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!
Masaru Ikeda
Tokyo-based web/mobile solutions company IMJ (JASDAQ:4305) has announced a partnership with Fenox Capital, a Silicon Valley-based VC firm. The companies have established a fund worth about $4 million dedicated to investing in startups in the South East Asia region. In terms of the fund’s capital allocation, IMJ takes a 74.37% stake and Fenox makes up the rest.
Rick Martin
