The Little Startup from Japan That Took Down NTT – TownWiFi

It’s rare for a Japanese startup to challenge NTT and come out ahead. But that’s exactly what Takehiro Ogita and his team at TownWiFi have accomplished.

TownWiFi is a mobile app that automatically detects and logins into available WiFi hotspots. Since TownWiFi was very modestly funded, Takehiro and his team relied on a better user experience and word of mouth to get the word out.

Today we sit down with Takehiro and dive into that story, but we also look at the company's existing overseas userbase and his plans for global expansion on a shoestring.

There is so much changing among Japanese startups right now, and Takehiro explains some of the social forces working for and working against new Japanese startups.

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

Show Notes

The universal problem with free WiFi What allowed TownWiFi to gather a userbase so quickly Why Rakuten produces so many startup founders Why Takehiro had to hide his startup from his family How TownWiFi managed to beat NTT in direct competition A common sense plan for global expansion How pivoting from a C2C to a B2B model saved this startup

Links from the Founder

The TownWiFi Homepage Takehiro's Blog Friend Takehiro on Facebook And, of course, download the TownWiFi app

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Disrupting Japan, episode 92.

Welcome to Disrupting Japan. Straight talk from Japan’s most successful entrepreneurs.

I’m Tim Romero and thanks for joining me.

Takehiro Ogita started TownWiFi as a simple way to allow Wi-Fi hotspots to be accessed and shared to mobile phones or mobile device users in general. There are a number of free Wi-Fi finding apps out there today but there are a few particularly interesting things about TownWiFi.

First, unlike almost all their competitors, TownWiFi has found a way to monetize this app. And while they’re not yet profitable, they are earning revenue. Second, and I love this for so many reasons, the dominant player in this space, when TownWiFi launched their product was NTT and little TownWiFi has absolutely crushed NTT in the marketplace.

Don’t get me wrong. I like NTT. I have friends at NTT. NTT is actually doing a lot of positive things in the area of corporate development and open innovation. The reason TownWiFi’s story is so inspiring is that it would have been absolutely impossible 10 years ago.

Back then, NTT DoCoMo was not only the dominant mobile carrier but strictly controlled which apps would be allowed to be featured on their platform and sold to their subscribers. This may sound vaguely like the way Apple runs the App Store but it’s not. At that time, Japanese carriers would select one or two apps in each category, usually from closely associated companies and then lock everyone else out. Apps did not really compete with each other and there is no way that a serious challenger to the carrier’s own app let alone one made by an independent upstart would have been allowed inside their walled garden.

Things are changing for startups in Japan, and when tiny little startups begin to beat NTT at their own game, it means great things are on the way. But you know, Takehiro tells that story much better than I can.

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

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[Interview]

Tim: So I’m sitting here with Takehiro Ogita of TownWiFi. Thanks for sitting down with us today.

Takehiro: Thanks for having me.

Tim: TownWiFi is an app that helps you find free Wi-Fi hotspots but I know it’s more than that, and you can explain it better than I can. So why don’t you tell us what TownWiFi is?

Takehiro: We are providing app which can auto-connect and authenticate to the public Wi-Fi. Our biggest point is that we are auto-authenticate, and auto-login, and auto-register to very public Wi-Fi of the world.

Tim: So that means that the user can just kind of keep this app running in the background --

Takehiro: Exactly.

Tim: -- and the phone will just automatically connect to publicly available Wi-Fi when it can?

Takehiro: Yeah. There’s many public Wi-Fi spot in Japan, in Korea, and all over. The UXO using Wi-Fi is not good at all, the WiFi Mark at the iPhone. You cannot connect after that. You have to open up the Safari, it will redirect you to registration pages of each Wi-Fi.

Tim: Right, right.

Takehiro: It’s super annoying.

Tim: You’ve got to go through at least three or four different pages and forms.

Takehiro: Exactly. Exactly.

Tim: Okay. So the real selling point is all this happens in the background.

Takehiro: Exactly, yeah.

Tim: Excellent. Tell me a bit about your users. Who is using this? How many hotspots do you have registered? How many companies? How many subscribers?

Takehiro: We have 1.5 million Wi-Fi spot all over the world.

Tim: Wow. That’s a lot of spots. So how many of those are in Japan versus global?

Takehiro: In Japan, we have 300K.

Tim: Okay. So most of the spots are overseas?

Takehiro: U.S., the most.

Tim: How did you register all these spots? How did you find the location?

Takehiro: We are not talking with each Wi-Fi provider. That’s super tough negotiation for an app which is not famous at all like us. What we do is that we just support the registration flow of the users. So contract is based on users and Wi-Fi provider, like users and Tokyo Metro or users and Starbucks.

Tim: But how do you support that? If you’re here in Japan and you’ve got Bob’s coffee shop in Central Missouri, how do you know what steps you need to take to register and log in there?

Takehiro: We have two different way to do that. One is to just go there. Just go to Starbucks at San Francisco.

Tim: Something tells me, with 1.5 million hotspots, that’s not really a practical approach.

Takehiro: Well, it is actually. Because if I went to Starbucks at San Francisco then connect to the Starbucks Wi-Fi, we will just build the same interaction into our apps. What user have to do, just set up the first sign and if we handle one Starbucks Wi-Fi, the authentication is same. We’re not sure about where exactly the Wi-Fi spot is but our app will connect when there is Wi-Fi around them. And next, we will analyze the log data of users. Where did they fail, if user tried to access the public Wi-Fi which we don’t know. The log will come, this SSID and this kind of registration pages. By analyzing that, we will make that Wi-Fi into our TownWiFi.

Tim: I get it. So the first time a user visits a location, they manually go through the process then it’s in the system and everyone can use it after that?

Takehiro: Exactly.

Tim: I guess similarly, if a location changes the protocol used to log in, the first person logging in after that has to go through it and then everyone else is updated.

Takehiro: Kind of that, yeah.

Tim: All right.

Takehiro: We are tracking the Wi-Fi success ratio. If the Wi-Fi manager change the registration flow, we can detect it and fix and reuse it.

Tim: On the user side, the subscriber side, how many people are using TownWiFi?

Takehiro: We have more than 2 million users and one million are active.

Tim: That’s also global or mostly Japan?

Takehiro: Well, sad to say it’s mostly Japan. We’re trying to expand global and we are handling Korea and U.S. Wi-Fi. It’s growing but not so fast as we expected.

Tim: Okay. What is TownWiFi’s business model? How do you make money from this?

Takehiro: We have two business models. One is making user pay and another is utilize Wi-Fi data. The first one is very simple. We will handle the paid Wi-Fi. If you pay ¥‎300, you can access this certain Wi-Fi. There exist all over the world and we are talking to that Wi-Fi provider. We will sell at ¥‎300. They will wholesale to us like ‎‎¥‎400.

Tim: So in those cases where there is no free Wi-Fi available, the phone would default onto the paid Wi-Fi?

Takehiro: Yeah. We will let user know, “Hey, there is a paid Wi-Fi but how about using it?” It is more targeting to travelers. Especially in China, the China Telecom Wi-Fi is all over China.

Tim: Right. And on the Wi-Fi provider side, what kind of data are you selling?

Takehiro: We are selling two data. One is Wi-Fi request data. User are saying that, “Hey, I want Wi-Fi at this shop.” And we are selling that data to Wi-Fi sales company and they will call shops that these people are wanting Wi-Fi at their shop. How about making it?

Tim: How do you get that data if the application is running in the background?

Takehiro: User have to do it manually. There is a request pages or request tab at our app.

Tim: Okay. I see. So it would be maybe there is a coffee shop in the middle of an area with no Wi-Fi and this would be a good way to get more people into the shop. Is Wi-Fi still an effective way to draw customers into a shop?

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Takehiro: Wi-Fi is not needed to all the shops. It basically depends on what kind of users are going there. So we are just creating the list based on user needs. So if there are more than five people requested it, there is a need for your shop for creating Wi-Fi. Especially young generations or people who change to cheaper telecom services, they will reduce the cost but also reduce the amount of data volumes. Another is that we are providing Wi-Fi dashboard to each Wi-Fi providers. They don’t know who are using their Wi-Fis when it’s used or is that repeater or a new user? We are providing that in dashboard. On top of that, Wi-Fi provider can contact users when they connect to Wi-Fi.

Tim: I can see the value in contacting users when they connect,