Disrupting Japan

Cerevo wants to be a “global niche” player. That makes sense for this Internet of Things company. The IoT has become so pervasive and so successful that the terms ha become almost meaningless. Today we simply except and accept that almost everything should naturally be connected to the internet. Of course, it wasn’t always that way, and today Takuma Iwasa, founder and CEO of Cerevo tells us of how he started his career at one of Japan’s big consumer electronics companies trying to force the internet into devices where it really didn’t belong. And how that experience forced him to find a better way and to found his own company. Takuma also explains Cerevo’s innovative business model. In fact, the company is structured less like a hardware manufacturer and more like a hardware startup accelerator. He and Cerevo are aiming for a series of niche-market successes which will be acquired by large mass-market firms. And his strategy seems to be working. It’s a fascinating discussion, and I think you will really e

Stripe’s Japan market entry did not go according to plan. Things worked out worked out well in the end, but they did not go according to plan. Stripe is one of the world’s largest payment processing companies, but they remained flexible and agile enough to take advantage of some of the surprises they faced in Japan. Today we sit down with Daniel Heffernan, the Japan head of Stripe, and he walks us through what happens when a technically sophisticated and streamlined FinTech company comes face-to-face with the very low-tech and slow-moving processes that make up FinTech in Japan, and how they made it all work. They faced complex, lengthy technical specifications delivered in three-ring binders and un-copyable, printed documents, and they dealt with the Japanese aversion to integrating directly with banks and financial institutions. They even planned to support some of Japan’s more unique payment methods until surprises during development made them change course. Stripe’s entry into the Japanese market is b

Startup M&A is changing in Japan. In August, Naoki Yamada sold his startup Conyac to Rozetta for $14 million. It was an unusual journey of alternating cycles of rapid growth and near bankruptcy, and today Naoki explains how he managed to make the deal happen and also how M&A is changing in Japan, and it seems that change might come much sooner than anyone had been expecting. Naoki talks very openly about some of the mistakes he made and give solid advice on how you can avoid making the same ones. And of course, he explains how he handled the negotiations for the acquisition, and why he decided the exit now rather than continue to grow the company. It’s a great story, and I think you’ll enjoy it. Show Notes for Startups How two quick pivots saved Naoki's company The risks for startups hiring (and firing) too quickly The temptation and danger of focusing on investors at the expense of the team Why M&A made more sense than another round of fundraising What Japanese acquiring companies are most wo

Expedia had a hard road to travel when they decided to come into Japan. The Japanese market turned out to be nothing like they had ever experienced before. Not only were consumer attitudes and behaviors towards travel booking completely different than it was in their home market, but they were up against some very powerful and well entrenched companies, including both online giants Rakuten and Yahoo and traditional powerhouses like JTB. Today Hidemaru Sato, or “Maru" as his friends call him, will explain to us how Expedia managed to overcome the odds on a ridiculously tight deadline and how a few tweaks to the core product turned out to be key to their success. Maru also shares some great advice for both western companies looking to hire a Japan country manager and for people who are Japan country managers and want to do their jobs more effectively. It’s a great discussion, and I think you’ll enjoy it. [shareaholic app="share_buttons" id="7994466"] Leave a comment Friend Maru on Facebook Connect w

This is a rather personal episode. We have no guests this time. It’s just you and me. From the outside, it looks like Airbnb is crushing it in Japan. Listings and rentals are both increasing at an unbelievable rate, and Japan is loosening her room-sharing (or minpaku) laws. The future looks bright for Airbnb here, but behind the scenes a resistance is secretly growing. You see, Airbnb has a real problem in Japan. At first glance many of the issues look familiar. They seem to be the same kinds of challenges Airbnb is facing all over the world, but things are different in Japan, and today we're going to take a look at how important these differences can be.  It's worth noting that so far, Airbnb has not taken steps to address their Japan problem, or even publicly acknowledged that it exists. But it's a situation they will be forced to deal with over the next 18 months, and it's something that we can learn a lot from. [shareaholic app="share_buttons" id="7994466"] Leave a comment Transcript from Japan Disr

GitHub entered the Japanese market under enviable conditions. They already had a strong corporate user base, solid brand awareness and product evangelists throughout Japan. They did not so much push their way into the Japanese market, so much as they were pulled into it. Even under the best conditions, however, Japan market entry is not easy and Derek Sorkin explains some of the challenges they faced with their distribution plans and the original go-to-market strategies. Managing to salvage a great ongoing relationship from what could have been a very ugly incident. Derek also explains why even in this age of Skype and go-to-meeting it’s absolutely essential to spend the time and money on airfare in managing international offices and to maintain trust and credibility. It's a great conversation, and I think you'll enjoy it. [shareaholic app="share_buttons" id="7994466"] Leave a comment Links & Resources The GitHub homepage Connect with Derek on GitHub @dsorkin Follow him on twitter @thesorkin C

You don’t usually think of Japan’s geisha as being an industry, but it is. In fact, strictly speaking, it’s a cartel. A cartel that is now being disrupted by internet-based booking agencies and low-cost substitutes. It seems that even geisha are not immune to internet-based disintermediation. In this special interview Sayuki, Japan’s only geisha that holds an MBA, explains the business model behind geisha. We talk about the way things used to be, the current threats that have many geisha concerned that the traditional art form and the lifestyle will not survive, and how some geisha houses are trying to adapt. This is a rare, behind the scenes look at the business of being a geisha and a chance to see how Japan’s geisha might survive and even thrive in the coming digital age. It’s a fascinating discussion, and I think you’ll enjoy it. Show Notes for Startups How Sayuki broke 100 years of tradition to become a geisha How geisha are being challenged by both the entertainment and tourism industries Ch

FinTech is one of the hottest startup sectors right now, but if you've been in the industry for a while, you know that FinTech is always one of the hottest startup sectors. And yet FinTech companies seem strangely local. Very few succeed outside their home markets. A complex web of regulations and local sensibilities almost always results in these firms struggling in overseas markets. PayPal wanted to make sure that did not happen to them in Japan. In this podcast, Jonathan Epstein explains how he brought PayPal into Japan. He talks in detail about how he got the Japanese regulators to sign-off on PayPal's innovative products, and also how he and his team had to throw out the US playbook and cooperate with other overseas divisions to build new retail and online markets from scratch here in Japan. Jonathan and I also talk about the exacting demands of Japanese consumers, and how those sensibilities convinced him to decide to start a project that drastically increased short-term costs, but might have saved t

Spacee has staked out an interesting position in the sharing economy. Spacee enables companies and individuals to rent out unused meeting room space to people who need to hold a meeting. It's an interesting take on applying a sharing economy model to business. I’m generally very skeptical of startups who define themselves as “Uber for X” or “Airbnb for Y”, particularly in the B2B space, but Spaceee has already been in business for several years in Japan, and they are seeing strong traction and increasing revenues. They might really be onto something. Taku has some fascinating insights on why Japan, and Tokyo in particular, might be far more fertile ground for sharing economy startups than almost any other place in the world. It’s a great discussion and I think you’ll enjoy it. Show Notes for Startups Why the basic business case makes sense How large the meeting space market can grow The challenge of expanding outside of Tokyo Why Spacee turned down venture financing to bootstrap for three years

Today is the first episode off our new expanded format. From today, we’ll be covering both disruptive Japanese startups and detailed market entry case studies of global companies that are disrupting Japan from the outside. Oracle first came into Japan more than 25 years ago, but the challenges they faced and overcame then are exactly the same ones firms are facing today in executing their Japan market entry. Allen explains why Oracle needed a unique sales and marketing strategy for Japan, and how he managed to get buy-in from headquarters — even though Oracle already had a sales and marketing program that had proven fantastically successful in other markets. We also talk about how Oracle managed to negotiate a amicable exit out from their exclusive distribution agreements not just once, but twice. That’s an amazing accomplishment considering that many foreign companies have destroyed their Japanese business the first time they attempt it. But Allen, tells the story much better than I do. I think you’ll en

Material Wrld has found a way to innovate in online fashion commerce, and that’s no easy task. It’s a crowded market, with tight margins. Rie Yano and her team, however, have found success by going against common wisdom. While their competitors were focused on building platforms and reducing the amount of work required by their staff, Material Wrld went the other way. They began to take on inventory risk and doing some of the most labor intensive parts of the process in house. This is the kind of move that looks foolish on the spreadsheets, but it turned out to be instrumental in enabling Material Wrld to maintain quality, develop lasting relationships with their customers and ultimately control their own brand. It’s an amazing, and somewhat surprising story, and it’s best if you hear it directly from Rie herself. Show Notes for Startups Why people feel guilty throwing out clothes How a credit card provides a physical anchor for an online brand Why traditional recycle shops need to change The nee

The aerospace industry has been particularly resistant to disrupting in Japan. In the rest of the world, launch vehicle and spacecraft technology has made incredible gains over the past decade, but here in Japan its still mostly the same government contracts going to the same major contractors. Naomi Kurahara of InfoStellar, has come up with an innovative way to leverage existing aerospace infrastructure and to collaborate globally by renting out unused satellite ground-sataion time, Airbnb style. You see when an organization launches a satellite, they also build a ground station to communicate with it. The problem is, that as the satellite obits the Earthy, it’s only in communication range of the ground station for less than an hour a day. The rest of the time the ground station just sits there. By renting out that unused time ground-station operators earn extra income, and the satellite operators are able to communicate with their satellites as often as they need. It’s a great interview and I think you’

Disrupting Japan is two years old and ready to party.  To celebrate, we gathered the leaders of Tokyo's venture capital community together in front of a live audience of made up of the thought leaders of Japan's startup community. We all had a few drinks and talked about fundraising in Japan, the future of venture capital here, and how startups can best get in touch with and impress VCs. Our panel included some of the top VC investors in Japan, which naturally led to an amazing discussion. Shinji Asada (@asada23) - Japan Head, Salesforce Ventures Hiro Maeda (@djtokyo) - Partner at BEENEXT James Riney (@james_riney ) - Head of 500 Startups Japan We discuss the challenges or fundraising in Japan, growing a Japanese company as a foreigner, what Japanese VCs can learn from their foreign counterparts, and what kind of of pitch mistakes will ruin your funding chances. On a personal note, it's hard to believe that two years have gone by already. Disrupting Japan has grown larger, faster, and with a more en

Ten years ago, everyone know that e-commence would drive most retail stores, especially specially stores out of business, and with the Amazon juggernaut plowing ahead, there were very few dissenters. But something very interesting is going on right now. Many e-commerce companies are opening physical stores. Even Amazon, going against all economies of scale, is opening up brick and mortar bookstores in expensive locations with full-time staff. And there a good reason for this trend. There is something very reassuring about holding a product in your own hands. And it’s something that can’t really be replaced with high- resolution photos and customer reviews. Tomohiro Hagiwara of Aquabit Spirals has committed both his company and a large part of his adult life to bridging this gap between the physical and the digital world and is helping online retailers jump into the physical world. Of course, Aquabit Spirals’ technology does much more than this, and Tomo tells an interesting story of how it took his compan

Fashion is a tough business, and fashion subscription boxes are even tougher. From the top down, this seems like a great business model. Subscribers are sent a new, hand-picked box of clothes or accessories each and every month. As you’ll see ...

Long before the maker movement existed, Akihabara was world famous as a destination for hardware geeks, robotics nerds, and audiophiles and tinkerers of all kinds. Hundreds of tiny specialty shops lined the areas back streets and did a surprising brisk business in items you could not find anywhere else. The internet changed all that. ...

Uber and Airbnb represent a new very kind of startup, one that could not have existed twenty years ago, and the very thing that make these companies so transformative in the United States ensures they will never succeed in Japan. You see...

Startup founders claiming their company is going to “change the world” has become a cliche. But rarely do we see a product that could clearly and significantly make someone’s life better. D-Free is one of those products. However...

A key component to making a startup a success is knowing who your true customers are. Today, Antti Sonninen, the Japan CEO for Slush, one of the largest startup events in the world lays out the business model for us, and the facts will probably surprise you.

Crowdfunding is at a crossroads. The inherent conflict of interest in the business model is forcing US firms to either limit their growth or become the online equivalent of late-night infomercials. In Japan, however, crowdfunding has grown more ...