Disrupting Japan

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 ...

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.

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 vi...

Startup M&A is changing in Japan. In August, Naoki Yamada sold his startup Conyac to Rozetta for $14 million. It was an unusual journey of alternating cycles of rapid growth and near bankruptcy, and today Naoki explains how he managed to make the deal happen and also how M&A is changing in Japan, and it seems that change might come much sooner than anyone had been expecting. Naoki talks very openly about some of the mistakes he made and give solid advice on how you can avoid making the same ones. And of course, he explains how he handled the negotiations for the acquisition, and why he decided the exit now rather than continue to grow the company. It’s a great story, and I think you’ll enjoy it. Show Notes for Startups How two quick pivots saved Naoki's company The risks for startups hiring (and firing) too quickly The temptation and danger of focusing on investors at the expense of the team Why M&A made more sense than another round of fundraising What Japanese acquiring companies are most worried and most excited about The struggles of post-M&A integration Advice for large companies who want to acquire startups Links from the Founder Learn more about Conyac at their home page Rozetta's Home page Read Naoki’s thoughts on Nakoki’s personal blog  Follow him on Twitter @naokey Friend him on Facebook [shareaholic app="share_buttons" id="7994466"] Leave a comment Transcript from Japan   Disrupting Japan, episode 65. Welcome to Disrupting Japan, straight talk from Japan’s most successful entrepreneurs. I'm Tim Romero and thanks for listening. Today, Naoki Yamada, founder of Conyac, joins us for a second time. Long-term listeners may remember that he first came on the show a little over 2 years ago and he’s been very busy since then. In August, 2016, Naoki sold his company to Rozeta for about 12 million dollars. But that deal almost didn’t happen and today Naoki joins us again to tell us the story of massive growth, followed by near bankruptcy, followed by massive growth, followed by near bankruptcy, followed by recovery, followed by M&A. So you already know the ending but it’s the story that’s important. Naoki talks very openly about some of the mistakes he made and gives solid advice on how you can avoid making the same ones. And of course, he explains how he handled the negotiations of the acquisition and why he decided to exit now, rather than continue to grow the company. But, you know, Naoki tells that story much better than I do, so let’s hear form our sponsor and then get right to the interview. [pro_ad_display_adzone id="1404"  info_text="Sponsored by"  font_color="grey" ] Tim: Cheers. It’s great to see you again. I’m sitting here with Naoki Yamada and we’re going to talk about Conyac. And it’s an exciting story of starting up and growing, and almost going bankrupt, and growing, and almost going bankrupt again, and having a happy ending. So thanks for sitting down with us. Naoki: Thank you. Tim: So let’s back up a bit—let’s back up a lot. Tell us about what Conyac is. Naoki: When was the last time we talked? Tim: A little over two years ago. Naoki: Okay. It’s been a while and we’ve changed a lot. We started Conyac as a social translation and we slightly changed our service from customer service to business service in 2013. Tim: So let’s start from the beginning. In 2009, you started it. What is consumer translation? Was it like peer-to-peer translation? Naoki: It was more like a community-based translation service. At that time, there were only two options for the translations. One is traditional translation entities and the other one is Google. We wanted to make our service in between those two options, so we asked people who could do the translations outside of the community. We added many translators in our platform and we did translation through those people. Tim: So was it just very small batch translations of 1...

Expedia had a hard road to travel when they decided to come into Japan. The Japanese market turned out to be nothing like they had ever experienced before. Not only were consumer attitudes and behaviors towards travel booking completely different than it was in their home market, but they were up against some very powerful and well entrenched companies, including both online giants Rakuten and Yahoo and traditional powerhouses like JTB. Today Hidemaru Sato, or “Maru" as his friends call him, will explain to us how Expedia managed to overcome the odds on a ridiculously tight deadline and how a few tweaks to the core product turned out to be key to their success. Maru also shares some great advice for both western companies looking to hire a Japan country manager and for people who are Japan country managers and want to do their jobs more effectively. It’s a great discussion, and I think you’ll enjoy it. [shareaholic app="share_buttons" id="7994466"] Leave a comment Friend Maru on Facebook Connect with him on LinkedIn Maru's advice on successful market entry Maru's advice on how to hire a country manager Partial Transcript Disrupting Japan, episode 64. Welcome to Disrupting Japan, straight talk from the CEOs breaking into Japan. I'm Tim Romero and thanks for listening. Travel giant Expedia has their work cut out for them coming into the Japanese market. Not only was the online travel game played very differently in Japan, but they were up against some very strong, very entrenched competition in Japan, both from the major online players like Rakuten Travel and Yahoo Travel, and from traditional players like JTB as well. Today we sit with down with Hidemaru Sato, or Maru, as his friends call him, and he explains how he had to change both Expedia’s marketing message and he product itself to make it attractive to Japanese consumers. In both cases, you’ll see why less is actually sometimes more. Maru also provides framework for both western companies looking to higher a Japanese country manager and for people who are Japanese country managers and want to do their jobs more effectively. Once you get to know Maru, you won’t be surprised to see that he has a very personality-driven approach on both counts. But you know, Maru can explain that much better than I can, so let’s hear from our sponsor and then get right to our interview. [pro_ad_display_adzone id="1411" info_text="Sponsored by" font_color="grey" ] [Interview] Tim: So, we’re sitting down with Maru Sato, and you’ve brought a number of companies into Japan, but today we’re going to talk about Expedia. It was a while ago but let’s go back to when Expedia was first thinking of coming into Japan. What did they see that was important about the Japanese market? Why did they want to be here? Maru: Okay, I think back to maybe the early 2000s, and basically it’s kind of the boom. It’s a lot of successful U.S. companies who enter the Japan market because Japan was still strong. Tim: Well, it still is. The Japan market is still pretty big. Maru: Then also, the Japanese market is something like new IT technology or internet-related business just starting. The first company I just helped come into Japan market is America Online, AOL. This is 1999, so this is when AOL was the world’s biggest internet service at that time. So they expand to Europe first, U.K., Germany, France, and also the Asia Pacific. Tim: In both AOL’s case and Expedia’s case, it was just part of the natural global expansion. Maru: And then U.S. companies, or global companies, they expect the Japanese market is big. So now it’s the same thing. Basically the Japanese market is big but usually they do not understand the cultural difference, and also business difference, and also user difference. So a lot of our conflict— Tim: I want to talk about that a lot. Before we get to that, though, how did Expedia pick you?

This is a rather personal episode. We have no guests this time. It’s just you and me. From the outside, it looks like Airbnb is crushing it in Japan. Listings and rentals are both increasing at an unbelievable rate, and Japan is loosening her room-sharing (or minpaku) laws. The future looks bright for Airbnb here, but behind the scenes a resistance is secretly growing. You see, Airbnb has a real problem in Japan. At first glance many of the issues look familiar. They seem to be the same kinds of challenges Airbnb is facing all over the world, but things are different in Japan, and today we're going to take a look at how important these differences can be.  It's worth noting that so far, Airbnb has not taken steps to address their Japan problem, or even publicly acknowledged that it exists. But it's a situation they will be forced to deal with over the next 18 months, and it's something that we can learn a lot from. [shareaholic app="share_buttons" id="7994466"] Leave a comment Transcript from Japan Disrupting Japan Episode 63 Welcome to Disrupting Japan. Straight talk from Japan’s most successful entrepreneurs. I’m Tim Romero and thanks for listening. Once again, I’ve got a special show for you today. There will be no guests, no beer, no playful banter with someone speaking English as a second language. Today it’s just you and me. For the next 20 minutes I’ll be whispering in your ear about something I consider very important, but that not enough people are talking about. Airbnb has a serious problem in Japan. They may or may not have recognized it yet, but there has been something massing behind the scenes, getting stronger and stronger. And it’s something that will become very visible over the next 18 months. Now, to the casual observer, and lets face it, most journalists and bloggers are casual observers. To the causal observer, it seems ridiculous to even claim that Airbnb has a problem in Japan. In fact, if you rely on what’s written in the English-language press, any rational person would conclude that Airbnb is crushing it in Japan. Let's look at the facts. Japan is Airbnb’s second largest and their fastest growing market. In fact, listings are up over 500% from last year. Furthermore, Airbnb are way out in front of their local competition. They have far more listings, and using publicly available data, it looks like Airbnb’s Japan site is getting more than 15x more traffic as the most popular local competitor.  In fact, I’ve had several different investors speculate that the Japanese companies providing cleaning services to Airbnb hosts are probably making more money than the Japanese companies competing with Airbnb. And yet, Airbnb is dancing through a minefield in Japan. Whether they are doing it blindfolded or with their eyes wide open, well that’s anyone’s guess. But if you read Japanese and you care about such things you can see that there are powerful forces lining up against Airbnb in Japan, and next year we are going to see the start of a real public backlash. Now, I know what you are saying. This is nothing unique to Japan. Airbnb is fighting this backlash all over the world. I mean New York and Berlin just passed strong anti-Airbnb legislation, and Airbnb’s lawyers are suing and pushing back hard. San Francisco recently added new restrictions to Airbnb rentals and Airbnb is suing the city, of course. [pro_ad_display_adzone id="1404" info_text="Sponsored by" font_color="grey" ] Airbnb is used to handing that kind of backlash and legal challenges. They are good at it. It’s in their DNA. No, what is happening in Japan is different. It’s quieter. More secret, and in some ways far more dangerous than the challenges they’ve faced in other markets. But i’m getting a bit ahead of my story. We will get to all of that. First let me set the stage and explain what is actually playing out on the ground here in Japan. So lets walk though what is happening around Airbnb in Japan and ...

GitHub entered the Japanese market under enviable conditions. They already had a strong corporate user base, solid brand awareness and product evangelists throughout Japan. They did not so much push their way into the Japanese market, so much as they were pulled into it. Even under the best conditions, however, Japan market entry is not easy and Derek Sorkin explains some of the challenges they faced with their distribution plans and the original go-to-market strategies. Managing to salvage a great ongoing relationship from what could have been a very ugly incident. Derek also explains why even in this age of Skype and go-to-meeting it’s absolutely essential to spend the time and money on airfare in managing international offices and to maintain trust and credibility. It's a great conversation, and I think you'll enjoy it. [shareaholic app="share_buttons" id="7994466"] Leave a comment Links & Resources The GitHub homepage Connect with Derek on GitHub @dsorkin Follow him on twitter @thesorkin Connect with him on LinkedIn Partial Transcript   Disrupting Japan, episode 62. Welcome to Disrupting Japan - straight talk from Japan's most successful entrepreneurs. I'm Tim Romero and thanks for listening. GitHub entered the Japanese market under enviable conditions. They already had a strong corporate user base, solid brand awareness, and product evangelists throughout Japan. They did not so much push their way into the Japanese market so much as they were pulled into it. Even under the best conditions, however, Japan market entry is not easy, and Derek Sorkin explains some of the challenges they faced with their distribution plans and their original go-to-market strategies. And how they managed to salvage a great ongoing relationship from what could have been a very ugly incident. Derek also explains, even in this age of Skype and GoToMeeting, it’s absolutely essential to spend the time and money in airfare in managing international offices and to maintain trust and credibility. But Derek explains all of that much better than I can, so let’s hear from our sponsor and then get right to the interview.   [pro_ad_display_adzone id="1411" info_text="Sponsored by" font_color="grey" ] [Interview] Tim: So I’m sitting here with Derek Sorkin, the Asia Pacific for GitHub, who spearheaded GitHub’s entry into Japan and that’s what we’re going to talk about today, so thanks for sitting down with me. Derek: No problem, Tim. Good to talk to you again. Tim: Excellent. So listen, you guys have been here a while and you’re doing really well. Let’s step it back a couple of years. What did GitHub see in Japan? What was the motivation for coming here? Derek: We had quite an interesting background with Japan. Our co-founders had been coming here for some time for different conferences; working with companies like Digital Garage back in the day, talking to them; and open source has always had a strong foothold in Japan, things like many of the contributors to the Ruby Project, which GitHub is obviously built on to a certain extent. In Japan and Japanese. Tim: Ruby is from Japan. Derek: Right. So we always had a good core base of those Ruby developers that were interested in open source, that were using GitHub since very early days of GitHub, back in 2009 and 2010. So when we started in the B2B space and working with enterprises—and I think we’ll get into this a little more later, around how decisions are made in Japan—but that really helped us here. There were lots of the forward thinking internet companies. I say “internet companies” broadly, but internet gaming companies like that, that immediately took a hold with organizations on GitHub.com Tim: Okay, so even before you guys were here, you had brand awareness and you had users here in Japan. That’s a huge leg up in the market. Derek: Yeah. It makes it very interesting, especially at that time,

You don’t usually think of Japan’s geisha as being an industry, but it is. In fact, strictly speaking, it’s a cartel. A cartel that is now being disrupted by internet-based booking agencies and low-cost substitutes. It seems that even geisha are not immune to internet-based disintermediation. In this special interview Sayuki, Japan’s only geisha that holds an MBA, explains the business model behind geisha. We talk about the way things used to be, the current threats that have many geisha concerned that the traditional art form and the lifestyle will not survive, and how some geisha houses are trying to adapt. This is a rare, behind the scenes look at the business of being a geisha and a chance to see how Japan’s geisha might survive and even thrive in the coming digital age. It’s a fascinating discussion, and I think you’ll enjoy it. Show Notes for Startups How Sayuki broke 100 years of tradition to become a geisha How geisha are being challenged by both the entertainment and tourism industries Changing geisha from a private art to a public one Why geisha might not survive the modern era of tourism The geisha cartel is being challenged, any why that's not good for anyone The challenge modern geisha face on social media The changes in training for the next generation of Japan's geisha Links from the Founder Sayuki's home page  Follow her on twitter @sayukiofasakusa Become her patron on Patreon Follow her on Facebook Book a geisha experience Geisha Banquet in Tokyo Private Custom Shopping Tour with a Geisha Private Lunch with Sayuki Kimono Shopping Tokyo Tour [shareaholic app="share_buttons" id="7994466"] Leave a comment Transcript from Japan Disrupting Japan, episode 61. Welcome to Disrupting Japan, straight talk from Japan's most successful entrepreneurs. I'm Tim Romero and thanks for listening. Today I’ve got something really special for you. We are going to talk about the kind of business that you’ve probably never heard any details about. Today we’re going to sit down and interview Sayuki, a Geisha. And since this is Disrupting Japan, we’ll be talking about the business side of being a Geisha. We’ll look at the Geisha business model and examine how it’s being disrupted by modern technology. And believe me, it really is. Now, listeners outside Japan might not understand how special this opportunity is. Traditionally, Geisha are not really supposed to talk about their business. Geisha create the illusion of comfort, beauty, and elegance, that is unsoiled by such base things as money. But make no mistake about it; it’s an illusion. Geisha is a very serious business and Sayuki, who also has an MBA from Oxford, has agreed to sit down and walk us through it. In fact, from a business point of view, Geisha are an established cartel that are being disrupted by new technology, the internet, and tourism websites in particular, and by low-cost substitutes. And there’s a very good chance that Geisha will not survive in their traditional form. In fact, many Geisha houses are proactively trying to adapt to this new market environment. But Sayuki tells this story much better than I do, so let’s hear from our sponsor and then get right to the interview. [pro_ad_display_adzone id="1404" info_text="Sponsored by" font_color="grey" ] [Interview] Tim: So today we’re sitting down with Sayuki, who is a bonafide Geisha here in Japan and we’re going to talk about the business of being a Geisha, so thanks so much for sitting down with me today. Sayuki: Thank you. Tim: First and foremost, a lot of our audience is either in Japan or knows a lot about Japan, but a lot of people don’t, so before I get started for the business can you clear up exactly what a Geisha is, what they do now, what they used to do? Sayuki: A Geisha means arts person, literally. So Geisha are traditional dancers or musicians,

FinTech is one of the hottest startup sectors right now, but if you've been in the industry for a while, you know that FinTech is always one of the hottest startup sectors. And yet FinTech companies seem strangely local. Very few succeed outside their home markets. A complex web of regulations and local sensibilities almost always results in these firms struggling in overseas markets. PayPal wanted to make sure that did not happen to them in Japan. In this podcast, Jonathan Epstein explains how he brought PayPal into Japan. He talks in detail about how he got the Japanese regulators to sign-off on PayPal's innovative products, and also how he and his team had to throw out the US playbook and cooperate with other overseas divisions to build new retail and online markets from scratch here in Japan. Jonathan and I also talk about the exacting demands of Japanese consumers, and how those sensibilities convinced him to decide to start a project that drastically increased short-term costs, but might have saved the business in the long run. It's a fascinating discussion, and I think you'll enjoy it. [shareaholic app="share_buttons" id="7994466"] Leave a comment Partial Transcript If you read the news, you know that Fintech is one of the hottest start-up sectors right now and if you’ve got a long memory, you’ll also know that Fintech is always one of the hottest start-up sectors. Yet, Fintech companies seem to be strangely local. Very few succeed outside of their home markets. A complex web of regulations and local market sensibilities almost always ensures their failure. PayPal wanted to make sure that did not happen to them in Japan and today, Jonathan Epstein explains how he brought PayPal into Japan. He explains not only how he got the Japanese regulators to sign off on PayPal, but how he and his team had to throw out the U.S. playbook and build a new retail and online market from scratch in Japan. Jonathan also explains how the exacting demands of Japanese consumers forced him and PayPal to make a decision that dramatically increased costs in the short run, but saved the business in the long run. But Jonathan tells that story much better than I can, so let’s get right to the interview. If you’re a start-up thinking about Japan, you’ll never really understand the opportunities here until you start to take a serious look at what’s happening outside of Tokyo. Osaka in particular deserves your attention and this is especially true if you and your team are involved in smart cities’ technologies. Now Hankyu’s GVH#5 project is Osaka’s start-up central and it’s a great place for you to get started. They offer co-working space, bilingual business support, venture investment, and they’re at the center of a great international start-up and community. Now Hankyu’s GHV#5 in Osaka really deserves your attention, so pay them a visit at www.GVH-5.com/EN. You’ll be glad you did. [pro_ad_display_adzone id="1411" info_text="Sponsored by" font_color="grey" ] [Interview] Tim: So I’m sitting here with Jonathan Epstein, who led PayPal’s market entry into Japan. And you’ve done a lot since then but today we’re going to talk about PayPal and how all that came together. So thanks for sitting down with us. Jonathan: Thanks for having me. Tim: Delighted. Well, let’s get right into it. When PayPal was looking at the Japanese market, what was headquarters’ main motivation for coming into Japan? What did they see here? Jonathan: PayPal has actually been in Japan for several years and what they wanted to do was to expand their presence dramatically. Basically, the entire focus of their mission in Japan has just been on their existing internet based business. And that’s been driven by a lot of natural—people signing up for PayPal because they want to buy something at a shop that offers PayPal, they learn about it. Originally it’s been driven a lot by foreigners who came to Japan,

Spacee has staked out an interesting position in the sharing economy. Spacee enables companies and individuals to rent out unused meeting room space to people who need to hold a meeting. It's an interesting take on applying a sharing economy model to business. I’m generally very skeptical of startups who define themselves as “Uber for X” or “Airbnb for Y”, particularly in the B2B space, but Spaceee has already been in business for several years in Japan, and they are seeing strong traction and increasing revenues. They might really be onto something. Taku has some fascinating insights on why Japan, and Tokyo in particular, might be far more fertile ground for sharing economy startups than almost any other place in the world. It’s a great discussion and I think you’ll enjoy it. Show Notes for Startups Why the basic business case makes sense How large the meeting space market can grow The challenge of expanding outside of Tokyo Why Spacee turned down venture financing to bootstrap for three years Whats wrong with the current fundraising environment in Japan Which other companies are coming into the meeting room rental space Why Japan is uniquely suited for the sharing economy Links from the Founder Learn about Spacee Follow them on twitter @spaceejp Friend them on Facebook An interview with Spacee CEO on fundraising [shareaholic app="share_buttons" id="7994466"] Leave a comment Transcript from Japan Disrupting Japan, episode 59. Welcome to Disrupting Japan - straight talk from Japan's most successful entrepreneurs. I'm Tim Romero and thanks for joining me. You know, the world is full of start-ups that define themselves as “the Uber of X” or the “Airbnb for Y.” Frankly, most of those business models don’t really make sense when you dig into them. Spacee, however, might just be onto something. Spacee rents out unused space around Tokyo to salesman, co-workers, or people who just need a quiet place to conduct a little business. As Takuya Umeda explains in the interview, it’s not just meeting rooms that are being rented out. The sharing economy is relatively new in Japan and Takuya and I talk not only about some of the problems its facing here, but why, in the long-run, Japan might be better suited for sharing economy companies than anywhere else in the world. He also explains why Spacee decided to delay taking outside investment for almost three years while they built their business and how that turned into an advantage later on. But you know, he tells the story much better than I can, so let’s hear from our sponsor and then get right to the interview. [pro_ad_display_adzone id="1404" info_text="Sponsored by" font_color="grey" ] [Interview] Tim: So I’m sitting here with Takuya Umeda, co-founder of Spacee. Thanks for sitting down with me. Taku: Thank you, Tim. Tim: Spacee is kind of like Airbnb for meeting spaces, but that’s a really overly broad description, so why don’t you tell us a bit of how it works. Taku: Spacee is really like the Airbnb of business. In Japan, wherever you have a meeting, if you have an outside meeting, the only place you go is like Starbucks or a café. Tim: Right. Everyone meets in coffee shops. Taku: If there is a professional conference room, it costs really expensive. It’s probably like 5,000 yen per room, per hour. And at that price you can’t really do much, like brainstorming and start up some business plan. Stuff like that you can’t really do. And a café is not really good at it too. So we found that there is a gap between an expensive conference room and a Starbucks, so we fit into the gap. Tim: So something a little more formal and private than a coffee shop, but not quite as formal as a hotel meeting room or a service office. So tell me about your customers. Who is it that’s renting out these spaces and why are they doing it? Taku: You know, there is a lot of salespeople around and they stay l...