Cloud visionaries promised us unlimited scalability, but they greatly underestimated the amount of data we would start producing.

Today we sit down with Michael Tso, the co-founder of Cloudian, and he explains why some systems are just too big for the cloud, and how the industry is adapting.  Mike also shares his advice for selling via channel partners, and we talk about the competitive advantages and disadvantages of being a Japanese startup on the global stage.

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

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Show Notes

  • The real reason we are “drowning in data”
  • The missing link in connecting cloud and local storage
  • What kind of apps really need 100’s of petabytes of storage
  • How to pivot successfully in Japan, and why it’s so hard to do so
  • Using Japanese culture as a competitive advantage
  • The most important difference between Japan and US startup culture
  • Why US companies hesitate to buy from Japanese software companies
  • How to expand globally using channel partners and systems integrators
  • What everyone gets wrong about failure

Links from the Founder

 

Transcript

Welcome to Disrupting Japan, straight talk from Japan’s most successful entrepreneurs.

I’m Tim Romero and thanks for joining me.

As a society, as a species, we have way too much data on our hands. A decade ago, our data got too big for our local systems and so we moved it into the cloud. And now, well, our data has gotten too big for the cloud and we’re moving it back on premises. 

Now, I promise this will make a lot more sense in a few minutes, when we sit down with Michael Tso, co-founder of Cloudian.

Cloudian makes massive scale storage systems, massive as an hundreds of petabytes of storage that can run on site and seamlessly integrate with Cloud Storage. Cloudian is also interesting, because they’re one of only a handful of Japanese startups that have really succeeded in the US and European markets. And Mike and I talk a lot about how they made that happen. 

We talk about the challenges and the necessity of pivoting in a Japanese startup, how Cloudian’s Japanese identity and culture both helped them and hurt them in their global expansion. And Mike gives some really great advice about how to sell software through channel partners and what you should really expect from those relationships. 

But you know, Mike tells that story much better than I can. So let’s get right to the interview. 

 

Interview 

Tim: I’m sitting here with Michael Tso, the co-founder of Cloudian, which provides object storage for the enterprise. And Mike, thanks for sitting down with us.

Mike Tso: Yes, happy to be here, Tim. 

Tim: Now, object storage for the enterprise is something that gets talked about a lot. But what does that mean exactly?

Mike: Yeah. So I think I need to just rewind a little bit and just kind of talk about why are we drowning in data? Why is there so much data? Well, because actually, if you think about the process of innovation and the process of invention, it’s data-based, right? You need to have data to know where you’re at, and you can draw inspiration from analyzing your data. And then you go try some invention, and then you have to measure the outcome. And then you go back and kind of either fix it or improve it. So it’s a continuous process.

Tim: But, I mean, if you look at kind of like human history, we humans will fill up as much data, well, we’ve always had data, it’s a question of how much we can store. And the easier it is to store, the more of this information we will. So it used to have to be engraving on cuneiform, clay tablets and creating vellum now it’s just, oh, we’ll automatically just save everything. 

Mike: Well, I think about this a lot, right? It starts with how easy it is to create the data. So if you have to chisel away on a rock, you’re not going to create a lot of data. But these days, we have sensors with cameras, when people think about data, people think about, oh, how many emails am I sending? How many pictures are you taking? But actually all these are very small in the grand scheme of things. What is generating what the big data that we’re seeing these days are mostly machines, because we have automated data curation, we’ve automated data movement, we’ve automated data storage. So, the whole thing is becoming very easy. And now we have AI, which has just a unsatisfiable appetite for more data, because the more data you have, the better your AI becomes. 

Tim: We’ve got this perfect circle. So we’ve got machines generating the data, the machines storing the data and the machines analyzing the data.

Mike: That’s right. And thankfully, humans are still needed in a process to make sure everything works. But exactly, the more value you’re able to get out of your data, the more people are keeping all the data, so we’re not keeping it just because it doesn’t have value. We’re keeping it because people are really generating this data. So actually, in a week from now, I’m going to be speaking at a conference called the High-Level Forum at Grenoble, France, where the theme is reinventing industry. And of course, I am there to speak about what I think is at the center of all this, what’s underneath all the reinvention is the amount of data that people’s collecting so that they can invent better. 

So anyway, so coming back to the object storage, when you have that much data to manage, you really have two or three kinds of sets of problems. So data that’s growing about 20-40% a year, that’s growing 5 times to 10 times faster than the IT staff that we have in the world. So you need a solution that can manage sort of an infinite amount of data with the same team, right? And that’s one of the things that object storage allows you to do. And then secondly, something like 80% of all new applications are born in the cloud. So, all these application expect cloud-native environments, and that includes object storage, because every cloud is using object storage as its way of storing data. And third is security.

We’re seeing 700% increase in attacks from ransomware. Building strong firewalls are really no longer sufficient. You have attackers that only needed see once, and once they come in, you have so much data that they’re going to be kind of going after it. So, the data storage, the data management systems need to be self-protecting. You cannot rely on building bigger walls.

Tim: To frame what Cloudian does. So, Amazon, Google, Microsoft, they’re all talking about object storage.

Mike:  90% of data on Amazon, Google, Microsoft is stored in object storage.

Tim: What does Cloudian add to this?

Mike: We develop object storage software that allows you to have the same kind of technology that’s being used in the cloud, but you’re able to deploy this in your own data center or in somewhere else where your data cannot move into the cloud, either for cost reasons, or performance reasons, or privacy reasons, or legal reasons. So really, the way to think about what we do is that we provide an extension of the cloud and bring the cloud to where your data is. We bring all the flexibility, all the ease of management, all the stuff that the cloud offers, but we bring it to where you happen to have the data.

Tim: Okay. So, if I’m a programmer sitting at one of these companies, and I’m accessing data, it all looks like I’m just accessing data in the cloud. I don’t necessarily know if it’s on-site or off-site or, okay.

Mike: Exactly. The idea is that your data should be resident wherever it’s most efficient for you. Our software makes it looks like it’s a cloud-native environment.

Tim: Awesome. You know, Mike, we’ve known each other for a long time, and I’ve been trying to get you on the show for a while, because you and Cloudian are one of the few real success stories of a Japanese startup that’s succeeding in the US market. I want to get into that, but first, I’m still trying to wrap my head around the scale of this data. So, you guys are talking about applications in the tens of petabytes.

Mike: It’s actually hundreds now.

Tim: Or hundreds of petabytes. 

Mike: Yeah.

Tim: And so when I was doing research, trying to understand what you do in this industry, I’m trying to wrap my head around these numbers. And it just gets silly, you know, you’re talking about, well, it’s millions of songs or hundreds of thousands of videos. The Library of Congress is about 20 petabytes of information, and like, my brain just can’t wrap around that. So really, what kinds of things require tens of petabytes of storage?

Mike: I can tell you quite a lot of examples. So one of our customer that has hundreds of petabytes of storage, they’re a major media company, and we archive for them all of the media that they have ever produced from the beginning of time. People tend to think about movies or TV shows. They think about, okay, it’s going to fit on a DVD, right? Okay, it’s true, that’s the finished product. But actually, all the clips that it took to make that, all the takes that they have, they actually keep all of it, because a lot of times they go back and they do a remake or they do a recap, or they make the movie for a bigger screen or for lower resolution for mobile devices. So there’s lots of different versions of this. And with 4k here and 8k coming, you’re going back and going to the source files, and they are making higher resolution versions of the same movies or the same shows. 

So, before they put us in, they used to keep that library on a bunch of tapes, and they have to tape libraries—one that they use actively, one that they live in like a mountain that they never touch. When you’re using tape, you know, when I want something I think it’s on that tape, tape number whatever, I send like a truck to go and get it. 

Tim: You have to go into the mountain vault. 

Mike: Yeah, whatever. And it comes back in same day, maybe a day or two later. And it may or may not contain what you need. So it’s a very non-interactive process, right? So, once they put our system in, they kind of realize that, oh, actually I can search on all the meta data comes. I can say, “Give me all the shows that has this actor from this time to this time,” and it’s all going to come up in real time. I don’t have to go sort through by the tape libraries or whatever. So that completely change people’s lives. Now, they want to use our system to keep all of the workflow they’re using to produce.

Tim: Yeah. It’s not just providing backup storage or an alternative to the cloud. It’s just changing the way people think about archives. 

Mike: Some of these media companies, their media is their IP. So they will never put this in a publicly shared — so anyway, so that is one example. Another example that I can give you is United States military. All four branches share the system called milCloud 2.0. We provide the underlying storage for that. That’s a obvious case, where you want these on a highly secure system, you don’t want any external people to be on your system, and you have to make sure that data is really protected. Not only do you have your usual hackers going after this, enemy states are going to be attacking you. Another one I can think of is one of the largest automakers in a world, 24/7, all the robots and machines in their factories are producing logs, logs on everything, right? And then they have their own in-house AI program that they run on our system to sort of detect which machines are coming out of alignment, which machines need to have certain parts serviced. Now it’s all kind of fully automated.

Tim: And for applications like that, do they keep that information long term so they can go back and say, “Three years ago, we saw this behavior”?

Mike: It really depends on the use case. I don’t want to comment on a specific customer, but I can tell you that there are customers that are storing their transaction logs and logs from their firewalls for something like 10 years. The reason for that is actually pretty straightforward. You know, of course, in case you have some customer complaints, you have audits, all that stuff, but that’s usually over in maybe two or three years. But the reason why they keep it that long is for basic security reasons. Because if you were ever attacked, usually that initial breach happened months ago, maybe even years ago, something got planted. And it takes a long time for that kind of virus and that kind of malware to work its magic, right, to work its way through and to do all the damage.

Tim: So some of these hacks are — I mean, I was always under the impression that these hacks were something that, you know, you hear a lot about zero day exploits and a lot of very time-sensitive information, but there are hacks that are staged over the course of months or even years?

Mike: Absolutely. I mean, the military, and so the security area where — so the factory self-destructed by something that was planted months or years ago.

Tim: Yeah, that makes sense. This is the high value targets. So yeah, it makes sense you want to go back years and figure out what caused this.

Mike: Yeah. Usually, these attacks these days are so sophisticated that it’s not a single breach, right? It’s not one thing, it’s one thing, another thing, another thing, and it’s important that people are able to track back to what happened.

Tim: I mean, I guess we really are in this age where nothing will ever really be forgotten. We’ll always have a record of everything. 

Mike: That’s right. If you don’t want something to be public, do not put it in anything digital, any sort of digital form.

Tim: Go back to the cuneiform clay tablets. 

Mike: Yeah, clay tablets.

Tim: Let’s step back a bit. So, you founded Cloudian with Hiroshi Ohta back in 2011, right?

Mike: Correct, yeah. 

Tim: But you had to do kind of a painful pivot at one point, because you started out with like a mobile messaging platform.

Mike: Yeah. That was actually the previous company. So, we had started another company back in 2001. 2011 was already that we were completing that pivot, right, because we had evolved into a cloud storage company. 

Tim: That’s a pretty radical shift. Is that something that just happened over time or that you and Hiroshi got together and said, “Look, this is the future we need to change directions,” how did it happen?

Mike: It’s one of these kind of necessity is always the mother of all inventions, right? So, what happened to us was the previous company was doing very, very well, selling large scale mobile messaging systems to top telcos in a world like Docomo and Vodafone and, and we were on a path to our IPO in 2009. We were already starting to work with bankers, auditors, and the entire process. And then the financial crisis came and the world was in a prolonged recession. And our sector was very heavily impacted, because we were selling very large scale software systems that were very large scale CapEx purchases. And there was a couple years where most companies stopped really spending in CapEx. So, we had to make a decision—do we continue to innovate in a mobile messaging area, or do we want to come out of this recession and build something bigger, something better? It was during that process that we sort of came to the conclusion that the center of gravity was kind of moving with the data, data was starting to accumulate in the cloud, and data was starting to accumulate in lots of other places where it’s being created. And we were already seeing this trend, because our messaging systems were storing billions and billions and billions of messages for people. That was why we made that pivot because it was a very obvious one. 

Tim: Well, I don’t know, I mean, it’s one of the things that was like 10 years later, looking back, it was obviously the right call. But like, in the moment, that’s got to be, I mean, and Japanese startups, it is notoriously challenging to pivot. 

Mike: Yeah. 

Tim: So in the moment, that had to be incredibly difficult.

Mike: Yeah. And I don’t want to sugarcoat it, right? I mean, it certainly wasn’t an easy decision. Good people left the company. And it wasn’t a moment, right, it took months of research and careful planning and thinking and throwing away literally pages and pages of good ideas. But we said, “Look, the choices are we either stop doing what we’re doing and go start a new company, or go work for another company, or we keep going and keep going and doing this pivot.” It’s very messy, it’s very difficult, as you pointed out. It’s a lot easier to start a new company. But then, what we said is, well, anytime we start a new company, what do you want? What do you need? Well, you need a good team. You need the right talent. You need a good idea. And you need to have some customers. And, you know, here we are kind of saying, “Well, you know, there’s absolutely nothing wrong with the vehicle that we have that we’re sitting right now.”

Tim: So yeah, I mean, in many ways, it would have been easier just to hit the reset button and start with just take the team you want to take, get new investors, but sticking with it, especially in Japan, I think probably came with advantages as well.

Mike: I think in the long run, it definitely did. In the short term, I tell you, the biggest reason why it drove the decision to go through pivoting, you know, I felt that our highest priority during that downturn was continuous support to our customers, because they all had a choice of buying from a bigger company when they bought from us, but they chose to go with us. So, we really cannot leave them hanging. Because if we just push the big red reset button, then what are they going to do? Because they are using us to run their most mission critical, like all the mobile messaging, people cannot send a text anymore if our stuff stops working, right? That’s a big deal. So, we will continue to support all of the current users and we will use additional time and resources that we have to work on a new product while never dropping the ball. Whereas the typical startup thing to do is, well, okay, we’re planning to go IPO. The IPO did not work out so everybody disband and we all go start a new company. And it’s very easy, very clean, but the problem is someone else is left paying and it’s your customers.

Tim: Yeah. And actually, I think this is one of the most significant differences between the startup culture in the US versus the startup culture in Japan. 

Mike: Yeah. 

Tim: And before we get into that, I just have to ask you, post pivot, did those customers you continued to support, did they form your initial base of enterprise customers for the new Cloudian product?

Mike: Not all of them, but I think they all really appreciated the fact that we did the right thing by them. And we actually still support some of them today. I mean, after 10 years we still have some, we’re still writing some of these machine systems, because people are still using them, right? So I think they really appreciated us. For example, NTT, they were one of our very first customers and probably our first major customer. And the fact that we did not leave NTT Docomo hanging, we told them everything that was going on in our company, I think they appreciated that honesty, and they knew that we were a company that they are able to count on.

Tim: And I think this difference in culture is, I mean, it’s different but in a way, I think it’s one of the strengths of the Japanese startup ecosystem. 

Mike: It is, it is.

Tim: Both engineers and CEOs do feel an obligation to their customers, but it’s returned like back in 2000, two bubbles ago. 

Mike: Yeah, yeah.

Tim: You know, 2000 was a rough time to be running an e-commerce company. Foreign-run companies were canceling contracts on me, even when I was saying, “Look, I’ll show you my books, we’ve got the cast, we can write it out.” And I went to my Japanese customers and said, “Look, we’re having a tough time.” And it’s, “We can give you a bit extra work. You’ve always fulfilled your obligations.” It’s interesting how it is viewed differently.

Mike: No, exactly right. I think Silicon Valley has a bit of a culture of boom or bust, right? I think in Asian culture, especially Japanese culture, there’s really a value to loyalty and to doing one’s best and really finding ways. So when we had difficulties during 2008 and 2009, I went and visited our major customers, and I was honest with them, right, it was terrible news. It’s like, “Look, depression is hurting everybody, and we are having to let some people go. And in some cases, we need you to pay more, we need you to pay more for your support contract, or we need you to change the way that we’re doing things differently so that we can both be more efficient.” I mean, they’re very, very hard conversations. But what I learned during that time is that there’s a lot of value to be completely honest to your customers, and to your investors, and to your own employees. Even though the news that you have to deliver is bad, the news that they’re imagining is probably even worse. So if you told them how bad the situation is, in most cases, what I found out they go, “Okay, that’s not so bad, that’s something that we can probably work with,” because what they were imagining is much worse, right? 

Tim: Yeah, yeah.

Mike: Yes. And it really is, and that has now become one of our company values, honesty. I still train all of our new hires, and all of our investors are required to attend our Cloudian culture training. And the value on honesty I spend a lot of time on because it’s somehow kind of obvious, because no CEO is going to stand up there and say, “Hey, I want you guys not to be honest.” Of course, they’re going to say you got to be honest. An what I tell people is, I want you to understand how honest we expect you to be. We just want you to go out there. If you think that our product cannot do that, just tell them. Because if they decide not to go forward with Cloudian because of that answer, you’ve saved yourself several months of dancing around. If you told them anything else, they’re going to expect that to work, and then how are you going to deal with that?

Tim: Yeah. But at some point, you decided to move to San Francisco and make Cloudian a US company. What drove that decision?

Mike: In terms of market sizing and investor base, we knew Cloudian was an enterprise company, and to build an enterprise company and to build enterprise sales teams require a lot of money. So, you need to go to a place with a bigger investor base and also with a bigger market you’re able to sell into. So, we were actually quite okay either way. The first major investment we took in was from Intel Capital, and Intel was actually okay for staying kind of one way or the other, Japanese company or US company. But overall, there are a lot of Japanese investors that would invest in US companies, but there are very few US companies that would invest in Japanese companies.

Tim: It certainly makes sense from a fundraising investing point of view. But even in presenting yourself to the market.

Mike: Yeah. So, that is another good point. Similar to the to the investor story, high tech software company, the Japanese enterprise are quite open to buying from US companies. There’s very few examples of US enterprise that will buy from a Japanese high tech software company. 

Tim: Why is that? 

Mike: I don’t know. I think there is a whole perception. I mean, you need enough momentum. And so if, I mean like, for example, Japan has a strong brand for machinery like hardware, audio device or be it a car or anything, right?

Tim: Robotic startups tell me that Japanese get moved to the front of the line.

Mike: Exactly, exactly. Because Japan is associated with high quality strong innovation but in the hardware space. And US, especially the valley, has been well known for large scale software systems. And in all honesty, when we started Cloudian, our entire engineering team, most of the engineers were based in the valley. So for us, switching kind of headquarters to the US was just more as a paper step.

Tim: Well, it certainly sounds like you’ve maintained a lot of that Japanese attitude and the Japanese culture internally.

Mike: There’s a lot of things to like about the Japanese culture.

Tim: Is that something you think might change or you might eventually lean into, because some of these things like the Japanese kind of fanatical support and devotion to the customers, I mean, this is very attractive market.

Mike: Exactly. We are a global company, so I sort of refuse to accept that the centers of excellence have to be at headquarters. Even though we’re not a big company, headcount-wise, from very early on we looked at different places to put our leadership. From day one, we ran our support team out of Tokyo, and to this day, our head of support is still based in Tokyo. I mean, I agree with you, there is no place that is better than Japan. And so we wanted to replicate that, the culture, the processes, the approach.

Tim: Yeah. But let me ask a little bit about the difference in the go-to market in Japan and the US. For enterprise software, in Japan certainly before the SaaS era, you almost had to go through systems integrators. Is that the path you took or did you kind of go direct in Japan?

Mike: No. We still have to do that. The business ecosystem is very much the same. Cloudian as a company is 100% channel-partner-focused company. Over 90% of our revenue are done through a partner. So, you know, there are a few exceptions where customer says, “No, I just want a direct contract with you.” Okay, fine. In that case, we will take it. But in almost all cases, we’re going through a partner. So that’s not only in Japan, but it’s everywhere in the world. 

Tim: All right. 

Mike: Yeah. 

Tim: Okay, that’s interesting.

Mike: Really, it’s a channel, it’s this model, right? Because we’re still selling a pretty high pet product. It’s not like a paperclip or something. It’s something that’s a fairly involved sales cycle. So, a lot of the deals that are brought to us by these partners, they know, “Oh, we need big amount of storage or a lot of data management,” whatever, “Oh, I need to call Cloudian.” And we will come in and help them. And over time, the partner knows to do more and more, so they can qualify the deal, they can get further along the way, they can run some kind of testings and then a demo without us. But initially, we’re doing a lot of the work and over time, they’re doing more and more of the work.

Tim: So what would be your best advice for a startup founder who wants to sell through systems integrators or wants to sell through channel partners? What’s your best advice on making those deals happen?

Mike: My best advice is that you really first got to be able to make the deals repeatable by yourself. So the first thing is you have to be able to sell your product. And we didn’t really engage in a lot of channels until we were a year or two into us being able to repeat the cycle. And what that means is you need to look at every step along the way that’s kind of manual or that require some special expertise. And you need to really automate that. So how to make the product easily testable, easily downloadable, how to make the contracts very easy for people to pick through, no lengthy — kind of go through the process. Take all of the friction out of the system, because at the end of the day, these partners, they’re selling 100 other products, maybe 500 other products, so you don’t want yours to be harder to sell. You want yours to be super easy. So you need to give them all the stuff. So when you make your sales and they’re repeatable, you shall have also figured out how to tell this is a customer for you, how to tell this is the right project for you. So, you need all the data sheets, all the training, all those things, and the more you can go in there and start with that stuff, the more momentum you will get. Because if you’re a nice startup, people will probably give you the benefit of the doubt. “Okay, that’s pretty cool so what why don’t we try setting you?” But if you don’t make some activity happen in a week, a month, three months, they get kind of tired. They go, “Gee, maybe it’s not going to happen.”

Tim: That’s where I’ve seen so many startups fall down. They’ll get the contract, they’ll get in the catalog, they get in the offering, but then the SI, the channel doesn’t actually sell.

Mike: Because everybody expects the channel is going to sell. The channel is initially not going to sell. The channel is going to put you there. They have a lot of other things that they’re really busy with, and you need to go sell for the channel. A lot of times we have to do the first deal and actually give it to the channel. 

Tim: Yeah, yeah, priming the pump.

Mike: Priming the pump, right. And then they go, “Wow, okay, this is a free deal. So why don’t we go do something together?” And what we’ll do is say, “Okay, go and bring us to customers that you have that fit this profile,” then we’ll organize some events, maybe bowling or play golf or whatever. And they’ll invite some of these people. And then from there, they’re going to say, “Oh, wow, there’s actually two or three or four interesting companies that want to take another meeting.” So see, now there’s the activity, and then you need to help them. And again, the more focused and the more automated the process can be, the faster it is for you to get attraction. Otherwise, if there’s no momentum for a few weeks or months, then they’re long kind of forgotten, right?

Tim: And does it pretty much work the same way in every country?

Mike: I think so. If anything, Japanese system integrators are actually more technically savvy than pretty much anywhere else in the world. 

Tim: Really? 

Mike: Oh, yeah. They’re really savvy and they sign up to do a lot more. If you look at CTC or one of these companies, they do a lot of very complicated implementations, and they do maintenance, support operators, do a lot of stuff. A lot of partners in US and also Europe do much less. I will say the European partners do more than the US. And maybe part is because most of the US customers themselves have very strong internals or the IP team, so they don’t need as much external support. But I think, the Japanese enterprise, a lot of times they lean on one of these large external IT shops to handle a lot of their stuff. 

Tim: That makes sense. So listen, Mike, before I let you go, I want to ask you what I call my Magic Wand Question, and that is, if I gave you a magic wand, and I told you that you could change one thing about Japan, anything at all—the education system, people’s attitudes towards risk, the way enterprise evaluate software, anything at all, to make it better for startups in Japan, what would you change?

Mike: I mean, the answer that comes to mind is I wish I could change the culture around failure. You know, everybody loves a good story, right? That’s why people like Cloudian, they like to talk to us, but what about all the other companies that had tried what we tried and failed? Why don’t we talk about them? Why do we glorify them? And why don’t we look at what — because the lessons learned there are actually more valuable, because we all know that we, as people, learn so much more from our failures than from our successes, right? So, analyzing and learning failure, I think, is a really key thing. But I think in Japanese culture, people don’t like to take the risk. And I think the reason why people don’t like to take risk is because society is very intolerant of failure. The very definition of risk is you might fail. And I’ve experienced this. I’ve met people in Japanese large companies, and they just don’t have that pickup in your step, and you find out that while they left the company or they try something and failed, and now they’re kind of mid-career and they just don’t, you know, they don’t have that–

Tim: I think that’s a really good point. I’ve always wondered, it seems like in Japan people are afraid of a very particular type of failure. It’s more like they’re afraid of being blamed for a failure. 

Mike: Right.

Tim: And I was wondering, is that one of the things that makes it so hard to pivot is because to pivot, you have to admit, like, okay, the strategy has failed, we need to change it. 

Mike: Exactly, right. I think, being accountable, and then being honest with yourself, and then being honest with everybody around you, and having everybody else around you to be then honest with one another, that’s the foundation of being able to make real change. You first have to admit that something needs changing. So I totally agree with you, I think Japan as a society needs to be more tolerant of failures. It sounds kind of weird, right? But I think without that, it’s difficult to really create something really breathtakingly new, right, because all the breathtakingly new things typically have lots of failures behind them.

Tim: It is, but I think, like, in the US it’s almost gone to the other extreme, right, where people are like, fail fast, fail forward, don’t worry about it, move on. And like no, it’s supposed to suck a little bit, right, you know, it’s supposed to hurt a little bit.

Mike: That was what I meant. You always know so much more from your failures than from your successes. In the US, we also kind of suffer from glorifying the ones who are successful because you always can write a story to say, oh, I did this, I did this. Therefore, you know — actually, it may not lead to the same outcome, you know, people can do the same thing. And actually, a lot of times I know I find that when you fail, you’re doing a learning alone. When you succeed, a lot of people are talking to you and they want to hear your story. They want a good story, right? They want, oh, they had this idea on a napkin and boom, they did this and boom, it just took off overnight. But life is not clean like that.

Tim: And I think like every successful founder, every honest successful founder, every founder who’s honest with himself realize that the difference between success and failure is like you’re an inch on either side of the line. 

Mike: Yeah, you’re exactly right. You’re exactly right. 

Tim: You can look back and find half a dozen things like, man, if this had gone, right, I would have IPO’d. 

Mike: That’s right. 

Tim: Even after the IPO, you can look back, say, “If that hadn’t have gone right, it wouldn’t have happened.” 

Mike: Exactly. I totally agree with you. The difference between success and failure, in a startup, especially, it’s really on a knife’s edge. It’s not a chasm as you expect it to be. A lot of times, it just depends on a few individuals and a few decisions. And I know that we all hate to admit luck has anything to do with it, but actually, luck has a lot to do with it, you know.

Tim: Oh, so much. Yeah, yeah. I mean, you can prepare, I mean, you’ve got to be prepared for whatever happens. But yeah, yeah, luck always plays a big role. 

Mike: Yeah, exactly right. Agreed.

Tim: Well, listen Mike, I want to thank you so much for sitting down with me. I’m so glad we finally got a chance to talk with the microphones on.

Mike: Likewise. I really, really enjoyed the conversations.

 

Outtro

And we’re back.

Our conversation with Mike really got me thinking about data and why we keep it. Because really, we’ve been keeping the same kind of data for thousands of years, even going back to those Sumerian clay tablets that Mike and I were joking about.

Those tablets famously contained poetry and the Epic of Gilgamesh. But the vast majority of those clay tablets are transaction records, accounting ledgers, rental contracts, bills of sale. It’s almost all “Alkar frrom Akad purchased 10 bushels of barley for 8 shekels.” Despite all this new talk about big data, I wonder if maybe data retention is actually a constant. Not in the amount of data stored, I mean, that’s clearly increasing, but maybe the amount of economic resources that we invest in data storage is a constant. S

o whether businesses are paying a scribe to mark and fire clay tablets in 3000 BC, paying a clerk to keep handwritten ledgers in the 1700s, having dozens of women form a typing and filing pool in the 1950s, or simply streaming vast amounts of data to the cloud today for AI to analyze later. Maybe the percentage of operating costs that businesses devote to record keeping always remains constant. 

But I want to get back to Mike’s comments about going global as a Japanese startup, and what Japanese startup culture has to offer the world. A lot of people will tell you that Silicon Valley’s fake it till you make it culture and the American style of making huge claims and oversized promises is a big driver of innovation. And you know what, it is.

But that doesn’t tell us the whole story. It doesn’t tell you who pays for the downside. Even Facebook’s famous motto of “move fast and break things” actually meant move fast and break other people’s things. When Facebook engineers started applying that philosophy internally, Zuckerberg quickly and officially changed the motto to “move fast with stable infrastructure,” which, come on man, that means exactly the opposite of the original. It means move fast but be sure not to break anything. 

As to the Japanese approach, yeah, I mean, of course, it’s possible to both innovate and to care for your customers and your users beyond the transactional contractual relationship. That level of trust and commitment actually encourages risk-taking. It allows for deeper integrations, it enables bigger bets.

Now, granted, you may not move as fast, you may not break as many things, but this uniquely Japanese approach to innovation is one of the startup ecosystem’s greatest strengths, and it might well become one of Japan’s most successful exports. 

 

If you want to talk more about mind-bogglingly large amounts of storage or the Japanese approach to innovation, Mike and I would love to hear from you. So come by disruptingjapan.com/show186, and let’s talk about it. If you leave a comment, I guarantee that Mike or I or maybe both of us will respond. And hey, if you get the chance, please follow us on LinkedIn or leave a review on iTunes or your podcast platform of choice, or you know, if you like the show, just tell a friend about it. In this age of over the top hype and fake it till you make it influencers, an honest recommendation, you know, it really means a lot.

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.