See the original story in Japanese.

Most of our readers are likely familiar with ‘Captchas’, the short online security tests that are easy for humans to pass but difficult for spam bots. People use captchas more than 280 million times a day. But because they can contain very hard-to-recognize characters, it is said that more than 10% of users give up on the attempt to pass this step.

To address this problem, Kyoto native and entrepreneur Mitsuo Okada launched a startup in the US last year. He has been developing a spam filter technology for smartphones and tablet devices called Capy. We recently spoke to him about his plans for the service.

Capy doesn’t use twisted characters like Captcha validation, but instead presents them as image-based puzzles. As a user, in order to to complete validation you simply drag and drop a piece to complete the puzzle, making you feel like you’re enjoying a sort of mini game. For smartphone users this is especially handy since you don’t need to enter any characters but instead simply move a puzzle piece with one stroke. There are many tools out there that allow malicious users to attack conventional Captcha security, but puzzle-based Captcha technology like Capy is a different animal.

Since Capy is an image-based Captcha technology, web developers can easily customize puzzles using their own images. It can take as little as 30 minutes to implement it on your website, since the technology is compatible with various development environments like PHP, Ruby, and Python. The program is being provided in private bata, and it’s available upon request by submitting a form. According to Dr. Okada, the startup is already in talks with major portal sites and telecom operators.

Capy launches in the US for the world to see

Okada came up with the original concept back in 2010 when he was study digital watermarking technology at graduate school in Kyoto University. During this research, he had the idea of creating a more enjoyable Captcha process, and that subsequently became Capy.

A typical smartphone does not have a big screen and therefore has little space to advertise.

His product was first introduced last November, but he has been exhibiting at many academic conferences and events before that. His startup was chosen as one of the top 50 companies at this year’s TiE50, an annual Silicon Valley event.

The company also won nine notable awards including the top prize at the Entrepreneur and Innovation track at MIT Sloan School.

Since Okada graduated from a university in the US, it was natural for him to launch the business there. And because US-based services receive many spam attacks from around the world, people there are typically very conscious about user authentication security and spam countermeasures. Of course, there are many competitors in this space, including reCaptcha (which was acquired by Google), Solvemedia, Nucaptcha, and Are you a human. In contrast with other solution providers who focusing only on their strict security, Capy aims to develop a stress-free and user-friendly program that also works as it should.

As for monetization, the service adopts a freemium model. The free version uses third party ads for images in the Captcha puzzle. But paying users can choose any images they want. If Capy could replace all of the world’s Captchas, it would generate an annual revenue worth more than $150 million.

For website developers, you can vary the security strength by increasing or decreasing the amount of puzzle pieces used. Okada explains:

Captcha and ads work well together. A typical smartphone does not have a big screen and therefore has little space to advertise. But with our technology, you can place an ad in the middle of your user validation screen. It might be even more effective than pay-per-view ads.

We also asked him if he had any advice for Japanese startups looking to expand globally.

In terms of both fundraising and exploring partnerships, registering a company in Delaware works for us. In Japan, some people say it’s just cost-consuming but is good for convincing our potential partners or investors that we mean business. People in the US are typically unfamiliar with the Japanese legal systems, so perhaps California- or Delaware-registered companies can take advantage of funding proposals.

For Japanese companies looking to grow globally, sometimes you need to abandon your preconceived notions. When you market a service in the US, you should consider that much of what you have learned in Japan will never work in that market. When Japanese entrepreneurs set up their base in the Bay Area, many of them typically rely on Japanese people living there. But Okada says, since very few Japanese entrepreneurs are active in the area, if you only rely on them, your business will never get beyond that tiny network. So you must get in touch with people who are influential in the area, regardless of their race or nationality.

According to Okada, their current version is just phase one. They’re aiming to keep developing an interface that is more optimized for evolving devices. He adds:

Passwords are still an old-fashioned technology. It still uses a keyboard even though our devices have been changed. In terms of authenticating a user, we want to propose more intuitive approaches. Capy is one of them. In this space, many developers have been pursuing security, but no one care about usability. Even if our approach results in a decrease its security, the technology with better usability will make users feel more comfortable in completing user validations. And this will contribute to raising people’s overall awareness of security.

The startup is hiring English-speaking programmers and designers, and also inviting websites which want to use the Capy service for their validation walls. If you are interested, feel free to sign up for it here.