[Podcast］How to build a startup in Japan

If you have ever wondered what it really takes to start and grow a startup as a foreigner in Japan. Well, I have a treat for you today.

Earlier this year, at the Japan FinTech Festival, I had the privilege of sitting down with four fantastic foreign FinTech founders and talking about what you need to succeed in Japan.

There are some great insights here from Jeff Wentworth of Curvegrid, Paul Chapman of Moneytree, Sam Pemberton-Ahmed of SmartPay, and　Samantha Ghiotti of Habitto.

It’s a great conversation, and I think you’ll enjoy it.

I think in every startup ecosystem, foreigners play an outsized role in promoting that ecosystem, whether it’s in San Francisco, whether it’s London. And the reasons for that might be a desire, a people who are willing to uproot themselves and move halfway across the world, maybe are just bigger risk takers. Maybe it’s new perspective.

But today, we’re gonna dig into what it takes to grow a startup, a Fintech startup in particular as a foreigner here in Japan. And to start out, we’re gonna do really brief, really brief introductions. So I’m Tim Romero. I’m a partner at Jira Ventures. We invest in green tech energy, sustainability, next generation energy.

Before that, I founded 4 startups here in Japan. I ran Google for startups Japan for a number of years. I helped Tapco spin out their CVC, and I run a podcast called Disrupting Japan, which is interviews with Japanese founders about what it’s like to be a founder in a culture that prizes conformity. Samantha? Hi, everyone.

My name is Sam, and I’m the cofounder of Habito. Habits is Japan’s first connected financial experience helping people save, invest, and protect what they love the most. As my surname suggests, I’m Italian and I’m a mother of 2. And, I’ve been living and working across 4 different continents, London, New York, Dubai, Singapore, and now Tokyo. I spent about 20 years at the intersection of tech and finance, about 10 years as an operator, both in large financial institutions.

And I ran the Singlife franchise in Singapore prior to its exit in 2021. And I spent 10 years as an investor sitting on the other side, predominantly in venture and also private equity, with a company called Anthemis Group, which is pioneer fintech investors in Europe and North America. And, that’s where I met a lot of people there today is in this room. So it’s great to see you all again. Excellent.

Sam? Hi. My name’s Sam. I’m from SmartPay. SmartPay is an embedded finance company.

What does that mean? We provide installment loans to consumers at the point of purchase to help merchants, to grow their revenue. And then as of today as well, we just announced insurance as well. So we’ve partnered with Chubb, and we’re providing product insurance and travel insurance with Chubb, at the point of purchase as well. We’ve signed over 20 banks and 201 credit unions.

What does that mean? It means that you can pay directly from your bank account digitally. So we’ve connected with the 20 banks and 201 Credit Unions through APIs. So through our app, you can access your bank account. Me, personally, I’ve been working in Japan since 2010.

Very lucky I was with Starbucks, where we rolled out in app payment, and loyalty card and obviously grew Japan to to be the 2nd largest market at Starbucks, moved to Mastercard, worked with Japan, as well with the banks, and then I was at Facebook, and WhatsApp, and Instagram in Japan and learned a lot from Zuck about success in Japan and decided to to go on my own. Good morning, everyone. My name is Paul Chapman. I’m the, the founder and and CEO at Moneytree. We’re a financial data platform, based in Tokyo.

We work with some of the largest banks such as SMBC, one of the sponsors, Mitsubishi OFJ, Japan Post Bank. We have some of the fastest growing, up and coming start ups in Japan using our data platform to get access to over 2,500 data sources. We we’ve been at this for a while, so I hope I can share some, longitudinal views on this not as long as Tim. But thanks for being here today, everyone. Hi, everyone.

My name is Jeff Wentworth. I’m the cofounder of Curve Grid. We’re a blockchain infrastructure company based here in Japan. We’ve been around for 7 years. We’ve been profitable for the last 3. 

We make it fast, easy, and cost effective for companies of all sizes, both Japanese and international, to build on blockchain versus doing so from scratch. I’ve lived in Japan for 18 years now, previously at Goldman Sachs and EMC, and, looking forward to sharing, thoughts with you today. Thank you. Fantastic. So there’s a lot of talk and advice online about what it takes to grow a startup.

Some of it’s more meaningful and useful than others, but I think one of the really unique opportunities we have here is that we’ve all been through this. So what I’d like to drill down with to start out with is from your own personal experience. What’s been your biggest challenge as a foreign founder in Japan, and how did you manage to overcome that? Let’s go the other way. So, Jeff, why don’t you kick us off?

Yeah. Sure. So I had lived in Japan for 11 years when we started curve grid. And at that point, and even today, my Japanese is not, perfect. It’s not I wouldn’t even say fluent.

I do business meetings in Japanese sometimes. I think maybe, it’s more tolerated when we’re talking about technical things because of my technical background. So I think one of the key, ways to overcome, let’s say, not only a language barrier, but a business culture barrier, even though for someone like myself who had lived and worked in Japan for more than decade at that point, was finding the right partners. And by partners, I mean, you know, service companies, service partners, agents that can help us do things like start our company, deal with our accounting, accounting, deal with our our legal matters. And I think those service partners have also evolved over time as as we’ve, grown as well.

And I think, you know, some founders here successfully do everything on their own. But for us, like, having that network of partners was something that that really helped us overcome a lot of challenges, and and to this day as well. So were those partners mostly on the the administrative side, you know, outsourcing accounting and things, or did you rely on those kind of partners for sales and and execution as well?  Yeah. It’s it’s a good question.

I think you have to always play to your strengths. Right? So we I come from an enterprise sales background in Japan, but also globally. And so I think we needed probably less support doing that and more support on legal, accounting, pension, payroll, HR, those those sorts of things. Excellent.

Paul, what’s been your experience? Okay. So this might be a bit controversial. I love that. Alright.

Well, first of all, I I, I’ve been studying Japanese a long time. So I came here as a student originally, then I was a local hire at a company here about 18 years ago. I haven’t been here the whole time, but this stint is pretty long, about the same amount of time total as you. And I always thought, well, Japan kinda sucks at software except for games. So I think I can contribute something there.

What I found despite speaking accentless Japanese, although my wife tells me it’s much better now than when we started Moneytree, I’m like, no. No. It was good then. But notwithstanding we could communicate at an equivalent level, our overseas experience and our overseas pedigree or achievements, anything that is sort of put on the scales of of how how, I guess, how how sparkly you are as as someone they could invest in. So fundraising was the big challenge for us.

I should have said that. Fundraising was the big challenge, and the and the the impediment was anything we did overseas was largely discounted because it wasn’t in Japan. So I sold my my first company, I started when I was 23. I was the CTO. We sold it to Thomson Reuters.

But for some reason, in the early days when we were fundraising, that was somehow less important than an Ivy League NBA. It’s like one guy’s got a swim certificate. I’ve swam the English Channel, and that wasn’t really put on the scales, and it didn’t weigh very much. So we we had to we had to build credibility. So getting to the how do we how do we overcome this challenge, I used to talk about this as, as manufacturing credibility.

Now I don’t mean like making things up and putting it on LinkedIn. Don’t do that. What I’m talking about is finding people who would trust us, and they themselves were very trustworthy, and that gave us the ability, because I I didn’t work in investment banking. I did study banking and finance and thought, I never wanna do that. I wanna start a start up.

In hindsight, working in investment banking is a really good way to, you know, to learn how to raise money. Working as a VC, Sam, that’s going to help you a lot, obviously. Not trying to teach anyone how to suck eggs. But in Japan, you need to find people here who trust you, and then step by step, like climbing a ladder, you will build your own credibility. So today, when Moneytree and thanks thank you to all the people who work with us and all the people who work for us and who still do today, when I go somewhere, that’s my pedigree.

Like, I’m from Moneytree. I’m one of the founders. We do these things. We’re doing our best. In the early stages, they’re like, who the heck are you guys?

And the first company to trust us in Japan was actually Apple. So we were a personal finance app. We were best of App Store 2013, best of App Store in 2014. We were a launch partner for the Apple Watch. That was the first rung on the ladder of credibility.

The second was our, our Jo Kyu Komond, our senior adviser, who worked for 30, 40 years at Sumitomo Bank and in the Mitsui Sumitomo Financial Group, and he vouched for us. And I’ll I’ll stop there. I’ve got more good stories. But mapping your overseas credibility to Japan, even if you’ve got fantastic brands like my co panelist today, you still have to show how that has gonna work in Japan. Excellent.

Sam? So I’m gonna talk execution. What what we often get asked is how did you sign 20 banks? How did you integrate with 20 banks? How did you sign 201 Credit Unions?

How did you integrate that? And how did you do that in 8 months? So, really, what we did was we focused on 3 fundamentals. One is in Japan, often, you’re told no. I remember with Howard Schultz, they said to him, Japanese don’t like coffee.

They’re not gonna pay $5 for the coffee. They don’t like experience. They’re not gonna pay for experience, and, you know, you’re not gonna succeed here. And now Starbucks is the 2nd biggest market in the world. I saw with Instagram, actually, as well.

We were told Instagram, Japanese are shy. They won’t take pictures of themselves and share it on social networks, and so you’re given the no. And so the question for us was how do we get over the no? And that really is about how do you sell the vision. But Japanese don’t want a vision PowerPoint.

They would like a document specifically on how you’re going to execute, the monetization of that execution, and a timeline. And if you miss one day, the trust is gone. So number 1 fundamental was setting up that vision in a very executional way, not a fluffy, what I call Australian or American way. The second was really our staff. Again, what I learned from Howard was you need to, first of all, focus on your staff and invest in them.

If you do that, when they turn up to meetings with these partners, they exude a confidence and a belief that, really, Japanese do pick up on. And if your staff don’t believe, if your staff think it’s a selling a product, that really does fail in Japan. I’ll give you an example. Our leadership team, 5 of them have all been promoted this year. Set very high goals, but everyone’s being promoted.

And the third fundamental to get over is actually sales. How sales culture in Japan, I always say, this is the hardest market to sell. Cold calling in Japan is really hard. So your sales team are going through a lot of stress every day. And you need to nurture your sales team very carefully.

Because I think in America and Australia and the west, selling’s a lot easier. Here, they’re getting so many noes and quite hard noes. As an ego, it’s very hard. So, really taking care of your sales team and nurturing that sales team was critical.I wanna drill down on one thing you mentioned.

So your the the importance of meeting the milestones and and hitting those executions. So as a startup or even a business developing new business, there’s a lot of unknowns there. Milestones are missed pretty regularly. And and how did that play out? Or how have you seen that play out?

First of all, it gives your team massive heart attacks because you’re making promises to people, and in the meeting, your staff are looking at you going, what? So, but you can execute. You set that goal. I find our Japanese staff work hard. They will deliver, and they can do more than they know.

And that’s something that I find important. If we stuck to a timeline that we all agreed to, it would be too long. So it is this about how do we push that level, and then how do we what I call what I learned from Zuckerberg was our our even our company goals are 3 months. Like, set 3 month goals, not 2 years, 5 years. And that helped the timeline a lot.

Excellent. Samantha? Do you want me do you want me to answer the first question or second question or both? The the the first question. What’s, from your own experience?

I think it’s been quite different from ours here. Yeah. So first of all, just a little bit of context. I think we are, part of sort of new generation of Fintechs here. We’re 2 years old.

And, frankly, I wouldn’t be here. The team wouldn’t be here if it weren’t for the advice that I actually got from some of the earlier founders, and some of us are here. So one of the first port of call when we looked at Japan for me was to actually talk to as many founders as possible, particularly foreign founders. And, the the challenge that we had and frankly, we’re a foreign founder. I’ve never lived in Japan.

I don’t speak a word of Japanese. So it was an altogether different order of magnitude. We have no context here other than a firm belief that Japan is probably the next destination market for Fintech. And I have seen many Fintech markets in the world. Japan really has all the hallmarks of an emerging ecosystem and the 4th largest economy, and it has the Fintech density of Estonia.

So, you know, if you look at it through the eyes of an entrepreneur and even through the eyes of an investor, this really speaks as a very, very interesting market with great potential. So we were attracted by that. We’re also attracted by some specific customer, I would say, characteristics that we noticed in other markets, but here in Japan take a very particular sort of cultural connotation. And we were very encouraged by changes in the regulatory frameworks. Again, as a foreign entrepreneur, particularly in the Fintech space, you know, those are characteristic that make you think differently about a market.

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