Two of the most persistent and damaging myths about Japan are that it is hard to start a company here and that it is hard to do business as a foreigner. Well, those are not complete myths. Both of those things are indeed difficult, but no harder than they are in any other country.
Today Marty Roberts explains not only how he started and rapidly grew a successful startup here in Japan, but how he got the Japanese government to pay for it.
To contain health care costs, the Japanese government is pushing doctors to prescribe more generic drugs, and that is forcing the pharmaceutical industry to change they way they do business or to go out of business. Marty saw an opportunity in this shift, and his company has quickly grown to be the leader in its space.
Marty also offers some very practical advice for anyone thinking of leaving a senior management role to start a startup.
It’s a great discussion, and I think you’ll enjoy it.
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- How pharma sales is broken in Japan
- Why work is about to get a lot harder for Japan’s Doctors
- How Japan plans on cutting medical costs in the future
- Why enTouch needed services to sell software
- How to negotiate non-compete agreements with your current employer
- Getting funding from the Japanese government
- Why you don’t want to invest in technology early
- How enTouch will survive the next phase of market distortion
- What needs to change about childcare in Japan
Links from the Founder
- Find out more about enTouch
- Friend Marty on Facebook
- Connect with him on LinkedIn
Disrupting Japan Episode 95.
Welcome to Disrupting Japan, straight talk from Japan’s most successful entrepreneurs.
I’m Tim Romero and thanks for joining me.
Work is about to get a whole lot harder for doctors in Japan. Japan’s rapidly aging population combined with a pressure to decrease costs in the National Health Insurance program means that doctors and well, all parts of Japan’s health care industry are going to have to do a lot more with a lot less.
Of course disruptive innovation in health care is rare and frankly, that’s a good thing. Most advances in health care are steady if unpredictable incremental innovation, and we’re going to be looking at one of those today. Japan’s pharmaceutical companies are under pressure not just from the drugs going off patent but the Japanese government’s plans to drastically increase the percentage of generic drugs being prescribed by Japanese doctors. This means a lot less money flowing to pharma and Japanese pharma companies are scrambling to cut cost and remain competitive.
Marty Roberts saw a startup opportunity here and he founded enTouch which provides what the industry calls remote detailing services. Now, this basically means explaining drugs to doctors online rather than face-to-face meetings but as you might expect, there’s a lot more to it than that and Marty soon discovered that it required a very specific Japanese twist to make this technology work here in Japan. Marty also provides some very sober advice for you if you are thinking of leaving a large company position to start your own startup. But you know, Marty tells this story much better than I can.
So let’s hear from our sponsor and get right to the interview.
Tim: So I’m sitting here with Marty Roberts of enTouch. A company that lets pharma reps more efficiently connect with doctors. I know that’s a really broad description, so can you explain a bit better what enTouch does?
Marty: You did a pretty good job there, Tim. EnTouch is focused on helping pharmaceutical companies communicate better with doctors so that doctors know about newest medicines, newest trends in health care so that they can treat their patients better. Pharmaceutical companies spend huge amount of money, like $20 billion a year promoting drugs to doctors in Japan and they do it with these really high price sales reps or they’re called MRs, medical reps. They’re always trying to catch the doctors in the hallway in the hospital and explaining to them the new medicine and we try to flip it around and let the doctor request online for more explanation.
Tim: You were describing it to me earlier and it sounded like this unbelievably inefficient process where these reps would just basically camp out in the hospital hoping to catch a doctor as he passes by.
Marty: Yes. And that’s exactly what it is. If you take a large pharma company in Japan, they tend to hire anywhere in the neighborhood of 1,000 or 1,500 or even 2,000 MRs to no fault of their own but they spend, I would say, the vast majority of their time waiting. The problem is that doctors don’t have time so the traditional pharma model has been we’ll just keep pushing the information and we’re going to get some time with you in the hallway for two minutes. But even when they catch the doctor, even if they get them for that two minutes, the doctor is already thinking about his next patient, he didn’t really request that information.
Tim: True. He’s distracted. It’s a horrible system for everyone.
Marty: In Japan, there’s about 29 sales people for every 100 doctors; whereas in America, if I recall, there’s about 9 sales people for every 100 doctors. In the UK, only 2 sales people, 2 MRs covering 100 doctors. The ratio of MRs to doctors in Japan is nuts.
Tim: EnTouch fundamentally is replacing that one-on-one camping out and the hospital interaction with a web-based interaction the doctor schedules in advance?
Marty: I wouldn’t use the word replacing. I would use the word augmenting.
Tim: Okay. Augmenting.
Marty: Because there’s some really large forces going on right now. You have a super aging population which is putting more and more pressure on doctors because the number of doctors isn’t rising in response to that. They have a higher case load, more chronic diseases, less time to talk with a sales person. At the same time, the pharma companies, right now generics, generics are non-branded medications, they make up about 60% of prescribing right now and the government has targeted at 80% by the year 2020.
Tim: Is that as a cost-saving measure?
Marty: As a cost-saving metric, because with the aging population, we need to save cost as a society. One way they can do that is basically encourage the prescriptions of generics and push down the branded medicines. In response to that, the pharma companies are trying to find ways to reduce their sales and marketing cost which is mainly their sales force.
Tim: Are the doctors enTouch’s customers or are they the pharma’s customers?
Marty: No. We have our own team of ex-MRs. We call the medical partners but they’re all licensed accredited MRs. I mentioned before that pharmas basically offering early retirement packages so I reached out to some recruiters I knew who helped me at my old company and said, “Hey, can you find some of these guys so I can interview them or ask them these questions?” Basically, what we ended up finding was that the people taking early retirement packages, there was two groups, there was the guys very close to retirement age anyways so they get two to three years salary to walk away. I would do it too. Those guys are awesome because they know all the doctors, they know all the secretaries, they know everyone’s schedule. And then the other group were the late 20s, early to mid-30s females who left MRs, who left to have a child. Given the way that the culture of working as a MR in Japan, it’s very difficult for those female MRs to return back full-time because they have child care considerations, et cetera. That’s really who we targeted to bring in.
Tim: Actually, listen, before we dig too much into the details of the company and the market, let’s back up a bit and talk about you a little bit. So you’ve actually got quite a bit of history in this industry. You’ve got a PhD in clinical psychology and you were president and representative director of Cegedim here in Japan. That company did market research and relationship management for pharma as well, right?
Marty: Right. It’s actually a bit of a strange story. When I was finishing my doctorate, I started working at Forest Laboratories, a pharma company, in their marketing market research division and I was quickly headhunted away by a French company called Cegedim to build their patient data business in the United States. To take patient data records and build intelligence out of it that could help pharmaceutical companies better target their drugs. It was a French company so the boss would be flying in from Paris. I lived in Brooklyn. He would be staying in Manhattan. Our office was in New Jersey so I would drive in my little car and pick him up every morning when he was in the U.S., take him to the office and drop him back up. We became really good friends, talked a lot about video games. At one point he’s just like, “What do you want to do?” I’ve been living in New York City then for 12 years and I was like, “I just want to get the hell out of New York.”
Tim: Really? I love New York City.
Marty: It’s a great place but man, after a while, I have to go try something new.
Tim: Okay. I could see that.
Marty: So he says, “What do you want to do?” I said, “I don’t know. I want to move?” He says, “Where?” I said, “I don’t know.” I gave him a list of countries. I was like, “I’ll go to France. I’ll go to Germany. I’ll go to India. I’ll go to Japan.” He was like, “Japan,” and that was basically settled.
Tim: I need someone in Japan, you’re going.
Marty: He was like, “I need someone in Japan. You’ll go.” So I sold everything and took two bags and got in the plane to come to Japan. And then at the Japan office, he wanted me to do similar things. We started running patient data business then I was working their market research company and then they also asked me to run a publishing company alongside and then after a while they asked me to also run their software company. The software was focused on sales force automation software for medical reps. But when I was overseeing both businesses, I saw the data coming in from the sales force automation software so what the MR said how many visits they had, what they talked to the doctor about, how impactful they thought that sales calls was. Then on the other side, the market research side, we had a panel of doctors who were reporting in who actually visited them, what they remember the person saying, how impactful the sales call was.
Tim: You’re seeing this massive inefficiency in the market.
Marty: It’s amazing. It was amazing. And when I started looking at the price tags of how much pharma was investing on it, I was thinking there’s got to be a better way. I started looking around at models throughout the world. We saw people doing market research on smartphones with doctors. So we basically copied it to be the first in Japan. We saw a few of different things like that. We quickly copied it in Japan. But here, looking at this opportunity, it was really unique because we know that the entire and digitalization on health care will be the end result. But humans will never be totally out of the mix. If you think about Japan, usually Japan’s 10-15-20 years behind what else is going on in the world. So I looked back at what was going on about 10 years ago in the U.S. and remote detailing was perfect. We realized that the U.S. and then Europe went through something similar to what Japan is going through today. About 15 or so years ago, the U.S. had humongous armies of MRs, of these sales reps, just ridiculous amounts. And then as the big blockbuster drugs like Lipitor and all of those huge drugs started going off of patent, they couldn’t afford the sales reps anymore. So it’s quite easy in the U.S., they just basically fired half of the sales forces and it dropped down over the next couple of years. Then you saw the same thing happening in Europe. Things were going off patent, there was more pressure on containing costs, increasing use of generics, and saw the MRs plummet.
Tim: Were they also introducing this kind of technology where it’s a Skype call and a remote presentation? Was this happening simultaneously in the U.S. with these staff cuts?
Marty: Yes. Companies are noticing that, even startup companies started playing in that space. They were just software providers trying to enable the existing MRs connect electronically online through the face. We also started looking at that in my previous company at Cegedim about bringing that software to Japan. We actually acquired one of those companies I was looking at and localized their software and started shopping it around but I quickly realized that software itself wouldn’t be enough. If you look at what’s going on in the Japanese market in changing a system, you can’t just say, “We bought this new software. Everyone use it from Thursday.”
Tim: Now, this is something I’ve seen a number of foreign software companies run smack into in Japan but in this case it seems like you were bringing in software that met the needs at a technical level because you’ve edited it. The industry itself was ripe for this change. There was general interest among the potential clients to have this software. What wasn’t enough? Why didn’t it take off in Japan?
Marty: No one would want to use it. If you’re an MR, you probably took that job because you like freedom, you like having this doctor be your customer, you drive to him or her or you’re your own manager. If you start sitting behind the computer all day, it’s quite a different job. It’s quite a different personality profile. It’s also a very different skill set. To sell face-to-face and to sell online requires greatly different skills.
Tim: Yes, I could see that.
Marty: Yes. Face-to-face, you can read the person, you can see what’s going on, you’re only probably going to interact for two minutes; whereas as an online call, if you and the doctor have set aside time, you have 25-30 minutes you’re going to talk with one another so you have to be super well-prepared. In our software that we’re using, you do not see the doctor’s face. You need to be able to guide the conversation to make sure that he or she is still paying attention to the slides, that it’s very interactive.
Tim: In the early sales attempts, did you get interest from the companies and then the sales department just kind of said, “No, we’re not doing this. It’s a non-starter here”?
Marty: I think the thing is the pharma companies needed someone to lead them out of the woods, to look at the situation a new way. Like just giving them a software —
Tim: It was just too big a step for them.
Marty: I think it was. I realized just selling software isn’t going to work. We had to enter the market as a service provider. Instead of focusing just on the IT, the IT was actually the easy part.
Tim: Actually, that makes sense based on those experiences but let’s take a quick little step back.
Tim: What made you decide to leave? You had a pretty solid expat package. What made you decide to give that up and start your own company?
Marty: It was a really great experience running Cegedim because I was exposed to lots of aspects of business I otherwise wouldn’t be. To be honest with you, I’m not particularly interested in but you have to deal with it. For instance, HR, finance, these are the things that don’t particularly interest me as a person but it was a great experience because I learned how to do it but at the same time I also saw frustrations in working in a global company. On one side of the business, I was spending as much time managing the office, managing my own people. That’s a major waste of time. When I realized that we had this market need for remote detailing and just providing software wouldn’t be enough and that we have to build an entire service platform around it, that’s something that requires an entire company.
Tim: So something you knew you couldn’t do within the structure of that company?
Marty: Yes, and especially because they were going under acquisition globally.
Tim: Okay. It makes sense why you’d want to jump out on your own at that point. But you weren’t a junior engineer with a great idea or something here. I imagine jumping ship at that point had to be handled a lot more delicately than others. You had a reputation and a market, you undoubtedly had NDAs. How did you navigate that?
Marty: While we were being acquired by a company that had 10 times more revenue than we did, they won’t need two presidents. That was pretty clearly evident. The acquiring company was great and the president of that company is a very fantastic guy and he was very kind to me. He offered me various positions but I didn’t want to do that. I wanted to leave. So actually, a friend of mine who’s a recruiter said, “No matter what you’re offered, just say ‘It feels like it might be a bit of a demotion.’” He eventually will get the idea. Anyways, we negotiated a nice way out. The non-compete is a difficult one though.
Tim: I imagine so.
Marty: Because I was asked to sign a very general non-compete. You know you’ll be working in the same space. Of course, in Japan, legally even if you compete, no one can come after you.
Tim: But still you want to make it clean.
Marty: You want to make it clean. You want to make it right. I was just very clear in laying out, “If you don’t want me to join a competitor, fine. Just please list the competitors I can’t join.” Because they can’t list a new startup I haven’t made yet. “If you don’t want me to compete against products, it’s fine. Just list your current existing products that I won’t compete with.”
Tim: Okay. You didn’t go to them and say, “This is my idea,” but you just said, “Tell me what you don’t want me to do”?
Marty: I wanted laid out what I couldn’t do because then the future is open.
Tim: I think that is a brilliant idea, to structure the non-compete as tightly as possible particularly when you’re going out to start a startup and you might have to pivot three or four times.
Marty: Yes. And also to be honest, if you’re coming with an industry background, of course (1) you want to make sure that the situation’s really good for all parties. But if you’re going to do a startup, you also can’t be in a situation where there could be any potential legal questions because of investors.
Tim: Right. How has it played out? Have they been okay with it? Once the contract’s done, everyone’s abiding by it, everyone’s happy?
Tim: When you went out to raise funds and recruit staff, you haven’t started a company before, you didn’t have a big network in Tokyo. How did you go about it?
Marty: Yes. That was tough, actually. Personally, great staff and great partners launched products in Japan, I hadn’t launched a company. That requires, as you mentioned, lots of things, navigating some of the legal paperwork all in Japanese or fund raising. I knew that the only way I could learn is by asking and networking all over the place. I think the first time you and I ever got in contact, I just cold emailed you, Tim, saying, “Hey, I’m looking for some angel fundraising. I’ve heard you’d done a good job. You know anyone?”
Tim: Really, it was just attending lots of events, sending out lots of cold emails, and that’s how you got started?
Marty: Yes. What you realize is that one person leads to a second leads to a third leads to a fourth, and that’s the whole network.
Tim: I’ve always described Tokyo as the world’s biggest small town. Certainly within the foreign community, everybody seems to be no more than one or two steps removed from everybody else.
Marty: Right. For instance, a good example was an enTouch investor too, Rob Noodleman, he was invested into my other friend, David’s company. I asked David that I was looking for someone to help me on some financial documents. David told me to ask Rob, Rob introduced me to this fantastic finance freelancer named Kimura-san. I expressed to Kimura-san, “I need money. It’s so hard to raise money.” She’s like, “The Japanese government offers this, this, and this. Do you think you qualify?” I looked at one of them and I started thinking about our entire labor model is basically hiring people who otherwise wouldn’t be employed.
Tim: Okay. Yes. The Japanese government offers a lot of packages for companies that might employ people in remote areas and rural areas.
Marty: Exactly or different age brackets. So if we’re taking people who are close to retirement age but not at retirement age, let’s be honest, no company in Japan’s going to hire that guy again. Or the female MR who has a child, let’s be honest, no one’s going to hire them.
Tim: It’s going to be tough for them.
Marty: It’s going to be very tough. So we approached the government, basically the Japan Finance Corporation and explained what we were doing. This is our business plan. This is the problem we’re solving. This is how we’re doing it with a unique labor force. People who otherwise won’t be tax payers, we’ll make them tax payers. Abe-san said women will revitalize Japan, we’re ready to do it.
Tim: You seem to be checking all the right boxes.
Marty: Yes. That’s how we initially got funded.
Tim: Really, so many people I’ve spoken to have applied for these government programs and they’ve mostly told me they’re more trouble than they’re worth. They got a couple thousand dollars out of them but you got substantive financing from these programs?
Marty: Yes. We were offered ni sen man (二千万).
Tim: Okay. So around $200,000.
Marty: About $200,000, eight-year non-secured loan, not bad.
Marty: And then what you can do is besides just the network effect, there’s also then a good influence effect. When I then started pitching angels around the time when I first emailed you, I already had that money in so that people are going to be like, “Who’s your investor?” And I’d be like, “Japan. The government of Japan.” So that helped.
Tim: I think more importantly, you also had clients who had already expressed interest and had validated this product.
Marty: Right. There’s no point raising money to make something that no one wants.
Tim: Well, a lot of people do.
Marty: Our first strategy was find out if the idea will fly. If customers, the ones who make the decisions, basically pharmaceutical companies, presidents, VPs, bucho-level, if these people, would they buy? And the response is really positive. Of course there was a lot of, “We don’t know how to do it.” To be honest, our response is neither do we.
Tim: You can’t say that.
Marty: But we’ll figure it out. So we definitely validated the idea and then once we started raising the money, we took that to create the most minimum viable product because our main concern wasn’t that our idea was wrong. My concern was our timing was wrong. Maybe remote detailing is a perfect idea that would solve the problems of doctors and pharmaceutical companies and the problem with them and out-of-work MRs but maybe it won’t work for another two years. So if I take my half million dollars of financing and pour it into all this IT systems, I’m gone.
Tim: You’ll burn through that really quick.
Marty: We basically started with a very off the shelf, using different SAS-based systems that we could put together under an enTouch name so we could be flexible so that when we receive requests from clients, we could turn on and off features, we could change things, we could find out what people wanted. And then after being in business now for a year plus, we’ve realized what we need. Now, it’s more of the time to actually rebuild.
Tim: EnTouch isn’t the first company to think of this. Other companies around the world have launched similar products like you were talking about. How do you defend this market long-term? After you do all the hard work of validating the process and proving that doctors like it and it’s simple to train reps to use this, how do you prevent other companies from coming in and selling this system to pharma then just get their own reps using it?
Marty: A couple of things. One, it’s not easy for a tech company to just come in and try to replicate it because you’ll remember, we’re entering as a service company that’s morphing over time into a tech company rather than vice versa. You have to be able to understand the market and set up the whole services which in and of itself is quite difficult. Also, we came with an advantage of having all of the pharma customers were customers with my previous company. So we had a lot of sales advantage to move in first. Beyond that, of course, there’s high switching cost to develop a program together with a pharmaceutical company. First, there’s a lot of internal consensus building that needs to be done at the customer level then it’s going to take two or three months to work together to get the project.
Tim: I think that’s true with any company coming into the market. But are there unique aspects of the way pharmaceuticals are sold in Japan that require a unique approach?
Marty: Great question, Tim. There’s actually almost two parts to that. So you have domestic competition and then foreign competition entering the market. The foreign competition is actually good because we can always use overseas examples coming from them and say, “Why don’t we have this in Japan” and use their success stories as our marketing material.
Tim: Sure. Proves the concept.
Marty: Right, suits the concept. And that really, especially in the beginning when we didn’t have customers, when we didn’t have a team, when it was just basically me and a PowerPoint, that helped a lot. At the end of the day, when they do want to enter Japan, Japan is one opaque market. Hundred times it’s easier to buy your way in than try to force your way in. I don’t mind having the foreign competition. The local competition, while there’s other providers in the market providing online education to doctors, they’re doing it differently, they’re doing just digital marketing, like watch this video or read this article. They’re not positioning themselves as providing high informational content discussion with an expert.
Tim: It’s not consultative?
Marty: It’s not consultative. The way I think about it is if you’re a doctor, when you’re making a prescribing decision, that’s really important. Take something even less important. Let’s say I want to buy a really nice car. I want to buy a Ferrari. I’m going to look at all the videos I can. I’m going to read everything I can online but I’m going to go talk to someone at the dealership who can answer all of my questions before I decide to open my checkbook. I think it’s the same thing for a doctor. That’s the way we’re trying to position ourselves.
But you raised another point of what about internal competitors. By that, I mean a pharmaceutical company says, “We want to do this but we want to do this ourselves.” That really is competitor is the wrong word, they’re also our customers, right? But that really is the biggest threat to the enTouch model because the enTouch model is based upon syndication. For instance, we do this project for company A that gives us learnings that we can apply to company B that gives us data on physician interactions we can apply to company C, and then we take company C and apply it to company A, and we just make the whole environment better for everyone. Whereas, if the company is trying to do it siloed, it’s tough. They always have to reinvent the wheel. They have to try to hire the right people who could set up a program like this. A lot of times what they do, in fact right before I started, the IT director of a major pharmaceutical company told me what they were doing. At the time, he didn’t know about enTouch and he was like, “We have these reps with just equipment, talked online with doctors. The proof of concept is great but it’s not economically feasible. Now, I have the same high priced MR but now sitting in an office, less satisfied, have to pay their overhead, have to pay training, have to do this IT investment, why can’t it be a syndicated service?”
Tim: Let me get back to you on that.
Marty: Give me a couple more months, I’ll come back to you on that and that one.
Tim: You think it will always make more economic sense for them to outsource that function?
Marty: Yes. Especially because of a couple of difficulties for pharma to face. The first one is this macroeconomic thing that I mentioned before. Increasing generics means that the pharma companies are trying to decrease their number of medical reps. They need flexibility. We might need an information campaign for the next 6 to 12 months but I don’t want to hire 10 new people to do it. So it makes sense to outsource. Traditionally, you would outsource to a contract sales organization where they carry your meishi and they go pretend that they’re you. What it doesn’t solve the major problem is how you contact with the doctor. If you hire someone from another company to run around for 12 hours a day to try to catch them in the hallways, they’re not going to be any more successful than the guys you already hired. Our whole approach is different, of course, where the doctor selects the time.
Tim: If the pharma companies ever decided to take this in-house, you could just shift your business model to a software business.
Marty: Yes. There’s different ways we can do it. In fact, we have to some extent done that with different clients. We had one who had some internal capabilities already.
Tim: Makes sense. You’ve got to be flexible. Is this something that can work outside Japan? Do you have global ambitions?
Marty: To be honest, we could do but what I find more compelling is a vertical Japan strategy whereas right now we’re a B2B business helping pharmaceutical companies get information to doctors. It’s good, there’s a market there and we have paying customers and it’s great, that’s what we need to start. But what I can envision is helping start connecting doctors to doctors. So doctors want consultation with another doctor or doctors need to understand people they can refer to but they want to connect with that person to make sure that the other doctor won’t steal their patients basically. If you look at tele-health in Japan, it’s changing. They’re recently reviewing the laws on it. Given this increasing age population, it will be very difficult to treat all of the patients in our traditional way.
Tim: Do you think sometime soon we’re going to see people being able to use enTouch to consult with a doctor?
Marty: That’s my goal.
Tim: There’s some big legal hurdles that need to be changed before that can happen.
Marty: Exactly. We can’t promise it but it is my dream if we’ve timed it right. If we can get doctors first familiar with the platform, with our brand, with what we’re providing to them, they see value through their discussions with pharmaceutical companies, then discussions amongst themselves which if you think about it, having a peer-to-peer network is the way to really build confidence and then help be the platform to bring them to patients. That would be my —
Tim: Sure. If you manage to build the social network for doctors, even if you can’t monetize that right away, eventually that’s going to be incredibly valuable.
Marty: Yes. I have to be honest here. It’s still a dream. There’s so many unknowns.
Tim: Like I said, there’s a lot of laws that need to be changed but I think you’re right. There is tremendous social and economic pressure to get those laws changed and technology is advancing so fast that a lot of doctors’ consultations could be done over Skype or similar products.
Tim: But even in smaller steps, we’ve been talking about pharma but it seems like this would be an ideal system for medical devices, for all kinds of high information sales that are made to doctors and hospitals.
Marty: Yes. In fact our customer was a medical device company. We can definitely apply it to medical device and we actually have a few more medical device manufacturers in our pipeline. You could also potentially go across industries, things like in the financial sector where you really do need to have a personal conversation.
Tim: Even before the laws are changed, you’re building up a tremendously valuable set of data, thousands upon thousands of interactions with doctors and one is likely to trigger a buying decision which hospitals and which areas are most interested in what kind of drugs, in what kind of procedures, in what kind of devices, seems very valuable and something that only you would have.
Marty: Yes, absolutely. What we’re doing is we’re collecting an enormous amount of data on each interaction. We know when does the doctor prefer to connect online, we know what topics is that specific doctor interested in, we know where is that doctor located within the hierarchy of the organization in the buying process in the hospital or institution, we’re building predictive algorithms so that we can eventually be — when we have a new client saying that we want to market this blood pressure drug, we already know which doctors are most responsive to that messaging. We already know what time of the day that doctor should be contacted. We already know what profile the person should sell to him. So yes, we totally base it on the data which is not surprising given that half of the core team were all coming from pharmaceutical data industry.
Tim: Excellent. Let’s talk a bit about Japan in general and starting a company here. You went from an expat package to starting your own startup which business culture-wise is about as big as jump as you can do. Looking back on the past two years, what was the biggest surprise?
Marty: One really pleasant thing I’ve realized, I’m married. I have two kids. They’re still young, they’re’ 6 and 4 right now so they were much younger when I started. I’ve always been a bit if a workaholic.
Tim: I know that feeling.
Marty: I’m always working crazy hours. But the nice thing about starting my own company was I was free from the clock. There was no almost distinction between life and work. I don’t know if this makes sense.
Tim: It does.
Marty: Instead of doing 9:00 to 5:00 or like, “Yes, I’ll go drop my kid off at school but then I need to stop at a coffee shop because I need to work on this and I promised I’ll get this email to this customer by then.”
Tim: I know exactly what you mean. It’s not really work-life balance exactly. It’s like this work-life flow.
Marty: Exactly, yes.
Tim: Where somehow you’re getting everything done in both your work life and your personal life, you’ve absolutely no other time at all but somehow it doesn’t bother you.
Marty: Right, yes. That’s been very good.
Tim: What’s the best advice you could give to other foreigners who are thinking of doing the same thing, of leaving their well-paying job to follow their dream and start a startup?
Marty: They should do it.
Tim: Just do it?
Tim: It sounds rather impulsive.
Marty: The one thing though, of course, plan. It depends a lot on where you are in your life. If you’re a younger engineer, just quit tomorrow. But if you’re older, if you have kids, you have to plan. Especially if you’re coming from a higher level or executive position at a global firm, you got different reason and you can’t just walk away. You have to follow through on your responsibilities to that company, that’s just the right thing to do. You need to prepare a lot to do that.
Tim: How long was your planning phase? From the time you had the itch to leave the company and start your own thing until the time you actually did leave the company and start your own thing, how many months did that take?
Marty: A year-and-a-half.
Tim: A year-and-a-half. Okay. That’s some serious planning. I’ve ha whole companies that didn’t last a year and a half.
Marty: Part of it though, the acquisition that was going to happen with the other company was announced it might have been a year in advance.
Tim: No, but I think that’s important for people to understand. I find it surprising but I’ve never done that and I think it might be encouraging for people who are looking at their position and saying, “God, I really want to do this startup but I’ve got these responsibilities,” to understand that hey, it might take you a year, a year-and-a-half, to work your way out and that’s just what it takes.
Marty: Yes. Because you have a lot of responsibility and it takes time, right?
Marty: Especially if you’re going to be the founder of the startup, then there’s no backup. So you have to make sure that you’ve financially thought it through because you know it’s going to take twice as long as you initially think it will. It requires a lot of planning.
Tim: Before we wrap up, I want to ask you what I call my magic wand question and that is if I gave you a magic wand, I told you you could change one thing about Japan, anything at all, the education system, the way people think about risk, anything to make things better for startups here, what would you change?
Marty: To be honest, the one thing I would want to change is the child care system.
Tim: Okay. How so?
Marty: When I started enTouch, I was hiring an awful lot of late 20s, 30s female MRs who had young kids. Of course we needed them to work from home environment so we needed to basically find a way how can we support them. How can the kids be taken care of while the mother works for three hours? I researched it for about a month, about all of the different babysitting services in Japan, all of the different community services, how much everything cost, what the waiting list were like, and it’s a nightmare.
Tim: I guess even if these women are working from home, they can’t have their kids screaming in the background.
Marty: Yes, exactly. It took us a long time and I ended up creating a childcare policy for enTouch which is actually a really attractive thing for a lot of the moms. We finally, about after a month, figured out ways that we could support these really talented women so that they could contribute to enTouch. I really think somewhere, I’m itching to try to solve that problem on a larger scale.
Tim: If you as a little underfunded startup can do this, large companies can, what kind of things did you do? Did you just give them an allowance for daycare?
Marty: Of course we ended up with an allowance and also support and finding the best childcare match for them. We did everything from looking at existing government programs or existing neighborhood areas for the child to be kept but then also trying to help them figure out how to transport the child back and forth. We explored all different ways and what we ended up doing is basically helping each female employee figure out what would work best for her. It was a lot of work but it was really interesting to do and it really makes recruiting these talented women much easier.
Tim: Why do you think most companies don’t do that? It is a lot of work but it’s not crazy amounts of work.
Marty: I don’t know. Your greatest resource is your employees or the people contributing to the business, so you need to focus on them.
Tim: That particular demographic, young mothers in Japan is one of the most underutilized resources this country has.
Marty: Absolutely. Ridiculously so, especially because these people are delaying having children and women are obtaining higher levels of education and gaining some work experience and then they’re having a child and then they drop out of the workforce. You just took half of your best and brightest and totally underutilized. After hopefully everything goes great with enTouch, we’re a big success, that’s what I want to do next. It’s look into that problem. If I had a magic wand then fix it now but if I don’t have a magic wand, we’ll create a new startup to fix that.
Tim: Fix it the hard way.
Tim: Excellent, Marty. Thanks so much for sitting down with me.
Marty: Sure. Thanks so much, Tim.
Tim: That would be good.
And we’re back. It’s interesting how many founders we talk to point out that Japan tends to adopt innovative technology three to five years behind the U.S. or in pharmas’ case, that seems to have been delayed to 10 or 15 years but the point still stands. Japanese industry does tend to wait until a technology has proven itself overseas; however, as Marty discovered, you can’t just bring the technology to Japan and expect it to sell. It will often have to be packaged differently, positioned differently, or in enTouch’s case, bundled with a set of services that are unneeded in the U.S. but which Japanese customers demand. And another point, it’s a subtle one that we kind of glossed over during the interview. We need to look at why there is so much resistance to remote detailing among the medical reps. We, technologist tend to dismiss this kind of opposition as an unwillingness to learn new technologies or as an irrational resistance to change. In this case however, and in fact in most cases, it’s a perfectly rational resistance to change. So in this case, the skills and the personality required to sell face-to-face are very different from the skills and personality required to sell online. The reps knew this. They knew that they would be less effective with this new technology. Marty however, rather than dismissing the reps’ concerns built his company around them and hired and trained people who were skilled in delivering information with these new tools. As enTouch grows and the industry becomes more accustomed to these tools, he might shift away from that model and focus on the software and the data but the strategy has enabled him to quickly sign up new clients and become the clear leader in this market.
If you’d like to talk to me or Marty, we’d love to hear from you. So come by disruptingjapan.com/show095. And when you come to the site, you’ll find all the links and notes that Marty and I talked about and much, much more in the resources section of the post. And by the way, please connect with Disrupting Japan on Twitter, Facebook, or even drop by our LinkedIn group. I’d love to hear from you and we have a lot more information about Japanese startups and innovation on the social site and our main Disrupting Japan site as well. 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.
Favorite episode in a while. Marty’s a cool cat.
Thanks for listening. I thought it was a pretty good one as well. Not too many people in his position would be willing to roll the dice like Marty did.