Why so many Japanese VCs won’t invest in Japan

Japan has one of the longest lived and healthiest populations in the world, and let Japanese startups are playing a relatively small role in the recent longevity-tech boom. The longevity market includes everything from health-tech wearables, to foods and supplements, to lifestyle coaching, to invasive medical procedures. The offerings themselves range from the incredibly useful and helpful to the wasteful and the outright dangerous. To make sense of all this, today we talk with Bilal Kharouni the CEO of Ekei Labs, who explains his startup's pivots through multiple sectors of the budding longevity market. It's a great conversation, and I think you'll enjoy it. Show Notes What exactly is “biological age” Where health tracking apps are useful and where they are dangerous How to market supplements in Japan's tightly regulated  market The business and medical challenges in direct-to-consumer health tech Pivoting from supplements to consumer test kits to research The path for commercializing  today's university medical research Business models that work for startups in medical research Advice to founders coming to Japan to start a startup How to sell in Japan with limited Japanese abilities How foreign founders can recruit Japanese advisors for their startup How Japan’s new via restrictions will affect foreign entrepreneurs in Japan Links from the Founder Everything you ever wanted to know about Ekei Labs Connect with Bilal The Aging Consortium is work on the clinical translation of the biomarkers of aging Life Biosciences is developing epigenetic reprogramming (gene therapy) protocols Leave a comment Transcript Welcome to Disrupting Japan, Straight Talk from Japan's most innovative founders and VCs. I'm Tim Romero and thanks for joining me. Japan is one of the longest lived populations in the world, and as you get older, well, you start thinking more and more about getting older. Of course, getting older is much better than the alternative, but we all want to slow it down a bit and do it in a healthy way. Now those of you who know me won't be surprised to learn that once I got interested in this topic, I got a little obsessive. I have a smart scale and a smart watch and a smart ring all confidently telling me slightly conflicting things about the state of my health. And anti-aging startups are a mixed bag at best, ranging from difficult, boring, but very effective medical advice about diet and exercise to fund cutting edge wearables and trendy supplements and treatments that are a complete waste of money and everything in between. Well, today we sit down with Bilal Kharouni, the CEO of Ekei Labs, who's going to help us make sense of all this. Now, the Ekei Lab's journey and their pivots while trying to find product market fit in the anti-aging market is really a microcosm of the whole wellness industry from supplements to consumer facing tech to medical research to well, I’ll let Bilal explain where it all ends. Now, interestingly, Bilal and I had this conversation in Okinawa, home of Japan's longest lived population. And we talk about finding product market fit in health tech, how to sell to Japanese enterprises when your Japanese ability is limited, and how Japan's new visa restrictions are going to impact startups here. But, you know, Bilal tells that story much better than I can. So, let's get right to the interview. Interview Tim: I'm sitting here with Bilal Kharouni, the founder and CEO of Ekei Labs, who's selling direct to consumer longevity testing and support services. So thanks for sitting down with us. Bilal: Yeah, thanks for having me. Tim: Now you're based in Tokyo, but we're sitting here in Okinawa today. You've recently joined the OIST incubator, so tell me about that. Bilal: Yes, we work on aging and longevity. So for us, there's not a better place than the blue zone of Okinawa to really sit our lab and working on aging. Actually, we pivoted quite a lot from direct to consumer longevity tests. So we really have a platform that is more intended for joint research. We went much further in terms of research, so having both the lab and the talent and also the perfect location too. Tim: Well, I mean Okinawa famously as one of the longest lived populations in the world. Is that coincidence or does that inform your research in some ways? Bilal: So, it's pretty consciously I will say, the reason why Okinawa and people live the longest are part due to diet or social activities being surrounded by their loved ones, which is great. But what we're investigating is mostly therapeutics to increase healthy lifespan. So, it's a deep tech zone I would say. However, for people who have an interest in longevity and living longer and who wants to work on these topics, it's a very attractive location and it's an attractive location for hiring some of the best people. We had the chance having members quitting the job for Tokyo to join us in Okinawa to work with us. Tim: Well, I can certainly see the appeal of coming to work here. So, let's talk about biological age. Because this is something that fascinates me. But what exactly is it, like my smart scale at home tells me about biological age. I think this wearable also will give me a biological age, but what exactly is it? Bilal: So, it's a very interesting question, and that can be quite confusing for many people because as you're mentioning, you have so many different biological age for one chronological age. So, it's really looking at the spectrum. So that can be, for example, your cardiovascular health, your fitness or any kind of biomarkers and see how you benchmark compared to rest of population. So, you might be 32 years old, but for example, your cardiovascular system might correspond to a healthy individual of 18 years old. So, you could say that your cardiovascular health is of someone of 18 years old and… Tim: But is it something that is scientifically defined? Is there like an accepted way to measure these biomarkers and calculate it this way? Is there an accepted scientific consensus about how to calculate it? Bilal: There is not a scientific consensus yet and that's actually big challenge in our industry. We have different ways of measuring chronological age using, for example, evidence marker, glycome marker proteomics, and the big question in which ones have a clinical translation. Because I can give you a chronological age, but if it doesn't mean anything in terms of risk of the disease or physical conditions, it's frankly huge metrics. Tim: I'm also curious about. Okay, not necessarily the way you calculate it specifically, but industry-wide. So, when biological age is calculated, is the actual chronological age always used as an input or can it be calculated independently or is it more of like an adjustment factor? Bilal: So when you do the algorithm, you have a dataset with the metadata sets with the gender, that helps calibrate the chronological age. And ultimately you would want when you take input from a patient not knowing the chronological age and estimates the biological age independently of the chronological age and industry-wide, there are different clocks. And now there's a huge work for having this clinical and scientific validation. So each year, actually I'm going to Boston in October for the biomarkers of aging symposium that takes place at the Harvard Medical School. So that's really ongoing discussions in the field. Tim: So your offering also involves a mobile app? This app provides insights and advice on how people can improve their biological age. So, what kind of insights and what kind of lifestyle changes does it recommend? Bilal: So for the app, low hanging fruit for someone like the diet, sleep, physical activity, and we put this app for use for clinicians and they can be also very helpful for the clinicians who have both a surgical age metrics as well as information the lifestyle of their patients. Because can be quite difficult for the clinics to know how well the patient eat or sleep. And then the medical doctor can really guide the medical journey to help them in their longevity medical journey. Tim: So, what are the biomarkers you're looking at? I mean, you've recently been selling like a home test kit for that's like a blood sample. So, you've got the blood test and what other information goes into the calculation? Bilal: So we have two type of product services. So, the one actually describes is for our individual use and we use a biomarker called IgG glycome. And what is amazing with this biomarker, it is that is very responsive to interventions, an intervention of eight to 10 weeks and do another test. You can see a data, you can see a difference in this biomarker like, and what is also great with this biomarker that is extremely linked with chronic inflammations and chronic inflammations are linked with a myriad of chronic disease. Tim: So, is that like just a coincident marker or is that actually directly related to biological aging? Bilal: That's a great question. Menopause is probably one of the condition that is the most linked to medical aging. And when we say that so many times it's misdiagnosed and mis-documented. So, having ways of getting the early science through this IgG glycome measurements and then having better medication or better health optimization or better response from the medical doctors, we think is extremely important. And probably the first longevity drugs that we could see on the market will be a drug targeting menopause and perimenopause. That may be one of the first age related condition that we might be able to treat one day. Tim: Excellent. Let's take a step back for a minute and kind of talk about how Ekei Labs came to be and how we ended up in this room having this conversation. So, you actually launched in 2019 with a completely different business model.

In the popular imagination, Japan is almost synonymous with robots. While Japan once dominated cutting-edge robotics, over the past decade she has fallen further and further behind the US and China. Today we sit down with Chiamin Lai of Firstlight Capital, who believes that Japan might just regain that leadership. We talk about the unique opportunity and advantage Japan has in the deployment of practical physical AI, the enterprise culture that is holding it back, and what a handful of innovators are doing about it today. It's a great conversation, and I think you'll enjoy it. Show Notes How starting startups in Japan has changed over the past 20 years -- especially for foreigners How Japan's labor shortage is driving the adoption of physical AI The biggest problem in integrating GenAI and robotics The best use cases for physical AI today and why healthcare is not one of them How secrecy is holding back AI innovation What keeps Japanese enterprise from embracing open innovation Can Japan's VC ecosystem afford to fund AI in the era of massive funding rounds Why physical AI companies should not create their own hardware Why Japanese startups should not look to hardware for competitive advantage The importance of industry cooperation and why it's critical for Japan's AI success What physical AI will look like in Japan in five years Links from the Founder Everything you ever wanted to know about Firstlight Capital Firstlight's thesis on Physical AI Connect with Chiamin on LinkedIn Follow her on Twitter @chiamin_lai Chiamin's excellent series on Physical AI in Japan Leave a comment Transcript Welcome to Disrupting Japan, Straight Talk from Japan's most innovative founders and VCs. I'm Tim Romero and thanks for joining me. Japan has always had a special and very positive relationship with robots from Astro Boy and Doraemon in the fifties and sixties, to Sony's Asimo in the 2000s to SoftBanks Pepper in the 2010s. It has always felt like Japan was set to create and then to lead a humanoid robot revolution. But that didn't happen. In fact, today, Japan seems to be far behind both China and the US in the development of not just humanoid robots, but intelligent robots in general. Well, today we sit down with Chiamin Lai partner at Firstlight Capital, to discuss how that came to be and what we can do about it. Now, Chiamin's investment interests are deeply focused on physical AI and specifically physical AI startups in Japan. And she remains optimistic about the future of AI and robotics in Japan. We talk about the market and the financial structures pushing Japan to adopt meaningful physical AI before the rest of the world. The technology and social challenges of trying to use AI and robotics and healthcare, and some really great advice for physical AI startups that are planning to raise money. But, you know, Chiamin tells that story much better than I can. So, let's get right to the interview. Interview Tim: So, we're sitting here with Chiamin Lai, the general partner at Firstlight Capital, and a director at Japan Venture Capital Association. So, thanks for sitting down with me. Chiamin: Thank you, Tim. Tim: Before joining Firstlight, you worked in startups and investing in Japan and in China and in the US but you've had ties to Japan for quite a while, haven't you? Chiamin: Yeah, I was born Taiwan, but then I came here when I was teenager, and after that I received education here. I also work in Japan, but then later to Europe and then came back. So I can say this is like my hometown in the way. I have more friends, more connection, and my family here. So yeah, some of my friends said, you are more Japanese than we are. Sometimes I agree. Tim: Yeah, I know the feeling. I've been here over 30 years myself. Yeah, it kind of sneaks up on you. And Japan is a very comfortable place to live once you kind of get used to it all. Chiamin: Yeah. But I would say it actually changed a lot for the past 20 years or 30 years. When I came, Japan is not that open up. Like people sometimes complain about they have a hard time finding apartment and so on. I'm like, okay when I came it was worse. Tim: Yeah, that's for sure. Chiamin: Yeah. Finding a part-time job, finding a job was not that easy at that time because we still have a lot of population. They don't really need a foreigner to work for their company. Tim: Well, I think that's one of the biggest changes is so when I started my first startups back in the dotcom era, a big part of it was that there weren't a lot of options open to foreigners in Japan. Having a regular career track job was exceptionally rare, and now it's almost kind of flipped. Chiamin: Yeah. Yeah. I agree. I think it's good for the country. I think both you and I, we stay here for a long time, so we have a deep understanding about this country and a lot of foreigner like us I think we all wish that we can contribute somehow to this society because it's a good country to live. That's also one of the reason why, even though I left for few years and I decided to come back to Japan and to do some contribution, and that's one of the reason I'm here. Tim: Well, let's talk about that because first slide invests fairly broadly in pre-seed, up to seed, but your own focus and your own passion seems to be in physical AI. So what is physical AI and why is it important now? Chiamin: So as a fund, our investment thesis is how can we actually solve the demographic challenge here in Japan. And if you want to solve that problem, of course you can use AI, we can use software, we can use automation. A lot of solution out there. So for my investment, I also of course invest in AI company, SaaS company. But one of the reason why I have heavily looking into physical AI is because of my background. Before I came back after COVID, I work in China for seven years. So I actually witnessed the heavy growth in China for entrepreneurship from 2011 to 2019. And then I also was working for a DCM, which is a Silicon Valley venture capital. I also was seeing how the Silicon Valley startup was doing. When I came back to this industry, I look in Japan, I think one thing that a lot of entrepreneurs forgot is what is the strength about this society and what is the heavily problem that you solve. For the past five years, SaaS has become a very common platform or common tool for a lot of office worker. But what we’re looking into this social problem right now, we need to urgently solve the problem on the ground, which means that essential worker. If you look at the restaurant, if you look at the construction, we are heavily lacking people, but we don't really have a solution to solve. So, let me come back to your question of physical AI. My definition of physical AI is how can we embed artificial intelligence on the actual physical operation? Tim: I mean, there's a lot in there. So let me try to peel that back a bit. So, could physical AI just be IoT rebranded with some AI, or is it something fundamentally different? Chiamin: I think right now, if you look at the VC, a lot of investment tied to humanoid robotics. If you look at recent fundraise with figure AI, with all those very interesting robotics company, humanoid company, right now, I think US, they are aiming for that. For me, I think it could be robotics, it could be using hardware to embed artificial intelligence. And to go back to you saying, is that a rebounding of IoT? I disagree. Because what we are talking about is how do you distinguish gen AI and AI, that's the discussion we normally have. Tim: Well, I mean, I want to get into that just nailing down what physical AI is before we get into gen AI. So there's AI can be applied to industrial processes, to robotics control, to like I mentioned IoT with a bit of AI shoved in there. But physical AI, does it require robotics? Does it require AI actually controlling something in the environment? Chiamin: I would say physical AI would be the enabler for automation in terms of action. Tim: So, does smart sensors count as physical AI? Chiamin: No. No, I don't count smart sensors as physical AI, it's automation of the procedure or process on the ground. So, let me give you a very easy imagination for physical AI on the construction side. So, if you are building the house here in Japan today, you need to have director checking the progress. So, making sure your house can be built and also making sure it's on time and on quality. Today, how do they do that? Is they will need to visit the site. They will need to use the measure to really measure exactly the length and so on. But Japan, today, we are lacking a lot of experience monitor person because they are retiring. So, what's happening today is the undergrads come to onsite, he's going to check in your house. Are you going to be comfortable for not really experienced person to making sure all the construction is correct. That's going to happen in 10 years, or even in five years. Now, when we say physical AI is if you have a tool there that has intelligence that can actually check what is going on the ground, using the AI to understand your status as well as the lengths because you need to measure what is going on, if that can be automated. And then you can have an agent to tell you, okay, in this case, this is what you need to do. Tim: So, the physical AI is AI that is interacting with the physical world in some… Chiamin: Yeah. And then it can generate action. And that's why I think why people say robotics right now, because you need somebody to do the actual physical world. Tim: Well, yeah. In most cases there would be some sort of an interaction component. Chiamin: Right, exactly. Is that there needs to be action there. Tim: So talking about AGI,

Japanese startups is hot right now, and more and more foreign money is flowing in. But many Japanese VCs remain stubbornly outward-looking. Today we sit down with Shri Dodani, who after a series of highly successful American startups, decided that Japan is the best place to invest right now, and co-founded of Global Hands-On VC, to make those investments. We talk about the unique advantages startups have in Japan and why Japanese founders often have trouble leveraging those advantages. It's a great conversation, and I think you'll enjoy it. Show Notes The unique potential Shri first saw in the Japanese market How Japanese buying patterns help Japanese startups Japan's transition from VC 1.0 to VC 2.0 Are Japanese startups really becoming more globally minded? Why the large global VCs seem to have so little interest in Japan How Japanese VCs and corporates are more supportive of startups than in other markets Why it's important to invest in  Japanese founders "with a bit of an attitude” What's holding Japanese founders back today What actually stops Japanese founders from going global? The importance of role models and for Japanese founders to mentor The most promising startup sectors in Japan How recent immigration tightening will affect innovation in both the US and Japan Links from the Founder Everything you ever wanted to know about GHOVC Follow them on Note Connect with Shri on LinkedIn Check out an interview with him on YouTube Follow (GHOVC co-founder) Ken Yasunaga on Twitter @ken_yasunaga Leave a comment Transcript Welcome to Disrupting Japan, Straight Talk from Japan's most innovative founders and VCs. I'm Tim Romero and thanks for joining me. Longtime listeners of Disrupting Japan know that I'm extremely bullish about Japanese startups. In fact, most of us on the ground here are pretty optimistic about the whole situation. And yet a surprising number of Japanese LPs and VCs seem to have little interest in investing in Japan preferring to focus on high profile San Francisco. Today we sit down with Shri Dodani and we look into exactly why that is. Now Shri is a successful American founder with multiple exits, totaling well over $1.5 billion. And when he transitioned from startup to VC and put his first fund together, he decided to focus exclusively on Japan in order to take advantage of what he thought Japanese and foreign VCs alike were overlooking. Shri and I talk about Japan's transition from VC 1.0 to VC 2.0, the aspects of the Japanese market that give it a unique advantage over Silicon Valley in some areas, the one thing that's holding Japanese founders back the most and why it's important to invest in founders who have a bit of an attitude. But, you know, Shri tells that story much better than I can. So, let's get right to the interview. Interview Tim: So, I'm sitting here with Shri Ddani of Global Hands-on VC, a serial entrepreneur and founder and managing partner at Global Hands-on VC. So, thanks for sitting down with me. Shri: Thank you, Tim. It’s an honor. Tim: I'm glad we've got a chance to talk because I think you really do have a different perspective on what's going on in the Japanese market today. And just to give our listeners a bit of a background, so before moving into VC, you had a remarkable string of successes. As a founder, as an operator, you had six startups and six exits, including one that was a $550 million acquisition and IPO that was worth over a billion. I don't want to dig too much into that because we could be here all day talking about it and it'd be a worthwhile conversation. But after being such a successful operator for so many different types of startups, why the move to VC? Shri: A good question. So sometime I do one day even after became a VC, that should I continue doing my own companies because I'm good at that. Having done company in different field, you kind of get the nose for the technology. Obviously you have to be technical person, but beyond that, you get nose of different technology, how they relate to the actual product. And how do consumer or the industries benefit out of that? Most of the VCs come from financial world and what we can bring them uniquely is that we give them perspective from development perspective, but we can help the companies from a product development perspective as well. Tim: I can completely understand the value add both to the other partners, to the investors, to the startups you're investing in. But like on a personal level, it's a really different job. So, why did you want to make that jump? Shri: Service time, I've done several companies, as you noted, they've done in different industry. So as you want to get new challenge always right, because that's what keeps you young. Secondly, I've invested in over 25 now 28 companies of my own money and equal number of companies as an advisor as well. So, I've made money as an individual investor, a good rate of return and it was an opportunity for me to work with Ken to sort of make it more formal. Tim: So, this is something you were kind of building up to through personal investments and angel investments over time. And as someone who's also done both VCs and founding startups, the ability to interact with lots of different ideas and ability to support a lot of different bets and interesting markets is exciting, but do you miss the ability to execute your own vision? Shri: Absolutely. Absolutely. I'd be lying if I said that I don't, right? Because I think ultimately, we are wired to drive our own destiny, but all along the way I have an opportunity to be advisors and investors and one of the things you learn is that the way to scale your operation is to other smart people as well. So, the downside, I'm not driving it, but the upside is I'm learning tremendously more from much, much smarter people than I am. Tim: You and Ken together established Global Hands-on what made you decide to join other partners rather than pulling in a fund of your own? Shri: Ken was investor in my company that we eventually exited and Ken and I got along well and he was with INCJ after that fund. And as part of it INCJ, him and I have invested in two Japanese company. So we've been touch, we've been helping companies go global. And even from that perspective, it was a good thing for me. I can't do Japanese company without Ken for sure, because I don't speak Japanese. So you needed a partner in Japan. So, that's one thing. Second thing, the challenge for me was Japan is, I'm trying to figure it out, that Japanese government, Japanese entrepreneur, everyone is doing fantastic job. They're following all the textbook thing of how to do startups, how to invest in startup how to nurture the startup. For some reason they can't break out in terms of the mass scale, a scalable global business. And I'm trying to understand why. Tim: This is something that's puzzled a lot of people, myself included. It's an ongoing theme of Disrupting Japan. So that makes sense to operate in Japan. You definitely won a strong team, people with a track record and the team at Global Hands on, definitely is that. But taking a step back, I mean, why Japan in particular? There's all kinds of things going on all over the world, so why focus on Japan? Shri: Yeah, it's a very good question, why Japan, especially for me, I could do something else in the US or anywhere else. In 2005, I put my first money into a fund in India. It was a small fund for $5 million. I wrote the first check it is now called Excel India. At that time, nobody wanted to invest until Google put last $1 million, the $11 million fund. And then we hit the flip card, the flip card changed the entire India story and they have massive investment, massive capital flow, a lot of startups, a lot of activity, energy and so forth. Japan, to me, because I'm a startup guy, feels like here's a country that had a lot of capital, has a government behind it, and a lot of talent, engineering talent, a lot of core technology on a global basis. It should be right for a disruption from a startup point of view where you could create new startups and hopefully get a competitive advantage from an investment point of view as well, while others are not seeing the same opportunity. So, for me it was no different than me doing a startup looking at where are the opportunities, what can be disrupted? Where can you get unfair advantage before competition discovers that opportunity? That's what interested me in Japan. Tim: So let's talk a bit about your history and connections to Japan. Shri: So back when I was working for another startup, early eighties, I was responsible for Japan joint venture with SIE chemicals. So, I've been exposed then it was obviously in a different time as before the bubble. Since then, I've done my own startups, six of them, almost every one of them had either investor, customer or partner in Japan. The three things that they taught me all along, it's very hard to get into Japanese customer because they're very, very demanding and challenging, but in reverse order, you learn the most from them. They make your product better, they make your technology better, they make you work towards success. Tim: Well, and Japanese customers also tend to be incredibly loyal. Shri: Loyal as well. Tim: Yeah. The upfront effort required in that long sales cycle is probably made up with mathematical identity, with lower churn rates and longer retention on the backend. Shri: Absolutely. Absolutely. And since then, every one of them, there's people still using those products even now, right? Tim: So identifying Japan as an underappreciated opportunity really makes sense. But there's a lot of early stage funds in Japan. So what were you trying to achieve with this one that was different? Shri: Yeah, for me, Tim, we're still learning.

According to Taro, Japan's logistics industry is on the brink of collapse, and it's hard to argue that he's wrong. Taro Sasaki founded Hacobu with the goal of modernizing Japan's logistics industry. He found few takers for the first few years, and then a new law changed everything. We talk about how Japan's demographic and economic challenges, why some industries simply refuse to invest in themselves, and how to sell to them anyway. It's a great conversation, and I think you'll enjoy it. Show Notes Why Japanese logistics is on the brink of collapse The factors pushing demand for trucking higher in Japan What's preventing Japan's logistics industry from modernizing How to sell digital products to skeptical analog industries A new Japanese law mandating business efficiency How to bootstrap a complex application ecosystem from scratch The huge value hiding inside Japanese logistics data Hacobu's global expansion plans Taro’s best advice to founders wanting to sell into traditional, blue collar industries The importance of dreaming big -- even in Japan Links from the Founder Everything you ever wanted to know about Hacobu Keep up with the latest on Hacobu [Japanese] Hacobu's survey of 1271 Japanese truck drivers [Japanese] Friend Taro on Facebook Connect with him on LinkedIn Follow him on Twitter @tarosasaki Leave a comment Transcript Welcome to Disrupting Japan, Straight Talk from Japan's most innovative founders and VCs. I'm Tim Romero and thanks for joining me. Today we are going to talk about how to drive innovation into traditional, conservative, low margin blue collar industries. Now, that might sound hard to do, but it's actually even harder than it sounds. And, you know, that's why so few startups seriously attempt it and why it's extremely profitable for the few founders who manage to get it right. Today we sit down with Taro Sasaki, the founder of Hacobu, a startup that is finally, finally bringing digital transformation and automation to Japan's logistics industry. Taro’s constant refinement and testing of his ideal customer profile and go to market is a story that all founders can learn a lot from. Taro and I talk about the best path for founders to take when trying to sell to industries that are resisting digitization, how a lack of regulation can sometimes actually lead to less innovation. Why the logistics market is so hard to crack globally, and the two big factors that led to Hacobu’s sudden change of fortune. But, you know, Taro tells that story much better than I can. So, let's get right to the interview. Interview Tim: So, I am sitting here with Taro Sasaki, the founder of Hacobu, who is reinventing Trucking Logistics in Japan. So thanks for sitting down with us Taro: Thank you too. Tim: So, MOVO is a suite of SaaS tools that handle fleet tracking vehicle dispatch loading, unloading.  I gave a brief explanation in the intro, but I think you can explain it much better than I can. So, what is MOVO? Taro: So, Japanese logistics infrastructure is collapsing. Tim: What do you mean collapsing? Taro: So, the number of truck drivers is decreasing. The government estimates that in 2030, 25% of truck driver will short to the demand. Tim: So, what's causing it? It's a lower paying job that younger people just don't want to get into? Taro: Yeah, yeah. That's one of the reasons. And also the business process in the infra is very outdated and very analog, there are many inefficient things going on. So, the demand for the truck driver is increasing, but actually the supply of the truck driver is decreasing. So, the gap is going to increase. Tim: That's interesting. So, the demand for trucking is actually increasing recently? Taro: Yes. Because of the development EC, we want to get things, for example, at the supermarket, we want the commercial goods on demand so that the suppliers have to deliver the products on time that we want to buy it. So, the amount of goods in one truck is decreasing. Tim: So, is this increase in demand, is it mostly that sort of last mile delivery? Is it long haul freight or is it both are increasing? Taro: Both of them. Tim: Wow. Did not expect that. Taro: Yeah, because B2C logistics is easy to understand because, you know… Tim: The whole e-commerce boom is Yeah, Taro: Yeah. But there is a big infra in the back of the EC, which is called B2B logistics. For example, there's a factory, and the factory have to be supplied. So the suppliers have to deliver to the factory by a track. And then after the factory manufacturer, they have to deliver to warehouse. And then the warehouse deliver to the supermarket, the EC in a warehouse. This B2B logistics infra much bigger than the EC infra. The number of the size of the infra is about like 50 cho-yen comparing to EC, which is about three cho-yen. Tim: And so Hacobu's goal, MOVO's goal is to address that 25% shortfall through increases of efficiency. I want to dig into that and the challenges of trying to bring digital transformation to these conservative blue collar industries. But before that, tell me a bit about your customers. So you have 850 or so customers using your products now. So what kind of companies are they? Taro: So there are many stakeholders in this infra, there is manufacturer and then talk warehouse, which is outsourced to large logistics, sample leaf. And then there is distributor, and then there is a retailer. Tim: So in Japan, from the time that Kirin makes that beer in their factory to the time it is sitting in a glass on my kitchen table, how many different warehouses has it been in? How many different trucks has that bottle of beer been on? Taro: At least two or three. And the trucks are not owned by large logistics companies, but by a small truck companies that there are about 60,000 small tracking companies in Japan. And then most of them are, papa, mama tracking companies, and then large logistics companies outsource business to those small tracking companies. So, there are two axis of the complication. Layers, times layers, those are all the stakeholders. And then communication between those stakeholders done fax and phone calls so that the data related to logistics are not connected to each other. Tim: So, in your system, you have different software components that support all of these different. Functions from the drivers themselves to the vehicle dispatch to the loading and unloading. So who's the customer that is paying for the service? Which part of the chain do you identify as like your real customer? Taro: It's by case by case. For example, Aeon the large retailer in Japan, they buy our application by themselves. But for example, 7-11, they outsource a logistics to logistics companies. So they ask the logistics companies to use our system. So, it's case by case up to the power balance between the shippers and logistic companies. Tim: Okay. So that's interesting. So in the case of something like 7-11, you're not actually selling directly to the logistics company. You're selling to the end client who will then go downstream and tell the logistics companies, we want you to use this software. We want you to use MOVO software. Interesting. Taro: So, you have to find a trigger point. So in the case of Aeon, you have to talk to Aeon directly. They directly use our system. But in the case of 7-11, we talk to 7-11. And also we have to talk to the logistics companies that 7-11, outsource their business. So, that's why I was saying case by case. Tim: I want to get back into the go-to market and sales cycle in a minute. But before that, I want to talk a little about you. Taro: Me? Okay. Yeah. Tim: So, you founded Hacobu back in 2015, but you started a number of startups before that, right? Taro: Yeah, yeah. Two startups. So, this is the third startup. Tim: And your previous startups were let's see, there was Glossy Box, which was a beauty e-commerce site and Fresco, which is kind of a food e-commerce site. So, why the change? What drove the move from like this very marketing intensive B2C e-commerce to a pure B2B pledge? Taro: So, my entrepreneurial life started from Glossy Box which was backed by Rocket Internet. Do you remember that? Rocket internet? Tim: A lot of Japanese founders today have a bit of a rocket internet story. Taro: Yes. They are not, superhero in the entrepreneurial in a scene, kind of heal. Tim: But I understand it can be a great learning experience. Taro: Yes, that's right. So, a friend of mine at the business school, his Korean guy, he first started Glossy Box back up by Rocket Internet in Korea. And then he successfully launched the business in 2011 something. And then he came to Japan. He was in charge of rolling out the business to APAC. He came to Japan and was looking for a CEO of Japanese business. And he asked me to take that role. And that was my entry to this entrepreneurial role scene. And then not so long one year and a half, but it was successful. In nine month, the business got profitable. I thought, oh, starting business is my calling. The pressure from Rocket Internet is very tough. But I kind of enjoyed it. But Glossy Box, the business model was given by Rocket Internet. So, I wanted to start a business from really scratch, and then I started Fresca. I thought e-commerce business is very easy because Glossy Box was successful in the short term. I thought I hacked online marketing, and then I found that Rocket Internet started HelloFresh. So, I thought I brought it to Japan. I copied the business model in Japan, but it didn't go well because the logistics was very difficult. So, I changed the business model to like online mall of high-end food, which was not successful at all because online marketing at Glossy Box was successful. But it is very different from online marketing for high-end products. Tim: E-Commerce has always been fiercely,

Last month I gave lecture at Globis University on what it takes to build an AI startup today. It's no longer early days for AI, and most founders don't have the connections and resources that drive toady's multi-billion dollar seed rounds. However, as I detail, they still have several paths to success. After the lecture I am joined on stage for a panel discussion by Reiji Yamanaka, the managing director of the Kibo Impact Investment Fund, and Kelvin Song, the program director of the Globis MBA program. It's a fascinating discussion, and I think you'll enjoy it. Leave a comment   Transcript Welcome to Disrupting Japan, straight talk from Japan's most innovative founders and VCs. I'm Tim Romero, and thanks for joining me. I have a special in-between episode for you today. A few weeks back at Globis University, I gave a lecture to aspiring founders on the best way to start a generative AI startup right now in this time of intense AI competition and funding levels. I cover the different AI business models, promising application spaces, and how to know if you've got an AI startup idea with a good chance of success. Now, the first 30 minutes of this episode is the lecture itself, and then I'm joined on stage by Reiji Yamanaka, the managing director of the Kibo Impact Investment Fund, and Kelvin Song, the program director of the Globis MBA program. And we dive even deeper into these ideas and also talk about how generative AI is likely to affect us all. I hope you enjoy it. So let's get right to the presentation.   Presentation Today we're going to talk about how to build a generative AI startup and some important things to keep in mind if you actually decide to do that. Now, before I tell you what we're going to cover, I want to kind of tell you what we are explicitly not going to cover. So first, we're not going to talk about the transformative nature of AI in general, the explosive growth of the market. There's already way too much chatter about that, and I assume if you're even thinking about starting an AI startup, you already know it. Second, I'm not going to offer general advice about starting and growing a startups, although this is a topic that's very close to my heart. I want to focus on what can add the most value to you in this particular seminar. If you want to talk about general start advice, talk to me later. I'll point you in the right direction or ask questions afterwards or during the panel discussion. We'll begin today by talking about four common exit and growth strategies. This is a bit unusual. I don't normally recommend that seed or pre-seed companies focus too much on exit strategy, but these are not normal times. With generative AI, you need to plan your end game from the very beginning. We'll spend the bulk of our time talking about actually building your AI startup. We'll cover some key strategic considerations, and also talk about a few of the most promising targets for AI disruption. Does that sound good? Well, before we get to it, why should you listen to me? And that's a totally reasonable question. So, I've been in Japan for, wow, over 30 years now. Currently a partner at Jira Ventures. It's $300 million corporate venture capital firm that invests in green energy, next generation energy, generation technologies. But in my time here, I've started four of my own startups I've sold two, bankrupted two. So, 50 50, not too bad as far as startups go. I've done a lot of angel investing. I've taught entrepreneurship and corporate innovation at New York University's, Tokyo Campus. I've brought foreign startups into Japan as a country manager. I was tapped by TEPCO to come in and help them spin up TEPCO Ventures. I left TEPCO to run Google for Startups, Japan, swearing I would never go back to energy CVC. After four years at Google, I decided to go back to energy CVC because right now what's happening in energy is just fantastically exciting. Oh, and I also run a podcast called Disrupting Japan, where we sit down and we talk with Japanese startup founders and VCs, not so much about their specific company or portfolio, but what it's like to be an innovator in a culture that really prizes, conformity and what problems these startups are trying to solve. So, you know, please like, and subscribe and all that. Okay, let's get into it. Let's talk about your exit strategy and the possible business models that stem from it. Now, as I mentioned before, this is not the usual way of doing things. At seed stage, founders don't normally need to think too deeply about the exit strategy. If you build a rapidly scaling business that adds value to your customers, M&As IPOs, both paths remain open to you and it'll eventually become clear to you which is your best option. It's not something you normally try to optimize for, not at seed anyway. However, these are not normal times, and if you're building a generative AI startup, your exit strategy will greatly influence how you run your business. So, the four exit and growth models in increasing order of complexity are the Peter Pan, riding the hype, rapid customer growth and sustainable revenue growth. Now, we're going to move really quickly through the Peter Pan and riding the hype, since they don't really require growth at all. And honestly, only sustainable revenue growth needs a path to profitability. So we'll be spending by far the most time on that one because sustainable revenue growth, it's the most flexible, it's the most complex, and in most cases, it'll give you the greatest chance for success. Now, as a founder, you need to understand your options and consciously make a choice of what your goal is. And on the other hand, if you're thinking of joining a startup, you need to make sure that you're a hundred percent aligned with the strategy that startups actually executing. Not just the one they're saying they're executing. Now, before we get into the details, I need to point out that, that even if you fully embrace the potential of AI, and it's transformative nature, the VC market has never seen anything like this level of hype and focus. We're already way beyond what we saw during the dotcom area. So, just how hot is the AI market right now? Well, it's stupidly hot right now. Between 60 and 70% of all VC investment is flowing into AI startups. In fact, if you remove the AI investments, VC investment is actually down sharply. So yeah, these are not normal times. So, let's talk about exit and growth strategies. First, the Peter Pan, also known as I'll Never Grow Up. Now this is not a serious strategy, but sadly, it's the one that most startups are executing either consciously or unconsciously. They raise some pre-seed, maybe some seed money. They play with some cool AI tools, they ship a me too product, and then they disappear in a year or two when they can't raise a Series A. Now I include this for two reasons. One, because like a surprising number of founders seem to be fine doing this. Some people just seem to want to have a founder experience and run what I've heard called a starter startup, which I mean, if that's what you want to do, fine. But it seems like kind of a waste of everyone's time. We are here at the beginning of what might be one of the most important transformative shifts in technology. And man, it makes sense to swing for the fences. Don't waste your time chasing small dreams on this. And two, I include the Peter Pan model for those that are thinking of joining an AI startup. If you're thinking of joining a team that is not clearly executing one of these other strategies, they're probably never going to grow up and you're probably wasting your time with them. Okay, let's move on to more profitable strategies. Our second strategy is to ride the hype. Now, I mean, all startups need to do this to some extent. We see hype driven business plans in every hot startup sector, but I mean, AI has everything dialed up to 11. Riding the hype is a pure play. This is pure marketing. Your product is your stock. It's a very good play for the right kind of team. So, what do I mean? We saw safe super intelligence raise a pre-seed round at a $5 billion valuation. They got a nice step up to a $30 billion valuation at seed. Thinking machines just raised 12 billion. Open AI acquired Johnny Ivey’s IO for 6.5 billion on the promise that they would eventually build something cool. Now, these are obviously really big numbers, but if you haven't worked in VC or startups for a while, it might not be apparent just how bonkers these numbers really are. So, when investors invest in seed startups, they're generally looking for a path to a hundred times return. They're not expecting a hundred times return, but they need a path to it. Now, even assuming these are somehow special, they're only looking for 50 times return or 30 times return. This is implying a trillion dollar exit, which would make it not only the biggest startup exit in all history, not only twice as big as the biggest startup exit in all history, but twice as big as the next five biggest startup exits in history combined. And that's not, keep in mind, this is not a bet on the technology. This is a bet on one particular company. So, yeah, thing things are things are a little frothy. Now, these valuations are based on the star power of the founders, and that's important to note that none of these companies have an actual product or even a prototype yet. So, shipping a product is actually a very dangerous step for hype driven companies because that's when people are able to compare the hype and the reality, and very often the reality just doesn't live up to the hype. But anyway, if you are extremely well known in the industry and you can line up an A-list VC to give you that credibility with other investors and to help you exit when the time comes, this could work for you, ride that hype as far as it'll take you. Generally however,

Japan's declining birth rate makes global headlines, but most of the developed world will soon be facing the same problem. The real solution involves a lot of social and economic changes, but as you'll see, technology has a huge role to play as well. Today we sit down and talk with Kaz Kishida, CEO of Dioseve, about how their technology promises to transform IVF, the rapid timeline for global rollout, and safety issues and ethnical questions involved. It's a great conversation, and I think you'll enjoy it. Show Notes How Dioseve will make IVF far more successful Why over 7% of all babies born in Japan are from IVF Bio tech CEOs don’t need life science degrees Safety concerns Applications to rejuvenation and ani-aging Ethical questions around this kind of reseach Japan’s policies towards stem cell and genetic research Roadmap and go-to-market Why some babies will have three parents, and what that’s good How Dioseve's ovarian cell technology will change IVF Why Japan’s bio tech ecosystem remains under-developed It's not harder to build a bio tech startup in Japan, but it is different Links from our Guest Everything you ever wanted to know about Dioseve Friend Kaz on Facebook Leave a comment Transcript Welcome to Disrupting Japan, Straight Talk from Japan's most innovative founders and VCs. I'm Tim Romero and thanks for joining me. Today we're going to talk about making babies. Now, this is not something that startups or startup podcasts normally weighed into, but as you'll see in this case, it makes a lot of sense. Today we sit down with Kaz Kishida, co-founder and CEO of Dioseve. And Dioseve has developed a technique for growing mature human eggs from IPS cells. Now, this technology represents a huge step forward for IVF and for human fertility in general. Some parts of Dioseve’s technology could be in commercial use as soon as next year. Now, kaz, I dive deep into Dioseve's technology and the potential good it can do and why some future babies will have three parents. We also cover the tricky ethical and safety issues involved, and we explore exactly why that, in spite of all Japan has going for it. The biotech startup ecosystem here is still facing challenges. But, you know, Kaz, tells that story much better than I can. So, let's get right to the interview. Interview Tim: So, we're sitting here with Kaz Kishida of Dioseve who's helping to address fertility by using stem cells to create fertilizer eggs. So, thanks for sitting down with us. Kaz: Thank you very much for having me. Tim: Now I gave a very high level description of what you do in the intro, but can you explain it a little better than I can? Kaz: Okay. So, our company has technology to induce IPS cells and to another types of cells, including eggs and ovarian cells. Most of their cells are related to germ cells and reproduction. Tim: Well, this technique's not yet used in fertility treatments. But it's something in the future that holds a lot of potential. Kaz: Right, right. Currently, like In Vitro fertilization, the success rate is still remarkably low. And sometimes that vitamin journey is tough. But if we can deliver our products, say IPS cell derived ovarian cells, then the IVFs will be more accessible and the success rate will be enhanced so many women and can have their children using our technology. Tim: So why would the success rate be enhanced from using these eggs produced from stem cells as opposed to eggs harvested from the women directly? Kaz: So, in the standard protocol of In Vitro fertilization, the first step is to retrieve eggs from women. And then in many cases, those eggs are immature and immature eggs can't be fertilized with sperm. So, we can mature those immature eggs and we can make mature eggs, which can be used for fertilization. So, it directly enhance their success rate of IVF. Let me clarify that. And we have two technologies. The first one is create egg itself, but the other one is create ovaries, ovarian cells from IPS cells. Of course, if we create eggs, we can use those eggs for fertilization directly. But the other product, IPS cell derived ovarian cells that can support current In vitro fertilization procedure. Tim: And actually I was surprised at how common IVF is in Japan. Kaz: Yes, yes. Tim: 7% of all babies are born from IVF now. Kaz: Right, right. Over 60 K babies are born by IVF. Tim: So, what's driving that trend in Japan? Kaz: Strong tendency is increased age of married and having the first child. Before time, there are average was 29 years old, but now, and the first baby will be born in later stage of women's career and life stage. Of course the age is strongly rated to the pregnancy, and it is getting harder to get pregnant when women ages. That is biggest reason. Tim: It seems like Japan is really number one in the percentage of IVF births. But is the average age that women have their first children significantly higher in Japan than other nations? Kaz: Comparing to the US, yes. Their first child comes in the later stage for women. Tim: Oh, okay. Well, before we get deep into the technology and your go-to market plans, I want to take a step back and talk about you. So, you graduated from Waseda back in 2020, you went into investment banking. And so what led you from investment banking into Dioseve? Kaz: The fact is I already decided to start my own company when I was in my high school. And when I was in my university, I experienced some internships in some startups. And after that I noticed that their main job of CEO in a startup is to raise money. Tim: That's an important one. Yeah. Kaz: Yes. And I thought, okay, what is the best way to learn finance? I thought, okay, investment banking. That's why I decided to go investment bank. Tim: But that didn't last very long. Kaz: Yeah, I'm sorry for the company, but I learned finance, and I exited. Like I resigned. But I already declared that I will have my own company in the near future when I got an interview. And the company said, okay. Yes. So yeah, I joined them. Tim: So they probably just didn't think it was going to be in like two years. Kaz: Yeah. Tim: So, how did you come together with Dioseve? Why this area? Kaz: Okay. As I said I decided to start up my company when I was in my high school and I was diagnosed with Hepatitis C, and there is a kind of potential liver cancer. And my parent had that disease, and back then there was no treatment. But the doctor said, in three years, the new drug will come to Japan. And I waited for three years, and the doctor said, yes, now we have the treatment. And surprisingly, the drug has super good effect on hepatitis C. Actually, I, my parent and my grandparent all totally cured. So, I was amazed and I felt, okay, my life was saved by biotechnology. So, it's turn for me to save others by starting new biotech company. Tim: What did you study medicine or biology at university? Kaz: No. I studied geology. Tim: Geology. Kaz: Yeah. Totally different. Tim: Alright. So, how did you meet your founding team members? Kaz: VC called ANRI introduced me to Dr. Hamazaki, and we got along together and I said, okay, how about establishing our company? And he said, yes, let's do that. Tim: So, of the founding team, are you the only one without a medical background? Kaz: Right. Tim: It's just you. Kaz: Yeah. But as you can imagine, the finance is super important for startup. Tim: Well, no, I think that's a really important step. In fact, over the last 10 years in particular one of the most important things I've seen for Japan's deep tech startups is that, I mean, 10 years ago, it was just kind of assumed that the professor would be the CEO. Kaz: Yes. Yes. Tim: And that's changing, and that's a terrible model because academics tend to be horrible CEOs. That seems to be changing recently. Kaz: Yes. I think so. Tim: Let's talk a little more about the technology and the positioning in the market. Women in developed nations around the world are having children later in life. This is such an important social problem everywhere. And IVF was first introduced in the 1980s, and it's been hugely successful, but it doesn't seem like we've seen a whole lot of innovation in the last 40 years. Why is that? Kaz: You're correct. First of all, the invention of IVF was super innovative. After that, there was not many rooms for improvement because get eggs, fertilize is just super simple. But there was not many things we can do for that process. But the last and biggest room was maturation because eggs can be functional only after getting matured, IPS cell technology enabled to do that. Tim: So other than that, maturation, everything else about the system is pretty optimal. Kaz: Every doctor has their own opinion and every doctor thinks their protocol is optimal. But at least like ICSI, ICSI is a second innovation I think regarding IVF. ICSI is a kind of procedure which inserts sperm to eggs directly. Before time we just put sperm and egg to one dish and waiting for the fertilization. But in 1990s they did ICSI and that dramatically enhanced and the fertilization rate. Tim: So, what are the main sort of safety concerns around this kind of a technology? Kaz: The biggest one is genetic manipulation from their natural born babies. But fortunately we have technologies to assess the situation of in genetic expression. So, we can precisely evaluate abnormality. Tim: Okay, creating the mature eggs from stem cells is pretty amazing, and it has obvious applications to fertility treatments. So, I'm just curious, does the technology of other medical applications outside of fertility? Kaz: Yes. We have. So one example possibly of topic, but we can use this for rejuvenation. So, we can reverse on the age of cells by using our eggs. So, this is very conceptual stage, so I can't say, yes, we can do that.

Last month I spoke on a panel about the future of climate tech. I was joined by Emi Naganuma, the founder and General Partner of Apprecia Capital and Richard Youngman, the CEO Cleantech Group, with Michael Matsumura of Scrum Ventures moderating. Right now is both a challenging and an exciting time for climate tech innovatoin. It's a fascinating discussion, and I think you'll enjoy it. Leave a comment   Transcript Welcome to Disrupting Japan, straight talk from Japan's most innovative founders and VCs. I'm Tim Romero, and thanks for joining me. I've got another quick in-between episode for you today. It's a great conversation about deep tech startups and the future of energy. I was part of a panel discussion organized by Scrum Ventures at the Sakura Deeptech Shibuya Conference. It was moderated by Michael Matsumura of Scrum Ventures, and I was joined on stage by Emi Naganuma, the founder and general partner at Apprecia Capital, and by Richard Youngman, the CEO of the Cleantech Group. We talk about the best way to raise venture funding as a deep tech startup, how enterprises and startups can better collaborate the important gaps we see in the green tech ecosystem and the somewhat controversial future of using ammonia and hydrogen as alternative fuels. So, let's get right to the panel.   Discussion Michael: Thank you much for our panelists. Maybe I'll just kick it off. Maybe you could start with Richard. Could you talk a bit about like what you're seeing globally in terms of where the dollars are flowing now? Has that changed like in the last like six months, one year from what you're seeing? From your perspective? Richard: It hasn't changed radically yet, but it made it. So, I think if you go into Q1, clearly the deals in progress and so forth, some of which may have fallen apart, but some of which happen. I don't think the community in the US judging by our conference the year before was expecting the inflation reduction act to be sort of aggressively taken apart as it was. Meaning if something was already a deal was done and it was expected to continue. And so that's obviously created a lot of back backtrack there. But geographically, I would say we're still to see that. I guess the second comment might be in our 20 years and why really we're excited to be in this part of the world more and more is because we believe that innovation under this theme is coming from everywhere and should come from everywhere and needs to come from everywhere. This is not as Silicon Valley phenomenon. Silicon Valley has a role to play but so does everywhere else. And so I think long term we're expecting to see capital allocation change quite a lot. Michael: Great. Then maybe staying on that sort of the macro theme maybe I could go to Emi obviously like on a similar topic, but in terms of like your limited partners, like the discussions you're having with your investors, like has there been a change in tone? Is it like in different sectors you guys are interested in or the partners interested in? Could you maybe touch upon a bit about that? Emi: I think from the expectations from the investors, the LPs into the fund I see that they have shifted their interest into deep tech incredibly especially university or research driven. So, really deep tech and clean tech in terms of geography as well. I think a lot of attention has been in the US but now it, we do see more attention coming into Europe. We see US VCs also emerging into Europe. Before it was series B or series C that they came into. Now, early stage, I think from seed we kind of see some US VCs coming in and trying to getting into the deals. And I also see a shift of students coming in to study in Europe, but yes. Michael: And in terms of your LPs, are they mostly Japanese or are they a mix of like global LP bases that you have? Emi: We have Japanese corporates as LPs. Michael: Thank you. Then maybe Tim, to your perspective, maybe also as JIRA, like you make one third of it a pound in Japan. But like you obviously have global operations. You've got like IPP businesses across Asia and also US as well. From like your perspective, how's the changing sort of landscape impacting the way how JIRA Ventures makes investments right now as well? Tim: So, energy is a global market and I think that to your point, you have to be globally minded. And I think when the IRA passed in the US a few years ago, there was this tremendous movement of innovative companies from Europe to the US. We're starting to see that trend reverse, and a lot of them are going back to Europe, but even within the US, I think for example, my own companies have been enterprise software. And you can go to San Francisco and understand 80, 90% of what's going on in the world of enterprise software. You can have your finger on the pulse never leaving that area. Climate tech energy's not like that, there's a lot more going on globally, even in the US I think Boston is more innovative than San Francisco, but there's a lot going on in Europe and a lot going on in Australia. There's a lot of promising startups in Japan as well. So, these things shift. If innovation in the US slows down, there's a lot of other places that'll pick up the slack and it seems like they're already doing so. Michael: Great. Thank you. Then maybe just diving a little bit deeper into some specific technologies or themes maybe as well. I think Richard gave a good overview of the sort of the, maybe the booms and buses the wrong way to put it, but like some hot sectors and less hot sectors. Maybe we'll start with Emi again then. What are the sort of areas that you see as very attractive right now? Like where do you think you'll get good returns looking for like what excites you right now? Emi: In terms of return and of course impact, we look at it into two kind of segments. First is where there's a high environmental impact right now that exists. So the large sectors, and usually these aren't so many, it's construction, agriculture, energy, concrete, et cetera. And then we look at the other one that is where there aren't so much of an environmental footprint yet, but that industry will grow and we think that's really, really interesting. And Richard has already highlighted, but we think the AI infrastructure space is going to grow. So, we're looking highly into that. It is becoming a competitive space and also we look into space tech because that is really interesting as well, and it can provide solutions in climate tech that we haven't seen before and that could provide solutions that we couldn't even think of. Michael: Yeah, I like the impact perspective is really important. And personally, I always thought that the industrial decarbonization never attracted enough capital, like given the emission level. So that's always a sector that I've always liked. Then maybe, Tim, to your side, I think JIRA's had a big focus on looking at hydrogen and sort of ammonia and I know there's been talks about using ammonia in sort of coal fire power plants like coal fire, coal firing, and then looking at sort of gas turbines using hydrogen as well. And obviously as Richard highlighted earlier hydrogen's kind of lost a bit of steam lately. In terms of the investment cases right now, is it still a viable sector that we should be looking at? Does it still have a -- what's your perspective there? Tim: Well, I think it depends on your time horizon and your investment objectives. So, as a VC with a seven year fund, I think it's really hard to invest in hydrogen. As an energy utility or as a nation who needs to have a secure power grid, it is essential to continue investing in alternative fuels. Because in the long term, even if we get a very green grid, we shut down all the coal, we shut down all the gas plants, we get to Carbon zero eventually, the Germans have a wonderful word called Dunkelflaute. And it means when the sun's not shining and the wind's not blowing. And right now we've got batteries that'll do eight hour storage, no problem, maybe 12,24. There's some promising things that'll go to a hundred hours plus. But at some point, there's going to be a few weeks or a month where you've got the Dunkelflaute and you need to burn something. And that something could be fossil fuels or it could be ammonia or hydrogen that is made with excess energy when the sun is shining and the wind is blowing. So JIRA's plant, a Hekinan was the globally first successful test of a blended ammonia and coal firing, and it was 20% ammonia, 80% coal, and it was hugely successful. The engineers are saying we go to much higher ratios. So, in terms of a startup investment from a VC perspective, it's very hard to justify an investment like that. You're not going to see returns in five years or 10 years. But as a utility who's making 40 year investments and 80 year time horizon planning, it's essential. And so that's why alternative fuels be it hydrogen ammonia is really important in the midterm. I think storage is extremely exciting in all forms, whether that's lithium-ion batteries or zinc oxide batteries or these iron rust batteries or when I see EVs, basically it just looks like storage on wheels to me. So, I think that that's like, in terms of my investor brain, that's what I'm most excited about right now. Michael: Nice. Okay. I'd like to add the geothermal and maybe nuclear to that, but… Tim: No, absolutely agree. Absolutely agree. I mean, JIRA doesn't do nuclear, so JIRA doesn't have an official opinion on it, but I think it's pretty clear from all available analysis that there's no practical path to net zero without a lot of nuclear on the grid. Michael: Yeah. Thank you. Then Richard, maybe to you obviously Cleantech group, you guys research and you look at so many different companies across the world. What are the sort of most under the radar sort of technologies and sort of sectors that interests you or excites you right now?

For the last 150 years Japan has made a science of borrowing the best ideas from the West and transforming them into her own. The startup world is no exception. Japanese startup culture is heavily shaped by western ideas, but not in the traditional top down way where leadership chooses which ideas are introduced.  Japan's startup ecosystem is being shaped by bottom-up experimentation by both Japanese and foreign founders on the ground here in Japan. Today we talk with Sandeep Casi, an entrepreneur and Partner at Antler. We talk about the challenges foreign founders still face in Japan and how they are changing Japanese entrepreneurship for the better. It's a great conversation, and I think you'll enjoy it. Show Notes How to make money investing in idea-stage startups Why Japanese startups are more likely to get funded than their global peers Where to find Japanese deep-tech founders How foreign founders are changing how Japanese start startups The myth that Japanese founders can't speak English The one thing making university spinout difficult Why professors can't be trusted to evaluate technology Different startup ecosystem needs (and strengths) in different countries What's holding foreign startups back in Japan The dark side of startup events Links from our Guest Everything you ever wanted to know about Antler The Asahi Global Sustainability Initiative Emurgo and Antler Ibex Follow Sandeep on Twitter @sandeepcasi Connect with him on LinkedIn Leave a comment Transcript Welcome to Disrupting Japan, Straight Talk from Japan's most innovative founders and VCs. I'm Tim Romero and thanks for joining me. There is a truism in venture capital that states no one invests in an idea. This references the fact that ideas are easy to come up with and they have very little value on their own. But it seems that this truism is not completely true. Today we sit down with Sandeep Casi, the general partner at Antler Japan, and he explains how Antler does in fact invest in ideas. I mean, in one sense, the truism is still true. Antler only invests in companies. But if you come to them with an idea, they'll invest a lot of resources to help get you from idea to startup. We also talk about some of the challenges foreign entrepreneurs still face in Japan, the myth of Japanese founders not being able to speak English. And we dive deep into how foreign entrepreneurs are changing how Japanese founders start startups. But, you know, Sandeep tells that story much better than I can. So, let's get right to the interview.   Interview Tim: So, I'm sitting here with Sandeep Casi, a partner at Antler Japan. So thanks for sitting down with me. Sandeep: Thanks Tim. And it's a pleasure to be talking to you today and looking forward to it. Tim: Yeah, well, I should say welcome back to the show because I first had you on maybe eight years ago? Sandeep: I think, so. It was a while. Yeah, it was about eight years ago. Tim: When you were running videogram. Sandeep: That's right. Tim: But a lot has changed right in the last eight, nine years. So, Antler has a bit of a different model than most of the VCs and accelerators in Japan. So tell me a bit about it. Sandeep: Just a bit about Antler’s background. We started in 2018 in Singapore. So, Antler is an ecosystem builder. We are not just a VC. So, what do we mean by ecosystem builder? We basically are the first check in most cases, and we take extreme risks as in zero day checks. So, we basically get people to come into our program who actually have an idea, maybe to start a company, but they have absolutely no idea how to go about doing that. They lack co-founders. They probably lack a lot of opportunities that are afforded to other startups that have pre-existing teams. So, when they come into a program, we actually sit with them for 10 weeks. We look at what their mission is, what their domain expertise lies in, and then we gel together a team in the next 10 weeks by iteratively going through different ditches and pivots. Tim: So, the founders who are joining, are they all just at idea stage or do you get founders that have an existing company and some revenues? Or do you really target those super early? Sandeep: All of them. There are founders that come in, they have no idea, never have started a company. There are founders that come to our program that have two, three exits before, and they also existing teams that come into a program because they haven't found attraction. So, basically it's day zero of their lives of starting a company. We basically work with them and get them to a point where they can actually pitch to an investment committee after 10 weeks. And we invest even when the company is not being incorporated, in most cases, they take our money to incorporate the company. Tim: So, what does the funnel look like? How many people will apply to a program? How many will get in, how many make it to pitch day, how many receive investment? Sandeep: So globally, we receive about 160,000 applicants a year. And usually we select about 3% of that applicants into our program. And out of that 3%, anywhere between one to 1.5% end up getting investments. Tim: And that's 1.5% of the 3%? Sandeep: Of the 3%. So, the way this works is that let's say that 3% that enter our program, not all of them are founders. Not everybody can be a chef. You need a sous chef, you need somebody to actually be in the front desk, somebody to take care of the supply chain. So, there are all kinds of founders that come in, not necessarily a founder that wants to be a CEO. Tim: Okay. So some of those, sometimes you'll have three different people who will coalesce into a startup? Sandeep: Coalesce into a startup. And sometimes they come with preexisting ideas and sometimes the ideas are born in the 10 week program that they participate in. Tim: Are the numbers similar for Japan, where…? Sandeep: Japan's slightly different obviously you know that but for the audience's purposes, things are slightly changing in Japan. But as you know, I had a company here from 2012. Things were really different for any startups here. There was no angel investments here in Japan. There was nothing. There was no risk capital. With Antler coming in, there's a tremendous amount of risk capital. So, I think that is changing the ecosystem a little bit. So in Japan, last batch, which was our third batch, we had about 950 applications. And out of the 950 we selected about 69 to enter the program. And out of the 69, there were 24 teams formed as in 24 ideas and out of the 24, 7 got invested. Tim: Okay, so the odds were much better for startups here in Japan. Sandeep: At the current batch, which is actually, we are in the investment committee week right now, 1300 were the applicants. Out of that I think it was 89 or 90 got selected. There are 14 teams in the IC right now. Maybe eight to 10 would come out. Tim: I mean I am delighted to hear this, but it's a little counterintuitive because everyone is constantly saying that there are no startups in Japan and they're at an earlier stage. But it sounds like the founders coming in have a much higher probability of not just getting in the program. Which could be explained by, well there's not as many applicants but actually getting investments. So, why is it different? Why are the numbers different here? Sandeep: The numbers are different because there is a tremendous amount of domain expertise in Japan. And I'll tell you why. There are two different areas of where we get our founders from. One such founder comes from a university backbone. Either they're PhD level candidates or postdocs that wanting to take their IP that they have been working on to market. So, they come into a program to find that co-founder who can actually help them get the piece of that startup experience that they don't have. The second is, very interestingly, in the last, at least a decade or so, MNCs have entered Japan, Amazon, Google, and these MNCs bring in people from outside a lot of foreign force in Japan. Let's take Rock 10 for example, or Amazon, there's lots and lots of people in these organizations that have been transferred from various locations, whether it's India or US. They come in, they work for three, four years here and they basically like, okay, I want to do my own thing. Where do you go? So, that's where Antler is. Tim: I found that really interesting because When I was a mentor or a judge at your pitch day a few weeks back, there were a lot of foreign founders. I mean all Japanese residents, but a lot of foreign founders. Sandeep: That's right. And these people have actually entered the market in the last three to five years. There has been tremendous amount of talent that is being brought into the country that are highly skilled. The first two batches of Antler was completely Japanese, a hundred percent Japanese. We really didn't have a big success rate and the minute that we changed our program to a hundred percent English. A very interesting thing happened. Even the people that are a hundred percent Japanese speakers started applying to the program because they want to really build global companies and find global co-founders. Tim: So, what's kind of the ratio between the foreign entrepreneurs and the Japanese entrepreneurs who are applying to the program now? Sandeep: We have very less data because it's only being two programs so far. We are seeing 70% foreign. Tim: 70% foreign. Well, I mean there's like two factors that are kind of pulling against each other here. One, I think it's absolutely true that in any global startup ecosystem, the foreign residents play an outsized role. That's true in Silicon Valley. It's true in London, it's just everywhere. And the other thing is like, it's really hard to get Japanese into an English only program. Sandeep: That's right. Tim: I mean,

Progress is not only slower in Japan, it is often different. Looking at the numbers, it's clear that venture capital is even more male-dominated in Japan than it is in the West. Our guest today explains not only how that's changing, but how she's changing it. Sophie Meralli is a Partner at Shizen Capital and co-founder of Tokyo Women in VC. We sit down and dive deep into the keys to developing a creative, global mindset among Japanese founders and VCs, the role immigrants have to play in developing Japan's startup culture, and what really works in changing, not only minds, but actions related to the role of women in startups and venture capital. It's a great conversation, and I think you'll enjoy it. Show Notes The kind of startups Sophie and Shizen are looking for Why Japanese AI startups need to be especially careful The percentage of Japanese VCs are women, and how it's changed over the past 5 years Why more and more VC funds are being started by women in Japan What Women in VC does, and how you can get involved The main things holding back women in VC in Japan today The critical next steps for women in VC Is it easier for foreign women to defy gender stereotypes? Are Japanese women founders making faster progress than women VCs? What a “global mindset” really means for startups How to develop cultures of creativity and innovation Links from our Guest Everything you ever wanted to know about Tokyo Women in VC Tokyo Women in VC Job Board Tokyo Women in VC Research: The 7 Stats Shizen Capital Friend with Sophie on Facebook Follow her on Twitter @Soph_VC Info on rate of Japanese Passport holders Leave a comment Transcript Welcome to Disrupting Japan, Straight Talk from Japan's most innovative founders and VCs. Finance and venture capital in particular has always been male dominated, and in Japan, well, it's even more so, but things are changing here and not quite in the way you might expect. Today we sit down with Sophie Meralli, a partner at Shizen Capital, and co-founder of Tokyo Women in VC. And we have a frank discussion about what it's really like for female founders and venture capitalists here in Japan. And some of it is surprising. In some areas it seems that Japan is ahead of the west and in others, well, not so much. The conversation is at times both frustrating and hopeful. Sophie explains the one thing holding female VCs back more than any other, how things are changing for female founders and for male founders as well, and why so many new Japanese venture funds are being founded by women. But you know, Sophie tells that story much better than I can. So, let's get right to the interview.   Interview Tim: So we're sitting here with Sophie Meralli, a brand new partner at Shizen Capital. So, thanks for sitting down with me. Sophie: Thank you so much, Tim. It's a pleasure to be here. Tim: You're not new to VC, but you're new to Shizen. So, tell me a little bit about your new role, what kind of things you're looking for. Sophie: Yeah, sure. For me, it's kind of interesting because I was in early stage in Boston and then when I came back to Japan, I was with Eight Roads Ventures for about five and a half years looking more into growth stage startups in FinTech, Enterprise SaaS. And those are really the area that I think are super interesting to me in Japan where I see a lot of potential. And so at Shizen, given this is much more like early stage, there are tons of ideas for which there are already unicorns abroad, but in Japan, those haven't surfaced yet. And I'm really excited to either incubate new businesses or just be able to be a partner for very early stage startups in those sectors. Tim: Now, you mentioned your experience back at InSpark in Boston? Sophie: Yes. Tim: If I recall back then you were looking at AI startups and sort of the previous generation of AI startups. What's your take on the situation of AI startups here in Japan right now? Sophie: I think AI right now, industry is very, full of hype and very Agentic. Tim: For various meanings of that word. Sophie: Yes. Back in the days it was much more about machine learning and being very application driven. So, I invested, for example, in companies that help construction site being able to do inspection in a less manual way with drones and AI automation. And that enabled drop the time to do a survey from two months to 30 minutes. And that was really new at that time. We did that also for dentists. Tim: Yeah, I think that that kind of previous generation of AI was really use case focused. And there's still a lot, whether it's in like predictive maintenance, a lot of medical applications, do you see the same thing happening in the current crop AI startups, the LLM startups? Sophie: I still have to try to understand the business model and use cases. So, I'm trying to be a bit more, I wouldn't say skeptical because I'm very excited as well, but I think generative AI and it's to be taken with a grain of salt, and if you have a lot of average input, then you get average output too. So, what can really a big data set do is become average quality sometimes. So, I'm excited to learn more about the data that these startups are using and the exact use cases that they want to tackle, rather than trying to completely, fully automate jobs. I think we're still a bit far away from that, although I'm using cloud and ChatGPT every day myself. Tim: I'm the same way actually. I use ChatGTP, I use perplexity every single day, but I'm also a huge AI skeptic in terms of actually investing in the companies and whether they can live up to the hype. But actually one thing I really want to talk to you about, let's talk about women in VC. Both the organization and, well, the actual women who are in VC. So, you and Shino Furukawa founded Tokyo Women in VC a couple of years ago, back in 2020? Sophie: Yes, exactly. Tim: Tell me about the organization. What do you do? Why did you start it? Sophie: Sure. I would love to. Basically, when I was in Boston, there was an amazing women in VC community called Breaking 7% because there were only 7% decision makers that were women back in the days. And we met almost every month through dinners and exchange ideas. And it was more of a ask me anything kind of community where members come up with problems and they share it with each other. And that really helped me a lot to build my network because in the US, I knew almost like no one. And when I came back to Japan, it was 2020, it was COVID, it was very hard to network. And I felt that women were also a bit isolated. And so I discussed with a few women in VC, and Shino is a very dear friend of mine. She was actually pregnant at that time, so I felt a bit guilty to ask her to take on… Tim: More work. Sophie: My co-founder for this, but at the same time, I was like it must be her. And so she accepted and she was very enthusiastic about it. So, we launched a community in 2020 with about 30 members only. Tim: Well, and you were mentioning the 7% decision makers in the US, I would imagine that number is lower in Japan. Sophie: Yeah, so now in the US it's about 16%, 18% so a lot of progress in Japan. We are doing a survey every year since 2020. And back in 2020, the number of decision maker was about 3%, total VCs. Tim: So, what is a decision maker? Is it a partner? Sophie: Yeah. It's a partner or a GP basically someone who has a voice at the investment committee. And now in 2024, we have about 8.4% women decision makers. Tim: Well, I mean, it's low, but that's a lot of progress. In just five years. Sophie: Yes. And one interesting trend is that rather than being internally promoted, it comes a lot by launching your own fund because the fund cycles are so long, 10 years. So, there's promotion to partner or decision maker. Often when there's a new fund coming up and there's not a new fund every year, it's mostly every three, five years. So, a lot of women actually launch their own funds and that's how they become partner. Of course, there are some exceptions, which is a great sign for the ecosystem when women are also promoted internally. Tim: That is interesting. So, I mean, of course it makes sense that there'll be more women at the newer funds. Just because you don't have a whole lot of mobility in an existing fund. You just don't. But are there a lot of women raising their own funds now in Japan? Because it would seem to me that that's a lot harder than joining a fund. Sophie: I mean, so in terms of women launching their own fund, I wouldn't say that there are a lot, unfortunately, we need many more to do that, but it's growing and we're seeing a lot of women launching their own. And I think we are about 20 to 30 women who are decision maker right now in the industry. And by 2030, we want to double that to 60 or more. And we have another KPI, which is the total number of women investors, and that's now 17% of the industry. And we hope to bring that to 30% by 2030. Tim: The women who are decision makers. So, men in VC in Japan are overwhelmingly finance guys from good schools who worked at tier one companies before jumping to VC women fit the same profile, or is there more variation there? Sophie: I think a lot of women who launched their own firm come from the VC industry, or some of them finance industry as well. I see some who are actually in the startup space. Tim: So, similar profile as the male VCs, then? Sophie: Yes, I would say that there is not a trend that women have a different profile than male counterpart. That being said, when they launch their own fund, they tend to have a different lens. And I see a lot doing funds focused on women entrepreneurs or women's health or impact, ESG, but obviously there are also sectors like healthcare in general or B2B SaaS,  and we don't want to have only women VC investing in women founders.

American startups dominate the current innovation cycle not as a result of startup innovation, but of enterprise innovation. Today we sit down with Dai Watanabe and dive into the dynamics of industry disruption and startup innovation. For the last 25 years Dai has held leadership roles at the center of Japan's major innovation trends. From the glory days of Japan's mobile internet, to the utter disruption unleashed by the iPhone, to today's doubling down on startup innovation. We talk about what's in store for the future of Japanese startups, and why opportunities in innovation are never quite what they seem at first. It's a great conversation, and I think you'll enjoy it. Show Notes When it's time for a CVC to transition into a VC How Japan lost its lead in the mobile internet How DeNA went global in China and then in the US Why the first generation mobile advantage did not transfer to the second generation The different approach to retaining talent in Tokyo and San Francisco What Japanese founders need to bring back from San Francisco Which Japanese startups should move to Silicon Valley The reason there are still so few Japanese entrepreneurs How to get talented employees to leave and start startups, and why we'll see more of it The biggest thing holding back startup growth in Japan How Japanese employment law keeps startup valuations low Japanese enterprise and startups are developing more collaboratively that in the US Links from our Guest Everything you ever wanted to know about Delight Ventures Meet the team Learn how they invest [Japanese] Connect with Dai on LinkedIn Leave a comment Transcript Welcome to Disrupting Japan, Straight Talk from Japan's most innovative founders and VCs. I'm Tim Romero and thanks for joining me. Mukashi mukashi, Once Upon a Time, but not so long ago, Japan was far and away the world leader in mobile internet innovation. But such times were not to last. The world changed, Japan changed, and today Japan is trying to catch up. And, you know, they just might do it. Today we sit down with my friend Dai Watanabe, co-founder and managing partner of Delight Ventures. And as you'll see from our conversation, Dai's career put him at the center of the entire arc from Japan's mobile internet explosion and crash, the current focus on startup growth and why Japan is now seriously rethinking the Silicon Valley model of startup innovation. Dai and I dig deep into his work with METI and other agencies to help form innovation policy, how Japan's lifetime employment system is suppressing M&A activity, and keeping valuations low. And why Japanese mamas don't let their babies grow up to be founders. But, you know, Dai tells that story much better than I can. So, let's get right to the interview.   Interview Tim: So, we're sitting here with Dai Watanabe, the co-founder and managing partner at Delight Ventures. So, thanks for sitting down with me. Dai: Thank you for having me. Glad to be here. Tim: Dai, I'm so glad I finally have been able to get you on the show. We've been talking about these things for years now. So DeNA, it's mostly mobile, social gaming, networking, entertainment, sports, consumer facing content, that kind of thing. But Delight's portfolio seems to be much, much broader than that. So, what's your thesis? What kind of companies are you investing in? Dai: So, the Delight Ventures is a VC fund that started as a spin out of DeNA, my ex-employer. But we are not CVC, so we don't do any strategy investment. We invest as independent VC. We set up some investment thesis at the beginning, which isn't necessarily aligned with DeNA's core strengths. Tim: Is DeNA still your sole LP? Dai: No, DeNA is one of the LPs. So, we are on fund two right now. The majority of the LP money is coming from Japanese financial institutions, some corporates banks. Tim: So DeNA, just like the rest of the LPs are looking for financial returns. Dai: That's true. Yes, that's correct. Tim: Well,  let's back into this because your career, it kind of perfectly mirrors this rise and fall of Japan's mobile internet and then the innovation shift to Silicon Valley and sort of the new rise of Japanese startups. I want to dig into this and to kind of set the stage for those of us who've been in Japan a long time. In the 2000s, Japanese mobile internet was by far the biggest and the most innovative in the entire world. And DeNA was clearly the most successful entertainment player in that market. That's no longer the case. Things have changed. So, walk me through what happened. Dai: So, going back to the year 2000 when I joined DeNA, I was one of the earliest employees of DeNA, it was pre-mobile era. So, there was dotcom bubble happening in Japan too. And like a fast wave of startups came in. Objectively, I think we can say that most of the internet services were dominated by US, especially Silicon Valley startups, whether it's Google, Amazon, these guys. And then this mobile internet started to happen in Japan, mainly thanks to NTT Tokomo's I mode, I think mid two thousands Tim: Imode were, was introduced in 1999. I mean, we were sending emails and browsing the web in a very basic way on our phones in 1999 in Japan. Dai: Oh, yeah. Oh, wow. I think it was early 2000s when this pake-hodai like all you can eat pricing came in, and then the whole population started to spend a lot of time just looking at the phone. That phenomenon didn't start in the rest of the world for another few years. Japan was definitely leading the whole phenomenon of mobile internet consumption in the world. And in that industry, DeNA was different leading. So, we came up with mobile auction. We came up with a mobile gaming platform, and we came up with mobile ad platform, none of which existed outside of the country. Tim: What do you think prevented this technology, this innovation from moving from Japan overseas at that time? Dai: The sign of that happening was seen in Korea, China, but this imode was so brilliant that the players in other countries really struggled. Outside of Japan you have to spec your website based on different phone devices, whereas in Japan, you just make one website for imode and then you don't have to worry about different devices. Tim: So at the time, was it just the carriers had the lock in, in the different countries and that prevented it or? Dai: So, different carriers didn't control precise spec of how the mobile websites are supposed to be built. So, the user experience was not as smooth as what you could see in Japan. But it's all you can eat. Pricing didn't start until few years later. So, the Japan was leading that market, and DeNA was leading that country. So, it was really natural for everybody to think that the DeNA should get out of the country and expand in other areas where mobile internet was about to explode. So, that's what we are working on starting 2004-5. Tim: Right. And you were president of DeNA global during that period, right? Dai: Yeah. Even before that, I was president of DeNA China. We actually started in Korea because Korea was known for its broadband. The government policy was really bullish on internet, and then also mobile internet too. But we found that the market was a little bit too small for us. So, we shifted our focus to China. So, we set up DeNA Beijing and I was leading that effort. And in China there is a huge mobile internet consumption explosion happening in the south of the country. Tim: Like you came to San Francisco to launch mobage, right? Dai: Yes, yes. Tim: Like the year before the iPhone launched. So, what was that based on pre iPhone? Was it the palm pilots and Blackberries and…? Dai: Yeah, our targeted platform was WAP. It is still feature phone, and we launched a gaming platform on the WAP platform. Tim: And when the iPhone was introduced, I mean, it didn't change overnight. Dai: No, it didn't. So, actually when I moved to the US iPhone had already been released, I believe it was in 2007. And then this iPhone app platform came out in 2008. It was like it was immediate hit. Tim: It took three or four years to really develop. Dai: So, DeNA was like leading star of mobile internet. So, not just ourselves. So, the whole industry in Japan, we felt was really rooting for us to become something in this mobile internet. So, we representing the whole Japanese industry we had really great product back then. We had gaming contents, we had a platform, but over time, maybe before we realized, the whole premise was disrupted by iOS and Android. So we were running gaming platform on top of much stronger, bigger platform of iOS and Android. And we really struggled and we swung our strategy to making games instead of working platforms. And that was totally different game too, no pun intended. We were making games on feature form platform, which was much lighter less expensive, but on iOS and Android game development was much more expensive. It took longer. It didn't work. Tim: That's a really good point. I mean, everyone kind of groups the mobile internet together, but the change from desktop to early mobile in Japan and the change from the feature phone to the smartphone, the iPhones, that was almost just as big a shift. Dai: Yes, yes, exactly. It took us a while to really realize how like fundamentally our business model was disrupted. That's one thing. Another thing is we came to Silicon Valley thinking this is a place that we launched new business, but when we started to see a lot of competition, we had to compete over like a talent. And we later realized that the Silicon Valley was not necessarily a great place to keep talent, especially when we are working on some industry that's past, like a very peak of the hype cycle. So, people started to leave. Tim: So, this is something that's very interesting.