remember 2011 we had this big earthquake in Japan. And we had this old tsunami almost like a more than I would say like 300 or 400 km, so in terms of miles like 200 miles, was wiped away, right?

Alex Romanovich (11:49):
It was devastating.

Michimasa Naka (11:51):
Lots of people died, but I think that Japan was very in that, I'm very proud of this country that we became one and that we thought like we have to go through this environment and this was not a war, right? This was just the earthquake and the tsunami, but we went through. So I think that we are very I would say the strong country to go through all those crisis. So, I think that's something that could driving me, and I talk to my colleagues and we have to stay always positive to think and to create that new things.

Alex Romanovich (12:53):
It's fascinating that you mentioned this, because culturally I was exposed to Japan for the past four or five years and spent some time with the Think Technologies for three years, almost three years. And what struck me.

Michimasa Naka (13:11):
One of my investment.

Alex Romanovich (13:11):
Yes, of course. We'll talk more about that. One of the things that absolutely amazed me and struck me is the level of discipline and level of commitment to other people, to the rest of the community and level of responsibility that I've noticed. You talked about the tsunami and I'll never forget watching on TV in 2011, how the entire nation of Japan got together, there were tremendous lines for food, there were lines for supplies, there were lines for, but everybody was very, there was no panic. There was water, there was a lot of discipline. There was everybody just looked at each other and totally understood what needed to be done, right?

Alex Romanovich (14:05):
And now we have a situation in the another country that is very near and dear to me, the United States of America, with coronavirus, with COVID, with a situation where we are the the biggest nation in terms of coronavirus cases, the highest number of cases, we have a number of different sentiments and emotions about this, about wearing masks, about doing social distancing, about doing what needs to be done for science. When you're dealing with the scientific type of situation. And we're not handling it the way I would like for it to be handled, I'll be honest you. And that's why we're seeing unnecessary amount of cases, unnecessary deaths. I am very concerned obviously because my parents, my elder parents live in Florida. Now it's one of the highest cases in the States, in New York we had obviously a big issue as well, just very recently, luckily it was subsided. But I guess the question I have for you is, as you observing all of this, you having been exposed to the West working for an American company and looking at all of this, what is sort of going through your mind? What is your feeling about all of this? Please, share.

Michimasa Naka (15:35):
Well, thank you for the question. I'll be a silly, it's a very sensitive question.

Alex Romanovich (15:47):
Those are my favorite ones, by the way, the very sensitive ones.

Michimasa Naka (15:53):
Well, of course, I'm very sad to see all those things happening in the world, and especially in U.S., especially in New York, which is still my favorite city. So, I miss New York and I hope I can visit it soon. And that, of course, I'm not a specialist on this COVID, so I cannot comment too much, but what I can say and what I can talk is about Japan. And obviously we see all those news happening in each countries, and also we have lots of information about Japan, about Tokyo every day. And still like we have the cases of just like 15,000 in port of the whole country actually, which is we are talking about less than like 0.1% of the whole population and the less than 1000 people died in this COVID.

Alex Romanovich (17:15):
Which is incredible compared to the United States where 125,000 people almost died so far.

Michimasa Naka (17:22):
And if you remember, Japan is a very aged country. So we have a huge number of people over seventies, which went through and I think also still going through this COVID, so people are very scared, very afraid. And I think we have this period. Even though, and those are the very important thing is the Japan was not locked down. So it wasn't locked down. It wasn't the kind of the order from a government, which is very different from the other countries, including U.S. But Japan was, because we don't have a law to lock down, it was just asking favor not to go out.

Michimasa Naka (18:28):
But I think, with our experience on tsunami, which you mentioned, and I think we had that a certain big earthquakes which was hit by the country. And I think that we have kind of, how do you say, natural habit over helping each other, which is, I think, very important and it could be very different. So, I think, that was the biggest thing, of course, we have probably one of the most number of beds in the hospitals by population, right? So I think, even though lots of the beds are still used by the people in the hospital, but also we are a pretty quick on opening some of the hotels for the spare beds for the hospital.

Michimasa Naka (19:48):
And luckily we never became the overshoot type. Of course, we were probably lucky, but also we were very much prepared. And also we believed that we have. Of course, the U.S. or China have a very strong and advanced medical system. But I think our Japanese medical system could be not so advanced, but we have a very nice medical system in the world. So I think that was also very important thing.

Alex Romanovich (20:37):
I mean, you and I intersected in the Health and Wellness company, and I've been in the Health and Wellness for quite some time. And let me tell you, I was actually very, I would disagree with you a little bit about the United States having the most advanced healthcare system. We may have maybe some of the drugs and some of the pharmaceuticals that we produce here. We may have some wonderful facilities, not for all. My father was a recipient of a kidney. He had a kidney transplant when he was 82, he did it at Cleveland clinic, one of the top institutions, he was very lucky to receive that kind of care. It was just pure luck, frankly. And we're very fortunate that he did, because that prolonged his life, but not everybody, I would say the majority of people would never get that level of care, number one.

Alex Romanovich (21:34):
And number two, I think the COVID situation stressed our system to the point where it was broken. It is still broken, it is still broken in terms of not having enough supplies, not being prepared, not having the protocols, not listening to our CDC executives and leaders, like Dr. Fauci. Having this sort of individualistic spirit that says, it's my freedom and I don't care about anybody else, I want to maintain that freedom, I want to maintain that individualism, and in constantly, it's my, it's our constitution and therefore I don't care. So clearly all of those things are very stressful to our healthcare system, which is fragile, which is probably the most expensive system in the world. It is probably one of the most inefficient systems in the world.

Alex Romanovich (22:43):
And you and I had these discussions in Japan and in the United States, when it comes to prevention and preventative care, it is probably also lagging significantly for countries like Japan, and Singapore, and Germany, and ,some of the other European countries and some of the Asian countries as well. So, I would disagree with you that it's advanced, but certainly, if you look at the level of preparedness, certainly Chinese showed that they are a lot more prepared. I mean, right now we're having a situation it's 22nd of June, and we're having a horrific, scaring situation in Beijing where they're about to, they just closed all the schools and they're about to almost very, very close to locking down the entire city of 20+ to 30+ million people.

Alex Romanovich (23:46):
I lost count how big the city is. So it's pretty significant. Let's talk about China, as you said for a second. This whole economic war, what do you make of this? What do you think is going to come out of it? Obviously, first, we were trying to Mr. Trump was trying to create an environment of collaboration, cooperation. Then there were tariffs on both sides, then there was COVID and then now we're in the middle of a cold economic war, which totally unpredictable, and obviously we're in the election year. So again, we're not sure what's going to happen. What do you make of this economic war?

Michimasa Naka (24:34):
Well, before you use the economic war I always teach this thing in the school and it's more about the end of globalism and the studying of nationalism. And I mean, I'm unfortunately to say, but your country started kind of this nationalism talk with the president. And with all of my career I enjoy globalism, I think that globalism was what led me to talk to people like you, have a friends over the globe, and I think that the very important part of globalism was a peace. And as a Japanese and also probably as my individual, I think the peace is the most important.

Michimasa Naka (25:46):
I think that we should never forget and we should pursue. Of course, there is a good competition, there's a good challenges for each countries. But always, I think we have to face on the way to be one globe, only one Earth. So I think that was always, but for some reason some of the countries started kind of say bad things about the different countries. And I think, some countries are number one, this is we are the strongest and blah-blah-blah, which is we shouldn't do that. And we'll go back to the days of war, which has bad side, and in Japan we had the biggest bomb which more than 200 or 300 people died in Hiroshima and Nagasaki.

Michimasa Naka (26:59):
And we shouldn't forget. Actually this only was like almost 60-65 years ago, right? And we shouldn't, I mean, we shouldn't forget about that. And I'm pretty lucky to be in the country, that we always are looking for a peace. And also in some ways China became very strong in terms of a number over economics. I would say the quality of economicsm, but the economic otherwise, China became very strong and they will become the biggest in terms of GDP. It really became the biggest country in the world, properly surpassing U.S.

Michimasa Naka (28:05):
But I would say that, we shouldn't be a war, and Japan has a very unique position, which is, of course, the U.S. is probably the strongest partner in terms of politics and in terms of economy and always be.And I think it will continue to be the strongest partner over U.S. But at the same time, China is still the biggest counterparty in terms of exports and the import. Chinese is the biggest number with tourism into Japan. And it's we are, even though there's a lots of arguments and news between that relationship between Japan and China. I have a lot of Chinese friends, and I think that they love Japan and I liked China. So even though there's a tension between China and U.S., and maybe China and Japan. I will be in the position to just go to the globalism. And I think I have, even with this type of interview, I think I strongly say that we shouldn't stop the way of going global.

Alex Romanovich (29:42):
I totally agree with you because I do business globally. I've traveled not maybe as extensively as you have, but everywhere I go the notion of global economy, the notion of we have one common goal is prosperity for everyone. Obviously we can't forget some of the countries that need the help and that investment help is available. Yes, there are a lot of issues between the countries, there are a lot of disparity. We have very strong economic nations: United States, Japan, Germany, China. But China has proven something very interesting. They have proven that a combination of some of the cultural traits, the discipline, the communal type of approach. Yes, to certain level of dictatorship, right? It's still a communist country.

Alex Romanovich (30:47):
And I came from a communist country a long time ago, so I know I can appreciate and relate to something like this. But the past 15 to 20 years have been absolutely phenomenal and have been absolutely impressive by what this country has done and what I've viewed some of the videos of these mega cities, these absolutely huge cities like Wuhan, that was under lockdown. It was completely empty because everybody understood how important it was. New York, by the way, to a certain extent did the same thing. And I think that's why we flatten that curve fairly quickly. Not without the loss, obviously, fairly quickly. Now we're seeing some other States struggling with the same thing, but to appreciate countries like China, countries like Japan, countries like Singapore, the combination of culture, the combination of discipline, the combination of this communal spirit, there's something to this, right?

Alex Romanovich (31:50):
So I think we have a lot to learn. We have a lot to learn. One final question for you. It's been a pleasure speaking with you by the way, and I always learn so much from you, but one final question, what would you say to the new generation of global entrepreneurs, who are maybe who may be listening to us, about what they should do, how they should approach their businesses, be at Real Estate, or Health, or FinTech, or co-working, or transportation, what should they value as a philosophy, if you will, as an approach?

Michimasa Naka (32:41):
This COVID is a new enemy. I will say, that new single enemy for the whole us and I think we have to accept that we have to keep on fighting and also living with COVID for a long time, right? So it wouldn't stop, it will continue. And I think that this is a new challenge for all of the human, which is we shouldn't depend on anybody to make a solution. I think we have to make a solution. We all are individuals and think how we can go through this situation. So that's how the new innovation comes, new solution, idea come up.

Michimasa Naka (33:42):
Only one thing I can say, and the lots of companies are already starting to do it, is probably we will not go back to the offices, where so many people sitting next to each other, very crowded offices. So one thing that we will have is that we will have a much, much less a number of people in each offices and the way of working will change. So, lots of companies in Japan is already accepting this remote working, also you mentioned about co-working, which is we're also investing in one of the largest co-working space company in Japan called Fabbit. I would say, it's not where we work, by the way. But the Fabbit is doing very well. I think that we are opening the new spaces in each cities. And I think that people start to use co-working as an alternative, a satellite office even for the big companies.

Michimasa Naka (34:59):
So there's a huge demand for opening the co-working spaces. And then the good thing with co-working spaces, which, Alex, you are there also, you get these ideas and you see lots of different companies and people every day and you get this new feeling, right? So I think this is something that we probably will face from this coming years is we probably will have a very different type of business, probably the shape of the company is going to be very different. I will say like people will start having different jobs. So even we wouldn't just belong to one company. I think we will have more cases to have a different jobs in, by the way, now I'm sitting for board of director seats in the listed companies which is I really enjoy.

Michimasa Naka (36:16):
So each company is different, but I think this is something, like even for me, I learn a lot from different companies and different businesses. So I think with this COVID, I would say everybody should think to be able to change what you are doing, even though if you don't want to change your company, that's fine. But probably your job might not be needed, your job might diminish in the next few years. So you have to be very creative and always think, what I'm doing? Is that necessary? Is that something like people want? That's how innovation comes and we always have to look for the solutions.

Alex Romanovich (37:25):
Very insightful. I totally agree with you that things will never be the same, I think, after this COVID situation I want to thank you from the bottom of my heart, Naka-san, for this wonderful interview. And for our listeners we will have some supporting information on Naka-san's investments, his company, Fabbit and some of the other ones, I believe you're also invested into beauty and cosmetics, and healthcare, and wellness. There's just a very, very interesting portfolio of investments. And we have a lot to learn from you. So thank you so much. I know that you have to run. I hear all the beeps and the messages. Everybody's trying to get ahold of you. And we will be happy to have you again in our studio and talk to you.Thank you so much.

Michimasa Naka (38:17):
Thank you. Bye- bye.


The decision to go the entrepreneurial route
The balance between entrepreneurship and family
A positive approach to life
COVID situation in Japan and USA
The unpredictable economic war
Advice to new generation of entrepreneurs