Wasting Billionaires' Time
Hey, I’m Casey. Welcome to our weekly newsletter sharing the startup journey of Kamui Whisky. Each week the team or I will share a story as we set up a craft whisky distillery on a remote, volcanic island in the most northern part of Japan.
On a good day, asking a billionaire to invest in your startup will get your heart rate up. Now, what is the smallest amount you could ask them to invest, that would be worth their time and doesn't get you kicked out the door?
We’ve all seen stuff like this, on how much a billionaire makes in a second:
If there is some sort of weird prize for wasting a billionaire’s time then I think I deserve a nomination.
Being in and around startups I have quite a few investment contracts laying around. As we are doing things in a bootstrapped way, it made sense to just repurpose one of these investment contracts for Kamui Whisky. So that’s what I did.
I spent some hours calculating everything; making sure the cap table was as promised, and generally making sure all was in order. I had our other, Japanese, co-founder double check the documents. All in order, so out it went to our small group of “Founding Family” investors. Of our very small group of investors there is one billionaire, possibly another, I’m not sure, and another that is certainly very wealthy. For ease of discussion, and to avoid possible offense, let’s just call them all billionaires.
Typically, anxiety level increases after you send out the investment contracts, waiting for them to get signed. Will the investors follow through as they said? Will they get busy, and this drops in their priorities? Luckily none of that happened. All the investment documents came back signed, funds transferred smoothly, with the founding investment in the bank. Kamui Whisky was good to go.
As we had a lawyer register the shares officially, he caught a mistake. The amount of investment was short by 188 yen ($1.75). The amount the investors had transferred didn’t add up based on the share price.
That’s when I started to sweat.
The Tricky Part
For the next couple of weeks we went back-and-forth with the lawyer trying to figure out how we can solve this problem. It had to be solved, otherwise the investors’ shares couldn’t be registered officially. If at all possible I wanted to solve it without having to involve the billionaires. Letting them know about a mistake is embarrassing enough, but one made with their initial investment doesn’t send a strong message of competence, and then there is the dinky amount which made it flat embarrassing.
For the next two weeks, it was discussions with the lawyer every day. He proposed making different share classes; we passed on that idea, as it wasn’t the right setup and would become a hassle. I asked repeatedly if I could just deposit 188 yen on behalf of each of them, to top up the investment to the required amount. I was told no, by Japanese laws, the transfer has to be made by them. Scrambling, I offered to do it in their name - with Japanese bank accounts there is a way to change the name of the payee when transferring money online or at the ATM. This seemed like a perfect. I wouldn’t have to waste the billionaires’ valuable time to transfer a miniscule amount of money, and we would have the official record of the 188 yen transfer in their name. Problem solved.
But, of course, it never is so easy in Japan.
The lawyer insisted the transfer had to come from their account officially. They couldn’t hand me 188 yen. I couldn’t transfer for them. I couldn’t change the name of the transferee to theirs. It had to come from their account. Once again my cavalier entrepreneurial actions were hitting up against the monolith of Japanese regulations and bureaucracy.
To fix the mistake with each investor it would take a fair amount of their time. They’d have to read and sign the new contracts. Take time to print them out. Scan and reattach them. Send them back to me. Then login to their bank accounts and make the wire transfer to Kamui Whisky, having to take a bit of time to make sure the name, account number, receiving bank info was all correct. It was what, maybe 15 minutes of their time? If they are working efficiently. And, of course, they’ll probably be muttering about how stupid the founder of Kamui Whisky is, and that will add time.
So let’s say, all together, it takes 20 minutes for them to fix the mistake I’d caused. Using Jeff Bezos’ rate that would be $2,986,800 worth of their time (20 minutes x 60 seconds x $2489/second). To transfer $1.75. Plus transfer fees.
It was what I had to do, but I began to procrastinate. For quite a while. Updating the documents and making an addendum to the investment contract for the missing 188 yen was all easy enough to do, but the embarrassment of having to ask the rich and powerful to take their valuable time to fix my foolish mistake was weighing on me, heavily.
There were several days I thought, “Okay, I need to get this done today.” I just had to contact the investors and work my way through it. But there was an emotional wall that was proving difficult to surmount. Somehow, I kept hesitating to take the few minutes needed to contact them.
Finally, the day came, when I felt I had enough emotional energy to let the investors know about my mistake, and just deal with the consequences, whatever may come.
All my mental anguish was for not.
The first investor came back in minutes with the signed addendum. A few seconds after that I got a notification from the bank that a transfer was received. His response was kind and to the point. No recriminations at all.
The second and third investor both came back quickly as well; didn’t require any bigger apologies than I’d already given, didn’t have an anger, and were straightforward in helping me solve this.
We were double lucky. We had gotten investment, which is a big win, and allowed Kamui Whisky to kick off. But we also had kind and gracious investors.
Alignment with Investors
The way we had gone about finding our investors was paying off. We only approached three people. And all said yes. Except one, they were people I’d known for a while and knew their character to be good. Believe me when I say not all billionaires, or near-billionaires, are like that; I’ve met a couple that left you feeling very differently.
When we’d asked them to invest we had clearly said there is no exit plan. We don’t ever plan to list Kamui Whisky through an IPO, nor do we ever want to sell.
It is a business we are doing for other reasons: to create community, build dreams, strengthen local pride, and create meaningful jobs. It’s a family business we want to do with care, and craft, and love. Taking our time to not only make a great whisky, but also a great business with deep connection to the community, with a team that wants to make a difference.
When I was first asking for the investment, I’d imagined this could be an. Why invest if you don’t expect to make a return?
But all the investors had agreed with our vision. Now here, with a mistake that could easily have annoyed them, they all came back quickly and graciously, showing their alignment and belief in the project to do be more than just financially successful.
Kamui Whisky’s vision is to build real meaning and give new vibrancy to the town. We want to inspire the ambitious and creative within Rishiri that there are exciting chances ahead. To give the young students in elementary and middle school big dreams that can be realized on island, rather than them running off to Sapporo or Tokyo when they have the chance.
The episode was a lesson in how purpose, and specifically how our investors aligned belief in the purpose of Kamui Whisky, can outweigh $2,986,800 worth of a billionaire’s time to fix a $1.75 mistake.