2013-09-06

Co.Labs

Hey Japan, What’s Up With Your Startup Culture?

When Americans hear "entrepreneur," we think visionary young techie out to change the world. When Japanese hear it, they often think "selfish, greedy, untrustworthy criminal." Why? And how can Japanese young people get back the creative spirit of the '50s? Terra Motors, maker of the iPhone-compatible electric scooters which are out to replace gas motorcycles all over Asia, says times are changing.



Where are the Japanese Googles, Facebooks, Twitters, and Apples? Who is Japan's Mark Zuckerberg or Steve Jobs, and why isn't he, or dare I say she, globally successful?

Trying to answer this question, I found some young Japanese entrepreneurs who don't mince words about what they say is wrong with their country's corporate culture.

"All the big work is done by old men," said Tetsuya Ohashi, PR manager of Terra Motors, a young startup that makes trendy electric scooters, now the top seller in Japan. Their "e-scooter," released in July, is the world's first smartphone-connected scooter, which logs the vehicle's route history and battery life data through the phone.

In journalist Yuri Kageyama's recent AP story on Terra, 26-year-old Kohshi Kuwaharu put it even more bluntly: "If you're stuck in a system that promotes by seniority, it's living a slow death, like animals on a farm. I wanted to be in a tough, competitive place."

Terra's founder and CEO, Toru Tokushige, 43, faced a similar frustration working at insurance company Sumitomo when he was 25 to 29. So he left Japan for Stanford Business School, where he met venture-minded entrepreneurs whose energy and vision he brought back to inspire young Japanese to quit following and invent their own careers.

"There are limitations for young people in Japan," Ohashi explains. "Bosses don't take risks. Japanese workers can't challenge the boss. If you give opinions, they don't listen. Bosses don't give young people opportunities: Only old men get to do interesting work."

Why Don't More Japanese Startups Spread Abroad?

So some young Japanese are inspired to leave crusty top-down corporate dinosaurs to join startups. That's awesome. But why is it that so few Japanese startups go global?

Startup-dating.com, a Japanese website tracking tech startups and venture funding, boasts an array of new Japan-produced apps and services, especially for smartphones, but most are targeted to the Japanese market. At the Tokyo SeedStarsWorld last week, an initiative touring 20 cities worldwide to find startup talent for a global competition, the winner was Locarise, a "Japanese" startup based in Tokyo and funded by startup incubator Open Network Lab, but the team, recently featured in a Co.Labs profile, is three French coders. Why don't Japanese entrepreneurs win these competitions? Why aren't more young Japanese motivated to make their own global companies?

Language is no doubt a barrier. Japan ranks famously low among Asian nations, given its high economic status, in English proficiency exams: 22nd out of 54 countries, versus Singapore's 13th, Malaysia's 14th, and South Korea's 21st in this year's Education First global English proficiency test. But Ohashi thinks two other factors are more important.

How Japan's Startup Image Fell From Grace

"Selfish, greedy, untrustworthy: That is the image of the entrepreneur in Japan since around 2000," Ohashi says. Why 2000? Here's why.

Japan did have its own would be Mark Zuckerberg or Steve Jobs, 13 years ago, and his reputation is mythic, too--only his is a "bad, black image," Ohashi says with a sigh.

Horie Takafumi launched Livedoor, a website that became a popular Internet portal and blog platform in Japan, after dropping out of the University of Tokyo at age 23. Takafumi, also known as "Horiemon," after the popular robot cat Doraemon he supposedly looks like, shared American tech pioneers' informal dress style (T-shirts and unbuttoned collared shirts, provoking the typical Japanese salaryman's suit), and having dropped out of ToDai, often called Japan's Harvard. He wore a mohawk at times and flaunted a counterculture image that irked traditional Japanese businesssmen during his heyday. But his site shut down in 2006--after a decadent and public career, buying horses, hostilely taking over companies, running for office--when he was arrested for lying about profits to hide losses at Livedoor, and sent to prison for almost two years.

Aside from this poisoned image of the startup founder, Ohashi says, Japanese people tend to be risk averse. They prefer to follow someone else's example--a bad sign, frankly, if what you want to be is a pioneer. Still, Ohashi uses a baseball analogy to make his point.

Nomo Hideo was the first Japanese baseball player to make it in the American Major League, in 1995--but he was followed by a flood of players, like Ichiro Suzuki and Daisuke Matsuzaka--more than 50 in all so far. Baseball had been huge in Japan since it was introduced there in 1872 by American professor Horace Wilson, but it was not until a century and a quarter later that Japanese pros started competing internationally. Terra Motors hopes to be the Nomeo Hideo of Japanese startups--the startup of startups, pioneer of pioneers.

"There is no model case yet," Ohashi says. "We have no Facebook, no Google, no Twitter, so young people don't believe Japanese startups can succeed. Our CEO's vision, what he wants to do, is to change that culture."

Terra Motors leads Japan's market in electric scooters. But Chinese knock-offs still dominate Asia, which makes up 80% of the world's motorbikes, Ohashi says. India has 13 million gas-powered bikes, Vietnam 3 million, versus Japan's 400,000--and China's got 20 million motorbikes. Most are imitations of Japanese models by companies like Honda, which tend to be "broken," Ohashi says--and lacking maintenance, spare parts or service; those markets, along with Thailand, the Philippines, and Indonesia, which is full of motorbikes, are some Terra hopes to penetrate soon.

When Did the Sun Quit Rising In The Land of the Rising Sun?

Japan is a rich country, with one of the best education systems on Earth. Yet what service do you use regularly, made by a Japanese startup? Sure, we love Japanese electronics--the Nintendo and Sony Playstation games we grew up on in the '80s; cars by Toyota or Honda, and clothes by UNIQLO or Rakuten, maybe. But those are old companies. My new Onitsuka sneakers may look sweet and modern, but the guy who stitched the first pair in his Kobe living room, Kihachiro Onitsuka, opened shop in 1949--yup, four years after Hiroshima and Nagasaki. In 1977 his shoe company became ASICS and spread to the U.S., in time for the running boom that swept up my parents and many other twentysomethings in those days.

Japan's inspiring revival after World War II, as told by MIT historian John Dower in his Pulitzer-winning book Embracing Defeat, was spurred by demand from America's army, stationed at Japanese bases while waging war in Korea and Vietnam. That's when the famous giants got their start: Honda, the world's largest motorcycle manufacturer by 1964, sold its first "Dream" bike in 1949, during the Allied Occupation; Sony started in the war's wake, when Panasonic transformed as well: its big product before the war had been bike lamps; after the war, radios and TVs sold all over the world.

"We Are All Different Than Usual Japanese. Everyone Has Been Abroad"

Internationalism is the most striking difference between Terra Motors' employees and most of their contemporaries in Japan. Kuwahara worked for Panasonic in Tanzania before joining Terra; another employee came from French tire maker Michelin; and Ohashi studied abroad in Pakistan, traveled to India, Myanmar, Russia, and elsewhere. Among Japanese young people, who are well known for their shy reticence to speak openly to foreigners, in the historically closed island nation, this is an adventurous crowd.

Ohashi, like most of Terra's 15 employees in their mid-twenties, ditched the prospect of working for a famous company to take a risk at a job where he'd be challenged. Ohashi was recruited by Mitsubishi from Hitotsubashi University, one of Japan's best, but he decided against the job when he heard of Terra through a venture capital recruiter.

"I quit because there is no chance to go abroad when you are young, or to do big work. Young people aren't given interesting chances. Maybe every young person in Japan has this frustration." This is ironic, he points out, because "the people who want to try the hardest are the young ones."

Japanese Dreams Deferred: An Old Road Rapidly Fading

American young people often think of youth as the time for taking risks, a time when we're curious, ambitious, and restless. So many Americans, especially in New York, make a stab at starting a business or doing creative work, like music or writing, in our twenties.

"Japanese young people are also restless," Ohashi told me, "but we have no successful examples." Not many recent Japanese startups have succeeded on a global scale, he stressed again. And few Japanese students go abroad. When Ohashi's friends hear about the time he spent in the Middle East, their usual reactions are "You've got guts"; an envious "sounds interesting"; and fear: "Why do you go to such dangerous places?"

"People want to stay at a big company," Ohashi's roommate added, in the background over Skype--11 p.m. in Tokyo, 10 a.m. here in New York. Safety is the priority; they think "'We will succeed if we follow this company'. But Japanese companies can't continue this [generous lifetime employment system] much longer."

The cozy security of Japan Inc. is bound to crumble soon. In the meantime, though, "Young people don't have incentives to take risks."

"After World War II," Ohashi said, "40 years ago, [Japanese] people took risks. But Japan is almost a developed country now," and many have grown complacent.

Okay, but what about the incentive of personal curiosity? Hunger for a challenge, a taste of adventure, or the natural restlessness a creative person feels? What happens to a dream deferred? In America, we're told that it explodes. So when will Japan's youth catch fire?

If Terra’s idealists are any indication, what we're seeing may be just the first spark of a coming inferno.

[Image: Flickr user Jesse Freeman]