How Japanese Startups are Breaking into Silicon Valley – Ramen Hero

More and more Japanese founders are moving their startups to San Francisco. It’s easy to see why. There is more venture capital, more startup know-how, and more startup energy in that city than anywhere else in the world.

In fact, there is a small, close knit Japanese startup community in San Francisco, with Japanese startups, mentors and investors all supporting each other and trying to grow their business there.

On my last trip to San Francisco, I had a chance to sit down with one of these startup founders, Keisuke Kajitani, co-founder of Ramen Hero. He moved to Silicon Valley from Japan to start his company because he thought the US market was a better fit.

Ramen Hero sells home delivered ramen meal kits. Interestingly, the popularity and ubiquity or ramen in Japan works against them, while the novelty and price of ramen in the US has enabled them to get attention from both VCs and customers there.

It’s a fascinating discussion, and I think you’ll enjoy it.

Show Notes for Startups

Why ramen gives them a competitive advantage in the US Previous failures in the ramen business and why it's different this time Why Ramen Hero had to pivot from B2B to home delivery What's great about the Japanese startup scene in San Francisco How many companies can the market sustain? When Japanese companies should move to Japan

Links from the Founder

Learn more about Ramen Hero at their home page Follow Ramen Hero on Instagram

[shareaholic app="share_buttons" id="7994466"] Leave a comment Transcript from Japan Disrupting Japan, episode 69.

Welcome to Disrupting Japan, straight talk from the Japan’s most successful entrepreneurs. I'm Tim Romero and thanks for joining me.

More and more, Japanese startup founders are looking at, or even moving to Silicon Valley. It’s easy to see the appeal. San Francisco is home to the largest and most competitive startup ecosystem in the world. In fact, there’s a small Japanese startup community in San Francisco, with Japanese startups, mentors, and investors all supporting each other and trying to make it work.

Of course, the founders that come from Japan—well, it’s a mixed group. Some successful companies view San Francisco as their logical first step towards global expansion; some are new founders that have an idea they feel is more suited to the American market than the Japanese market; and some, well, some are kind of startup tourists, visiting the offices of famous startups and going through the motions, as if they were in some sort of startup role playing game.

On my last trip to San Francisco, I had a chance to sit down and talk with Keisuke Kajitani, co-founder of Ramen Hero. He and his co-founder moved to San Francisco from Japan because they thought the US would be a better market for their product, oddly, because ramen is already too popular in Japan. Now, Ramen Hero sells home delivery ramen meal kits and it’s a business that makes much more sense to launch in the US than it does in Japan. But, you know, Keisuke explains all that much better than I can.

So let’s hear from our sponsor and get right to the interview.

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[Interview]

Tim: I’m sitting here with Keisuke Kajitani of Ramen Hero and we’re sitting here in beautiful San Francisco. So thanks for sitting down with us.

Keisuke: Thanks for having me.

Tim: I’ve got to say, San Francisco is not so beautiful today.

Keisuke: Yeah, it’s raining hard.

Tim: I don’t think I’ve ever seen this much rain in San Francisco.

Keisuke: Yeah, it’s unfortunate.

Tim: But we’re inside and dry, so that’s good. Listen, to get things started, why don’t you tell me a bit about Ramen Hero?

Keisuke: Sure. So Ramen Hero is a meal kit service specifically focused on delivering authentic ramen to your house. So what we deliver inside of the meal kit is fresh noodles, and soup, and toppings, and of course the recipe cards. So you can become a ramen chef at your house.

Tim: Okay. The food industry in general is hard. It’s incredibly competitive, it’s hard to build up a loyal user base because trends come and go so fast. Why did you choose this particular startup?

Keisuke: I’ve seen a lot of Japanese entrepreneurs trying to figure out how to make a big company in Silicon Valley, but I often find that the Japanese entrepreneurs are not having strengths in their expertise. There is tons of good engineers, there is tons of good entrepreneurs, but ramen is something Japanese can be expertise about, so that’s why we chose ramen as the first entrance for food business.

Tim: Okay, so it was something that would make you unique and play on your Japanese-ness here in Silicon Valley. How did you pull it together? Tell me a bit about your partners and co-founders. Tell me about the team.

Keisuke: Sure. So I’m the COO of Ramen Hero and I have a co-founder whose name is Hiro, who is the CEO/the chef of this company. Hiro graduated Tokyo University but while he was in university, he decided to open his own ramen restaurant by himself with his friend. But he totally screwed up. He had the wrong recipe, he tried to have the squid intestine in the soup to have uniqueness, but it smelled horrible. He was unique for sure but he wasn’t a good chef. So after that, he founded online farmers market service, which restaurants in Tokyo can purchase fruits and vegetables directly from the farms. He was doing that business but he couldn’t actually erase the passion of the ramen by himself, so he decided to come to Silicon Valley and start a ramen business. But he cannot turn himself into a ramen chef instantly, so what he did was he entered a ramen university.

Tim: There’s an actual ramen school to learn how to—

Keisuke: Yes, for sure.

Tim: This is Japan. This should not surprise me.

Keisuke: Exactly. So he went through like a couple weeks of training, it was a couple thousand dollars; it was expensive, but it surely was very fruitful. So he got the basic understanding of ramen there and then he was serving ramen in the United States for maybe 40 to 50 times, getting the local taste, sometimes serving like 100 ramen in 2 hours.

Tim: And how did you two end up getting together?

Keisuke: We met through the mutual mentor, his name is Kiyo Kobayashi. Very famous guy in Japanese startup industry. We had the same mentor and I always wanted to start a business in Silicon Valley, that was like the holy place for entrepreneurs, but I didn’t have a chance to do it by myself. I was seeking for an opportunity and that’s how Kiyo introduced me to Hiro.

Tim: All right. It makes sense as an objective but usually people who are passionate about food—whether it’s ramen or any other particular type of food—their goal is to open a restaurant. You guys have taken the home delivery approach, so it’s similar to like Blue Apron but for ramen. How big do you think this market is? How many customers could potentially be realistically interested in home-delivered ramen?

Keisuke: The market research is estimated as 1.5 billion US dollars for the meal kit market right now, but it’s not as big as you think. It’s going to be growing to around maybe 4 to 5 billion US dollars in maybe the next 10 years—that’s what the research is saying. But what’s more interesting is I think the meal kit business, or the restaurant without the physical restaurant model, is much more scalable than the other restaurant business types because you can basically own a restaurant without paying lots of rent. So we think, starting from San Francisco, where the rent is most expensive, we believe the business model of the meal kits is more fitable than actually opening a ramen restaurant.

Tim: But of the currently 1.4 billion—it could be up to 4 billion in a few years—meal kit market, what percentage of that do you think could be filled by ramen? Or do you plan to expand beyond ramen?

Keisuke: I think you multiply that 1.4 or 5 meal kit business times the ramen ratio is going to be very small, but you can also look at the number of the servings of the instant noodle, which is I think over billions—only in the United States. So the ramen is the foundation of the people’s way of eating, and we definitely want to improve rather than just eating the Top Ramen. So you can look at the market in two different—maybe three different—perspectives. One is the meal kit service that I mentioned. Two is the instant noodles I just mentioned. And the third one is a ramen shop. It is estimated that we have 12,000 ramen shops in the United States and it’s growing by 17.5% every year. If we grow at the same growth rate, the number of ramen shops will double in 5 years. So in the food industry, doubling the number of restaurants is a huge change. So we think that’s the trend that we are chasing for.

Tim: So are you always going to be marketing these meal kits to consumers or are you also going to be marketing to restaurants and pop up restaurants as well? What’s the plan?

Keisuke: Very good point. Actually, when we started this company in the beginning, we were aiming for the B2B market, serving the ramen soup to the restaurants, like Chinese restaurants or ramen shops. There is one Japanese company called Ariake Japan, IPO’d company who sells the manufactured ramen soup to the restaurants. Very profitable and very good business, so we decided to do something similar to that, but the feedback we got from the chefs all around the bay area was like, “You need proof. I know this soup tastes good, but you need proof that this soup sells—not just tastes good.” So just because we can make a good ramen doesn’t mean it sells right. It has to have a brand or it has to have a proof from the customers, good feedbacks. So what we decided to do is—

Tim: Let’s dig down on this because I find that surprising.