Disrupting Japan

Startups solve real problems. During the boom times, the media focuses on the multi-billion-dollar valuations and the mega-IPOs. But even in those times, founders are innovating in the background and using technology to just make the world a better place. Today we talk with Sun Xiaojun, who started BionicM in 2015 as a way to replace the limb that he lost when he was a child.  And since then, he has built the startup into much more. We talk about the challenges he had to overcome to bring innovative medical technology to market, why Japanese universities still struggle to productize their impressive deep-tech,  and why the world has been thinking about prosthetic limbs all wrong for thousands of years. It's a great conversation, and I think you'll enjoy it. Show Notes Why powered prosthetics are a game-changer The challenges of being your own first beta-tester How coming to Japan changed Sunny's life How prosthetics are fitted and sold Go to market strategy and discovering the true customer Total addressable market size User feedback, human variation,  and future changes How people are using the bionic leg as a fashion statement How Japanese professors make product development difficult Why it is often so hard for Japanese startups to sell to Japanese consumers Links from the Founders Everything you wanted to know BionicM Follow Sunny on Twitter @Bio_Leg Friend him on Facebook Connect with him on LinkedIn A great article about BionicM Transcript Welcome to Disrupting Japan. Straight Talk from Japan's most successful entrepreneurs. I'm Tim Romero and thanks for joining me. Today we're going to talk about bionic legs, the real deal, a battery powered below the knee powered prosthetic leg that is already being used by amputees all over the world, and it looks pretty good too. We're going to sit down with Xiaojun Sun or Sunny, as he likes to be called. The founder, and CEO of BionicM who lost his leg when he was nine and spent the next 15 years determined to do something about that, and he did. BionicM is a Japanese startup creating artificial limbs that are not just functional or practical or good enough, but are different and innovative and well, to be honest, kind of cool. We're going to talk a lot about Sunny's journey and the BionicM prosthetic leg, but we also talk about why it's easier to launch this kind of product in America, despite the stricter certification requirements. The challenges in figuring out who the actual customers for artificial limbs really are and why Japanese universities have so much trouble getting their deep tech startups out of the labs and into the market. But, you know, Sunny tells that story much better than I can. So, let's get right to the interview. Interview Tim: We're sitting here with Sunny Xoajun, the founder and CEO of BionicM who makes a robotic prosthetic leg, and thanks for sitting down with us. Sunny: Ah, thank you. I'm very glad to be here. Tim: So, I've given a brief description of what you do, but I'm sure you can explain what BionicM does much better than I can. So, what does BionicM do? Sunny: Yeah, we are a startup company, spin of the Tokyo University. We are building a powered prosthetic leg to have the handicap improve their mobility. Tim: Why is the powered prosthetic leg important? What's the important part of having the active? Sunny: Currently, most of the prosthetic is unpowered. We're developing something different from the current products which has a power to have user walk more easily. Perhaps do something which they couldn't do with current products. Tim: It's battery powered electric motors. What does this leg do for users that passive prosthetic legs cannot do? Sunny: For example, it's very difficult for some elderly amputee to stand up because when they stand up with the passive prosthetic, there is low power to help them, so they have to rely on their sound leg. If their sound leg doesn't work very well, it's difficult for them to stand up. Tim: Okay. So, the power in the BionicM leg duplicates the muscle power that is in a regular human leg for things like standing up from chairs or going up and down stairs and things like that. Sunny: Yeah, you're right. It works like a muscle. So, it will give a power to have user do something. For example, when they use it to stand up, they can get the power from the prosthetic. So, it's easier for the user to stand up, of course they can do something like going upstairs or downstairs. Tim: Okay. And I want to really dig into the details later, but it's fascinating. So, it's battery powered and so how long does it last on the charge? Is it charged like once a day? The user uses it all day. Sunny: It can be charged fully for three or four hours. So, it can last for one day. Tim: Oh, okay. So, users just charge it overnight? Sunny: Yeah, yeah. Right. Tim: And how much does it weigh? Sunny: It's about three kilogram. Tim: Three kilos? Yeah. Oh, that seems quite light. Sunny: Yeah, we did a lot of work to make it light weight. So yeah, it's quite light weight. Tim: And tell me about your customers. Who's using BionicM now? Sunny: Right now we are just commercialized our product this year, so we'll develop our product to the US market. So, right now we're developing some kind of business in the US. So, we hope amputee in the US could use our product. Tim: So, now it's just in sort of the testing and evaluation phases? Sunny: Yes. We have done every test, right now we will manufacture our product in September. So, we are applying for the FDA in September. And then we will sell our product in the next year. Tim: Well, and I understand you are BionicM's first customer and beta tester yourself, right? Sunny: Yeah, you are totally right. In fact, I started to do this research while at the university. At the beginning I tried the prototype by myself and did many improvement. After we build the company, I'm also the first user to try every new prototype. I have used this prototype for over two years. Tim: Just to make sure our listeners understand what that statement means, can you tell a little bit about your own story, about why this is a special passion for you? Sunny: Yes. I got my right leg amputated when I was nine years old because of the bone cancer. At that time, there was difficult for me to afford a prosthesis, so I worked with a crutch for 15 years. 10 years ago, I got a chance to study in Japan, and then I got my first prosthesis, some financial support in Japan. It was great. It changed my life, and for the first time my hands could be free. I can do something which I didn't do before. Tim: So, it's like your first time not on crutches since you were nine years old? Sunny: Yeah, it's quite difficult because when you walk with a crutch, I cannot hold the umbrella when it's rainy. I cannot take my own something or I go to restaurant. So, that's quite tough. Tim: Wow. And what happened then? Sunny: It was great at the beginning, but after I use the product a lot, I also found there was some issue of current products. I was an engineer in Sony, so I was wondering whether I could design better product for myself and other people. After I think a lot I should do this. So, I quit my job and then came back to the university as a PhD student. And then I began to do this research in my PhD study. Tim: So, the BionicM project was started in 2015? Sunny: Yeah, 2015. Yeah. Tim: And let's see, just so we can get the timeline. So, 2015 is when you started this research project? Sunny: Yeah. Tim: And Bionic and the company you started a few years later? Sunny: Yes. in 2018 I got my PhD degree, and then at the end of the 2018, I built this company. Tim: And you've gotten a steady stream of awards? I can't list them all here because the podcast is not that long. But both in Japan and overseas. So, have these awards led to partnerships overseas, have they led to increased funding? Sunny: Yeah. First I know many people. So, some of them are investors, we talk about the investment about our company. And besides, we want to develop our business in some countries so they can introduce some people. Some people I think it's a great chance to expand our level work, to know more people, to know more investors. Tim: So, let's talk a bit more about the product itself. So, what's the total cost for the user of these prosthetics? Sunny: In fact, in the US it's covered by the insurance. So, the reimbursement will be the $45,000. Tim: So $45,000 in the US and similar price in Japan? Sunny: Yeah. Similar in Japan. Tim: And it is that high, is that low? Is that average for prosthetics in general? Sunny: It's quite high because it's the high end product, so because it has a power, so it's better than the current high end product. So, it's higher than current high end product. Tim: Okay. What's been the reaction from the test users so far? Sunny: Yeah, we did many tests in Japan, and we are also doing some tests in US. We got a lot of feedback, for example they found that it's easier, it's less tiring for them to use our product. It's easier for them to stand up with our leg because when they use some traditional product, it's quite difficult for them to stand up. Tim: What's involved when someone is fitted for a bionic and prosthetic leg? What's the process? Is there a lot of customization and training for each user? Is there a period where the user needs to be trained on how to use it? What's the whole process? Sunny: Our product is standard which means it's a mass production product. We don't do any customization, but each amputee has different heights. So, some customization should be done in this process. So, we will sell our product to the prosthetic clinic where they will do the customization for the end user.

Some things are supposed to be only whispered about in Japan. But startups are about breaking taboos and pushing boundaries, and making the world a bit better when they do it. Today's we sit down with Amina Sugimoto of Fermata, and we talk about how quickly and radically the FemTech movement is changing Japan's conversations, attitudes, and even public policy around women's health. It turns out things are both much worse and much better than you probably imagine. It's a great conversation, and I think you'll enjoy it. Show Notes Why VCs have been hesitant to invest in FemTech How FemTech is defined in Japan, and what makes a "FemTech product" FemTech as a B2B business in Japan Japanese enterprise's, hesitant moves into FemTech Discussing sexual pleasure with Isetan's conservative management and customers How the FemTech label is opening up a new conversation about women's health in Japan FemTech as a national movement Why it is hard to get FemTech devices approved in Japan The future of FemTech in Japan What we need in addition to FemTech to really make a difference #WereNotSalmon Links from the Founders Everything you wanted to know about Fermata Transcript Welcome to Disrupting Japan. Straight Talk from Japan's most successful entrepreneurs. I'm Tim Romero and thanks for joining me. I love it when a conversation takes me by surprise. I usually already know the guests I'm interviewing and I do my research ahead of time. So, I generally know what to expect from these conversations. But every once in a while things head off in a completely different direction and the facts on the ground take me by surprise. Today is one of those conversations. Today we sit down with an Amina Sugimoto, the founder of Japanese FemTech powerhouse Fermata, and we talk about how Japanese attitudes towards women's health are changing and how the FemTech movement is a driving force behind that change. Fermata speaks directly and candidly about topics that Japanese society has always preferred to whisper about. She's worked with industry, government, and consumers to change laws and attitudes and is seeing real progress. Amina and I talk about how to get laws changed in Japan, what happens when women start frank conversations about their health and sexual needs. And what she learned by selling vibrators to Isetan department stores super conservative shoppers. But you know, Amina tells that story much better than I can. So, let's get right to the interview. Interview Tim: So, I'm sitting here with Amina Sugimoto of Fermata, one of the leaders of consumer FemTech in Japan. Amina: Thank you. Tim: And thanks for sitting down with me. Amina: Of course, of course. It's my pleasure. Tim: I gave a really brief explanation of what Fermata is and I’m sure you can do a much better job than I can. So, what is Fermata? Amina: So, we initially started as a research group within the Venture Capital. Tim: Mistletoe, right? Amina: Yeah. Ran by [inaudible 00:02:16]. There is this one company that came across two things that I found out. One is not many venture capitalists were interested in this emerging new technology, our women's health. And then two, there are not many companies that instead of actually focusing on how to actually create industry brand a product, Tim: So, at Mistletoe were you trying to get them to invest in these FemTech companies? And Amina: So initially, yes. I still remember today that we were sitting around in the table and there's one company from the US that's actually called Modern Fertility. Now, what they did is they brought in existing technology of measuring AMA's hormone, which basically we can measure how much eggs we've got left. This technology is available at clinics in the name of marriage checks in Japan. So, basically before you get married, you get the test. And if you can't get pregnant anymore, oftentimes that marriage just no longer. Tim: Wow, that's kind of dark. Amina: But what they did is that bring that technology to the hands of women. And what if we get to find out how long are we going to be pregnant at the age of, I don't know, 25, 30? Maybe then we can decide our own career. And that information doesn't have to be shared by anyone. I thought that that product was amazing. Unfortunately not many who were sitting at the table found it interesting. So initially, Mistletoe, who was running the fund at the time and came up to me and said, if you think there's a potential for this market, why don't you create a research group that focus around FemTech to let people learn more about FemTech? Tim: That seems like kind of a strange move for a VC. If you have an interesting market, an interesting product, a company that is seeking investment, a venture partner who's excited about the investment, why form a research group? Amina: Well, the problem is exactly that. I mean, only 5% of the global level investors are female. And oftentimes the question I get asked is that what's the problem that company is trying to solve? Or what's the business model? How is it going to make money? The things that for women is so obvious that there is need. Tim: Well, actually let's take a step back just so our whole audience understands what exactly is FemTech? Where do you draw the lines around what FemTech? Amina: So, FemTech is a term that came around in 2012, and that person who created this term is called Miss Ida Tin, started her company in Germany called Clue. This is the app and it tracks menstruation. And when she tried to get fundraising, she struggled quite a bit because not many investors understood why it's so useful to have an app tracking period and how that would make money. Exactly the same problem that I had at Mistletoe. It's just that there's an obvious need, but it's not obvious for certain people. Tim: Sure, sure. Amina: So, what she did was she came up with this term FemTech and just by creating this term is all of a sudden become some sort of a new industry, a blue ocean, and an investor slowly started to getting interested instead of actually saying, oh, this is a product for menstruation. It's easier to say it's Femtech. Tim: She created a category. Amina: Exactly, exactly Tim: Category. So, what is considered, what's inside that FemTech box? Amina: Good question. So, a lot of different definitions are out there and in Japan now, the way people use FemTechs, they're focusing on menstrual cups, underwear, not so much tech, but the way Fermata defines it is a product that basically solves women only or diseases that exist in men, but women have slightly different prevalence rate or different symptoms. So, for example, women's specific will be fertility and menstruation and menopause, but also osteoporosis, dementia, we don't really know why, but the previous rate among women is higher. Tim: So, broadly speaking, it's not just the technology or the products, it is the whole research ecosystem. Amina: Yeah, yeah. A lot of these product now are B2C but also B2B infertility clinics and treatments using AI and so forth. So, it's really varies depending on from which angle you look at. Tim: Well, I guess all of the investment categories are kind of like that, right. So, that makes sense. Now before the interview I had a great tour of your store downstairs. It's fascinating. So, Fermata specifically… Amina: So, we started in 2019. We initially started off trying to build a product, but then we quickly realize that this is an area where even if you come up with a really good product, difficult to sell because there's no market. Women ourselves don't even notice what sort of unmet needs that we have. So, what we do, we have two businesses that we are running simultaneously, B2B business and B2C business B2C. We deliver products to these consumers will help them identify their own unmet needs. We collect data from these consumers. Tim: So, what kind of products? Amina: So, FemTech products. Tim: Kind of going in a circle with that? No, I mean, can you give like, just specific examples of like some of the products you're selling and… Amina: So for example, this is a product called pelvic trainer from the UK. You basically apply this little device into the slightly vagina and we can actually control our pelvic muscle. And there is an app that you can download and in the app there are different games that you can actually play to strengthen your pelvic muscle. And as a result it basically prevent incontinence. Tim: That makes perfect sense. And it also makes sense why it'd be hard to get most male VCs to invest in it. No, I mean, there's no discrimination per see. It's just one of the cardinal rules of investing is you invest in what you know. Amina: Yeah, exactly. So, I'm totally again, sort of saying, it's not a… Tim: I can see why it's so difficult to get funding for a lot of these companies and why the FemTech category is a huge help for that. Amina: So, like women don't even know, like quite often, like we ask women, do you know what happens if we don't train our pelvic muscle after a certain age? They're like, no idea. And we didn't really get taught. How much do we bleed during menstruation? We don't even get taught. But anyway we have a consumer business, but also we have B2B business and that's our 80% of our sales come from that. What we do is we help companies in Japan develop products in this area. They have technologies that they can apply to new field. They just don't know how, or they don't have an idea. Tim: So, what kind of companies are interested in developing these kind of products? Are they electronics companies? Are they…? Amina: I can't companies say the details, but yes. Electronic companies, supplement companies, food companies, and I think there's a social as well as global pressure for especially Japanese big public companies to do something around this field.

Graffiti is impermanent. Normally, thats a good thing, but as the global art world has begun to recognize graffiti and street art as a legitimate art form, the short-term and public nature of street art has presented challenges around sales and ownership. The team at Totomo has found a solution. They have been working with street artists around the world and galleries across Tokyo to create a platform to prove digital ownership of street art. We talk about the challenges of bringing digital tools and provenance into the spray-can world of street art, why this international team decided to launch in Japan first, and how to take advantage of the new startup support programs offered by the Shibuya government. It's a great conversation, and I think you'll enjoy it. Show Notes The challenges involved in monetizing street art Is street art "legitimate", and how world opinion is changing Why Japan views street art differently Why Totomo is not using the standard NFT marketing strategy The importance of real-world gallery events Why most Totomo NFTs are not bought using crypto Do NFTs really pay artists on resale? Bailing an artist out of jail How attitudes to street art are changing in Japan The real reason Totomo launched in Japan first How a foreign-run startups can raise money from the Japanese government Links from the Founders Totemo Street Art NFT Gallery Street Art Collector podcast Follow Totemo on Twitter @totemoart See some great street art Check it out on Instagram Street art on YouTube Transcript Welcome to Disrupting Japan. Straight Talk from Japan's most successful entrepreneurs. I'm Tim Romero and thanks for joining me. Today we're going to talk about NFTs and no, no, it's not what you think. Regular listeners know that I'm an NFT skeptic, but being an honest skeptic means keeping an open mind. And in that spirit, I'd like to introduce you to the team at Totemo because they're doing some genuinely interesting things with graffiti, street art and the block chain. They're helping artists get paid and as far as I'm concerned, that's always a worthy activity. So, today we sit down for a four-way conversation with the Totemo team of Marty Roberts, Elena Calderon Alvarez and Minami Kobayashi. We talk about why Totemo decided to target their business much more tightly on the art community than on the crypto community. and also why this international team who represents international artists, decided to launch their startup in Japan. We talk about how graffiti and street art are becoming accepted as mainstream art around the world and the amazing level of support that the Shibuya government is providing startups these days and whether bailing your clients out of jail is a good use of investor capital. But you know, the Totemo team tells that story much better than I can. So, let's get right to the interview. Interview Tim: So, I'm sitting here with the founders of Totemo. Marty, thanks for joining us. Marty: Thanks so much Tim for having us. Tim: It’s good to have you back. And Elena. Elena: Hi. Thank you for having us. Tim: It's good to have you on and Minami. Minami: Hi.. Thank you for having us. Tim: It's great to have you on. I don't usually have three people on the show, but making an exception this time because what you guys are doing is really interesting. You're bringing street art and graffiti art to the blockchain, but I think you can probably explain it a little better than I just did. So, what exactly does Totemo do? Marty: Yeah, yeah, I think you summed it up quite well already, but the point that we're trying to work on is that right now graffiti and street art, while it's loved by many around the world, it's impermanent and eventually it will be destroyed by the elements, by the government, by other graffiti writers. So, if there was a way to make this permanent and also collectable and tradable, that would be fantastic because then the artwork will exist forever and will have owners and be traded. And that will allow these street artists to be able to monetize their work in a new way. Tim: And so you've created basically an NFT auction house that that's dedicated to this street art and graffiti art. Marty: Exactly. Tim: So, you're doing things quite a bit differently than most NFT marketplaces and I mean that as a compliment. Marty: Thank you. Tim: So, the NFTs you're creating, they're not simple photographs of the artwork, there's additional work that goes into them, there's motion involved. Can you talk a little bit about the art itself? Minami: Basically we use pictures from real artworks that the already as same murals and we have like animation team that they help us to animate these pictures and to break them a bit of life. Tim: So Elena, you actually studied curation in Athens, right? And you've had a long interest in graffiti art and street art. And is this considered, for lack of a better word, legitimate art in the art world? Or is it something that's not quite accepted yet? Elena: Well, in Japan it's not really accepted yet. And that's why I moved here to Japan with the idea of doing like research about graffiti. My goal was like do PhD in graffiti and street art. That's why I choose this country because it's like totally different from any art scene or graffiti scene in the world. And in Europe they're like starting to do like museums focusing only in street art. Like in Berlin for example, they have a huge museum only focused on it. But in Japan it's not considered still any kind of art. So, that's why I wanted to take it a bit more in a like academic way, like studied in university. Tim: Yeah, I think that to a large extent it's still considered more of a nuisance than an art in Japan. So, is your go-to market, your marketing strategy, it's quite a bit different from the standard NFT marketplace and it seems like you've actually been working to engage the art community and the gallery community here in Tokyo. Marty: Yeah, absolutely. We're really working in strong partnership, not just with the artists but with the entire art community. Now of course we also work a lot within interconnections with the NFT community, which Minami can speak more about. But we found it's been really important to actually form live events at different galleries. We've been doing live events where the artists themselves perform some live painting so that people can see what goes into creating this art. Tim: So, I've noticed you have been doing the live events. You had one in October, another November. Is what you're doing closer to an art gallery style event or more of an NFT promotional event? Can you explain like how it leans one way or the other? Marty: I think it's more of a community building exercise. It's a little bit educational and focused because we want the people to meet the artists, hear the story. Why does that artist create this specific style of art? What is it that the artist is trying to say through their art? It's really interesting for the attendees to have a chance to speak with the artist, to hear from the artist. Sometimes the artist speaks a little bit then watching the artist perform live art is very, very fun. And then of course we do want to promote the NFTs, so we tend to perform an auction at the end. And also anyone who attends our event, we allow them into our NFT gallery because you're right, it's very different than other projects. We're not making 2000 copies of an NFT and just trying to make a quick buck on a drop. Tim: Right. Minor variations of… Marty: Right, right. We're taking, sometimes they're one of one NFTs. Sometimes they might be an addition of 50, just like a normal print art business might have. So, I'd say much more focused like the traditional gallery method rather than this NFT spammy approach that we've seen over the last several years. Tim: And so you mentioned the auctions. Is this a traditional offline auction or is it an online marketplace or is it kind of a hybrid auction? How are you selling these NFTs? Elena: So, far we are selling the art pieces on marketplace, but normally we do set price non auction, but still we have the auction to do the auction. But so far we did a live auction in real life. Tim: Yeah, like the physical space? Elena: Yeah, physical space. Tim: And so like the flyers and the promotional stuff, you mentioned that you could pay in crypto or cash or credit card. So, obviously trying to be very friendly to the non-crypto art community. What's the breakdown? Are most of the people coming from more of a traditional background and paying in cash and credit or most of the customers who are engaging with this coming from the crypto community and paying in ETH? Marty: We've had both. But at our live events, I mean in real life live events that we've hosted, most people I'm seeing are just really using credit cards, that's easier for them. And then in our online marketplace that's still, which is kind of in a closed beta right now, it only accepts ETH but we do plan to be adding a credit card option. Tim: No, I mean I think that's really interesting in that it is using the blockchain technology in the art domain rather than, for lack of a better term, kind of pulling the art into the blockchain. So, how does this focus on the art galleries, on the artist community, how does that factor into your long-term plans? Is that where you want to continue to focus or do you think that eventually or sooner than eventually perhaps you'd want to address the much bigger speculative financial crypto markets as the bigger market? Or do you just want to stay focused on the art community? Marty: Well, we really feel that our collectors that we're targeting are more people who are actual art collector.

Not many startups land their tech on the moon. Dymon has designed an autonomous lunar rover that will land near the lunar south pole later this year as part of NASA's Artemis program. Today, we sit down and talk with founder Shin Nakajima who explains what it takes for a startup to become part of a NASA mission, the role YouTube had to play, what startups can contribute to space exploration, and how NASA and JAXA are changing to be more startup-friendly. It's a great conversation, and I think you'll enjoy it. Show Notes How Yaoki became part of NASA's Artemis program How Yaoki got its name Why Dymon focused on lunar rather than terrestrial problems How to (not) make money building autonomous lunar rovers How the Artemis program is driving innovation Why we expect a lot of water at the lunar South Pole How a YouTube video got the attention of NASA What's involved in getting technology approved by NASA Possible Earth-bound use cases and long-term business model How to raise money for a literal moonshot The future of lunar exploration and settlement The role startups have to play in space exportation Why Japanese aerospace startups want to work with NASA rather than JAXA Links from the Founder Everything you ever wanted to know about Yaoki Follow Yaoki on Twitter @yaoki_space_g  or in Japanese The official Yaoki Facebook page Follow Shin on Twitter @Shin_Nakajima Friend him on Facebook Transcript Welcome to Disrupting Japan. Straight Talk from Japan's most successful entrepreneurs. I'm Tim Romero and thanks for joining me. Today we're going to talk about moonshots, and I don't mean moonshots in the sense of wildly ambitious dreams, although come to think of it, yeah, yeah. We're also going to talk a lot about wildly ambitious dreams. But today's focus is on actually going to the moon. Shin Nakajima's startup Dymon has built a lunar rover called Yaoki that later this year we'll be traveling to the moon as part of NASA's Artemis project. Now, the name Yaoki comes from the Japanese expression nanakorobi-yaoki, which means falling down seven times and getting up eight. It means persisting in the face of repeated failures. It means never giving up. And both that word and that outlook on life feature prominently in today's conversation. We have an interesting debate on the role startups have to play in space exploration. And I don't mean just the SpaceX scale startups. SpaceX is doing awesome things, but most aspiring founders don't have access to the level of capital needed to play at that scale. We're talking about how small teams of innovators can make a difference and how NASA and maybe even JAXA are changing in order to give them the chance to make that difference. Shin and I talk about the design of the Yaoki Rover itself, how we raised money for a project that almost no one believed in, and what it really takes to get your technology approved for a NASA mission. But, you know, Shin tells that story much better than I can. So let's get right to the interview. Interview Tim: So we're sitting here with Shin Nakajima of Dymon, so thanks for sitting down with us. Shin: Thank you. Me too. Tim: You make this amazing lunar rover Yaoki, which is just amazingly cool. Tell us a little about the rover. Shin: This is what I am developing for 10 years, and now it's finished, and now it is contract with NASA Moon Rover project, which is called an Artemis. We are joining for commercial [inaudible 00:02:45]. Tim: Right. And for our listeners who can't see this, this looks nothing like you would imagine a lunar rover would look like. It's like, can I hold it? Shin: Yes, you can. Tim: Okay. That's so cool. I don't even know how to describe it. It looks like a little barbell with treads on it. Shin: Yes. Tim: I mean, this is really tiny, right? Shin: So very, very tiny. And it's just on the hand. Tim: So it's about six inches by six inches or so. Shin: It looks like a camera, camera size, and the two holes. And also this can lamb even drop because the hole is covering the body. So each time, every time wheel can touch the ground. Tim: So no matter what happens to it, it will always have wheels on the ground. Shin: Yes. Tim: All of us can always move forward. And that's actually part of the name, right? Shin: This name is Yaoki. Yaoki come from the nanakorobi-yaoki. Nanakorobi-yaoki direct translate to English is seven drops, but eight coming up. Tim: So fall down seven times. Stand up eight. Shin: So I never give up. Tim: Right. And you are, well, not you, but this cool little rover is flying to the moon later this year. Shin: Later this year. This is decided on announced by NASA website. Tim: Okay. I really want you to get into the specs and the mission and the business model in just a minute. But before that, I want to talk a little about you. And you have been working on this project for a really long time. Shin: Yes, actually it takes about 10 years. Tim: So, I mean, let's see. You found it in 2012. Right? Shin: 2012. I founded this company. Dymon. Tim: Okay, well let's, let's back up to the very beginning. So before Dymon, you worked at Audi's and automotive engineer. Shin: Yes. Audi Quantum system. You know, the Quantum system means Tim: Four wheel drive. Shin: Four wheel systems. I was inventor of that system. Tim: So what made you decide to start a startup and especially like a lunar explorer startup? Shin: 10 years ago, I was something like one of the cool driving engineer. I prouded myself, honestly. And the earthquake, big earthquake happens in Japan. Maybe everybody knows Tohoku earthquake. That time I decided to stop the, my engineer job and make startup, because I don't think in the future car big is not important, but something else. Tim: So was your original vision lunar rovers or was your original vision something else? Shin: Honestly speaking, after last week, what I decided is just quit my job. And after that, I think what to do next. then. Okay. I'm a driving engineer, so next step should be, not us, but the space. Okay. Moon. Tim: Wow. Because I would think, especially after the 3/11 earthquake, there's so much like in search and rescue or like the nuclear power plants, they were looking for robots to go in and clean up with. Did you ever think about that or were you just focused on space? Shin: Okay. 10 years ago, there is no plan to go to the moon every countries. But I decided my goal is to develop the lunar rover, but actually how can I earn money? Right? Tim: Yeah. Yeah. Shin: I mean, this is big problem because I was only one person, so nothing, nothing. But I decided to develop the lunar rover. And next big matter is how to earn the money. To earn the money. I also developed a robot, not to say lunar rover, but say robots. So 10 years ago, the main business is to develop the robots. Tim: Right? Because I mean, 10 years ago, no one is going to pay you to develop a lunar rover. Shin: Doesn't make any money. Tim: Not going to happen. So, what kind of projects, what kind of robots were you developing in the early days? Shin: Of course, many things, but some example wire inspection robot. Tim: Oh, so for example the power lines. Shin: Yes, power lines, electric power lines. And as everybody knows, it is now getting older and still this inspection is done by human. So very dangerous. And of course, some accident happens. Tim: Well, that sounds like an incredibly useful and profitable robot to be building. Why did you stop? Why did you, is it just you really just had this passion for building the lunar rover? Shin: Because this kind of development is not my own dream. So this is important, but not perfectly mine. My own dream is moon. Tim: So in the background, you were always working on the lunar rover? Shin: Something like that. On the daytime, I am doing a job for robots. And nighttime I am developing the lunar rover. Tim: So, when was the big chain in 2012, nobody's thinking about private lunar robots except for you and maybe a few people? When was Dymon able to really pivot and focus on lunar rovers? Shin: This is a good question. This point was like five years ago to developing robots is going, well, very lucky, I can earn money then I have one idea. Maybe I can continue developing the lunar rover for maybe two years. In two years, maybe some developing the rocket to go to the moon, but no guarantee. And actually Trump did, President Trump announced, we decided to go to the moon again. Tim: The Artemis project? Shin: Which is called Artemis and lucky things for me is Artemis program is having the ticket to join global ticket. Tim: All right. It's not just American companies, it's anywhere in the world. Shin: Yes. This is very rocky for me because Artemis is of course the American project, and most companies is of course American, but only few the global attendance is approved. Tim: Okay, well that brings us back to today. So let's get back to the moon. Your little rover will be flying to the lunar South Pole later this year. What's the goal of this mission? Shin: Yes, this mission to inspect the water. Tim: So searching for water. Shin: Searching water. Tim: And why is that important? Shin: In the upper case, upper inspection result is moon has nothing only sand. But after that the satellites are searching the water and it seems there should be a lot of water on the moon. And if there are lot of water on the moon, this water can be used space, energy, water to change to hydrogen. Hydrogen energy is very important for space. And of course for the human, water is very important. Tim: Yes, yes it is. This is all part of the Artemis project. So, what was the process of getting involved and getting approved for this mission? Shin: I started development 10 years ago, and after that takes eight years to lead certain level of the development.

There is a lot of hate directed at Japanese UI design. To Western eyes, it's just too busy, too dense, too confusing, too outdated, and just plain wrong. And sometimes that's true, but usually there are very good, and highly profitable, reasons Japanese websites and Japanese software looks the way it does. Today I sit down and talk (and argue a bit) with Brandon Hill about how Japanese design got this way, and the new direction it's currently heading. It's an amazing conversation, and I think you'll enjoy it. Show Notes Why people think Japanese UI design is broken The real reason Japanese sites never seem to get updated Why young Japanese sometimes prefer old-fashioned design How high-information density builds trust in Japan The social trigger that caused Japan to (almost) abandon minimalist design Why Japanese core design metaphors differ from those in the West Answering the top Western criticisms of Japanese design How Japanese labor law affects web and app design Why Western logo design is changing (and not for the better) The impact of smartphones on online and brick-and-mortar design What it's like for foreign designers at Japanese companies Links from the Founder Everything you ever wanted to know about btrax The amazing btrax blog A recommended in-depth article on American and Japanese UI/UX design Follow Brandon on Twitter @BrandonKHill Friend him on Facebook Transcript Welcome to Disrupting Japan. Straight Talk from Japan's most successful entrepreneurs. I'm Tim Romero and thanks for joining me. Today we're going to talk about Japanese UI/UX design. For the last 20 years, there's been this steady stream of Western designers explaining how Japanese web design is “broken”. Now, those critics often make some good points, but they usually completely misunderstand the underlying reasons that Japanese design is the way it is. Today we're going to address these criticisms once and for all as we sit down over a beer with my old friend Brandon Hill. Now Brandon runs btrax, a design and market entry consultancy based in San Francisco. And for the past 10 years, Brandon's been working with Japanese firms to get their design and UI ready for the American markets and with American firms to get their design and UI ready for the Japanese markets. In terms of practical hands-on experience, Brandon probably knows more than anyone in the world about the reasons Japanese and Western UX design are so different. And that's what we're going to dig deep into today. This episode's a little long, but I assure you it's worth it. There was simply nothing more I could have edited out. We explore the common criticisms of Japanese design, we talk about the psychology of e-commerce, and we dive deep into Japan's commercial culture. But you know, Brandon tells that story much better than I can. So, let's get right to the interview. Interview Tim: So, cheers! So, I'm sitting here with Brandon Hill, the CEO and founder of btrax. So, welcome back. Brandon: Thank you so much. It's my pleasure to be back here. Tim: Now I've given everyone a really detailed description of you and your expertise during the intro. But just to make sure, why don't you tell us a little bit about what btrax does. Brandon: I started this company btrax long time ago. It's a long time that I don't even remember when that was, but started as a web design agency in San Francisco, and then we started specializing in US and Japanese localization and cross-border, cross-cultural marketing and branding. We now do a lot of work for Japanese corporations to create a new businesses as well as promoting them, branding them, and expanding them into the global market. Likewise, we work with many US companies coming to the Japanese market, taking care of their marketing and branding and localization. So, that's what we do, Tim: And that is why I'm so glad to have you here, because I think you know, more than anyone else I know, and probably more than almost anyone in the world about Japanese design sensibilities versus western design sensibilities. And so we are going to work through all of the myths, truths, and half truths about Japanese design. Are you ready to dig into this? Brandon: I love to do that. Tim: So, like Japanese web design, how bad is it really? Brandon: It really depends on how you look at it. Because you said bad. It's is really a subjective opinion. From Western's point of view, they look really messy, clutter too busy. It's not intuitive. However, as far as I know, from performance point of view, that's the most appropriate design. Tim: Yeah. This is one thing I think is an obvious truth. I mean, since the early 2000s we've had a steady stream of American web designers coming to Japan declaring Japanese web design, hopelessly broken, and they're going to fix it. But the e-commerce sites in particular are extensively AB tested. Try everything. If you can get like a 3% uplift with a new design, people be all over it. So, it seems to me that like they're doing what works. If not what the consumer wants, what the consumer responds to. Brandon: So, I think there are two aspects to it as far as I see. One is people may prefer easy looking, messy layout. I wouldn't say messy, but it's cluttered and busy. The second thing if you realize is there are many, many websites in Japan, popular high traffic website that haven't been redesigned for 10 plus years. Tim: Yeah. I mean, there's a lot of it. Like Yahoo Japans still looks like Yahoo… Brandon: From 20 years ago. Tim: Yeah, yeah. Why is that? Is it It's certainly not laziness or lack of funds. Brandon: My theory here, two or three. One is people in this country do not typically like changes, they feel more comfortable sticking with the original design or what they have been seen on a daily basis. Something gets changed then they get freaked out. I mean, everywhere does, but especially in Japan, people get freaked out and traffic goes down for short amount of time. Eventually it'll come back, but before it comes back, maybe the corporate says like don't make those changes. Like, we don't want to have any dip. The second is aging society. Elderly people typically like to stick with what they have seen 10 years ago, and they don't want to learn anything new. So, mixture of those two, maybe. Tim: Yeah, that makes some sense. But like nobody likes change. Even like we Americans are supposed to be all this innovative in here, but we hate change too. And so like anytime someone redesigns a website or software, users hate it.  So, what's kind of the mental calculus that the American companies are doing that Japanese aren't? Brandon: There's clear, clear differences there. In the United States typically tech startups, there is one person who takes full responsibility, which is CEO obviously. Recently Elon Musk purchased Twitter and he says, get rid of this, get rid of this team, people, I'll take full responsibility because I'm the CEO. Top down a hundred percent. People just follow him. And it's extreme case. But with many organizations in the United States, it's really top down. If the top guy says, change this today. Everything is different from tomorrow. In Japan I think even if the president has an opinion, he needs to get all the consensus from people around him, Nemawashi, yeah. Tim: Yeah. That is an excellent point. And actually, and I think that is something that a lot of people misunderstand about Japan, particularly Westerners look at Japan, which in some ways very hierarchical. People are aware of and sensitive to the hierarchy. Protocol is there, it's almost military in some respects, but it's not top down. Brandon: It is not at all. It is not. Tim: It's kind of middle up… Brandon: It's middle up, I would say group of executives anywhere between like three to 10 people. There's committee sort of team, and you need to get a majority of votes from the committee members, otherwise you cannot push things forward. Tim: So, just the initial effort required to push it through internally is not worth the expected gain. Brandon: Right, right. Tim: That makes sense. That makes a lot of sense. On the consumer side, though, even new consumers, I mean, Yahoo, Japan, even though it looks just like it did in 2000, it's still attracting new users. I mean, young people use it. Why is that? Why hasn't a newer, hipper, cooler design site taken business away from them with the next generation? Brandon: My theory to that is when it comes to webpage on the computers Yahoo, Japan is leading, however younger audience shift focus onto mobile phones, smartphones. And there's some apps like SmartNews, NewsPicks, New Kids on the Block, taking younger audience possibly away from Yahoo, Japan. Tim: Okay, that makes sense. But I'm going to play devil's advocate. The American designers advocates here. So, I understand what you're saying but some things do seem objectively bad. I mean, for example, there is flashing colors on sites and there's images that are really low res. A lot of times I'll still fill out a form, and if I make a mistake, it clears the whole form. I mean, things that we haven't seen since the dotcom era in the US are still pretty common here. Brandon: Yeah, it is. It is. There are a few aspects there. I learned users in Japan like to get led to specific directions instead of, they decide everything all by themselves. It's cultural difference. If you go to a restaurant in the United States, you can pretty much customer order everything like slip or salt, what kind salt, what kind of dressing. Tim: Yeah. Japan is everything, this is the set menu. Brandon: Set menu and Omakase. Omakase is non-existent in the United States. Tim: After 30 years in Japan. I love Omakase. I mean, just bring me the food you decide. I love it. Brandon: So, the Japanese websites,

Sometimes it seems like Japan is almost invisible in global e-commerce. Despite a dynamic domestic e-commerce market and a long tradition of global exports, Japan just  doesn't seem that interested in selling to the outside world. But things are changing, and Kazuyoshi Nakazato of Zig Zag is working to make sure they change even faster. We talk about why Japan is unrepresented in global e-commerce, why that's changing, some things you should never try to sell online. It's a great conversation, and I think you'll enjoy it. Show Notes Why even small e-commerce is global The bowling ball export experiment What are Japan's biggest export markets for e-commerce How acquire overseas e-commerce customers How to select overseas markets to target How fast are Japanese e-commerce exports growing? How to grow and thrive as a small e-commerce site How to get Japanese founders to think more globally Links from the Founder Everything you ever wanted to know about Zig Zag and their World Shopping international or domestic in Japanese Check out a good video intro to World Shopping Shop in Japan from the rest of the world Follow Kazuyoshi on Twitter @nakazaty Friend him on Facebook Connect on LinkedIn Transcript Welcome to Disrupting Japan. Straight Talk from Japan's most successful entrepreneurs. I'm Tim Romero and thanks for joining me. Japan is missing out on the global e-commerce boom. Well, there is plenty of e-commerce going on in Japan, but it's almost all domestic and Japan is really missing out on the growing global market. However, Kazu Nakazato, founder of Zig Zag is changing that. Japan's e-commerce exports are still relatively small, but growing at 140% a year. And Kazu is looking to increase that even more. But as you'll hear, that's not easy. Kazu and the team at Zigzag are up against strong entrenched interests, language barriers, and one particularly frustrating aspect of Japanese business culture that we'll talk about in a few minutes. Kazu and I also discuss what COVID taught us about the resilience of global e-commerce. Some things you should never try to sell online. And Kazu also shares some really great advice about how to survive and grow as an independent e-commerce site. But you know, Kashi tells that story much better than I can. So, let's get right to the interview. Interview Tim: So, we're sitting here with Kazu Nakazato of Zig Zag. Kazu: Yeah, Zig Zag. Tim: Who's helping Japanese e-commerce sites sell globally. So, thanks for sitting down with us. So, I explain really simply what you do, but I think you can explain Zig Zag much better than I can. So, what does Zig Zag do? Kazu: We offer a service called global base. Our eCommerce site can quickly transform into share site. It's very simple. All it takes is a single line JavaScript tag. It's provide marketing input forms, marketing our customer support and payments support. Tim: That's a lot for one line of JavaScript to do. So, it covers the translation, payments, logistics? Kazu: Yes. Shipping. Tim: Okay. Wow. And do you handle like returns? Kazu: Returns, yes. And there are 200 countries. Tim: So, tell me about your customers. Who's using Zig Zag? What kind of e-commerce sites? Kazu: Fashion, cosmetics, Anime and entertainment type. For example, Japanese apparel is Beams and Tower records about 2,500 website. Tim: So, that's quite a range. So, is it mostly the bigger sites like Tower Records and Beams or small independent sites also using it? Kazu: Yeah, for example in Fukuoka, very, very small apparel shop. And in Chiba, bowling maker site. Tim: Like bowling ball maker? Kazu: Yeah, bowling ball. Very, very heavy. Tim: I was going to say that’s really expensive to ship. Kazu: Yeah. FedEx or DHL, air or by ship. Tim: Exporting bowling balls. Are like Japanese bowling balls, like really high quality or something? Kazu: Maybe customer is living Saudi Arabia. Tim: Okay. Where are the biggest export market? Where are they exporting to? Kazu: Number one is USA. Number two is Hong Kong and Taiwan and China. Tim: That's interesting. Before we dive deep and talk about e-commerce in general, I want to back up a little bit and talk about you. So, before you started Zig Zag from like 2010, you were CEO of a company called Growbits, right? Kazu: Growbits, yes. Tim: A very similar business model. Kazu: Growbits is logistic only service. Tim: So, you left Growbits to start Zig Zag. So, what was the difference between like Growbits and Zig Zag? Because they're both focused on consumer facing exports for Japanese e-commerce sites. So, what's the big difference between the two? Kazu: Growbits is not my company. Tim: Well, that's an important difference. Kazu: And Growbits is broadening logistic only, Zig Zag is a customer support and payment and online support. Tim: Oh, okay. Yes. So, you left to form like a more full service company. And so you've been running Zig Zag since 2015, right? Eight years. Kazu: Eight years. Yeah. Tim: So, that's interesting because 2015 was still kind of early in Japan's e-commerce boom. Kazu: The first three years, only one. Tim: Just you? Kazu: Yes. Tim: For three years? Kazu: Yes. Tim: Okay. How big are you now? Kazu: Now? 55. Tim: 55. Kazu: Yes. And customer support partner in the Philippine and China and also partner in Chiba. All the team maybe 100 over. Tim: I mean it's a lot of growth, but a lot of work over eight years. What's been your go-to-market strategy? So, how did you get your customers? Do you integrate with Rakuten or Base or Shopify? Kazu: First core to website. Moshi-moshi faster. Second strategy and IS Partner now in Japan. Cart service, e-Commerce cart in the GMO shop. Tim: Oh, GMO. Yeah, that's right. Kazu: Future shop and Ebisu Mart, EC Bin. These are carts for large commerce site and many commerce site network. IS Partners company Zig Zag service. Tim: Okay. It's an option for their customers. Kazu: Overseas being option on. Tim: So right now in Japan, what are the biggest e-commerce platforms? Kazu: Rakuten and Yahoo do not yet offer our service. Tim: But what about companies like Base? Kazu: Base is not IS, but e-service supporting. Tim: Okay, so you can integrate with them? Kazu: Yes. Tim: All right. So, that makes sense. But there's two parts of it. So, it sounds like integration makes it very easy for the users of this e-commerce platform to use your service. But how do you convince these shops to sell overseas? Because it seems like most Japanese e-commerce has no thought to selling overseas. It's strictly selling in Japan. Kazu: Social media. In the China market, we approach TikTok, WeChat and Alipay network. Tim: So, like if you're running an e-commerce site, you're talking about the payments, logistics, returns, Zig Zag handles, all that. But there's also what seems to me to be the most difficult part, which is actually finding the customers. Kazu: Anime category is a community, Facebook, Twitter. Tim: That makes sense for something like Anime that has strong word of mouth. Yeah, they have fans. But you also mentioned like some of your biggest customers are like fashion, cosmetics. These are really competitive for internet advertising. So, how do those companies reach customers in say America? Kazu: Advertising, organic search and organic grounding about 2% and 8% overseas access. Tim: Really? Yeah. So, are people searching for that specific brand? Kazu: Yeah, brand and Anime character name. Tim: For example, you mentioned Beams. So, Beams is kind of a select shop, right? They're not their own brand. They find cool, interesting products from other brands. So, what are the customers searching for? Are they searching for those other brands? Kazu: These they increase Instagram and Pinterest. Tim: So, photos. And so these are like, for example, Beams or Beams like shops running their own Instagram and their own Pinterest and people saying, oh great, click on that. Kazu: Yes, yes. Tim: Do you also work with the e-commerce sites overseas, selling into Japan for example, Chinese companies or…? Kazu: Yeah, from US to over the world and Chinese and maybe Korea. From Korea to worldwide. Tim: So, for this kind of a strategy, having an internationally enabled e-commerce site, relying on social media or word of mouth advertising or organic search, is there like an ideal type of business perfect for this kind of e-commerce strategy? Kazu: Promotion is very difficult. Focusing country category forecasting. Taiwan, Hong Kong and figure character hobby is US and EU. Tim: And is that just because in the US and EU there are communities that are fans of Anime and in Taiwan, Hong Kong, there's communities that are fans of Japanese fashion. Kazu: Yes. Fashion category in the America, but Chinese people sizes too wrong America size. Tim: Oh right, right. Just the sizes. Kazu: Yes, yes. Tim: Ah-Huh. I hadn't thought about that Kazu: From America, Access. But name is Kim Sang, Vi Sang, Chinese's name. Very, very many user. Tim: Are there any kind of goods that you just won't work with at all? Like what kind of goods just don't sell well overseas? Kazu: Very big and very heavy. Tim: Well, yeah, but you were saying bowling balls were doing … Kazu: Bowling is rare. Rare case. Very heavy. And very large item is very expensive shipping cost. Tim: Yeah. So, shipping costs. Yes. Well that makes sense. Fashion is very light. Yes. Anime is digital. Kazu: Character goods are very light package, videos, trading cards, Pokemon cards … Tim: Ah, right, right. Collectibles. Kazu: Yes. Tim: So, I'm curious about e-commerce in general in Japan. In Europe and especially in the US the end of COVID or let's say the slowing down of COVID because it's still here. When COVID has started to go down e-commerce sales have started to go down as well.

This is our 200th episode, so I wanted to do something special. Everyone loves to complain about the poor quality of Japanese software, but today I’m going to explain exactly what went wrong.  You'll get the whole story, and I'll also pinpoint the specific moment Japan lost its way. By the end, I think you'll have a new perspective on Japanese software and understand why everything might be about to change. You see, the story of Japanese software is not really the story of software. It's the story of Japanese innovation itself.   The Elephant in the Room Japanese software has problems.  By international standards, it’s just embarrassingly bad. We all know this, but what’s interesting is that there are perfectly rational, if somewhat frustrating, reasons that things turned out this way. Today I’m going to lay it all that out for you in a way that will help you understand how we got here, and show you why I am optimistic about the future. You see, the story of Japanese software, is not really about software. It's the story of Japanese innovation itself. The ongoing struggle between disruption and control. It’s a story that involves, war, secret cartels, scrappy rebels, betrayal, rebirth, and perhaps redemption.   How This Mess Started So let’s start at the beginning. The beginning is further back than you might expect. To really understand how we got here, we need to go back, not just to the end of WWII, but to the years after the Meiji restoration, the late 1800s, back when the Japanese economy was dominated by the zaibatsu. Now, “zaibatsu” is usually translated as “large corporate group” or “family controlled corporate group.” While that is accurate, it grossly understates the massive economic and political power these groups wielded around the turn of the 20th century.    Japan’s zaibatsu were not corporate conglomerates as we think of them today. You see, although the Meiji government adopted a market-based economy and implemented a lot of capitalist reforms, it was the zaibatsu, with the full support of the government, that kept the economy running. And the zaibatsu system was almost feudal in nature. The national government could, and did, pass legislation regarding contract law, labor reforms, and property rights, but in practice these were more like suggestions. In reality, as long as the zaibatsu kept the factories running, the rail lines expanding, and the shipyards operating at capacity, the men in Tokyo didn’t trouble themselves too much with the details. In practice, the zaibatsu families had almost complete dominion over the resources, land, and people under their control. They were the law. At the turn of the pervious century, there were four major zaibatsu (Sumitomo, Mitsui, Mitsubishi, and Yasuda). And each zaibatsu had its own bank, its own mining and chemical companies, its own heavy manufacturing company, etc. But it wasn’t just industry, each of these zaibatsu  groups had strong political and military alignments. For example, Mitsui had strong influence over the army, while Mitsubishi had a great deal of sway over the imperial navy. At the start of WWII, the four zaibatsu families controlled over 50% of Japan’s economy. This fact, when combined with their political influence, quite understandably, made Japan’s military government very uncomfortable, and during the war, the military wrested away a bit of the zaibatsu’s power and nationalized some of their assets. After Japan’s defeat, the American occupation forces considered the zaibatsu a serious economic and political risk to Japan becoming a liberal, democratic fully developed nation. They targeted 16 firms for complete dissolution and another 24 for major reorganizations.   Rising from Ashes Now, that was supposed to be the end of the zaibatsu. I say “supposed to” because those of you who know Japanese history understand that it never really happened. Of course, many things changed. Important political and social reforms were implemented, the legal system was greatly strengthened, a lot of zaibatsu assets were nationalized, and the zaibatsu themselves ceased to be. At least, officially. You see, the zaibatsu were quickly allowed to restructure in greatly weakened , but very familiar, forms, as keiretsu.  This was permitted for two main reasons. First, as the cold war heated up in the 40s and 50s, America’s idealistic vision for a democratic and progressive Japan took a back seat to the more practical and pressing need to develop Japan into a bulwark against Communism. And that meant prioritizing economic growth over social reforms. With these new goals in mind, both the American occupation forces and the Japanese government, quite correctly, concluded that having something like the zaibatsu groups would to lead to faster, more predictable growth than tearing everything down and rebuilding from scratch. The second important, and kind of surprising, reason was that almost no one in Japan really wanted to see the zaibatsu broken up. Not the politicians, certainly not the leaders of the zaibatsu, not the public at large, and to the endless frustration and confusion of western labor organizers, not even the rank-and-file zaibatsu workers and employees. In fact, at one point 15,000 Matsushita union members signed a petition demanding that the Matsushita zaibatsu(1) not be broken up. So in the end, important changes were made. Labor rights and contract law were strengthened significantly, and even more zaibatsu assets were confiscated. The traditional family holding companies were dissolved, but they were replaced by cross-company shareholdings  and interlocking corporate boards that achieved much the same result, but in a much more transparent and manageable way. And so, most of Japan’s zaibatsu were allowed to morph into the smaller, less threatening, and much more manageable keiretsu.   Japan as a Global Innovator In same way that the zaibatsu defined the economic miracle that was Japan’s Meji-era expansion, the keiretsu would come define the economic miracle that was Japan’s post war expansion. Today there are six major and a couple dozen minor keiretsu groups, and during Japan’s economic expansion, as much as possible, they kept their business within the keiretsu family. Projects were financed by the keiretsu bank, the materials and know-how were imported by the keiretsu trading company, and the final products would be assembled in the appropriate keiretsu brand’s factory. And supporting all of these flagship brands were, and still are, tens of thousands of very small, exclusive manufacturers that make up the keiretsu supply chain — and the bulk of the Japanese economy. And with the exception of a tiny handful of true startup companies like Honda and Sony, all of Japan’s brands that were famous before the year 2000 or so, are keiretsu brands. And for those of you who think big companies can’t innovate, let me remind you that from the 50s to the 70s, these keiretsu groups began innovating, disrupting, and dominating almost every industry on the planet; from cars, to cameras, to machine parts, to steel, to semiconductors, to watches, to home electronics, Japan’s keiretsu simply rewrote the rules. But how did the keiretsu do in the world of software development?  Well, pretty darn well, actually. It’s important to remember, though, that the software industry in the 60s and 70s was very different than it is today. The software development process itself was actually rather similar. Fred Brooks wrote The Mythical Man Month about his experience during this era, and it remains as one of best books on software engineering and project management today. But the way software was bought and sold was completely different. In the 60s and 70s, software was written for specific and very expensive hardware, and the software requirements were negotiated as part of the overall purchase contract. Software was not viewed so much as a product, but more like a service, similar to integration, training, and ongoing support and maintenance. It was usually sold on a time-and-materials basis, and sometimes it was just thrown in for free to sweeten the deal. The real money was in the hardware. Software in this time (both in Japan and globally) was written to meet the spec. It did not matter if it was creative, innovative, easy to use, or elegant, it just had to meet the spec. In fact, trying to build exceptional software in this era was considered a waste of resources. After all, the product had already been sold and the contracts had already been signed. The goal back then, just like many system integration projects today, was to build software that was just good enough to get the client to sign off on it as complete. Software that met the customer’s spec was, by definition, good software. Japan’s keiretsu did well in the age of big-iron. Although Fujitsu, NEC, and Hitachi never seriously challenged IBM and Univac’s global dominance in the 60s and 70s, they did pretty well in mini-computers and large office systems. They were innovators.   Japan Turns its Back on a New Industry However, when the PC revolution arrived in the late 1980s, Japanese industry as a whole was hopelessly unprepared, and not for the reasons you might think. The reason Japanese software development stopped advancing in the 1980s had nothing to do with a lack of talented software developers. It was a result of Japan’s new economic structure as a whole, and the keiretsu in particular. As a market, personal computers were something fundamentally new. Sure, the core technology and the hardware were direct continuations from the previous era, but this new market was completely different. The PC market quickly coalesced around a small number of standardized operating systems and hardware architectures. The keiretsu did pretty well in hardware side of this market, making some really impressive machines, particularly laptops.

There has never been a better time to be raising money in Japan than right now. Founders ask me about fundraising more than any other topic, so this guide is long overdue. There are links that cover the basics in the Show Notes, and I will be keeping this page updated as new information becomes available and members of the community create new resources. Calling something "The Ultimate Guide" to anything is a pretty big claim, and I'll do my best to make sure this page lives up to it. Please enjoy. Show Notes Results of the "Why Meet a Founder?" survey Directories of Japanese VC firms Japan Venture Capital Membership Crunchbase's list of Japanese VCs The Bridge: not a directory, but a good source of Japanese funding announcements Kei Furukawa's master list of Japanese VCs Tyson Batino's list of foreign-founder-friendly VCs in Japan. How to pitch like a Pro Dave McClure's original guide to pitching VCs - Very much substance over style The same information in a more readable format Dave's deck redesigned by people who do care about style What you need to put in your pitch deck - an infographic Design advice for pitch decks  - more geared towards pitch contents Advice from Japanese VCs James Riney talks about the VC business model and gives pitching advice Disrupting Japan's live show on fundraising in Japan Hiro Maeda on fundraising in Japan Ikuo Hirasishi provides an overview of Japan's VC landscape More from James Riney back when he was with 500 startups Leave a comment Transcript Welcome to Disrupting Japan, straight talk from Japan's most successful entrepreneurs. I'm Tim Romero and thanks for joining me. Today, I am going to answer the question that everyone seems to be asking. Or at least the question that everyone seems to be asking me. I am going to explain how to raise money as a new startup founder in Japan. You know, it’s funny how things work out. I originally planned to write this episode a few months ago as a short-take on a focused topic while I fished up my episode about the history of software engineering in Japan, but the topic kind of got away from me. My first draft and notes for the show came in at over 24,000 words, which by the time I fleshed it all out would have ended up as a four -hour podcast, and even I can’t stand to listen to me for four hours. So I’ve had to make some cuts, some painful ones. This episode should be under an hour, but it requires that I speak in generalities and make a few over-broad statements. There are a few really important topics that I will just mention briefly before moving on. So, if while you are listening to this episode, particularly my VC listeners, and you find yourself thinking that I would explain a particular point in more detail and with more nuance, or wishing that I would dive deeper into specific strategies and scenarios …   Yeah. Me too. But we’ll save that for another podcast or maybe a conversation over a beer. Now, there are a few very important questions you need to ask before you even decide to seek VC money. Things like “How do you plan on using those funds?” and “Are you sure you understand the growth-driven management style you are signing up for here?” But, from my experience, relatively few founders really want to dive into those topics. No, what founders in Japan really want to know is how to raise money. So that’s what we are going to talk about. I’m going to give you a clear and actionable plan so that: You can decide which VCs you should approach You can set up meetings with partners at reputable Japanese VC firms You will know how to pitch in the most effective way possible You will have some strategies to help you actually close the round, and get the money in the bank. And you’ll be able to do it all in a reasonable amount of time without going absolutely crazy. Now, I’ll warn you. Each of these steps is significantly harder than the one before, but you’ll be building up your skills as you move through the process. Also, as part of my research for this episode, I not only had a lot of conversations, but I also created an informal “Why Meet a Founder” survey and sent it to many of my VC friends in Japan. The survey asked what factors influenced their decisions to meet with a founder and hear their pitch. We’ll talk about the survey a bit during this podcast, and the results available to you as a special bonus download in the show notes on the Disrupting Japan site. Alright, are we ready to go? Let's get started with Step 1 How to decide which VCs to approach. Creating your shortlist of VCs to Target Now, when I talk about creating a list of VCs, I’m not talking about finding the names and contact information for a bunch of VCs in Japan. That’s actually pretty easy, we’ll talk about that later and there are links in the show notes. I’m talking about creating the shortlist of VCs that you want to approach with your startup. So why a shortlist rather than a long list? After all, many successful founders tell of how they made dozens of pitches before getting funding? Why should I limit my options? Well first, your options are already limited, and it’s best that you understand that in advance.  No matter how great your idea is, most funds simply won’t be able to invest in your startup for reasons that, as you’ll see, are very easy to understand. The problem is that there is this really popular startup origin myth about how some disruptive and innovative founders had to pitch to dozens — hundreds — of investors before they found a VC who could recognize their vision and their genius. It’s almost always bullshit. In a recent interview, Peloton founder John Foley bragged that over 400 investors turned him down. Now, maybe that’s just an exaggeration. Maybe he’s counting all 50 investors who attended some pitch event or demo day. I don’t know, but if he really made 400 investor presentations before finding investment, it was probably because he didn’t take the time to figure out who was to invest in him in the first place. Pitching is not simply a numbers game, or at least it should’ be. The second reason you should have a shortlist of VCs is that while there are a lot more VCs in Japan than there were a decade ago, there really aren’t that many, so it doesn’t take much time to research them and start with the ones where you will have the highest chance of success and can give you the best advice. OK, before we get into how to find the VCs ad put together your list, you need to understand the different kinds of venture money available in Japan. There are actually a lot of different types of VCs, and I’ll get to some of the finer details a bit later.  But for now, the most important difference you need to understand is the difference between regular venture capital funds (or VCs) and corporate venture capital funds, or CVCs.  Japanese CVCs behave differently than those from the US and Europe, so we’ll cover them in depth. And we’ll also talk about foreign VC funds, specialty VC funds and government-related VC funds which are all special cases as far as startup founders are concerned. The most fundamental difference between CVC and regular VCs is that regular VCs raise money from a wide range of individuals and institutions, and they are primarily interested in financial returns. Acutely, obsessed with financial returns would probably be more accurate. You see, those financial returns determine how the investment team is compensated, whether they will be able to raise another fund, and even whether they will be able to continue having a career as a venture capitalist. In this sense, traditional VCs are simple creatures. You know exactly what motivates them. Corporate VCs, CVCs, in Japan are very different and far more complicated in their motivations. CVCs are run by a large enterprise, and the investment funds come primarily, or even exclusively, from that enterprise or its corporate group. In fact, many CVC funds in Japan aren’t actually funds at all. In many cases, the company can pull the money out of the fund at will, and sometimes there isn’t even a dedicated pool of money. The enterprise simply invests from its balance sheet. While Japanese CVCs do care about financial returns, it's usually not their primary metric. CVCs usually invest strategically; to gain insight into new technology in their industry, to own a portion of a company they want to do business with, or to build a relationship with a company they might want to acquire later. Now, to most founders, CVCs with their long-term focus and industry-connections sound like an ideal investor.  And yeah, they can be, but the truth is that as an early-stage founder, and it breaks my heart to say this, but you are probably wasting your time pitching to Japanese CVCs. It’s not that CVCs don’t make great investors. They do. However, pitching directly to them is usually not the most efficient way to get them to invest. That sounds like a harsh statement, but if your startup is still early stage, by which I mean this is the first time you are raising venture capital or you do not have an existing customer base in their industry with real sales, simply leave Japanese CVCs off your target list — at least for now.  The hard thing about pitching Japanese CVCs is that since their careers are not tied to the returns of their fund, they are much less likely to take a risk on an unproven startup than a regular VC. Now if you are already doing business with that CVCs corporate group, you should definitely pitch them. However, even then, your best strategy is to have them recommend you to a regular VC, who can help them set valuation and de-risk the deal for them. The basic reason for this is that CVCs tend to require a lot more external validation and certainty than regular VCs do.

Police departments around the world are using this startup's AI to predict future crime. Mami Kajita, founder of Singular Perturbations, explains the success of their models, the public reaction to the technology, and how the physics models of glass transition lead to a crime prediction AI. We debate the future impact of crime prediction technology, and we also talk about how researchers and entrepreneurs can better connect and collaborate. It's a great conversation, and I think you'll enjoy it. Show Notes Telling police what future crime is likely to occur Who else, besides the police, can use these tools How the physics of glass transition lead to crime prediction How to sell software to the police (and other government agencies) Real world trials led to a 68% decrease in crime What data go into Crime Nabi's models The public reaction to future crime prediction Unintended consequences and and the future of crime prediction How founders can find mentors and advisors How researchers and entrepreneurs can better connect and collaborate Links from the Founder Everything you ever wanted to know about Singular Perturbations Check out Mami's published research Connect with Mami on LinkedIn Friend her on Facebook Transcript Welcome to Disrupting Japan, straight talk from Japan’s most successful entrepreneurs. I’m Tim Romero and thanks for joining me. Today we're going to talk about predicting future crime, and not in terms of 1950s science fiction, but in terms of real software being used right now by police departments all over the world.  We talk with Mami Kajita of Singular Perturbations about their Crime Nabi AI, and how this technology is starting to change policing. In real world use Crime Nabi has already resulted in crime reductions of over 50% in areas where it's been tested around the world.  In our conversation, Mami and I dig into these numbers and we talk about the somewhat surprising inputs that go into training the Crime Nabi AI.  And of course, we also talk about the very real potential dangers for misuse and what Singular Perturbations is doing to make sure this technology is a force for good.  Along the way, we talk about how founders can find good mentors and advisors, the proper balance between research and sales, and some really good advice about how to sell to national governments as a startup.  But, you know, Mami tells that story much better than I can, so let's get right to the interview. Interview  Tim: So, cheers. Mami: Okay, cheers. Tim: So, I'm sitting here with Mami Kajita, the founder and CEO of Singular Perturbations, the AI for Crime Prediction. So, thanks for sitting down with me. Mami: Yeah, thank you so much. I'm very honored to be here, and thank you so much for this opportunity. Tim: I'm glad to have you here. In the intro, I explained a little bit about what Singular Perturbations does. But I think you can explain it much better than me. So, what does Singular Perturbations do? Mami: We predict future crimes in using AI technology and we provide operation management services for police departments and local governments. And the name of our product is Crime Nabi. Tim: So, you are telling police departments where future crime is likely to occur? Mami: Yes. Using this technology we can provide the area where the risk is higher than the other area. Tim: Okay. And how do they use this information? What do they do with it? Mami: We provide operational management services in the police department, and there is a team who patrols outside and in Japan, and many police departments doesn't use crime prediction technology before patrols. They have not so much established plan. Tim: So, the police departments are using this predictive technology to decide where to send patrols? Mami: Yes, yes. Tim: Okay. What kind of predictions does it make? Does it predict the type of crime or just the level or…? Mami: Our crime prediction technology predict future crimes, when and where, which crime type likely to occur. Tim: Looking at your website though, you also have an app that individual citizens can download? Mami: Yeah. This mobile application have users of citizens and in Japan, in local governments, they have a team who patrols outside using blue patrol car, and we provide our crime prediction mobile application for them. Tim: Oh, okay. So, it's not individual citizens, it's still the government?  Mami: Yes.  Tim: It's just not police? Mami: It's not police department, but many of blue patrol cars are operated by local governments or citizen. Tim: So, it's similar to in America we have neighborhood watch.  Mami: Yes, neighborhood watch. Tim: It's a similar program to that.  Mami: Yes. Yes.  Tim: Let's dive deep into the technology, the business model a little bit later. And let's talk a little bit about you. So, you founded Singular Perturbations back in 2017. And back then you were a researcher at the University of Tokyo. So, did it start out as a research project? How did you get the idea to start this?  Mami: I have a background of theoretical physics. My research topic is about glass transition. That topic is very different from the crime prediction technology, but I worked for university for several years, and after that I have to move to Italy because -- so my husband have to move to Italy, so I… Tim: Went with him.  Mami: Yes. At the time I quit my research topic and I was thinking about my future. And my research background is theoretical physics, but I think that theoretical physics is a very basic topic. And theoretical physics people have a potential to make in models. Tim: I've always thought, I majored in physics myself, but I've always thought that physics is kind of the liberal arts of the sciences. Mami: Yes, yes. Tim: You understand a little bit of everything but until you get a PhD, you're not really qualified to do anything in particular. So, the mathematics and the modeling for the glass transitions, is it similar? Mami: Yes. And very similar. Using this background, this kind of basic liberal arts background helps to create a new business. I think that there is a many similarity between researcher and entrepreneur. Tim: I think so too. And I want to talk about that, but I'm really curious, what is the connection between the physics of glass transition and crime prediction? It's not an obvious link. Mami: Yes. Yeah, yeah. Eight years ago I started to live in Italy in Bologna. And I have experiences to be a pick pocketed several times. And at the time I wanted to start some new services using theoretical physics background. So, I studied to develop mobile application and I collected crime data. And then I developed a mobile application, which shows when and where the past crime occurred. And also I found a theoretical paper, which is about crime prediction technology. And this paper was written by theoretical physicist. So, I started to analyze the crime data using this kind of technology. And then I invented a new algorithm to predict future crime. And this achieved very good accuracy. Tim: Were you a researcher while you were living in Italy, or was this just a side project you were doing for fun? Mami: Ah, this is for fun. Tim: No, that's awesome. I love that. Mami: Yeah. And after that, I sold this mobile application to a Japanese company and then I wanted to start a new crime predictions project. Tim: So, after you sold that mobile application company, what brought you back to Tokyo? How did you start this startup? Mami: After I came back to Japan, I entered a company where I sold my application and I tried to make a business using crime prediction, but it has several problems. So, I founded my company by myself after that. At the time, I was only visiting researcher at University of Tokyo, and I met one policeman. He's very interested in my crime prediction technology, so he can invite me to a project of police departments. Tim: This is interesting to me. So, when you went to the University of Tokyo as a researcher, were you going in thinking that, okay, I really want to start another company now? Or were you thinking, okay, I really want to get back to theoretical physics research? Mami: After I have experienced long time research, I was very devoted in that topic but I also think that maybe I can help some people, but the impact is not so big. But using my background, I can make more big impact using this kind of technology. That's why I was interested in the development of mobile application and the foundation of my company. Tim: I think that is one of the most exciting things and the most addictive things about startups and many people discover it when they first start how valuable what you make is to your customers and how appreciative they are. And that's something you usually don't get in the business world or in as a researcher.  Mami: Yeah. Yeah. Tim: That's nice. So, you're still doing fundamental research and that was a NEDO grant, right? Mami: I guess NEDO grant, yes. Tim: So, one of the things a lot of researchers struggle with is the pull between doing long term fundamental research and having to sell this much product this quarter to make sure you're on track to get your next funding round. How do you handle that conflict? Mami: Yes. At the first, when I found my company, we can only provide crime prediction report, but this type of report doesn't change the police department's operation. So, we want to change the operation. Tim: Well, let's talk about some of your successful trials and proof of concepts you've run so far. You launched a project in Adachi ku in 2020 in Nagoya last year? So, what were the results? Mami: Yeah. In Nagoya City introduced our product and many other local governments and the police departments started proof of concept. And now we started proof of concept in Latin American countries.

Today's episode is about trust; trust in technology and trust in each other. Very few startups experience what LPixel went through and far fewer survive it. Today we welcome Yuki Shimahara, founder of LPixel, back to the show. The last few years have been a roller-coster for LPixel, and despite the chaos LPixel managed to created Japan's first certified medical AI device and roll it out into hospitals around the country. And despite his success in Japan, Yuki also explains why smart medical AI startups are all looking to Southeast Asia. It's a great conversation, and I think you'll enjoy it. Show Notes How LPixel was certified as Japan's first AI medical device The transition from diagnostic support to full medical diagnosis Why it's not technology holding back medical AI The nature of trust in Japanese business Japanese health insurance is now paying for AI diagnosis What happens when an employee steals all your funds? The advantages (and disadvantages) of full transparency How investors reacted and their new demands Why more doctors are founding startups Why research is easier at startups than at universities Why developing countries will see more advances in medical AI than the developed world Going global does not mean going to the US (yet) How the Japanese government should (and should not) foster Japanese innovation Links from the Founder Everything you ever wanted to know about LPixel LPixel's medical diagnostic support system Eirl Transcript Welcome to Disrupting Japan, straight talk from Japan’s most successful entrepreneurs. I’m Tim Romero and thanks for joining me. Japan is often described as a high trust society, but it's hard to explain exactly what that means and why it matters. Well, today we sit down to talk about trust and about medical AI with Yuki Shimahara, CEO of LPixel. Now, a lot has changed since Yuki was on the show four years ago. And by all metrics, LPixel is a stronger and more successful startup today. But one unfortunate event really put that level of trust to the test. Well, Yuki will give you the details, but the level of trust that existed between investors and clients and employees resulted in saving a startup that no one could reasonably expect to be saved. And we also talk about why medical AI is going to be adopted so much faster in Southeast Asia, why more and more doctors are starting startups in Japan and why Yuki thinks it's more productive to do deep research at a startup than at a university. But you know, Yuki tells that story much better than I can. So, let's get right to the interview. Interview Tim: I'm sitting here with Yuki Shimahara, the CEO of LPixel. So, welcome back to the show.  Yuki: Yeah, thank you for having me. Tim: LPixel a cloud-based AI image analysis for life sciences and medical research. And well, you can probably explain it much better than I can. Yuki: I'm very honored to be back here. LPixel is a startup company from Research Lab of Tokyo University, which is a pioneer bio image informatics. We combine life science and imagine analysis including AI, but also we do are the two main business. So, we developed the AI for medical misdiagnosis and then developing AI for accelerating the pharma research. Tim: And wow. Last time we talked, I think you were still a PhD candidate at that point. Yuki: Probably. Tim: Yeah. Because I do remember we were running around into different rooms at the University of Tokyo campus at Hongo trying to find a room that didn't like echo. So, much has changed since then. You're a lot bigger and more successful than before. So, how many people do you have working at LPixel now? Yuki: Now, 60 or 70. Tim: Tell me about your customers. So, last time most of your customers were research institutions, people working on medical research and it seems like you've expanded a lot since then. Yuki: I think the last time is just developing the AI but three years ago we got the AI as a medical devices. It is said that it is a fast AI got approval as medical devices using deep running. So, our stage changed the last time. Maybe I focusing on R&D, but we do the sales and marketing now. Tim: And just to clarify, so when you say it's a medical device, does that mean it is a diagnostic tool? What is the certification of being a medical device mean? Yuki: Our AI is supporting the diagnosis, the medical doctor even the professional mistakes sometimes. So, misdiagnosis is very big problem for patient. The AI support the diagnosis. For example, by using our AI, the accuracy increase 10%. So, we can claim that it is good for not misdiagnosis and improve accuracy. Tim: Okay. So, just let's walk through a typical example. So, LPixel technology works on, for example, imaging from a CT scan. And it would analyze the image. And what would it suggest to the doctor that there's a high chance of this disease? How does it help the doctor?  Yuki: So, very simple AI highlight the candidate of the diseases. It is like mis-spelling check using something. Tim: I like that analogy. Yuki: Very simple. It's just highlight. Tim: When you say highlight, does it, for example, does it show an area of the scan that needs special attention? Yuki: Yes, exactly. The detection is the most important part I think. But the next we do the classify the diseases and suggest the treatment or something. But for now focus on detection. Tim: So, it's not yet a diagnostic tool. It's a diagnosis support tool. Yuki: Right, exactly. Tim: That's a subtle but very important distinction. How many years away are we from having AI being able to actually diagnose? Yuki: For now, legally AI cannot diagnose, it is just supporting tool. But little by little we improve the AI. Probably next step is we change the double check system. The US are the same. So, US and Japan, the government recommend double check because human misdiagnosed sometimes. So, we can change human plus human to human plus AI. So, it is the next step. Tim: So, but not yet AI plus AI? Yuki: No, not yet.  Tim: Is the biggest challenge one of technology or is it one of perception? Yuki: Good question. So, because the technology is very important, but I think that society development is very important. So, we show that evidence human plus AI is better or same as human plus human. And then so we do lobby activity with public sector or academic society. I think it takes seven or eight years, but it is very soon I think. Tim: When both technology and society get to the point where AI plus AI counts as the second opinion. I think that's going to transform medicine completely. Yuki: Right. Tim: And eight years sounds like it's far away, but I mean it was only what, five years ago you were on the show. It's not that far away. Let's talk a bit about your go to market. So, last time we talked you were just starting to work with the manufacturers of CT machines, MRI scanners. How has that played out? Yuki: I think the five years ago, so we do joint the research business mainly, but from five or six years ago we had just started product development. Three years ago we got approval. So, our policy is vendor neutral. So, investors like Cannon Medical and FujiFilm and Olympus and also GE and Siemens, not investors. But our policy is vendor neutral. Tim: I think it is interesting because well one of the things I want to talk about is how trust works in Japan, the importance of trust in Japan. And how the level of trust enables different kinds of relationships between startups and enterprises and startups and the investors. You've had research relationships with these companies for many years. And last time we talked, you were saying that you weren't that concerned about having a direct relationship with the doctors, which as an American founder I found like shocking and like kind of made me nervous. But has that strategy been successful? Have the partners, the OEMs supported you and helped you get to market without those direct relationships? Yuki: Good questions. I think that timing is good. So, we was first paying in this market and then medical doctors present our AI or good AI is coming. So, medical doctor trust medical doctor sales, right?  Tim: Yes.  Yuki: Right. So, academic presence is very important. So, health insurance coverage is very important. So, this fiscal year government support, insurance coverage for AI, it is very limited, but it is good trend. Tim: That's very interesting. And that's very new. When you say insurance is paying for AI, what does that mean? Yuki: For example, if medical doctor diagnose MRI or CD images, they can get 3000 yen a year per scan and then from this year using AI 400 yen. Tim: And so until this year, hospitals couldn't even bill for it? Yuki: Right. But it is very limited, but it is good first step. Tim: Well I think that's an amazing first step, especially since it's like one-tenth the price. Yuki: Yes it is. Good change. Tim: The other thing I really want to talk about is what you and LPixel went through back in 2020. Well, actually why don't you share what happened? Yuki: So, it is very hard things for us. So, two and half years ago, one of our members director and embezzled about 25 million. So, we lost all money and then cannot pay the salary. Tim: Yeah. Like $25 million and it was gone and not recoverable because he spent it on like FX trading or something like that. Yuki: Exactly. Yeah. Tim: And that was all the money your company had? So, what's going through your mind at this time? Yuki: Yeah, so it is a tough situation. The first thing is we explain to the investors and very sorry, so why it happens or like that. And then this is a new brand, so that's why we need this kind of resources.  So, very tough communication, few months. Tim: What about your employees? Because I think like customers and investors you can have more rational conversation.