Disrupting Japan

Hiking, back-country skiing and mountain climbing are not usually the first things associated with Japan. Japan, however, has some stunning natural beauty and Yoshihio Haruyama of Yamap is trying to get more and more people to appreciate that. Yamap is a mobile app that allows hikers, back-country skiers and other outdoorsmen to know exactly where they are even when they are well outside of areas cell-phone reception, and the platform is also providing Japan’s outdoor enthusiasts with a way of connecting to each other. Yoshi also explains how relatively young Yamap managed to negotiate OEM deals with both Casio and Kyosera, and give practical advice for other startups hoping to partner up with large Japanese firms. It’s a great discussion and I think you’ll enjoy it. Show Notes for Startups Why add gamification to a hiking app Why Yamap had to pursue multiple monitazation strategies What a startup needs to know to work with a large Japanese brand Why going global might require a business model pivot There are important differences between hikers in the US and Japan The importance of inbound tourism for outdoor activities in Japan How the Fukuoka startup scene is different from Tokyo Links from the Founder Everything you wanted to know about Yamap See a demo video of Yamap in English Check out Yoshi on Tumbler Follow him on twitter @haruyamayoshi Friend him on Facebook [shareaholic app="share_buttons" id="7994466"] Leave a comment Transcript from Japan   Disrupting Japan episode 75.   Welcome to Disrupting Japan- straight talk from japan’s most successful entrepreneurs. I’m Tim Romero, and thanks for joining me. Ah, the great outdoors, it is something that nerds like me do not get enough of, especially living here in Tokyo. Yoshi Haruyama of Yamap is starting to change that. Yamap is a mobile app that allows hikers, back country skiers, mountain climbers and other outdoors men to know exactly where they are. Even where they are far, far away from anywhere with cell phone reception, and to share this experience with others and to learn from them. If you are one of our overseas listeners, you might be surprised at how much natural beauty Japan has to offer, and if you are of our listeners in Japan you might be surprised at the average age of Japanese outdoors men. Yamap has also done some OEM deals with Japans largest brands. Yoshi gave us some practical advice on how startups can sell to and work with large Japanese companies on joint projects. Oh and during the interview we talk about a wireless transmission technology called Lora. Just so you know, it is a low power wide coverage network that is useful for transmitting large numbers of very small messages. So, now you will know it when you hear it. Let us hear from our sponsors and get right to the interview.     [pro_ad_display_adzone id="1404"  info_text="Sponsored by"  font_color="grey" ] [Interview] Tim: I am sitting here with Yoshi Haruyama of Yamap, it is an application for hikers and mountaineers and other outdoors men in Japan but Yoshi I’m sure you can explain it a lot better than I can, so, tell us abet about a Yamap, what is it? Yoshi: Yamap is a social GPRS tracking application. You install the Yamap application. You can find where you are without mobile reception, such as mountain or foreign countries. Tim: Who are the main users, is it hikers, is it back country skiers, mountain climbers? Who uses it? Yoshi: The most of our uses are hikers and back country skiers. Tim: Okay let us see, you started the company in 2011 and you launched like two years later, right? You were working on this project for a long time and you digitized a lot of these maps by hand and were like marking the trails yourself earlier on. Was there problem that there just is not digitized information on hiking trails in Japan? Why did you spend so much time having to do it by yourself? Yoshi: The most difficult point, we made this application Yamap, so Yamap can work without mobile reception. So most applications are based online. We had to adapt our application online environment and offline environment. Tim: Mobile reception is good in Japan, but if you are in the mountains there is no cell reception. Yoshi: No, no no. Now we have a full set of aerial maps in Japan and about 100 areas in foreign countries like New Zealand, United States, Switzerland, and so on. We need enough time to make maps. Tim: Are you and the Yamap team still creating and entering the maps or are your users now doing that for you? Yoshi: Both. We take advantage of the information from users, but, we made a map which is based on our information. Tim: What kind of information? I mean it is easy to understand why a hiking map application that works with no cell connection is valuable, but what is the social aspect of it?\ Yoshi: We add information such as, hiking time to where the toilet is, where the parking lot is, to the map, so that is why we need to customize our map. Then, when our users used our maps, we can take the advantage of these users’ data. They make our maps better. Like Wikipedia. Tim: Right, exactly. Let us talk about your customers. Tell me about your users, so, right now, how many monthly users do you have? Yoshi: We have 380,000 users per month. Tim: Are they mostly hikers, or skiers or what kind of activities are the most common? Yoshi: Most of our users are hikers. Tim: Before, you mentioned gamification was very important in this, but I am curious, to me it seems like a very interesting concept. Is the idea simply that if this person climbs this mountain he gets a badge? Do hikers and outdoors people, do they need that kind of motivation? Yoshi: I think that developed countries like, United States or Japan, there is a big problem, so many human beings do not use their own body. There is no chance to connect our body to nature. Tim: I can see that. Most Japanese do live in cities and most people are working at office jobs, programming computers or making podcasts, but does an application such as Yamap actually motivate people to go out and hike or do you think it is the existing hikers who are adopting Yamap because it provides a very convenient way for them to get maps? Yoshi: Yea in Japan, there are 7,400,000 people who are doing outdoor activities, so, I think they are few. Tim: Does that include things like going to the beach? Or is that only hiking and skiing? Yoshi: Hiking and skiing and picking the mushrooms in the forest. Tim: How does the gamification work? Yoshi : We want to give the people who are not doing outdoor activities the chance. Tim: The hope is that it will attract new hikers and new snowboarders. Let us talk about the business model itself, it has been very interesting watching Yamap over the last three years now. You launched in 2013, so, over the last three years both grow the size of your business, but also find the right revenue model. Tell us a bit about how Yampa actually makes money? Yoshi: Our monitization point; one is the freemium model, two is outdoor insurance for hikers and skiers, and three is the affiliate model for outdoor equipment. Tim: Alright, now those  are three very different ways of monetizing ,so let us take them one at a time. In the freemium model, the basic application is free, and in-app purchases are used to buy a what, different maps or? Yoshi: It is like an airplane, the people who pay more, sit business class. The person who pays for Yamap can use the good maps. Tim: Practically what is the good difference? Is it just that there are more maps, more detail? Yoshi: Pay users can get a premium maps which is color map. Tim: So it is not like the free version they will tell you how to hike in, but you need to pay for... Yoshi: No, no we are very honest. Tim: That is good to hear. I think the affiliate program, where you are running like an affiliate for outdoors goods and the insurance program, it is very interesting. They are both a way of monetizing your community. It is a very different model from a freemium, from a pure freemium model. Which has been more profitable for Yamap? Yoshi: That is a very good question. I think it is easier to sell goods to our users. It is very difficult for our users to buy premium. I think human beings don’t used to get digital contents. Tim: I see what you expect .It is hard to get a pure digital purchase. Every one that is running freemium  model, the overwhelming majority are free and free is often good enough. So what percentage of your users are paying users, and which are free users? Yoshi: Just one percent. [pro_ad_display_adzone id="1653" info_text="Sponsored by" font_color="grey” ] Tim: Okay, that is pretty standard, I think for a lot of apps, but I can see why it makes it very difficult to run business, when you only have 380,000 users. Yoshi: That is why we want to emphasize on that, such as goods, insurance. Tim: it is changing the company from being a company focused on the application to a company that is focused on the community. You have also just recently done some really interesting deals with Casio,  and Kyocera. You integrated with Casio’s outdoor smartwatch. How did that project happen did you pitch to Casio or did Casio find you,? Yoshi: Casio found us, maybe two years ago. First, Casio was interested in Yamap. One year later, Casio, wanted to develop smart watch for outdoor people so Yamap has a big community for outdoor people. That is why we can help with Casio. Tim: What is the arrangement? Are they just pre-installing your app on the smart watches, did they pay a onetime license fee, are you getting a percentage of every watch sold? How did the deal work out? Yoshi: It is a license fee.

More than a few people dream of coming to Japan, starting an online business that gives you financial freedom and leaves you with enough free time to study the language travel and just enjoy Japan. I know that sounds like the opening to some terrible multi-level marketing pitch, but today we site down and talk with someone who has done exactly that — twice. Patrick McKenzie came to Japan more than 15 years ago and after enduring the soul-crushing boredom that is the life of a Japanese programer, he took maters into his own hands, left his job and began developing software products that he sold and supported all over the world the world from his home in the Japanese countryside. It turns our that life was not as idillic or as simple as it seems, but there are some important lessons learned and a great story to be told. I think you’ll enjoy this one. Show Notes for Startups What it's like working as a developer at a Japanese company The 30-year career plan Japanese companies have for their employees Why Japanese developers don’t start side businesses Why it's smart to focus on the foreign market when selling software from Japan  What's the wrong way to generate a startup idea  Why running a micro-startup can be more rewarding than getting investment What made Patrick give it all up and get a day job Why you need to develop the ability to do arbitrary hard things How to make failure a part of life in Japan, and why that would be a good thing Links from the Founder Patrick runs the Kalzumeus blog Check out some of Patrick's (aka patio11) prolific writing at Hacker News Stripe's Atlas Program Check out the Kalzumeus podcast, and tell Patrick to make more of them [shareaholic app="share_buttons" id="7994466"] Leave a comment Transcript from Japan Disrupting Japan, episode 74. Welcome to Disrupting Japan, straight talk Japan’s most successful entrepreneurs. I’m Tim Romero, and thanks for joining me. One of the things I enjoyed most about making Disrupting Japan, is not only do I get a chance to sit down and talk with some of the most innovative people in Japan, but I hear from people all over the world who are thinking about bringing their company to Japan, or who are deeply involved in the startup scene in their own country, or who just have a love of Japan and enjoy hearing about startups and how things are changing here. I also get a pretty steady stream of inquiries from listeners with a very specific Japan-focused dream. There are a lot of developers all over the world who want to move to Japan, maybe move to a Japanese company, study the language, and then start some kind of internet business that would give them the financial independence and the freedom to just live your life in Japan. Well, if that sounds appealing, I’ve got a treat for you today. Today, we’re going to sit down and talk with my friend, Patrick McKenzie, and we’re basically going to give you a blueprint for doing exactly that. I’ll warn you in advance, it might not be as easy as you think it is, or as rewarding as you imagine it might be, and in fact, in the end, Patrick left that life behind. Before he did that, however, he created not just one, but two successful online businesses, that he ran from the comfort of the Japanese countryside. Now, you’ve probably never heard of either of Patrick’s companies, but he’s a more important part of the Tokyo startup ecosystem than he likes to let on. He’s an advisor, a connector, and someone whose name just keeps popping up in Tokyo’s startup scene, and he has a really amazing story to tell. So let’s hear from our sponsors and get right to the interview.     [pro_ad_display_adzone id="1411"  info_text="Sponsored by"  font_color="grey"  ] [Interview] Tim: I’m sitting here with Patrick McKenzie of Stripe and of Kalzumeus software, and the illustrious Kalzumeus podcast, as a matter of fact. You’re really a unique figure in the startup ecosystem in Japan and you’ve done something that I think a lot of our listeners dream about doing, which is running two companies on your own here. Your ideas, your marketing, your coding, and bringing them to fruition, and so thanks for sitting down and talking with us today. Patrick: Thanks so much for having me, Tim. Hidey-ho, everybody, I’m Patrick McKenzie, better known as Patio11 on the internets. Micro tip for everybody: memorize a self-intro that is one sentence long and then you can just play it on every podcast, from now to eternity. I don’t know if I’m a very important person, but I have a less than common life story, so people apparently like hearing it. Tim: Well something that I think should be more common. You did what a lot of people want to do. You became a micro-startup. You went from idea, to code, to product, not once, but twice, in Japan. In fact, you were living in the countryside while doing it, so literally, doing your own business from anywhere. Before we really dig into the mechanics of those companies, let’s back up and talk about you for a bit. Why Japan? Patrick: I have an odd answer to this question. I grew up with my father and every day, as our father-son bonding activity, we would read the Wall Street Journal together. And when I was studying engineering in school, the Wall Street Journal was very insistent—this was back in the early 2000s. All of the engineering jobs were going to India and China, so I was getting a lot of parental pressure, “Go get a W-2 job at a nice, big megacorp, something which is safe and stable, with healthcare,” and my inaccurate assessment of the world, from my perch in St. Louis at the time, was that basically only existed in the United States at Microsoft, so I wanted to get a job at Microsoft, but I didn’t think I was the sharpest knife in the coding drawer, so I thought, “If I could combine a language that was commercially reasonable for software development, with the actual skill of doing software development, then Microsoft would have to give me a job, as like the product manager of X country Excel. And if I did that, I would be only competing against not 100,000 people who were graduating in India and China every year, but only the small subsection who had mastered the same language and were also fluent in English. So I asked my university, “Can you give me a list of every language the university teaches?” I went down the list on how many billions of dollars of software does this country make and how many billions of dollars of software do they buy? And Japan was number one on this by a longshot. So I immediately signed up for Japanese 101 and I think about one hour into learning the Japanese language, I was like, “Yep, this is clicking with me. I’m totally going to major in this.” So I majored in that and in engineering and then when I graduated, I was like, “Can I, in good conscience, go to Microsoft right now, and say, ‘You should make me the product manager of MS Excel Japanese version.’” I thought, “Well, I know nothing about anything and my Japanese is good enough to have a conversation, but probably not good enough to lead a project management meeting.” Tim: Actually, the idea of combining engineering with another skill is a really good one for anyone, whatever that other skill or other passion happens to be. Did you try to market yourself? Did you try to get a job combining those two skills straight out of college? Or were you really kind of headed for Japan at this point. Patrick: I was terrible at this. I was actually—randomly met someone who it would be professionally advantageous to know if that was the career past plan, and when he heard engineering degree plus some level of Japanese conversational fluency, he asked me to apply to his company on the understanding that he would immediately be able to say yes to the application. And I heard that and did not take action on it because I was worried about it being too much. Meanwhile, I could just send him an e-mail saying, “Hey, I graduated now. Can I have that job you promised me?” When I graduated, I thought my Japanese not sufficient to run an engineering meeting in Japan right now, so I will go over to Japan after graduation, work as a translator for a few years to firm up my business Japanese, and them come back and get a job with Microsoft, was the plan. Tim: Okay, it seems like being in St. Louis, it would actually be harder to get a job as a translator in Japan than it would be to get a job as a product manager at a software company in America. Patrick: Yeah, you would think that, right? I think this is one of the many times in life where people don’t have a great idea for what is easy and what is hard. They just have an idea for what is like the well-trodden path and what is not the well-trodden path, at Washington University, which was where I was going to school. One well-trodden path was applying to the JET program. There is an A4 sheet of paper that you just put your name on and boom, that takes off— Tim: A clear path from A to B. Patrick: Yeah, a clear path from A to B. I’m like, “Oh, I will apply to the clear path from A to B,” and applied to the JET program. They assigned me as a coordinator for international relations, prefecturally sponsored technology incubator and Gifu prefecture. If you’re not too familiar with the JET program, they do 3 things: the big one is they send people without much Japan experience or knowledge of the Japanese language to be ALTs, Assistant Language Teachers at Japanese schools, to have a foreigner with native pronunciation of English teaching there. And then their much smaller thing is they place translators and interpreters at a variety of governmental and quasi-governmental organizations. Tim: But at this point, your Japanese wasn’t good enough to be a translator, right? So you were going in to be an English teacher? Patrick: No,

Gaming is very different in Japan than it is in America, but PowerCore is introducing technology that could lead to major changes in both of them. Toys to Life technology blurs the distinction between the analog and digital worlds by having digital gameplay react to the presence of physical toys. For example, after buying a figuring, that character would appear in the game. The first generation of this technology is already being used by powerhouses such as Disney and Nintendo, but the real change is yet to come. Today Jia Shen explains what the future holds for Toys to Life, and why he decided to start his company in Japan. It seems that the boundary between analog and digital is about to become a lot less clear. It’s a great conversation, and I think you’ll enjoy it. Show Notes for Startups Why large companies have trouble crossing the toy-game barrier Why it made sense to build a distributed team from Tokyo The special appeal of physical goods in our digital life How Disney just made a big mistake Why children don't play with some toys Why Japan gaming might be the future model for the rest of the world Links from the Founder Learn more about Powercore Check out their Online Store Some cool toy pics on Instagram Follow Jia on twitter @mekatek Friend him on Facebook Jia on Instragram You really need to see the toys in action to appreciate them check out This video or this one this is cool too or this video [shareaholic app="share_buttons" id="7994466"] Leave a comment Transcript from Japan  Disrupting Japan, episode 73. Welcome to Disrupting Japan, straight talk from Japan’s most successful entrepreneurs. I'm Tim Romero and thanks for joining me. You know, gaming has always pushed the limits of both computer hardware and the interfaces we use to interact with computers. Jia Shen, of PowerCore, is blurring the distinction between the online and offline interaction. Powercore enables video games to react to the presence of physical object. For example, if you owned a figurine of a superhero, that hero could appear in the game. It’s a simple interaction that radically changes the way we view the digital-analog divide. Of course, as with all technologies, adoption is never smooth, and Jia explains some of the mistakes that burned Disney, and some of the major market players. It seems that, as is so often the case, the secret to introducing innovative technology, is to do only as much as you absolutely have to, and then watch how your users react. It’s a simple idea in principle but there are surprising reasons why some of the most influential companies in the industry have trouble following it. But Jia tells that story much better than I can, so let’s hear from our sponsors and get right to the interview.     [pro_ad_display_adzone id="1404"  info_text="Sponsored by"  font_color="grey" ] [Interview] Tim: I’m sitting here with Jia Shen of PowerCore. Now, PowerCore does toys to life or sometimes it’s called offline-online business, but why don’t you explain basically what it is and who uses it. Jia: Sure. The toys to life is a model, that from our perspective, Japan has done a lot of pioneering, but the United States, in maybe the last 5 or 6 years, have made a very large business out of it. So we point to, in the US, Skylanders from Activision, Disney had a big one called Infinity, featuring a lot of the great Disney characters. Nintendo, LEGO, they all have some forays into this. And specifically it’s toys that are collectible, that have a strong interaction with video games. So the guys that do it on a large scale, they usually have console games, and you have different characters, which you can stick into the game, they have different power-ups, they have different game mechanics. Tim: For example, there would be a figurine, or a trophy, or a sticker of some kind that would activate a character in the game or would activate new levels in the game? Jia: Skylanders, I think, is the best game design. They really accentuate the collection of individual characters. So imagine a Super Mario game but different levels have different mechanics. For instance, certain ones require you to be able to have wheels as feet, to be able to run faster. Other ones require you to have big hands to be able to crawl up walls. Tim: So what is the physical tie-in there? Jia: As a player, you literally have your character in front of it when you’re walking through, and say there’s a specific enemy that you want to defeat that requires a specific characters, you immediately swap the character right on the pedestal, and that person immediately appears out of the game. Tim: Okay, so you’re swapping physical characters in the real world and that’s impacting the game in real-time, as you play it? Cool. Are most customers taking existing IP and making toys, like Star Wars or Frozen or Angry Birds? Or are they companies that have like a popular game and want to add a layer of physical activity to it? Jia: We have 3 categories of customers. The big customers are large toy companies that are trying to unify kind of a merchandising strategy. In Japan, let’s use Naruto as an example. Naruto is kind of licensed out from Shoeisha and they take that and a bunch of other companies do the merchandise, and a bunch of other companies do the games. None of them are the same. So typically, with an IP company, there’s a lot of business units, a lot of companies associated to it, and none of them are really interacting with one another. And that’s really kind of a sweet spot for us, IPs that are doing large launches, that are existing in a lot of different places, but they really should be creating experiences that really unify everything. Marvel’s a good example of doing a good job of that. Marvel and Disney, what they do is they’re creating universes that everything interacts with the TV shows, work with their movies, the movies work with their games, everything kind of feeds into individual aspects to it. But if you look at everybody else outside of Disney, they’re definitely not doing that. A movie launches, it has nothing to do with a TV show. The toys themselves have their own campaigns and whatnot. Our job is to actually create universes among all these different mediums and the users are free to participate. Tim: Okay. Listen, before we dig down deeper into the market as a whole, let’s talk about you for a minute. So this isn’t your first startup. You actually started up a pretty successful company called RockYou in San Francisco 8 years ago now? Jia: I officially started 10 years ago. Tim: 10 years ago. It was a company that was a platform for developing apps on Facebook and social media. What made you decide it was time to move on from that industry and move into toys to life? Jia: I think one of the other big things was I moved to Japan. Around 2010, I came here because we did a joint venture with SoftBank, so that was a catalyst for me to move here. But I personally always wanted to be in Japan. The reason for me to move on was kind of more of a personal reflection point. RockYou as a company became very, very large. It’s definitely not the sweet spot in which I enjoy operating at. When I left, we were like 350 people or something in the United States office alone. I wanted to come here to basically try and do new stuff. I wanted to focus on becoming somebody that actually created strong content. Tim: What was your attraction to Japan? Was the industry itself attractive or was just the country attractive? Jia: The country attracted me. I’ve been coming to Japan since 2003, every year. For me it was like a very strong personal decision. I definitely wanted to live here. Tim: Okay. Well, gaming in Japan, it’s certainly different than it is in the US. So is Powercore doing most of its current business in Japan, or the US, or do you have customers in both places? Jia: We’re pretty much evenly split, as far as customers and the team. As far as core game businesses, Japan and Korea is actually the leader for that kind of business. The US, it more interestingly is coming more from the toy side, as well as the IP rights holders. United States’ IPs are more movie driven, so we’re doing a lot more business from kind of the movie IP and marketing launch sides. It’s the same goal that we’re trying to achieve, but because of how businesses and companies are setup, the US and Japan are actually very different. Tim: With everything being digital these days, more and more of our life is digital. Do you think there’s some special appeal to having a physical object? Do people identify with that somehow more strongly than they do just the digital game or the digital character themselves? Jia: Absolutely. And there is a difference based on individual IPs and that’s something that we’ve learned a lot about in the last year. Tim: Like how? Jia: The original thesis was you take any game that has a large audience with it, and we should be able to merchandise it. That’s absolutely not true because the two ways to look at our business: one is a very practical one, from business—I’ll get to that in a second—and first is actually universe-building. It works for adults and it works for kids, but it’s a lot more easy to see when a child takes a toy, scans it in. When they get it, it completes a fantasy, “Oh my goodness. My Pokémon is a stuffed animal and now it’s in the game.” Once you make that connection, it’s very nice. So the universe-building part is actually a nice part. Tim: I could actually see how children would pick that up more quickly than adults would. [pro_ad_display_adzone id="1653" info_text="Sponsored by" font_color="grey” ] Jia: Yeah, they super love it. Every time you show a kid our scanning stuff,

Selling services in Japan is very different than selling products or software. Everyone knows that relationships are important in Japan, but not many people understand why they are so important, and how you can use that understanding to build a successful business here. Today Sriram Venkataraman explains how he grew InfoSys Japan from a one man operation to over 1,000 employees and how understanding why Japanese enterprises must trust their vendors far more than companies in other developed countries. We talk about hiring strategies and techniques he used to get his initial customers and some of the most common mistakes that western companies make with their senior leadership in Japan. It’s basically a blueprint for how to grow a services company from nothing to thousands of people in Japan, and I think you’ll enjoy it. [shareaholic app="share_buttons" id="7994466"] Leave a comment Links & Resources Follow Sriram on Twitter @japansriram Connect with him on LinkedIn Transcript Disrupting Japan, episode 72. Welcome to Disrupting Japan, straight talk from the CEOs breaking into Japan. Today we’ve got some amazingly good advice for anyone who wants to sell services in Japan. Selling products or software is challenging enough, but selling services where relationships mean everything and where the quality expectations for service is perhaps the highest in the world, that provides a host of very special challenges. Today we sit down with Sriram Venkataraman, as he explains how me manages to scale Infosys, which provides outsourced Indian development services, from 2 people, to over 1,000 people in Japan. In a very real sense, he did it with a strategy that is pretty much the opposite of what you would expect from an Indian software services company. This is a real insight into the mind and the buying decisions of Japanese enterprise customers and Sriram has a different, very compelling perspective, on why so many foreign companies have trouble gaining real trust in the Japanese market. We talk a lot about finding the right people here in Japan, and how to avoid the hiring traps that western firms commonly fall into. Really, this interview is basically a blueprint of how to grow from nothing to 1,000 people in Japan. But, you know, Sriram Venkataraman explains that much better than I can. So let’s hear from our sponsors and get right to the interview.     [pro_ad_display_adzone id="1411"  info_text="Sponsored by"  font_color="grey"  ] [Interview] Tim: I’m sitting here with Sriram Venkataraman, of Infosys, and you have been with Infosys from the very beginning in Japan, and you’ve seen it grow from a tiny team to over 10,000 employees here now, haven’t you? Sriram: Not 10,000. Tim: No? That was on the website. Sriram: Our total Japan business is probably about 1,000 people today. But given the business model, not all of them are here. Roughly 65 to 70% of the teams are in India and the balance are here. Tim: Okay, let’s actually back up a bit to 20 years ago. The Japanese market is obviously a very big one but system integration is always a very local game, so what attracted both you and Infosys to the Japanese market in the first place? Sriram: So Infosys was founded by 7 people. The senior founder, I think he’s a true visionary . So one of the important dimensions for Infosys was, “How do we move away from a large dependence on the market of the United States?” Because our business is quite dependent heavily on the mobility of people’s ideas. If you are dependent only on one market, if there is a regulatory change, or if there is something else that happens, then you are not going to be able to sustain the productions that you make. Tim: And back then, what percentage of the revenues were coming from the US? Sriram: The year I joined, this company had a global revenue of $26 million. I was I think sales employee number 10. Tim: But that was—so this was ’96? Sriram: And ’97. Tim: So this was at the very start of this global outsourcing— Sriram: Absolutely. And at that time, we were at what, 78% of our revenues, or something like that, was from the US. We had just started Europe a couple of years ago, and we had just started some stuff, and the next extension was to figure out Asia. Japan, obviously, was of interested, just given the GDP size. And the company tried to do some experimentation through some remote sales, if you will. People came, then they realized it was simpler to have somebody here. And that was in ’96. Through a strange set of circumstances, I got introduced to this company. Tim: How strange? Is this something you want to talk about? Sriram: Yeah, I can discuss. So I was doing very well in another Indian company, and I had been there for almost 6 years, and I was responsible for new product development and new businesses. We were developing the computer peripheral business in India and India deregulated in ’91, and then the economy really started picking up. I think IT is the only industry where India has always kept pace with the global level. Every other industry, we started from behind. I think it was just perfect timing that when India started to open up, computing was also getting democratized thanks to the PC and stuff like that. So my job was to manage our technical partner, who was over in Japan. And I visited Japan a couple of times, and when I came to Japan, one of the things that really struck me was how is it that a country, which lost everything in two wars, come up like this in 50 years? It is not that Indians, on an average lack an intellect—also, they work very hard. What is it that makes this county so successful that we are not able to duplicate in India? Tim: I’ve got to ask, did you manage to figure that out? Sriram: Yes and no.  lot of it has to do with how well they work with the cultural context that they have. And the notion of common good being more important than a private good, I think drives this place pretty well. Economically speaking, I think METI did a brilliant job of figuring out what this country identity is going to be from from an economic sense. They went from ship building, steel, automobiles, electronics, semiconductors, and so on. But all of it I think was a very carefully planned, orchestrated resources allocation, managing the industry in such a way that there is limited competition, which is incentive enough for everybody to stay competitive, but at the same time, not so unlimited that nobody is making money. Tim: And they were highly competitive in the global markets. Sriram: And they would go together as Japan Inc. Tim: It worked incredibly well until about 1990 or so. Sriram: When I was doing this printer business, obviously we had a relationship with one of the Japanese companies and there was this other Japanese company that had something very interesting. And it is almost sacrilegious to even think that you would even talk to the other company, but I did, just to explore because the technology was changing, and the other company was a little ahead in the new stuff. But before I knew, the other guys knew that I had met these guys. And it goes on from our side. Tim: The relationships in Japan are so important. And actually, let’s dig into this because I think what Infosys was selling, these relationships and services—it’s fundamentally different from coming into Japan and trying to sell hardware or consumer brands, or enterprise software. When you first came to Japan, how big was the team and what did your first deal look like? Sriram: Before that, let me just finish the moving story. I was doing very well and because India had deregulated a whole bunch of multi-nationals who were coming in, one of my customers actually left his job and started a headhunting firm. And this guy was calling me every day, saying this company wants somebody, that company wants somebody. And I kept telling no to this guy and one day he called me and he said, “What do you want to do?” And I thought I would get him off my back by saying, “The next thing I want to do is I want to work overseas, and in Japan only, thinking that this guy would never call me. The next morning, at 6:30, he calls me. He said, “Infosys was looking to do something in Japan, you promised me, so you will go and meet these people.” I said, “Yeah, a promise is a promise; I will go and meet these people.” And usually people say you should never change your job, your home, and city all at the same time, and I did all of that. And I also changed industries. I had no idea about what the software business was. But I just had this foolish energy in me that said, “How bad can it be? How hard can it be?” Tim: I think in some ways, coming to Japan with no preconceived notions at all might be an advantage. Sriram: Yeah. Then I joined the company and I was told that, “Could you please learn Japanese in India before you go?” Then I started learning and I had two tutors—one in the morning and one in the evening. Intense classroom for 3 months and then somehow I managed to convince these guys to call my boss and say, “This guy is okay. Beyond this, he won’t improve in India. Send him to Japan.” Then I came here, I landed at Noreda, heard the train announcements, and I couldn’t understand anything. But then, by then, I had already come with one suitcase and a bag, so I had to make it work. We had one more guy here and that goes back to how we tried to enter the market. So I was running the independent influences operation, then they also said there was an opportunity created by the famous consultant, Kennedy. He wanted to bring India and Japan together, so he created a company with 4 Indian companies as investors and some Japanese investors called Jastic Park. Tim: So is this consortium of— Sriram: Yeah, but they created an entity, they hired people,

Today we are going low-tech. Sledgehammers and paint brushes low tech. Keigo Fukugaki has started his own hotel brand, BnA, which stands for Bed & Art. It’s not a platform. It’s not an online marketplace. There isn’t (yet) even a meaningful e-commerce component. BnA is a new kind of hotel that places travelers not only in hotel rooms with interesting decor, but plugs them into the local artistic community. It’s an incredibly ambitious project, but Keigo and his team have three small prototype hotels up and running, and they are in the process of building a full scale facility in Japan and already in talks about international expansion. With SaaS companies and digital marketplaces  dominating the news, sometimes it's nice to know that some startups are running businesses based on concrete and lumber. It’s a fascinating interview, and I think you’ll enjoy it. Show Notes for Startups Why old office buildings make ideal art spaces The dangers of standardization in Japan and global the hotel industry Why Bed&Art is the anti-Airbnb Why crowdfunding should never be about the money any more Why Keigo left San Francisco to start his startup in Japan The very real danger of stretching yourself too thin Why the differences between Japanese and American programmers are real and important Links from the Founder Learn more about Bed and Art Follow Keigo on twitter @makeshiftjp Friend him on Facebook Checkout Keigo's design firm Makeshift Honey Wedding The BnA prototype as Airbnb in Ikebukuro Their successful crowdfunding campaign [shareaholic app="share_buttons" id="7994466"] Leave a comment Transcript from Japan Disrupting Japan, episode 71. Welcome to Disrupting Japan, straight talk from Japan’s most successful entrepreneurs. I'm Tim Romero and thanks for joining me. You know, more than anything else, Disrupting Japan is about introducing you to the people who are changing business in Japan. I mean, really introducing you to them. Not the banal book tour interviews you hear everywhere else, but to let you get to know the real people starting things up in Japan. People you would love to sit down and have a beer with and with whom I’m lucky enough to do just that. It’s letting you know the people behind the startups. And although Disrupting Japan is a business podcast, business is personal. Hiding behind every great startup with impressive numbers, there is an interesting story about how it got started. And hiding behind that interesting story is the story of what really happened and the real goals, and the real successes, and real disappointments. And what I love about podcasting is that it makes it so easy for you to hear when someone is telling a PR approved origin story and when someone is really speaking from the heart, when they are telling you about something that really matters to them. Well, I’ve got a great story for you today and listeners have commented that I’ve been a bit tech heavy recently, so today, we’re going to meet someone who is decidedly low tech, as in paint brushes and hammers low tech. Keigo Fukugaki has started his own hotel brand, Bed & Art, in which he tries to merge travel with supporting the local artistic community. It’s an ambitious project to be sure and as the interview progressed, I went from thinking, “This won’t work,” to, “Nah, this is way too much of a long shot to really work,” to “You know, this is just crazy and quirky enough that is just might work.” In this age of SAS, Airbnb, and middleware, sometimes it’s refreshing to find a startup that deals in concrete. But, you know, Keigo tell that story much better than I can. So let’s hear from our sponsors and get right to the interview.     [pro_ad_display_adzone id="1404"  info_text="Sponsored by"  font_color="grey" ] [Interview] Tim: So cheers. We’re sitting here with Keigo Fukugaki of Bed & Art, which is sort of a distributed hotel art space, but you’re going to be able to explain it much better than me, so what is Bed & Art? Keigo: Basically, we’re a hotel startup and we’re trying to find a new way to start a hotel brand, not a real estate mogul. We’re just four guys with a little bit of cash. We also work with a lot of artists and we’re mixing the hotel business with art to create a new kind of travel experience. Tim: Okay. Concretely, what are you doing? Keigo: We’re creating one of a kind rooms with artists and every time someone stays in those rooms, part of the revenue goes back to the artist. It’s bringing together a lot of unique travellers and the local artists together. Tim: Are these apartments that you own? Are they apartments that other people are letting you renovate? How does it work? Keigo: We’re actually a hotel, registered as a hotel. So we’re taking over old buildings and we’re renovating those, creating lobby, bar, hotel rooms. And in Tokyo, there’s a lot of these office buildings that we’re able to convert into a hotel. And I think that’s new. Usually when you think about a hotel, it’s about where it is and how beautiful the exterior is. Tim: Sure. The hotel industry has really become standardized. And that’s good and bad. You know what to expect. But every room is completely different and some of them are really crazy. We’ll put links to the site so everyone can see it. Always hard to describe art in an audio podcast. You’ve got a couple of hotels now, right? One in Koenji, one in Kyoto. Keigo: And then we have a pilot room that started off as an Airbnb room in Ikebukuro. Tim: So how many rooms are in each of these hotels? Keigo: Very small. The one in Koenji has 2 rooms, and Ikebukuro has one room, and Kyoto has 3 rooms. Tim: All right. Is your marketing primarily via Airbnb, or do you use Expedia, or word of mouth? How do you get your bookings? Keigo: Most of our bookings come through Expedia and Booking.com. Tim: Really? I would have figured it would have been Airbnb. Keigo: We’re actually at a separate price range than what an Airbnb customer might be looking for. So we’re priced at the same level as a hotel, so you’re looking at $160-200 something per night. Usually, in Tokyo at least, Airbnb costs are much lower than that. So even though we have some of our rooms listed on Airbnb, most of our customers don’t come through there. Our target market is actually slightly separate from an Airbnb customer base. We believe we’re target towards young professionals who are looking for great service, but also a unique experience as well. Tim: Interesting. I guess in some ways, you’re kind of the anti-Airbnb. Because when you rent an Airbnb pretty much anywhere in the world these days, you’re going to go into the same type of room with the same IKEA furniture, and that’s all fine, but it’s getting sort of standardized like the hotel experience. Keigo: Exactly. It’s interesting that you say this because this is exactly why we started BnA. And I mentioned that we started the Ikebukuro project as a pilot because two of our partners, or co-founders, they used to run a lot of Airbnbs in Tokyo and they were actually Airbnb moguls. They had something like 40 Airbnbs in Tokyo, and they were one of the first ones to really start making that into a pseudo business. And they were killing it but I came in and I actually made fun of them, said, “Basically, you guys are actually making this cookie cutter room with IKEA furniture, and all you’re doing is making money.” Tim: There’s nothing wrong with that. Keigo: There’s definitely nothing wrong with that but these guys, at the time, they were like 27—brilliant guys. And that’s why I’m working with them. But I realized, at 27, I think if you have a higher goal, you can achieve much, much more interesting things. And that’s where I came in and kind of poked around, and they agreed. They wanted to do something more interesting. Tim: Now, Airbnb rates in the last year or so have really been coming down in Japan. Are they still in that Airbnb business or did they sort of pare that back? Keigo: They’re in it, but they have definitely pulled back. They realized the competition is really high, in terms of how many listing there are. So even if you are doing a great job, the price will come down. Tim: It’s kind of a race to the bottom now, now that everyone expects the IKEA furniture. All right. So tell me about your customers. Who stays here and who goes to the bar? Keigo: We call them like-minded people. To us, our focus is really to try and find who would be our best friends in the rest of the world. And these people are young, hip, they know what they want. When they travel, they’re well-travelled, so they expect a certain amount of an unknown. And they feel that they can handle certain amounts of differences. Tim: Are your guests mostly foreign or Japanese? Keigo: They’re mostly foreign and they’re actually all from Europe, or the US, or Australia. So western countries are our main customer base. Tim: Are they people from, let’s call it an artist community, that are usually using it, or is it more of just regular travellers looking for something a little different? Keigo: They’re definitely the creative types. They’re TV producers, they might be writers, they might be musicians, web designers. So they tend to be more in that creative field. But they’re all young professionals. They make a certain amount of income that they can actually stay in the hotel and kind of have a decent amount of spending. I’m not saying they’re luxurious in any way, but they have done the Airbnb and they’re over it because they know they can afford a little bit more service. But that middle ground is missing right now. Tim: That middle ground between the standardized Airbnb experience and the standardized hotel experience. But from a business point of view, if you’re operating property that only has two rooms,

Sales is different in Japan. When Fastly entered the Japanese market, they quickly discovered that they had change their technology-driven bottom up sales approach to fit Japan’s top-down enterprise market. Today we sit down with Doug Chuchro, the Japan head of Fastly who explains how he had to chance both the sales strategy and the corporate culture from that of the US, which a highly knowledgeable user base who understood the workings of their technology as well as the sales team to Japan, where they frequently found themselves educating potential customers about what a content deliver network is and how they are used. We also explore the importance of partners in the Japanese market, and how those relationships can be very much a two-edged sword. It’s a fascinating conversation, and I think you’ll enjoy it. [shareaholic app="share_buttons" id="7994466"] Leave a comment Links & Resources Learn more about Fastly here Connect with Doug on LinkedIn Follow Doug and Fastly Japan on Twitter @FastlyJapan (Japanese) or @fastly (English) Contact  doug@fastly.com or the Tokyo team  japan@fastly.com (English or Japanese) Read about Fastly’s partnership with Nifty Cloud (Japanese) Read about Fastly’s partnership with SoftBank (Japanese) Learn about Fastly’s Cloud Accelerator with Google Cloud Platform (English) Sign up for a free Fastly trial account Find out how to do stuff on Fastly from posts on Qiita (Japanese) Transcript   Disrupting Japan, episode 70. Welcome to Disrupting Japan, straight talk from the CEOs breaking into Japan. I'm Tim Romero and thanks for listening. Today we’re going to talk about content delivery networks or CDMs, those services that cache your website locally around the world so that users can access it extremely quickly. Or more accurately, we’re going to talk about how Fastly has managed to sell them in Japan. We sit down today with Doug Chuchro, the Japan head of Fastly to talk, not so much about the company, but how you sell innovative technology to large Japanese enterprises. We’ll explore why partners are all but essential in entering the Japanese market, but how those relationships can be very much a two-edged sword, you need to know what to expect going in and to try to manage the expectations of everyone involved. When you’re trying to convert a proven, bottom-up, technical sales process into one that is Japanese style top-down, and governed by long-term relationships and unseen alliances. Even when done perfectly, your Japanese partner won’t always do what you want, but sometimes they’ll do what you need. But, you know, Doug tells this story much better than I can, so let’s hear from our sponsors and get right to the interview. [pro_ad_display_adzone id="1411" info_text="Sponsored by" font_color="grey" ] [Interview] Tim: I’m sitting here with Doug Chuchro, the representative director of Fastly KK and thanks for sitting down with me. Doug: It’s my pleasure. Tim: Before we get into all the details of how you brought the company into Japan and how you grew it here, I want to take a step back. Can you explain what Fastly does? Doug: Sure. We are a content delivery network. There are a number of content delivery networks out there. Many of them have been around for years and years. In fact, the space is close to 2 decades old. We are, essentially a content delivery network brings content closer to end users and increases the performance for those end users, and decreases the amount of workload that the customer’s origin has to do. So it essentially is a global caching network that the two major benefits are increasing the end user performance and decreasing the origin offload. Tim: So just every individual around the world would, instead of accessing the original source homepage, they would be accessing the cache that is closest to them and having the fastest experience possible. Doug: Exactly. For example, for a news media site, I go to the New York Times webpage every morning to see what’s going on. And rather than connecting to the New York Times origin infrastructure on the east coast of the United States, which would be a terrible experience for me here in Tokyo, I can actually connect with the local pop server of Fastly, here in Shinagawa, where most of that content is cached. I get a very quick response. That page loads almost instantly, and likewise, the operations team for New York Times in New York, they don’t even see a hit against their infrastructure. It essentially offloads that. Tim: Unless customers scale out much further and much faster as well. Doug: Exactly. Yes. Tim: Okay, so this sounds almost by nature like a global business. Doug: It is. In fact, before we started our business in Japan, we had one PoP operating in Tokyo and several others in Asia. Tim: And a PoP is a— Doug: A Point of Presence. Tim: What was headquarters’ main motivation of setting up in Japan? Doug: There were a number of factors. Fastly was growing quickly in North America, our headquarters was in San Francisco, we had started an office in London. So we were beginning that process of growth in Europe, and like you mentioned, we had to build a global network to serve all of our audience. Global expansion from an infrastructure point of view is pretty easy because we’ve already built out quite a bit of our infrastructure globally just to serve our North American customers well. So going into a new market is just a matter of hiring the salespeople and standing up the business. It’s not a trivial thing at all, it’s not a trivial matter at all, but the infrastructure was largely there. Tim: Was there a particular trigger event? Were you getting either demand from your US customers to have more PoPs in Japan, or were you having Japanese customers who wanted to use your network globally that kind of pulled you into Japan, or was this just a natural progression? Doug: It was a number of different things. We were interested in international expansion, we were pushing into Europe, we were looking at places in Asia to expand, and looked at Japan. In fact, one of our customers in the United States is a subsidiary of a large retailer here in Japan. So they made a connection for us and started those conversations for us. We got some executives to come over here and talk to some people and kind of feel it out. That coupled with a healthy fascination of our CEO of Japanese culture— Tim: This happens a lot actually. I’m not sure why exactly, but there are so many, particularly from San Francisco, in the startup community, they are fascinated with Japan in general. Doug: It’s interesting. You come over here, it’s the third largest economy, you look at the CDM market space here and it’s fairly mature and continues to grow. So unlike setting up in either Singapore or Hong Kong—they’re global hubs, but their domestic markets are relatively small. The other one is China. China’s massive but it is a completely different ball of wax, one which we are still very cautious about, so Japan really made sense for us. Tim: So Fastly and CDM in general, it’s a niche market so was there a perception of the Fastly brand in the Japanese market before you came in? What was the competitive landscape like? Were there strong competitors in the market? Doug: Yes, there are very strong competitors in the market, and to answer your first question, the Fastly brand, we realized that it was next to unknown. There were pockets of knowledge about Fastly, but we hadn’t done anything to promote our brand here. So we knew that was going to be one of our major challenges. The dominant player in CDM globally and in Japan specifically is Akamai. They’re the 800-pound gorilla and they’ve kind of defined the space over the last 2 decades. We knew that we didn’t have much of a brand. We had to spend a lot of effort—and still need to spend a lot of effort—to build our brand here, and that’s a multi-pronged effort. One of the things that we thought would be really good for us would be to get somebody to vouch for us because having a local partner to vouch for you means quite a bit. Early on, our executive team made some connections with SoftBank. They have been, and continue to be, very generous with their time and their energy in promoting Fastly. So they are a reseller of Fastly today and have been for 18 months. And I would venture to say that if it weren’t for their generosity and their willingness to partner with a relatively unknown in Japan company, that we may not have even opened the office here. Tim: I want to talk about that relationship. But before we do that, your significant competition was foreign companies—are there domestic companies in this space as well? Doug: There are very few domestic CDMs. The big ones that we run into, as I said, are Akamai, the other one is AWS has their own CDM offering. And AWS, I think, is remarkable with the work that they’ve done here in Japan, a foreign company coming into Japan and establishing. Themselves the way that they have, I think is quite commendable. Tim: They’ve been a steamroller in this market. Doug: Yeah and something that I inspire to, to be honest with you. Those are our two major competitors, or our other competitors, but none of them really domestic. Tim: That’s a really interesting situation to be in. Doug: It is. But if we go back to the notion of a content delivery network really has to be a global network to be an effective thing, there really hasn’t been a Japanese domestic CDN that has been able to build out. Tim: It’s very interesting in a go-to-market perspective, in that you are free to make partnerships, and you are not entrenched in decades-old alliances in the market. Doug: Very much so, yeah. Tim: So let’s talk about the partnerships that you did make. You worked very closely with SoftBank.

More and more Japanese founders are moving their startups to San Francisco. It’s easy to see why. There is more venture capital, more startup know-how, and more startup energy in that city than anywhere else in the world. In fact, there is a small, close knit Japanese startup community in San Francisco, with Japanese startups, mentors and investors all supporting each other and trying to grow their business there. On my last trip to San Francisco, I had a chance to sit down with one of these startup founders, Keisuke Kajitani, co-founder of Ramen Hero. He moved to Silicon Valley from Japan to start his company because he thought the US market was a better fit. Ramen Hero sells home delivered ramen meal kits. Interestingly, the popularity and ubiquity or ramen in Japan works against them, while the novelty and price of ramen in the US has enabled them to get attention from both VCs and customers there. It’s a fascinating discussion, and I think you’ll enjoy it. Show Notes for Startups Why ramen gives them a competitive advantage in the US Previous failures in the ramen business and why it's different this time Why Ramen Hero had to pivot from B2B to home delivery What's great about the Japanese startup scene in San Francisco How many companies can the market sustain? When Japanese companies should move to Japan   Links from the Founder Learn more about Ramen Hero at their home page Follow Ramen Hero on Instagram [shareaholic app="share_buttons" id="7994466"] Leave a comment Transcript from Japan Disrupting Japan, episode 69. Welcome to Disrupting Japan, straight talk from the Japan’s most successful entrepreneurs. I'm Tim Romero and thanks for joining me. More and more, Japanese startup founders are looking at, or even moving to Silicon Valley. It’s easy to see the appeal. San Francisco is home to the largest and most competitive startup ecosystem in the world. In fact, there’s a small Japanese startup community in San Francisco, with Japanese startups, mentors, and investors all supporting each other and trying to make it work. Of course, the founders that come from Japan—well, it’s a mixed group. Some successful companies view San Francisco as their logical first step towards global expansion; some are new founders that have an idea they feel is more suited to the American market than the Japanese market; and some, well, some are kind of startup tourists, visiting the offices of famous startups and going through the motions, as if they were in some sort of startup role playing game. On my last trip to San Francisco, I had a chance to sit down and talk with Keisuke Kajitani, co-founder of Ramen Hero. He and his co-founder moved to San Francisco from Japan because they thought the US would be a better market for their product, oddly, because ramen is already too popular in Japan. Now, Ramen Hero sells home delivery ramen meal kits and it’s a business that makes much more sense to launch in the US than it does in Japan. But, you know, Keisuke explains all that much better than I can. So let’s hear from our sponsor and get right to the interview. [pro_ad_display_adzone id="1404" info_text="Sponsored by" font_color="grey" ] [Interview] Tim: I’m sitting here with Keisuke Kajitani of Ramen Hero and we’re sitting here in beautiful San Francisco. So thanks for sitting down with us. Keisuke: Thanks for having me. Tim: I’ve got to say, San Francisco is not so beautiful today. Keisuke: Yeah, it’s raining hard. Tim: I don’t think I’ve ever seen this much rain in San Francisco. Keisuke: Yeah, it’s unfortunate. Tim: But we’re inside and dry, so that’s good. Listen, to get things started, why don’t you tell me a bit about Ramen Hero? Keisuke: Sure. So Ramen Hero is a meal kit service specifically focused on delivering authentic ramen to your house. So what we deliver inside of the meal kit is fresh noodles, and soup, and toppings, and of course the recipe cards. So you can become a ramen chef at your house. Tim: Okay. The food industry in general is hard. It’s incredibly competitive, it’s hard to build up a loyal user base because trends come and go so fast. Why did you choose this particular startup? Keisuke: I’ve seen a lot of Japanese entrepreneurs trying to figure out how to make a big company in Silicon Valley, but I often find that the Japanese entrepreneurs are not having strengths in their expertise. There is tons of good engineers, there is tons of good entrepreneurs, but ramen is something Japanese can be expertise about, so that’s why we chose ramen as the first entrance for food business. Tim: Okay, so it was something that would make you unique and play on your Japanese-ness here in Silicon Valley. How did you pull it together? Tell me a bit about your partners and co-founders. Tell me about the team. Keisuke: Sure. So I’m the COO of Ramen Hero and I have a co-founder whose name is Hiro, who is the CEO/the chef of this company. Hiro graduated Tokyo University but while he was in university, he decided to open his own ramen restaurant by himself with his friend. But he totally screwed up. He had the wrong recipe, he tried to have the squid intestine in the soup to have uniqueness, but it smelled horrible. He was unique for sure but he wasn’t a good chef. So after that, he founded online farmers market service, which restaurants in Tokyo can purchase fruits and vegetables directly from the farms. He was doing that business but he couldn’t actually erase the passion of the ramen by himself, so he decided to come to Silicon Valley and start a ramen business. But he cannot turn himself into a ramen chef instantly, so what he did was he entered a ramen university. Tim: There’s an actual ramen school to learn how to— Keisuke: Yes, for sure. Tim: This is Japan. This should not surprise me. Keisuke: Exactly. So he went through like a couple weeks of training, it was a couple thousand dollars; it was expensive, but it surely was very fruitful. So he got the basic understanding of ramen there and then he was serving ramen in the United States for maybe 40 to 50 times, getting the local taste, sometimes serving like 100 ramen in 2 hours. Tim: And how did you two end up getting together? Keisuke: We met through the mutual mentor, his name is Kiyo Kobayashi. Very famous guy in Japanese startup industry. We had the same mentor and I always wanted to start a business in Silicon Valley, that was like the holy place for entrepreneurs, but I didn’t have a chance to do it by myself. I was seeking for an opportunity and that’s how Kiyo introduced me to Hiro. Tim: All right. It makes sense as an objective but usually people who are passionate about food—whether it’s ramen or any other particular type of food—their goal is to open a restaurant. You guys have taken the home delivery approach, so it’s similar to like Blue Apron but for ramen. How big do you think this market is? How many customers could potentially be realistically interested in home-delivered ramen? Keisuke: The market research is estimated as 1.5 billion US dollars for the meal kit market right now, but it’s not as big as you think. It’s going to be growing to around maybe 4 to 5 billion US dollars in maybe the next 10 years—that’s what the research is saying. But what’s more interesting is I think the meal kit business, or the restaurant without the physical restaurant model, is much more scalable than the other restaurant business types because you can basically own a restaurant without paying lots of rent. So we think, starting from San Francisco, where the rent is most expensive, we believe the business model of the meal kits is more fitable than actually opening a ramen restaurant. Tim: But of the currently 1.4 billion—it could be up to 4 billion in a few years—meal kit market, what percentage of that do you think could be filled by ramen? Or do you plan to expand beyond ramen? Keisuke: I think you multiply that 1.4 or 5 meal kit business times the ramen ratio is going to be very small, but you can also look at the number of the servings of the instant noodle, which is I think over billions—only in the United States. So the ramen is the foundation of the people’s way of eating, and we definitely want to improve rather than just eating the Top Ramen. So you can look at the market in two different—maybe three different—perspectives. One is the meal kit service that I mentioned. Two is the instant noodles I just mentioned. And the third one is a ramen shop. It is estimated that we have 12,000 ramen shops in the United States and it’s growing by 17.5% every year. If we grow at the same growth rate, the number of ramen shops will double in 5 years. So in the food industry, doubling the number of restaurants is a huge change. So we think that’s the trend that we are chasing for. Tim: So are you always going to be marketing these meal kits to consumers or are you also going to be marketing to restaurants and pop up restaurants as well? What’s the plan? Keisuke: Very good point. Actually, when we started this company in the beginning, we were aiming for the B2B market, serving the ramen soup to the restaurants, like Chinese restaurants or ramen shops. There is one Japanese company called Ariake Japan, IPO’d company who sells the manufactured ramen soup to the restaurants. Very profitable and very good business, so we decided to do something similar to that, but the feedback we got from the chefs all around the bay area was like, “You need proof. I know this soup tastes good, but you need proof that this soup sells—not just tastes good.” So just because we can make a good ramen doesn’t mean it sells right. It has to have a brand or it has to have a proof from the customers, good feedbacks. So what we decided to do is— Tim: Let’s dig down on this because I find that surprising.

Ride sharing works differently in Japan. Hailo lost the global market-share war to Uber and Lyft, but Hailo won the battle in Japan. Today, Ryo Umezawa details Hailo’s Japan market entry strategy and explains how they were able to succeed  where Uber has failed. While Uber vowed to disrupt transportation by taking on both government and industry, Hailo worked within the system. They designed and launched a platform that was completely legal and made life better for all major stakeholders, including the taxi companies. This was a battle between Uber’s disruptive innovation and Hailo’s sustaining innovation. On the global battlefield, Uber won. Uber is the world’s most valuable startup and is still growing fast, while Hailo had a cash crunch in 2016 and was acquired by Daimler. In Japan, however, Hailo won. Hailo’s sustaining innovation soundly trounced Uber’s disruptive innovation, and Hailo remains significantly larger than Uber in Japan. Of course, as you probably suspect, both companies had very different strategies in Japan than they did in the rest of the world, any Ryo explains it all in the interview. [shareaholic app="share_buttons" id="7994466"] Leave a comment Links & Resources Check out Ryo's blog Follow him on twitter @umemac Transcript Disrupting Japan, episode 68. Welcome to Disrupting Japan, straight talk from the CEOs breaking into Japan. I'm Tim Romero and thanks for listening. Today we once again turn our attention to ride sharing, but surprisingly, we won’t be talking about Uber—at least not very much. No, today we get a chance to sit down and talk with my old friend Ryo Umezawa, who is responsible for Hailo’s market entry. Now, listeners not familiar with Hailo, let me explain. Hailo is, in a way, Uber’s quiet and somewhat neglected little brother. Hailo did not make the same impact as Uber worldwide, because they followed a very different strategy. While Uber vowed to disrupt transportation by taking on all-comers, both government and industry, Hailo had a different approach. Hailo wanted to work within the system. They wanted to design a platform that was completely legal and that would make life better for all stakeholders, including the governments and taxi cab companies. In fact, their model involved working with taxi companies directly. This was very much a batter between Uber’s disruptive innovation versus Hailo’s sustaining incremental innovation. And on the global battlefield, Uber won. Uber is the world’s most valuable startup and is still growing fast, while Hailo ran into a cash crunch in 2016 and was acquired—for quite a healthy sum, mind you—and it’s still an ongoing concern. In Japan, however, Hailo won. Hailo’s sustaining innovation soundly trounced Uber’s disruptive innovation and Hailo remains significantly larger than Uber in Japan. Of course, as you probably suspect, both companies had very different strategies in Japan than they did the rest of the world. But Ryo Umezawa tells that story much better than I can. So let’s hear from our sponsor and get right to the interview. [pro_ad_display_adzone id="1411" info_text="Sponsored by" font_color="grey" ] [Interview] Tim: I’m sitting here with Ryo, the former country manager of Hailo. You’ve since moved on from Hailo, but we’re going to back up a couple of years because I think your experience with Hailo is something that a lot of people who are coming into Japan now can learn a lot from. Thanks for sitting down with us. Ryo: Thanks for inviting me to speak. Tim: Hailo is very popular in Europe and it made a good run in Japan, but I think a lot of people in the U.S. aren’t familiar with it. So can you just give a brief overview of what it does? Ryo: Okay, sure. Hailo is a British company started up in 2012. It’s a smartphone hailing app. So we basically connect drivers and users who want to ride a taxi through the app and we also help drivers basically raise revenue by utilizing our unique algorithm to efficiently connect users to the driver. And then for the consumer side of the experience, we help them hail the taxis very easily. Tim: Okay, so it sounds very much like Uber but with one important difference. You guys were dealing with actual cab companies? Ryo: Yes. So we only work with licensed taxis. So for example, in London, it’s a black cab. There are 6 founders in the company. 3 of them are black cab London taxi drivers, so they wanted to create more revenue while driving around and create efficiency doing their job because their time is limited. Tim: So, back in 2013, I believe is when it came into Japan, right? What was Hailo’s main motivation for coming into Japan? What did they see in the market? Ryo: Actually, I’m the second person for Japan, so there was a predecessor before me. In Japan, yearly, there is about 1.8 trillion yen market size. This includes taxis and private vehicles. But in Japan, taxi companies own most of the private hired vehicles. That’s why the market basically size is 1.8 trillion yen, as big as the entire Europe market put together. So it’s a very big market and it’s actually twice or three times bigger than the New York Taxi market. Tim: Okay. So it was simply the size of the market; they knew they had to be there. It wasn’t a particular trigger event. Ryo: Yes, and also in addition, Hailo tends to focus on market that has high number of concentrated taxi in that area, and then in addition, the average fare is higher than other cities where we look at. Tim: That makes sense. How did you structure the market entry? Was it holding a subsidiary? Did you set up a joint venture? Ryo: In the beginning, when they came in with the predecessor, he came in with 100% subsidiary, so it was a wholly owned subsidiary of the UK headquarters, but when I was taking over as the new country manager/president, we had a lot of difficulties acquiring new drivers because penetration from the smartphone, where our business was, it launched also from the beginning. The penetration for the smartphone drivers was about 10% because our driver’s age was about 50 years old. So by looking at all this data and then looking at the speed of acquisition of drivers, I was thinking that we need a Japanese local name that can kind of vouch for us in order to create our brand, as well as get trust, because trust is very important. And when foreign companies come in, in some cases, in some industries, people see us as a black ship coming in, just like wartime. So my strategy was to basically change the black shit to either grey or white, by raising money from a conglomerate, the company called Hikari Tsushin. We kind formed a type of joint venture. Tim: So Hikari Tsushin invested in the subsidiary or you created a new entity for them? Ryo: We created a new entity for them, that we can jointly put money in. Tim: And what was the split, was it—how much did Hikari Tsushin own and how much did the parent company control? Ryo: I can’t disclose, but we had the majority of the shares. Tim: Meaning Hailo? Ryo: Yes, Hailo has the majority of shares. Tim: Actually, before we get into some of the marketing techniques you used and how you built up some of that trust that you said is so important, I’m going to take a quick step back. You made some big changes to Hailo when you came on since Japan’s CEO. What was the reason for the change? Ryo: Most of it was that we weren’t seeing the growth that HQ projected or predicted in the beginning, and also our business is all about platform, so matching drivers and users. And it’s always chicken or egg in these kind of platform businesses. You might have a certain point of time, more taxi than users, more users than taxis, but in this business, I thought having more taxis was more important because the user acquisition could be done online but all the taxi acquisitions are done offline. Tim: Well, yeah, also, since you’re working with the taxi companies, you can do one deal with a company and get a few hundred taxis on the service. Okay, so to set the scene, how big was your team at that time when you were just taking over? Ryo: When I was just taking over, I think the team was about 10, 12 people. Tim: So not small for a new company coming in. Did you make changes to the team as well or did you make just strategic changes when you came in? Ryo: Yeah, I made changes to the team and strategy. We weren’t doing that many rides a day but we had actually full customer support. Tim: Well, customer support is important in Japan. Ryo: Sure, but back then, we would have one customer support for few rides. Of course, I think they were looking at the scalability, but the service works. The service started in 2012; we were in Dublin, Spain, Singapore, and we even had a US operation, like we were operating in New York and it was proven that this really works. Of course, customers are thought of as kings in Japan, but in the beginning—I’m more of a startup guy, so I am happy to pick up calls from customers and I was actually picking up calls from drivers as well because I really want to know what is going on and what their concerns are, rather than hearing it from customer support. Of course, they will probably have a better voice and better service than I do, but market entry in Japan, I just thought it’s better as a lead startup to have more flexibility. Tim: And I’m sure the fact that they are talking to the Japan CEO carries a lot more weight, even if you are not doing support perfectly correctly, right? Knowing they have that attention is far more valuable to them. What sort of changes did you make? How did you go about acquiring both the supply side, acquiring those taxis, and on the demand side, acquiring users? Ryo: So originally, our operation was based in Osaka.

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 enjoy it. Show Notes for Startups Why Japan's first "smart devices" failed The foundations of the "global-niche" IoT strategy Why startups should build rather than license How to get media attention for cool, new IoT devices How IoT startups really should be using crowdfunding Will Japan ever regain the lead in robotics? Why Japanese companies were afraid of the Roomba Links from the Founder Learn more about Cerevo at their home page [shareaholic app="share_buttons" id="7994466"] Leave a comment Transcript from Japan Disrupting Japan, episode 67. Welcome to Disrupting Japan, straight talk from Japan’s most successful entrepreneurs. I'm Tim Romero and thanks for listening. The internet of things is unstoppable. It’s so broadly defined these days, connectivity is cheap, and they can be added to just about anything. Of course, whether it should be added or not is another matter entirely. That question is near and dear the heart of Takuma, founder and CEO of Cerevo, one of the most innovative and connected device makers in Japan. Takuma started his career at Panasonic and he had high hopes of creating all manner of consumer devices that could take advantage of internet connectivity. What he found, however, was that his job consisted mostly of finding ways of trying to force internet connectivity into existing products. Genuinely new products and innovations were being dismissed out of hand. Well, Takuma did what everyone should do, but very few people actually do in that situation, he quit his job, took some of the best engineers with him, and he started his own company. Now, there are a lot of gadgets and IOT devices being built in Japan, but Cerevo has a genuinely interesting and methodological approach to it. During the interview, you’ll hear Takuma try to downplay that strategy as just gut instinct, but as you listen, you’ll understand the very rational method of what, from the outside, might look like madness. We’ll talk about plenty of cool devices, but I think you’ll find the strategy that underlines Cerevo’s success to be at least as interesting. But, you know, Takuma tells that story much better than I can. So let’s hear from our sponsors and get right to the interview. [Interview] [pro_ad_display_adzone id="1404" info_text="Sponsored by" font_color="grey" ] Tim: So I’m hitting here with Takuma Iwasa of Cerevo. Now, Cerevo, I’m tempted to call it a gadget company, but that’s not really fair because you guys do a lot more than just make little gadgets. So can you tell us a little bit about what Cerevo does? Takuma: Okay, so my company’s name is Cerevo and we say Cerevo is a consumer electronics start up company, not gadget, right. We are really focusing to the connected consumer electronics devices—connected robot, or connected camera, or connected, of course, gadgets. Sometimes we try connected toys, connected sports equipment. Tim: You guys make so many different kinds of internet of things products, we could spend the whole podcast just listing them all. There’s a huge variety of them. You make everything from tools for IOT developers, to connected sports equipment, to video streaming equipment, but first, let’s back up a little bit. You started— Takuma: From 2008. So my past background is a spent time Ritsugaku Kyoto University studying computer science, but I’m not good with the software programs. Tim: So you studied software development, but you just weren’t very good at it? Takuma: Yes, but I’m working into the very small startup company and in the college student generation, I spend a long time to make a website and I received a job from the boss and I managed many of my friends. I received the job from the client and broke it up. Tim: So kind of project management? Takuma: Yeah. I’m also a programmer and manager. In that time, I spent a long time to make a computer programming, that my friend started to from 1 to 100. They spent just 5 days. At the same time, I started almost the same to-do’s that I already spent one week, but I already, I can’t do just only 20 or 25. But I can really easily manage my friends. Then, after college, I decided to go to product manager—not program. Tim: And you were with Panasonic? Takuma: Yes. I really like 021 timing. That means in 2001, that timing, the dot com bubbling the years. Tim: Yeah, just as it was starting to burst. Takuma: The web-based, internet-based companies are already growing into a big company. And I look to the internet or computer job. But my aptitude is not good for programming. Then, I’m looking for the money, not the purely internet companies. So automotive company, consumer electronics company, I tried some other fashion company, or so many different type of business area. Tim: So when you were saying you were trying all of these companies, was this— Takuma: Just looking for. Tim: Just checking them out? Takuma: Checking and just go into the interview, then I find the consumer electronics is almost all the blue ocean from the internet deal. So consumer electronics is just born from the 2001 or 2002. Tim: Well, that’s true. Going back to 2001, almost no companies were seriously trying to connect. They weren’t seriously trying to make smart appliances. There were a few gimmicky— Takuma: Yes. And also some of the R&D departments, the Panasonic R&D department or Sharp R&D department, that tried an internet refrigerator or microwave. Tim: Microwaves that could access recipes. Takuma: And people have to connect the phone cable to the microwave. So that’s really ugly in the really early stage of the internet connected consumer electronics. Then I go to Panasonic, and start to produce internet connected devices? Tim: What kind of devices? Takuma: First my job is remote the TV programming, reserving the website for the old style mobile phone. It’s not a smartphone, but people can reserve the recording of one of the TV programs from the mobile phone. After that, the TV, I discussed with Google and YouTube guys, and built in a Google function to the Panasonic TV. And finally my job is connected camera, the camera with the Wi-Fi in the systems. Tim: So you were working with that at Panasonic as well? Takuma: Almost all of my business background is IOT, IOT, and, IOT. Tim: Your first product, Cerevo, is also video streaming. What made you decide to leave Panasonic and start up your own company? Takuma: That story is very difficult to translate from Japanese to English but I am going to try. So into Panasonic, one or two years, I’m very happy to touch the huge consumer electronics business with the internet business, but I faced on the huge war from the internet based side guys and the consumer electronics business guys’ side. Tim: So just politics? Takuma: Not only politics, but their completely different approach or thinking pattern of politics. The image, like Google guys and Bank of America guys, of course they are trying to improve every year, but the two guys, the thinking pattern— Tim: So they just think differently. Takuma: Yeah, completely different pattern. But Bank of America, and Google, no need to collaborate with them, but the internet company and the consumer electronic company—my job is connected, so I have to merge to the business area. I faced on this war and finally, the Panasonic is not so innovative and not so user friendly from the internet user vision. From consumer electronics, the cost over vision is okay, it’s almost okay. Tim: Well I think the biggest difference is that first generation of connected devices, it didn’t really change anyone’s behavior. It was just adding features to a product. Takuma: Correct. It’s just adding in a different culture, in a different function. I like to make merge the product, internet merged with consumer electronics, not add It’s very difficult to merge because that’s why the war is available. Then I’m looking for the job off and I talked with the Sony guys, the Sharp guys, something guys, but they are completely same culture as Panasonic. Tim: So they were just trying to figure out how to put the internet into their existing products? Takuma: Yes. Then I decided to start the new business, start the company with internet side guys and consumer side guys. [pro_ad_display_adzone id="1653" info_text="Sponsored by" font_color="grey” ] Tim: So did you start the company with friends from Panasonic? Takuma: At first, I started the company with two investors, the names, Mine-san & Yamada-san. Miene-san is ex-Sony. He go out from Sony and start the investment business, so he knows what is internet company and what is consumer electronics. Tim: Since you didn’t have a background in engineering or programming, where did you recruit the first engineers from? Takuma: Also, I have to talk about Yamada-san.

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 both an essential case study for any FinTech company considering coming into Japan and an entertaining story for those of us with an interest in business in Japan. It’s a great discussion, and I think you’ll enjoy it. [shareaholic app="share_buttons" id="7994466"] Leave a comment Links & Resources Check out Daniel's blog Follow him on twitter @danielshi Find out more about Stripe Transcript Welcome to Disrupting Japan, straight talk from the CEOs breaking into Japan’s. I'm Tim Romero and thanks for listening. Stripe is one of the largest credit card payment processing companies in the world and their Japan market entry did not go according to plan. It went well, mind you, but it just did not go according to plan. Stripe was agile enough to take the changes and surprises in stride. Today, we sit down with Daniel Heffernan, the Japan head of Stripe, and he walks us through the process where one of the most technically sophisticated and streamlined fintech companies in the world came face-to-face with a very low tech and manual nature of fintech in Japan, and he explains how they made it all work. From detailed, extensive technical specifications that were delivered as uncopiable, printed documents in three-ring binders, to the Japanese aversion to interacting directly with banks and financial institutions, to trying to support some of Japan’s more unique payments, and some of the surprised they discovered once they began work. Stripe’s entry into the Japanese market is both an essential case study, for any fintech company looking at Japan, and an entertaining story for those of us with an interest in business in Japan. But you know, Daniel tells that story much better than I can. So let’s hear from out sponsor and get right to the interview. [pro_ad_display_adzone id="1411" info_text="Sponsored by" font_color="grey" ] [Interview] Tim: I’m sitting here with Daniel Heffernan of Stripe and we’re going to talk about Stripe’s market entry into Japan. And you guys have just officially launched officially but let’s back it up and talk about when you first came in. What was Stripe’s main motivation of coming into Japan in the first place? Daniel: Well, when we started looking at Japan, we looked at it kind of like we do every other market that we considered. There are a few things we look at when we’re trying to decide whether to go into a market. One of them is the size of the e-commerce economy. Japan is pretty big. Last year it was about $130 billion, which is significant. That’s actually number 4 in the world. So you have China and U.S., are giants at the top, then it’s kind of a big jump down, and you have the U.K., and Japan is actually just behind the U.K. If you think about it from a population point of view, it’s really weird because the population of U.K. is like half of Japan. Tim: Yeah, I find that surprising from both a population and an economy point of view. Daniel: Right. If you think about why that is, it’s because of the number of online transactions that are happening online, or aren’t. So in Japan, I think it was 4.7% of all transactions are online, which is really small. As someone who uses the internet 4.7% feels tiny. Tim: Yeah, so what is a comparable number in the U.S. for example? Daniel: The U.S. is actually pretty much in line, but if you look at the U.K., it’s jumping over 10% and it’s up around 14%. So in the U.K., lots of transactions are happening online, even though the absolute value of commerce is smaller. So there’s this sort of gap between Japan and the U.K. in how much is happening online. And there’s an even bigger gap within this generation of our expectation how of much transactions should be happening online and what it actually is. Tim: So Japan is still very much a cash-based society? Daniel: Yeah, it’s cash-based, it’s offline. People aren’t buying things on the internet. These numbers include cash on delivery and things like that, so it’s transactions which are happening in the supermarkets instead of online shopping platforms. Tim: Okay. So I take it Japan was not Stripe’s first overseas market? Daniel: No. We look at the amount of e-commerce that’s happening online as one thing and it’s number 4, so it’s like, what is the 4th market you’re in. If you look at China, which is way up there at the top, it’s not a market we’ve gotten into yet. So another important thing is complexity and Japan is relatively complex. If it wasn’t, I don’t think you would have this podcast. There wouldn’t be enough to talk about but I think there’s plenty to think about when you’re thinking about trying to get into Japan and that’s because of all this complexity. So China is incredibly complex and Japan is pretty complex. Tim: All right. So when you first came into the market, Stripe ran in stealth here for a good year, year-and-a-half or so? Daniel: Yeah, we first got moving on Japan probably around January 2014. That was I was on the scene before, even, but we had identified SMCC, Sumitomo Mitsui Card Company, as a partner. We knew we were going to make it happen. We started opening the box and looking at what the technical integration might look like, what the deal would look like, what kind of agreement it is, but we haven’t started executing on it. So when I joined, which was April 2014, three months in, the first thing to do was to figure out this contract and then make a local entity so that we could sign the contract, and then we had a whole bunch of local vendors we would have to work with on things like data centers and things like credit card authorization switching networks. Tim: You finally officially launched in September 2016, was it? Daniel: October 4th. Tim: October 4th, 2016. So in that two-and-a-half years, was that the expectation going in, or        what took so long? Daniel: So Japan actually wasn’t a long time for us. We have other markets where we’ve been in beta for longer. I think we approach new markets as engineers, so whenever we come into a new market—and I think this was true in Japan as well—we are working towards launch, and our partners are saying to us, “When is the launch? When is all the PR going to happen? When are you going to do the big reveal? When is the launch party?” And for us, that’s not something that we’re thinking about from day one. The first thing we should think about is getting to first charge. So the first live payment transacted in the local country. So it’s sort of a step by step process. We get to first charge, we bring in the first user, we run a private beta, and we just use invite-only, and we pick who comes into that. After that, we sort of move towards a public beta, where anyone can sign up, and for that, we need to be a bit more confident about the stability of the system, our risk in underwriting and KYC, (know your customer), ID verification plots. Once we have everything in place with the product market fit, then we move towards launch, so it’s a very careful step by step deploy. It’s not like doing this huge fork in your code, having this enormous branch, hitting deploy and praying that it will work. Tim: Okay. Payments are particularly local. Every single market seems to have its own set of payment processing companies. And when you came into Japan, where there specific regulatory licenses you needed to get and how did you go about that? Daniel: On the regulatory side, there are actually no specific relation yet, which covers credit card payment processors, and there is regulation coming, and it’s something where we’re sort of chatting with the Ministry of Economy Trade and Industry, making sure we’re in the loop there, we can see these things coming, and it’s interesting when you talk about payment methods. When we started working on Japan, the top of our list were things like Konbini, the convenience store payments where you, when you’re buying something online, you say you want to pay for the convenience store, they give you a number, or they give you a piece of paper to print out, and you go to the convenience store and you key it into the kiosk, or you scan the bar code, and you give them cash. Then the convenience store will tell the online seller that the cash has been accepted. JCB is a large Japanese credit card brand. And it’s not the largest in Japan anymore these days, but it’s still significant. And we were looking at these as sort of critical payment methods which we needed to have. We launched without them and what we realized while we were verifying that our product market fit was strong, was that these kinds of methods are critical for the businesses which are already in existence. I mentioned $130 billion a year of e-commerce in Japan. That is obviously generated by companies who already exist and I think this gap between this 4.7% and our expectation, for me,