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Interstellar Technologies unveiled a real-size mockup of a suborbital rocket on Jan. 22 that it plans to launch in the spring.   © Kyodo
Startups in Asia

A disruptor-in-chief is driving Japan's space dream

Takafumi Horie: maverick businessman, ex-inmate, author, and now a rocket entrepreneur

TOKYO -- Takafumi Horie, the maverick internet entrepreneur, is hoping to transform Japan's space industry.

Interstellar Technologies, which Horie founded in 2013 but has its origins in 2006 in one of his previous enterprises, plans to launch a rocket this spring, aiming to be the first Japanese company to privately reach space. The 45-year-old disruptor-in-chief envisages a future in which Japan is a space-industry powerhouse, competing with the U.S. in a race that will be driven by private companies rather than governments.

It will be a daunting task.

The Hokkaido-based company has a staff of just 14, all but one of whom are engineers. It is dwarfed by Elon Musk's Space Exploration Technologies, better known as SpaceX, which has more than 6,000 employees. The company which has 92 million yen ($846,600) in capital, has not disclosed Horie's ownership share.

In the year ended February 2017, the company reported a net loss of 154 million yen. It has invested hundreds of millions of yen so far to build an assembly plant and a launch site on the eastern coast of Japan's northern Hokkaido island. It relies on well-known technologies for its rockets, such as an ethanol-based propellant, which dates to Germany's World War II-era V-2 rocket, and a fuel-injection system that was used in the U.S.'s Apollo moon lander.

Takafumi Horie, the founder of Interstellar Technologies, at a press conference in July after one of the company's rockets failed to reach space. (Photo provided by the company)

Horie -- who at age 27 became the youngest Japanese person to lead a publicly listed company, and at 32 became one of the country's richest men by pushing a reluctant business establishment to embrace the internet -- is backed by an enthusiastic public. He has 3 million Twitter followers and has authored books on such topics as starting a company, management, technology and other subjects with sales of 2.5 million copies.

Horie's arrest in 2006 on fraud charges and a subsequent prison term initially hurt his reputation, but he has since tempered his brazen behavior and his continued anti-establishment stance has appeared to have earned him more supporters than he has lost.

His goal for now is to get Interstellar Technologies' low-cost, commercial rocket launch services operating so that he can fund his much-bigger goal of running space tourism, conducting interplanetary spaceflights and exploring asteroids for minerals, he said in a recent interview with the Nikkei Asian Review via Skype.

The company's aim is to provide a launching service for a suborbital rocket at less than 50 million yen and an orbital rocket for less than 500 million yen.

Sending satellites into low-earth orbit will not be such a technological feat, said Atsushi Uchida, a researcher at Mitsubishi Research Institute. "What's really remarkable about Interstellar Technologies is its willingness to do something no one else has attempted in Japan and its tenacity to keep at it."

Childhood dream

Horie, the only child of a couple from modest means in rural Japan -- his father was a truck salesman -- was a bright child and quickly demonstrated his talent as a programmer.

Horie harbored the space dream from a young age, growing up under the influence of science-fiction fantasies, like "Star Trek." What sets him apart from other Japanese space enthusiasts is his hands-on approach. Having set up his first company at 23, Horie, a serial entrepreneur, has always been his own boss. "My job is to dream big and show what is possible," he wrote in one of several autobiographies.

Horie's venture into space tourism began in 2005, the year after his internet portal company, Livedoor, broadcast live on its website the world's first privately financed spaceflight by SpaceShipOne in California.

Like other space-industry entrepreneurs, including Musk and Richard Branson, Horie wanted to break the government monopoly on space exploration, bring down the cost of space travel and make it more accessible to private citizens, thereby spurring more innovation in the space business.

Horie met with Musk in 2004, when SpaceX was still in its infancy and working to build engines for its first rocket, the Falcon 1. "I wasn't much behind then," he said.

Horie described Interstellar Technologies as "a front-runner in the small-rocket launch business," vying with a small group of ventures that include Rocket Lab, a Los Angeles-based startup backed by big investors, including Lockheed Martin.

While Horie himself is not an engineer, he is confident of his ability to create and run a team of engineers. One of the advantages of building rockets in Japan, Horie said, is the availability of a reliable talent pool. "There are many bright engineers in Japan who are willing to work hard for wages lower" than they could get in the U.S., partly due to the language barrier and partly because his team supports his vision, he said.

With its small operation and workforce, Interstellar Technologies does not have the resources to recruit experienced engineers from NASA or large corporations. Instead, the company hires eager college students as interns and retains them after graduation. Horie said the company is also looking to collaborate with retired engineers from large corporations.

Horiemon

In Japan, few businesspeople are as widely known as Horie, whose actions have frequently stirred controversy.

Livedoor made headlines with a series of bold acquisition attempts. It made an unsuccessful takeover bid for a professional Japanese baseball club in 2004 -- a move that was copied successfully by other internet companies, including SoftBank and Rakuten.

Horie was hungry for success, and the stock market provided him with a shortcut to reach that goal. He snapped up companies to build a 900 billion yen ($8.3 billion) internet empire, which included a web portal, online banking, online travel and publishing. "There is nothing money can't buy," he wrote in 2005, and he used Livedoor stock as the currency for his acquisitions.

Horie ran as a candidate in elections for the lower house of the national legislature in 2005 in support of reform-minded Prime Minister Junichiro Koizumi. At 32, he attempted to take control of the Fujisankei group, one of Japan's largest media conglomerates that leans conservative. 

Those moves and others raised Horie's profile, but none worked out, and his brashness brought him more enemies than friends among Japan's business establishment. But he gained popularity among the public, earning the nickname, Horiemon -- a nod to his resemblance to Doraemon, the chubby manga-anime robotic cat.

The upscale office and residential complex in which he resided in downtown Tokyo -- Roppongi Hills -- became a popular tourist spot, as people tried to get a glimpse at his glitzy lifestyle. The building is now home to the Japanese head offices of Goldman Sachs, Google, Apple and other large foreign companies.

Horie greets the public during his election campaign in the city of Onomichi, Japan, in 2005.   © AP
People in Tokyo reading the news report of Horie's arrest on allegations of securities law violations in January 2006.   © AP

Horie's high-flying career came to an abrupt halt in January 2006, when he was arrested on allegations of securities law violations. A police raid on Livedoor triggered a 6% tumble in Tokyo share prices over the following two days, causing a glitch in the Tokyo Stock Exchange's computer system and a 20-minute suspension of all trading on Jan. 18 of that year. Investors refer to the incident as "Livedoor Shock."

The court case ran more than four years, and Horie eventually was found guilty of accounting fraud at Livedoor, sending him behind bars in 2011 for nearly two years. He forfeited his personal assets to pay back losses incurred by Livedoor,  whose operations were later absorbed into what is now chat app operator Line.

Horie did not lose his passion for the space business while in prison. In 2013, the enterprise was reorganized into Interstellar Technologies, which he immediately took charge of after his release from prison. "Space is what I'm focused on," he wrote in "Zero," another autobiography he published that same year. Zero also is the name of the rocket Interstellar Technologies is scheduled to launch this spring.

The rocket is being developed in-house, using widely available materials for its engine, air frame and control systems to reduce costs.

"Ethanol is a relatively safe liquid but not as powerful as kerosene or liquid hydrogen as a fuel," said Tetsuo Hiraiwa, researcher at Japan Aerospace Exploration Agency or JAXA.

Horie said he regrets the seven-year interruption in his career, falling behind rivals Musk, Branson and Amazon.com founder Jeff Bezos. "My arrest was a big blow" to Interstellar Technologies, Horie said at a recent press conference, losing his wealth that he needed to fund the enterprise.

Social media savvy

Horie has given up on trying to build a business empire, now preferring to stay small, nimble and smart, and harnessing the power of social media to realize his vision.

Interstellar Technologies plans to raise funds for the second test flight of a 10-meter-long, one-ton rocket through crowdfunding organized by Campfire, another Japanese startup.

Interstellar Technologies has already launched a dozen rockets since 2011. A rocket launch last July was designed to reach an altitude of 100 kilometers, but the operation failed.

The company is not trying to compete head-on with SpaceX or Bezos' Blue Origin, another spaceflight company, both of which launch large rockets. Interstellar Technologies is creating a niche in the market by perfecting skills to build small rockets at low costs. Musk and Bezos "are just people in the same business," Horie said of the entrepreneurs.

Demand for small rockets is expected to grow. U.S. research firm SpaceWorks Enterprises projects that 300 to 400 small satellites will be launched annually by 2022, up from 101 in 2016. These new satellites are likely to be used for monitoring forest fires, checking pipelines for damage, and providing internet connection from space.

But competition in the small-rocket sector is heating up. Beijing-based LandSpace Technology expects to offer high-frequency launch opportunities beginning this year, according to its website.

Rocket Lab, Interstellar Technologies' main rival with 220 employees, launched a rocket into space in 2009, and on Jan. 21 it placed satellites into orbit for the first time.

Interstellar Technologies' first attempt to launch a rocket into space -- an altitude of 100 kilometers -- last July failed. (Photo by Koji Uema)

But Interstellar Technologies' limited human and financial resources could soon become a major bottleneck for the project, said Harunori Nagata, professor of space engineering at Hokkaido University.

Nagata noted that Interstellar Technologies has to skip some of the basic rocket tests, such as wind-tunnel and vibration tests, which regular space agencies do not omit. While it helps the company save on costs, it could make its rockets prone to mishaps in actual launches. "If Interstellar Technologies wants to become a proper business, it needs at least several hundred engineers, not 13," he said.

An Interstellar Technologies spokesman said the company's next flight is still a test and that obtaining various flight data is part of its objective.

The day after Rocket Lab's launch in January, Horie appeared at a press conference and admitted that the news made him anxious and impatient, but he is trying to moderate his pace. "I feel as if I was a child too excited to go to sleep before a school trip," he said. "But nothing good comes out of skipping sleep."

Horie then praised Rocket Lab's success and welcomed the challenge. "Our mission is to bring down the cost of space travel," he said. "That will only happen with competition."

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