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Culture and Startups in the Land of the Rising Sun

By Ghela Boskovich

I live in Startup Land – no, not a physical place like Silicon Valley or Shoreditch (although my office is in Shoreditch, I certainly don’t live there). Startup Land is more of an industry, a conceptual spot, kind of like ‘online’ is to IRL (in real life, for those who aren’t hip to the current digital acronym heavy lingo).

It’s a world unto itself, focused on innovation, tech, new business models, data, and funding. It is mostly obsessed with funding. I advise, coach, advocate, and spend most of my days talking to entrepreneurs and big corporates about startups and how they’re disrupting business as usual. I live, breathe, sleep, and eat startups, specifically fintech startups. It’s my work, my social life, and my admitted addiction. And I do this across the globe, from London to Paris, New York to Singapore, Tel Aviv to Sydney, Dubai to Bogota.

And most recently, at the invitation of the Tokyo Metropolitan Government’s Access to Tokyo initiative to participate in a Tokyo Familiarization Trip for the Invest Tokyo Program, I visited Startup Land Tokyo for a weeklong parade of startups from med-tech to fintech, and robots to drones. 

Here’s what I’ve observed about Startup Land: nihil sub sole novum. There is nothing new under the sun. Sounds cynical, and rather hard to believe as we’re inundated with assertions of innovation and tech that continues to leap-frog itself beyond what we can fathom into the realms of science fiction. Quantum computing is new, true. So is artificial intelligence. Hardware is new, daily announcements from the likes of Apple, Google, Intel and the like prove it. Markets are new, P2P marketplaces continue to pop up. Yes, all this is new. But at the core of this, what drives all this, is nothing new.

“A week in Tokyo’s Startup Land provided a front row seat to some of the challenges, growing pains, and successes that come when a well-established market decides it needs to adopt new habits.”

Peel back all those layers, like an artichoke, and what is at the heart of all this newness is the same, eternal desire to solve a problem, make a task easier, free up time, and improve the quality of life. The core of all this is about humanity, making things better for humans. Even the concept of business is about humans. Everything – from our consumption, our exploitation of the environment, our cities and governments and institutions – is about being human. And humans have behaved in similar ways throughout the ages, with the same obsessions despite the era: money, influence, vanity, sex, entertainment, not to mention the Maslow basics. Nothing fundamental to being human is new under the sun. 

Yet in the land of the rising sun, they’re attempting to build a new innovation ecosystem. A week in Tokyo’s Startup Land provided a front row seat to some of the challenges, growing pains, and successes that come when a well-established market decides it needs to adopt new habits. What struck me then, and even more so now after some time to digest the whirlwind week, is that what makes change and new habits such a struggle, is culture. 

Culture eats strategy for breakfast. A simple truth, but culture is so complex, so engrained, and so powerful that it informs every part of how we do business, it answers a lot of the ‘why’ we do business the way we do it. And despite this global economy becoming more enmeshed every day, each market is still shaped by its culture. Changing cultural norms is a Sisyphean challenge. 

Japan is attempting to do just that. Prime Minister Shinzo Abe is working to pull Japan out of a two-decade long economic malaise, ‘Abenomics’ is one of the central policy tenets of the current government to drive growth, stimulate a little inflation, and encourage consumer spending. Promoting entrepreneurship is key to Abenomics, and it’s going up against culture. Culture is quite the pugilist. 

Abandoning the corporate ladder 

Entrepreneurship is really just a series of failures, lessons, and getting up from the mat after a hard punch. When fear of failure is engrained in a culture, overcoming that failure stigma can be uncomfortable, resulting in few home-grown examples of budding companies. Newness and innovation become the realm of big corporates, who can hide those failed experiments in readily funded R&D. Small startup success stories are few and far between. 

The Japanese government has recognized this, and is working to normalize startups by importing examples. Visits to startup accelerators FINOLAB, LINK-J (Life Science Innovation Network Japan), and Accenture’s Innovation Hub were reminiscent of ‘It’s a small world after all’: the majority of resident startups were foreign, looking to expand into the Japanese market. Most startups acknowledged the challenge of the complexity and homogeneity of the Japanese market, but saw it as a proving ground rather than a hindrance. ‘If you can succeed in Japan, you can succeed in any market’, was a common reply to why these startups chose to be there. 

This move is starting to pay off, spurred on by a change in Japanese big corporates embracing internal innovation as well. More and more of these behemoths are convinced that they can’t survive without innovation, and are setting up intrapreneurship programmes, and scouting for outside innovation from startups and universities. Startups have become more fashionable, more normalized, and the shift in labour supply (corporate Japan is struggling with a labour shortage) towards startups is chipping away at the cultural tradition of working for a large corporate being the only desirable work future. 

Universities are focused on supporting startups. One visit to UTEC (University of Tokyo Edge Capital) showcased several of the startups coming straight out of STEM R&D tracks at the University. UTEC invests in growth stage ideas before incorporation, focusing on research in life science and healthcare, physical science and engineering, and deep tech/tech for tech. Investment happens before a business model has even been identified. It’s a growth factory for startups, encouraging students to take the entrepreneurial path over traditional corporate career ladders. Their network partnerships with Ivy League and Oxbridge universities and research institutes globally help identify and polish innovative ideas and research. Started in 2004, UTEC has invested in 100 startups, 10 of which went public, and 11 exits on acquisition.

Insularity and Homogeneity vs. Openness and Diversity 

Insularity has been associated with Japanese culture since the Commodore Perry first sailed into Tokyo Bay harbour in 1853, reestablishing regular trade between Japan and the western world after 200 years of being estranged. Even post WWII, Japan has retained elements of homogeneity, with one of the lowest immigrant populations in the world. But things are changing, and government policy is tackling cultural insularity from a number of angles. 

“It’s a growth factory for startups, encouraging students to take the entrepreneurial path over traditional corporate career ladders.”

Language in Japan has always been a barrier for outsiders, but the government has taken great pains to increase English education programmes. Big corporates like Rakuten, Uniqlo, and Softbank are also shifting away from being Japanese language centric. In preparation for the 2020 Olympics, myriad efforts are being made to bring effective English education to the country. Tech is playing a vital role, robots in particular, are being touted as a solution. Musio, a robot, uses AI, to communicate through speaking, text, facial expressions and gestures in an aim to provide a natural English-speaking environment for those studying English. I met this Korean startup in Harajuku on a sweltering day in late July, and had a surprisingly cogent conversation with the little robot (surprising that I was cogent, Musio had vast patience with me). 

One of the biggest challenges Japan faces is a declining population, and its negative effects on potential economic growth, the workforce, and solvency of the national pension and healthcare services. Opening borders has been one response to this dilemma. 

Japan has seen net immigration rise to a record high 6.6%, six straight years in a row – resident foreigners constitute 1.76% of the population now, an all time high.  Recent revised immigration legislation has created a new visa status for workers in short-handed industries. Japan is opening its arms wider and wider, as evidenced by the number of foreign-born startups I met sitting in accelerators all across Tokyo. 

This new openness is also evidenced in Japan’s version of Open Banking. Japan’s Banking Act was revised in 2018 to promote competition, with a mandate to have most banks open up APIs by 2020.  The Ministry of Economy, Trade and Industry (METI)’s ‘Fintech Vision’ is doubling down on cracking open financial services.

There has been a proliferation of licensed and regulated companies (both fintech and emoney) acting as AISP and/or PISP (account and payment initiation service providers) with the Japanese Financial Service Agency (FSA) regulator. Sounds about par for the open banking course, and the legislation is still vague on the required technical standards for APIs. But instead of rushing to standardization, the FSA is looking at this as an optimal time for first movers to experiment and learn what works well and what doesn’t. 

The FSA approach to the regulatory sandbox is even more open. Called “Connected Industries”, it is a vision of industries creating new added value and providing solutions to societal challenges by connecting a variety of data, technologies, people and organizations in the midst of the global rise of the Internet of Things and artificial intelligence. 

In context of the Japanese approach to Open Banking, the role of PISPs is that of identity authenticators – something that has yet to take hold in the European model, and one completely absent in US financial services to date. This example of new business lines focused on value add – with a commercial return to the customer – is not just novel; it is proof that Japan is experimenting with innovating and opening the traditional banking model.

Gender & Economics 

The Japanese concept of WA – harmony – is also slowly starting to shift. Wa dictates that the harmony and needs of society take priority over personal opinions or interest. Coupled with Honne (what you say in private) and Tatamae (what you say in public, which translates to maintaining face, or group harmony), the definition of Wa seems to be shifting. Traditional harmony in terms of gender relations is being challenged, in part due to economic necessity (a retracting economy will do that). And that’s provoking a cultural shift.  

Gender equality rankings in Japan are poor. World Economic Forum ranks Japan 114th out of 144 in gender equality, as of 2017. However Abe’s ‘Womenomics’ initiative (which he has recanted) is slowly changing workforce demographics, with a 4% increase of women in the workforce in the last 4 years. Change has been slow, and the main culprit behind the low ranking is the dearth of female participation in the political arena. 

Traditionally highly conservative when it comes to gender roles, there is evidence that things are changing in politics. After a hotly contested run, Tokyo Governor Yuriko Kioke won the 2018 race after creating a new political party, the first woman governor of the city. A new role model for Japanese women, and one who packs a political and economic punch, she too is making ‘Womenomics’ a top priority by removing ‘institutional impediments’ to gender-pay equality and a better work-life balance, as well as supporting more progressive corporate mindsets, and pushing more women to run for public office. 

“Startup Land in Japan is new, is evolving, and is changing the nature of business in the Land of the Rising Sun.”

Technical KO or another bout? 

There really is nothing new under the sun when it comes to human beings, certainly according to Maslow. But there is newness, freshness, experimentation in culture as we evolve. And the Japanese have proved Darwin right in their ability to adapt to survive, and thrive (mid-20th century Japanese economic growth is a case study in this very thing). They are thumbing their noses at cultural nihil sub sole novum, embracing change and disrupting themselves. Startup Land in Japan is new, is evolving, and is changing the nature of business in the Land of the Rising Sun. It’s a new day for Japan, and its doors are open to Startup Land. 

My weeklong startup adventure in Tokyo reminded me of another thing: Faber est suae quisque fortunae. Every man is the artisan of his own fortune. In Japan, an entire innovation ecosystem has come together to design a work of art, one that it invites the world to share in the resulting fortune. 

To learn more about Tokyo Metropolitan Government (TMG) policies and support:

– More details can be found on TMG‘s website

– Any inquiries, contact Access to Tokyo

TMG provides various support for foreign startups, such as: free consulting services, and an accelerator program. For more information on the next round of support, contact [email protected] 

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