Hiking, back-country skiing and mountain climbing are not usually the first things associated with Japan. Japan, however, has some stunning natural beauty and Yoshihio Haruyama of Yamap is trying to get more and more people to appreciate that.
Yamap is a mobile app that allows hikers, back-country skiers and other outdoorsmen to know exactly where they are even when they are well outside of areas cell-phone reception, and the platform is also providing Japan’s outdoor enthusiasts with a way of connecting to each other.
Yoshi also explains how relatively young Yamap managed to negotiate OEM deals with both Casio and Kyosera, and give practical advice for other startups hoping to partner up with large Japanese firms.
It’s a great discussion and I think you’ll enjoy it.
Show Notes for Startups
- Why add gamification to a hiking app
- Why Yamap had to pursue multiple monitazation strategies
- What a startup needs to know to work with a large Japanese brand
- Why going global might require a business model pivot
- There are important differences between hikers in the US and Japan
- The importance of inbound tourism for outdoor activities in Japan
- How the Fukuoka startup scene is different from Tokyo
Links from the Founder
Transcript from Japan
Disrupting Japan episode 75.
Welcome to Disrupting Japan- straight talk from japan’s most successful entrepreneurs. I’m Tim Romero, and thanks for joining me.
Ah, the great outdoors, it is something that nerds like me do not get enough of, especially living here in Tokyo. Yoshi Haruyama of Yamap is starting to change that. Yamap is a mobile app that allows hikers, back country skiers, mountain climbers and other outdoors men to know exactly where they are. Even where they are far, far away from anywhere with cell phone reception, and to share this experience with others and to learn from them. If you are one of our overseas listeners, you might be surprised at how much natural beauty Japan has to offer, and if you are of our listeners in Japan you might be surprised at the average age of Japanese outdoors men.
Yamap has also done some OEM deals with Japans largest brands. Yoshi gave us some practical advice on how startups can sell to and work with large Japanese companies on joint projects. Oh and during the interview we talk about a wireless transmission technology called Lora. Just so you know, it is a low power wide coverage network that is useful for transmitting large numbers of very small messages. So, now you will know it when you hear it. Let us hear from our sponsors and get right to the interview.
Tim: I am sitting here with Yoshi Haruyama of Yamap, it is an application for hikers and mountaineers and other outdoors men in Japan but Yoshi I’m sure you can explain it a lot better than I can, so, tell us abet about a Yamap, what is it?
Yoshi: Yamap is a social GPRS tracking application. You install the Yamap application. You can find where you are without mobile reception, such as mountain or foreign countries.
Tim: Who are the main users, is it hikers, is it back country skiers, mountain climbers? Who uses it?
Yoshi: The most of our uses are hikers and back country skiers.
Tim: Okay let us see, you started the company in 2011 and you launched like two years later, right? You were working on this project for a long time and you digitized a lot of these maps by hand and were like marking the trails yourself earlier on. Was there problem that there just is not digitized information on hiking trails in Japan? Why did you spend so much time having to do it by yourself?
Yoshi: The most difficult point, we made this application Yamap, so Yamap can work without mobile reception. So most applications are based online. We had to adapt our application online environment and offline environment.
Tim: Mobile reception is good in Japan, but if you are in the mountains there is no cell reception.
Yoshi: No, no no. Now we have a full set of aerial maps in Japan and about 100 areas in foreign countries like New Zealand, United States, Switzerland, and so on. We need enough time to make maps.
Tim: Are you and the Yamap team still creating and entering the maps or are your users now doing that for you?
Yoshi: Both. We take advantage of the information from users, but, we made a map which is based on our information.
Tim: What kind of information? I mean it is easy to understand why a hiking map application that works with no cell connection is valuable, but what is the social aspect of it?\
Yoshi: We add information such as, hiking time to where the toilet is, where the parking lot is, to the map, so that is why we need to customize our map. Then, when our users used our maps, we can take the advantage of these users’ data. They make our maps better. Like Wikipedia.
Tim: Right, exactly. Let us talk about your customers. Tell me about your users, so, right now, how many monthly users do you have?
Yoshi: We have 380,000 users per month.
Tim: Are they mostly hikers, or skiers or what kind of activities are the most common?
Yoshi: Most of our users are hikers.
Tim: Before, you mentioned gamification was very important in this, but I am curious, to me it seems like a very interesting concept. Is the idea simply that if this person climbs this mountain he gets a badge? Do hikers and outdoors people, do they need that kind of motivation?
Yoshi: I think that developed countries like, United States or Japan, there is a big problem, so many human beings do not use their own body. There is no chance to connect our body to nature.
Tim: I can see that. Most Japanese do live in cities and most people are working at office jobs, programming computers or making podcasts, but does an application such as Yamap actually motivate people to go out and hike or do you think it is the existing hikers who are adopting Yamap because it provides a very convenient way for them to get maps?
Yoshi: Yea in Japan, there are 7,400,000 people who are doing outdoor activities, so, I think they are few.
Tim: Does that include things like going to the beach? Or is that only hiking and skiing?
Yoshi: Hiking and skiing and picking the mushrooms in the forest.
Tim: How does the gamification work?
Yoshi : We want to give the people who are not doing outdoor activities the chance.
Tim: The hope is that it will attract new hikers and new snowboarders. Let us talk about the business model itself, it has been very interesting watching Yamap over the last three years now. You launched in 2013, so, over the last three years both grow the size of your business, but also find the right revenue model. Tell us a bit about how Yampa actually makes money?
Yoshi: Our monitization point; one is the freemium model, two is outdoor insurance for hikers and skiers, and three is the affiliate model for outdoor equipment.
Tim: Alright, now those are three very different ways of monetizing ,so let us take them one at a time. In the freemium model, the basic application is free, and in-app purchases are used to buy a what, different maps or?
Yoshi: It is like an airplane, the people who pay more, sit business class. The person who pays for Yamap can use the good maps.
Tim: Practically what is the good difference? Is it just that there are more maps, more detail?
Yoshi: Pay users can get a premium maps which is color map.
Tim: So it is not like the free version they will tell you how to hike in, but you need to pay for…
Yoshi: No, no we are very honest.
Tim: That is good to hear. I think the affiliate program, where you are running like an affiliate for outdoors goods and the insurance program, it is very interesting. They are both a way of monetizing your community. It is a very different model from a freemium, from a pure freemium model. Which has been more profitable for Yamap?
Yoshi: That is a very good question. I think it is easier to sell goods to our users. It is very difficult for our users to buy premium. I think human beings don’t used to get digital contents.
Tim: I see what you expect .It is hard to get a pure digital purchase. Every one that is running freemium model, the overwhelming majority are free and free is often good enough. So what percentage of your users are paying users, and which are free users?
Yoshi: Just one percent.
Tim: Okay, that is pretty standard, I think for a lot of apps, but I can see why it makes it very difficult to run business, when you only have 380,000 users.
Yoshi: That is why we want to emphasize on that, such as goods, insurance.
Tim: it is changing the company from being a company focused on the application to a company that is focused on the community. You have also just recently done some really interesting deals with Casio, and Kyocera. You integrated with Casio’s outdoor smartwatch. How did that project happen did you pitch to Casio or did Casio find you,?
Yoshi: Casio found us, maybe two years ago. First, Casio was interested in Yamap. One year later, Casio, wanted to develop smart watch for outdoor people so Yamap has a big community for outdoor people. That is why we can help with Casio.
Tim: What is the arrangement? Are they just pre-installing your app on the smart watches, did they pay a onetime license fee, are you getting a percentage of every watch sold? How did the deal work out?
Yoshi: It is a license fee.
Tim: Almost all big Japanese brands are saying they want to work with startups, and they want to do innovative things, but those kind of deals do not often go very smoothly. There is a big impedance miss match between startups and big companies, did you find it hard to get that deal done? Did things move too slowly, or…
Yoshi: It is pretty hard because there is a different world.
Tim: What kind of things?
Yoshi: Startup companies, doing so fast, if it is good for users and customers we can do fast, but big companies have enough time to decide. It takes two weeks or one month.
Tim: Just to have a meeting or to make a simple decision.
Time: A lot of people expect working with a big company or selling to a big company to be really slow. Did they have a lot of request? For example, for changes in your product, or customization?
Yoshi: Before we began to cooperate with big companies, we advised them to one point, this program is good for our users and your users. We do not want to do this program for ourselves.
Tim: You did want to customize it for Casio?
Tim: I think that makes sense .The fact that you had built up a community of uses around Yamap. That is what is attractive to Casio, so it sort of proves that this model works. Did Casio understand that? Did they agree with it?
Yoshi: Yes. That is why we are doing a good job with Casio.
Tim: You have worked with a number of others like Kyocera, talked to number of big companies, has it all been kind of the same experience?
Yoshi: Yea, same experience.
Tim: Slow decision making, but they give you creative freedom for your product.
Yoshi: After decisions they are doing good.
Tim: That is really encouraging to here. From my own experience, so many times when I have been trying to sell software products to large corporations, they want lots of changes and lots of customization. The fact that they are looking to startups, and accepting the product basically as is, I find that really encouraging. So what advice do you have for other startups that want to work with big Japanese companies?
Yoshi: The most usable advice is to have large community platform in your service. If your service is just two, it is not a good point for big companies. Many big companies are not good at managing community platforms, on the other hand, startups are good at making community platform and managing community platform.
Tim: I think that is a really interesting point, because, so what you are saying is that the large companies are not so interested in the technology. They are interested in the community and the user base. It is interesting because so many startups do tend to be focused on their technology, but the real value is in the user base.
Yoshi: Yes, the technology is not enough, so we need both technology and a community platform.
Tim: Do you think that is because the large companies look at the community and say, “We want those customers”? Or do you think that it is the large companies look at the community and say, “Oh, that community proves that this is a good product”?
Yoshi: I think both.
Tim: Let us talk about going global. You mentioned that you have a few maps in countries outside Japan, but do you have plans to expand globally?
Yoshi: Yes, of course, so in this year we want to try in the United States.
Tim: How are you going to do that? Are you going to start with say, just maps of Hawaii…
Yoshi: We have already made national parks in the United States, almost all of the parks.
Tim: What is your plan for building up a user base? For example, in Japan you were personally very involved with the outdoors, so you had a good place to start to build that core user base. But going into the US market, you are kind of starting from zero, what is your plan on building up those users there?
Yoshi: We are making an IOT device, with LoRa.
Tim: That is really interesting, so, your strategy is not a Smartphone app, it is hardware?
Yoshi: Yes, hardware.
Yoshi: It is the size of a name card. People can send a message to their family or your friends.
Tim: Even with no cell reception?
Tim: From the business model, it sounds like it is going to be a very different style. So in Japan you started out as a freemium application and pivoted to a more of a community. And in the US, are you planning on building up a community as well or is the sales going to be driven strictly by these internet devices?
Yoshi: I think first we have to make a good community platform to our users in the United States. That is why we want to make special devices for outdoor users to make their own outdoor activities safer and more interactive.
Tim: When are you planning on releasing this?
Yoshi: Maybe the end of this year or the beginning of 2018.
Tim: How much do you think it will cost?
Yoshi: Maybe 3000 yens
Tim: So about $25.
Yoshi: It is not expensive. We want to connect this IOT device to our application Yamap.
Tim: The idea is the Internet of Things device will also connect with the Yamap application and you use that to build up community in the United States or elsewhere, okay. The business model might evolve very differently in the US or in Japan. Now outdoor activity is very different in Japan, for example hiking is very different than it is in the US. In Japan the trails are, much more clearly marked and in some popular spots there are even little railings along the trails.
Yoshi: I think part of the difference, part of the same. I think the big difference is the education. I had stayed in Alaska for two years to study biology. So in the United States; outdoor activities are part of the education. People can learn communication, people can learn biology, in the natural field. I was really impressed with that.
Tim: You think, for example, in America people who are hiking know more about the trees and the types of animals they will see, they study for the hike.
Yoshi: Yes, and a good opportunity to communicate with family and friends.
Tim: In Japan, it is different?
Yoshi: A little different I think. It is just for pleasure, just fun. That is why; there are few young people in Japan, but in the United States 50 or 60% of outdoor activity over 20 years old and under 40 years old.
Tim: In Japan, is it mostly older people?
Yoshi: Very old, so 60% is over 60 years.
Tim: Okay, that is going to make it very different. In the US it is mostly people in their 20s or 30s or 40s, but in Japan it is 60 and older, is that true of your users as well? Are most of them 60 and older?
Yoshi: Of course there are 60 and older but the percentage is 30% in Yamap application.
Tim: Is sixty and older?
Tim: That is a really interesting challenge, because the smartphone penetration within seniors in Japan is actually quite high, so a lot of people over 60 have iPhones or Android phones. What do you think of the market as a whole? If Yamap is serving a market that is aging, 60 and older, and young people are not so attracted to outdoor activities, what do you think is the future not just of Yamap, but of hiking and outdoor activities in Japan?
Yoshi: The outdoor numbers have been decreasing in Japan, if we do not program for outdoors.
Tim: So that is the big need for the gamification.
Yoshi: Yes, yes that’s right.
Tim: Trying to get more people outside.
Yoshi : Especially young people .
Tim: Have you thought of focusing on inbound tourism? A lot of people now are coming to Japan especially like backcountry skiing and things, is that an area you are looking at?
Yoshi: Yes, so last year we launched our application Yamap in the Niseko area for backcountry skiers, so it really works.
Tim: Niseko is just world famous as a skiing place.
Yoshi: I think there is a problem; almost all people do not understand the nature around their own area. They do not figure out how nature is beautiful in Japan.
Tim: You think that Japanese people do not appreciate the nature that is here.
Yoshi: No, usually Japanese people advertise shrines, a temple, it does not include nature points.
Tim: It is true. The government programs, the Japanese advertising for inbound tourism does focus on Kyoto and famous temples, but a little more these days on skiing and hiking.
Yoshi: It is getting popular. For example in Kyoto, there are really good temples, but also, there is good nature along Kyoto. But people do not know, especially local people.
Tim: It is probably because most of Japanese tourism comes from Japanese. It is internal tourism, and if the hiking trails, that makes sense that they are not focusing on them. But hopefully this new wave of inbound tourism will bring different tastes and new priority on the nature.
Yoshi: If the hiking and outdoor activity is getting more popular, I think people would have stayed longer in one area.
Tim: I think so too, it is more to do. Hiking or cross-country skiing is a much slower activity.
Yoshi: It makes local Japanese people to be changed. I want them to have confidence in their own home town.
Tim: To advertise their nature to the world. But I think that, once different areas see it being done elsewhere… once they see it working and foreign tourists come into Japan for hiking in one area. I think other areas will copy that, and start doing it as well. Actually Yama is based on Fukuoka and you yourself are from Fukuoka.
I am a big fan of Fukuoka, actually. I really like it. There are a lot of startups in Fukuoka but the startup scene Fukuoka seems to be different from Tokyo.
Yoshi: The best point is to enjoy the whole of life. It is not only doing your job but also having fun with family and friends. Five years ago, I was doing a job in Tokyo. I understand that Tokyo has a real advantage to get a job.
Tim: Yes there are many more jobs in Tokyo.
Yoshi: There are many talented people and there are many jobs in Tokyo but in this age, we have to focus our life, not only the job.
Tim: So it is a better work-life balance. I guess particularly with a company like Yamap, where there is a lot more accessible hiking trails around Fukuoka than around Tokyo.
Yoshi: We can keep a good a balance.
Tim: It’s interesting. One thing I have noticed about Fukuoka startups as compared to say, Osaka startups. When a Fukuoka start up starts getting larger and more successful, they will open a sales office in Tokyo, but the headquarters always stays in Fukuoka. When an Osaka starts getting popular and successful, they move to Tokyo. I think that has resulted in a really nice startup community in Fukuoka.
Yoshi : Because Fukuoka has a background, there are many good game software companies in Fukuoka before smartphones. Since smartphones were launched, those kinds of companies made their own products; there are good engineers in Fukuoka.
Tim: I think it was about so 20 years ago Fukuoka was kind of an outsourcing center. A lot of Tokyo software companies outsourced to Fukuoka because it was cheaper. But in the last five, ten years a lot of these companies decided no, we are going to make our own software now.
Yoshi: Yes, that is why. It is a really good environment to develop software like application and games.
Tim: Before we wrap up today, I want to ask you what I call my “magic wand” question, and that is if I gave you a magic wand and I said you can change one thing about Japan, anything at all, the education system, the way people think about risk, anything at all to make it better for startups, what would you change?
Yoshi: People have kindness for fatal people. I mean, fail is not fail, fail is connected with success and fail is a learning point so people have to share.
Tim: Do you mean that you think that people should be more willing to accept their own failure? Or that society should be more tolerant of other people who have failed?
Yoshi: I think both. Especially in startup companies not to try is the most risky.
Tim: Doing nothing is, you will die.
Yoshi: In Japan people do not want to fail. That is the most risky I think. We want to encourage the people to do new jobs and new challenges.
Tim: I think that is true, particularly at large companies, being associated with failure or being associated with a project that fails is a terrible thing, but being associated with success is okay, but it’s not necessary. It’s just failure is bad. What I have seen a lot of startups starting to do successfully in Japan in terms of failure, is they are talking more about experiments. Experiments do not fail, you are just testing.
Yoshi: Yes, that is a point, the experience. We want to search the experience of being alive, including failure and success.
Tim: I have seen a lot of Japanese companies change the attitude towards risk, to talk about small projects as tests. It is like alternative market research.
Yoshi: We have to think big.
Tim: Do you think that is changing now in Japan?
Yoshi: Yes, I think Japan is changing.
Tim: Excellent! Well listen, thank you so much for sitting down.
Yoshi: Thank you.
And we are back.
I love what Yoshi and Yamap are doing. And living in Tokyo, pigeons and the occasional squirrel, is the closest thing we have to wild life here.
Japan does have some stunning country side and it would be great if more people got more time to appreciate it. That said, Yamap seems like a company in search of their perfect business model. Creating a social platform with premium content did not work out, because the initial community was too small. Selling insurance and outdoor gear to their user base provides solid revenues but will not scale as well, particularly in overseas markets as a simple mobile app.
As they say, the hound that chases two rabbits catches neither of them.
Still though there is nothing intrinsically wrong with hybrid and complimentary business models, and it is going to be interesting to watch how they continue to evolve. You know it was their work with large Japanese companies, like Seiko and Kyocera that I found most interesting. Not simply because those large Japanese companies are working startups in a meaningful way. We are seeing more and more of that.
No, that the most important thing for these companies was not the startup’s technology or the platform, which is what so many startups focus on. What Casio really wanted out of these relationships was Yamap’s userbase. Not simply because they wanted to sell products to those users, it is something more important. A growing and engaged user base is the only thing that validates the product. It is the only reason a company would select a startup’s product over one they developed internally.
After all, actual success in the market itself is the clearest way to demonstrate that a startup’s idea has value.
If you have ever been hiking in Japan, or are thinking about doing it, Yoshi and I would love to hear from you. So, come by Disrupting japan.com/show075 and let us know what you think. And when you come to the site, you will see all the links and resources that Yoshi and I talked about and much more in the resources section of the post.
I would like to say a little word about our sponsors. These companies make it possible for me to continue putting this show together and putting out this great content, so if you get the chance, visit them and let them know you heard about them on Disrupting Japan.
But most of all, thank you for listening and thank you for letting people interested in Japanese startups know about the show. I am Tim Romero and thank you for listening to Disrupting Japan.