Japan leads the world in this one important branch of AI

Technology develops differently in Japan.

While US tech giants have been grabbing artificial intelligence headlines, a business AI sector has been quietly maturing in Japan, and it is now making inroads into America.

Today we sit down again with Miku Hirano, CEO of Cinnamon, and we talk about how exactly this happened.

Interestingly, Cinnamon did not start out as an AI company. In fact, when Miku first came on the show, the company had just launched an innovative video-sharing service. Today, we talk about what lead to the pivot to AI and why even a great idea and a great team is no guarantee of success.

We also talk about some of the changing attitudes towards startups and women in Japan, the kinds of business practices AI will never change, and Miku give some practical advice for startups going into foreign markets.

It's a great discussion, and I think you will really enjoy it.

Show Notes

How Miku invented TikTok before TickTok and why it didn’t work How you know when its time to pivot a startup Why companies will never go digital and will always use paper Who will benefit most from AI The four categories of AI How AI will change the legal profession How japan is actually ahead of US and China in some kinds of AI What's really driving business innovation in Japan Can AI actually reduce overtime? How enterprise clients treat women founders

Links from the Founder

Everything you ever wanted to know about Cinnamon Follow Miku on Twitter @mikuhirano Friend her on Facebook More about Cinnamon

Miku's original Disrupting Japan interview Eliminating Repetitive Office Work through Disruptive AI Miku on the John Batchelor Show - Part I Miku on the John Batchelor Show - Part II

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, we're going to sit down and talk about artificial intelligence with Miku Hirano of Cinnamon. Now, Cinnamon is actually a great example of a successful Japanese startup pivot. When we first sat down with Miku four years ago, she had an innovative micro-video sharing company called Tuya and really, you should go back and listen to that episode. I've put a link on the show notes and it was really a good one.

Anyway, Miku basically started TikTok a few years before TikTok and we talk about why things didn't work out, why even with the same idea, one startup will become a multi-billion dollar brand and the other will pivot. Of course, the pivot to AI and the rebranding to Cinnamon has led this to their current success in using AI to read and to understand common business forms.

In fact, for reasons that Miku will explain during the interview, Japan is actually ahead of the US and China in the area of business AI. We'll also talk about how attitudes towards women are changing here and how Japanese men at traditional companies treat women founders, particularly women founders with children, and I think it might surprise you. I mean, it surprised me and it surprised Miku as well,

But you know, Miku tells that story much better than I can, so let's get right to the interview.

[pro_ad_display_adzone id="1411" info_text="Sponsored by" font_color="grey" ] Interview Tim: So, I'm sitting here with Miku Hirano of Cinnamon and it's great to have you back on the show again.

Miku: Yeah, thank you so much for having me here again.

Tim: Well, so much has changed since -- it was three years ago, right?

Miku: Yeah, yeah, and I had a totally different business at the time.

Tim: Well, not only a totally different business but you've gotten married and you've had two kids.

Miku: Yeah, yeah, and at the time, I think I was living in Taiwan and now, my business is in Tokyo, so everything has changed.

Tim: And so, we're not even going to cove what we talked about last time even though in the intro, I've told my listeners to go back and listen to the old show, I know some of them won't do it.

Miku: So, please listen to the last audio show.

Tim: Okay, so guys, listen to Miku. It was a great show.

But let's just pick up where we left off because it's been a busy three years. Last time we talked, you were working on Tuya which was this great seven-second video sharing startup. So, what happened?

Miku: Tuya was a video sharing app but unfortunately, that business didn't go well, so we couldn't get enough users to raise a fund, so I called the Taiwan office at the time and...

Tim: Let's get back to it because I mean, the mechanics of what happened are important, but I think what's more interesting is the idea, the seven-second videos, it was a great idea. It was basically TikTok a couple of years before TikTok, and this is something that happens so often, so for example, like Uber and Lyft were not the first companies to try that business model. AirBnb certainly wasn't the first company to try that business model. There is so much more involved than just having a great idea and a great team, and we'll get to how you're executing now, so we know it's a good team.

Miku: Thank you.

Tim: But why do you think that Tuya didn't take off where TikTok became a worldwide craze?

Miku: I see, so we lost some users and some of the users used Tuya, our app, every day. They took a video, it's just a seven-second video maybe seven times or eight times a day, so there are some active users, but I think Tuya doesn't have a power that our users want to tell to other friends. So, for example, TikTok, sometimes, you find some very interesting hilarious videos, right? And sometimes, you show it to your friends, but on my app, we didn't have that part.

Tim: So, was the key innovation, the key driver at TikTok, you think, was that integrated sharing mechanism?

Miku: Yes, yeah, to other friends.

Tim: Alright, and what was the trigger? What made you decide to say, "Okay, we're shutting down Tuya and we're moving to AI"?

Miku: So, that pivot didn't go that quickly. It was very ugly, to be honest.

Tim: It usually is. So, what were the steps? How did it roll out?

Miku: Okay, so our company was almost going bankrupt, so we found that our company will have no cash in two or three months, so we needed to change our business.

Tim: And you were a pretty big company at that point, right? How many employees did you have?

Miku: We did have around 20, but I need to restructure maybe one-third of the company, and then I need to come back to Tokyo to survive some of the members, I need to earn money, so I came back to Tokyo. So, in that point, I had two options. One is to raise enough fund and the other is to get cash, I mean, from sales, but for the first option, I guess, I thought it wouldn't go well. We just had a failed business, so both me and Hajime, my co-founder Hajime are serial entrepreneurs but we couldn't make the second business wait.

Tim: Yeah, I think especially in a business model like yours, raising funds at that point would be extremely difficult because the investors would say, "Well, look, you tried it, it didn't work, try something else." Did you try to raise funds or did you just --?

Miku: Actually, I didn't try.

Tim: Just figured that this is time to...

Miku: Yeah, just finding, I mean, just doing sales would be better.

Tim: What kind of sales did you do?

Miku: Just system development. So, at that first point, we didn't think about AI at all.

Tim: So, just we'll develop apps, we'll do javascript programming app development business?

Miku: Yeah, with somebody else to get money. I think most of entrepreneurs having engineering background have this kind of idea, that if our business doesn't go well, we can do systems development business and then we can survive, so we have that kind of fault, but actually, it didn't go well.

Tim: It did not?

Miku: No, no.

Tim: What happened?

Miku: It was really difficult. Yeah, so I did not have any sales experience and also, another reason, most companies have experience, have system development company that they have already used, right? So...

Tim: Right, so they need a reason to start looking for a new vendor.

Miku: Yeah, yeah, so yeah, I improved the sales material that there was a page, things that we can make, and actually, one of them was AI. The reaction of the potential clients got changed.

Tim: You found something that their current vendors couldn't do.

Miku: Yeah, and at that point, we totally forgot that both me and Hajime didn't research about AI when we were students. We totally forgot about it.

Tim: You did your Masters in AI, didn't you?

Miku: Yeah, yeah, and even my co-founder had phD in AI deep learning, but we totally forgot about it.

Tim: Just too much stress of trying to keep the company going?

Miku: Yeah, and then to increase what we can do, I just wrote AI, then their reaction changed, so I thought it might be a chance.

Tim: So, you started getting contracts, and then you just started re-tooling the company around AI?

Miku: I started to get contracts from a couple of companies, so that is how we could survive.

Tim: And I guess from that interest, eventually developed the Flax Scanner product.

Miku: Exactly, so the idea of Flax Scanner which is our flagship product came from one of our projects. So, one of the projects was extracting the information from resume.

Tim: And so, who's using it now? What kind of companies?

Miku: Yeah, so now, more than 50 companies use Flax Scanner, mostly insurance companies and banks, and manufacturers, including Toyota, Daiichi Insurance, Nihon Insurance, so that kind of top tier Japanese huge enterprise.

Tim: And what kind of documents are they using this on?

Miku: For example, in an insurance company, the receive tons of documents, so for example,