There is something odd about the way we treat sleep. 

We understand that it is essential for good health, but we are almost ashamed when we admit that we get enough of it. We are rightfully proud when we keep our resolutions to go to the gym more or to eat a more healthy diet, but if we get a good night’s sleep, we tend to keep it to ourselves.

In fact, when we talk about sleep at all, it’s usually to brag about how little sleep we are getting. We seem to consider getting a healthy amount of sleep to be some kind of luxury, or worse, as evidence of laziness. 

Today we are going to talk with Taka Kobayashi, the founder, and CEO of NeuroSpace, and he’s going to explain how things got so bad, and what he plans to do about it.   

Taka is is building a business around that idea that companies should not only encourage employees to get more sleep but that they should pay NeuroSpace a helthy sum to do so. 

Most sleep-based startups have failed in the past, but Taka explains how NeuroSpace is doing things differently and how he his building on his initial successes.

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

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Show Notes

  • Why sleep is really a skill
  • The reason we ignore the importance of sleep
  • How to fall asleep more quickly
  • What your iWatch isn’t telling you about sleep
  • The right way to track your sleep
  • A way to overcome jet lag
  • The real challenge facing all sleep startups
  • The good and bad sides of Japanese govement startup grants 

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Transcript

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

I’m Tim Romero and thanks for joining me.

Let’s talk about sleep. Are you feeling tired? 

If you’re like most workers in Japan, the US, or Europe, the answer is yes, and oddly, even if you’re not feeling particularly tired, you probably won’t admit to be well-rested to your coworkers. 

We, and by we, I mean all of the developed world, we have this funny relationship with sleep. We all know, we all acknowledge how important sleep is. Science and personal experience have proven conclusively that our own health and performance depend on it, but for some reason, we all like to brag about how little sleep we’re getting. 

Normally, I’d call this macho bullshit, but women seem to be every bit as bad about this as men are. We seem to consider getting a healthy amount of sleep to be some kind of luxury or worse, as evidence of laziness. 

Now, there are a lot of reasons for this and we are going to talk about them with Taka Kobayashi, the founder and CEO of NeuroSpace.

NeuroSpace is doing something important but something very difficult. Taka is building a business model based on convincing companies that not only should they encourage their employees to get more sleep but that they should pay NeuroSpace to help them do so. Taka is fighting some deeply ingrained culture here, but he is making progress, and today, we will talk about some of the unlikely partners and bedfellows he finds himself with, why so many other startups in the space have failed to achieve product market fit, and most important, what NeuroSpace is doing different. 

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

    

Interview

Tim: I’m sitting here with Taka Kobayashi of NeuroSpace who is a startup specializing in sleep. So, thanks for sitting down with me.

Taka: Thank you.

Tim: What NeuroSpace is doing is really fascinating but I think you can explain it better than me, so why don’t you tell us a bit about what NeuroSpace does?

Taka: NeuroSpace is a company focusing on technology which is evaluating sleep relation and quality, and sleep skill improvement program for company. I found this company in 2013, a big motivation was my own serious sleep problem.

Tim: You said something really interesting. You mentioned sleep as a skill, and I don’t think I’ve ever heard sleep described as a skill. So, what do you mean by that? How is it a skill?

Taka: In general, anyone can improve like how to speak English and how to control bicycles, and so on. This is also a skill. Sleep also can be improved. For example, people suffering from wake up. There are some skill to wake up easy.

Tim: I’ve never quite thought about it this way. So, is sleep really like a collection of different skills? Is there like a, for example, falling asleep quickly or getting deep sleep, or waking up fully? Are these things that you can train yourself to do?

Taka: Yeah, of course, there are many kind of skill. To fall asleep, having good quality sleep, and easy to wake up, and so on, yeah.

Tim: Okay. You know, we don’t really talk about sleep much in terms of our health. We talk a lot about diet and if you go to a bookstore, you’ll find lots and lots of books on exercise and lots and lots of books on diet, but we don’t really talk much about sleep. Why do you think that is?

Taka: So, almost all people focusing on the time that we are active, but sleep is a very important thing in terms of consolidate our memory and eliminate our needless memory.

Tim: So, do you think it’s just because we are not awake not conscious, we don’t think about it, whereas diet and exercise, it’s something we consciously do and get feedback?

Taka: Maybe in the sleep time, all people does not have consciousness, so they cannot understand the importance.

Tim: It almost doesn’t feel like something we actually do, right? It feels like almost something that sort of happens to us. You know, actually though, when people to talk about sleep, and I think this is true both in Japan and in the US, there’s almost kind of this macho culture where people kind of brag about how little sleep they are getting. Every day at the office, I hear someone saying, “Oh, yeah, I only got five hours of sleep last night,” and “Oh, yeah, this week has been –“ so, it’s almost like we’re trying to train ourselves not to sleep.

Taka: Yeah. I understand the situation well. In the company view, many manager and leader don’t take care of employees’ sleep because sleep seems like spend time not active.

Tim: Yeah, it seems like almost like it’s being lazy.

Taka: Yeah, yeah, lazy, lazy, yeah.

Tim: So, how do you get companies interested in helping their employees improve sleep when there is this culture of no, we don’t need sleep.

Taka: In the NeuroSpace business, we promote importance of sleep in terms of productivity, concentration level. These conditions always depend on sleep condition.

Tim: But I mean, it’s definitely true, having too little sleep, being sleep deprived is a lot like being drunk in terms of reaction time and judgment. So, the scientific data is really clearer, but is the data strong enough to counteract this business culture?

Taka: Yeah, yeah, yes. In my opinion, this problem depends on culture, especially Japan and Korea have such kind of culture.

Tim: Yeah, it seems like there would be a real kind of honne and tatemae problem.

Taka: Yeah, absolutely, yeah.

Tim: Thinking about it, most of the books and the blogs that focus on sleep seem to be telling people how to train themselves to get less sleep.

Taka: Oh, yeah, yeah.

Tim: So, there’s a lot of things like, “Okay, you don’t really need eight hours. You can train your body for six or four hours.” Is that possible and is that even healthy?

Taka: No, the answer it’s impossible. It’s impossible. The reason why these kinds of books are popular is business. Almost all people want to make their sleep little. Simultaneously, they believe that that is a good thing. This is a fundamental problem.

Tim: Right, right. So, how do you overcome that?

Taka: We provide questionnaire for employees which can detect 10 types of sleep problems. After that, we analyze the answer and we provide the company three problem tendencies.

Tim: So, what are you asking? Are you asking employees like, how much sleep they get a night or how well they sleep?

Taka: Yeah, ideal sleep duration and real sleep duration, and how many times do you have difficulty to wake up for a week?

Tim: Okay, so what’s you collect that data and once you have a profile of how well different employees are sleeping and how much, what do you do to improve the situation?

Taka: Okay, we provide a seminar. I teach the skills to overcome such kind of sleep problem, difficulty to wake up and go to sleep, and wake up during sleep.

Tim: What kind of things do you teach? So, for example, if someone is having trouble falling asleep, how do you train them or how do you teach them to train themselves to fall asleep faster?

Taka: For example, people who suffer from difficulty to fall asleep, we give advices that having sunlight, especially in the morning makes people sleepy in the midnight, in nighttime.

Tim: So, if someone gets exposed to sunlight early in the morning, by the time evening comes, they will be ready for sleep?

    

Taka: Yeah, exactly, yeah.

Tim: Okay. So, I guess a lot of your techniques are just training the body to get into this kind of rhythm?

Taka: Yeah, yeah. Some people trying to fall asleep have a rhythm problem.

Tim: And what sort of results have you gotten?

Taka: It depends on the company, especially regular worker wake up in the morning and go to bed at night improved by utilizing this solution, but on the other hand, especially like restaurant chains –

Tim: So, someone working at night and sleeping in the day?

Taka: Yeah, yeah, this kind of employee, the solving level is low.

Tim: Yeah, I imagine it must be very difficult for anyone to train their body to kind of sleep when it is light and wake up when it is dark. There is a lot of sleep trackers…

Taka: Yeah, yes there is.

Tim: Right, right, like the iWatch and things you wear on your wrist or things you put on your pillow, are those useful? Are those helpful?

Taka: Yes, these kind of devices is useful just only for making attitudes to watch our behavior objectively, but the problem is accuracy level.

Tim: Okay, so they are useful because they make us think about sleep and maybe take action, but the data is not very good?

Taka: Yeah, exactly. So, these kind of devices can detect sleep duration but the difficulty to tell the sleep state level, like REM sleep or non-REM sleep, especially in the non-REM sleep, stage 1 to 3, this kind of accuracy is very difficult for these devices. So, the NeuroSpace developed a new device to detect such kind of data very accurately.

Tim: So, how is this device different from the usual sleep trackers and fitness trackers?

Taka: Most important thing is algorithms which evaluates sleep, quality and the quantities. Our devices use of three types of data: heart rate, breathing rate, and body movement.

Tim: So, what sort of sensors do you use? Is that the device simply a wrist wearable?

Taka: Our device is used under the mattress. So, we don’t have to put such kind of device on our body.

Tim: Really? And you can sense breathing and heart rate through the mattress?

Taka: Yeah, exactly. This is like our core technology.

Tim: Wow! I could see why that could be so important because I actually have tried to use a sleep tracker and I had trouble sleeping with the tracker on my wrist, but if it was just underneath the mattress, then nobody notices.

Taka: Yeah. User interface is perfect.

Tim: Huh. So, is it something you are planning on selling to consumers or is it more of a research tool?

Taka: In the first phase, we are planning to provide this device and the solution to employees in the business field to overcome sleep programs, but for scaling, it’s a B2B2C. The company in the middle, B, like KDDI, KDDI and NeuroSpace are planning to develop a very special bed that includes sensors. Using this mattress, consumer can sense sleep condition automatically and unconsciously every day. In the collaboration, the solution is controlling electronics like air conditioner and light. For example, in the REM sleep, our brain is working, but our body, it doesn’t move, so especially in the summer time, the heat condition between our body and the bed will become worse, so heat condition disrupts our good sleep quality.

Tim: I can see why KDDI, which is a telecom and data company would be very interested in NeuroSpace, but it would seem like a better partner for you would be either a furniture and bedding manufacturer or a sporting goods, or sports clubs, or someone with that kind of consumer connection.

Taka: I have to explain another bed maker. In this collaboration, NeuroSpace and KDDI, and one traditional bed maker in this depend on the real-time sleep data, NeuroSpace engine controls the electronics for good sleep.

Tim: What do you do in the situation where you have like, husband and wife in the same bed?

Taka: Oh, very good, good question. Yeah, it’s a little difficult, so in the first phase, our target is single person.

Tim: Right, it’s because you have lights coming on and off. All right, let’s see, you are also working with All Nippon Airways on a project to reduce the effect of jet lag.

Taka: Yeah, NeuroSpace have sleep scale to overcome jet lag. ANA Holdings have hundreds and thousands of potential customers in need of solving jet lag. Basically, NeuroSpace is in charge of developing a smartphone application which provides consumers to overcome the jet lag.

Tim: I think that’s a great problem to be solving because it’s usually solved with drugs or alcohol.

Taka: Like melatonin, yeah.

Tim: Right, right, but you mentioned before that, your techniques are mainly focused on help to get into that rhythm, that daily cycle. So, are those the same techniques you are using to help people get over jet lag are you developing new methods?

Taka: Basic point and essence is the same. Our solution have five categories, like light conditioning and eating, eating timing, sleeping timing, nap and regular sleep, and exercise.

Tim: How have the results been so far?

Taka: Next Phase in this test, ANA’s members also participate in this trial experiment.

Tim: It’s on schedule for the full launch in the spring?

    

Taka: Yeah, yeah.

Tim: Excellent. Now, NeuroSpace is not a brand-new startup. You started this back in 2013, right?

Taka: Yeah, 2013.

Tim: And before, you mentioned that you had kind of a personal motivation.

Taka: Yeah, yeah. When I was young, I had suffered from sleep problem. Things like I was very sleepy during classes in high school and junior high school. The reason why, my parents tell me, just study hard without sufficient sleep duration.

Tim: That’s very common in Japan.

Taka: Yeah, yeah, yeah, and after I entered a company. The company caused me not to have sufficient sleep time.

Tim: Also very common in Japan.

Taka: Yeah, yeah, yeah, it’s very particular to Japanese culture. In this situation, I suffered from mental depression, very negative thinking, and I decided to quit.

Tim: When you decided to leave the company, did you know you wanted to start a startup? Did you know you wanted to work with sleep, or did you just want to get out of that company?

Taka: Yeah, it’s a very good question. I had worked, totally two companies as an employed person, but I noticed that as an employed person, I cannot achieve my best performance. So, I decided to start myself.

Tim: So, that point, was it just you wanted to create a company that had a more reasonable work life balance or you wanted to create a company to solve this problem with sleep?

Taka: In the first three years, a very serious situation, I worked a part-time job to survive. My parents also supported me sometimes.

Tim: So, how long did you bootstrap the company before you got outside investment?

Taka: Two years.

Tim: Two years?

Taka: Yes, in 2015, first investor helped me.

Tim: So, two years of bootstrapping and so far, three years of financed startup?

Taka: Yeah, yeah.

Tim: You know, sleep is so important, but it seems to be so difficult to make a business model around it. I mean, it’s really easy to make a startup focusing on exercise or on food. I mean, really easy on food, but sleep is something that I don’t know, no one seems to have been able to build a solid business around it yet.

Taka: Yeah, exactly.

Tim: You guys are doing a lot of things to improve sleep. You are doing training programs, you are building better hardware sleep trackers and partnering with IOT initiatives. Do you feel like you have really found that product market fit yet, or do you feel like you are still experimenting and still searching?

Taka: I believe that our business model is best to overcome, solve a sleep problem in the world. Yeah, as you said, almost all startup companies and big companies tried this market but they failed, but our technology is evaluating sleep quality and duration very accurately. It’s a solution on how to solve the sleep problem, and our main business category is B2B2C. In the B2B2C, the B in the middle holds many potential customers.

Tim: So, do you think the better strategy and of the more attractive customers are going to be technology companies like KDDI or special needs companies like ANA Airlines, or do you think it’s going to be more effective to target large companies who want to improve productivity?

Taka: I think that this target is very good. Our target has two types: employee and consumer. The B and the middle holds many consumers, but employee in the company aim better productivity. They focus on sleep skill improvement.

Tim: It’s an interesting approach. I mean, you are fighting against a lot of corporate culture around the world who is saying, “Now, we don’t need sleep; we just need to work harder,” but I can imagine, if you show them hard data, both from universities and actual results, you could get a lot of interest, but what kind of companies and what sort of industries are most interested in improving their employees’ sleep patterns?

Taka: Currently, our client which focus on this area is like, information technology company.

Tim: So, like software companies or systems integrators?

Taka: Yeah, including system engineer.

Tim: That makes sense because of those are high-paying positions, and lack of sleep can have a very direct effect on quality. Interesting. How much sleep do you get every night?

Taka: Yeah, ideal time is eight hours, yeah. In the holiday, I have eight hours.

Tim: What about like, weeknights?

Taka: Between 6 to 7.

Tim: Oh, okay. Is that enough?

Taka: No. In that situation, I always take a power nap.

Tim: You are doing it, too. It is the same cultural problem. So, you recommend napping?

Taka: Yeah, of course, of course.

   

Tim: Let’s talk about Japan in general and startups here. So, one of the things I noticed is that NeuroSpace has had a lot of support from NEDO and government agencies with grants. Has that been useful? Because I know applying for government grants can be time-consuming and complicated, but is that something you would advise other startup founders to do?

Taka: Grants from government are very helpful. This year, our project with ANA is received, the grant NEDO project. A few years ago, almost all startup companies focused on just on the developing a smartphone application, fintech and game, but I think that such kind of smartphone application developer startup are suffering from scaling, so currently, real-tech field startup companies increased recently, and this core technology and the patent is very useful.

Tim: So, most people applying for the grants are applying to get the money?

Taka: Yeah, yeah.

Tim: But does being part of these programs help you with sales or partnerships, or credibility?

Taka: Yeah, and developing, like IOT devices and software.

Tim: Okay. Well, listen, Taka, 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 and I told you, you could change one thing about Japan, anything at all – the education system, the legal system, the way people think about risk – anything at all to make it better for startups and innovation in Japan, what would you change?

Taka: I think the most important thing for running a company well is human. 

Tim: Sure, the people.

Taka: The people, the people, yeah. Previously, you asked the startup company the situation, the failed startup company suffer from people. Some people quit, so I think that people in the company are treasure and the most important thing.

Tim: So, you would change the culture to make companies appreciate their staff more?

Taka: Yes, especially people who have correct ethic.

Tim: Well, I think all companies say that they want employees that are enthusiastic and that have vision, and can make changes on their own. They say that, but most companies don’t have those employees. Why do you think that is? What should companies be doing to build that?

Taka: I think that before hiring, we need to estimate the person correctly, yeah, but after they become employees, we need to change them to our field.

Tim: So, if you point to change, the one thing you would like to change, do you mean that the companies should care more about the people as like, individual skills and individual talents rather than trying to just change the people to fit the company culture?

Taka: Yeah, yeah, yeah, so characteristic is most important rather than skill.

Them: That is interesting. I do think that yeah, Japan, traditionally, it is very top-down where this is our mission, these are our values and we need to change everybody to fit that mold, and I think startup culture everywhere, Japan too, obviously, is it more of what unique skills do these people have?

Taka: Many people who have certain skills, like system engineering easily come if we provide much money, but individual characteristics are very difficult to change.

Tim: Yeah, yeah. I think recognizing that is the only way to build a real team. It’s not just a collection of skills, it is a collection of individuals. Do you think that is changing? I think that is changing with startups for sure.

Taka: It’s a very good question. In my opinion, the attitude in Japan is not changing even though technology has evolved, human doesn’t.

Tim: True.

Taka: Especially in Japan, it’s very correct.

Tim: Yeah, yeah. So, we have to – small startups and as people are trying to sell goods in the market, we have to adopt ourselves and our own plans to the teams that we can build.

Taka: Yeah, some startup company CEOs’ goal is fundraising. So, fundraising success seems great, oh, yay, but it’s not fundamentally important thing. The most important thing is human and the culture.

Tim: I think so too, and I think that is changing at startups. At large companies, that doesn’t seem to change.

Taka: Yeah, yeah, yeah, yeah.

Tim: Okay, listen, Taka, thanks so much for sitting down with me, I really appreciate it.

Taka: Thank you so much.

     

Outtro

Tim: And we’re back. 

So, how deeply is this bias against sleep ingrained in our culture? Even Taka, a man who is building his company and his reputation around of the need for enough sleep, even Taka, when I asked him if he got enough sleep, he hedged and said no, and I don’t blame him one bit. 

In the business world, getting enough sleep is almost an act of defiance and admitting it would be seen as admitting to laziness, but you know, I don’t think that’s the big reason that sleep-related startups have such a hard time finding product market fit. 

I think it gets back to what Taka mentioned about sleep being seen as a passive activity, as something that happens to us rather than something we do. What is more, it’s something we do alone and in a way that cannot signal status to others, and that makes sleep very hard to monetize. 

There are fortunes being made in diet and exercise, and even mindfulness, but sleep has so far been very resistant to commercialization. That doesn’t mean it’s not important. The vast majority of money spent on diet and exercise programs is completely wasted, but that is the world we live in. Problems that cannot be monetized usually don’t get solved, and I’m not saying that’s good. It’s not, but that’s the reality we live in.

So, will NeuroSpace break the mold and become a successful sleep startup that actually makes a difference? Maybe. I mean, I hope so, and they seem to be making some real progress, but it also seems like they are still struggling to find real product market fit. 

What Taka calls the B2B2C model is often called channel sales or reseller strategies, and both can be very effective for scaling but it’s often very hard to get your first customers when you interact with your prospects via third parties. Still though, NeuroSpace has made it farther than most sleep startups and it seems that they are just getting started. Our chronic lack of sleep is a species-wide problem that really, really needs to get fixed, and NeuroSpace might be just the team to do it.

If you’d like to talk more about sweet, sweet sleep, Taka and I would love to talk with you, so come by disruptingjapan.com/show134 and let us know what you think, and hey, be sure to follow us on Twitter and Facebook, and even check out our LinkedIn group. If you ask a question there, I guarantee you, you will get a response. 

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.