I attended several Tokyo developers meetups last month. I go to as many of these events as my wife and liver will permit. Talking candidly with developers founders over drinks is endlessly fascinating. I almost always learn something new.
Naturally, I bring Engine Yard stickers to these events to hand them out to anyone who wants them. Last month we had just designed a very cute logo sticker in the shape of a train, and the attendees were so enthusiastic about them that I completely ran out after 20 minutes. At thee same event, another company had brought small candies that were imprinted with their company logo. These were also received with great excitement and quickly ran out.
It suddenly stuck me as odd. This room was filled with some incredibly smart people, most in their 20s and 30s, and some in their 50s. And all of them were very excited and happy to be receiving free stickers and candy. We really haven’t changed all that much since kindergarten.
I was in Fukuoka the other week speaking with Hashimoto of NuLab, and he explained a perfect metaphor for the transition that is happening among new startups in Japan.
Traditionally, Japanese companies have been run as little kingdoms. The president is the king. If you disagree with the king’s judgment, he will graciously allow you to leave the kingdom, quietly. Newer, and more successful, startups are being run by teams. The final decision is not the result of one man’s opinion, but the blending of the different perspectives of different people with different skills. Good ideas should bubble up. The top-down, tyrannical model seems quite odd to many young Japanese.
Whether these young founders and companies can maintain this dynamic as they age remains to be seen, but I am optimistic. In nearly all of the Disrupting Japan interviews I do, founders talk about the critical importance of the “founding team” rather than “the founder.” That was not the case 20 years ago.
Your quality of life is inversely proportional the number of lawyers you interact with. This is true even when all your interactions are with friendly lawyers like patent attorneys and general council. I don’t mean this as a cheap shot at lawyers. Many attorneys are wonderful people who care deeply about their clients and their craft. This is not a people problem.
The problem is that if you are consulting an attorney at all, you are doing so because there is some kind of barrier that you need their help to remove. Problems that involve lawyers are the most frustrating kind, you can’t solve them on your own, you can’t fully delegate them, and you’ll never completely understand the solution. It’s a horrible feeling.
Visiting my attorney is like visiting my dentist. I like and trust my dentist. I know that his skills make my life much better in the long run, but I only visit when I must. No one wakes up in the morning and looks forward to their appointment with their dentist or their lawyer.
I’m sitting in the audience of one of the best-run startup events I’ve attended this year. Next up, a procession of startup CEOs will be introducing themselves and their companies to the audience. The printed agenda details each company’s name, founder, kind of business and how much capital they have raised.
Oh, good grief.
There are few metrics that tell you less about a startup’s potential than how much money they have raised. Fundraising has become a kind of vanity metric, and people who should know better pay way too much attention to it. Revenue has real meaning, but most startups would be horrified at the idea of publicly positing sales numbers — with good reason.
Raising funds is such a tiny part of growing a business, but the startup world seems fixated on it.
I’m working on a number of new projects, and most of them have some tie-in to Japan. Naming them always turns out to be harder than you imagine. The problem is that most relevant Japanese words (and their related domains) have been appropriated by western companies trying to be cool. There are a host of sites out there using the terms like “sumo”, “dojo”, “sushi” and “ninja” in their names, and almost none of them are based in Japan.
Perhaps I should use “cowboy”, “hot dogs”, and “football” to brand these products as uniquely Japanese.
Against my better judgment, I somehow found myself barefoot, looking across 30 feet of burning coal. A tribal drumbeat pounded behind me and fellow participants chanted encouragement. Sweat dripped down my face, triggered partially by the heat coming off the coal and partially from fear.
I was clearly an idiot for being here.
I take the first step, and before I know it I arrive on the other side. My nerves and feet are still intact.
Some of the other participants claimed that the experience was deeply spiritual or even life changing. I think that’s wonderful, but I can’t say it changed my life. However, there was one aspect of this day that has stuck with me ever since. The fire-walking experience has become a metaphor for just about every difficult thing I’ve had to do since then.
Most truly difficult projects are just like fire walking. The only hard step is the first one. After the first step, the rest come quickly and automatically.
In the startup teaching and mentoring I do, many-to-many marketplaces are one of the the most common business ideas my students come up with. Whether it is restaurant recommendation sites, crowdsourced software development, or matching babysitters with parents who need them, all of these ideas have the same structure and the same fundamental challenge.
Students typically imagine these companies as they would be after they had already become successful with thousands or hundreds of thousands of users registered and active. Naturally, any business plan is much simpler if you can simply assume you already have the contact information of thousands of people who what your product.
But, of course, you don’t.
My advice to all these students is the same. “What will you do tomorrow? If someone comes to your site tomorrow, they will see an empty marketplace and never come back. How will you get your first 1,000 users? What will you offer them?”
Fortunately, for valid business ideas there are always strategies for developing your initial user base, and that is what will make or break the venture.
Getting your second million paying customers is much simpler than getting your first 100.
I was chatting with a Western manager at Google Japan about the differences between managing Japanese and Western staff. He mentioned that he was baffled by the lack of drive and ambition among some of his Japanese subordinates. These people had graduated from some of Japan’s top schools and many had been recruited from some very prestigious firms. Yet time after time, he would have discussions that amounted to:
“You are smart, but unless you push this project to completion and be more aggressive, you won’t advance your career.”
“That’s OK. I’m happy with the way things are. I like my job.”
People who want to work for a successful company are very different from people who want to work to make a company successful.
I’ve written about this before, but the problem persists.
Japanese society is unquestionably hierarchical. True peer relationships, either social or business, are rare. Advice and instruction from higher up is to be respected and trusted. To be successful, Japanese entrepreneurs need to reject this pattern of thinking, but it’s hard. It is so pervasive in Japanese society that it is almost invisible.
This attitude frequently hurts startup founders in their relationship with VCs. Since the money is coming from the VC, the VC is more senior in the relationship, and Japanese entrepreneurs defer to the opinions of VCs far too quickly and far too often.
Of course, some individuals in Japanese venture capital firms have real world experience, industry knowledge, domain expertise, and mentor new founders. However, such people are rare ― and extremely busy. Ironically, the VCs with the least real-world experience seem to be the most confident and prolific in their advice.
If you, as a founder, need advice on raising funds, listen to everything VCs have to say. In this area they are truly domain experts. If you need advice about market direction or growth strategy, listen politely and attentively. Thank them, then get three more opinions from other entrepreneurs or someone in the industry. Then make up your own mind.
A fellow entrepreneur who had some successes or even failed completely in the market will probably provide you with far more valuable insight.
My Japanese is good, but far from what I consider fluent. Even so, I accept almost all opportunities to speak to an audience in Japanese – provided I have time to prepare. Things usually go well, but sometimes I go down in flames.
However, it turns out that even when I crash and burn, l come out way ahead.
Last year, I was invited to give a 20-minute presentation about PaaS and Engine Yard to a Japanese audience of about 1,000. I bombed about as badly as was possible. The wrong version of the slide deck was projected behind me, I stumbled through my talk never quite finding my rhythm, and my jokes were met with a dead silence. (The audience got them. They just weren’t funny.) Ouch!
After the presentation, a lot of people approached me and opened conversations with something like “That took a lot of guts. I don’t think I could have done that in English.” I ended up with over a dozen promising business leads and met a lot of interesting people I would not have met otherwise.
In Japan, a terrible speech in Japanese is far more effective than a brilliant one in English.