 Good afternoon. This is Rei Tsujiyama for Think Tech Asia. We're here on a very balmy afternoon in Honolulu. We're lacking today my co-host, Russell Liu, and it's just myself, Rei Tsujiyama, with a guest all the way from Tokyo, Japan, whom I've known for many, many years, and his name is Jim Weiser. And he's with a company, a high-tech company, that we'll get into in a few minutes. And first, I want to welcome Jim to the show. Thanks, Rei. I appreciate it. Thanks for having me on the show today. Now, you and I go way back, and you first arrived in Japan one year. It was 1993. And I came in 1991, so you came just around that time. So you're my senpai. Thank you. You're my kohai. And so, now you're originally from what state in New York? I grew up in Texas. Okay. And you went to a university there? Yeah. I grew up in Fort Worth in Texas, and I went to school at Rice in Houston. And then I've heard that you had graduated from Rice University. That's right. And that got you to Japan. Tell me how you got to Japan. Well, it maybe isn't the most direct route, but what had happened was at school I'd studied chemical engineering. And I had the opportunity, because Rice was in Houston, to go and work in an actual chemical plant. And that was great, because what it showed me was that might not be where my passion lay. And so, instead of going directly to the chemical industry after I graduated, I went and took a, I don't know, you say gap year if it's after you've graduated. I took an after gap year. You're ahead of your time. Yeah, we didn't call it that then. I went to Japan to teach English. And I thought, man, I'll do this for a year or two. And of course that was what, 24 years ago now. And the city that you taught English, where was it? I started in Sagami Hara, which is a suburb outside of Tokyo. Okay. So, and you did that for how many years? So, I taught full-time for two years. I did a little bit for another probably six months after that. And I kind of, I got lucky, I guess, because what I considered to be my meager computer skills were in fairly high demand. And so I started doing computer training, some consulting work, and eventually ended up working in the internet for a PSI net there. So, you were at the dawn of internet in Japan, in hindsight. In hindsight, yeah, probably true. Because there wasn't much going on. There was some internet, I guess, servers and, you know, the Japanese side. But for foreigners, there were very little at that time. That's, I think that's right. It's safe to say that there was very little going on in the internet comparatively anywhere in the world at that point. You know, there were a couple of companies of which PSI net was one that kind of started the commercial internet. And in Japan, there were some companies in 96 when I got into it as well that were doing internet services for businesses. But nothing like we think of today. Because if you go back, one of the major networks or whatever, there was a very early service on the Fujitsu. It was a very early service. And there was AOL of that time in the U.S., you know, in the U.S., going strong. Now, going a little more further, now you worked in the internet space in the late 90s. What could you see happened in the late 90s and the 2000s that started to bring Japan into the internet age? Right. Well, I think there were several things, you know, because in Japan at that point, and really the internet generally, people were thinking it was predominantly a telecom service. They weren't thinking as much about data and, you know, what are the different things you can do? Email was the big exciting new invention, right? And so when you look at it, the kind of the key things were moving from something that was always charged by the minute, was what you had with dial-up calling. Because, you know, in the U.S., there were all these fixed-rate plans. If you get on your modem and you call AOL one fee, you're done. But in Japan, that was all minute-spaced, right? So that was one big thing. And then the second thing was NTT, which was the dominant telco in Japan and really still is, decided that maybe this internet thing would catch on after all in, I believe it was, 97 or 98, and released a product. Now, I was working at a company that was competing with it, and a lot of my colleagues were really concerned by that, but that was one of the best things that could have happened to us. Because once the really big company like that entered the market, it validated the entire offering. Now, also, when we talk about Japan, there was something happening in a mobile space called iMode. And that came out around 99,000, around that time. And that took Japan and society in a different area earlier than the U.S. And so that was the launch of iMode, which was based on digital communications and data and texting and also how to access some sites. Would you say that delayed PC and laptop internet usage or that really got Japan to a new level faster? That's an interesting sort of question. So I think what you saw with iMode was that it was the old dumb phones. It's a pretty smart phone, right? And I think it started in 97. It might have been 98. But what they were able to do was they were able to put an email on a cell phone. And that's pretty innovative. That's pretext, right? And so people were able to do a lot more. They were doing subscription-based content and a whole bunch of other things. In 2000, 2001, 2002, like you're talking about, and even licensed it to other countries. So that, the first email account many Japanese had was actually on their cell phone. On their phone. I remember a Docomo account, an email account or an email address. Right. No, that's right. And so because of that, in a lot of ways I think that enabled the growth because it now gave you a reason to get on the net to do things. Yeah, if you look at a traditional Japanese language input environment, the keyboard's not the most natural way to do it. That's right. And so if you talk to people who are completely bilingual in either language, even if they're native Japanese speakers, they'll tell you it's always faster to write in English because of the keyboard input mechanism. Well, you were at the dawn and then we went through the iMode and the launch of Internet in Japan. Where are we today? I mean, we have a sprawling landscape, domestic landscape in Japan that deals with the Internet, ranging from e-commerce of Rakuten. There are communities under Mixi. There are GRI and mobile and also games played a lot. Right. There's also SoftBank that does a lot more in e-commerce and millions of sites and so forth. Is it a robust landscape in terms of the Internet and mobile or has it morphed into something that our friend Gerhard says, a Galapagos island that's distinctly, you know, that's different than Europe and the West and the US? Well, can I say yes to that? Okay. All right, go ahead. So to start with, you know, you've named a lot of big names. Now, right now the single biggest name in e-commerce in Japan is actually Amazon. Yeah, Amazon is roughly a third of the market. Rakuten is roughly another third. So they dominate. So the two are two-thirds of the time. Those two are roughly two-thirds. Then between Yahoo Auction and Yahoo Japan, they pick up another substantial amount. So that's what I remember. Don't hold my feet to the fire. It might be only a quarter or a quarter. But those are two giants in the space in e-commerce in Japan. I think what you see is... And what is foreign and what is domestic? Amazon is... Well, sure, Amazon's foreign, but like any successful foreign company, they're, you know, 90-something percent of the volume they do is with Japanese people and their staff are predominantly Japanese. You know, that's not a unique kind of environment. And I think there are certain industries like that in Japan and you've probably seen that as well. We're McDonald's. Well, right. We're predominantly in Japan or 7-Eleven and others that have become part of the Japanese society. They become part of the landscape, but in certain industries, you know, the U.S. or other countries are viewed as being innovators. And so there's a strong opportunity to enter the market, where if you go and say, oh, you know what, I'm an innovative construction company. The older Japanese construction companies will say, well, guess what? We've been building temples since 1600. Yeah, thank you very much, right? So certainly in internet space and software as well, there's been more of an opportunity to approach the market. So what you're saying is that there's a lot going on in e-commerce, but it has evolved towards large players, dominant in the space. Yeah, I think that's fair. There's also, you know, we're kind of being a little narrow on e-commerce. We're talking mainly about package shipment type stuff. And interestingly, there have been a number of articles recently where the Japan domestic shippers for the first time in 20-something years are raising their parcel rates because the volume that they're seeing in e-commerce generally... Oh, really going up. And the drivers are quitting, as you know. They're getting stressed out by all the packages. That's right. And delivery times have to be very, very, you know, just in time. Basically in a 10-year time period, the total parcel delivery rate's gone up somewhere around a third. Wow. And so that's a pretty big move. And there's a declining workforce. In the U.S., the millennials are as large as roughly the baby boom, right? In Japan, they aren't. In Japan, the millennial generation is smaller than our generation X, right? And so we end up with a dichotomy where you have a smaller labor market and a 30% increase or something like that in packages shipped. So the landscape of companies in Japan and economy, we talk about big companies like Sony's and Toyota's and Sumitomo's and Mitsui's and so forth. They're still there in the economy. And Japan has not gone off the map. It's still the third largest economy in the world. That's right. And still has major shipments of cars, of electronics to all over the world. And the brands are unbelievable when you think about it. What's the landscape for startups? Has it become better? I remember going back to the early 2000s, the Bit Valley, there was a sudden rise of venture funds coming to Japan and trying to accelerate startups in Japan. It didn't flourish as people expected. It blew up, right? It didn't. And there were many reasons for that. And as you know, I work for MIT. There's a synergy between research at universities and researchers and entrepreneurs, MBA types, getting together and forming startups and products and getting funding from venture funds. And they go off and do exits and become very big or they don't do so well, which is the majority of all startups. Has that culture developed in Japan? So let me start off by saying yes to the question you just asked. You're starting to see some motion in universities, especially where not entire cohort, but people from the same cohort or the same lab will go and start a company. And that's relatively neat. I believe that's a development that's new since you left or at least over the last kind of 10 years. But if I could use a couple of examples for my personal history. So in 2002, I was basically unemployed. And I couldn't find a job I thought that fit my skills or whatever. So I started a company and that was a consulting company. And that was a typical, okay, I'm going to bill by the hour. I'm going to provide value for service. Always in tech related things, but fairly wide range. In 2005, I kept seeing more or less the same problems with the clients I was working with as it related to telephony. And in those days, you buy a big PBX and you stick it in your office. There's no kind of cloud offerings. And so in 2006, I started a company. They did that for businesses in Japan. No consumer stuff. It would always be different. Fast forward 10 years later, and not only had that market kind of started to develop, it's still a little bit early stage. But that was when my company at the time was acquired by BroadSoft. And we're going to take a minute to explain how this all came together after this break with ThinkTech Asia. This crazy thing going on today. I was just walking by and all these DJs and producers are set up all around the city. Hello, this is Ray Tsujiyama. We're back with our guest from Tokyo 24 years in the third largest economy in the world in the areas that we always talk about innovation in information communications and internet areas. He has been active in the American Chamber of Commerce in Japan and even headed a committee in the chamber. I also did a cover story for the American Chamber of Journal back in 2000 on iMode. So I go back and also in Japan, as you know, was on the board of venture capital companies and plus we did a company called Teagik, which was acquired by AOL and later by Nuance. So all you're talking to me and to the audience in Hawaii and beyond about Japan is really exciting because people don't see people like yourself, entrepreneurs in the trenches and to explain what happened and I want you to go back to your story about finding a solution for companies in the cloud. Go ahead. Okay, thanks. So for us, we kept seeing the same problem which is people were buying expensive stuff and putting it on site. And so the approach that we took was this should be a cloud offering. Now, we'd worked with a couple of different platforms but at PBXL we chose BroadSoft our technology partner in 2012 and we'd worked closely with them and I knew pretty well a lot of the team in Asia and so at the point we were looking to take external investment we had some serious conversations with BroadSoft and they said well actually we're looking for a cloud deployment in Japan would you be interested in joining us as part of the team? Define BroadSoft, what kind of company are they? So BroadSoft is headquartered in Gatorsburg, Maryland. We've got 30 different offices around the world 92 different countries, people are using our stuff and basically 25 of the top 30 carriers in the world use the platforms that we provide. Now the platforms are basically focused on enterprise collaboration and communication services for businesses in the cloud. So that can be something as simple as a desk phone where you also have an application on your smart phone so that's the voice level if you will there's chat and team collaboration spaces So many apps all integrated for enterprise, for business to work together and collaborate and team and to really move ahead on product development That's right and then the other piece that we didn't touch on was call center and contact center stuff So that's kind of what BroadSoft is a whole And so we work together I've been running the broad cloud piece of BroadSoft in Japan now for a year and a half or more than that So the venture area that you were involved in our question was how did the changes work? Right, it's not all about me Well as we talked about I've done a little bit of angel investing and I can talk about mistakes in that later if you want But the things that are really different right now is probably in the early 2000s if you looked at venture capitalists in Japan there were very few and the opportunity to get investment from them was relatively small And so you didn't see a monetary ecosystem that would sustain startups very well Like when I was a PBXL we actually took a loan from the bank Now to do that I had to put a personal guarantee on and you would find venture capital companies doing the same thing So what's the difference? It's kind of like the private loan market or the public loan market And actually one of the other venture companies I've been involved with had done this whole loan thing from venture capitalists It was a huge disaster The guy kind of goes personally bankrupt But now what you see the common complaint is there aren't enough deals there aren't enough operators there's plenty of money chasing deals and you see it in the valuations as well Is that sustainable? I don't know My only past experience with that was Bit Valley which all blew up But you see a resurgence of entrepreneurs and venture businesses and corresponding interests by venture capitalists That's right and I think you hit on something that is really important that has changed It used to be you'd never find a bunch of graduates from an elite institution starting their own company Now you see it I'm not going to say frequently because that's probably over-representing it but it's not uncommon to see people come out of a research lab and start something or a cohort kind of say we're going to go do this But that's a tremendous sea change because it's the latest 10 years ago the place to go for top researchers at Kyoto University or Tokyo University or Tokyo Institute of Technology, Osaka go to Sony or Toyota or NEC or Fujitsu or the government or entity or entity labs in Yokosuka or whatever but to do research that ends up in a product, a diversification that's a whole dramatic change and to work with others to kind of put together a team CEO, CTO, CFO, CMO kind of team, that is more Silicon Valley Right, I think that's right and I'm not going to say it's Silicon Valley the Silicon Valley is unique But it's analogous to kind of a product formation You see the product formation approach you see the businesses approach and the thing I'm starting to look for is will someone fund some will a VC fund someone who has failed once because in Japan that's the big thing That's a very good point and the answer that I've been getting from a few of them is yes Because in Silicon Valley, if you haven't gone bankrupt three times they think that you don't know your stuff I'm not sure I feel that strongly about it But it's okay to fail and then have another idea That's right and what's interesting as well is when you look at the places people are going everyone associates Japan with kind of high tech Sony or air conditioners or stuff like that but you also see a lot or a number of people going into the tourism space because that area has been booming over the last 10, 15 years I think when you left there were what 4 million 4 or 5 million right we're on track this year for over 20 I don't know if it's over 22 or 25 That is unbelievable to me because the infrastructure of Ryokan Onsen has not changed they just accommodate other people everywhere from South America to the US throughout East Asia and even Europe now so that is a tremendous difference and I think it's kind of like leading to a wave for the 2020 Olympics in fact I think that was a big part of it when the Olympics was awarded to Tokyo there was this kind of mental confidence shift that went on like oh hey maybe we can do something because it's hard if you have 25 years of no growth that's a really hard economy to build a business in right and then you start to see people who are coming to Japan because what happens is Tokyo while certain things remain very expensive I think I was talking before but it used to be when I go back to the mainland US I go back to Texas I go out to dinner with someone and the check had come and I think oh well that's pretty reasonable for my 6th or whatever of the check but that wasn't the 6th of the check that was the whole check now when I go back and this is still Texas this isn't even the most expensive place the check comes that's a little much for my 6th of the check I mean for the whole check but that's just my piece right so Japan has become a bargain in many ways for food and they see the quality of the food in Japan and products electronics and all kinds of anime related things and building Japan has become a center of shopping I think not just a center of shopping but particularly when you look at younger people tend to talk about their experiences so I want to go eat sushi in Tokyo I want to go to the Hokkaido Snow Festival and as you know all over these regional areas in Japan there's always something you take the Aomori Naruto Festival or Kumamoto villages and small towns all have very distinct cultures in Japan and you're right that young people today are not looking for an experience orthodox experience they're looking for something that's distinct and it can be distinct in one village next to another in Japan I think that's true of course you still see large busloads of tourists from certain countries you're like okay I really want to get this done or do that and that makes sense too from a shopping perspective I think so we had just a few minutes you've been there 24 years right and the people who came with you or been around they came and laughed and so forth and now you're still there in many ways and what would you tell a person coming to Japan maybe they want to start a venture or work in Japan what would you tell them I'd say just go for it you can create lots of reasons to not do it a long list of bad possible outcomes but basically Japan is very civilized it's safe and even if you don't know the language you can kind of get around one of the things I think maybe that's changed as well since you've been there is Japan's ability to do foreign languages on public transportation it's been a kaizen effect you go back to the World Cup in 1998 it's like okay here's a little bit expo and it just kind of ticks up and up and up and so because of that now things are pretty addressable and with the tourism having come up people want to do that we're talking about Tokyo how about the other smaller towns affecting small cities and towns somewhat Tokyo is really different than a lot of Japan it's much more international London is like in the UK or Great Britain we're in New York in the US they're not confused those experiences right and so it depends on what you want to do if you want to start a business Tokyo is roughly a third of the GDP so a greater Tokyo so you could probably go somewhere else I mean there are some foreign entrepreneurs I know who started a microbrew company there are some people who own ski resorts up in Niseiko but unless you have a specific area that fits what you're trying to do how about Osaka have you done any business in Osaka it's a very different culture for you well the culture is different and as you know the language actually is different too and the thinking is different well the thinking is different and I don't know how to characterize it what I would say is I've done a little bit of work with people in Kansai generally but there's nowhere near as much ICT there if you're in pharma biotech is very important you're right well it just moves so fast we're at the end I told you we are getting into it I want to thank Jim for his insights for a great career and he's an unusual entrepreneurial spirit in Japan which is really hard even with Japanese to do business but he's proven that if you have motivation commitment, motivation and some really savvy tech skills you can really do make it kind of making it in Japan thank you very much this is Raisa Chiyama for Think Tech Asia