Gengo understands the need for small-batch translation. Global communication takes place exponentially faster than the project management cycle, and understanding is way too important to be left to machines. And with even the smallest and most early stage startups understand the importance of going global, Gengo seems to have found their niche.

Matt and I talk about the growth of the company, the changing nature of startup investment in Japan and the rest of Asia, how to recruit and retain high-powered engineering staff in a hyper-competitive environment and the significance of foreign entrepreneurs in Japan.

One of the most interesting topics we cover, however, is how Matt (and Gengo) are handling the recent change in CEO. It’s always a difficult transition and many companies don’t survive it. In this frank discussion without the usual platitudes, Matt explains the specific steps he’s taking to bring openness and transparency to all of Gengo’s stakeholders, and he also explains the changes he had to make in himself in order to take Gengo to the next level.

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

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Show Notes for Startups

  • The importance of simple solutions for large companies
  • Why an open API is critically important to growth
  • The defect in the existing translation agency model Gengo exploited for early success
  • Why it’s important to get investors and employees talking
  • When personal change is the key to corporate growth
  • Advice to foreigners who want to start a company in Japan
  • Why Japan’s founders are more advanced than her VCs
  • Why Asia is becoming more attractive for investors

Links from the Founder

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Transcript from Japan

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

I am Tim Romero, and thanks for listening.

We are broadcasting today from the new Disrupting Japan Studios at the foot of Tokyo Tower. In fact, if you look closely at our logo you can almost see the building. Of course, the most interesting part of the show is recorded at the offices of Gengo over a beer with Co-Founder and new CEO, Matt Romaine.

Gengo is one of the world’s largest Crowd Source Translation Platforms. We talk a bit about his crazy journey building it, and the changes that lay ahead for the Translation Markets.

You know, since Disrupting Japan is focused on innovation and disruption there is never a shortage of new topics. Change is the one thing that is constant in this industry, and in this world I suppose. I guess you could say that change is the one thing that never changes. Change is simple. The world changes whether we want it to or not. Change is easy, but progress is hard.

What I found most interesting in this discussion is all of the different ways in which Matt is focusing on progress in this time of Corporate change.

We talk about the recent change of CEO at Gengo, and how he is using this change to improve relationships among his staff, his customers, and his investors. Matt explains not only the changes he had to make in his Company to make this work, but also the changes he had to make in himself.

Matt tells the story much better than I do. Let’s get right to the interview.

Tim: We are sitting here with Matt Romaine of Gengo formerly My Gengo. It is the largest and certainly the most interesting Crowd Sourced Translation Platform in Japan. Perhaps the world now. That’s a really simple way to introduce it. I think you can probably do your Company a lot more justice than I just did.

Matt: Well, to start the word Gengo means language in Japanese. There use to be a boom in Japan to add the word “My” before something so like My Hashi would be like my personal chopsticks.

Tim: Oh, that’s where My Gengo came from. I see.

Matt: Yeah, or my boom is your current boom, your current sort of interest or hobby.

Tim: Yeah.

Matt: At the time we thought we would throw on My before the Gengo. We had the opportunity to buy the domain Gengo dot com, so we rebranded and dropped the My. Kind of like the Facebook dropping The.

Tim: Yeah, okay.

Matt: As a Company yeah we are a Crowdsourced Translation Platform. We have about 15,000 translators now around the world. We do 37 languages, all of them through English and a couple of other within the matrix. Through across Japanese.

Tim: When you say through English. You do a lot of language pairs.

Matt: Mm-hmm.

Tim: If someone is translating Russian into Chinese it would go through English first?

Matt: Exactly. For that specific pair, Russian and Chinese it would have to go through English. There are other language pairs such as Japanese to Thai or Japanese to Indonesian which are direct language pairs.

Tim: Okay.

Matt: We have over 60 language pairs, but in terms of unique languages we have around 37

Tim: What language pairs are most popular? I am guessing Japanese to English.

Matt: Japanese to English definitely. English-German is a popular one as well. English-Portuguese is also quite popular. It kind of fluctuates depending on the sort of customer needs at the time.

Tim: Oh really, it’s quite fluid that way.

Matt: Mm-hmm.

Tim: I guess that makes sense. Gengo is filling a very specific niche in the Translation Business. As I understand it, you guys aren’t doing Literary Translations. You are a cut above the machine translation of something like Google. What is kind of a typical, who uses Gengo on the customer side?

Matt: One of the drivers for us launching actually was I use to work at Sony, and even though I was hired as an Engineer I would have more and more colleagues asking me to translate you know their e-mail correspondence with another.

Tim: That’s a curse that falls on any bilingual employee in Japan.

Matt: Yeah

Tim: You become the default translator.

Matt: Exactly. In-house translator. You weren’t hired for it, but then you end up doing a lot of that kind of work. I found myself doing quite a bit of that. When we’d launched it was sort of to address the desire to want to read blogs and news. They don’t need a professional translator with years of experience.

Tim: The goal is to give someone like the reliable basic understanding of what is being said.

Matt: Basically, yeah. I mean the content itself is not that complex. Because of platforms like Facebook and Twitter and E-commerce. Those are the types of platforms that are generating the type of content that we fill Gengo Translators are best suited for.

The idea is like from a central location you can actually Tweet in multiple languages, and to get those tweets out into multiple languages those platforms would use Gengo Translators.

Tim: Right. A human being. I got ya.

Matt: Mm-hmm.

Tim: You know that brings up something really interesting because this is what struck me as how Gengo seems different from all of the other online Translation Agencies out there, and there are a lot of them.

It seems to me that a lot of your growth is coming from your open API. Your willingness to embrace connectivity to other people.

Matt:   Yeah. In the very beginning when we launched, Gengo was just like one of a couple of projects that we were building.

Tim: Right.

Matt: We didn’t really set out to raise multiple rounds of funding and build the company that it is now. After we launched we noticed on customer usage.

Tim: What were you trying to do at first? What was your vision like when you were first creating it?

Matt: Our initial version was Text Area, Copy and Paste. We had to immediately calculate how many words or characters there are, and we will give you a quote. Because it is a fixed price per character per word. You can decide on the spot if you want to pay. If you do then you use Paypal or Pay By Credit Card or something like that, right.

Tim: Basically, just rapidly accelerating the existing model.

Matt: Cutting out a whole bunch of steps.

Tim: Yeah.

Matt: The other funny thing is a lot of these agencies they won’t do less than a page, or they won’t do less than $100 bucks for example.

Tim: Sure. Too expensive to send out the invoice otherwise.

Matt: Mm-hmm. There were cases where what is this tweet saying? What is this you know e-mail saying? It is only 50 words, so then you can’t even get it done period. Our motto is “You can translate one word if you want”. People actually do, interestingly.

Tim: Really?

Matt: Yeah, because sometimes the machine translation, it is difficult to give a machine the context.

Tim: Mm-hmm.

Matt: Right. For human translation you can say here is the word I want translated, but here is the background information. Here is the context for it.

Tim: Oh.

Matt: The translator reads the context at no cost because they need to understand how to best translate the word and then they translate the one word and get paid for that.

Tim: Right, right.

Matt: The machine translation has the machine technology has been around for over 50 years.

Tim: Really?

Matt: The development of it within the industry. For at least the past decade there is this kind of running joke that every year someone says in 5 years.

Tim: . When did you start opening up the API and letting other people plug into your system?

Matt: When we realized that the platform, the service could be more than just this web form where you order translation and based on some of the content that we were seeing being ordered for translation. Like product description, people were like actually like selling stuff like on E-bay and Auctions and stuff.

Tim: All right.

Matt: We were like well that’s kind of interesting. It’s really short form, so it is a couple of hundred words. You know product description. We thought well how can we make it even easier for them to order it? Basically, it was like well if we can get to be integrated into those platforms then that would fantastic.

Tim: Right.

Matt: That led to okay how do we do that? Well, we have to develop an API. The API was never closed. From the get go we were just thinking well of course you would make it open because you want people to build on top of it. Which means there should be there should be client libraries. There should be online documentation.

Tim: Right.

Matt: There should be a sandbox for people to kick the tires against. That was always built from the very beginning.

Tim: You guys have been in really kind of a marathon fund raising mode since the very beginning. I mean you have been growing like crazy. You have done $25 million dollars in 6 rounds in about 6 years. Is that about right?

Matt: Five or six, I mean if you count friends and family. I have like less than $100 Grand.

Tim: That’s kind of a crazy pace.

Matt: About $23 million I think, yeah. Yeah, I mean the market itself is just humongous. We got the Sam Adams already starting to kick in.

Tim: Yeah. .

Matt: Yeah, not it is a huge market opportunity. I guess what is kind of funny is you know initially when we were trying to raise from Local Angels in Japan they were kind of hesitant.

Tim: 2008-2009.

Matt: 2009. Yeah, 2009-2010 tried to raise from Local Angels here. I found it quite challenging. Ended up going to the U.S. because of Dave McClure.

 

I meet Dave at a dinner about a year after I had left Sony. We kept in touch. A couple of years later I had this Gengo idea going. I pitched it to him, and he got really excited because he immediately saw the need for international and global support. This is during setting up 500 start-ups actually. He gave us a bit of funding and said come out to the U.S. I will introduce you to a bunch of Angel Investors and B.C. and see if you can raise the seed round. That was what sort of kicked off the fund raising. Every investor that we have has either lived overseas, yeah has basically lived overseas.

Tim: Yeah, anyone that has lived overseas will immediately see the value of this.

Matt: Mm-hmm.

Tim: I guess that’s not surprising.

Matt: Yeah.

Tim: It’s mostly been in hiring. You have been growing the team mostly focused on the Engineering talent.

Matt: The emphasis now for this most recent round that was announced last week is on Sales and Marketing.

Tim: We talked before about recruiting in Japan and trying to hire Engineers. I know this is something that well both of us feel very passionately about.

Matt: Mm-hmm.

Tim: What do you think is the biggest challenge and the biggest advantage that a foreign company has in hiring Engineering talent here in Japan?

Matt: One challenge is just going to be to get the talent that you feel fits with your culture. Every company whether they are foreign “Company” or not you know has a different sense of culture. Because the pool is in a way it is smaller here.

Tim:   Yeah.

Matt: Especially if you need to run, if you need to operate in English.

Tim: One thing I have noticed over the last 15 years or so in Japan. Software Engineering was never really seen as a particularly respected profession. Sales was.

Matt: Mm-hmm.

Tim: Hardware engineering kind of is.

Matt: Mm-hmm.

Tim: Software Engineers were expected by the time they were 30 to move into management.

Matt: Hmm.

Tim: If you were a software at 35. If you like being unmarried at 35. Everyone looks at you and says something must be wrong with this guy.

Matt: .

Tim: That seems to be changing now with the current crop of start-ups and such.

Matt: Mm-hmm.

Tim: Have you found it most effective to recruit Engineers from the pool of larger companies? People who are looking to try something new and exciting and have their work mean something. Have you been focusing on younger, more energetic people who grew up in this start-up culture?

Matt: Our approach in building our team by default the company basically runs in English. What we have been able to do is hire individuals who are from overseas and are interested in living and working in Japan. We provide an environment where they can be productive because they will work in English, and they can live in Japan. They are interested in a growing, vibrant work environment. That’s the type of individual that you know is attracted to Gengo and that we are attracted, interested in hiring.

Tim: What’s the break down in your Engineering Department? Like what percent Japanese? What percent?

Matt: I think it is about 50/50 now. It might even be 60/40 Japanese and Foreign actually.

Tim: All right.

Matt: A few more Japanese maybe more.

Tim: That’s a good mix.

Matt: Yeah. Then on the Japanese side what is interesting is we are most interested in individuals who are interested in a sort of more foreign work environment.

Tim: Do you think Japanese view foreign technology companies as more progressive or more innovative.

Matt: That is definitely another component of it, yeah.

Tim: Mm-hmm.

Matt: One of my pitches when I was helping to grow the Engineering Team was definitely here are the tools that we are using and we use Get Hub. We are moving from PHP to Python. Now, we are moving a lot of code from Python to Go Lang.

Tim: Right, right.

Matt: We had transitioned from MySQL to Postgres. Like we do things like Hack-a-thons.

Tim: Our overseas listeners are hearing this right now, and thinking well yeah of course they do.

Matt: Right, right.

Tim: Our Japanese listeners are going that’s fantastic. I am going to be sending my resume.

Matt: Yeah, absolutely. I mean –.

Tim: It is very progressive here to do that.

Matt: We give a lot of flexibility. Basically, there is not this process someone has to go through just to get approval to use a new tool or a new service or something.

Tim: Right, right.

Matt: You want to try out a new tool, some new fast service that is going to improve your workflow or something on the Engineering Team. Maybe it costs $50 bucks a month or something. Here is the credit card, use it for a couple of months see if you like it or not. Also, make a decision pretty quick, like either you find it effective or not. Then if you don’t close the account and move on.

Tim: Yeah. Here is the astounding thing. Is that in the end it is far cheaper to operate that way than to have everything ran through approval.

Matt: Mm-hmm.

Tim: And, so many Japanese firms don’t realize that. They are –.

Matt: A lot of security concerns I suppose is part of it.

Tim: I suppose, but I think it is more of a general vague fear of loss of control.

Matt: Mm-hmm. Yeah, possibly. You are right. That type of environment is not typical in the larger Japanese companies. It becomes very attractive for the Japanese Engineers. Yeah.

Tim: Okay. I can see it being a very unique and attractive work environment for Japanese Engineers who sort of admire the foreign start-up way of doing things.

Matt: Mm-hmm.

Tim: Actually, getting back to the fund raising.

Matt: Mm-hmm.

Tim: Your fund raising marathons. . Now, you have just closed a little under $5.5 million.

Matt: Mm-hmm.

Tim: This round is all Japanese Investors.

Matt: New Investors are all Japanese, yeah. Existing Investors also followed on. That is always a good sign.

Tim: Yeah. Does that represent a new shift in strategy? Did it just kind of work out that way?

Matt: It’s more the latter. There was a certain element of practicality. Since the Core Team is here in Japan our primary investors . Our contacts are basically also in Japan, so they have been very supportive in helping us with the introductions.

There is sort of an element of practicality where I am already in Japan. I can speak Japanese, and so I can pitch to them in Japanese.

I think there is also growing interest from just the Japanese investor side as well to invest in more start-ups.

Tim: There was no big underlying reason for it. It just sort of worked out that way, is what it sounds like.

Matt: Yeah.

Tim: A lot of strategic partnerships. A lot of –.

Matt: Yeah, for the most part I would say so.

Tim: Let me ask you about kind of your own through all of this. Because you went from Programmer to sort of a day-to-day Operational CTO, to a more of a Co-Founder role. You have recently take over as CEO.

Matt: Mm-hmm.

Tim: Actually, before we go back into the distant past. Let’s talk about the recent past. Any transition of that magnitude particularly in Japan?

You know it is very unusual for a company to change CEOs and how are you managing it internally? How are you keeping the team focused on the Core Mission through this transition?

Matt: In our case, our mission hasn’t really changed. The transition, so I have always been kind of more going to conferences and –.

Tim: Sure, very public.

Matt: Mm-hmm.

Tim: Very much the public face.

Matt: Kind of more outward facing. Yeah, and we were on a couple of panels, right.

Tim: Sure.

Matt: And conferences together. That plus just the fact that I did the fund raising with the Japanese Investors in this round. We have built a very stable and scalable infrastructure. Capacity wise we can handle you know maybe more than 10 times the current volume of content that we are doing.

Tim: Right, right.

Matt: You know, Japan is a large market for us. If fact, it is not our largest market currently. There is a lot of low hanging fruit potential.

Tim: That makes sense from like a high level strategic point of view. All business in Japan is very personal.

Matt: Hmm.

Tim: Something as important and significant as changing a CEO. I mean there is a lot of companies that don’t survive that.

Matt: Mm-hmm.

Tim: How are you getting the team through it? What are you telling the employees? What’s the story?

Matt: Naturally, with any transition like this. There is going to be some level of attrition.

Tim: Yeah.

Matt: Employees kind of end up falling into one of three groups. In a transition like this when there is sort of an individual leader. One group is individuals or employees who haven’t been around long enough to really develop a specific or a deep emotional connection to be impacted by a change like that. They are willing to focus and see where things go.

Tim: Right.

Matt: There is another group that maybe kind of lost confidence in the existing, in the leadership at the time, and so they were waiting for some kind of change.

Tim: Okay.

Matt: Then in the third group there are individuals who are very loyal to the previous leadership, and are personally disrupted by it.

Tim: Hmm.

Matt: At least that is kind of what I observed. Because I went through and had one-on-ones with every single employee.

Tim: Okay. How many employees do you have now?

Matt: We have got about a little over 40.

Tim: Okay.

Matt: It took some time.

Tim: Yeah, but time well spent.

Matt: Yeah. I think so. Gave them an opportunity to share their thoughts, listen to them, and hear their concerns and what they want to get out of working at Gengo. You know, out of those 3 groups then obviously there is the group that is hoping to move on to some new opportunity or something like that.

Tim: Right.

Matt: For the other two groups, my focus has been to reengage with them, and get them engaged in Gengo’s Mission. One of the things that I have noticed over the past year leading up to this transition was that we haven’t really been exposing sort of the Gengo internals to the outside world in terms of the relationships with the customers and public as much.

Tim: What do you mean?

Matt: That feedback loop. Bringing back impressions that customers have and that the public has on Gengo. As a Gengo employee, you might have observed it peripherally kind of. Like maybe you read it in a blog post, or you have read it in the news somewhere.

Tim: Okay.

Matt: It was kind of a tenuous type of observation.

Tim: Most employees didn’t really have a sense of what your customers thought of Gengo and thought of the product.

Matt: Not just customers, but just like the public. Like high profile individuals as well.

Tim: Oh, okay.

Matt: What there impressions were, and how they felt about Gengo?

Tim: What are you changing to give your employees that insight on what the world thinks of Gengo?

Matt: Sure. I have started this new thing called basically “The Guest Speaker Series”. Bringing in individuals who are high profile from outside, and giving them an opportunity to share and present some topic of their choosing to the Company. As an example, we had John Britton from GitHub.

Tim: All right.

Matt: We are going to have Craig Maude come this Friday. He is the former UX Designer for the foot boards iPhone App.

Tim: Right.

Matt: He is also an Advisor for Smart News. Just kind of doing more of that. Like the fact that Gengo is able to attract those types of high profile individuals to come and visit the Company.

Tim: I see. I see, yeah.

Matt: It is kind of a validation metric I guess if you will.

Tim: I guess that makes sense. Because it not only validate the Company, that Gengo is a force in the world.

Matt: Mm-hmm.

Tim: Also provides some really insightful ideas and can start some interesting conversations among the staff.

Matt: Yeah, I mean that’s the hope, right. Also, up until the transition the investors and the employees have been very sort of segregated. Most of the employees didn’t know who any of the investors were.

Tim: Oh.

Matt: With this transition what I have done is given the opportunities for the investors to interact with the employees. Investors will give you the money, working capital or whatever. Then they also give you their time, and their advice and their resources, and their energy, right. It’s just a give, give, give. Right.

Tim: Right.

Matt: The thing is all that giving actually is going to lead to significant, the idea is that it leads to significant ROI, right. For me anyway, the idea of having the investors spend time with the employees is it shows how excited and confident I am in our employees, right.

Tim: Right.

Matt: I want the investors to see how awesome the employees are, so that they are even more excited when they are go out there and meet other people that Gengo is always top of mind. I mean part of the job –.

Tim: It makes sense yeah.

Matt: Going out there and meeting all of these are other companies and all of these other potential customers. The more they are exposed to and thinking about Gengo, the more excited they get about it. Which I think they will the more they interact with the .

Tim: Yeah, certainly. I can see the engagement on all sides. Is is working out that way? Are you seeing?

Matt: It is still early, it has only been a month.

Tim: Oh okay. Well, I will check back in 6 months. . Let me ask you about you.

Matt: Hmm.

Tim: Because I know as CEO you have got to be kind of careful about what you say about the Company.

Matt: Right.

Tim: You are free to talk about yourself.

Matt: .

Tim: On that path from Programmer to CTO to Co-Founder to CEO. I mean that is a lot of changes and skill sets.

Matt: Hmm.

Tim: What did you have to change most about yourself in that journey?

Matt: I guess thinking a lot more about my relationships with people and just in general. I use to have sort of blinders on, and I would kind of just work on things that I maybe wanted to do and not really thinking about my relationships so much.

Tim: What kind of things? Just like getting back to people on e-mail or?

Matt: As simple as that. Exactly. You know, yeah. As simple as being responsive and respectful. Yeah, corresponding in a timely fashion. Thinking about communication in sort of more of a multichannel way.

Tim: Okay.

Matt: Not just e-mail, but occasionally calling or messaging and wanting to meet in person for example. Right.

Tim: Right, right, right.

Matt: Different people absorb information and appreciate interaction in two different mediums.

Tim:   You have to learn to kind of adapt yourself to the various ways that people want to be interacted.

Matt: Exactly, so being perceptive to what is the best way of that an individual absorbs information, and then trying to accommodate you know their medium.

Tim: Yeah, it’s utterly foreign from someone who is strictly focused on the code right?

Matt: Staring at the screen the whole time.

Tim: Yep. Do you ever miss being heads down in code?

Matt: I do a little bit. I use to a lot in the very beginning.

Tim: I do sometimes.

Matt: Yeah. At least I was in the very beginning. It has been awhile. Because I sometimes might give some feedback. I will usually get e-mail updates, and then sometimes if I click on a link it will take me to like a GitHub, commit. Then I get to look at the code there. Then I will be like oh yeah. I know what this is doing. That’s cool. To that extent.

Tim: Look but don’t touch.

Matt: I can’t deploy anymore. I use to be the one who could.

Tim: I think it is probably for the best for everyone. .   We talked a lot about how useful it is foreign engineering talent is coming through Japan, and is attracted to a chance to work in a bicultural, bilingual environment.

Matt: Mm-hmm.

Tim: There are a lot of foreign entrepreneurs here in Tokyo now. Some are coming just for a couple of months to work somewhere and pass through. I growing number seem to want to set down roots for awhile, to grow something here. What advice would you have for foreigners who want to start a company here in Japan?

Matt: As you and I know living in Tokyo is super convenient, super safe, great lifestyle.

Tim: That is why we are both still here.

Matt: Yeah. I initially thought I was only going to be here for a couple of years.

Tim: Oh, me too.

Matt: I’ve been here over a decade.

Tim: 23 years ago.

Matt: Yeah.

Tim: I was coming here for a year or two checking it out.

Matt: . I think in terms of quality of life, and ability to maybe focus and get a MVP out or something. It’s a nice place.

Tim: Yeah.

Matt: Now, does it make sense to actually register a company and use this as a base? I kind of think it only makes sense if you have some kind of competitive advantage that is specific to Japan. Otherwise, it is just one hurdle over. There is already going to be so many risks and so many challenges when you are starting up a company. As much as possible you want to reduce you know all of the different unknowns, right.

Trying to operate in a foreign language in a foreign land is. Dealing with a foreign culture. There is just more unknowns one after another.

Tim: Make sure you have got an edge that requires you to be here in Japan.

Matt: Yeah. There are a couple of foreigners here who obviously have a competitive edge because of the time that they have spent here, and their ability to function in the Japanese work environment. For them those issues are not risks. They are not hurdles, right.

Tim: Yeah.

Matt: Of course, you know the business model itself needs to make sense you know culturally within Japan itself.

Tim: All right. Japanese start-up founders on average are not nearly as experienced as their peers in the States or in Europe.

Matt: Mm-hmm.

Tim: Like you say, most are still on their first start-up. Do you think there is anything that the Japanese start-up founders are doing better or more effectively than the rest of the world?

Matt: Looking at it between Founders from different Geographies is probably not the way I would look at it.

Tim: Okay.

Matt: I would look at it more as the Founders versus the Investors.

Tim: Hmm. All right.

Matt: The information flow and the education of the Founders across different Geographies is actually moving a lot faster than among the Investors.

Tim: Hmm.

Matt: The Founders, whether you are fifth start-up whether it’s your first start-up. The Delta in information is much smaller.

Tim: Yeah, that’s really interesting. I never thought of that.

Matt: The Founders are a lot more educated. Not just in Japan, just like anywhere around the world. A Founder knows okay if I am going raise capital, you know what do I need to learn? You go on to some resource like Hacker News or something.

Tim: Sure.

Matt: You just search and you find out. Okay, I have got to think about Liquidity Preferences. I got to think about you know different funding stages. They all kind of know about that.

Tim: I never thought of that. I think you are dead on. I think that the Japanese Entrepreneurs are learning much, much faster than the Japanese Venture Capitalists.

Matt: Then there is a Delta between the Investors and first time investors around the world and those in the Bay Area.

Tim: Right.

Matt: Right. That Delta is much bigger I think.

Tim: Hmm.

Matt: What is happening in a way is if you have a two-time entrepreneur in Asia or anywhere outside the Bay Area they might interact with an investor who is maybe not as in tune or as experienced. Right.

Tim: Right.

Matt: The Founder would just basically just as easily just go well okay I can get the terms that I want if I go in this other direction. This “other direction” being head west.

Tim: Right. Well, why do you think that is? Do you think it is that kind of hierarchical nature of Japan? Where the VC’s they don’t want to ask for help or admit they need to learn something? Whereas the Founders are starting from zero, and are willing to ask for help. Why do you think that Delta is so different?

Matt: Part of it might just be legally. For example, convertible notes. Yeah, it was something that was pretty popular a couple of years ago in the Bay Area. Completely unheard of you know when we initially started doing that in Japan. Had to be explained in the news. Like what exactly is a convertible note.

Tim: Really?

Matt: That Gengo is raising on kind of thing. Yeah.

Tim: That wasn’t that long ago. When was that?

Matt: Five or six years ago.

Tim: Okay.

Matt: Our first one, when we – Part of it might just be sort of knowledge-based locally around certain terms and practices when it comes to financing.

Tim: Right.

Matt: Part of it may be there is an inherent aspect of entrepreneurship that is this desire to want to learn and explore.

Tim: Oh yeah.

Matt: Right.

Tim: Right.

Matt: You don’t want to get too creative at Financing or you might find yourself in jail, and so –.

Tim: . Yeah.

Matt: You work with sort of what you know, and you don’t really try and come up with a new way of doing something unless it is presented to you from an entrepreneur maybe. Who comes along and says here is a term sheet that I got from this other party. It has got all of this new way of, these new mechanics around something. They go I have never seen this before. Then there is a natural cultural sort of risk aversion of oh I have never seen it before and therefore.

Tim: You don’t want to try it,.

Matt: I don’t want to try it, right.

Tim: Yeah.

Matt: Which is the complete antithesis of entrepreneurship.

Tim: . Yeah, yeah. Listen, let me ask you is there anything that you want to talk about, anything you want to tell our listeners before we wrap up?

Matt: A couple, I would say maybe about a year ago I was kind of pessimistic just about Southeast Asia in general. In terms of just like investment opportunities and stuff.

Tim: Okay.

Matt: I think I am getting more and more excited about it and the opportunities. From an entrepreneurship perspective. There is a lot of interesting opportunities, services to build, and companies to build.

Tim: What changed?

Matt: I think part of it is access to infrastructure and talent.

Tim: Yeah.

Matt: Access to infrastructure. For example, there is the Hardware Infrastructure aspect of it.

Tim: Right.

Matt: … the  infrastructure of it being able to use something like Zero for example.

Tim: Right.

Matt: Which is an Australian Accounting Finance sort of Platform that you know we use. The tools that allow one to basically run an operation pretty leanly from many parts of Asia.

Tim: Just the ability to use Cloud Computing and Staff Services. The cost of starting a company has gone down.

Matt: Mm-hmm.

Tim: The creativity within Southeast Asia has been bubbling up.

Matt: Yeah. The bandwidth is getting much better, and obviously there are certain areas that have skipped the computer completely and gone straight to the mobile.

Tim: Oh yeah.

Matt: I am quite excited about that. I think the Investors expertise I think there is a bit of a risk there where if there is like a first time or a new Entrepreneur who has a great idea. Whose only connection to capital may be through someone who is not as tuned in or connected with the Venture Capital style of Investment.

Tim: Sure, sure.

Matt: I think it doesn’t take too much work to figure out what makes sense from an entrepreneurs perspective.

Tim: Well, like you say I mean Venture Capital now is more global than ever. Dave McClure the original Investor has been I don’t want to say instrumental, but certainly one of the leaders in investing in emerging companies.

Matt: He was super important to find a cheerleader when you are just getting started.

Tim: Yeah. All right. Well, it is going to be interesting to watch with Japan to Southeast Asia for the next couple of years.

Matt: I believe so.

Tim: Well, Tim Romaine, thanks so much for sitting down with me.

Matt: Oh it was a pleasure.

Tim: Great one. Thanks so much.

Matt: Yeah, cool.

And we are back. Communication and transparency is something almost all companies struggle with. Especially so here in Japan.

I certainly hope that Matt’s efforts to improve communication and openness among all of Gengo’s stakeholders will bear fruit. I honestly think they will.

That level of transparency is unusual even in Silicon Valley where Investors and Board Members tend to interact only with a top few Managers. Hey, this openness seems to be something that is part of Gengo’s DNA. From there initial open translation API, to there recent efforts to have their Investors, Customers and Employees all get to know each other better.

For all of you technical listeners who are thinking of starting a company, and I know there are a lot of you. Because I get a lot of e-mail from people just like you. I think that Matt hit the target dead center when he said the hardest and most important thing from transitioning to developer to effective start-up CEO was learning that you are responsible for figuring out how other people communicate. Then adapting to them.

Most people have never done the job. A lot of bad CEOs as well think that it is everyone elses job to adapt to the leader’s style. That usually doesn’t end well for start-ups.

Now, if you have got an experience with Crowd Source Translation that you want to share, or you want to know more about Gengo. Drop by DisruptingJapan.com/show020 and leave a comment and let us know what you think.

When you drop by the site you will also see the links that Matt and I talked about and much, much more in the Resources Section of the post.

Most of all, thanks for listening.

Thank you for letting people interested in Japanese start-ups know about the show.

I am Tim Romero. Thanks for listening to Disrupting Japan.