19 Insights From Tokyo’s Founders: Out to Build the Next Sony

19 Insights From Tokyo’s Founders: Out to Build the Next Sony

Japan’s startups are on the brink of spurring an innovative resurgence

Within the world’s third largest yet most discrete economy there is a next wave of tech revolution.

Shaking off the doldrums of more than 20 years of sluggish economy and the customs of a traditionally risk-averse culture, what startups mean and how the behave are more often than not, different than in Silicon Valley.

In The Quiet Comeback, Casey Wahl sat down for in-depth interviews with the diverse cast of visionary entrepreneurs leading Japan’s next tech boom.

Here are highlights and insights from what it’s like on the inside on the other side.

1.    Kiyo Kobayashi  Founder, Nobot and Chanoma

Kiyo attributes the demise of his early enterprise, an ecommerce coffee importer called In the Cup, entirely to his own shortcomings; an immaturity in management style and flaws in the business model.

For his next venture, a mobile advertising platform he launched with no advertising experience, he canvassed every advertising executive he could meet for ideas and insights. The company sold to a Japanese telecommunications giant for $19m just over a year after its launch.

The difference? Constant revision of his own mistakes.

“I have a habit of writing down all my experiences: the details of my failures and advice from other people. I started this habit during my internship. I’ve written about 3000 entries, and I still go through them every day.”

 2.    Shinji Kimura  Founder, AtLantis, Angel Investor and co-CEO, Gunosy

Shinji sold his ad network for $26 million before investing in the news aggregate startup Gunosy, bringing it to IPO in April 2015. A former strategic consultant, his entrepreneurial impulse was ignited by the people involved. “Seeing people deeply enjoying the life—living their passions—inspired me to become an entrepreneur.”

He defines the word very carefully, he believing that only first core team, more specifically, the first five founding members are the only ones deserving of the moniker.

“Those first five are the ones who get things off the ground, taking the risks and sourcing the money and the team. Those people are entrepreneurs.”

His take on entrepreneurial values is also quite particular.

“More than anything Silicon Valley says, the most important thing is making people happy. Another important thing is fairness—if you have to employ someone at low salaries, it means that the CEO is not very capable.”

3.    Soichiro “Swimmy” Minami  Founder and CEO, BizReach

Soichiro, who founded the executive recruitment site BizReach at age 32, thinks of himself as a business producer. 

After an initial career in finance, “Swimmy” sharpened his business acumen at Rakuten Eagles (under the mentorship of CEO Mikitani), but he did not possess a technical background of his departure.

What he had seen what was tantamount to a “systemic failure” of the recruiting industry while also recognizing the Information Revolution as his generation’s Industrial Revolution.

“I felt a key component of being a producer is to understand, and have the flexibility, to take in the new dynamics of the world.

“So if all this is the case, why don’t I go into this space where there is a lot of frustration and use this magical Internet thing to create a service that strives to be a solution to the problem?”

4.    Mari Murata  Founder and CEO, iemo

Mari consistently defies the expectations of the Japanese business world.  She pivoted her already profitable outsource development company to social gaming, refusing investors and hitting the timing just right, finally taking an offer on the company while clearly pregnant.

Her second enterprise, iemo, was inspired by her time as a housewife, finding that the Japanese real estate industry just wasn’t up to speed with mobile technology. “I couldn’t easily use a PC to find new properties while carrying a baby in one arm.”

With iemo, Mari achieved one of the quickest exits ever in the Japanese Internet space, selling within seven months of its 2013 founding.

“A violent eruption of energy is the necessary first step for creating a business. There aren’t that many people who have this in them. This energy is very important.”

5.    Yusuke Mitsumoto  Founder and CEO, Bracket

Yusuke worked for Ogilvy& Mather, following advice he had been given to “join a big company to see how things are done” by a CEO of a startup he gained experience at as a university student.

Leaving the company at 27 to become a founder, his initial social car-sharing enterprise was perhaps ahead of the “social” curve in Japan and it was only Yusuke’s agility of mindset that saved him from the brink of bankruptcy. He seized the opportunity to license Australia’s Shoes of Prey in Japan almost immediately after learning of its existence. Their made-to-order model did not require inventory and would bring in cash from the start.

At the time of the sale of his next venture (within a year of its launch in 2013), the online store platform stores.jp had more than 45000 registered stores, nearly as many as Rakuten.

“Personally, I hate having ‘if-I-had-only-done-that’ regrets, so the moment I think of something, I do my best to take action immediately.”

6.    Yo Shibata  Founder, Spotlight

Yo joined McKinsey after running a successful startup as university student, but began to realize that the nature of the exactly analytical nature made it tough for consultants to create interesting businesses.

“However, when you became an entrepreneur, you’re thrust into a chaotic situation and have to creatively come up with fresh ideas—a kind of quantum leap is necessary… it isn’t something that can be developed in the general world of consulting firms.”

Leaving McKinsey to launch and successfully exit two popular apps, he says the future holds future entrepreneurship for him, with successfully larger enterprises.

“There is a very strong cultural current here in Japan that view executive founders as inextricably linked to their companies. That’s why people almost never consider leaving the companies they created. However, for serial entrepreneurship to flourish, separation is needed... For me, it’s about pursuing my interests and developing the skill to be a serial entrepreneur.”

7.    Rob Laing & Matt Romaine  Co-founders, Gengo

Matt, a half Japanese designer who had previously worked at Sony, and Rob, a graphic designer, started Gengo, a crowd-sourced language translation tool, to resolve issues each had experienced on opposite sides of the language barrier. Translations were either tedious favors asked of friends or expensive time consuming services ordered out.

With no experience in the translation industry, their naivety allowed them to build a simple product that is appealing from the consumer perspective.

The naivety has transitioned into authority over time, and their peers look up to their ability to secure funding both in Japan and the US.

Rob says, “People have these perceptions about fundraising, and I’ve just found that it’s really a lot of hard work. It’s a numbers game. You’ve got to meet a lot of people, you’ve got to get out there, you’ve got to know how to sell your business. We’ve become good at it.”

And just where does this translation company founded in Japan by both foreign and Japanese nationals consider their base?

“I usually say our headquarters is on the Internet,” quips Matt.

8.    Taro Fukuyama  Founder and CEO, AnyPerk

Taro knew he “wanted to do something great, and do it globally.” After working at a social gaming company in Singapore he met Sunny, the man who would be his eventual partner. They started with a dating site, came to San Francisco with it in 2011, and struggled, living in and starting the company in a car in a Taco Bell parking lot, as the car was the only place they could afford to stay.

Just before retreating to Tokyo unfunded, they showed up uninvited to TechCrunch Disrupt. Faced with a $2000 entrance fee, Taro convinced the registration staff to let them work as interpreters for people coming from Tokyo who don’t speak English and “aren’t going to have any fun and won’t come back.”

Once inside, he made a bold challenge of Paul Graham got into Y Combinator, though their original idea wasn’t strong enough to face Demo Day, “the most leveraged day of your life as an entrepreneur.”  The advice they received was to think about something that Japan has that the US doesn’t have, and one month after joining Y Combinator, they decided to work on AnyPerk, which provides employee perks to companies.

Though he admits that getting visas is tough and the competition is fierce in the US, he thinks that there are a lot of great Japanese startups with the potential to succeed there. “They just don’t make it happen because they are afraid to be here.

“If you have a great service and you have great passion, then just do whatever you want to do.”

9.    Takahito Iguchi  Founder, Tonchidot, Telepathy and DokiDoki

A philosopher/coder, Taka’s long history of groundbreaking entrepreneurship started when he left JustSystems and created the first B2B blogging platform in Japan.

Now revered both at home and in Silicon Valley, he remembers the moment he was challenged to take it up a notch.

“I grabbed a coffee with friend. He asked me, ‘Are you changing the world or not?’ I thought, ‘Oh, my god. I’m not changing the world.’ So I changed my course.”

Together with said friend in the aughts, they brainstormed ideas as magical as robots to take care of plants, a new type of money akin to Bitcoin and a universal language, founding Tonchidot and prototyping the game-changing Sekai Cameria at lightening speed.

Shocked by the initial close mindedness of Japanese VCs, he aimed for the Grand Prix from TechCrunch, where the company garnered interest on both sides of the Pacific, only to be hampered by Lehman shock and a dilution of vision when it came to monetization.

Suffering a loss of pride after being asked to step down as CEO, Taka came back with Telepathy, a virtual reality headset, and after initial successes, he was asked to step down from it as well.

“With both Tonchidot and Telepathy, to different degrees, we had Tokyo operations and Silicon Valley operations.  That was a huge problem. You have to do very big things to effectively develop a company culture across that divide. And it’s very important.  I didn’t take the time to mold the company culture. Maybe that was my mistake.

“Sometimes, I feel this is part of my mission—to make connections between Silicon Valley and Tokyo.”

10.  Takehiro Kakiyama  Founder and CEO, MONOCO

Tak established his first startup, Flutterscape, a smartphone-based C2C social buying service with his Indonesian co-founder before graduating university in 2010.

Initially well-received and attracting a large user base, they struggled to find a sustainable revenue stream and instead developed MONOCO as an online B2C selling curated, imported designer goods to Japanese domestic buyers. Rapid growth was followed by a major meltdown.

At a certain point, MONOCO achieved 100% growth, momentum enough for 12x growth in a year. But importing products necessitates making payments first. The more they sold, the more strapped they became.  Things became critical in 2014 and Tak set about getting Series B funding.

“It didn’t come in time. Each time I looked, our cash flow was worse. Potential investors were afraid that their investments would evaporate, so we didn't get investment. In any case, Japanese investors don’t really give their honest feedback, so I don’t really know what they were thinking.”

Demoralized by the grueling task of eliminating his employees, his girlfriend shocked him back into action with the question, “Where is your resolve?”

Once emboldened, he set about the task of repackaging his remaining stock into value sets, he thought, alone. “When I showed up there were 13 employees from my shareholders waiting for me. They were there to cheer me on and to help me. We worked from dawn to late and night, packing and selling 500 of these boxes and turning 60% of our inventory into cash.”

MONOCO is now ready to go forward with a revamped version of the original idea--highly curated ecommerce platform focusing on one important, fundamental principle: to convey meaning.

“If customers understand the product they buy—the real, deep story behind it—then that item becomes something sentimental, something they will treasure.”

11.   Miku Hirano  Founder, Naked Technology and Cinnamon

Miku was the only woman on her master’s course in computer science at Tokyo University, during which time she and three of her friends founded Naked Technology, a firm that created an innovative user-generated data utilizing software for feature phones. Once smartphones took hold, Naked Technology pivoted to creating a platform for the development of apps for Android and iPhone at the same time.

After some stumbles, they completed an exit, with Miku diving again into entrepreneurship after the lock-up period, this time a photo-sharing service and more global in scale. Building the tech development center in Hanoi, Cinnamon ran into difficulties immediately.

“We found it very difficult to comprehend what the Vietnamese were thinking. People in Japan tend to choose their jobs depending on its meaning and how well it suits them. However, in Vietnam, money is the bottom line. Things got backlogged, so we made the tough decision to cut the whole team. We’ve come to understand how things work, so now I’m confident that we can hire and manage properly when we enter a new market.”

12.  Yuya Kuratomi  Founder and CEO, Panda Graphics

Yuya got a head start with internships at several Tokyo startups while still in high school. Looking up to the CEOs he saw on TV or interacted with in person, he strove to be both an entrepreneur and a business executive. Deciding that acquiring global experience was the next step, he moved to Shanghai and opened his first enterprise, a bagel shop, in Shanghai just after his 19^th birthday.

Despite pushing himself to the limits doing everything from promotion to retail to advertisement design to the website, his initial outing failed, but he impetus for Panda Graphics, a globally crowd sourced graphic design company had been born: Yuya had noticed while assembling drawings for shop “that there was a strong demand for outsourcing 3D drawings for construction.”

Yuya tackled the risk-averse venture capital practice are par for the course in Japan with a similar joie de vivre.

“The second month after starting up, some VC people were saying the company was worth only $300,000, but I insisted that I wouldn’t accept investment unless the company was valued above $3 million.  In the end, we were valued at $3 million.”

Today, Yuya is headed toward becoming the youngest tech entrepreneur ever to take a company public in Japan.

13.  Yosuke Ariyoshi  Founder and CEO, Lancers

Yosuke began dabbling in the still-nascent field of freelance web developing while a university student in the 1990s. By the time he graduated, he had garnered such a reputation as a hired gun as to bring in $200,000 in yearly revenue.

Putting his high-flying freelance career aside, he became a salaryman upon graduation, at Nifty as a web director. Three years in, he had noticed enough corporate contracting inefficiencies to coalesce his resolve and solidify his dream. “ I wanted the world to be able to feel the excitement that I felt when I was 22, starting to work as a freelancer on the web. This was my deepest desire. I simply became an entrepreneur to chase it.”

Initially expanding through word of mouth, and utilizing the plan-do-check-act cycle, improvements were made incrementally.  In the next phase, however, “Being able to expand explosively was like an aerial battle. We had to use marketing, public relations, advertising, etc.  Just like war, things don’t just end because you bomb someone else. The ground troops then need to go forward and occupy the place.”

Lancers was Japan’s first major crowdsourcing platform and has grown to become one of the most dominant.

14.   Toshiyuki Yamamoto  Founder and CEO, ChatWork

A jock turned onto the Internet by his “otaku” little brother, Toshiyuki founded one of the first web design and internet marketing firms in Japan while doing a junior year abroad in Los Angeles.  Though founded by a student, the company was subsequently named the best company to work for in Japan two years running. The secret to such management prowess?  The discipline of an athlete.

He had been told to consider himself rather than his employees as the source of the company’s problems. With admirable Japanese humility, and dedication, this son of a CEO took it upon himself to meet 1000 CEOs as a method of improving his management skills.

“It wasn’t just about exchanging business cards with 1000 business leaders.  I wanted to talk to each of them for at least a half an hour. Thankfully, they shared their advice and experiences with me, and from 2006 to 2008, I worked hard to develop my management style based on all the advice I received.”

 15.  Shokei Suda  Founder and CEO, Enigmo

Shokei saw his first job, at advertising giant, Hakuhodo as a stepping stone to fulfilling a deeper life goal—that of becoming a successful entrepreneur.

His venture, Buyma, is an Internet social buying site. Originally dealing in a broad range of goods, the business model has been tweaked several times, and is now focused on high-end women’s fashion.

“You really only need to add new features once your current features reach their limit, then you can add the needed functions. Your values will be communicated to the user in the way you operate your site… so just fiddle around and make improvements.”

With his sights now on Asia on the way to the global stage, Shokei posits that what differentiates buyma from his international counterparts is a particularity of Japanese management.

“I think that meticulous operating philosophy is a uniquely Japanese characteristic. We’re lining our catalogue and doing customer support as if we were a B2C company… If you don’t treat your customers like your lover or your family, they’ll quickly go somewhere else.”

 16.  Hikari Sakai  Founder and CEO, Interest Marketing

Hikari overcame what, in Japan, was an unimaginably unconventional youth to become one of Japan’s few serial entrepreneurs.

After dropping out of high school, he managed to not only save $200,000 through 40 or so odd jobs and part time work to start his first enterprise, Brand Databank, at age 30, he also managed to save himself from a path into “the dregs of society.”

Selling Brand Databank for $1.5 million and gaining executive experience as a result of the exit, he launched a series of companies that merged to become his current venture, Interest Marketing.

Despite his unusual experience and multiple business outings, Hikari eschews the conventional romanticism of the ‘idea’, instead placing emphasis squarely on execution.

“I regularly research tech companies abroad and most of our clients are tech companies, so I constantly check to see who has investor relations problems. I always ask myself if they could solve their problems with a new idea. The answer is usually no. I think of ideas all the time; very bluntly, the process of building a strong team, starting a solid project, doing sales and then meticulously checking customer and user responses and then, on top of all that, improving—this is all much more important. It’s not the idea but the execution that matters. A successful tech startup is 95% execution.”

17.  Shinichiro Kawabata  Founder and CEO, Interspace

Captivated by the burgeoning Internet economy, Shinichiro founded Interspace in 1999 without having decided what the business would actually do. Experimentation led to a paid-for-performance advertising model. Initially somewhat hampered by a lack of Internet advertising knowledge, the firm was successful, and went public as a part of a personal mission rather than a cash grab.

“One our personal missions was to rejuvenate the Japanese market. The only way we could achieve this was by making a company of sizeable scale. This is why we chose to go public.”

I feel the need to raise Japan’s position in the world, given that it doesn't occupy a high position now. Unless we have successful Japanese companies, Japanese people won’t feel confident in themselves.”

18.   Yukiko Muto  Co-founder, Pro Trade

Yukiko left Andersen Consulting with three of her colleagues to start the on-line business matching platform ProTrade in 2000 and were able to successfully exit within nine months with a sale to Rakuten.

Acquiring customers readily and quickly through a combination of the then un-named “spamming’ (to which they received replies of gratitude for introducing “such a wonderful service”) and highly active PR efforts (there were “… no limits to the number of catch phrases we could come up with),

the team was always confident of the success of the service itself. However, the bursting of the Internet bubble impeded key infusions of venture capital leaving a service with over 6000 customers severely strapped for cash.  With options limited to quitting or selling, Yukiko found herself in the CEO responsibility conundrum that is perhaps uniquely Japanese.

“When we sold the company, I paid close attention to whether the company buying us would properly employ all of our staff and ensured that their salaries would not be cut.”

Rakuten made good on those promises, and Yukiko worked continued to work within the organization, ensuring the initial ProTrade business was successful and assuming handful of top end roles before embarking on her second entrepreneurial foray, TravelZoo Asia.

19. Kaoru Hayashi & Joi Ito  Co-founders, Digital Garage

Joi, a college drop out many times over, ingrained himself in the emerging culture of the internet early, launching the first personal website and becoming the first blogger in Japan.  Kaoru, meanwhile graduated from an esteemed Japanese university and dutifully commanded a job offer from a domestic advertising giant.  Their chance meeting in San Francisco in the early nineties has had a profound impact on the shape of startup culture both in Japan and abroad.

Merging their two companies to form Digital Garage as a “context company” in 1995 placed their venture in the center of the Internet phenomenon, starting with mostly contractual assignments, eventually investing in and growing other successful Internet services such as the most widely used restaurant ratings tool, to incubating Twitter’s entry into Japan (and narrowly losing the contract to establish Yahoo!Japan to Softbank CEO Masayoshi Son along the way).

Being ahead of the wave was both a blessing and a curse, something Kaoru refers to as the “first penguin” thing. 

“We needed to be the first one out to sea, because in Japan, there just aren’t many people who jump in early.”

Although the pair believes lack of capital due to the cautious nature of Japanese investors occasionally cost them the advantage, Kaoru notes, “Entrepreneurs are natural optimists. We just forget our regrets.”

He remains CEO of Digital Garage and is widely regarded as one of Japan’s most influential businessmen. Joi heads the MIT Media Lab.