Exploring Investment Strategies and Japan's Mobile Internet Evolution

American startups dominate the current innovation cycle not as a result of startup innovation, but of enterprise innovation. Today we sit down with Dai Watanabe and dive into the dynamics of industry disruption and startup innovation. For the last 25 years Dai has held leadership roles at the center of Japan's major innovation trends. From the glory days of Japan's mobile internet, to the utter disruption unleashed by the iPhone, to today's doubling down on startup innovation. We talk about what's in store for the future of Japanese startups, and why opportunities in innovation are never quite what they seem at first. It's a great conversation, and I think you'll enjoy it. Show Notes When it's time for a CVC to transition into a VC How Japan lost its lead in the mobile internet How DeNA went global in China and then in the US Why the first generation mobile advantage did not transfer to the second generation The different approach to retaining talent in Tokyo and San Francisco What Japanese founders need to bring back from San Francisco Which Japanese startups should move to Silicon Valley The reason there are still so few Japanese entrepreneurs How to get talented employees to leave and start startups, and why we'll see more of it The biggest thing holding back startup growth in Japan How Japanese employment law keeps startup valuations low Japanese enterprise and startups are developing more collaboratively that in the US Links from our Guest Everything you ever wanted to know about Delight Ventures Meet the team Learn how they invest [Japanese] Connect with Dai on LinkedIn Leave a comment Transcript Welcome to Disrupting Japan, Straight Talk from Japan's most innovative founders and VCs. I'm Tim Romero and thanks for joining me. Mukashi mukashi, Once Upon a Time, but not so long ago, Japan was far and away the world leader in mobile internet innovation. But such times were not to last. The world changed, Japan changed, and today Japan is trying to catch up. And, you know, they just might do it. Today we sit down with my friend Dai Watanabe, co-founder and managing partner of Delight Ventures. And as you'll see from our conversation, Dai's career put him at the center of the entire arc from Japan's mobile internet explosion and crash, the current focus on startup growth and why Japan is now seriously rethinking the Silicon Valley model of startup innovation. Dai and I dig deep into his work with METI and other agencies to help form innovation policy, how Japan's lifetime employment system is suppressing M&A activity, and keeping valuations low. And why Japanese mamas don't let their babies grow up to be founders. But, you know, Dai tells that story much better than I can. So, let's get right to the interview.   Interview Tim: So, we're sitting here with Dai Watanabe, the co-founder and managing partner at Delight Ventures. So, thanks for sitting down with me. Dai: Thank you for having me. Glad to be here. Tim: Dai, I'm so glad I finally have been able to get you on the show. We've been talking about these things for years now. So DeNA, it's mostly mobile, social gaming, networking, entertainment, sports, consumer facing content, that kind of thing. But Delight's portfolio seems to be much, much broader than that. So, what's your thesis? What kind of companies are you investing in? Dai: So, the Delight Ventures is a VC fund that started as a spin out of DeNA, my ex-employer. But we are not CVC, so we don't do any strategy investment. We invest as independent VC. We set up some investment thesis at the beginning, which isn't necessarily aligned with DeNA's core strengths. Tim: Is DeNA still your sole LP? Dai: No, DeNA is one of the LPs. So, we are on fund two right now. The majority of the LP money is coming from Japanese financial institutions, some corporates banks. Tim: So DeNA,