Why Japanese Femtech is so different

Things don't always go as planned. In fact, they usually don't. Four years ago, femtech was both a rapidly-growing product category and a nationwide movement vocally championed by politicians, industry, and the media. As the market began to grow, however, Japan's incumbents took note and took action. The femtech social movement began to decouple from the products. Today we talk with Amina Sugimoto about the future of femtech in Japan, the fragile nature of public promises in the face of corporate lobbying,  the likely impact of Prime Minister Takaichi on femtech, and how, despite aggressive lobbying by the incumbents, foreign femtech products are starting to enter the Japanese market. There is a lot of important advice for anyone thinking of entering the Japanese market. It's a great conversation, and I think you'll enjoy it. Show Notes What femTech means in Japan Why its hard for men to invest in femtech -- even when they want to The transformation of femtech in Japan Massive social and political support does not always translate to sales How Japanese incumbents (still) stifle innovation The core challenge in introducing new innovation in Japan Prime Minister Takaichi's likely impact on femtech in Japan What other innovators should learn from femtech in Japan WHat's next for femtech in Japan Links from the Founder Everything you ever wanted to know about Fermata Follow Fermata on Twitter @hello_fermata Friend Amina on Facebook The Kegg Crowdfunding Page 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. FemTech is, well, it's just different in Japan. FemTech in Japan is part market disruption, part social movement, part technological innovation, and part bureaucratic red tape. It's something that everyone seems to get behind and support, but at the same time, that support is often slow, sometimes very slow, to translate into real action. Well, today we sit down once again with Amina Sugimoto, founder of Fermata. And Amina is absolutely on the forefront of Japanese FemTech, women's health, and the regulatory challenges that these products face in Japan. Now, since we last had the chance to catch up with Amina three years ago, Fermata has had a change of fortunes and a change of strategy. Amina saw the growing social movement that powered FemTech in the early days start to decouple from the technology and take on a life of its own. And so she restructured Fermata, shrinking the team of 35 down to a small core team, and then refocusing and rebuilding. Amina and I talk about why FemTech is having so much trouble crossing the chasm in Japan, what happens when Japanese incumbents decide they don't want you in their market, and what's really going to be at stake for women's health in Japan over the next five years. But you know, Amina tells that story much better than I can. So, let's get right to the interview. Interview Tim: So, we're sitting here with Amina Sugimoto, the founder of Fermata, and one of the most active advocates for FemTech in Japan. So, thanks for sitting down with us and welcome back. Amina: Thank you so much for having me again. I'm super excited for this. Tim: So, we've got a lot to cover because so much has happened in I guess the last three years since you were on the show last. Just to kind of set the stage, like the word FemTech, it means a lot of different things to a lot of different people. So, what is FemTech? Amina: So yeah, it does mean a lot of different things for different people. Initially, the term itself, people started using it around 2017, I think 18-ish. And it used to be a term that being used between investors and entrepreneurs. And at the time, a lot of sort of entrepreneurs working in sort of women's health, they were having a hard time getting investment. So, they came up with a term to communicate with investors. And it literally sort of back then means the latest technology being applied on women's health. So, it was very broad back then. Tim: So originally, it was more of a financing, an investor-focused term, rather than a consumer-focused. Amina: Yes. It really was. Tim: Interesting. Amina: Because back then, FemTech, edotech, I think all these terms started to sort of appear. Back then, and it still is, the majority of people working in finance are men. And it's not like men's fault, but it's just difficult to communicate about the industry. Like this product is for menstruation, this product fertility, rather than saying that the FemTech sounded a bit easier for investors to sort of... Tim: And I see what you mean. It's not really discrimination exactly. It's just investors tend to invest in what they know. Amina: Or what they like, or what... Tim: What they understand, I mean. Amina: Exactly, exactly. So, there was a gender imbalance within the investor world. And so the term then was used to raise money. Tim: But now it's taken on a much, much broader use. Amina: Yes. So interestingly, the term, so just sort of like around the same time as COVID. And I think that's when the people start to get more interested about their own well-being or wellness. So, when Fermata started, it was in 2019, we started to use the term FemTech for consumers. It was during COVID, so we started to events on women's health, and we started to use the term FemTech. And I think that sort of, it was the right timing. So, the term itself in Japan sort of spread really quickly. All these major magazines, newspapers started to pick up. But sadly, compared to what's available in the US or Europe, there are not many tech products available in Japan yet. It's just that the word simply became a lot more popular than the actual industry. Tim: Is that because of regulations around medical technology? Is it just a Japanese consumer's reluctance to try new things? Why do you think it's? Amina: Well, I think there's a lot of things. And one of it is, of course, deregulation, which I can tell you more about later. Another thing would be that we have a pretty good health system. So, for people in Japan, compared to let’s say Americans, we are less interested in purchasing new products, because it's easier and cheaper to go to a doctor. So, the mentality and sort of the industry itself is a lot different. However, there is a trick. The Japanese health system only covers clinical stuff, not prevention. And women's health, most of it is related to prevention. So, we can only get covered by government if we have a breast cancer. But to prevent breast cancer, the only way to prevent it is to go to the checkup provided by the government. But there's no intention. There's no motivation to create something in between. Something that maybe we can track something at home. Tim: So, last time we spoke, Fermata was experimenting with a lot of different business models and business directions. You were working with a lot of imported products. You had some pop-up stores, a couple of physical stores in e-commerce, and doing B2B consulting. And where is Fermata today? Amina: I made a decision in February 2024 to shrink the size of the company to just myself. The market didn't grow as fast as I predicted. So, February 2024 is when Fermata hosted our signature event called FemTechFest. We had over 6,000 people coming and we rented out the entire floor of Roppongi Hills. But then I realized soon enough, the market in Japan when it comes to women's health and FemTech will hit the chasm. So, we managed to just capture those individuals who's early innovators or those who's interested in this kind of product. But we struggled enough to get into the mass market. So, the women's health industry was hitting the chasm. And then I felt that when I hosted the event of over 6,000 people, we can host an event and bring in loads of people, but it doesn't directly link that with our sales. And there's something wrong is happening. Tim: You know, it is. I mean, one of the things you told me last time we spoke really stuck with me about FemTech in Japan. And I think it goes directly to what you're telling me now. Last time you mentioned that FemTech is more than a product category in Japan. It's more of a social movement. It gives people kind of social permission to reexamine gender roles and to reexamine these conversations that were once considered settled about what's appropriate for women to do and things like that. Can you talk a bit about if that's still the case? And is it more that the interest was more on the social dynamic side than the product side? Amina: I think it still is. So, we couldn't get any of the signature tech products out in the market in the last five to six years because of the regulation, because of the market dynamics were spread. And then people had this high expectation and motivation. Yes, we can now freely talk about our own health issues, period, menopause, whatnot. And that did get to a certain level in Japan, there's a TV shows and stuff. So, the environment around it has changed. But yet it has a lot stronger social movement connotation to it. And then not so much of the business industry side. So, when it comes to B2B business, we get a lot of inquiry from companies. Okay, we would like to do something about FemTech. And I'm like, what do you mean by something about FemTech? And for me, I'm like, whenever we speak with the Japanese, especially the big companies, it's not their fault, but they're just very general. And I guess those people who's responsible leading this project, they're often women. And they have something that they want to communicate. They have these passions and maybe the struggle that they have gone through over the time working in the company. But it's usually like more of a social side and the product development. Tim: Yeah,...

Welcome to Disrupting Japan, straight talk from Japan’s most innovative founders and VCs. This is our 250th episode, and I wanted to give you something special; something I have been thinking about more and more as my career in startups and venture capital has developed. Leave a comment Today we are going to talk about a group of people who are perhaps the most reviled and maligned by technologists and innovators worldwide. People who stand in opposition to everything innovators hold dear. Today we are going to talk about the Luddites — those individuals who through a combination of ignorance and shortsightedness opposed technology and change. But that’s not really true. The Luddites were not who you think they were. In fact, almost everything you have ever been told about them is wrong. In truth, the Luddites were not really opposed to new technology. Not even when it threatened their livelihoods. There is growing concern today about AI taking our jobs, but if AI had emerged 220 years ago, the Luddites would have embraced it. Far more important, they would have held a much better understanding of the true dangers posed by today's new business models than do most of the AI advocates or critics talking about it today. Although the Luddites are accused of opposing the very technology that resulted in the incredible progress and the rise of living standards that we have experienced over the past 200 years, that’s simply not the case. In fact, as you’ll see, although the higher living standards and shared prosperity enabled by the technology of the industrial revolution are undeniable, we actually have the Luddites, and not the technology, to thank for that. The Luddite in the Mirror So who exactly were the Luddites? You have probably heard that they were cloth workers in late 18th century England who, early in the industrial revolution, saw their livelihoods threatened by the new textile factories, and they tried to shut down those factories by destroying automated looms and other textile equipment. That much is completely true. The important question, however, and the one with a wildly misunderstood answer is “Why?” “Why were the Luddites breaking machines and shutting down textile factories?” The mythology is that Luddites rejected the new technology because they benefited from the old system. Rather than embrace technology which would lift millions out of poverty, lengthen lifespans, and lead to greater shared prosperity, the Luddites selfishly wanted the world to stay as it was. They were backward-looking rubes who simply could not see the bigger picture. And that, all of that, every single word of that, is simply wrong. If anything, the Luddites were alarmed because they saw the big picture far too clearly. So let’s take a quick step back into the world of the Luddites and see just how much like us they really were. And also see that although the technologies are completely different, how the new business models of the industrial age changed society in very much the same ways as the new business models of our emerging AI age. As the industrial revolution was gaining momentum in the closing decades of the 1700s, textiles were one of England’s most important and profitable exports, and they were manufactured using what was called the “domestic system.” Textile workers worked with their own machines in their own workshops. Some of the more enterprising had multiple machines and employed others. The work was distributed, done mostly at home, and the finished product delivered to merchants. This system is where the English term “cottage industry”comes from. By and large, these clothworkers did not have leisurely or even particularly comfortable lives, but it was a better living than agricultural work and much better than most of the newly emerging factory jobs. What these clothworkers did have, however, and what they were very afraid of losing, was a degree of economic freedom. The freedom to negotiate fair prices with their customers and, based on those negotiations, the freedom to decide what and how much they would produce. These proto-Luddites had no problems with machinery or technology. They used and maintained machinery. They experimented with and developed technology. What they objected to was not the new technology, but the new business models. To understand the Luddite’s position here, we need to understand that new technology was not the only thing powering England’s industrial expansion. These new factories were also powered by some of the most horrific forms of child labor imaginable. Children as young as six were forced to work 14 to 16-hour shifts crawling under machinery to recover scraps of cloth and reaching into running machines to untangle threads and remove debris. Some business owners even made deals with the government to take orphans off public hands and put them to work in their factories. And to be absolutely clear, these children were not paid. They were given enough food to keep them alive and only allowed to sleep a few hours a day. When children tried to escape, they were brought back in chains. These children would either die in one of the frequent industrial accidents or they would literally be worked to death. Working conditions could have easily been made safer, but pausing or turning off the machines would lower profits. The whole point of this innovative new business model was that it produced textiles continuously, 24/7. Things like idling machines or buying safety equipment would cut directly into shareholder value.  Since there were always more bodies to feed the machines, it would have been unfair to the shareholders not to leverage that resource. No one knows how many children died in those factories. Neither the politicians nor the business owners benefited from that kind of record keeping. Slaughtering children has always been bad optics. Today we usually try to gloss over this behavior with the rejoinder that “attitudes and values were different back then”, but that’s not really the case. Even by the standards of the day, these new business practices were appalling. Many religious, social, and political groups were outraged and worked to force business owners to respect social norms and basic human decency. Many business owners did, of course, but they were quickly outcompeted and bankrupted by the business owners who chose not to. Working children to death was just so damn profitable. William Blake famously referred to these factories as the “Dark Satanic Mills”. Our proto-Luddites were not simply worried that their way of life was changing, but that it was changing into something horrible. The Broken Legal Shield It’s also important to understand that these business owners were actually breaking the law. Not just social norms, but the actual law. Labor protections in that era were not exactly robust, but some basic rules did exist. When challenged on their illegal labor practices, the new business owners responded in exactly the same way today’s new business owners do. They claimed that since no one imagined this new technology when those labor laws were created, they clearly did not apply to them. Forcing them to abide by the law would only slow progress. And just like today’s business owners, they had legions of supportive journalists and caravans of lobbying money to amplify that message. It’s quite impressive how effective and unchanged this strategy has remained. Over the past decade, Uber and other gig-economy companies executed this playbook exactly. They claimed that since their new technology did not exist when the relevant labor and licensing laws were passed, those laws should not apply to their new business model. They argued that if they were forced to pay minimum wage or comply with licensing and insurance laws, their business model would collapse and that would slow the march of progress for everyone. Interestingly, that playbook worked well in the US, but not everywhere. There are many markets where Uber is required to follow local labor and licensing laws. And you know what? Uber does fine in those markets. They are a little less profitable, of course, but they do fine. Their business model never required them to ignore labor and licensing laws, it is simply more profitable if they can do so. For over 200 years, business owners have used this slight of hand to sidestep both criticism and regulation. They simply assert that any criticism of their business practices is actually hostility towards and fear of progress and technology. Right now, this “old laws don’t apply to new technology” grift is being used by AI companies to deflect copyright concerns. I’m not talking about using copyrighted works to train AI. Admittedly, that’s a grey area. Rather, I‘m talking about the simple fact that I can pay OpenAI $20, and with a bit of prompting, it will sell me all kinds of copyright-infringing images and whole passages lifted from books and screenplays. That is straight, blackletter-law copyright infringement for profit. It makes no difference what the user does with the image they paid OpenAI to generate. OpenAI is violating the law when they sell it without permission. It’s a commercial transaction. The AI companies usually imply that the customer is at fault for requesting the images. But again, No!  The law is clear. Asking a company to create a work that could infringe on someone's copyright is not illegal. However, creating and selling that work without securing the necessary rights? That’s illegal. My point here is not that AI companies should be shut down for copyright infringement. I don’t think they should be. The point is that we need to stop falling for this 220-year-old slight of hand where the existence of a new technology is used as an excuse to violate any laws or social norms that might reduce profitability. I’m not anti-technology. I’m just anti-bullshit.   ...

I have a short in-between edition for you today. Last month at Venture Cafe's big global gathering in Tokyo, I had a chance to sit down on stage with two old friends of the podcast, and we talked about where physical AI is heading in Japan. This conversation is with Chiamin Lai, general partner of First Light Capital, and Kaname Hayashi, founder and CEO of GrooveX, the makers of the absolutely adorable Lovet robot. Chiamin is one of the most savvy physical AI investors in Japan, and Kaname has been pushing the boundaries of human-robot interaction for years. It's a fascinating discussion, and there's some wonderful insights about Japan's unique strengths and challenges near the end. But don't skip to the end. The whole conversation is great, and I think you'll enjoy it. Leave a comment Transcript Tim: Okay, thank you so much, and thanks for coming. We're going to be talking about Japan and physical AI today. And it was not that long ago that Japan was the undisputed leader in robotics innovation. And while some people claim it still is, that claim is highly disputed today. So, we're going to talk about where we are and where we're going. And we're going to start with some brief, brief introductions, so you'll know who we are and why you should be listening to us for the next 40 minutes or so. So, my name is Tim Romero. I've been in Japan for about a little over 30 years now. I've started four startups here of my own. I've done a lot of angel investing. I helped TEPCO and JIRA spin up their CVC units. I've taught entrepreneurship and corporate innovation at NYU's Tokyo campus. I ran Google for Startups here for about four years. And I run a podcast called Disrupting Japan, which is just a labor of love. I've been doing it for 12 years. It's interviews with Japanese founders and VCs about innovation and what it's like to be an innovator in a culture that prizes conformity. So please give it a listen. Chiamin: Hi, everybody. My name is Chiamin Lai. I'm a general partner of a VC fund here at First Light Capital. A little bit of introduction about myself. So, my parents are Taiwanese, but I grew up here in Japan and studied here and also work here in Japan. But then I actually, after working in Japan for a few years, I was in Europe and then had the fortune to join venture capital. So, it's about 15 years ago, which I think it's hard for you guys to believe at that time compared to today. And then decide to do startups. I was a startup operator in China and Japan for seven years and came back to the industry five years ago. And right now I'm actually the board member of Japan Venture Capital Association, as well as running up my own fund here in Japan. Quick introduction about the fund. We are running two funds right now in Japan, about 120 million US dollars. And we're focusing on early stage and investment thesis is mainly focusing on Japan's demographic challenge, innovation for startup. And what we believe is, or what I believe is physical AI could be a very, very good potential for Japan, especially under the label shortage. So, I'm very excited to have opportunity to talk to you guys today. Thank you. Kaname: Yeah. My name is Kaname Hayashi. I’m the founder and CEO of GrooveX. GrooveX is a company that develops LOVOT. LOVOT is L-O-V-O-T, which you may see on our website. It’s kind of a small robot. We call it a family-type robot. Currently, around 18,000 units are working. Even though we shipped just a little bit more than 21,000 units, 18,000 are still working. This shows very good user retention, meaning the churn rate of our robot is just 0.4% per month. So, we believe our robot has achieved social implementation. And our aim is to enhance the resilience of people. It’s completely different from other robots that improve productivity. And the reason why I’m chasing this area is, I worked on Pepper before, which was a humanoid robot 10 years ago. And I learned a lot about humanoid robots and conversations between computers and people. So, I thought probably this area is interesting, but we can do something else in the non-verbal area. That was the reason why I founded the company 10 years ago. Before I worked on Pepper, I was working in the automotive industry. So, I worked in aerodynamics or product planning. I worked for Formula One in Germany or product planning for the European market or something like that. That’s all, thank you.  Tim: Excellent. And I want to emphasize, so they brought one of their Lovet robots with them today. And after the session, it's over there in the corner and it is absolutely adorable. I encourage you to go play with this thing. It's just, you'll see what I mean. It's just something different about that. But to kick us off, to make sure we're all on the same page, physical AI is a term that's thrown around a lot these days. It's a little bit of a trendy term, but to make sure we're all talking about the same thing. When you're talking about physical AI, what do you mean? How's it different from traditional robotics or IoT? Kaname: Right. Probably there are several understandings, but for me, a robot working in an open environment could be an important point. Because before the physical AI boom, a robot was typically working in a designed condition, a controlled condition, like a factory or some certain closed area. But for example, in our case, LOVOT is shipped anywhere, sometimes overseas, and we never know what kind of environment it is. But still, LOVOT has to keep working. The ratio of daily active users remains high, over 90%. And it means a robot can adapt to the environment somehow. Surely AI has big potential to adapt to more various environments, but using AI is not the purpose.  Tim: Okay. Chiamin? Chiamin: Since I'm an investor, so I'm going to use through you different kind of words there. But so basically what I see physically AI right now, if you read a lot of news, people were putting physical AI equal to humanoid. And I have a totally different definition. For me, physical AI equal to the system, that the system will have see, thinking, and action. And everything needs to be automated. That's my definition of physical AI. What do I mean by that? Existing robots, as what Kaname-san was saying, it doesn't really actually understand the environment. That's one. Two is it doesn't have any action. When I say action, it doesn't necessarily mean that you need a humanoid to do the action. Action means that the machine, anything that can help you to finish the action. It could be picking something from the shelf. It could be holding your coffee, whatever. That's how I define physical AI in the personal level. But at the business level, you can also consider if you have a software, that the software can actually help human to do an action. That is also physical AI from my point of view. Tim: Okay. So, it sounds like we are in a surprising amount of agreement here. So, physical AI, it requires a certain amount of autonomy. It requires a certain amount of flexibility and the ability to deal with new and unprogrammed environments and situations. Excellent. It's nice when we agree. I think things are about to diverge. So, with that in mind, robotics in general, IoT are really well established. They're deep global markets. So physical AI, this ability to interact autonomously and flexibly, what are the new markets that this opens up? Why is this an important new development? Kaname: Basically, if we would like to use a robot in your home, then a robot must have a capability to adapt to any environment and stay always-on. So, humanoids look like they can do it. I mean, you can easily dream it because of the human shape. So, you naturally expect it could work like a human. So, that was very good as a trademark for physical AI. But current humanoids are different from the expectation, because they are focusing on a few tasks with precise kinetics. So, for example, you already can see lots of movies of very great backflipping humanoids, but all of the robots have an issue with heat for always-on. You never see a humanoid robot working eight hours continuously under autonomous control. While I worked on Pepper, I learned a lot about how motors are very sensitive. If you’d like to use a leg instead of wheels, the leg must keep supplying motor power to keep posture. The motors consume power and generate heat. So, in all the demonstrations, it’s working for 10 minutes or maximum 30 minutes, but after that, cooling down is still important even nowadays. But for the future, of course, all the technology evolution will solve these issues, and we can expect to have a robot which can work like a human. But before that, probably being without legs might be a better solution for most cases.  Tim: But so, I mean, Pepper's a really good example, because that was fascinating technology that they couldn't bring to market, really. Boston Dynamics, kind of facing the same problem. They're developing this amazing technology, which has some of the most viral YouTube videos. But it's really hard to bring a product to market beyond kind of a proof of concept stage. So physically, I mean, what are the markets that are opening up for this? Are we looking at healthcare? Are we looking like home helpers? Chiamin: So, I know where you want to head into. So, because all of you pop out in the tech industry, so I kind of want to give you a kind of overview. I don't believe the physical AI will be such popular if we don't have a chat GPT, if we don't have a transformer. So basically, the momentum change is in 2020 to 2023 after ChatGPT. And what does that mean? And everybody today using LLM to do your work. And a lot of developers are using LLM to develop your code. That also means software become commodity. I know a lot of you reading like X, you know that SaaS is dead, software is dead. I think one thing what I want to say before I come back to your question is,...

New technology is always introduced with the promise of the good it can do for humanity. Most of the time the promised good never come to be. This is largely a structural problem ib how startups are funded, and some founders are creating a better way. Today we talk with Yosuke Kaneko, founder of  Sora Technology, who is using drones to fight malaria in Africa. The technology is a perfect fit, but it was hard to address this problem as a startup. We talk about the challenges of using technology to solve important, but only marginally profitable problems, and why the unique nature of Japan's startup ecosystem might provide the solution. It's a great conversation, and I think you'll enjoy it. Show Notes How drones can find mosquitos that humans can’t Why real done innovation continues to come from the global South Why it's getting harder to build a drone startups in Japan Moving from a good idea to getting the first contract The difficult business model of doing good How to continue growing long-term The impact of regulations on drone innovation The truth about the startup scene in Nagoya and Aichi The current state of drone startups in Japan How to get Japanese companies exporting again Links from the Founder Everything you ever wanted to know about Sora Technology Friend Yosuke on Facebook 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. Fortunately, most of us never have to think much about malaria, but it's one of the most deadly diseases in human history. Malaria was responsible for up to 5% of all the deaths of the 20th century, and it killed tens of billions of people before that. Even now, the disease continues to kill around 600,000 people every year. Well today, we sit down with Yosuke Kaneko, founder of Sora Technology, and we talk about a new approach to startup business models that can actually help save lives. Sora uses drones in Africa to identify water bodies with the highest chance of being mosquito breeding grounds, and then they work with government agencies to ensure that those water bodies get sprayed with insecticide. Yosuke and I talk about the challenges and the opportunities in working with global and national health organizations, when to pivot from solving the problem you want to solve onto solving a problem that actually needs to be solved, and the challenges involved in making a profitable business that is actually focused on doing good in the world. But you know, Yosuke tells that story much better than I can. So, let's get right to the interview. Interview Tim: We're sitting here with Yosuke Kaneko of Sora Technologies, who's using drones to combat malaria in Africa. So, thanks for sitting down with me. Yosuke: Thank you, Tim. Tim: Now, I explained very briefly what you guys are doing, but you can explain it much better than me. What is Sora Technology doing? Yosuke: Okay, so it's using drone, satellite, and AI, then analyzing environment data, such as the water and also the surface data. Then one of our flagship projects is, you mentioned, the malaria. Tim: So, how are you using drones to combat malaria? Yosuke: So ,do you know where is habitats of mosquitos? Tim: Well, I know when they're little, when they're larvae, they grow up in these shallow ponds and shallow pools. Yosuke: Yeah, you are right. You are right. Exactly. So we are searching the water bodies where mosquitos larvae is habitat. So, we are firstly searching from the sky, so satellite and drone. Then after that, we will find out high risk breeding site of mosquitos. So, the highest breeding site is only 30% of all water bodies. After that, we will spray insect site by drone and also by human. Tim: So, why is it important to do this by drone? Are the water bodies changing every year? Are they coming and going and evaporating? Are they hard to find? Yosuke: So, existing way is that they have to treat mosquito larvae, but they don't know where is the water bodies. So, that's why they open the maps. Then from their experience, okay, maybe this point, there are the water bodies. So, only their experience, they imagine where is the water bodies. And also they are spraying the 100% of the water bodies. So, that's why 70% of the insect site is just a waste of money. It's not good for environment. Tim: Do these water bodies form in different places every year? Yosuke: Almost decided place, but the detail is different by season and also the rainy volume, also the climate. Tim: Your drones are trying to identify the highest risk pools, what are the factors you're looking for? Yosuke: We are taking the water body sites and also depths and temperature and also the water bush information based on that we are put to our AI, then classify the highest breeding site. Tim: Now, you originally didn't start out doing anti-malarial activities, right? You started out with last mile drug delivery. Yosuke: Exactly. So, we slightly pivoted from original. Tim: Well, actually, then let's back up a bit and talk about that pivot and also talk about you. So, you started out interested in economics rather than communicable diseases or technology. So, how did you end up involved with drones and malaria? Yosuke: Before I established Sora technology, I worked at JAXA, Japanese NASA. I was the senior researcher of drone, flying car, and also low altitude control. Then actually in Japan, research and development, R&D is enough, but drone, the real data on ground and on site is the most important. That's why I believe the new tech, especially drone, will be started not from Japan, but global South, especially Africa. Tim: Yeah, I mean, it makes sense. Any new technology, you want to be deploying it where you're solving a real problem. But with your work at JAXA, was that also involving using drones for maybe agriculture or surveys, or was it a similar application space? Yosuke: Yes, similar. I was belong to disaster management team. So, before disaster, we took GIS data from satellites, Eros, which is a satellite named by JAXA. Then after the disaster, we will send the drone, then getting more detailed data, then overlay on the GIS. Tim: That sounds like a really worthwhile area of research. Yosuke: Yes, but this is for only disaster case. So, special case, not commercial case. So in regards of the commercial side, for example, drone delivery, we tested one time each quarter by NATO or something. It's not enough. R&D level is enough, but the commercial level not enough. So, I said our benchmark is Zipline, the San Francisco venture. They started medical drone delivery from Rwanda. Their valuation is around 7 billion US dollars. So global level, using Japan technology, then starting the global south, it's very general strategy. Tim: That makes sense. So, yeah, I can understand, well, not so much frustration, because as you meant, if your goal is research, having one test flight a quarter might be perfectly sufficient, but completely impractical for commercial development. So, once you got the idea of what you wanted to do, how did you move from that idea to your first contract to actually deliver these medicines? Yosuke: The first project is work with UNICEF, United Nations UNICEF, in Sierra Leone, Western African country. Project name, it's Medical Drone Delivery Project. We went to Sierra Leone based on this contract. Then we discussed, okay, that we have drone, then where's the medicine? Then they said, we don't have medicine. Tim: So, the problem is further upstream, yes. Yosuke: Yeah, because we don't have money. Then our counter partner is Science Technologies Ministries, so not Ministry of Health, so they don't have the real needs. That's why we discussed with Ministry of Health to know the real needs. Then Ministry of Health person said that we don't have enough items. So, if we can use technology for reducing the item, then I asked what is the current biggest issue? Then they said the malaria. We don't have enough items, so enough spray and insecticide. So, that's why if we can find out only high-breeding site, then reducing the insecticide, it's good for environment, good for health, and it's good for money. So, they said yes. Tim: So, they were willing to fund that pilot, or was that pilot also funded through UNICEF, philanthropic? Yosuke: Unfortunately, we could not with UNICEF, but Japanese METI supported our project. Then the same year, 2023, June, we started the pilot project. Tim: And what have been the results of the pilot? Yosuke: Actually, I was pretty surprised that we took the data from the drone, then we created POC level of the AI. Accuracy is over 80%. It was very good. Tim: So, did it allow them to spray more ponds? Did it decrease the cases of malaria in the coming year? Yosuke: So, in that time, we could not prove that level. We could prove only AI accuracy. But this year, we published work with Ghana University, and Noguchi Memorial Institute, which is very famous for infection disease, and Harvard Infection Disease Team. Then we already proved reducing the volume of the insect sites. And also the mosquito count is also reducing, and the suffering person is also reducing. Tim: I mean, that's fantastic. Is the government of Sierra Leone going to continue this program and expand it? Yosuke: Yes, we also testing in Ghana, more big sites, POC with JICA. JICA is a Japanese International Cooperation Agency. Now we are trying to update WHO manual. WHO agreed our strategy. Now we're working with them, more data we're getting in Mozambique. Also, last month, Ghana Ministry of Health explained to over 10 country Ministry of Health person this solution. It's very good. So, you must use that. Tim: Oh, fantastic. That is just really great to hear. I mean,...

You might think that large Japanese companies have trouble innovating. Unfortunately if you believe that, you would be correct. Recently, however, there are a few reasons for hope. The first step to recovery is admitting you have a problem, and Japan Inc. now largely understands that their traditional R&D methods are broken, and are looking to startups for help and inspiration. Corporate venturing (spinning out internal projects as startups) is one such approach. But it's not an easy one. Today we sit down with Kenji Tateiwa and discuss the rewards and challenges of spinning Agile Energy X out of TEPCO. We talk about why it's hard to bring renewable energy onto the grid, how to nurture a startup inside very conservative organizations, and the future of corporate venturing in Japan. It's a great conversation, and I think you'll enjoy it. Show Notes Why it's hard to get more renewable energy onto the grid Introduction to demand response and demand management How to nurture a startup inside a conservative enterprise and how to spin out The financial challenges in the core business model The competitive landscape in energy services Why its hard to raise funds as a corporate spin-out Staffing challenges in corporate venturing Maintaining strategic independence from the parent company Can corporate venturing drive innovation back to the parent Links from the Founder Everything you ever wanted to know about Agile Energy X Japanese homepage Connect with Kenji on LinkedIn Yuri Group's paper on using Bitcoin Mining to support renewable energy Info in Japanese Kenji's article on how Stanford creates an innovative mindset Denki Shimbun's series on bitcoin mining 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. Who says, large enterprises can't innovate?! Well, most people actually, and overall they're right. The larger an organization becomes, the more barriers to innovation it puts in place. It's almost a form of self-defense for the enterprise. Well, today we sit down with Kenji Tateiwa of Agile Energy X, and we explore corporate venturing in Japan. Kenji was a decades long employee of TEPCO, Japan's largest energy utility. And also my old employer. Kenji had an idea that he developed into a small internal project, but one that was simply not practical to run inside of TEPCO. So, he convinced leadership to give him the seed funding to spin it out into a new startup. But there have been some bumps in the road, both the things that all founders face, like customer acquisition and also challenges unique to corporate venturing, like transitioning from a subsidiary to a true startup. Kenji and I dive into the challenges of maintaining independence from the mothership and the mixed incentives of corporate ventures, how he convinced conservative management to take a chance on his startup idea. And why, despite all the challenges, this kind of corporate venturing is going to prove absolutely essential to innovation in Japan. But, you know, Kenji tells that story much better than I can. So, let's get right to the interview. Interview Tim: So, I'm sitting here with Kenji Tateiwa of Agile Energy X, who's helping get more renewable energy onto Japan's grid via Bitcoin mining. So, thanks for joining me. Kenji: Yeah, you're welcome, Tim. My pleasure. Tim: Now I gave a really brief introduction to what you do, but I think you can explain it much better than I can. So, what is Agile Energy X doing, and what's the problem you're trying to solve? Kenji: Yes, founded Agile Energy X as an inhouse startup within TEPCO with a mission to introduce as much renewable energy in Japan as possible using a flexible demand, including Bitcoin mining. Tim: So, how does having flexible demand help get renewables onto the grid? Kenji: So, the issue with renewable energy, and I mean variable renewable energy, like solar power and wind power cannot control how much power you supply from these energy sources. Tim: When the wind's blowing, the sun's shining, you got a lot of electricity. And when it's not, you don't. Kenji: That's right. And the issue of electricity is you always have to match the demand with the supply or else the grid frequency will fluctuate, and in a severe case, it will lead to a blackout. And the issue of balancing the grid, it's very challenging for the utilities. So, if there's not much demand to soak up the power generated by these variable renewable energy you have to shut down the renewable energy resources, which leads to curtailment or a wasted energy. Tim: Unlike you and me, most of our listeners have not worked for years in the energy industry, but the process of grid balancing is just fascinating. And I think people don't appreciate what a wonder of engineering it is. Basically, every electron you push onto the grid anywhere has to be taken off somewhere else in real time. It's moving almost to the speed of light. You just have to balance these power generation with the load caused by millions of millions of people randomly switching things on and off in real time. So, with Agile Energy X, when you've got excess energy, you spin up bitcoin mining? Kenji: That's right. The push for renewable energy has accelerated in Japan after the 2011 FIMA nuclear accident. Before that Japan used to depend about 25% in nuclear but then it dropped almost to 0% after 2011. And then the Japanese government pushed for renewable energy before the push for renewable energy power utilities. Primary function was to match the demand with the supply. So the power demand came first, and in order to match the demand, the fluctuation was controlled by mostly thermal power. But then we had this generation coming in independent of the demand. The utilities have now been tasked with something that they hadn't done before to match the demand with a uncontrollable supply from the variable renewable energy. Tim: So, suddenly they find that they have to manage both sides of the equation. Kenji: That's right. And the issue is the power demand is the utilities customers so you cannot control what the customer does, the customer behavior, it's up to the customers. If they want to use electricity, it's their choice. But there's a flexible customer, like a Bitcoin miner. Utilities can ask Bitcoin miners to turn up or turn down to match the supply. Tim: So, there's two things there. First is traditional demand response. As you said, they never really manage the demand side too much, but there was always a case where if the load was too big, the power companies could call up factories and say, Hey, we'll give you some money. And if you shut down for a while, are you taking advantage of demand response as well? Kenji: Yes, utilities have been taking advantage of demand response to some extent. However, the economic incentive was not sufficient to have enough resources that could cope with the amount of variability of renewable power generation. And also in Japan, utilities don't really want to force customers to change their behaviors, even if there are contracts that allows utilities to do. So, it's a Japanese way of doing business. Tim: Well, let's talk a bit about what curtailment is and why it's important. Kenji: Back in 2018, the first curtailment of renewable energy started in Japan in the Kyushu Island, the southern part of Japan, where there's abundant solar energy resources. The demand during the spring and fall during the daytime, when it's sunny and a lot of solar power generation happening, but not much air conditioning demand, then curtailment happened, meaning the utilities had to ask the renewable generators to stop generating because there is not much demand. And if they continue to generate power, it's going to overshoot the grid frequency. Tim: Actually, in Japan, curtailment rates are still very, very low. It's around like 2%, 2.5%. Kenji: It's increasing by the year. And depending on the location, the Kyushu area, it's getting quite high. April or May, during the daytime, some solar power generators are asked to curtail more than 50% of the time during April, May. Tim: And, and so with so much curtailment, it means that these project developers who want to put up wind farms, solar farms, can't make money. So, that really slows down the renewable development. It slows down people putting in renewable power. Kenji: Absolutely. So, it's not just the issue of existing solar generators or wind generators. It hinders the new development because as you mentioned, it will make the renewable generators difficult to finance because of the curtailment. The banks will not be willing to lend money to set up a project financing, because the uncertainty with the curtailment is a big issue for the profitability of the renewable projects. Tim: And so Agile Energy X acts as sort of a buyer of last resort. Instead of having to shut off the generation, you can say, hey, we're located close by. We'll use whatever energy you have and we'll buy it from you. Kenji: That's right. So Bitcoin miners like ourselves, we can be the buyer of last resort, but as well as buyer of first resort. Meaning like nowadays, everyone's trying to build AI data centers when it's going to take time. And depending on if the solar or wind or whatever generators come into line before the data centers are built and ready to offtake the power, Bitcoin miners can first take the electricity from the generators. And if the AI data centers comes along, then Bitcoin miners can move on to another place. Tim: Now this model's been used in other places, Texas in particular. Is this the first in Japan? Kenji: I think it'll be the first in a large scale at least, however, just solving the curtailment issue, there is not enough profitability....

It's tough to be a vegetarian in a world full of carnivores. It's even tougher to be a startup selling a vegan egg-substitute into a world full of carnivore-dominated market, but that's exactly what Umami United is doing. Umami United founder Hiro Yamazaki explains that the real diver for vegan-food adoption is not ethics or sustainability, but simple economics.  The startup's market traction seems to show that he and the team are on the right track. We talk about the importance of keeping an open mind about product-market fit, Japan's unusual dietary habits and how to go global on a limited budget. It's a great conversation, and I think you'll enjoy it. Show Notes Why are there so few vegetarians in Japan Overcoming the "vegetarian" stigma Why Japan has the world's 2nd highest per-capita egg consumption (really!) The different go-to-market strategies for Japan and overseas Why industrial kitchens want to move away from natural eggs The challenges in restaurant and home use Umami’s global expansion plans Why so many alternative food startups fail, and why Umami is different Why Japan is a perfect food tech market The future of food tech in Japan Links from the Founder Everything you ever wanted to know about Umami United Japanese homepage Umami United blog Check out Hiro's blog Connect with him on LinkedIn Friend him on Facebook Follow him on Twitter @Japanveggie 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.   Eggs! We are going to talk about eggs and about things that are almost eggs. You know, in researching this episode, I learned far more about the egg industry than, well, more than I thought there was to know about the egg industry. It's complex, surprisingly global and fiercely competitive. Today we sit down with Hiro Yamazaki, the founder and CEO of Umami United, who's making a vegetarian egg substitute that is finding product market fit in overseas markets rather than in Japan. And for reasons that have surprisingly little to do with vegetarianism. Now Hiro and I talk about how to find product market fit when your initial strategy doesn't work out. Like you expect the best strategy for aggressively going global on a limited budget. And why the Japanese eat a hell of a lot more eggs than you probably think they do. I mean, seriously, this country eats so many eggs! It just blows my mind. The data's coming up in the podcast. But you know, Hiro tells that story much better than I can. So, let's get right to the interview. Interview Tim: So, we're sitting here with Hiro Yamazaki of Umami United, who has developed and is now marketing a plant-based egg substitute. So, thanks for sitting down with us. Hiro: Thank you so much for having me. Tim: What you're doing is really interesting. Hiro: Thank you. Tim: So, tell us a bit about the product. What exactly is it you're making? Hiro: Right now we're making a plant-based egg powder product. It's made out of konjaku, it's a root vegetable in Japan.  Specifically, we're focusing on the bakery application right now and baked good. There's so many eggs, but yeah, we are replacing the functional ingredient from the egg. Tim: So, as an egg substitute, is it similar in nutritional value to eggs? Is it similar in sort of the cooking functionality of eggs? What exactly is it substituting for? What part of the egg? Hiro: Yeah, right now we're more focusing on the egg functionality, like the coagulation forming, those kind of characteristics. But we started actually more scramble egg, omelets, those kind of in a savory application at the very beginning. But after one or two years, we decided to more focus on baked goods. Tim: Tell me about your customers. You mentioned that you're focusing on bakeries. Is this like commercial bakeries or more of the industrial side that are feeding, like schools and hospitals? What sort of bakeries? Hiro: Yeah. Most of our customers right now are industrial, like baked goods manufacturers making French kernels or donuts, those kind of things. Tim: I noticed on your website you also have direct to consumer products ss well. Is that more for a marketing? Hiro: Right. We started actually from e-commerce channels, but like you said, it's more like the marketing perspective. Tim: Okay. And the main positioning, is it for health benefits or vegetarian vegan lifestyle compliance? What's the main selling point? Hiro: Yeah, there are two big categories. One is the vegan, vegetarian, or allergy free. We call it like dietary restrictions. And then the other one is more supply cost because of the broad flu, avian flu. We're having that in every two or three years. And that's a huge issue in the industry because the cost and the supply is not stable. So, that's why our clients are looking for an ex-substitute, not only because of the vegan allergy reason, but also this supply chain issues. Tim: Yeah, actually I want to get back to that and dig into it much more deeply. But before we do that, I want to ask a little bit about you. I mean, you founded Umami United in December, 2021. But you've been involved in this alternative foods movement for quite a while. You also founded an organization called Plant-based Japan. Tell me a bit about that project. Hiro: Plant-Based Japan is kind of a media and consulting company focusing on the plant-based industry because back then a lot of the tourists coming to Japan after the Olympic game. There's so many demands about the veganism, the vegetarianism, but we did not have much options here in Japan. So that's why a lot of tourists needed the vegan, vegetarian information to find out like the specific products or restaurant. Tim: Yeah. But on a personal level are you a vegan or vegetarian yourself? How did you get interested in this particular space? Hiro: So, I used to be a vegan for a year or something, but it's not because I was vegan that I started to become in interested in this industry, but more like back to my, the college student. So, I was actually a volunteer tour guide in Tokyo. But the food dietary restrictions like a vegan, vegetarian, like halal, kosher, so many customers cannot dine together. Then I become interested in this, the food and diversity. Tim: That makes sense. It explains why kind of the plant-based Japan was the next logical step. Is trying to solve that problem. Hiro: Right, right. Yeah. Tim: Awesome. Let's look at the bigger market again. Japan is interesting in that, I mean, the Japanese diet is pretty healthy overall, but my impression is that there's not a lot of vegetarians or vegans in Japan. Hiro: It's very few. Yeah. Tim: So. has that limited the interest in this kind of a product in Japan? Hiro: Yes. I think it affects on limitation for the sales and the marketing for sure. But interestingly, yeah, Japan had a long history that we could not eat meat in over 1000 years, the meat consumption was banned. Tim: You have to go way back, but yeah, that's true. That is true. Hiro: Yeah. Yeah, yeah. Kind of funny. Yeah. Tim: Not so much anymore. So, what's driving it in Japan? Is it companies trying to serve that niche market of vegans and vegetarians or is it allergies or is it something else? Hiro: Yeah, there are few, like you mentioned, allergy is one of that, but it's only for the egg categories. But like for meat industry, like it's a different story. Companies are trying to solve more sustainable goals and also inbound. There are so many foreign tourists right now. There's huge demands. Tim: So, it's important to have those vegetarian or vegan options. Hiro: Right, right. Tim: So, in researching for this article, I learned a lot more than I expected about eggs in Japan. So, so Japanese people eat a lot of eggs. Hiro: Yeah. Japan is actually the second largest consumption of egg per capita. One of that number one is Mexico. I don't know why it's Mexico. But Japan is number two. Tim: That kind of blows my mind. So, I mean, on one hand it's great, the market's big, but it's confusing because how like Japanese traditional cuisine doesn't use a lot of eggs and Japan still overwhelmingly rice instead of bread. So, who is eating all these eggs? Hiro: I have no actual data, but like, this is my observation, but Japanese people would love to eat like a raw egg. A raw egg on top of the rice. If you go to like the gyudon’s place or pokeball place, there are so many like eggs on topping. I think that's one of the reasons. Tim: It's true. An awful lot of salads will have egg in it. Hiro: Right, right. So, we use eggs than we expected, I guess. And we also consume a lot of baked goods. But I also really, get surprised Japan is actually number two country. Tim: So, let's talk about your go-to market in Japan and then how you're looking at it overseas. In Japan, you mentioned your focus on industrial kitchens. So, mass market based goods. So, what is the value that your customer sees it? Hiro: So again, there are two, especially in Japan, most of our customers are using our products for their vegan or gluten-free applications. So special diet. Some of our potential customers trying to use it for reducing the accuses for their recipe because of the supply chain price issue. But when we talk to like US based manufacturers, it's a different story. In the US most of our prospects are trying to use our product for their cost supply issues because the egg supply is really, really unstable in the US. Tim: What is the price point for umami eggs versus natural eggs? Hiro: If the customers use our product for their baked goods, most of the cases cheaper compared to the egg. Of course, depending on the purchasing volume and then the act price because it always up and down. Tim: Well, I can see why that would be a big advantage in and of

Japan market entry is hard. Consumer tastes are different, business culture is different, and market needs can be radically different from those anywhere else.  Entering the Japanese market is a challenge for even the strongest and best positioned brands. Today we sit down with Ernie Higa, the man behind two incredibly successful market entries, Dominoes Pizza and Wendys, both of which looked like extreme long-shots at the time. We talk about when to localize and when to stay true to the brand, the importance of repositioning, and how to find startup opportunities in Japan today. It's a great conversation, and I think you'll enjoy it. Show Notes How to determine the kind of startup you can create How to sell to Japanese enterprises even when you are not fluent The importance of focusing on difficult things How Ernie knew that pizza would sell in Japan when all evidence said otherwise How Japanese and US consumers measure quality differently When to localize in Japan and when to stay true to the brand Rethinking pricing and positioning for the Japanese market Why Wendy's could re-enter the Japanese market when others failed Japan's changing approach to shareholder value How Japanese attitudes abotu failure are changing in Japan Links from the Founder Everything you ever wanted to know about Higa Industries 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. Perhaps the most common question my non-Japanese listeners ask me is, what kind of a startup should I start in Japan? You know, I want to be helpful, but the answer to that question depends not just on market opportunities, but the skills and the temperament of the specific would be founder in question. The right question to ask is really what is the best startup for me personally to start right now? And no one can really know that except for you. But there are some things that remain true and some strategies that remain effective for all people and across decades. Well, today we sit down with Ernie Higa, a man who's kind of a legend among those of us who really study Japan market entry. Ernie brought both Domino's Pizza and Wendy's to Japan. And although both of those ventures seem like extreme long shots at the time, Ernie made them both work and prosper. Ernie and I talk about how to identify entrepreneurial opportunities, how to know what needs to be localized for the Japanese market and what needs to remain true to the brand and what so many people misunderstand about brands and branding in Japan. But, you know, Ernie tells that story much better than I can. So let's get right to the interview. Interview Tim: So, we're sitting here with Ernie Higa, the representative director of First Kitchen and Wendy's Japan, but best known as the man who first brought Domino's Pizza to Japan. So thanks for sitting down with us. Ernie: Well, thank you, Tim, for having me. Tim: I really appreciate this. I wanted to get you on the show for a very long time. So, you founded Domino's back in 1985, but let's step back a bit before then. Many young founders today are looking to Japan, trying to figure out where they fit in, what value they can add. So in your case, why Japan? Ernie: Well, back in those days, Japan was becoming the second largest economy in the world and was really growing fast. So, there was opportunity here. Having said that, as an entrepreneur, the last thing you want to do is do something that large companies were already doing. So, the idea was to pick a niche business where I felt that I had a more of a competitive edge and leverage my understanding of both Japan and the US. And learning about Japan dedicated myself to learn the business here, learn the language, learn the culture, but to find an area where the large companies, say for example, the Mitsubishis of the world, Mitsubishis of the world were not doing, or they were not so adept. Just to give an example the first business I got involved in was in the lumber business in the 1970s, a little bit different than today. There was the US Japan trade wars. The US companies were trying to figure out how to break into the Japanese marketplace. And there's also some geopolitical pressure as well too. And one of the things was in the lumber business the normally large trading firms would import logs from the United States and have it cut in Japanese sawmills for the Japanese housing size and specifications. But the US said, well, we want the value done in US sawmills. So, you might ban the export of logs to Japan. And of course that was great, except that in the US houses are built on what they call two by four construction. And so there are different sizes, different quality requirements, and the Japanese housings sizes were built upon what they call post and beam. And even further, there was a huge prefabricate home building market that was using lumber, and they had even more difficult sizes, specifications, and so on. And so if the US sawmills could cut those sides, fine, but none of them could. And so this is an opportunity for someone like myself to say, oh, maybe I'll take on that challenge and see if I can't find a US sawmill or a Canadian sawmill at that time to cut for the Japanese marketplace. And that's really where I started. Tim: How did you get that insight? Were you involved in the lumber industry before then, or no? Ernie: No. When you're an entrepreneur opportunities just come by chance and you just have to be looking for that and then again, see where you can fit in. But by chance, I happened to meet a director of a company called Misawa Homes, and in those days, the largest end user of lumber in Japan. And so when this potential of the ban of export of logs came about from the US side, Misawa Holmes said, we really need to have our size and our specification cut in the US otherwise it'll be out of business. Tim: There's an opening. Yeah. Ernie: So, that was an opening and I got to know the director and said, we have this issue. And I said, well, maybe I can resolve that. Who knows? I had no background in the lumber business, but I thought it was an opportunity. Tim: Well, I agree there's a lot of the finding the opportunity is just kind of keeping your antenna up and looking for them. But when you first came to Japan, did you speak Japanese? Did you have a solid cultural understanding of Japanese business? Ernie: Well, so that's an interesting question. I guess since I'm of Japanese descent, there was maybe in my upbringing some sense about Japan, but I really had to start almost from ground zero when I came here. So, and I said, okay, if Japan's a difficult mark to get involved, then this is what I should try to do. But to do that, obviously you do have to learn the language. You do have to learn the culture and the ways of doing business here, which are different than the US. I will dedicate myself, but I'll give myself five years and really work at it and see if I'm able to do that. And then the opportunity with the lumber business came along and I said, okay, this is what I'll try. Tim: What's your kind of best advice to so many foreign founders and aspiring founders here in Japan today? A lot of people come here, they work really hard, they're studying every day, but it takes a while. It's not like you can learn the language in a year and do business. So, like on a practical level, how did you compensate for that early on? Ernie: Well, you're asking very deep questions, but since I was an entrepreneur, if I didn't learn the language and the culture and the way of doing business very quickly, I would go bankrupt. I had a lot of incentive to learn very quickly. So, it took a while. But when you're an entrepreneur, timing and luck and circumstances does play a role. Tim: But I also think, like even with a lack of strong language ability, it sounds like if you're solving a big enough problem, the market will work around that. The bigger edge is not the fluency. It is solving a meaningful problem that they can't solve on their own. Ernie: Yes. So that's where, for example, if you're a large firm, say, we don't need to do that. But if you're trying to develop as an entrepreneur, a new business, then you have to say, okay, there's an opportunity, but there's a lot of issues. Can I resolve it or not? And that was my first entrepreneurial venture where I had to leverage everything I knew, but in a niche area. But it had a big opportunity, but that no one else wanted to do. Unfortunately, the most difficult things is where there's potential for an entrepreneur. Tim: I think that's true. I mean, you have to be doing something that is difficult and or that nobody else wants to do. Otherwise, better funded companies would already be doing it. Ernie: They'd be doing it. Right. And so going back to your initial question to do this business, I had to learn not only Japanese, but we started to sell all over Japan and they have different dialects. And so I had to learn various different Japanese dialects to sell this lumber business. I went the whole nine yards in terms of really trying to get involved in the language and the culture and… Tim: And super traditional business as well. Ernie: Very traditional. And so the interesting thing, because I had to go out to the countryside, whatever, and the fact that I was a Japanese was actually kind of a novelty. And so it ended up being an advantage working with these guys in lumber business who once we got to know each other, very fun for them. Tim: So, identifying a gap in the market, a painful problem, figuring out how to solve it, that makes a lot of sense. But pizza, because how does pizza fit into this? Because back in the mid-eighties, this was not a problem that needed solving Japanese people just didn't need a lot of pizza....

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....

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