In Japan Partnerships are a Two-Edged Sword – Doug Chuchro – Fastly

Sales is different in Japan.

When Fastly entered the Japanese market, they quickly discovered that they had change their technology-driven bottom up sales approach to fit Japan’s top-down enterprise market.

Today we sit down with Doug Chuchro, the Japan head of Fastly who explains how he had to chance both the sales strategy and the corporate culture from that of the US, which a highly knowledgeable user base who understood the workings of their technology as well as the sales team to Japan, where they frequently found themselves educating potential customers about what a content deliver network is and how they are used.

We also explore the importance of partners in the Japanese market, and how those relationships can be very much a two-edged sword.

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

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Learn more about Fastly here Connect with Doug on LinkedIn Follow Doug and Fastly Japan on Twitter @FastlyJapan (Japanese) or @fastly (English) Contact doug@fastly.com or the Tokyo team japan@fastly.com (English or Japanese) Read about Fastly’s partnership with Nifty Cloud (Japanese) Read about Fastly’s partnership with SoftBank (Japanese) Learn about Fastly’s Cloud Accelerator with Google Cloud Platform (English) Sign up for a free Fastly trial account Find out how to do stuff on Fastly from posts on Qiita (Japanese)

Transcript

Disrupting Japan, episode 70.

Welcome to Disrupting Japan, straight talk from the CEOs breaking into Japan. I'm Tim Romero and thanks for listening.

Today we’re going to talk about content delivery networks or CDMs, those services that cache your website locally around the world so that users can access it extremely quickly. Or more accurately, we’re going to talk about how Fastly has managed to sell them in Japan. We sit down today with Doug Chuchro, the Japan head of Fastly to talk, not so much about the company, but how you sell innovative technology to large Japanese enterprises.

We’ll explore why partners are all but essential in entering the Japanese market, but how those relationships can be very much a two-edged sword, you need to know what to expect going in and to try to manage the expectations of everyone involved. When you’re trying to convert a proven, bottom-up, technical sales process into one that is Japanese style top-down, and governed by long-term relationships and unseen alliances.

Even when done perfectly, your Japanese partner won’t always do what you want, but sometimes they’ll do what you need. But, you know, Doug tells this story much better than I can, so let’s hear from our sponsors and get right to the interview.

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[Interview]

Tim: I’m sitting here with Doug Chuchro, the representative director of Fastly KK and thanks for sitting down with me.

Doug: It’s my pleasure.

Tim: Before we get into all the details of how you brought the company into Japan and how you grew it here, I want to take a step back. Can you explain what Fastly does?

Doug: Sure. We are a content delivery network. There are a number of content delivery networks out there. Many of them have been around for years and years. In fact, the space is close to 2 decades old. We are, essentially a content delivery network brings content closer to end users and increases the performance for those end users, and decreases the amount of workload that the customer’s origin has to do. So it essentially is a global caching network that the two major benefits are increasing the end user performance and decreasing the origin offload.

Tim: So just every individual around the world would, instead of accessing the original source homepage, they would be accessing the cache that is closest to them and having the fastest experience possible.

Doug: Exactly. For example, for a news media site, I go to the New York Times webpage every morning to see what’s going on. And rather than connecting to the New York Times origin infrastructure on the east coast of the United States, which would be a terrible experience for me here in Tokyo, I can actually connect with the local pop server of Fastly, here in Shinagawa, where most of that content is cached. I get a very quick response. That page loads almost instantly, and likewise, the operations team for New York Times in New York, they don’t even see a hit against their infrastructure. It essentially offloads that.

Tim: Unless customers scale out much further and much faster as well.

Doug: Exactly. Yes.

Tim: Okay, so this sounds almost by nature like a global business.

Doug: It is. In fact, before we started our business in Japan, we had one PoP operating in Tokyo and several others in Asia.

Tim: And a PoP is a—

Doug: A Point of Presence.

Tim: What was headquarters’ main motivation of setting up in Japan?

Doug: There were a number of factors. Fastly was growing quickly in North America, our headquarters was in San Francisco, we had started an office in London. So we were beginning that process of growth in Europe, and like you mentioned, we had to build a global network to serve all of our audience. Global expansion from an infrastructure point of view is pretty easy because we’ve already built out quite a bit of our infrastructure globally just to serve our North American customers well. So going into a new market is just a matter of hiring the salespeople and standing up the business. It’s not a trivial thing at all, it’s not a trivial matter at all, but the infrastructure was largely there.

Tim: Was there a particular trigger event? Were you getting either demand from your US customers to have more PoPs in Japan, or were you having Japanese customers who wanted to use your network globally that kind of pulled you into Japan, or was this just a natural progression?

Doug: It was a number of different things. We were interested in international expansion, we were pushing into Europe, we were looking at places in Asia to expand, and looked at Japan. In fact, one of our customers in the United States is a subsidiary of a large retailer here in Japan. So they made a connection for us and started those conversations for us. We got some executives to come over here and talk to some people and kind of feel it out. That coupled with a healthy fascination of our CEO of Japanese culture—

Tim: This happens a lot actually. I’m not sure why exactly, but there are so many, particularly from San Francisco, in the startup community, they are fascinated with Japan in general.

Doug: It’s interesting. You come over here, it’s the third largest economy, you look at the CDM market space here and it’s fairly mature and continues to grow. So unlike setting up in either Singapore or Hong Kong—they’re global hubs, but their domestic markets are relatively small. The other one is China. China’s massive but it is a completely different ball of wax, one which we are still very cautious about, so Japan really made sense for us.

Tim: So Fastly and CDM in general, it’s a niche market so was there a perception of the Fastly brand in the Japanese market before you came in? What was the competitive landscape like? Were there strong competitors in the market?

Doug: Yes, there are very strong competitors in the market, and to answer your first question, the Fastly brand, we realized that it was next to unknown. There were pockets of knowledge about Fastly, but we hadn’t done anything to promote our brand here. So we knew that was going to be one of our major challenges. The dominant player in CDM globally and in Japan specifically is Akamai. They’re the 800-pound gorilla and they’ve kind of defined the space over the last 2 decades. We knew that we didn’t have much of a brand. We had to spend a lot of effort—and still need to spend a lot of effort—to build our brand here, and that’s a multi-pronged effort. One of the things that we thought would be really good for us would be to get somebody to vouch for us because having a local partner to vouch for you means quite a bit. Early on, our executive team made some connections with SoftBank. They have been, and continue to be, very generous with their time and their energy in promoting Fastly. So they are a reseller of Fastly today and have been for 18 months. And I would venture to say that if it weren’t for their generosity and their willingness to partner with a relatively unknown in Japan company, that we may not have even opened the office here.

Tim: I want to talk about that relationship. But before we do that, your significant competition was foreign companies—are there domestic companies in this space as well?

Doug: There are very few domestic CDMs. The big ones that we run into, as I said, are Akamai, the other one is AWS has their own CDM offering. And AWS, I think, is remarkable with the work that they’ve done here in Japan, a foreign company coming into Japan and establishing. Themselves the way that they have, I think is quite commendable.

Tim: They’ve been a steamroller in this market.

Doug: Yeah and something that I inspire to, to be honest with you. Those are our two major competitors, or our other competitors, but none of them really domestic.

Tim: That’s a really interesting situation to be in.

Doug: It is. But if we go back to the notion of a content delivery network really has to be a global network to be an effective thing, there really hasn’t been a Japanese domestic CDN that has been able to build out.

Tim: It’s very interesting in a go-to-market perspective, in that you are free to make partnerships, and you are not entrenched in decades-old alliances in the market.

Doug: Very much so, yeah.

Tim: So let’s talk about the partnerships that you did make. You worked very closely with SoftBank.