Henk Rogers knows a little something about business, which is why he is among those scheduled to speak at Tuesday’s 2011 Hawaii Venture Capital Summit on what it takes to attract investment capital.
The Dutch-born Hawaii resident, 57, whose family moved to New York when he was 11, has several successful companies, including Blue Planet Software, which he began as Bullet-Proof Software in the early 1980s to promote a computer game he had designed. The Black Onyx became the No. 1 video game in Japan, where he had moved after studying computer science at the University of Hawaii.
These days, Blue Planet Software manages the rights to Tetris, one of the world’s most popular computer games, which was designed and programmed in the early 1980s by Russian computer engineer Alexey Pajitnov. In 1996, Rogers partnered with Pajitnov to create The Tetris Co., the exclusive source of all licenses to Tetris.
One of Rogers’ newest companies is Tetris Online, which he started with Minoru Arakawa, former president of Nintendo of America. He also owns Avatar Reality and Blue Lava Technologies. Combined, his privately held companies employ about 85 people.
In 2007 Rogers started the Blue Planet Foundation, which encourages alternatives to carbon-based fuels. Its accomplishments include persuading Hawaii to impose a
$1-a-barrel tax on imported oil and initiating on-bill financing for clean energy sources. It also has helped Molokai residents lower their power bills by helping them obtain energy-efficient light bulbs and refrigerators.
The owner of one of the first all-electric Tesla cars in Hawaii, Rogers is married and lives on both Oahu and Hawaii island. He and his wife, Akemi, have four adult children.
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Question: So how do you start a business that will attract investment capital?
Answer: One is you try to tap emerging markets. For example, social gaming is an emerging market that I’m in. If you have a brilliant idea, and you can convince people that you have an idea that is going to cause an emerging market to happen, that would be great. But, in general, it’s good just to watch out. And the emerging market in Hawaii is alternative energy. We spend $7 billion on oil every year …
Q: In Hawaii?
A: In Hawaii … out of Hawaii, actually. (Laughter) It would be nice if it was in Hawaii; that’s the point. So basically we’ve got $7 billion a year on the table that we can play with, that we can use to generate local, indigenous energy, and that money would just stay in the economy. So anything that we can do to keep that money here would be great.
Q: What are social games?
A: Social games are — how can I say it — it’s hard to even call them games, compared to the old days. They reward you for clicking on the screen. That’s basically what it is. If you click on the screen (for example), you get a seed, and then you can grow a plant, and so on and so forth. Then you compete with your friends, or you can trade things with your friends — that’s where the social aspect comes in. But it’s designed to make you click.
Q: Is that like FarmVille on Facebook?
A: Yes, that’s exactly what it is. That’s what the social games are. FarmVille is right down the middle of the genre.
Q: Are computer games still a growing business?
A: It’s a shifting business. It’s shifted to these social games, and now what’s going to happen … is companies like Electronic Arts are going to come in and take their existing computer game skills and apply them to social games, so that social games will actually become fun to play in and of themselves.
Q: What’s your best-selling product these days? Is it Tetris?
A: Yeah, sure, it’s Tetris. Probably the best-selling product right now is either Tetris on iPhone or it’s Tetris Battle on Facebook. That’s our rising star on the social games side.
Q: You didn’t so much invent Tetris as acquire the copyright to it. Is that right?
A: Yeah, that’s true. I didn’t invent the original game, but I have done a lot more than just license it over the years. I’ve nurtured it, and done brand management and changed the design, or added to the design, to keep the game relevant to today’s players.
Q: So at some point, then, your strength has been in marketing and understanding intellectual property law?
A: Well, it’s become that. (Laughter) My strong point, historically, is I’m a game designer. I started my first company by writing the first role-playing game, in Japan, in 1983. So that’s really my strong point. The business and the legal side of it has sort of been school of hard knocks. I never studied any of that stuff.
Q: What does it mean to be a software publisher?
A: Well, I’m at this point in my career not a publisher, I’m a licensor. But I have been a publisher in the past.
What it means to be a publisher is that you actually take a product and somehow or other sell it to the end users. There’s nobody between you and the end user. There may be a distributor or there may be a store or something like that, but you’re basically doing the marketing, the advertising and the PR for the product. So what we today do with Tetris is we license, which means we find somebody like Electronic Arts, which is a publisher, and we license the product to them and they deal with distribution and marketing, sales and returns and all that.
Q: What other games have you worked on through the years? I heard about Black Onyx.
A: Black Onyx was the first one, yes. And that’s sort of my … the one that took everything out of me. It’s sort of the one that made my wife a computer widow for two years. (Laughter) So I made a decision that I was never going to get that involved in another game after doing that — basically The Black Onyx and its sequel The Fire Crystal. I was going to move upstairs and run things, and that’s sort of what I’ve been doing ever since.
But besides Black Onyx, probably the one I have been most involved with is Tetris. I do, every once in a while, come out of game-design retirement and get serious about figuring out how to deal with the next platform.
For example, the next platform in 2001 was mobile phones. And you could say that we were very successful, in that we sold, gosh, like 130 million copies so far, and still going strong.
So that was a very successful thing. And now we’re in the middle of social games. So again I’m rolling up my sleeves and we’re working on a Tetris social game to compete with the likes of Zynga (which developed FarmVille and CityVille, among other social network games).
Q: What attracted you to computer games?
A: I fell in love with computer programming ever since high school. You know, a computer, you can tell it what to do and it does it. I mean, it’s, like, awesome. (Laughter) So programming is probably the favorite thing that I’ve ever done in my entire life.
Q: Who financed your first business?
A: It was an old friend from my previous business, which was the gem business. I used to work with my father in the gem business — gemstones.
Q: Going back to the question about trying to have a business model that will attract capital, who are the people that put up money for things like this?
A: Right now in Hawaii it’s mostly angel money — high net worth individuals.
What has happened in Hawaii is that institutions like pension funds need to start looking at Hawaii as a place to invest. Most of the pension fund money in Hawaii goes to the mainland and gets invested in mainland companies.
Q: But a new company would be considered high risk, right? That could violate investment protocols for pension funds.
A: Any company is high risk. If it’s there or here, it’s the same high risk.
The only thing that I would say is that companies that are started here have trouble getting access to second-tier capital. In other words, angel money you can pretty much do it, but then when you need venture capital to bridge you from angel to IPO (initial public offering), that’s the tough thing to do in Hawaii because we don’t keep any of that money back in Hawaii; we send it all to the mainland.
Q: Why haven’t you gone public yet?
A: I have friends who’ve gone public and their lives turned upside down. If I was a public company, I’d have to spend the rest of my days talking to Wall Street.
Q: Do ventures that are heavily reliant on tax breaks or subsidies make sense to you, like some of these clean-energy things?
A: Yes. The thing that we don’t get is that oil is subsidized. We give them billions of dollars in tax breaks. So subsidies are just leveling the playing field.
Q: If companies in the alternative energy field are relying on subsidies or big tax breaks, is that really safe? I mean, look at what happened to Solyndra.
A: Well, you know, it’s very easy to point at one sore thumb somewhere. And there’s always going to be people who take advantage of the system. But if you look at, for example, Germany and solar, or Denmark and wind, all those subsidies that have existed in those countries have made those countries hugely successful in the area of alternative energy.
So at the end of the day, if to get us there we do some subsidies, that’s no problem. At the end of the day, we’ll be saving $7 billion a year. I would pay $7 billion to get that back. Spend $7 billion and then save $7 billion a year for the rest of time? How hard is that to figure out? And it could be half of that.
Q: What do you think about Hawaii’s business environment?
A: It could be a lot better. I mean, you know, everybody seems to be trying to find a way to keep you from doing what you need to do to get a business successful. Everybody has a problem with something.
Look at the Superferry. That’s just an example. Aside from the EIS (environmental impact statement) and all that, it’s a big black eye for Hawaii, as far as I’m concerned.
Q: Hawaii needs a more relaxed business environment perhaps?
A: It’s really hard to say … I mean, for alternative energy, there’s just so much pushback, from all different directions. …
I built a workshop on the Big Island. The workshop is there so I can experiment with alternative energies — you know, storage or whatever. And it took me, like, two years to get the building permits. And that’s on the fast track, because all of those alternative energy programs are supposed to be fast-tracked. To build it was, like, six months. To get the permits was, I think, more than two years. It was just horrendous.
Q: What about taxes?
A: I don’t feel big pressure. I think if we look at the world, we don’t have the highest tax rates by any means. Our tax really is on the energy side of it. I mean, we pay 40 cents a kilowatt hour, and that is ridiculously high. That’s double what they pay in Japan. So that’s our tax. We’re being taxed by the oil companies.
Q: You started the Blue Planet Foundation to help wean society off fossil fuels. What will it take for these other energy sources to become market competitive?
A: It’s just a question of time. All they need is a chance. The vested interest, meaning oil, is so entrenched and powerful that it’s very difficult for these new technologies to flourish. Every once in a while it looks like things are going right, and then OPEC, the oil cartel, decides to lower the price of oil. And that really messes up business plans, because that’s what we’re competing against.
Q: Instead of having solar power and wind power and all this stuff feeding into the monopoly grid, isn’t the real ideal some sort of individual home-powering units?
A: Yeah, sure.
Q: How far are we away from that?
A: We have so many roofs in Hawaii wasting so much solar energy it’s not even funny. If we could put all those roofs to work, that would be great.
I mean, that’s land that’s already been — how can I say — denuded.
So the environmental impact is already there. It’s just that we have to get used to the aesthetics of having solar panels or even little windmills on top of residences and, you know, learn how to live with that.