2009/12/21

Entrepreneurship in Japan and Startup Weekend Tokyo

Startup Weekend is a 54 hour event that a group of developers, business managers, startup enthusiasts, marketing gurus, graphic artists get together to build communities, companies and projects,etc.

It started in 2007 and has spread to over 52 cities and 12 countries and growing. For the first time in Japan, mini-Startup Weekend (2 days version) was held in Tokyo this weekend.

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** Entrepreneurial Environment in Japan **

In Japan, entrepreneurial spirit is weak due to various social and cultural reasons. In general, we were educated not to stand out, many still believe working for a big company is more stable and better (I can tell because I used to work for a company with 190,000 employees, which split and I moved to 60,000 employee company, then to 30 employee company which grew to 100, then I joined to found a company and now I am freelanced. I've been facing many and various reactions.) They value "suffering" and some expect others to be "loyal" and stay in the same company until they retire. There is lack of acceptance of failure, so people try not to take risk.

All this is changing compared to several years ago, but those social / cultural aspects that are deep in people's mind still affects entrepreneurship to some extent.

According to InternationalEntrepreneurship.com, Total Japanese Entrepreneurial Activity Average (TEA) during 2001-2009 was 3.2%, which was one of the lowest rates amongst the world's leading nations. The TEA rate is the proportion of people aged 18-64 who are involved in entrepreneurial activity as a nascent entrepreneur or as an owner-manager of a new business. They continue: "Entrepreneurs (in Japan) face many difficulties when starting their own ventures. Some of these difficulties include receiving loans from banks, the pressures of deflation, weak domestic demand, and tough competition within the country."

The following chart presents TEA rates for the 43 countries surveyed in Global Entrepreneurship Monitor (GEM)'s 2008 report.

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This is a lot better than what we saw several years ago- in GEM report 2005, which reported that Japan had the lowest startup rate in the 34 countries that was surveyed- Japan marked only 1.5% whereas world average was 9.3%, US was 11.3%, and average of European nations was 5.3%... but it is still in the lower group.

- Japanese TEA -
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Japan's entrepreneurship potential was discussed during Red Herring Japan 2007 conference according to an article by Globis, and Nobuyuki Idei ( former CEO of Sony) said that Japan suffers from an “ABCD” syndrome, which stands for Aging, Bureaucracy, Closed and Domestic. The article continues: "Mr.Idei went on to say that Japan must not make culture-based or language-based excuses to resist integration on the world stage. Japan must instead be a catalyst for future change, and abandon its negative self-critical nature. Japan must be less afraid to take risks and develop a vision. Without the vision, said Mr. Idei, there is no chance to get attention from investors, either inside or outside Japan."

The conference's final panel came with the following advice:

-Globalize Japanese venture capital, venture capitalists inside Japan need to travel more and learn from other countries as to how to make venture capital more successful.
-Reform the Japanese financial system. Japan is sitting on savings amounting trillions of yen which had been going overseas in search of higher yields.
-Transform the image of the entrepreneur."According to panelists, the word 'entrepreneur' still has a vague connotation in Japanese society. The image of the Japanese entrepreneur needs to be remade into someone who cares about society, and uses his or her power to advance the country through their creativity and vision."
-Change the mindset inside companies.


Another article on Japanese entrepreneurship and venture capital by Forbes:

Statistics show Japanese entrepreneurship is bleak. Although the country is the world's second-largest economy, it has generated only $3 billion a year, on average, in venture funding, for about 3,000 investment deals annually. Venture funds here typically eke out internal returns of just 4%. Even the Japanese government, which traditionally bolsters industries until they can stand on their own, has not been able to spark a more welcoming environment for Japanese startups. "Up until now, policies to support ventures have not been that successful," says Kazuhiko Toyama, chief executive of Industrial Growth Platform.

In the U.S., by comparison, startups get funding to the tune of $30 billion a year over deal volume of about 4,000 investments. Silicon Valley's venture funds and their compatriots enjoy returns three to four times higher than Japanese funds.


Startup Weekend is just one small event, but I believe it is so important to hold these kind of events especially in Japan, due to those environments.

** Startup Weekend Tokyo **

The real 54 hour version Startup Weekend Tokyo will be held in February, but as a warm-up event, 2 day ver event was held this weekend.

The real great thing about Startup Tokyo is that you don't just talk - you DO and CREATE. You form real teams with other engineers, designers, marketers etc and start coding and create business plans that would be evaluated by people like Dave McClure (VC), CEO of KDDI web communications, head of TechCrunchJapan, etc. Some team actually created iphone apps, some already got the domain and created demo sites and other websites.

Another great thing was that it was a mixture of Japanese only + English only + bilingual people, helped with a bunch of staffs who can interpret, and the event was completely bilingual.

Not only were there the workshops, but Ari Awan, CTO of Flutterscape and Ki Yoyo, CEO of Lang-8 visited to make keynote speeches.

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** Dave McClure at Startup Weekend Tokyo and Half-baked dotcom **

Startup Weekend Tokyo attendees were fortunate enough to have Dave McClure - a Silicon Valley tech entrepreneur, startup investor, and blogger - visiting Japan from Silicon Valley to be present at the event. He gave a speech, stayed in the room for advice most of the time during the event, and served as a judge for the final presentation.

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He emphasized the importance of projects solving a PROBLEM. Lots of people- especially engineers pitch solutions -like great technology they came up with; what they really should do is to pitch the PROBLEM, and share the problem. If the problem can be shared with the listeners it is a problem worth going ahead and solve with your solution, if not- you need to come up with a better problem. (BTW I totally agree with this... I've been interviewing various entrepreneurs and felt the exact same way. David Sifry made blog search engine Technorati because he couldn't find anything on Google when he ego-searched his name after he made a speech to see how the audience felt, Mina Trott made Movable Type because existing blog tools were just not good enough for her, Martin Varsavsky made wifi sharing service FON because he was uncomfortable travelling overseas and being unable to use wifi- or it was too expensive.)

Dave proposed to do an exercise called "Half-Baked dot Com". Everyone in the room can shout out words and when they reach 50, they break up into teams, each team picks 2 words from the list of 50 words and comes up with a name of a website using those 2 words (for example "corpse" + "Twitter" and make corpsetwitter.com, "subliminal" + "monkey" and make subliminalmonkey.com, etc.) Each team is expected to make a presentation about their website with the following:
1) tagline
2) logo
3) problem (that you are going to solve with your service)
4) business model
5) marketing plan

Therefore it is important to have a good mix of creators, designers, marketers, engineers etc for each team. The teams came up with the following 5 dotcoms:

-Realtimeaccesibility.com (dating service for handicapped people)
-Boobsfail.com (mobile app for breast-enhancement using vibrations)
-Freshyopparai.com (Yopparai means drunk. It's a NicoNicoDouga-like video-sharing site of drunk people in Tokyo. Yopparai conversation can be subtitled)
-Kusairobot.com (Kusai means stinky. It's a Roomba-like device that finds/follows stinky stuff & perfumes it away)
-Sexypropose.com (Uses Augmented Reality like Sekai Camera and suggests cool, stylish, sexy places for marriage proposals )

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There are 3 key factors to this exercise:
1) Japanese people are generally shy and don't speak out, so Dave making everyone shout out words at the beginning was a good icebreaker.
2) You are given a very limited time, so it's a good exercise to think quickly and prepare for the real project after this. According to Dave, ideally Half-Baked should take 30-40min total. 10 minutes to come up with words and split to teams, 5 minutes to decide which word they'd use, 10 minutes to prepare for the presentation and 15 minutes for the presentation - is the longest it should take.
3) Members get to know each other before they start the real project.

** Time for the REAL projects! **

Each person who wanted to make a proposal came up on front and made 2 minute pitch of the problems they wanted to solve.

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There were 17 people who presented, and each presenter wrote a tag line on a paper and started to pitch to each other.

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Project migration during this pitching time

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Then there was the voting time to decide which project will make it to the real project.

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There were 5 winners- so the 5 people were to examine what resource / who they need to make this company / project happen in 2 days. Others will huddle up in each of the project to help examine and decide which project they would be contributing to.

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There was a status reporting time to share where they are, what resource they lack, etc.

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Further working in teams- some started coding already.

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End of Day1 - status report.

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It looked like all of the teams were seeing progress, but I was amazed by the Yoga App team which already created a working iPhone App that would give you a "ding" sound if you can keep your pose for 5 seconds, and a "boo" sound if you move / fall, and demoed it for us.

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Day 2 starts with breakfast, some people are deadly tired :)

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Working hard to prepare for the presentation that starts in the afternoon- even working while eating lunch (look at the bento on his PC!)

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As for the final presentation, please check out the video recording of Ustream here:





The judges:
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The winner! "team Wubble" makes smartphone apps and games for Japanese women to understand how smartphones are fun; 1st app is Mobile Yoga Fitness.

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Presentation slides can be seen here:



A shot from the awarding ceremony- Dave joins them do the Yoga pose!

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The winner of TechCrunchJapan Award! "Team Nakano" will provide People-Powered Problem Solving Platform called "Wishcovery" for everyday problems,via crowd-sourced solutions.

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A shot from the awarding ceremony- Shinohara-san from TechCrunchJapan joins them with Yoga pose!

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"Team Cloud Compliance" provides workflow and compliance for the Cloud. They outlined why record management solutions are necessary, why hosted compliance workflow will accelerate use of Google Docs/Apps in enterprise.

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"Team themselves (no team name)" EnjoyBet provides social betting platform for making casual bets with your friends.

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"team DOOCANA" Doocana is a social media news & education site, a Mashable-like website in Japanese. Presentation slides can be seen here:

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It looks like they've already made web and mobile interface.
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Otsukare sama deshita!

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A big applause to Jonny Li the organizer, KDDI Web Communications for the venue and all the staffs:

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Many thanks to Dave McClure and Chris McCann from Geeks on the Plane, also Sano-san from Cookpad:

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My photos can be seen here:
Derek's awesome photos can be seen here:
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