Japan’s Business Card Giant Explains Why Business Cards Are Disappearing

If you've ever done business in Japan, someone probably walked you through the intricacies of Japanese business card culture.

Chika Terada, the founder of Sansan, created one of Japan's most successful startups around the business card protocol. And even though Sansan has been expanding quickly and is on track for an IPO, Chika thinks that Japanese business card culture will soon disappear.

Chika and I talk about the challenges of rapidly scaling a company, and how the IPO market in Japan will change in the next few years.

We also talk about what Chika learned as his company expanded into other markets and how even B2B business is really a complex mix of business and culture.

It's an interesting conversation, and I think you'll enjoy it.

Show Notes

Why business cards are not data, but an event marker Why Sansan wants to replace business cards How to save the corporate culture when you are committed to things that don't scale How stock options should be (and are) used at Japanese startups Why marketing is so hard to disrupt in Japan How Japan's business card culture extends overseas How big company attitudes towards startups re changing in Japan How to teach innovation in Japan

Links from the Founder

Everything you ever wanted to know about Sansan

Check out Eight for business networking Sansan in English

Friend Chika on Facebook

[shareaholic app="share_buttons" id="7994466"] 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.

You know, anyone who has done business in Japan has had to learn the intricacies of Japanese business card culture and the protocol involved in exchanging them.

Well, Chika Terada has built Sansan, one of Japan's most successful startups around business cards. The name Sansan started as a play on words, kind of like the band Mister Mister but the company itself has grown into a powerhouse of B2B CRM and corporate relationship management in Japan where LinkedIn has failed.

Now, Chika and I talk a lot about the challenges involved in scaling a company up so quickly and what he's learned by expanding into international markets, some with business card cultures very similar to Japan and some with very different protocols, and we talk about why we might finally be seeing a shift in the unhealthy fixation that so many Japanese investors and founders have on the IPO.

And you know, despite the fact that Sansan has built its entire business on business cards and the protocols surrounding them, Chika explains why he thinks that they may eventually go away and what will replace them.

But you know, Chika 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 we're sitting here with Chika Terada, the CEO and founder of Sansan who is really changing how Japan looks at business cards. So thanks for sitting down with me.

Chika: Thank you, thank you very much for giving me this opportunity to talk with you again.

Tim: Again, yes, it's great to have you back on the show because you were actually the very first guest I had on this show over three and half years ago.

Chika: I'm very pleased to hear. I mean, by looking at your success after the first interview, that's remarkable.

Tim: And likewise, you as well. Sansan has been just growing at a fantastic rate since that interview and jt's one of the real startup success stories in Japan. People from overseas often see Sansan as kind of like a business card scanning app and I know it's a lot more than that. It's more like a networking tool but maybe you can just start out by explaining what Sansan is and what Eight is.

Chika: Right, it is true that our company deals about business cards but this means our company is all about the business encounters. People meet people in business every day and in Japan and in other Asian countries, people exchange business cards. This is a kind of culture so we provide two services, one is same name as the company Sansan for companies and the other services called Eight which is for business professionals. So Sansan is more like CRM solution based on business cards. The idea is that assuming the business cards as the representative of the business encounters, if you can manage business cards successfully as a company, it's going to be your sharing database because you can search that database with the name of the company you'd like to access, then you may or may not find a past to that company that your colleagues have. So that's the whole idea and that data itself can be utilized or exported to other system like salesforce.com.

Tim: Well, and you also sort of work out the whole, the corporate org charts and hierarchy based on these cards, right?

Chika: Because business cards have the information of title and organizations, so we can structure organizations by capturing business cards.

Tim: And every April, when Japanese companies reorganize, Sansan kind of keeps track of that reorganization, right? Well, I think it's interesting. You guys have really filled a niche that LinkedIn wanted to fill in Japan but wasn't able to.

Chika: Well, it's about our B2C service. I mean, Eight is the most suitable for that aspect. I mean, you use it for free to build your network. So you scan a business card and you connect with others, and before scanning the cards of others, you’re required to register your own business card. As you scan business cards, you may connected to the people of business cards you scan if they are on the network.

Tim: I really liked the way you had of putting it that the business card represents an encounter rather than an individual. Do you think this is at the heart of why Sansan has been so successful when getting in this niche that LinkedIn has not been, this focus on encounters rather than broadcasting information about yourself?

Chika: Well, why it is well-adapted in Japanese market is because first of all, people use business cards and we have some trouble managing or keeping track of business cards after they're received. Of course, we'd like to replace business cards in the end because we don't believe the usefulness of paper business cards at all. This is a culture right now and it can be altered.

Tim: Yeah, no, I think it is interesting. Maybe I've just been in Japan so long. Japan definitely has a business card culture where that card does represent the encounter. The US and China don't have that. I find it to be very easy workflow. So if I've gone to an event, I can go back home and look over 25 business cards and remember, oh, I talked to this guy about the this and I talked to her about this, and I promised to follow up. Without those business cards, I can't remember everyone I talked to and who I have to follow up with.

Chika: So, there is still a merit of a business card because it's portable and everyone has one but still, we'd like to provide a way in which you can do the same thing online digitally. So recently, we released a new feature in which you can scan business cards on the spot and you can send your digital business cards to his or her email. So the image is included, so it's almost similar to the paper business cards. We try in anyway.

Tim: Step-by-step moving towards digitalization.

Chika: But we like to keep or sustain a taste of business cards and the benefit of business cards like you said. So we are in a transition period, I think.

Tim: Okay, well, one of the things that was unique about SanSan when you were first starting off was that all of the business cards your customers would scan and you would have human staff double check to make sure it's right. Are you still doing that?

Chika: Yes, and the automation really is getting high. From the beginning, we use the technologies and also we used human power. It's a combination. OCR technologies cannot be perfect. The accuracy rate would be like, 80% to 90% but the remaining 10% to 20% is critical because when you talk about the information, if you get an email address lacking one letter, it's useless, right? So to fill that gap, we've been using crowdsourcing. So as we gather the accurate data, we can automate the process. So we combine technologies with human power. In the beginning, maybe it was only 10% automated but now the rate is like at 60% or 70%, so remaining 30% is done by human.

Tim: Okay, that's still quite a lot of human labor going into this. Do you think AI will ever be at the point where you can just trust AI to do this?

Chika: Well, partially, we trust AI. For example, our engine to distinguish language of business cards are fully AI-based. We trust it so we just sort the business cards into English, Chinese, Japanese, or other language using that AI. In that part, there is no human involved. We used to have human in that part as well. So step-by-step, we automate by using AI, and once AI passes the threshold that we can replace human, we apply that to that point.

Tim: That makes sense. Actually, as you've scaled up, right now, you have around 400 people. So over the past four or five years, you guys have moved from being like a cool small startup to sort of a cool large start up. What did you have to change about your company or your culture to make that happen?

Chika: Well, there have been challenges to scale, of course but already have a challenge, right? So to be honest, I don't have any specific case or a transient period that I would just say that it was difficult. I don't have such story, to be honest.

Tim: Well, okay, from my own experience, I've always noticed that when I was running startups and the team was really small, like five or six people, that's almost like a magical time.