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Stand up: Lessons on entrepreneurship and innovation from the Japan New Economic Summit

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Last week we live-blogged many of the sessions from the Japan New Economy Summit on disruptive innovation. Since then, we’ve had a chance to digest all the information, and our more in depth overview of the discussions is below. Admittedly it’s a little long, so we’ve made it available in ePub format which you can take for free. The Japan New Economic Summit took place on April 16th in Tokyo, where business leaders from Japan and Silicon Valley came together to discuss innovation and entrepreneurship. While the word “disruption” was peppered though the event’s agenda, the most prominent themes of the event were slightly different. In a way, the day felt like a giant collaborative diagnosis, where some of the greatest innovators in the Internet space came together to find out what ails Japan. Conversation continually returned to emphasize the importance of failure for entrepreneurs, as well as the ability to quickly recognize and rebound from that failure. Directly connected to this notion was a recurring discussion of risk, and Japan’s traditional aversion to it. And while these are not messages we haven’t heard before, it’s the first time that we have heard these ideas coming from such prominent business…

Last week we live-blogged many of the sessions from the Japan New Economy Summit on disruptive innovation. Since then, we’ve had a chance to digest all the information, and our more in depth overview of the discussions is below. Admittedly it’s a little long, so we’ve made it available in ePub format which you can take for free.


The Japan New Economic Summit took place on April 16th in Tokyo, where business leaders from Japan and Silicon Valley came together to discuss innovation and entrepreneurship. While the word “disruption” was peppered though the event’s agenda, the most prominent themes of the event were slightly different. In a way, the day felt like a giant collaborative diagnosis, where some of the greatest innovators in the Internet space came together to find out what ails Japan.

Conversation continually returned to emphasize the importance of failure for entrepreneurs, as well as the ability to quickly recognize and rebound from that failure. Directly connected to this notion was a recurring discussion of risk, and Japan’s traditional aversion to it. And while these are not messages we haven’t heard before, it’s the first time that we have heard these ideas coming from such prominent business leaders in Japan and Silicon Valley.

Success is not a straight line

During the conference, a number of speakers mentioned a lack of agility that exists in companies in Japan, or a need to always plan for everything. Joichi Ito, the director of MIT’s Media Lab, drove this point home in the context of how internet technologies have drastically changed the rules of the game:

Everything was moving slow before and that’s when Japan was strong. … But after the internet, the rules that everyone anticipated [changed everything]. When there is a concentrated control, Japan excels. But with the internet, this has changed.

L to R: Masatoshi Kumagai, GMO Internet Group; Yukihiro Matsumoto, Ruby Association; Yoshikazu Tanaka, GREE; Akira Morikawa, Line Corporation; Joichi Ito, MIT Media Lab
L to R: Masatoshi Kumagai, GMO Internet Group; Yukihiro Matsumoto, Ruby Association; Yoshikazu Tanaka, GREE; Akira Morikawa, Line Corporation; Joichi Ito, MIT Media Lab

The notion of creative freedom is one that Joi promotes at MIT Media Lab, explaining that members of the lab are completely free to study what they want without his approval. He emphasized that “it’s not about profitability or outcomes, because if you know this in advance, then it’s not disruptive.” As many others noted during the conference, there should be a basic direction, but the minor details can be decided along the way.

While most traditional Japanese companies lack this sort of agility, recently we have seen one very notable exception. Line Corporation, headed up by Akira Morikawa, has developed its Line chat application with a decision-making strategy that I suspect involves a dart board of some kind. Since announcing back in the middle of 2012 that Line would be a platform for other services like games, coupons, and other things, the service’s user base has ballooned to 140 million around the world, and more than 45 million in its home market of Japan. He notes that at Line, their priority is not to innovate, but rather to provide customers with what they need as quickly as possible. Morikawa elaborated on his company’s improvisational philosophy in very simple terms:

Japanese people love plans. But I thought it would be good to not announce our strategy. Japanese companies love to announce strategies. We don’t. People get concerned because we don’t have any plans, but from that vagueness we can create a tension that in order to survive we have to do something.

Line Corporations CEO Akira Morikawa echoed these sentiments again at B Dash Camp in Fukuoka
Line Corporations CEO Akira Morikawa echoed these sentiments again at B Dash Camp in Fukuoka

But is this top-speed philosophy really sound? I’m sure that much of Line’s success to date is largely attributable to timing and luck. And I’m sure that their big ad spending hasn’t hurt either. But at the summit, there were a number of other success entrepreneurs – both foreign and domestic – who echoed this notion of working as fast as possible. George Kellerman, partner at 500 Startups, explained that it’s all about the accelerating speed of technological development. “You have to speed up,” he asserted. “If you don’t speed up you will lose.”

But Japanese corporate culture is notoriously slow, and it remains to be seen whether the messages expressed during this conference will leave any lasting impact. Programming legend Yukihiro “Matz” Matsumoto, the chairman of the Ruby Association, underscored that slow-moving corporate culture can often stand in the way of those who have true vision:

We are living in an era where it could take only one or two years to change the world. […] We should let these people move from the company working style, so we don’t impose an obstacle to those who want to change the world.

Failing fast

But when companies move at such a rapid pace, it’s critical to identify when corrections need to be made, so that you can change direction if you have to. Niklas Zennström, the CEO of Atomico and co-founder of Skype, expressed this sentiment in the conference’s opening session, saying that creating a disruptive service is seldom just simple execution of a business plan:

[M]any times, the road is just not a straight line and you need to iterate and fail fast. If something is not working, do a course correction and make another iteration. But as long as you have a long term vision you can be successful. If an idea doesn’t work out it doesn’t mean that you have failed.

Likewise former Google SVP Andy Rubin opened the conference by relating the early days of Android, when their product was pitches as a platform for digital cameras. But as everyone knows, Android had a far different fate in store, and their second VC presentation was Android for cell phones. It was this willingness to stray from the original plan that led to the company’s subsequent acquisition by Google. Andy added:

You have to be flexible, and if your business doesn’t work, you have to change. You have to make decisions quickly, and change direction instantly.

Former Google SVP Andy Rubin emphasized the importance of agility
Former Google SVP Andy Rubin emphasized the importance of agility

While most of the speakers appeared to agree that failing fast and making speedy corrections is an essential component to success, the Silicon Valley entrepreneurs have a much more forgiving environment in which to operate than their Japanese counterparts. Japan, of course, is typically far less accepting of failure, and this is a heavy burden that the nation’s entrepreneurs have to carry.

Safety and support

Imagine if people said to [aspiring] doctors “Oh my god, but what if you fail?!”

Pinterest CEO Ben Silbermann posed this hypothetical to the audience in the second morning session, saying that if you meet an entrepreneur trying to do something, you should do your best to support and encourage them. And as we heard from many of the speakers, one of the beautiful things about Silicon Valley is that it offers exactly this type of support.

Derek Collison, the founder and CEO of Apcera, put it best when he said that the valley is a unique environment “where you have more reasons to try something than not.”

In contrast, Domo’s Josh James spoke of how hard it was to build a Silicon Valley-like company when he was in Utah, and he figures Tokyo might be much the same. He reflected back on those difficult days:

The VCs [there] thought of themselves as better than the entrepreneurs. That made things very challenging, because it felt like they were taking advantage of you. Silicon Valley is great because everyone is respected and viewed the same.

Perhaps the most moving moment of the conference came when George Kellerman, partner at 500 Startups, asked all the entrepreneurs in the audience to stand up, so the audience could give them a round of applause in support. “These people are the future of Japan,” George declared, “you must really celebrate them!”

The symbolism of this exercise wasn’t lost on the Japanese audience, as these entrepreneurs are precisely the proverbial nails that stick out in Japanese society; the passionate risk-takers in a country where passion and risk are not exactly embraced when it comes to business. Speaking briefly with George after the conference, he told me that one of the event staffers was even in tears as he came off stage. Cool moment.

500 Startups partner George Kellerman requests a round of applause for the Japanese nails who stand up
500 Startups partner George Kellerman requests a round of applause for the Japanese nails who stand up

A call to action

But as beautiful this moment was, CyberAgent’s founder and president Susumu Fujita reminded us that the country’s entrepreneurs are going to need more than just warm fuzzies in order to thrive. Government, he says, will have to play a role as well:

[W]e need to see actions, such as changes in policies. Startups bring new ideas, new hires. […] The government should act upon their messages – so for example making an entrepreneurship center for Asia in Tokyo, or a place where engineers can be educated, or something like that.

The notion of an entrepreneurship center is an interesting one. There are are number of seed accelerators and incubators in the Tokyo area (we’ve mapped them here if you’d like an overview), but there isn’t really a prominent focal point to speak of. But I don’t think it would really take much to establish such a hub near Shibuya or Roppongi; some sort of special area that could attract both companies and entrepreneurs from at home and abroad. Joi Ito pointed to the example of Singapore, which is “very proactive in issuing visas to talented people” from other countries.

Get out of the way

In addition to helping out in this way, governors and lawmakers need to stop hindering promising new startups through regulations that protect legacy businesses. It’s truly a shame to hear about great services like Uber that can’t enter the market due to unneceessarily complex laws designed to protect the taxi industry. At the summit, Uber’s CEO Travis Kalanik lamented the obstacles he’s up against in bringing his luxury car service to Japan:

In Tokyo they fix the prices on private car services at 5540 yen. There are something like 90 different zones with different minimum fares, different rules. We are in cities all over the world and we haven’t seen anything like this. The government has essentially said that only rich people are able to get car service. […] These laws are set up to protect the taxis and your city is worse off because of it. In order for us to connect you to a car service through an app, we have to become a licensed travel guide. We have to hire certified travel guides. I don’t know why. They’re just trying to make it hard.

Rakuten CEO Hiroshi Mikitani also noted that there are a lot of regulations in place in Japan that have to be overcome when creating a disruptive internet business. But whether anyone in government will take action on the messages expressed during this conference remains to be seen. Prime Minister Shinzo Abe did swing by on the evening before the summit, and we hope that it wasn’t just a photo opportunity.

On the verge of a renaissance?

While this conference included much talk of the problems facing Japan, there were many more optimistic voices during the day as well. When it comes to the potential of Japan, perhaps no one was more complimentary than Evernote’s CEO Phil Libin. He explained a little about why he’s so positive:

I’m super optimistic about Japan, it’s why I’m here, it’s why we invested in Japan. Japan has a giant disconnect between how the country perceives itself and how outside Japan sees the country. Everyone outside Japan, everyone thinks Japan is a magical place. I come to Japan, and all the conversation is about ‘What’s wrong with Japan’ — and there’s a big mismatch between that and how the world sees it. When people talk about China, there’s some good and some bad, but when you go there, everyone is positive. For whatever reason, Japan is more negative about themselves than other people are.

I think Japan is on the verge of an entrepreneurial renaissance. You don’t need so much money to startup these days. The most important thing is attention to design and details, and Japan does that well. The boundaries to export to the rest of the world are lower than ever before, so I think Japan is on the verge of a major renaissance, and that’s why we’re here — we’re betting on it.

L to R: George Kellerman, 500 Startups; David Chao, DCM; Derek Collison, Apcera; Josh James, Domo; Phil Libin, Evernote
L to R: George Kellerman, 500 Startups; David Chao, DCM; Derek Collison, Apcera; Josh James, Domo; Phil Libin, Evernote

However, Phil did note that he thought people in Japan aren’t quite as willing to express their passion in business. And this is something that entrepreneurs need to do in order to get people to get behind them on their journey. He said with a smile that Japan should treat entrepreneurship with the same passion that it shows to food, fashion, and culture.

This sentiment, combined with George’s grand gesture of recognition to entrepreneurs in attendance, ended the summit on a high note. But as an observer, I was perhaps more impressed by something that Matz mentioned earlier in the day. When a Japanese panel was discussing how Japan can create disruptive innovation, he made what I thought was a very disruptive comment that threw the raison d’etre of the entire conversation into question:

Is it really necessary to have disruptive innovation from Japan? If we have innovation from Google that makes our lives better, isn’t that good? If we talk about globalization, why focus on having it from Japan. Is it loyalty?

Matz appears to see things through a truly global lens. And where everyone else sees borders, language obstacles, and a country falling behind, those things don’t even appear to register with him. I get the impression that he sees the internet as a great enabler, where a rising tide floats all boats regardless of location.

So maybe the true root of the problem is that many Japanese entrepreneurs and companies don’t really think on a global level, or see themselves as a part of a larger world community together on the web. Because if they did, maybe there wouldn’t be a problem at all.

Japan New Economy Summit: Recommendations for Japan

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This is part of our coverage of the Japan New Economy Summit happening in Tokyo. See previous updates here. Participants in the sixth and final session of the day, ‘Recommendations for Japan’, are as follows: Hiroshi Mikitani (Chairman & CEO, Rakuten Inc.) Yasufumi Kanemaru (CEO, Future Architect, Inc.) Masatoshi Kumagai (Founder & Group CEO, GMO Internet Group) Susumu Fujita (President, CyberAgent, Inc) Atsuki Ishida (President and CEO, FreeBit Co., Ltd.) Joichi Ito (Director, MIT Media Lab) Niklas Zennström (CEO, Atomico / Co-Founder, Skype) Phil Libin (CEO, Evernote cooperation) Daisuke Iwase(Co-Founder / Representative Director, Lifenet Insurance Company) 18:34 – Mikitani: The internet is a key to creating disruptive innovation in society. In Japan there are a lot of regulations in place and we need to overcome this. 18:36 – Niklas: If you think about software, you might as well do it for the global market. Doing things abroad can be difficult, different. The first time I came to Japan I was very nervous, I didn’t know how to behave, you need to learn languages and travel. 18:37 – Phil: Althelete who train to be great have to look at the things they aren’t good at and try to improve. But you…

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This is part of our coverage of the Japan New Economy Summit happening in Tokyo. See previous updates here.

Participants in the sixth and final session of the day, ‘Recommendations for Japan’, are as follows:

  • Hiroshi Mikitani (Chairman & CEO, Rakuten Inc.)
  • Yasufumi Kanemaru (CEO, Future Architect, Inc.)
  • Masatoshi Kumagai (Founder & Group CEO, GMO Internet Group)
  • Susumu Fujita (President, CyberAgent, Inc)
  • Atsuki Ishida (President and CEO, FreeBit Co., Ltd.)
  • Joichi Ito (Director, MIT Media Lab)
  • Niklas Zennström (CEO, Atomico / Co-Founder, Skype)
  • Phil Libin (CEO, Evernote cooperation)
  • Daisuke Iwase(Co-Founder / Representative Director, Lifenet Insurance Company)

18:34 – Mikitani: The internet is a key to creating disruptive innovation in society. In Japan there are a lot of regulations in place and we need to overcome this.

18:36 – Niklas: If you think about software, you might as well do it for the global market. Doing things abroad can be difficult, different. The first time I came to Japan I was very nervous, I didn’t know how to behave, you need to learn languages and travel.

18:37 – Phil: Althelete who train to be great have to look at the things they aren’t good at and try to improve. But you also have to look at the things you are good at. [Regarding Japan] I think the country has a great culture of design, and it is becoming the most important thing for successful products. Japan is also great at service, there are many great companies who have become great because of customer service. Lastly, attention to detail, and making everything perfect. Making everything better. These three things together, I think are Japan’s unique strenths which it can invest more in — even more important that investing on strengthening its weaknesses.

18:40 – Joi: In Japan its not about taking risks, but about taking the stable road. Entrepreneurs want to take the risk automatically. But in Japan there is the view that taking risk is not respected. And having the passion is not praised here in Japan. In Japan you get a good job in a good company, and you will have a good future.

18:43 – Niklas: After the dot com crash no one wanted to go back to entrepreneurship, but recently there’s a return to that spirit. I have had many headlines in Sweden about me being involved in products that don’t work, but this is part of being an entrepreneur.

18:45 – Phil: I think in every culture there are many people who want to change the world. And in the past that was limited to people in art, music, or science. But these days, you can still change the world by being an entrepreneur.

18:47 – Kanemaru: I would say that middle risk, middle return is maybe prevalent on the east coast of the US, and maybe that’s the same here in Japan. … My impressions from today is that we can’t just blame the business environment, but much of it is in our heads, and about how we act — about people trying to change the world for the better, I think that mindset is important.

18:52 – Kanemaru shows a keyboard mat in a Denmark elementary school, which kids jump on — but eventually they get familiar with a keybaord layout, very early in life.

18:56 – Kumagai: My impression of the past two days is that we can rediscover Japan’s strengths. We have good design capabilities for example. Regarding the tax system, I’m not sure if I can be accurate on this topic, but we focused a lot on fundraising before. Overall it is really hard to raise funds in Japan … funding should be smoother.

19:01 – Joi speaking of foundation work in the US (Knight, MacArthur). In the US foundations can invest in civic startups, or startups that benefit society. We don’t really have this term ‘civics’ in Japan, and I think that’s very symbolic.

19:04 – Fujita: This summit has been a dream of Mr. Mikitani since we established JANE and I think it has been successful. Yesterday Prime Minister Abe came, and we met him twice yesterday. How can government support entrepreneurship? The public has to know they are supporting about it. … With PM Abe, there is a new monetary policy and a strong message of support for entrepreneurs. But we need to see actions, such as changes in policies. Startups bring new ideas, new hires. As a CEO we say that we will do hackathons and new ideas, and we have places like Silicon Valley where the culture nourtures such ideas. … The government should act upon their messages, so for example making an entrepreneurship center for Asia in Tokyo, or a place where engineers can be educated, or something like that.

19:09 – Ishida: Entrepreneurs can be very solitary and if you have problems you can’t really whine to your team. But if we have any environment where entrepreneurs can come together and feel safe, this would be good. … From my standpoint, I’m on the board of JANE, and we hope to think more broadly, not just IT — but also things like energy. The situation is important and I think entrepreneurship can help. We want to have a broader scope in entrepreneurship so Japan can rise again.

Japan New Economy Summit: Roles of entrepreneurs and venture capitals in disruptive innovation

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This is part of our coverage of the Japan New Economy Summit happening in Tokyo. See previous updates here. Participants in the fourth session of the day, on the role of entrepreneurs and venture capitals, are as follows: Phil Libin (CEO, Evernote cooperation) Josh James (Founder and CEO, Domo) Derek Collison (Founder & CEO, Apcera) Katsujin David Chao (Co-Founder and General Partner, DCM) George Kellerman (Partner, 500 Startups) Moderator: Daisuke Iwase (Co-Founder / Representative Director, Lifenet Insurance Company) 15:24 – Phil: At Evernote we never set out to disrupt anything. We set out to make a second brain. We rejected the idea of business as a zero sum game, where there’s a winner and a loser. There’s much talk of business as a zero sum game, with sports analogies or fighting analogies — but I don’t think business or entrepreneurship has to be like a sport. More than anything else, it’s more like art or music. It doesn’t matter who came before you, there’s always something new you can contribute. 15:29 – Phil: We had maybe the world’s worst VC pitch at Evernote. I would say to VCs that we have a way to remember things, it was free, and…

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This is part of our coverage of the Japan New Economy Summit happening in Tokyo. See previous updates here.

Participants in the fourth session of the day, on the role of entrepreneurs and venture capitals, are as follows:

  • Phil Libin (CEO, Evernote cooperation)
  • Josh James (Founder and CEO, Domo)
  • Derek Collison (Founder & CEO, Apcera)
  • Katsujin David Chao (Co-Founder and General Partner, DCM)
  • George Kellerman (Partner, 500 Startups)
  • Moderator: Daisuke Iwase (Co-Founder / Representative Director, Lifenet Insurance Company)

15:24 – Phil: At Evernote we never set out to disrupt anything. We set out to make a second brain. We rejected the idea of business as a zero sum game, where there’s a winner and a loser. There’s much talk of business as a zero sum game, with sports analogies or fighting analogies — but I don’t think business or entrepreneurship has to be like a sport. More than anything else, it’s more like art or music. It doesn’t matter who came before you, there’s always something new you can contribute.

15:29 – Phil: We had maybe the world’s worst VC pitch at Evernote. I would say to VCs that we have a way to remember things, it was free, and please give me $10 million. And most would kick me out.

15:30 – Phil: At Evernote we were deeply inspired by Japan. About 20% of our users and 30% of our revenue comes from Japan. The Japanese aesthetic really influences us. We have said from the beginning that we want to make it a 100 year startup, and that was influenced by Japan. Japan understands this idea of long term thinking, and we hope to combine that with the best of Silicon Valley.

15:34 – James speaks some Japanese, then describes about building his company in Utah, saying that it was very difficult to build a Silicon Valley-like company. Maybe Tokyo is the same he says. In Utah 15 years ago, the VCs thought of themselves as better than the entrepreneurs. That made things very challenging, because it felt like they were taking advantage of you. The Silicon Valley is great because everyone is respected and viewed the same.

15:37 – For Domo, we raised $130 million, are building the company as fast as we can. … One thing that we figured out is that VCs want to be inspired. I want to be able to look back on Omniture as that cute little company we did before Domo.

15:41 – Derek describes being one of the few people at this conference whose company has not seen crazy growth yet. Describes driving out to Silicon Valley, living in his car, and getting a job. … What Silicon Valley offers is an environment where you have more reasons to try something than not.

15:49 – George talks a little about 500 startups, which has invested in 450 companies — 10 in Japan. People ask how did you invest in so many companies in so many countries. We have a global team.

15:51 – The challenge is around the accelerating speed of technology. If you have smartphone, anybody can quickly exchange information with people around the world. So the change in Japan should accelerate. You have to speed up. If you don’t speed up you will lose.

15:55 – Josh: Many people think the first thing they have to do is raise money, but there are lots of ways to do that. There are lots of customers that are willing to invest in your product. … I think my favorite word is ‘no,’ because it is so motivating.

15:58 – George: Many VCs in Japan have finance backgrounds, but elsewhere we’re seeing a shift to ones with operational backgrounds.

15:59 – Phil: We’ve gotten much value from our VCs and partners. Our initial investment came from Japan, from Docomo capital, and from Russia and from Canada. It was very non-traditional. What they all had in common was that they all loved Evernote. So when Silicon Valley VCs wouldn’t give us money, it was VCs elsewhere who loved the product. But later on when they came around, we could be very selective about the investors we picked, to ensure they had the same long term vision.

16:02 – I think the startup world right now is very different from 5 or 10 years ago. It’s a meritocracy. 10 years ago, the product wasn’t the most important thing. All the other stuff like contacts, connection, and marketing was important. Now all of that has changed. There is basically no friction left for great products.

16:04 – Try to think the way VCs would think. How are you going to convince them? They aren’t in the business of losing money just to lose money. It’s a business.

16:07 – David Chao: When I became a VC in the US, I thought VCs and entrepreneurs should be like a husband and wife, going through good times and bad times together. But as someone said before, you much have a shared vision.

16:10 – Phil: I’m super optimistic about Japan, it’s why I’m here, it’s why we invested in Japan. Japan has a giant disconnect between how the country perceives itself and how outside Japan sees the country. Everyone outside Japan, everyone thinks Japan is a magical place. I come to Japan, and all the conversation is about ‘What’s wrong with Japan’ — and there’s a big mismatch between that and how the world sees it. When people talk about China, there’s some good and some back, but when you go there, everyone is positive. For whatever reason, Japan is more negative about themselves than other people are. I think Japan is on the verge of an entrepreneurial renaissance. You don’t need so much money to startup these days. The most important thing is attention to design and details, and Japan does that well. The boundaries to export to the rest of the world are lower than ever before, so I think Japan is on the verge of a major renaissance, and that’s why we’re here — we’re betting on it.

16:21 – Phil: I’ not sure if Japanese entrepreneurs need to be more aggressive, I don’t think we need more assholes. Being an entrepreneurs is a quest, it has to be epic. The secret to succeeding is to get people to join with you, and to communicate why your idea needs to exist. In Japan sometimes people are a little less willing to express this. I do see a lack of passion in business. Japan should treat entrepreneurship with the same passion it shows to food, fashion, and culture.

16:25 – I spoke with Matz about Ruby, and I was talking about how talented the people in Japan were. I often ask people here why they don’t start a company, and they say ‘no no, I could never do that’. In Silicon Valley you run into people who think they can solve world hunger. I think that’s one thing that Silicon Valley does well, it’s an unrivalled optimism. And I think Japan is pushing to get to that place, and that’s a great thing.

16:30 – George: The success of Japan matters to us. George asks entrepreneurs in the audience to stand up. Asks everyone sitting down to look at these people, says these people are the future of Japan. “You really must celebrate them.” Says these people are the nails that get beaten down, so support them!

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Japan New Economy Summit: New trends in disruptive innovation

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This is part of our coverage of the Japan New Economy Summit happening in Tokyo. See previous updates here. Participants in the third session of the day, on new trends in disruptive innovation, are as follows: Brian Chesky (CEO, Airbnb) Travis Kalanik (CEO, Uber Technologies, Inc.) Gary Swart (CEO, oDesk) Jason Goldberg (Founder and CEO, Fab) Moderator: Akio Tanaka (Co-Founder & Managing Partner, Infinity Venture Partners) 13:41 – Brian from Airbnb explains Airbnb to Japanese crowd. 13:48 – Brian says 100,000 people are styaing on Airbnb every night. Hilton has about five times that, but too much longer to grow! For Airbnb, the last year represents the majority of its growth. 13:48 – Travis explains his Uber car service. Says it cost more than a taxi, but is very reliable and efficient. Launched in June 2010, 240 employees (across more than 30 cities). They partner with local limousine and sedan companies. They recently launched in Singapore, but Seoul and Taipei coming soon. 13:51 – Travis: We could love to be in Japan, but given the regulatory environment we haven’t been able to find a way to do that. 13:52 – Travis: Just because we are legal, it doesn’t mean the…

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This is part of our coverage of the Japan New Economy Summit happening in Tokyo. See previous updates here.

Participants in the third session of the day, on new trends in disruptive innovation, are as follows:

  • Brian Chesky (CEO, Airbnb)
  • Travis Kalanik (CEO, Uber Technologies, Inc.)
  • Gary Swart (CEO, oDesk)
  • Jason Goldberg (Founder and CEO, Fab)
  • Moderator: Akio Tanaka (Co-Founder & Managing Partner, Infinity Venture Partners)

13:41 – Brian from Airbnb explains Airbnb to Japanese crowd.

13:48 – Brian says 100,000 people are styaing on Airbnb every night. Hilton has about five times that, but too much longer to grow! For Airbnb, the last
year represents the majority of its growth.

13:48 – Travis explains his Uber car service. Says it cost more than a taxi, but is very reliable and efficient. Launched in June 2010, 240 employees (across more than 30 cities). They partner with local limousine and sedan companies. They recently launched in Singapore, but Seoul and Taipei coming soon.

13:51 – Travis: We could love to be in Japan, but given the regulatory environment we haven’t been able to find a way to do that.

13:52 – Travis: Just because we are legal, it doesn’t mean the taxi industry is happy to see us. Essentially the regulators start to protect the people they are supposed to regulate.

13:54 – Travis: In Tokyo they fix the prices on private car services at 5540 yen. There are something like 90 different zones with different minimum fares, different rules. We are in cities all over the world and we haven’t seen anything like this. The government has essentially said that only rich people are able to get car service.

13:56 – Travis: These laws are set up to protect the taxi’s and your city is worse off because of it. In order for us to connect you to a car service through an app, we have to become a licensed travel guide. We have to hire certified travel guides. I don’t know why. They’re just trying to make it hard.

13:59 – Gary gives a brief introduction to oDesk.

14:01 – Gary: The world’s best companies should have access to the world’s best workers at any given time. We are a global company with 3.2 million freelancers, 1.6 million jobs posted in 2012.

14:07 – Gary says that one in three workers will be hired online by 2020.

14:08 – Jason gives a quick introduction to Fab, which he describes as the world’s best marketplace for design. Curated design as a lifestyle experience.

14:10 – Jason: FAB didn’t exist a year ago, and we’re going to have $250 million in sales in its second year of business.

14:11 – Jason: In 2010, Fab was an entirely different company, a social network, sort of a gay yelp. In 2011, they were the gay Groupon. In February last year, Jason said to his co-founder “This isn’t fucking working.”

14:14 – Fab has 13 million people, 6 million products sold, 33% of sales on mobile. 2/3 of sales are from repeat customers. 10% of sales is art, 10% of sales is jewelry. There are about 15000 different products on Fab today.

14:17 – Jason: We have a sign on the way at Fab offices that says ‘Make Mistakes’ — and this is core to entrepreneurship. Our job every day is to reimagine, reinvent. I wake up every single day fearing that we will go bankrupt, and that’s what keeps us driven.

14:19 – Brian: Everyone thought what we were doing was absolutely crazy. They said “That’s the most absurd idea, no one will let strangers into their home.

14:21 – Gary: Experience is what you get when you don’t get all the other things you want. Tell a story about borrowing money from his father in law to go towards a failed business. But he says he is better for the experience.

14:25 – Jason notes his investor says that the best time to invest in an entrepreneur is right after a loss.

14:31 – Jason: I really believe in the motto that you should fail fast. … You can’t iterate your way to a business model. You shouldn’t hold on to something just because you were doing.

14:32 – Travis disagrees: When you’ve lost believe in what you’re doing, that’s when it’s time to give up.

14:43 – Travis: How vulnerable are regulators to be persuaded by a slow growing industry… That’s the first sign that bad laws are going to be made. What is the legal construct to ensure that doesn’t happen. … There can be laws in certain cities/countries, where anti-competitive laws are not allowed to be made. And in other places regulators protecting an industry is totally ok. … What we find in most American cities is that the laws are in the right place. But you still have regulators that protect the industries they regulate. In Japan we have found that the laws are not in the right place. We have helped in changing laws in DC, and in New York. … We are trying for a law in Miami that will open the city to Uber, because right now we aren’t there. Here in Japan we are probably going to have to find a way to work around regulation, or to change the law so we are allowed to work.

Japan New Economy Summit: How can Japan produce its own disruptive innovations?

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This is part of our coverage of the Japan New Economy Summit happening in Tokyo. See previous updates here. Panelists Joichi Ito (Director, MIT Media Lab) Akira Morikawa (CEO, LINE Corporation) Yoshikazu Tanaka (Founder and CEO, GREE, Inc.) Yukihiro “Matz” Matsumoto (Chairman, Ruby Association) Masatoshi Kumagai (Founder&Group CEO, GMO Internet Group) Moderator Waichi Sekiguchi (Editorial Writer, Nikkei Inc.) Comments below are paraphrased from the provided translations. 11:17 – On recent internet trends and changes – Joi: I want to start with the word innovation, because I think creativity is key as well. Japan was once strong and now it is greatly different. Everything was moving slow before and that’s when Japan was strong. … But after the internet, the rules that everyone was anticipated [changed everything]. When there is a concentrated control, Japan excels. But with the internet, this has changed. 11:21 – Joi speaking of agility, cites YouTube as an example. Most of the companies winning right now have changed their initial concept. So agility is key. 11:23 – Japan is known for craftmanship, but I think it’s important to have more robust plans in place, and if that’s the case, there are restrictions to how disruptive you can…

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This is part of our coverage of the Japan New Economy Summit happening in Tokyo. See previous updates here.

Panelists

Joichi Ito (Director, MIT Media Lab)
Akira Morikawa (CEO, LINE Corporation)
Yoshikazu Tanaka (Founder and CEO, GREE, Inc.)
Yukihiro “Matz” Matsumoto (Chairman, Ruby Association)
Masatoshi Kumagai (Founder&Group CEO, GMO Internet Group)

Moderator

  • Waichi Sekiguchi (Editorial Writer, Nikkei Inc.)

Comments below are paraphrased from the provided translations.

11:17 – On recent internet trends and changes – Joi: I want to start with the word innovation, because I think creativity is key as well. Japan was once strong and now it is greatly different. Everything was moving slow before and that’s when Japan was strong. … But after the internet, the rules that everyone was anticipated [changed everything]. When there is a concentrated control, Japan excels. But with the internet, this has changed.

11:21 – Joi speaking of agility, cites YouTube as an example. Most of the companies winning right now have changed their initial concept. So agility is key.

11:23 – Japan is known for craftmanship, but I think it’s important to have more robust plans in place, and if that’s the case, there are restrictions to how disruptive you can be. At MIT Lab, they have total freedom to study whatever they want without my approval. It’s not about profitablity or outcomes, because if you know this in advance, then it’s not disruptive. You maybe set the basic direction, but all the details you have to decide as you go.

11:27 – Mr Morikawa of Line speaking now.

11:28 – We have 140 million users, 45 million in Japan. Loved in over 230 countries. 15 million in Taiwan and Thailand, 10 million in Spain. We converted from a communication tool into a platform. We are creating an ecosystem with games, manga, and other contents.

11:31 – Japanese people love plans. But I thought it would be good to not announce our strategy. Japanese companies love to announce strategies. We don’t. People get concerned because we don’t have any plans, but from that vagueness we can create a tension that in order to survive we have to do something…

11:33 – Tanaka-san of GREE speaking now.

11:34 – Mr. Tanaka cites lessons learned from Mikitani-san in the early days.

11:37 – Regarding globalization, we are the fastest growing company in the San Francisco area, with about 2500 employees, and 40% not from Japan.

11:38 – Matz: Did I make a business model to create Ruby? No. I created it by myself. I had some spare time from work, and developed it. I thought it the documentation was in Japanese only Japanese could use it. I had an offer from an American who said he could write a book on it, and that’s how it got popular. I didn’t expect it to be a big hit. As Joi said, we can’t predict anything in the internet era. The speed of change is so fast, and is getting even faster.

11:40 – We saw how fast Line has grown. We are living in an era where it could take only one or two years to change the world. If you want to change the world, we should let these people move from the company working style, so we don’t impose an obstacle to those who want to change the world.

11:44 – Kumagai: At GMO internet we have 3200 employees, and 1000 engineers and creators. In 1995 we started our business and it has been 18 years since. Our domain name service, Onamae, is the biggest portion of our revenue. We also have shopping cart services, and media or internet advertising, as well as a net insurance business.

11:47 – It’s very low risk to fail. When Tanaka-san created GREE, VCs wanted to invest. They asked for a business plan, and he didn’t have one. He said, if you want to invest in me, you should write the business plan.

11:48 – For success on the internet, there are two important things: speed, and a willingness to take the risk. … I think we have a mid-level sort of scale in business, and we don’t have the rush to expand.

11:50 – Joi: Who drew pictures in kindergarden? [Lots of hands raised] Who draws pictures right now? [not many] When you become an adult, it’s really a minority of people who spend time creatively.

11:58 – Joi: In our lab, 50% of people are foreigners. Singapore is similar, in that it is very proactive in issuing visas to talented people. … In Japan, not only should we give visas, but we should offer something more attractive.

12:00 – Matz: Is it really necessary to have disrupted innovation from Japan? If we have innovation from Google that makes our lives better, isn’t that good? If we talk about globalization, why focus on having it from Japan. Is it loyalty?

12:03 – Matz: If I have to point out a difference between Japanese and American engineers, Japanese ones are paid much less. And that’s something I’d like to call into question.

12:07 – Morikawa: At Line we aren’t trying to innovate, but what’s important is to see how fast we can provide customers what they want.

12:10 – Joi: The companies that try to be innovative in Japan, don’t survive — the companies that try to succeed on a global scale survive.

Japan New Economy Summit: Panel on Innovation

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At the Japan New Economy Summit, Rakuten CEO Hiroshi Mikitani moderated a panel on disruptive innovation. Participants included: Andy Rubin (former SVP, Google) Niklas Zennström (CEO, Atomico / Co-Founder, Skype) Ben Silbermann (Co-Founder and CEO, Pinterest) Jack Dorsey (Co-Founder and CEO, Square / Co-Founder of Twitter) 10:29 – Andy Rubin: It kinda surprises me that Android was so successful in Japan. Typically Japan and its culture has a broad understanding of ecosystems. i-mode was the first such ecosystem, and it was easy for OEMs and third party develoers to adopt Android from an ecosystem mentality. 10:34 – Did the Silicon Valley ecosystem help you? Ben: For me it absolutely was, but I don’t think that means you can’t start a company anywhere. 10:36 – Can disruptive innovation be sustainable long term? Andy: The industry is going to react to either compete or adapt. … As time goes on and new ecosystems are created, it’s the job of legacy organizations to be open minded. You can’t be close minded and expect to survive. 10:37 – Jack: I don’t actually like the word ‘disruption’. … I think the really successful companies are not disruptive by nature – though that may occur —…

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At the Japan New Economy Summit, Rakuten CEO Hiroshi Mikitani moderated a panel on disruptive innovation. Participants included:

  • Andy Rubin (former SVP, Google)
  • Niklas Zennström (CEO, Atomico / Co-Founder, Skype)
  • Ben Silbermann (Co-Founder and CEO, Pinterest)
  • Jack Dorsey (Co-Founder and CEO, Square / Co-Founder of Twitter)

10:29 – Andy Rubin: It kinda surprises me that Android was so successful in Japan. Typically Japan and its culture has a broad understanding of ecosystems. i-mode was the first such ecosystem, and it was easy for OEMs and third party develoers to adopt Android from an ecosystem mentality.

10:34 – Did the Silicon Valley ecosystem help you? Ben: For me it absolutely was, but I don’t think that means you can’t start a company anywhere.

10:36 – Can disruptive innovation be sustainable long term? Andy: The industry is going to react to either compete or adapt. … As time goes on and new ecosystems are created, it’s the job of legacy organizations to be open minded. You can’t be close minded and expect to survive.

10:37 – Jack: I don’t actually like the word ‘disruption’. … I think the really successful companies are not disruptive by nature – though that may occur — but it’s a deep vision about what people want to use. It’s about being focused on building something you want to see in the world. It’s about recognizing these intersections ahead of us.

10:40 – Ben: Pinterest had a very poor start, but it was a better start than anything I had started before. Other people weren’t excited, but me and my friends were very excited that people were using things we had made. That’s a great feeling.

10:42 – Niklas: You need to be committed, and when people tell you its not going to work, you have to believe in what you do. It’s imporant to have co-founders and a strong team, so you can encourage each other in really difficult times.

10:43 – Advice to Japanese entrepreneurs:

Andy – A lot of times when doing business in Japan I hear Japan consumer is different, but I think its not that different.

Jack quotes William Gibson: “The future is already here, it’s just not evenly distributed.” You need to get it out of your head and build it. It goes back to what do you want to see in the world and why can’t this exist. It’s the easiest question to ask but the hardest to answer.

Ben: Imagine if people said to people who wanted to be doctors “Oh my god, what if you fail”. If you meet someone trying to success you should encourage them, that maybe they can go out and do it.

Niklas: You can find so many reasons why you shouldn’t do something. If it doesn’t work, so what? You have gained an experience and you have tried it. … Just go out and try things and don’t be afraid of failure because that’s the best learning experience. Think about building for the global market. Why develop for just domestic market? It’s important to learn foreign language and to travel (He cites his past travel experiences which widened his horizons and thinking.)

Japan New Economy Summit: What is Disruptive Innovation?

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The Japan New Economic Summitis kicking off in Tokyo this morning. We plan to bring you some updates throughout the day [1]. So stay tuned. Opening Speech: Hiroshi Mikitani (Chairman and CEO, Rakuten, Inc.) Keynote Speech: Andy Rubin (former SVP, Google) Niklas Zennström (CEO, Atomico / Co-Founder, Skype) Ben Silbermann (Co-Founder and CEO, Pinterest) Jack Dorsey (Co-Founder and CEO, Square / Co-Founder of Twitter) 9:09 -Opening remarks from Rakuten CEO Mikitani. [Plays video message from prime minister] 9:15 – Mikitani: We need to be leading in innovation. We know we have great technology in Japan, but we have not been able to implement that as products. … We want to connect Japanese technology with global entrepreneurship. 9:20 – Mikitani introduces session 1, with Andy Rubin, Jack Dorsey, Ben Silvermann, Niklas Zennstrom. 9:23 – Andy Rubin on stage. 9:23 – Andy speaking about investor presentation for his Android company way back in the day. Their first VC presentation was a platform for digital cameras. In the beginning, the team was mostly engineers, with a product idea. 9:26 – Andy talks about the opportunity they saw at the time for a smart camera concept, where third party devs could create new apps…

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The Japan New Economic Summitis kicking off in Tokyo this morning. We plan to bring you some updates throughout the day [1]. So stay tuned.

  • Opening Speech: Hiroshi Mikitani (Chairman and CEO, Rakuten, Inc.)
  • Keynote Speech: Andy Rubin (former SVP, Google)
  • Niklas Zennström (CEO, Atomico / Co-Founder, Skype)
  • Ben Silbermann (Co-Founder and CEO, Pinterest)
  • Jack Dorsey (Co-Founder and CEO, Square / Co-Founder of Twitter)

9:09 -Opening remarks from Rakuten CEO Mikitani. [Plays video message from prime minister]

9:15 – Mikitani: We need to be leading in innovation. We know we have great technology in Japan, but we have not been able to implement that as products. … We want to connect Japanese technology with global entrepreneurship.

9:20 – Mikitani introduces session 1, with Andy Rubin, Jack Dorsey, Ben Silvermann, Niklas Zennstrom.

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9:23 – Andy Rubin on stage.

9:23 – Andy speaking about investor presentation for his Android company way back in the day. Their first VC presentation was a platform for digital cameras. In the beginning, the team was mostly engineers, with a product idea.

9:26 – Andy talks about the opportunity they saw at the time for a smart camera concept, where third party devs could create new apps for cameras. It wasn’t just an operating system, but we envisioned it being connected to the cloud with access to the internet.

9:27 – That was Android for digital cameras. Andy moves on to second iteration of their VC presentation, which was Android for cell phones. Founding team was a little more broad, with some expertise in marketing.

9:30 – Andy says in 2005 he wasn’t worried about Microsoft. They positioned Android between enterprise and low end. They knew if they wanted to move up or down later on, they could. The middle game them the most flexibility.

9:32 – [Speaking of shift from camera to smartphone] You have to be flexible, and if your business doesn’t work, you have to change. You have to make decisions quickly, and change direction instantly.

9:36 – After the Google acquisition, the services business model was advertising.

9:38 – Japan is the most interesting market from an app revenue basis.

9:39 – Andy say that Puzzles & Dragons in-app purchases caused them to have to make changes to their infrastructure to accomodate so many in app purchases.

9:40 – Mikitani introduces Jack Dorsey.

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9:42 – Jack shows a video of real time visualization of Tweets during the earthquake.

9:42 – We started Twitter in the US and our first major market was Japan. It has been a major success here.

9:43 – Like Twitter made communication easy, Square makes payments and commerce easy.

9:45 – Jack speaking about early development of Square. Says its not just for individuals, and have found users in nearly every form of commerce. Wherever commerce is happening, Square is there. Not just in metro areas, but all over the country. Many new technologies hover around San Francisco, but we are all over the country. [Shows a map of US, with hotspots everywhere.]

9:49 – Jack demos Square with Mikitani-san’s credit card. Asks for a tip. (below)

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9:53 – Jack says cites a small coffee house a a Square success stories. Also cites Starbucks, a Square partner. Good for big and small businesses — both can use the exact same tool. People compete on the merit of their ideas.

9:55 – It’s not just about payments, but it’s the activity between the buyer and seller. It’s being able to give them a fast experience, because with speed, the technology disappears. Technology is best when it completely disappears, when it is additive.

9:57 – Mikitani-san introduces Ben Silvermann of Pinterest.

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10:01 – We thought it would be cool to share our collections online. I left Google, we got a tiny office. And we started building. It started small with a few dozen users, then a few thousand. What was special was that just by pinning things you could also find other people with the same interests as you. It connects people according to their points of view in the world.

10:06 – I think there’s something beautiful the fact that you don’t have to live in Japan to love anime, you don’t have to live in California to love skateboarding.

10:09 – Niklas Zennström now speaking on stage.

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10:09 Usually disruption is a seismic shift in functionality. It’s usually done by outsiders. It’s hard for industry insiders to be a disrupter.

10:10 – Sometimes a disrupted company can be too disrupted, and that’s something I experienced with Kazaa. Unfortunately the incumbent record industry and movie studios were not ready for that, and we could not survive in that space. We were unable to create a sustainable business model

10:12 – Disruption is about making something that is easy to use, and simplifies everything.

10:16 – A third of international phone calls are made with Skype.

10:18 – Gengo is disrupting translation services. Before you would send text to a translation agency, and they send it back to you. Gengo uses the internet to crowdsource translation among freelance translators, and give you maybe a 90% cheaper price, a much faster service… And if gives people with language skills to fulfill these translations requests. It’s a truly disruptive service.

10:22 – Another example is Halo, an app that you have on your smartphone that you can use to hail taxis. It connects drivers and customers wherever they are. It’s beneficial for customers to find taxis, but for drivers it enables business.

10:23 – We heard Andy speak of iteration, and very rarely is disruption just writing a business plan and executing it. But many times, the road is just not a straight line and you need to iterate, and fail fast. If something is not working, do a course correction and make another iteration. But as long as you have a long term vision you can be successful. If an idea doesn’t work out it doesn’t mean that you have failed. … In this economy we should encourage people who create disruptive businesses.


  1. Quotes are not verbatim, but are pretty close.  ↩