It’s hard to imagine an organization more resistant to change and disruption than the government of Japan. But today’s guest, William Saito has made it his mission to bring innovation to the way the Japanese bureaucracy operates. And more astoundingly, he’s actually having an effect.

William is in a unique situation as a special advisor to the Japanese cabinet, and brings the perspective of a successful startup founder to solving beuqacratic problems. We talk about both the challenges and the strategic advantages that Japan has in the coming decades and discuss a few areas where new Japanese technology has a real change of soon becoming the global standard.

Our discussion gives me hope that innovative change in Japan is is possible not only bottom-up from the startups but top-down from the government. And if the goals are aligned, Japanese innovation will be a truly unstoppable force.

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

Show Notes for Startups

  • Starting a company in HS & running it in Med school
  • Why most companies fail
  • Why William chose Japan over Microsoft
  • Government problem solving as an entrepreneurial activity
  • How startups and government can work together
  • The importance of teamwork in Japan
  • Why women have an important role to play in Japanese startups
  • The unique opportunities in health care and elder care in Japan
  • The most important change Japan could make to improve entrepreneurship

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Transcript from Japan

Welcome to Disrupting Japan, straight talk from Japan’s most successful entrepreneurs. I’m Tim Romero and thanks for joining me.

Our guest today William Saito is changing Japan form the inside, is an adviser to the Japanese government on all things technology, and although he’s a big fan of disruptive innovation, he’s convinced that small sustaining incremental innovations are the way to go. Or rather that’s the way things are already going here in Japan. We talked about the challenges being faced by Japanese startup founders, corporate executives, government bureaucrats and talked about the best way that they can all work together to solve these problems. He’s an interesting guy and as he tells his story you’ll see that he’s clearly not afraid of challenges. And since his currently trying to change the way Japanese government operates, that’s definitely a good thing. But it’s best that you hear it directly from William. So let’s get right to the interview

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[INTERVIEW]

Tim: Okay, I’m sitting here with William Saito, a successful entrepreneur currently president of Intecur Consultancy, a special adviser of the cabinet office for government in Japan, lecturer at both [Kale 00:01:29] and University of Tokyo, and the truth, I’m just going to leave out a whole lot of other things so we can actually have time for the interview. But thanks for sitting down and talking with us today.

William: Not at all. My pleasure.

Tim: Okay. Listen, let’s back up a little bit because you started entrepreneurship at a really early age. You started in your first company in high school with a friend right?

William: Right.

Tim: Could you tell me a little bit about that?

William: Well, it was back then when being a nerd wasn’t such a cool thing and we were lower than the chess club in the pecking order of things.

Tim: I remember it well.

William: Yeah. And we found that just using our fingertips we could actually create something that people wanted to pay money for. And that was interesting concept for that and it had a lot demand, so does today.

Tim: How did you do that? How did you go from nerdy high school student to actually running a business?

William: I actually don’t think anything has changed. So in my case, it was never the fact that I wanted to start a business so that we had the CEO title or that you’re president of something. It was and still continues to be to this day that we did something that we like, that we were making a difference and we’re very passionate about. And I think the people who really succeed in the end are the people who believe in it and grab that passion and money tends to just be a bonus. So, even to this day I still think I’m doing entrepreneurial activities and being very entrepreneurial in whatever I do because that’s what makes life fun and you want to do anything.

Tim: It’s easy to say when you’re in high school but it sounds like there was no grand plan. It was pretty one foot in front of the other and taking advantages of the opportunities in front of you?

William: It’s not that there wasn’t a big grand plan. It was perhaps that it was even more grand than one would think. And even back then ICT was making a difference. And a high school kid in his room can actually create something of value without big machines and factories per se. By putting together algorithms you could actually benefit people in doing new things. And so when that ability became apparent, that grand plan of let’s try to change the world was the big dream where you can actually make a difference and that you’re actually able to do it.

Tim: But you pursued this through not only high school but your college as well and it evolved. Well you ended up creating a fingerprint recognition system. But as this whole time because I mean you’ve got almost this parallel track of your life going on. You’ve got university and this was back before it was cool to start your own companies in college. There must have been some conflict there. I mean, did you know you wanted to be an entrepreneur? Or were you like split in your opinion?

William: No, there was never a split. It was one of those things back then in California where if you had Asian parents they wanted you to be a medical doctor. You know, as the good son, one just really made that into reality. And I did that. And I never really had any hesitations to appease my parents by becoming that doctor but I really knew from the very beginning that that was going to be my life and career either.

Tim: But when you said you did that, what do you mean?

William: Do check that box for your parents; to become a medical doctor.

Tim: So you attended med school?

William: I went to med school. I graduated. I became a doctor for one whole day quick.

Tim: So you just literally were just ticking the box.

William: Yes. I was absolutely ticking the box.

Tim: Well, I guess they didn’t say how long they wanted you to be a doctor.

William: Unfortunately, they forgot that detail.

 

Tim: Wow. That is an astounding commitment. So are you running this company while you’re in med school?

William: It was both fun, passionate, but at the same time, to be very honest and open, a lot of people see the history of what I did on the web and so on and it’s very polished and very clean. And oh we did the fingerprint thing but in fact the reality is there were six definite instances where we were technically in bankruptcy, where we failed and the product and the service that we did, did not work out. But it was part of that too. It was the perseverance that if we stopped there, then we would have really gone out of business. And it would have been a complete failure where something drives you and you pivot to then use that core technology and then re-purpose it for something else. And we did it six times, so we were very lucky and on the seventh time we were finally able to create something that would become famous for…

Tim: Well, you know that’s something I think a lot of people who have not been through this process don’t appreciate that, often the difference between success and failure is, you can be one inch on either side of that line. And if you’re one inch on the failure line, no one’s returning your phone calls. If you’re one inch over on the success line, everyone’s asking you to speak at conferences and then tell your secrets of success. But when you’re in the middle of it, it really is only an inch difference that can go either ways sometimes.

William: Well and I think to add to this truth where, if you win the lottery you will file for personal bankruptcy in three years. And the point there is it’s easy come, easy go. And when you see this and you see these ventures that are actually long sustaining its people who have never had it easy. They go through these trials. They go through all sorts of misfortune. Entrepreneur sounds really cool and interesting and like glamorous at the end for those who succeed but I will tell you 98% of the time is pretty dark and ugly, and it’s how you overcome that. In the end, find that winning solution. So most of it is persevering.

Tim: Do you find yourself sometimes having to dissuade people from doing it; to say, “Well wait now the reality is that this is really hard. Let me explain what you’re getting yourself into.”

William: Well, no, actually I don’t think I’ve ever dissuaded anybody from becoming an entrepreneur because the other flip side to it is life in general is hard in many cases. Japan is actually very well and out and that you could have a perfectly good life being the quote and quote salary man and keeping your head to the ground and not stirring the pot. But at the end of the day when you have a time to reflect and go what is life all about. What am I doing? What purpose is this? And you let all that out, I think everybody goes through hardships and stuff, but if the hardship doesn’t have an end result or meaning, that is just hardship.

Tim: Oh, yeah.

William: So, I think that what the entrepreneur thing does is that it gets tough; that it’s like tough like anything.

Tim: You have a purpose. There’s a reason behind it.

William: It’s tough working for a company. But the toughness there is that you’re not necessarily in control of your destiny there.

Tim: Right. When you sold it, you sold to Microsoft; someone told me that you just emailed Bill Gates but I assume it was something more complex how that deal got done.

William: Well that was a bit more complex. And the relationship with Bill was sort of many years before that. And so it was a relationship that we built up and working with Microsoft at many different levels and really learning from the Microsoft model of creating a platform and being really at the centerpiece of how the IT industry was forming. And so you put yourself in the business where people have to pass through you.

Tim: You and Microsoft had been working together for years so this was not an unexpected result.

William: That is right.

Tim: But after the acquisition you didn’t join Microsoft, you came back to Japan. Here’s two different questions. Why didn’t you join Microsoft? And what brought you back to Japan?

William: That’s a good question. I think that there was a hesitation in part of me where I’ve actually have to work for a real company, private and the like, and sort of work for a large behemoth and I actually have a boss and so on. I wasn’t in any rush to do so. The other aspect is given that I was going through medical school and also running a company, I’ve never actually was able to enjoy life as an adult. You know drinking margarita by the cool side kind of thing was just this fictional concept. So some part of me said, “Well, you know I might want to try that a little bit.” And I tried to take a year off but actually failed miserably at that and found that it’s actually quite overrated.

Tim: You failed at relaxing.

William: I failed at relaxing. So it occurred to me, “What am I going to do here?” Am I just going to bum around or what? And I realized that my company was actually formed and its success was really based on the opportunities that various Japanese companies gave me, from when I was a teenager.

Tim: All right.

William: And it occurred to me that these opportunities aren’t given to the teenagers of Japan today or for people in their 20s for that matter. And that I thought it’s kind of my duty to give back to Japan and to that generation to give them that chance that I got. And that would be very unfair if I just took and never really gave back to the next generation. So I thought, “Well okay. I’ll just spend a retirement in Japan as a venture capitalist.”

Tim: You’re having a very busy retirement, I must say.

William: Yes this is true. I’ve probably been busier probably in my life right now. So it’s probably some bad disease of not being able to  settle down.

Tim: Some character defect that just wont let you to switch off. You’re working now very closely with a lot of different parts of the government. From my perspective it would seem that going from running your own company where you are very much in control of your destiny for better or worse to working within the government is got to be about a completely diametrically opposed situations in terms of effectiveness and the types of people you’re working with. How did you make that transition without going absolutely crazy?

William: The big moment that I think changed me to shift focus to government was probably after March 11.

Tim: The big earthquake.

William: The big earthquake. What happened was soon thereafter one of my medical school professors became the chairman of the National Diet’s investigation of the nuclear accident. And incredibly this was the very first accident investigation board by the Japanese government ever.

Tim: Well it was the first independent….

William: Yes ever.

Tim: Outside. Yeah.

William: You know, not modern history, not ancient history, ever in Japan.

Tim: Japan is not known as being an open society in this way.

William: Professor Kurokawa who I have known for many years basically comes to me and says that, “We have to create a very first of its kind accident investigation board in the National Diet, probably one of the most un-entrepreneurial entities on the planet.” Through that process itself because we’re doing something new, Japan is very abhorrent of new things but especially in government, my 30 odd years of preparation was really for this timing that I was using every ounce of entrepreneurial experience to try to do something new within this entity; to stand up on organization. I could easily that was probably my most entrepreneurial experience in my life because of all the things, the new rule makings, the corners that had to be cut, the red tip that had to gone through the bureaucracy that’d be fixed because we only had a short limited time and so that was probably my most entrepreneurial activity in recent memory.

Tim: I can see an incredible challenge both in terms of a difficult challenge that has an important purpose at the end. But a lot of people around you are career bureaucrats, the politicians, and I don’t imagine they were seeing the same opportunities that they were.

William: Sure, no, and they were always impediment, not in a belligerent way but that’s their job to always be conservative. I use really the original French meaning of entrepreneurism it initially meant more of a change maker; that someone takes an idea and actually executes on this and does something different. It’s not necessarily about ventures; it’s not necessarily about starting a new company. It’s really the ability to execute on an idea and to make change and do new things. And so by that very definition, I think that the National Diet of Japan was really right for a change that it became ossified, it was very bureaucratic. The people working with it did not have any malicious intent, but in the fact that they became very lazy and that they didn’t want to do new things, take risks, fail, whatever, and I can understand that given the hierarchy. But we had a mission to do. We had a ten month window to do the investigation and issue report. Fix timeline, no excuses, had to get it done, it was a lot. I had a boss that for anybody who knows Doctor Kurokawa does not take any excuses for things. You just have to get it done. I had to basically do lots of acrobatics to get even simple things done but it was the entrepreneurial way that I approached that I think that allowed us to do what to do but it also gave certain bureaucrats ideas of where how that’s interesting. I didn’t realize that might be a different way of approaching the problem and addressing it instead of always just going and coming out with reasons of why you can’t.

Tim: I really want to dig down on this and talk about the way that startups and government can work together. Because the fundamental problem I see, I mean there’s no ill intent. I mean you’ve got startup founders who generally focused on a very specialized product, making changes quickly. If something doesn’t work, they can walk away from it. And you’ve got a bureaucracy who’s focused on delivering a very standardized product to many, many, many people. Everyone’s underfunded. They can’t just walk away from it. How do we get these groups working together?

William: Right. So well the problems of Japan that used to be its strength is that the bureaucrats were the elites of the country. They graduate in Tokyo University. They worked their butts off and they do a very good job of getting things done on a timely basis. The problem is ICT has even upended the Japanese government and things happen at a much faster way. And the problem is ICT does not respect sovereignty. Well you know global issues affect things in Japan very, very quickly; much faster than at the excessive meetings that the Japanese like to do in making decisions. I think that this entrepreneurial outside refreshing thinking is more needed in government right now to get people to use this and it doesn’t happen at countries like the United States because in the United States, even the bureaucrats, people who work in the hill, in various state department or whatever department in the United States. I think the United States has a much more open door, revolving door, policy where you have people go in and out of the government and the private industries. And they get to cross-pollinize their different ideas and so obviously it’s not perfect. But I know many cases where many friends of mine have gone from Silicon Valley down to the ventures and stuff and narrowing government and cross-pollinating those ideas and so on. And the government has become receptive in a way, “Huh, that’s an interesting way of doing things as long as it doesn’t break the law. Let’s try these different ways of innovation or how to do processes and things differently.”

Tim: In America for example, particularly at the local level, there has been organizations like Code for America that has got very wide spread about. Are there programs like that in Japan? And do you think they’d be welcomed?

William: There are but I mean if you think about things that have to have a top down, if you look at how the US systems work were you have cabinet members or secretaries of such and such, or department heads, a lot of them tend to come from private industry. And they’re appointed or presidentially appointed or they’re hired from off the street. This is important because that adds perspective and keeps things fresh and that you could bring these different styles of work into government that keeps things stirred up. The nice tension there…

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Tim: There’s a change agent to attend to it.

William: Whereas Japan career bureaucrats are always career bureaucrats, and it’s taboo to go back and forth to industry and government that you know these government people but I will tell you if they were just government for the last 40 years, they’re thinking is going to be very narrow-minded and they don’t have much opportunity for real input or exchanging of the latest things.

Tim: Do you see that changing? That seems like one of the last things that’s going to change in Japan.

William: Well, I think it’s changing at the very least for having some crazy guy like me being in a position that I am. So the very fact that they are going outside for consulting and advice and acting on that is a good sign. I think I represent something that’s very unusual in Japan right now and I don’t know if the prime minister made a mistake but I am the youngest in Japanese history to have this title of mine. I am probably going above and beyond the definition that was originally intended for my role but really shaking up thing. And you know, I’ve been doing this for three years. I served at the pleasure of the prime minister. I’ve gone through three ministers. I’ve outlasted a lot of the cabinet here and I’m still here.

Tim: So you must be doing something right?

William: I don’t know that or if he finds it entertaining but this is having small changes in certain structures and stuff.

Tim: I’ve worked with the government of Osaka and they’re very active trying active entrepreneurial input into the way the government works. And there’s been this sort of impedance mismatch, getting bureaucrats to talk to startup founders, even if both of them enter into the discussions with the best of intentions. Can you think of anything practical or any type of programs that could help governments and startups work together.

William: In Japanese context?

Tim: Yeah.

William: Under the rules and regulations that exist in Japan right now there seems to be this taboo line where that’s not supposed to like cross mix and so on. But I think it’s really having a mechanism where one can fully communicate and explain and understand why, whether to go on a business sense or making the decisions we’re doing, the reasoning behind that and how you get work through it. The problem is it’s not businesses’ job to educate government. And government really don’t understand sometimes the business needs because they don’t come from that area. So, at a local level, I would find that tough. At a national level, I’m integrating it in because it’s easier to have hearings; it’s easier to have stuff on the records. It’s easier to get more exposure. It’s easier to enact things so that you have a bigger view on whether it’s METI or the Ministry of Education  and getting things in there.

Tim: It’s a much bigger lever at the national level…

William: Plus you have a lot of funding opportunities that you could use to either be the carrot or the stick.

Tim: Well hopefully we’re going to see more outside advisers and outside consultants for government agencies. I mean, that’s only a good thing.

William: Yeah, I do too, and I think the keyword there is outside because a lot of people who become advisers used to be ex-something and given that in entity and then it’s just really self-serving.

Tim: Did you ever miss programming, the simplicity of it?

William: I think that it never leaves you in a sense, whether it’s problem solving or organizing your emails or doing things. Having that basic understanding, I think it’s helpful but if I were to step back a little bit I think going through medical school also helped out in terms of defining the unknown, solving things that you can’t see directly, asking questions. These are all skills that doctors play and so I think from that perspective medical training was very essential for really helping…

Tim: Huh. But I guess that makes sense, it’s problem solving, exploration…

William: Yup. Asking questions.

Tim: Shifting gears a bit, you’ve talked a lot about the importance of not just teamwork but the importance of teams rather than the traditional command and control framework inside

Japan. Startups in Japan really seem to be embracing this idea of teams and you’re seeing a lot of startups being founded by teams rather than solo founders which I think is very encouraging at the larger enterprises that you deal with day to day and even in government. Have they embraced this concept of teams or is the old hierarchy or structure still the only way things get done?

William: You know it’s unfortunate. So at one level, I don’t know if I had a big impact on it but I did sell over a 120,000 copies of my book on teams which kind of shows that I guess it was interesting. That team concept I think is very fundamental and very interesting and very at the root of a lot of Japan’s successes. If you look at the history of successful Japanese companies that are sustaining, whether it’s the Sony’s or the Sharp’s or the Toyota’s, they’re all founded by teams. And so this is a concept that I tell people in Japan. At the root of Japan’s success that the Japanese have tended to forget that and you have this management systems which highlight people’s singular, almost daily like entities who have never failed before. And I’m telling people that no, that’s probably the worst type of person you want to be leading the organization because now they’re too afraid to fail. They’re putting the spotlight.

Tim: That’s true in fact, that the Toyota production quality assurance system was built entirely on empowering teams and allowing individuals within the teams to change the way or suggest changes. And somehow we’ve lost that.

William: The team building, the Five Whys, these various MBA type clichés that you hear, they were all actually started in Japan and the Japanese ironically forgot many of them.

Tim: Yeah, hopefully they’ll be getting it back. But I mean, it certainly is changing on the startup level. The new founders definitely get the idea right? So let’s talk about startups in Japan. So you mentioned that your parents didn’t consider startup founder a valid career option. I assume they’ve changed their minds at this point.

William: Not at all but maybe.

Tim: I think you turned out okay. Do you think the opinions of parents in Japan are changing? Is the idea of starting a company becoming more viable?

William: I think environment is conducive but to it, but ironically I think the parents or more namely the moms who actually have control over this, the impression has become a little bit more dire in that, if the moms had their way they’re worried about especially their sons going off the rails and not joining what they call the escalator here and having a proper job and getting promoted. Women who aren’t bound by this because they are put under a different social pressure many who get it and go, “Hey why do I have to succumb to that?” They actually go out, study overseas, and start businesses at a much higher rate. They actually at the end are more successful as well.

Tim: Well actually that’s interesting because you’ve spoken a lot about the importance of women in entrepreneurship in Japan. Prime Minister Abe has also spoken quite a bit about the importance of it. I do notice that there’s a high percentage of women entrepreneurs here. Do you think it is just that this is the way that they can cut through a lot of the hierarchy and social standards and just focus on results? Or is it more of a push situation where they don’t really have other options and this is kind of the best one in front of them.

William: From the women perspective, I really think that statistically it just makes sense because, one, they’re more of them. They’re smarter than the men because they go to the school an average of 3.4 years longer than men.

Tim: Really?

William: Yeah.

Tim: This is from Ministry of Education. And the other thing here is, they’re naturally better communicators and because they don’t have the social pressures from their moms especially, they’re free to do things under the radar like go overseas, and study or learn hobbies or whatever. So the women who get it and go, you know, “Screw this. I’m not going to serve tea and then get married and be in the house kind of thing.” They actually feel more empowered to start these businesses and because they have these basic skills that are better than the men, they do at least in a Japanese context, much better especially and initially in starting these companies. And so it just makes obvious sense to do this because they have this certain pressure to succeed and keep learning. There’s always this continual growth path. They communicate and make grow their networks. They know when to reach out for help; all these things that a lot of Japanese men are not necessarily the strongest in. So yeah. I see tremendous and opportunities there.

William: Okay, on a macro level, are there particular areas of the Japanese economy or particular types of Japanese startups that you are especially optimistic about? It comes down to that question of I see a huge potential here where Japan is very well educated. The base education’s is very strong. Infrastructure is very solid. Government is stable. Crime is low. If you think about it, there are very country’s that can actually say that.

Tim: Oh yeah.

William: You know incidence in Europe, Southeast Asia is a little bit iffy.

Tim: But isn’t the flip side of that stability is that…

William: And at least the complacence for all this.

Tim: Yeah.

William: But what I see in this though is a huge opportunity. We also have one of the fastest aging and shrinking populations in the world. The areas that I invest in and many of the Japanese don’t even know this yet. But, what made the Japanese don’t realize is this is a big issue. And because the Japanese are the first to experience it, which is a good thing, they’re actually solving this bit by bit.

Tim: What do you mean?

William: Whether it’s health care, whether it’s elderly care, whether it’s medicine, whether it’s all these things to help the aged, there are bits and pieces here.

Tim: So do you think that where America tends to be very focused on disruptive innovation like overturning the status quo, do you think Japan is going down the path more of sustaining innovations, fixing small…

William: Well the information, yeah. So if you look at this, and I teach this a lot, and you look at the difference between incremental and disruptive innovation, this is fine. And everyone has their own cup of tea. But what you notice though is that the disruptive innovations happen on a haphazard basis where I think they’re big. Incremental innovation may not be sexy sometimes, but over the long haul the delta that you get could be as large as disruptive innovation. And so, of course, I like disruptive innovation because it could take that whole industry and it does really new things and so on.

Tim: Change happens fast that way.

William: But it’s really risky and you have to have the mind-set for it, thick skin, and so on. But the incremental innovation I think Japan is optimized for neither pro nor negative for either way. Obviously I’m more of the disruptive innovation and problem maker upset industry kind of guy anyway, but it’s definitely a steady kaizen type culture where innovation is on a steady base. A lot of incremental innovation, if you look at it from a decade type snapshot can look like disruptive innovation…

Tim: Sure.

William: …in the net.

Tim: It could be huge change eventually.

William: Right. So one of the things that I always talk about is that Japan because of its demographics and its aging and shrinking population, it has thrown a lot of economic assumptions on its head. Things like deflation and how that has looked at monetary policy, how that has looked at capitalism has turned on its head to democracy  turned on its head. And Japan’s one of the first countries to experience this so they had this hurdle. So you could attribute a lot of the last 20 years to this really anchor that’s been weighing it down. But on the other hand, because the Japanese are the first to experience this and we don’t throw our grandparents out onto the streets, there are solutions that are being developed to address this situation. So, why is this important? It’s important because in the next 10 to 15 years starting with places like Western Europe, Korea, China, the United States. They’re all going to be ageing, much more abruptly than Japan. And so guess what, the Japanese have figured this out in terms of new products and services because they’ve had the last 20 or 30 years to figure this out, it’ll be one of the first company countries to find ways to address this where it’s going to be probably the biggest export market, exporter of technologies and services for other countries here. So I see that’s a tremendous opportunity.

Tim: Do you think that the Japanese approached innovation? Do you think there’s a greater effort here to slot a particular innovation into a broader societal need and to judge it based on whether it’s good for society as a whole?

William: No.

Tim: No?

William: So that’s the thing. I think there’s a huge opportunity that a lot of Japanese are resolving this issue. Actually I don’t see the big pictures that I just explained. They’re doing it just for the sake of doing it.

Tim: Okay.

William: But, the opportunity that I see here is that if you get these distinct components and parts here of what people are doing time together to address this aging problem, you will have a pretty good business here.

Tim: Okay. So it’s not uniquely Japanese, things the same market forces that exist everywhere; as Japan is the first developed nation to run up against this.

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William: Go through this. Yup. And that they are not realizing yet serendipitously that are addressing in piecemeal but if you see the bigger picture, this is going to be a very, very, big problem. Today, we have four kids in their mid-40s and 50s taking care of one elderly person in their 80s and they’re already having a tough time of it. When I’m in my 80s, there’s only going to be one person taking care of me which means, no one’s taking care of me.

Tim: Right, that math doesn’t work.

William: Yeah, we’re going to be more reliant on automation and robotics and ICT and all these other things to help that one person take care of me once true.

Tim: All right. The Abe administration has been extremely outspoken in its support of entrepreneurship and startups and embracing kind of the freelance economy. A lot of government programs to support entrepreneurship, there can be a lot of money deployed. But a lot the money is not deployed particularly well. It goes in construction projects and the usual politically connected companies, but what do you think are some of the most important and effective ways that government can support entrepreneurship.

William: I think a little bit contrary on this and that the Japanese government when they have the knee-jerk reaction to help things; they tend to throw a lot of money at it. Money tends to create more hazards. From a government role, I’m actually telling people that, no, no, you have to decrease this stupid funding. You have to decrease this sprinkle effect thing of just throwing money around because it’s not doing anybody any good in the long run. What we need to do is revise the laws and regulations to make things less friction… You know some of these things are for example; firing people in Japan is very, very tough. And if you’re on an entrepreneurial venture, and you’re hiring your first couple of people, you may not be the best HR guy in the world. And you may hire a few bad apples, but if you cannot fire them it saps the hell out of you. So that’s one thing that I’m trying to work on and going this protection of the employees going a little bit too far for allowing entrepreneurs to have the more vibrant companies. So that’s one. The other one is that, we all make mistakes. And we look at Steve Jobs or you look at any of the successful people in the world today, they’ve actually failed at something pretty spectacularly at least once before they’ve become famous in their current known state.

Tim: Right.

William: In the United States, we have things like the incorporation code where their own independent entities and that if it goes bust, you can kind of walk away from it. The K.K. mentality in Japan is somewhat based on that but if you go to a venture capital or any institution that promotes entrepreneurship yet they ask you for collateral?

Tim: For the seed-stage funds, that is extremely rare now.

William: It is rare but…

Tim: I hear the bank VCs still do that occasionally.

William: Well, yeah, yeah. There are no real VCs in Japan to the extent a lot of people think. But the bank VCs are not real VCs. That VC actually means either, very cowardly or very conservative, but it’s definitely not venture capital.

Tim: I’d like to ask you what I call my  magic wand question.

William: Okay.

Tim: Okay. So if I gave you a magic wand and I say, “You could change one thing about Japan to make it better for startups here.” What would you change?

William: What I would do and I’m trying to do is really institute a system where sometime between high school and on the time you graduate from college that you spend at least one year overseas.

Tim: Really?

William: And that’ll change Japan miraculously.

Tim: How so?

William: At many different levels. One, they would frigging understand why English is important instead of just being able to take it on the test. Number two, I think going overseas it really enable people to have context that a lot of Japanese actually live in their little own bubble and think that this is how the world ran. And that this is how everybody thinks and this is how everybody has their values systems aligned. Do you need to have a first person experience in realize this that no, people’s morals, values, and the ways of thinking are different and so you need to know how to work with them. Number three, I think that by exchanging ideas, having dialogue, communication, being able to debate, negotiate in these things of are key talents that are not taught in Japanese schools that Japanese are very, very bad at. So they lose out when they be do going to society because that’s definitely a very global world. Unfortunately, we do not now live in an island where we can be self-sustaining. We have to interact with society at large and without this experience; Japan’s going to be screwed. And Japan is the second risk averse country on the planet. It’s very dangerous to have people this single-minded here, because once what I call this bubble, peaceful bubble that we have here bursts and we succumb to the real winds of global competition, a lot of people are not going to be prepared.

Tim: Right.

William: And we have this very Japanese thinking still that is actually becoming even more insular these days. It becomes very important to really see how the world it is and not necessarily just through media or some other small ends.

Tim: And I also think that you’re suggestion like spending a year abroad, people who do that will bring a different set of problem solving skills to either large companies they joined or startups they might want to find.

William: Exactly. Japan is almost too peaceful, almost too perfect and that you really don’t have to try hard, or experiment or problem solve because it’s kind of they’re on a silver platter. Yeah you need to be trained to be able to expect the unexpected and to be able to overcome that. I feel very sorry for people who have not experienced that.

Tim: Okay listen. Thanks so much for sitting down with us tonight.

William: Certainly, my pleasure.

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[OUTRO]

And we’re back. I think one of the most important developments we talked about is the new found willingness for the Japanese government to use outside, truly outside advisers. Well, I suppose calling it a willingness maybe overstating the case a bit. Since at the moment, William seems to be the only one they’re listening to at the national level. But still, it’s a start and time will tell whether he turns out to be a black swan or the first robin of spring.

That basic openness to new ideas is essential for Japan to move forward as a society. Private sector and startup innovation is taking off here, but it can only take the nation so far. Still, I’m optimistic that the innovative green shoots we see in Japan today will continue to grow and that in 30 years’ time, Japan will be a leader, not just in elderly and healthcare tact that William talked about but in a wide variety of other fields as well.

If you’ve got a story about trying to work with the government as a startup, we’d love to hear about it. So come by disruptingjapan.com/show035 and let us know what you think. And when you drop by, you’ll find all the links and sites that William and I talked about and much, much, more in the resources section of the post. But most of all thanks for listening and thank you for letting people interested in Japanese startups know about the show.

I’m Tim Romero and thanks for listening to Disrupting Japan.