Disrupting Japan

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 the business in the long run.

It's a fascinating discussion, and I think you'll enjoy it.

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 the business in the long run.

It's a fascinating discussion, and I think you'll enjoy it.

 Leave a comment

Partial Transcript

If you read the news, you know that Fintech is one of the hottest start-up sectors right now and if you’ve got a long memory, you’ll also know that Fintech is always one of the hottest start-up sectors. Yet, Fintech companies seem to be strangely local. Very few succeed outside of their home markets. A complex web of regulations and local market sensibilities almost always ensures their failure.

PayPal wanted to make sure that did not happen to them in Japan and today, Jonathan Epstein explains how he brought PayPal into Japan. He explains not only how he got the Japanese regulators to sign off on PayPal, but how he and his team had to throw out the U.S. playbook and build a new retail and online market from scratch in Japan. Jonathan also explains how the exacting demands of Japanese consumers forced him and PayPal to make a decision that dramatically increased costs in the short run, but saved the business in the long run. But Jonathan tells that story much better than I can, so let’s get right to the interview.

If you’re a start-up thinking about Japan, you’ll never really understand the opportunities here until you start to take a serious look at what’s happening outside of Tokyo. Osaka in particular deserves your attention and this is especially true if you and your team are involved in smart cities’ technologies. Now Hankyu’s GVH#5 project is Osaka’s start-up central and it’s a great place for you to get started. They offer co-working space, bilingual business support, venture investment, and they’re at the center of a great international start-up and community. Now Hankyu’s GHV#5 in Osaka really deserves your attention, so pay them a visit at www.GVH-5.com/EN. You’ll be glad you did.

[Interview]

Tim: So I’m sitting here with Jonathan Epstein, who led PayPal’s market entry into Japan. And you’ve done a lot since then but today we’re going to talk about PayPal and how all that came together. So thanks for sitting down with us.

Jonathan: Thanks for having me.

Tim: Delighted. Well, let’s get right into it. When PayPal was looking at the Japanese market, what was headquarters’ main motivation for coming into Japan? What did they see here?

Jonathan: PayPal has actually been in Japan for several years and what they wanted to do was to expand their presence dramatically. Basically, the entire focus of their mission in Japan has just been on their existing internet based business. And that’s been driven by a lot of natural—people signing up for PayPal because they want to buy something at a shop that offers PayPal, they learn about it. Originally it’s been driven a lot by foreigners who came to Japan, and then it took off in Japan and reached a sort of critical mass, and has grown, has continued to grow.

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.

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

Whats wrong with the current fundraising environment in Japan

Which other companies are coming into the meeting room rental space

Why Japan is uniquely suited for the sharing economy

Links from the Founder

Learn about Spacee

Follow them on twitter @spaceejp

Friend them on Facebook

An interview with Spacee CEO on fundraising

 Leave a comment

Transcript from Japan

Disrupting Japan, episode 59.

Welcome to Disrupting Japan - straight talk from Japan's most successful entrepreneurs. I'm Tim Romero and thanks for joining me.

You know, the world is full of start-ups that define themselves as “the Uber of X” or the “Airbnb for Y.” Frankly, most of those business models don’t really make sense when you dig into them. Spacee, however, might just be onto something. Spacee rents out unused space around Tokyo to salesman, co-workers, or people who just need a quiet place to conduct a little business. As Takuya Umeda explains in the interview, it’s not just meeting rooms that are being rented out.

The sharing economy is relatively new in Japan and Takuya and I talk not only about some of the problems its facing here, but why, in the long-run, Japan might be better suited for sharing economy companies than anywhere else in the world. He also explains why Spacee decided to delay taking outside investment for almost three years while they built their business and how that turned into an advantage later on.

But you know, he tells the story much better than I can, so let’s hear from our sponsor and then get right to the interview.

[Interview]

Tim: So I’m sitting here with Takuya Umeda, co-founder of Spacee. Thanks for sitting down with me.

Taku: Thank you, Tim.

Tim: Spacee is kind of like Airbnb for meeting spaces, but that’s a really overly broad description, so why don’t you tell us a bit of how it works.

Taku: Spacee is really like the Airbnb of business. In Japan, wherever you have a meeting, if you have an outside meeting, the only place you go is like Starbucks or a café.

Tim: Right. Everyone meets in coffee shops.

Taku: If there is a professional conference room, it costs really expensive. It’s probably like 5,000 yen per room, per hour. And at that price you can’t really do much, like brainstorming and start up some business plan. Stuff like that you can’t really do. And a café is not really good at it too. So we found that there is a gap between an expensive conference room and a Starbucks, so we fit into the gap.

Tim: So something a little more formal and private than a coffee shop, but not quite as formal as a hotel meeting room or a service office. So tell me about your customers. Who is it that’s renting out these spaces and why are they doing it?

Taku: You know, there is a lot of salespeople around and they stay locked in some business meeting, and I thought those people need some sort of private room.

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 enjoy the interview. I know I did.

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 enjoy the interview. I know I did.

 Leave a comment

 

Partial Transcript

Disrupting Japan, episode 58.

I’ve got some big news for you today. Disrupting Japan is going to be twice as big, twice as informative, and twice as frequent. From today on, we’ll be sending out new episodes every single week. To do this, we’re going to be expanding the format. Half of our interviews will be with start-up founders, just like before, and half of our interviews will be with people who are disrupting Japan by bringing foreign companies, technologies, and innovation into Japan.

This really makes a lot of sense because as fans of Japanese history know, foreign pressure has always been a powerful agent of change in Japan. I think you’ll find these additional episodes very interesting. And to kick things off today, we’ll get a chance to sit down and talk with my good friend Allen Miner about the challenges Oracle faced, and overcame, when breaking into Japan.

I’ll warn you in advance that this episode is longer than most, and believe me, I cut things to the bone. But there is just too much great information about how to overcome both the personal and professional challenges that foreign companies face here. I felt like I would be cheating you if I edited out any more. In fact, Allen explains how Oracle successfully maneuvered out of an exclusive distribution agreement, not only once, but two separate times. This is something that has sunk more than one foreign company here. But Allen tells the story much better than I can, so let’s get right to the interview.

[Interview]

 

Tim: So I’m sitting down here with Allen Miner and Allen, you’ve been involved with the market entry of a lot of companies into Japan. But today I want to focus on the one that you led personally, which was Oracle Japan. So let’s back up. What was attractive about the Japanese market? What made Oracle decide that they needed to be in this country?

Allen: Actually, that happened a few years before I joined Oracle. In, I believe it was 1982, Oracle was about a $5 million a year company worldwide, 5 years old as a company, and just released their first commercial version of the Oracle database software. There was quite a bit of press about, “How interesting is this relation to technology? It doesn’t require traditional programming to do data manipulation.” And the U.S. press got read by some technical geeks in Europe. And one in particular in Japan said, “This sounds really interesting. We ought to figure out if we can bring this cool new technology to Japan.”

Tim: So it was a partner company pulling you in?

Allen: Yeah, it was a company called Digital Computers Limited, that at the time was building DEC VAX clones. Because Oracle originally was released on the DEC VAX computer platform, the president of that company, a gentleman named Mr. Yamada had read an article about it.

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.

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 need for cross-brand data in fashion commerce

How Material Wrld handles inventory risk, and why?

What kinds of pieces are easiest to sell online.

Why doing things that don't scale pays off when building a brand

 

Links from the Founder

Learn about Material Wrld

Check our Rie's articles on Medium

Follow her on twitter @rieglobe

Friend her on Facebook

 Leave a comment

Transcript from Japan

Disrupting Japan, episode 58.

Welcome to Disrupting Japan - straight talk from Japan's most successful entrepreneurs. I'm Tim Romero and thanks for listening.

It’s hard to innovate in online commerce today. It seems like everything has been tried before and now we’re just looking at variations on a theme. At first glance, Material Wrld seems like just another online fashion marketplace but that first glance is deceiving. There is something very interesting going on here, but before I tell you what that is, I want you to meet someone.

Online marketplaces are usually designed to be low-risk, low-capital organizations that focus on marketing building a technology platform with the buyers and sellers doing as much of the work as possible. Rie Yano, the founder of Material Wrld, however, ended up taking a very different approach. By taking on inventory risk and shifting non-scalable labor requirements onto her own team, they were able to build and scale a unique fashion commerce brand, where so many before have failed. Her reasoning may surprise you a bit, but you know, she tells the story much better than I can, so let’s get right to the interview.

[Interview]

Tim: So, I’m sitting here with Rie Yano of Material Wrld and thanks for sitting down with me.

Rie: Thank you, Tim, for inviting me.

Tim: Great to have you here. So, Material Wrld is a fashion trade-in service and, well, rather than have me explain it, why don’t you explain a bit about what material world is and how it works.

Rie: Sure thing. Material Wrld is based in New York. We are a service that helps women easily refresh their closets. Often times, we find ourselves waking up, looking into a closet and feeling a sense of guilt or frustration in that what’s in your closet may not be what you want to wear or how you feel that day. We created Material Wrld so that you can constantly evolve your wardrobe. One day you might be feeling like you want to be a powerful woman. Another day, you might feel like you want to dress with some beautiful, emotional colors. Making sure that our service can enable that idea or feeling that you have by making the refresh very simple.

Tim: So, usually that’s done by just buying more clothes but Material Wrld has a little bit of a different approach. What are the mechanics? How does it work?

Rie: Sure. Everyone thinks about shopping for new clothing when they think about trying to become different or refreshing. Where we’re quite different is really focus on the reuse of desi...

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’ll enjoy it.

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’ll enjoy it.

Show Notes for Startups

Why the Airbnb for satellites startup model makes sense

The demand-side problem

Why this market is much larger than it seems today

The key growth drivers in the satellite market

Why the Japanese aerospace industry can't innovate

How to run a startup as an expectant mother

What challenges women scientists still face in Japan

How Japan could better support working moms

Links from the Founder

Learn about InfoStellar

 Leave a comment

Transcript from Japan

Disrupting Japan, episode 56.

Welcome to Disrupting Japan - straight talk from Japan's most successful entrepreneurs. I'm Tim Romero and thanks for joining me.

Aerospace in Japan is particularly resistant to disruption. Over the past decade, the rest of the world has seen incredible gains in both launch vehicles and spacecrafts. But Japan has been moving slowly. Sometimes it seems as if she’s determined to stay the course with the same government contracts going to much the same corporate heavyweights year after year.

Naomi Kurahara of InfoStellar once had plans of changing the Japanese aerospace industry. But along the way she went out on her own with a plan that bypassed Japan’s major players and targeted the global market. You see, when an organization launches a satellite, they usually also build an antenna and a ground station to communicate with that satellite. The problem is that as the satellite orbits the Earth, it’s only communications range with the ground station for less than an hour a day. The rest of the time the ground station just sits there.

So, Naomi decided to pool all of the unused ground station time together and rent it out to satellite operators, Airbnb style. Everybody wins by sharing resources. The ground station operators get income by renting out their facilities and the satellite operators get to communicate with their satellites far more often.

But Naomi explains it better than I can, so let’s get right to the interview.

[Interview]

Tim: Cheers! I’m sitting here with Naomi Kurahara, the CEO and fearless founder of InfoStellar, so thanks for sitting down with me.

Naomi: Thank you for inviting me.

Tim: Now, InfoStellar is basically time-sharing for satellite ground station, or Airbnb for satellites, but it’s a complex idea so why don’t you explain a little bit about what InfoStellar does.

Naomi: Okay, the reason I started this business is the aerospace space has an issue for cost. Like satellite is expensive, and rocket is expensive, and ground station is expensive because, maybe, not many people are using.

Tim: Well, aerospace is incredibly expensive but actually I think before we get into InfoStellar’s business model, I think it’s going to be best if you explain what ground stations are and how they work.

Naomi: Okay, so there is three main components for space business. That’s the ride, or spacecraft,