(This is a translation of part of a series of interviews between Satoru Iwata and Shigesato Itoi, which can be found here)
(Itoi) Good afternoon, Mr. Iwata.
(Iwata) Good afternoon.
(Itoi) Thank you for speaking with me today.
(Iwata) Thank you for having me.
(Itoi) We’ve known each other for a long time Mr. Iwata, but this is the first time we’ve spoken in this “Learn From the President” format.
(Iwata) It definitely is. Though we have many conversations like this one, Mr. Itoi.
(Itoi) We do have quite a few.
(Iwata) It’s our first time going back and forth in this sort of structured format though.
(Itoi) Right. The truth is that you’re the one that led me to come up with this “Learn From the President” series…because you’ve always taught me so many different things.
(Iwata) Ahh, well that’s probably because I told you some interesting things about how I was way back when. You’re the type of person who’s very happy when you tell someone something about yourself that you feel is interesting and they say “Wow!”, aren’t you Mr. Itoi?
(Itoi) Yeah.
(Iwata) I’m exactly the same way. Whenever I’d tell you something that I’ve learned through experience that may have been of use to you, you’d always respond strangely right?
(Itoi) I was always happy though. I’d think to myself “Oh, really!?”
(Iwata) That was right around the time when we formed Hobonichi. I feel like that’s when I told you most of those things.
(Itoi) Yeah, it was right around that time.
(Iwata) Even though at that time I didn’t know my life would be like it is now.
(Itoi) Right, right. From my perspective, Mr. Iwata, you’ve always been “the president”. When we first met you were already the president of the software development company HAL Laboratory, so you’re one of the rare people who has been a president for a large portion of your life. You’ve been one since your 30s right?
(Iwata) That was at age 32, and since I’m 45 now that means I’ve been a president for about half of my working life. Although I wasn’t the president just after coming to Nintendo.
(Itoi) Right, there was that brief time where you weren’t.
(Iwata) There was a two year gap there.
(Itoi) But even though there was a two year gap until you were president again, because you were a person who became president without necessarily aiming to be in the first place……you were probably starting all of this from a place of not knowing things that other presidents of the world would normally know, right?
(Iwata) That’s right. Because when it came to games, I was always the type to be interested in being able to program them in a more interesting way, and that sort of thing.
(Itoi) When you were 32 and became the president of HAL Laboratory, you did so without any sort of mentoring right?
(Iwata) When I was at HAL Laboratory, that’s right.
(Itoi) When you tell stories from back then to your friends, everyone smiles bitterly and says “That’s amazing”. I see, president from the time he was 32…
(Iwata) Right. When I was 31, the company had some financial difficulties.
(Itoi) There were newspaper articles about it, so in some ways it was a big deal. I remember reports that said things like “The game software developer HAL Laboratory has gone bankrupt despite leadership, after having setup an office full of computers in Yamanishi”. Were you Head Engineer or something at that time, Mr. Iwata?
(Iwata) I was the Head of Development. And well, that meant I was really responsible for all development activities.
(Itoi) So then as far as what you were “managing”…
(Iwata) It wouldn’t be an exaggeration to say that I didn’t think about that too much.
(Itoi) But you attended meetings and such, right?
(Iwata) Sure, I did those sorts of things. But at that time I just spoke on behalf of the development side of things.
(Itoi) So when asked “What does this look like from your standpoint?”, you could just say something like “We can’t really do that”, right?
(Iwata) Right.
(Itoi) In other words you didn’t have the attitude of a president yet…
(Iwata) That’s right, I really didn’t at all. The company went bankrupt for a variety of reasons, the biggest being debt. The amount it was in debt at that time was in the billions of yen.
(Itoi) Ouch!
(Iwata) As a result they had to pay back 1,500,000,000 yen over six years.
(Itoi) So basically they said “It may not be reasonable for us to tell you to pay it all back, but you should at least give us something”?
(Iwata) That’s right. We caused trouble for all sorts of different people back then, so I don’t say that with any sort of pride. There aren’t many companies in the world that can reach a settlement like that. Actually, for most companies it’s “Pay back 1/10 of your debt over 2 years”…But at any rate 1,500,000,000 yen is what I had to start with. We paid back 250,000,000 yen each year, over 6 years.
(Itoi) And you were still paying employee salaries right?
(Iwata) Of course, we were paying all the various operating costs for the company. Also the land and building still had a mortgage on them as well, so that was another debt we paid back. Of course we were able to do it because of our friends and cooperation from everyone around us, but you could definitely say that I started with a lot against me.
(Itoi) Even if the amount of debt had been 50,000,000 yen, you would just say “I see…” But as a person that’s just an unfathomable amount of money.
(Iwata) Right. In Japanese society, the rule is “When the bank lends you the money, the manager needs to personally guarantee it”. That request isn’t made to the president of a large company, but in small or medium companies you’re made to promise “If the company goes bankrupt, I’ll pay it back throughout my lifetime”. And well, there are people who do the bad thing and run away from that. This structure was put in place to limit a corporation’s responsibility, but also so that a person doesn’t profit from destroying their company and running away. So I was in a situation where with the mortgage we had on the building, if the company were to go out of business I would have to pay it back myself.
(Itoi) Here we’ve inserted an explanation for Hobonichi readers:
Mr. Iwata’s explanations have been made primarily from the standpoint of a bank.
A succeeding manager of a company that is billions of yen in debt explaining all of these rules is a very rare case indeed. Here you’re in the position of being “The one who was made to suffer by being made president in a crisis!”, so the story would be more interesting if you vilified the bank and said “So THIS is what they’re doing to me!”. Yet you’re explaining all of this from the opposing perspective. This speaks very much to your character Mr. Iwata.
(Iwata) I see. But there really are all sorts of things that appear in these kinds of crises. You think things like “How did we handle contacting someone at the bank?”. For example, I should probably go and visit them as the new company president, right?
(Itoi) Right. You were a youngster at 32 years old. So they must have felt like “Can this kid…really pay us back?”
(Iwata) Yeah, a 32 year old kid is going in and saying “As the company president I will make every effort to repay our debt”. And when I did, there was a bank that said “Please do your best to do so”, and another that took the very high-handed attitude of saying “You’d better make sure you pay us back!”.
(Itoi) But no matter which type, you weren’t in any kind of a good position to be able to pay them back right?
(Iwata) That’s right. Another interesting thing is, the high-handed bank that I mentioned quickly changed its name after that.
(Itoi) Oh dear!
(Iwata) It must have been a pretty serious matter over there as well.
(Itoi) (Laughs) See, here you are explaining from the opposing perspective again! You don’t say “Well of course they went under, they were all bad”, but rather think “They were high-handed because things were difficult”……That’s just your character Mr. Iwata. I think people create stories to be black and white, good and evil. When watching a drama and you’re meant to feel something like “Wow, that character is really bad”, your recognition that “This is a normal person living their life, just the same as me” never falters, Mr. Iwata.