Live & Unleashed – Japan’s New Wave of Hardware Innovation

Disrupting Japan is three years old, so we decided to invite a few hundred movers and shakers from Tokyo's startup community over to have few drinks and to hear three of Japan's most successful startup CEOs talk about what it takes for Japanese startups to succeed globally.

Our panel included the CEOs of some of the most innovative startups in Japan.

Ken Tamagawa (@kentamagawa) - CEO, Soracom Takuma Iwasa (@cerevoglobal) - CEO, Cerevo Shin Sakane (@laundroid_0 ) - CEO, Seven Dreamers

We talk about strategies for global growth, how to best manage multi-cultural teams, and the likely future of hardware and IoT startups in Japan.

In fact, we talk a lot about the challenges hardware startups are facing in Japan today. Japanese hardware startups are at a crossroads. The old model of hardware innovation is failing, but there is a new model, unique to Japan, that might just take its place. But, as our guests explain, things are far from certain.

It's a great conversation, and I think you'll enjoy it.

On a personal note, thank you for reading and listening and for being a part of Disrupting Japan. When I started this project three years ago, I never imagined how big it would become, or how large, passionate, and global the interest in Japanese truly is.

I want to offer a sincere thank you to everyone who has pitched in to help make Disrupting Japan a success. There is no way I could have built this by myself. I have access to a bottomless well of innovative and genuinely interesting Japanese startup founders, and I look forward to continuing to introduce them to you and to bring you their stories.

Thanks for listening!

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Transcript Welcome to Disrupting Japan, straight talk from Japan’s most successful entrepreneurs. I’m Tim Romero, and thanks for joining me. You guys are joining mw. You guys are awesome.

Audience: [Cheering]

Tim: I’ve got to admit, that is the exact response I hear in my head every time I say that phrase.

Audience: [Laughing]

Tim: Before we get to the kampai and to the panel discussion proper, there’s a few people I really want to thank, who without them I couldn’t have put this show together. The first of which is Creww. What Creww does is they run about 80% of the corporate accelerators in Japan. So if your startup wants to hook up with a large corporation or you’ve got a big company who want to hook up a startup, you need to talk to Creww and Segawa-san is hanging around somewhere. Where is Segawa-san? Waive. I can’t see you from up here, so. There he is in the back. Talk to Segawa-san and also, Creww is opening a new co-working collaboration space to help startups connect with enterprises. It’s just up the street.

Second, I want to give a big shout out to the Carter Group. Dominic Carter is here somewhere, himself. There is Dominic over there. And so, for those of you who have done business in Japan, which is pretty much everyone here, the things never quite work out as you expect them to. The Carter Group provides market intelligence and market research that help companies grow their business here or come here in the first place. Their processes and the prices are extremely startup-friendly. So if you want to grow your business here, talk to Dominic.

And last but certainly not least, I want to give a big shout out to Digital Hub. Now, you’ll see these guys running around with cameras and microphones, documenting this for all of posterity. Don’t talk to the guys with the cameras. But they also do some great corporate video work. So if you’re looking for video — and who isn’t these days — talk to Steve, who is over there.

Audience: [Applause]

Tim: So, I’d like everyone to raise their glasses and thank you guys so much for being with me for three years and over 100 episodes. And I hope you come along with me for the next 100 episodes in the next three years. Thank you so much. Kampai!

Audience: Kampai!

Tim: Cheers! All right.

Audience: [Applause]

Tim: Now, we get to the meat of the show. Now, I want to introduce the panel myself because I know these guys. If I just let you talk about your companies, you’re going to use up all the time. So, on my far left is Shin Sakane of Seven Dreamers. They have been one of the most innovative in aggressively exporting hardware companies in Japan. You’ve done everything from carbon fiber golf shafts to a medical device that fits in the nose for some reason. But you’re most known for the Laundroid, laundry-folding robot, which you’re releasing overseas and Japan at about the same time.

Shin: Right.

Tim: In the center is Ken Tamagawa of Soracom, who makes extremely affordable and flexible connectivity for internet of things and connected devices, and who is in the process of selling his company to KDDI. Nothing’s been officially launched but it’s been leaked all over creation. And on my immediate left is Takuma Iwasa of Cerevo, who is one of the most innovative device makers in Japan and one of the leaders in the maker space here. I will say you’ve got one of the most interesting models for global expansion that I’ve ever heard of. So, let’s hear it for the panel.

Audience: [Applause and cheering]

Tim: So first and foremost, I want to talk about going global. In all of your cases, the global market has been extremely important to you. How soon in your company history did you decide to go global and why did you do it at that time? Shin, let’s start with you.

Shin: We have three products and two of them are already launched. Our strategy is initially start marketing in Japan. Japanese market is one of the, I shouldn’t say easiest, but really kind of the warmest, is the nicest marketplace I ever think. So, if we cannot be successful in Japan, forget about global expansion. Just like we test market in Japan, and once we found it successful and immediately go global. That’s our strategy.

Tim: So basically as soon as you find that that product market fit, you’ll take it global?

Shin: Right, right.

Tim: Okay.

Shin: It’s about like one year or a little bit less than one year after we launched in Japan that we just go global.

Tim: And do you think the Japanese market is easy because you’re Japanese or is there something unique about the market that makes it easy?

Shin: So good thing about Japanese market is, I think — maybe I skip this.

Tim: We’re going to come back to that question.

Audience: [Laughter]

Tim: Ken, How about you? You took a different route but the international markets are really important.

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Ken: Yeah. Actually, let me talk about my background. So, I used to work for Amazon Web Services (AWS). I really like the business model, kind of, global platform business. So when we started Soracom, we want it to make naturally global platform. So when we started the company, actually, I registered entity in the data ware first then we tried to fundraise money but we couldn’t. So we switch to Japanese company. What I actually understand is what our team has unfair advantage is in Japanese market. Because I knew a lot of people, VCs and also the many, many CIO, CTO of the companies, so we changed our strategy. First, we start Japanese company. Then after we demonstrated our product strength, immediately, we started expanding our business to the global. So we started our business is 2015 September then last year 2016 December, we started business in the US, then EU.

Tim: It sounds like it’s pretty much the same strategy. As soon as you validated the product, you went overseas.

Ken: Exactly.

Tim: Why? Why was that important? Because so many Japanese companies are Japan-focused. It’s much easier and it is a very big market.

Ken: Because if we demonstrated our product is very good, somebody might copy our business. But before other doing that, we want to go global. And also, if you look at the technology like AWS and other smartphone and platforms, it’s not that difficult to go global in terms of technology.

Tim: True. For the technology going global and the company going global are really different. Actually, let’s talk about that in a minute because before then, Takuma, why don’t you explain your global strategy? Because I think it’s a very interesting one.

Takuma: Yeah. I just understood why I invite here, because of my companies. I have to explain about my company’s very curious strategy because every startup company is focusing in the mass market or future mass market. Laundroid is like this. I think the second is on product. It’s future, the washing machine or future something but my company doesn’t focus to any mass market. Our product is a really niche product. I worked I Panasonic for years, and Panasonic is really focusing on the consumer market. That was very tough for me and very tough for the Japanese startup companies. That’s why the Japanese startup company doesn’t have huge money compared to Silicon Valley. Then I changed my company strategy to the global niche. That means we are slicing very, very small the users in India, in US, in UK, in Japan like this.

Tim: You’ve developed a lot of very, like you say, global niche. Things like smart snowboard bindings and streaming video that clips on to video cameras. So for WiFi and strange anime connected gun looking things. I don’t know what it’s called.

Takuma: The name is dominator.

Tim: Dominator. That was it.

Takuma: Raise your hands. Anyone knows dominator? Oh, very small quantity. So let’s see the anime. The name is Psychopath.

Tim: But this is interesting. So Shin and Ken were saying that they find product market fit in Japan first and then go global. But it sounds like what you are saying is that you didn’t get that much interest in Japan, and you got greater interest overseas.

Takuma: Yeah.