At Startup Asia Tokyo today, we had three big names on stage talking about the potential of Asia: Hiro Maeda, managing partner at Beenos, Taizo Son, CEO at Movida Japan, Kevin Hale, partner at Y Combinator, and Dave McClure, founding partner at 500 Startups. Hale and McClure provided their Silicon Valley perspective on the differences between Japanese entrepreneurs and those in Silicon Valley. Son believes that “in terms of Asia, we’re catching up to Silicon Valley.” For Hale and McClure, although they have taken a look at Asia, they concede haven’t had as much exposure as they would like.
1. Turds versus sparkling gold products
According to Hale, Japanese founders are very sensitive about sharing their products. No doubt, this is a result of Japanese perfectionist culture. But this also affects the approach to iteration. By contrast, Silicon Valley founders are willing to share a product even it’s just half-done. In fact, they’re proud of a half-done product. This is likely influenced by the Valley’s exposure to lean startup methodology. Hale adds:
Japanese founders hold their products under lock and key, whereas Silicon Valley guys are very proud to show off a turd, and Japanese founders won’t show off their products unless they’re sparkling gold.
2. Dominance of social media and online games
McClure and Hale both made the point that, when looking at ecosystems outside of Japan, it is heavily influenced by online games and social media. McClure explains:
There’s an extreme fascination with online games and social media. Probably because there’s so much success with folks like DeNA and GREE, so startups want to follow.
3. Not enough B2B startups
When McClure compared Japan specifically to Germany he saw a lack of business-to-business (B2B) startups. It’s likely that investors are eager to invest in this category, but he notes that there aren’t enough success stories despite there being a huge opportunity.
There’s more SaaS in Germany than in Japan. – Dave McClure
Would love to see more B2B startups out here – Kevin Hale
4. Not lazy enough
As some have noted, laziness is invaluable. It’s oftentimes the seed for new ideas and it creates a lack of tolerance for inefficiencies. After all, a lazy person is more likely to find an easier way to do something so he/she can go back to being lazy. Hale notes that this is certainly not in the Japanese culture. Japanese are perfectionists that work very hard.
I’d love to see more laziness from Japanese, because that’s where we get a lot of our best ideas in Silicon Valley. – Kevin Hale
5. Going local first, global later
Taizo notes that Japan’s startups are still too focused on the local market. This is a barrier for them in growth later, when they would like to expand globally. Although he does note that there are more globally-minded startups in the country.
They focus on the local market first and then if they have a big success they will focus on the global market. But now things are changing, and they’re starting to think global from day one.
6. Scale of vision is too small
Taizo also notes that the scale of local startups’ visions is small. He believes this may be one reason why we’re not seeing such big startups coming out of Japan.
Scale of the vision is smaller compared to entrepreneurs in the Silicon Valley. But now, some young people are thinking bigger.
7. Investors are the bottleneck
To follow up Taizo’s point, McClure believes it’s not true that startups think too small. In fact, the issue comes down to investors. He clarifies:
I think that startups having a small vision is bullshit and that the real bottleneck is the investors – because the investors don’t have enough exposure. Large VCs with large capital interests.
On this count, Taizo certainly agrees.
Most investors in Japan are in banking or private equity. They come from a financial background and so they have a more money hungry outlook. Whereas venture capitalism requires a more entrepreneurial mindset. But former entrepreneurs becoming investors is rare, and this affects the outcomes.
Hale chimed in to say that thinking small early and then big later on is how startups and investors should be thinking:
I don’t want entrepreneurs to think too big, and most of the time they just need to solve a problem that the customers would pay money for. I mean, Uber wasn’t even that big of a problem. Getting a taxi is not even groundbreaking. Most value creation is mundane and incremental.
8. The big guys would rather enter the market than acquire new guys
According to Taizo, big companies like Rakuten, instead of looking at startups to invest in or acquire, would rather beat the startups than work with them. If a startup is doing well then a big company would rather jump into that market. This also means it’s harder for acquisitions. It means it’s harder to build a healthy startup ecosystem.
McClure says that in China it may be improving as Baidu, Tencent, and Alibaba are starting to invest locally. But across Asia, Japan included, this problem persists. In general, this makes it harder for founders to make it.
9. Treatment of employees
Hale theorizes that the treatment of employees in Japan is very different from the Valley.
It’s a mistake to treat first employees as second-tier. Because they’re taking a big risk. Especially since they get less equity but they put their careers on the line. ‘Oh it’s my friends, so they don’t think about the structure.’
Maeda agrees in part with this theory. He says that there is an “empire mentality” in Japan and that the talent market is different. The competition for talent is less and talent usually stays for longer. This influences the treatment of first startup employees, who are arguably some of the most important people.
10. Starting up still has a stigma
And lastly, the panelists explored the idea that not only public failure is scary and stigmatized, but also creating a startup in general is very fresh in Japan:
It’s changing very fast, but families and friends have traditionally been less supportive of doing a startup. – Taizo Son
By contrast, in Silicon Valley, startups are now trendy.
In Silicon Valley, people start a startup to get a date almost. Doing a garage startup is the new garage band. – Dave McClure
On that note, the panelists ruminated on the current innocent stage that Japan’s ecosystem is in. The question now is what can Japan do? There’s a lack of acquisition possibilities, investors are not as forward-thinking, founders are too perfectionist – and more issues persist. The panelists suggest importing Silicon Valley culture into Japan. But it’s possible that Japan may have to find its own path. McClure notes that it’s some of the more crazy Japanese founders that do very well.
The post 10 ways Japanese entrepreneurs are different from Silicon Valley entrepreneurs appeared first on Tech in Asia.
10 ways Japanese entrepreneurs are different from Silicon Valley entrepreneurs
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