What Every Foreigner Needs to Know about Hiring Staff in Japan

Japanese labor law is very different from what is standard in the US or Europe, and more than a few foreigners have made simple mistakes that have cost them their jobs or their entire companies.

Terrie Lloyd has started more than a dozen companies in Japan over the past 30 years and has hired hundreds of people here. Today Terrie shares a number of personal stories and also offers a lot of practical advice for westerners in Japan who need to hire, manage and retain Japanese staff, either for their own startup or as part of a larger organization.

Of course, we talk about Japan Travel, Terrie’s latest venture, but we also cover the state of Japanese startups in general, how to best raise money from Japanese VCs, and we go over a few real-world examples of how you can protect yourself when things go horribly, horribly wrong.

It’s an interesting discussion, and I think you’ll enjoy it.

Show Notes

One mistake all founders need to avoid when building a platform business Why Japanese VCs have a blind spot to the travel industry How you know when to bootstrap and when to raise funds Why loyalty points are stronger than blockchain Why Japanese companies are afraid of open data The best way to recruit and manage Japanese staff How to find a startup niche as a foreigner in Japan How to get rid of problem employees without getting sued What you need to watch out for when getting legal advice in Japan

Links from the Founder

Check out Japan Travel Terrie's Take is a weekly newsletter that is definately worth reading Japanese Labor Law for startup founders

A general overview of Japanese Labor Law JETRO's Guide to Japanese Labor Law Some good advice to startup founders from a Japanese Lawyer

[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.

Okay, I want to explain in advance, this one is going to be a little long, but believe me, you are going to be glad you spent the time, and you know, you might even find yourself listening to this particular episode a couple of times. There's so much good stuff coming.

Terrie Lloyd has started more than a dozen companies in Japan and he has hired hundreds of people over the past 30 years. Now, Terrie and I have known each other for a long time. In fact, when I was first starting out in Japan, I did some programming for one of his companies back in the 90s. I wrote for one of his magazines in the early 2000s, and you know, I'm not sure what took me so long to invite him to sit down and talk, but I'm glad I finally did. Of course, we talked about Japan Travel, Terrie's latest startup, but our conversation also turns into a brutally practical guide for any foreigner who wants to run a business in Japan. I will warn you in advance, our conversation lacks most of the startup hype and pep talking most founders exude, but you're about to hear some fantastic real-world advice about how foreigners can hire, manage, and occasionally even fire Japanese staff.

Japanese labor law is well, different than it is in the US or Europe, and more than a few foreigners have made simple mistakes in this area that ended up killing their companies. Terrie has some great advice both on how to attract and to keep Japanese talent, and a few real-world examples of how you can protect yourself when things go horribly, horribly wrong. But you know, Terrie tells that story much better than I can, so let's get right to the interview.

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[Interview]

Tim: So I'm sitting here with Terrie Lloyd, the founder and CEO of Japan Travel and LINC Media, and BiOS and quite a few other companies, so thanks for sitting down with me.

Terrie: It's my pleasure.

Tim: Yes, I'm amazed how long it's taken us to get around to doing this interview because we've known each other for a couple of decades now.

Terrie: Yes, that's right, absolutely.

Tim: And I want to talk to you about Japan Travel, but there's a lot I want to dig into about the ecosystem itself and how it's changed, and some real practical advice for foreigners doing business here. So let's talk about Japan Travel. Can you explain how it works? I think it's a really interesting model.

Terrie: Well, I started off as portal. I've been interested in media for a long time as you know, and so I wanted to create a community-driven media brand, basically. The impetus for making Japan Travel, of course, was to help with disaster, and so I wasn't really thinking too hard about turning it into a business per se. I thought it would be kind of like a good way to contribute to help rebuild Japan. As you recall, back in 2011, I went to meet people looking at the traveling to Japan.

Tim: Oh, I see, so I mean, but you always envisioned that as an inbound travel portal, right?

Terrie: No, actually, originally, I created a piece of software which we called ACQ2 which is a community management platform, and I went out and tried to get funding for it, and it was obvious that nobody really understood what I was trying to do. I don't know that I understood. So I realized I would have to make something that was more solid that people could identify with, and actually, originally, I started off with a dog site, and then it was called doglovers.jp, and roughly at the same time, of course, the earthquake happened. I had a very powerful dream, actually, and it woke me up. I started writing down furiously what I remember and I decided that I would do something to contribute to help Japan. I've always been a firm believer that money follows quality, so if we did a good job, maybe we could turn it into a business. Of course, that's always in the back of my mind.

Tim: What exactly is the platform? How does it work?

Terrie: Yes, okay, so originally, as I said, we started off trying to build a portal. I've always been in the publishing business where we are very concerned about quality, but at the same time, we had all these constraints, and one of the constraints is having to hire people to create the content and so on, and so I decided that I would try to do something more on the community basis by building this whole quality control method. The the earthquake turned out to be kind of like a blessing and a curse. It was a curse because, of course, the damage it caused], but it was a blessing because there were other people like me who felt like they wanted to do something to help Japan. So the first stage, I was running around and emailed friends, my network, basically, of foreigners living in Japan. I must have contacted about 500 people. I had a great response, and so on the basis of that, we started building this community. We ran it on the platform and today, their community is about 30,000 people, so it is quite large.

Tim: And the platform itself allows for crowdsourced content generation with some editorial control and some editorial direction as well, right?

Terrie: Yes, I took two patterns out, actually, which I have successfully received just recently. One was an insight into human behavior, so when you have people who are contributing to a crowd in the cloud, it's as hard for -

Tim: It's hard to get that in Japanese, yes.

Terrie: That basically, if you ask them what kind of job they want to do right at the start and they nominate the role out of a pull-out, generally, they will stick to that. So I have people who first signed up as people who created the original content, of course. They are kind of like travel journalists, and then we had people above that who are editors, and people who are fact-checkers and people who are translators, and so on. So each layer, those people kind of stick to their role, so you get this kind of like 360 coverage for each article. You don't get just one person's view, you get at least two or three other people on top of them, and by the time you come out of that process, that article is actually transformed.

Tim: So what is the motivation for people to participate? I mean, for writers, I think both you and I can attest to this, writers are willing to write for free to get their ideas out there, to be heard, but editors and fact-checkers, much less so. So what brings them onto a platform?

Terrie: Well, first of all, we have this points and awards system which is kind of like, imagine Facebook rewarded everyone for all the work they do to make it worth all those billions, that's the first thing, and then secondly, as people become skilled and their reputation goes up, we ask them commercial work. So we have lots of commercial work coming in: regional governments, large corporations, advertising companies, travel agencies, and so on, and so we basically ask those people to do that work.

Tim: Okay, and the first application you used this for was, you mentioned a dog site?

Terrie: Yes, that's right, for people who were dog lovers, basically.

Tim: Well, what happened with that?

Terrie: Well, I had two sites running in 2013 and Abe got voted into power, then suddenly opened up all the visas, the floodgates for tourism, and the Tourist Act just took off. The dog site was also doing well. In fact, we were number four in the country when we decided to close it down. I just couldn't afford to run two things at the same time, so I decided to focus on the travel side of things, but I still have the dog lovers domain and at some point, I may actually resume.

Tim: Bring that back to life? Well, the travel industry is an interesting one, particularly with startups in general, so it's a huge growth industry, one of the few growth industries in Japan, but there seems to be relatively little venture investments in travel. Why is that?

Terrie: Yes, so I have of course,