Koichiro Yoshida took CrowdWorks from idea to IPO in less than three years, and today both CrowdWorks and crowd-sourcing in general are seen as essential to Japan’s future economy. Just 10 years ago, Japanese politicians pointed to freelancers and part-times as part of the cause of Japan’s economic woes. Fortunately, Japan’s leadership is now beginning to realizing that having a flexible and skilled workforce is actually a tremendous economic advantage.
Of course, since so much of modern business culture in Japan is based on the idea of belonging to a specific company, the move to large-scale freelancing will lead to large social changes as well. Both good and bad.
Koichiro and I talk about the impact those coming changes will have, and about his own journey and how there were many years of preparation, hard work and painful failures hidden behind the “overnight success” of CrowdWorks.
Show Notes for Startups
- Why Japan needs crowd sourcing to survive in the 21st century
- How to build a flat company in a country where hierarchy is prized
- How to foster a sense of community and loyalty among freelancers
- Getting large Japanese companies onboard with crowd sourcing
- What Koichiro learned from the disaster that followed the IPO of his first company.
- The secret of CrowdWorks incredibly high(even for Japan) employee retention
- The importance of burning your bridges and focusing your attention
- Japan’s slowly changing attitude towards failure, and what will change it
Links from the Founder
- Sign up to be a freelancer or employ one
- Koichiro’s Blog
- Follow Koichiro on twitter @yoshidacw
- CrowdWorks Facebook Page
Transcript from Japan
Disrupting Japan – Episode 17
Welcome to Disrupting Japan. Straight talk from Japan’s most successful entrepreneurs.
I am Tim Romero, and thanks for listening.
Today, we sit down and talk with Koichiro Yoshida of CrowdWorks. Now, this is one of Japan’s largest Crowd Source and platforms, and Koichiro built it up from nothing to IPO in less than 3 years.
He has received awards from people like Prime Minister Abe for the potential for this Crowd Sourcing movement to reshape the Japanese economy. He has got some fascinating insights on that very subject.
Now,CrowdWorks was not Koichiro’s first company. He has been involved in more than a dozen different projects over the years. Including one to build an entire new city just like Henry Ford did.
Now, most people in the software world are very glib when talking about failure. When you ask them about it they will say oh yeah you know fail fast, fail forward. Well, yeah okay, but what about you? You personally. Oh me. No, me I am crushing it. I am not failing at anything.
There is something rather amusing about people who simultaneously emphatically proclaim that failure is good while being terrified as actually being seen as failing.
Well, near the end of this interview I realized that a perfect demonstration of lack of concern about failure was in this interview itself.
Let me explain. This is Koichiro’s first audio interview in English. He still struggles with English. The 30-minute interview that you are about to hear is an edited down version of our almost 90-minute conversation.
During that time we were breaking in and out of Japanese. You can hear his assistants in the background trying to cobble together correct English phrases, or put up PowerPoint slides for reference. You can hear Koichiro reaching back into his memory of college English classes to find the right words to answer a question with.
Two things we discuss in this interview that listeners outside of Japan might not know. First, Son-San is the CEO of SoftBank. He is one of the few truly successful and disruptive Japanese entrepreneurs. SoftBank is one of the very few start-ups that succeeded by taking on the powerful domestic incumbents head on.
Second, in Japanese the word challenge is used as a verb. The challenge is not the difficult external situation. The challenge is what steps you take to resolve that situation. I have to admit I sort of like the Japanese use of the English word better.
Anyway, in terms of not fearing failure. Even outside of his native language, and far outside his comfort zone Koichiro dominated the room. He is laughing through the entire process, and having a great time. We all were.
Somehow, we managed to explain some very complex ideas using very simple words. If this interview seems a bit chaotic well, it was. There is a lot to learn from trying to make order from that chaos.
Here we go…
Koichiro: Thank you for coming. .
Tim: Thank you for being part of this. Let’s get started.
Tim: I am sitting here with Koichiro Yoshida, who started CrowdWorks. So, our listeners understand CrowdWorks is a B2B focused crowd sourcing platform in just about only 3 years.
Tim: You have grown it from nothing to 68,000.
Tim: Client, customers. Almost 450,000 freelancers.
Tim: I have used it a number of times.
Koichiro: Oh, you forgot one important thing.
Tim: What’s that?
Koichiro: Less than 3 years we went Public.
Tim: You went Public.
Tim: You went public last December.
Koichiro: Yes, yes, yes. A very important thing. .
Tim: Congratulations. Your job is now much, much harder.
Koichiro: . Exactly, exactly.
Tim: One thing is I have noticed in this office the environment here still feels very much like a start-up.
Koichiro: Start-up, yes.
Tim: You have grown very fast over the last 3 years.
Tim: Your plans for growing this year.
Tim: Is also. You are planning on almost doubling the size of the staff. How do you think you are going to be able to keep the corporate culture the same?
Tim: How are you going to keep CrowdWorks thinking like a start-up?
Koichiro: Processing. I tell you our station in Crowd Sourcing.
Koichiro: As you know SoftBank is most successful company information technologies in Japan market.
Koichiro: Now, CrowdWorks was featured as the next SoftBank
Tim: The next SoftBank.
Koichiro: Yeah. By Nikkei a media giant.
Tim: That’s a big ambition.
Koichiro: Yes. I tried to make the next trillion-dollar company. In fact, I made a presentation at the SoftBank Awards. Masa Son, Jack Ma, and … It’s me! .
Tim: That’s impressive company to be in.
Koichiro: Our company is the next SoftBank.
Tim: Soft-Bank I think is one of the few truly entrepreneurial companies in Japan. Son-san is very aggressive. He is very disruptive.
Tim: He is a great person to both model yourself on and set your ambition towards.
Tim: How do you think growth will change your cultural inside the company?
Koichiro: Yes, yes.
Tim: Do you think it will stay the same?
Koichiro: I think, not same, not same. Not same. Because as you know Mr. Son is powerful people and big ambition. I think I am not so strong, so it is important to think teamwork.
Tim: To build the team around you.
Koichiro: Build teamwork is the most important thing for my event. Because our vision is smaller. Crowd Sourcing means open innovation. Our management style we are close to to crowd sourcing.
Tim: Very open.
Koichiro: Yes, very open, very open.
Tim: Very transparent.
Tim: It’s a very flat hierarchy. Complicated ideas in simple ways.
Koichiro: Our company is called the next SoftBank.
Koichiro: But not SoftBank. Because our management style is flat, very flat.
Tim: Right. Soft-Bank is extremely hierarchical.
Koichiro: Yes, yes.
Tim: It’s a different generation. I think Japan today, the whole society is much more flat.
Tim: Than Japan 40 years ago, 30 years ago, in Son-san’s generation.
Tim: Let’s talk about that. I know since you are IPO you are not as free to talk about the future of the company as much. Let’s talk about the future of Japan, and about Crowd Sourcing. Because of the language barrier in Japan.
Tim: The Japanese Crowd Sourcing Market is it is very isolated. Well, just like Japan it is sort of an island. Do you see a difference in the types of use patterns between Japan and the rest of the world? Is is still primarily developers and designers, or are there some unique stories and you unique types of freelancers that you have seen only in Japan?
Koichiro: In America, there are many community for example working time, private time, family time, and religious time. For Japanese the only community is company.
Koichiro: Yes, yes. In America, many, many communities. Particularly in 20th century, Japanese always think company. Company means personal life.
Tim: Yeah. In Japan it is very much so a person is his identity.
Koichiro: Yes, yes.
Tim: Is the company.
Koichiro: Exactly, exactly.
Tim: His social life, his wife status, everything depends on the company he works for, and his position.
Koichiro: In 21st century change. Yes. Before earthquake. Japanese person always believe in Company. After earthquake Japanese people believe in family. Extremely changing.
Tim: Do you think there really was a nationwide shift after that?
Koichiro: Yes, yes. In emergency time, the company not perfect partner.
Tim: That’s true.
Koichiro: Oh yes. Company not protect person. Family protect person, so changed Japan’s mind.
Tim: That is really interesting. Now, freelancing and Crowd Sourcing in general. It has been interesting to watch the politicians and the government talk about it over the last 10 or 15 years. Fifteen years ago, ten years ago, people were talking about Freeters and NIETs as almost parasites Now, even METI has been saying Crowd Sourcing is part of Japan’s future. How do you see the future of Crowd Sourcing in Japan? Do you think this will be a niche type of employment? Do you think that this will come to a place where 5, 10, 20 percent of Japanese are working on a Crowd Sourcing or Freelance basis? How big will this change be?
Koichiro: For many people in Japan working under the rules of their company is a general center of their work life. However, since the earthquake, many people began to reflect their way of life, and have come to realize the importance of family.
In addition, as globalization has been progressing more young people came to stay in local areas, and the number of students who want to go into local University has been increasing. I believe it could bring people a new way of working in a way that enable our people to stay in local areas where they grew up and get job. From all over the country at the same time.
As an initiative for that, we launched our program in 2014 collaborating with Ichinan city in Miyazaki to enable people living in that area to make 200,000 yen a month.
Tim: That is fantastic. I think that is one of the government’s big hopes for Crowd Sourcing.
Koichiro: Yes, yes.
Tim: A lot of our listeners overseas might not know, but over the last 50 years or so the population of the countryside has been getting smaller.
Tim: The big cities, especially Tokyo has been getting bigger and bigger. Crowd Sourcing holds the hope that we will be able to have people in rural areas that can enjoy their higher quality of life, but still earn a living.
With Miyazaki Project. Is this happening yet? Are a large percentage of your freelancers in rural areas?
Koichiro: Please show.
Tim: It is hard to show slides because it is audio, but I will explain it.
Tim: I will do my best to explain to the listeners.
Koichiro: Yes, yes, yes, yes, yes. Do you know the one at right end?
Tim: That is Prime Minister Abe.
Koichiro: Yes, yes, yes, yes. Last month. Abe praised me. . First Nippon Venture Awards. President Abe expect our company too.
Tim: They are expecting a lot from you.
Tim: It’s hard to know what happens in the future. Right now.
Tim: Do you have a lot of freelancers that are in the countryside?
Koichiro: Many of our workers are living outside of Tokyo.
Koichiro: Yes. Crowd worker can work every time everywhere.
Tim: It think you have mentioned once before in a presentation that a lot of your freelancers, a lot of your crowd workers were retired.
Tim: It is not just young designers and programmers? What other kinds of jobs the retired people are doing most?
Koichiro: Yes. Called retire is correct, but not correct because in company 60 years is retirement years. In crowd sourcing.
Tim: Great. Japanese people retire very early, and live very long.
Tim: They might have to retire from their companies at 60.
Tim: They can still participate in Crowd Sourcing.
Tim: What kind of jobs are the older people especially those in the countryside? What kind of jobs are the doing?
Koichiro: Our main users are professional engineers, designers and writers. More than 50 percent of our users are female. Our females users are raising a child at the same time.
Tim: That is very important for Japan’s future.
Koichiro: There are 188 industries.
Tim: A huge variety.
Koichiro: Yes. Variety of jobs.
Tim: Both CrowdWorks and crowd sourcing is certainly taking off in Japan. On a personal level what you said before about the company being so important. I think there is also a deep feeling that people need to feel they belong.
Tim: The place that people always belonged was the company.
Tim: Using crowd sourcing.
Tim: How do people feel they belong in Japan? Do they feel loyal to the crowd sourcing platform? Do they build new networks? How do people keep the sense of belonging?
Koichiro: I think belonging to internet, like The Matrix]. .
Tim: . The Martix, of course, yes.
Koichiro: Morpheus. Belong to internet.
Tim: I never thought of that. I mean that does make sense with the internet being more open.
Tim: And, it not mattering whether you are in Tokyo or in Sado or wherever. Yeah, I guess you could have a very, very large network where everyone belonged.
Koichiro: Yes, yes, yes.
Tim: Have you found, have your customers hesitated to use Crowd Sourcing? In Japan, traditionally businesses like to build up long relationships.
Tim: They like things very stable, and working with the same people over time. Was it hard to convince big companies to trust crowd sourcing
Koichiro: Yes. I think Japanese people have separate custom, language, one culture.
Tim: Do you think that Japanese companies are becoming more flexible?
Koichiro: Yes, yes, yes. This century Chinese people often come in Tokyo.
Koichiro: For sight-seeing.
Tim: I think the government said that Chinese tourism is very important.
Koichiro: Yes, yes, yes, yes, yes.
Tim: Companies are being more flexible. Japan is being more willing to open up and look to outside.
Tim: I know CrowdWorks is trying to partner with Crowd Sourcing Platforms in Southeast Asia. Do Japanese companies prefer to work with the Japanese freelancers, or are they more flexible and willing to work with people from Vietnam or Thailand?
Koichiro: In the near future we try to make collaboration in Vietnam and Thailand. Now, just research and just study Japanese circumstance is very special always need to meet.
Tim: Yeah, so much business is face-to-face.
Koichiro: Yeah, face-to-face. Crowd Sourcing in word no need to meet. Crowd Sourcing in Japan need to meet.
Tim: How did you solve that problem clients who want to meet?
Koichiro: In America, companies can describe concrete profile for out sourcing. In Japan, customer….
Tim: Japanese companies yeah that’s true. Japanese companies are not very good at writing a specification.
Koichiro: Yes, yes, yes, yes.
Tim: You were saying before they like things to be vague.
Tim: That is why they need meet face-to-face.
Tim: Doesn’t this make it difficult for crowd sourcing platforms?
Koichiro: . When I found this company 3 years ago. A customer come here and said please make iPhone application like Line.
Tim: That’s a pretty vague spec. For overseas listeners Line is like Skype.
Koichiro: . I think it is difficult. I have experienced old economy. I have experience in working in Japanese manufacturing company. Japanese language seems the same, but Japanese old company talk other language. .
Tim: Japanese new internet companies and Japanese old companies are both speaking Japanese, but it is practically a different language.
Koichiro: Yes, yes, practically different. Big different.
Tim: Now, you have got some very large Japanese companies as customers.
Tim: Are most of your customers like new internet companies, or are most of your companies more the traditional?
Koichiro: I show you our project. Sony, Itochu, Yamaha, TBS TV Company.
Tim: These are big, big, big, Japanese companies.
Koichiro: Yeah, big company. Start to use Crowd Sourcing. Do you know Christian Ronald? You know? You don’t know?
Tim: No, I don’t.
Koichiro: Oh really. . Soccer player.
Tim: I am not a sports person.
Koichiro: . Oh really?
Tim: I am a geek.
Koichiro: Use CrowdWorks.
Tim: Oh really.
Koichiro: I have never seen.
Tim: That’s the advantage of Crowd Sourcing, you never actually meet the customers.
Koichiro: No need for a meeting. Yes, yes, yes.
Tim: Before we were talking about the research you were doing now about Crowd Sourcing in Southeast Asian countries for new freelancers. With the Tokyo Olympics coming up.
Tim: Do you think that a lot of overseas clients might suddenly need to use Japanese Crowd Sourcing services?
Koichiro: Increasingly. Increasingly. Recently United Air used CrowdWorks for promotion. And Nestle used CrowdWorks for making new kind of chocolate for Japanese seniors.
Koichiro: Yes, yes, yes.
Tim: That’s very interesting. That is very interesting.
Koichiro: Vice-President of Nestle is is very interested in CrowdWorks. Yes.
Koichiro: Yes, yes.
Tim: Oh okay. The world is getting smaller. Both the clients and the freelancers are becoming more international.
Koichiro: Yes, yes.
Tim: Let me ask you maybe some kind of personal questions about your own story.
Tim: I know you originally wanted to be an actor.
Koichiro: . . Yes
Tim: That seems like kind of a big career change.
Tim: How did you go from wanting to be an actor to starting different companies?
Koichiro: In my young days. Yes, I wish to become actor, but I failed because I don’t know money and contracts.
Tim: The failure is because you didn’t understand the business side?
Koichiro: Yes, yes. CrowdWorks is the third challenge in my start-up career. For the first one I joined IT start-up called DoiCom as a company executive and experienced the company going public on Mothers Exchange 20 years ago. At that time I was only 20 and honestly speaking going public was only goal I had in mind.
Koichiro: However, after the company went public I got stuck and wondered what am I going to do now. After going public the company experienced a deficit. Then downward adjustment and downsizing.
Tim: Oh. That happens a lot in Japan, sadly.
Koichiro: It even came to the point where there was no choice, but to cancel the offers to the new graduates after having already made then the offers.
Koichiro: Yes. That was hard.
Tim: How long did that take after IPO until the troubles happened?
Koichiro: Only 6 months passed.
Tim: Oh wow.
Tim: Six months after IPO. That is not a fun thing to be going through.
Koichiro: The worst part was I personally had to take back the offers. I gave the students half the year before. One day I got a call from one of them those new grads, but I couldn’t pick it up. Ever since then CrowdWorks has been selecting people carefully during the hiring process. Because of this there have only been 3 people who left CrowdWorks.
Tim: In the 3 years since you founded you have only had 3 employees leave. That is incredible.
Koichiro: Yes. . Thank you.
Tim: No, that really is. That is astounding.
Koichiro: I think incredible. .
Tim: How many staff do you have now?
Koichiro: 100. About 100.
Tim: That’s incredible. Even by Japanese standards. That’s incredible.
Koichiro: . Incredible, is my favorite. . The most important thing is Arigato.
Tim: Thank you.
Koichiro: Yes. Thank you, thank you. Thank you. Every morning I imagine my colleague and my company’s user. I say arigato. I come to office. I can always work with smile every day. I have experienced lonely time, no colleague, no user, 3 years ago.
Tim: I think that is important. Right now starting a company is seen as kind of glamorous and fun.
Tim: Sometimes there are definitely fun times, but there is also really difficult times.
Koichiro: Yes. Almost all fail cause they forget arigato.
Tim: You think that most companies and also where some of your earlier ventures. Do you feel the problems was you didn’t appreciate your users as much?
Koichiro: I have a variety of interests. Money, girlfriend, go public so I failed.
Tim: Just a lack of focus.
Tim: Lack of gratitude.
Tim: Well, I think that is having both focus on your goal, and a sense of gratitude of arigatai.
Tim: Is extremely powerful. It may not be like what’s kind of fashionable in the movies, but I think staying focused, staying grateful.
Koichiro: Our company has 100 employee have different thinking.
Koichiro: Yes. Perhaps cannot control. Just arigato for 100 people, workers.
Tim: Right, right. I think that is also the attitude of being grateful to your employees rather new in Japan. It is almost the reverse.
Tim: Traditionally, the employees were loyal and grateful to their boss and the company President.
Tim: I think that is a very interesting attitude.
Koichiro: Thank you, thank you, thank you.
Tim: And a very refreshing one.
Koichiro: . In the near future we make new culture company.
Tim: In the past you worked on many different projects.
Tim: Are you still working on different, crazy side projects, or are you 100 percent only working on CrowdWorks now?
Koichiro: . I concentrate CrowdWorks. Only one. Yes. Tomorrow I go to playing golf.
Tim: You play golf once a year?
Koichiro: Yeah. . Please forgive.
Tim: Yeah. I think your investors will forgive playing golf once a year.
Tim: It is fascinating in Japan now. Japan as at a point of change. You talked before how the shift away from the company being the center of the life. Start-ups are becoming more socially acceptable.
Freelancing where 10 years ago it was viewed as there is something wrong with this person.
Tim: Is now understood to be very important to have a mobile flexible workforce. I go to a lot of co-working spaces and start-up events in Tokyo. Most people are freelancers, not so many are really entrepreneurs. What do you think is the difference between a good freelancer and a good entrepreneur?
Koichiro: A bit different. It is interesting organization. Freelancers have no interest in.
Tim: The start-up founders need to understand organization.
Koichiro: Yes, yes, yes.
Tim: Freelancers can be, well free.
Koichiro: Free, free, yes, yes, yes. I think freelance is our family.
Tim: When you started CrowdWorks I mean you really boot strapped. I think you said you sold your car. You used your own money. If you had to do it today would you start the same way, or would you try to get money quicker from like an incubator?
Koichiro: Depends on personal type.
Koichiro: Yes. I think I am lazy.
Tim: I don’t think you are lazy. No, no, no. I don’t think so. You play golf once a year.
Tim: That is not lazy.
Koichiro: I need to throw away everything.
Tim: Did you need to throw it away so you could focus, or to throw it away so you would have no choice, but to succeed?
Koichiro: Yes, yes, yes.
Tim: No choice, but to succeed.
Koichiro: Yes, yes. If I have many choice I spread my mind.
Tim: That is very interesting. I think it is true. We have seen a lot of companies in Japan and in America who raise a lot of money.
Tim: Very early and, spend it very quickly and very badly.
Tim: I suppose there is using your own money definitely helps focus.
Koichiro: Yes. Gathering money is important.
Koichiro: For start-up. Most important things is credibility. I decide that I concentrate only this one that’s my credibility.
Tim: By putting yourself in that position your customers, your investors, everyone understands that you are 100 percent committed to success.
Tim: That makes sense.
Koichiro: Gathering money. Is just process.
Tim: True. I agree 100 percent. I think right now if you read news about start-ups most articles are about raising money.
Tim: When I go to start-up events, and I teach at start-up classes most students questions are about raising money.
Tim: I think you are right.
Tim: It is not important, but everyone thinks it so important.
Tim: I can imagine that is very personally motivating. What did your family, and what did your friends think about that decision.
Koichiro: My family suggests me. My friends cannot understand, but only 3 years, only 3 years. My life is very long, very long. Just 3 years. Five years, ten years.
Tim: You explained to them it was just something you were going to try.
Koichiro: Yes. Another time we lived with friends and family. If you have will to start up business you should start the business now. And if you never give up. You will surely find a way. An entrepreneur fails when they don’t make challenges in life. Where there is not success, nor no fear.
Tim: If you don’t have a chance to fail, you can’t really succeed.
Koichiro: Yes. Failure is a chance to grow. Nice. Nice one.
Tim: I think that is true. Do you think Japan’s attitude towards failure is changing? Failure has always been a very bad thing in Japan.
Koichiro: Yes, yes. In Japan.
Tim: Do you think that Japanese society or younger people are more willing to take a change and fail now, than they were before?
Koichiro: Perhaps change. But, situation.
Tim: Still a lot of people view failure.
Koichiro: Ten years after, or twenty years after. Decreasing the old style.
Tim: The attitude towards failure you think is changing.
Koichiro: Yes. Change, change, change, change.
Tim: Ten or Twenty years ago.
Koichiro: Challenge. Young people always need to challenge.
Tim: Okay. A lot of young people today want to start companies, and they have an image of what starting a company is like. What is their biggest misconception about it?
Koichiro: No dead.
Koichiro: No dead, no dead.
Tim: You are not dead if you fail.
Koichiro: Yes. . Keep living is mostly success. .
Koichiro: Young people think mistake, but no, no, no mistake. You live, live, live.
Tim: You are a live.
Koichiro: You are alive. Oh, yes, yes. Keep living is success.
Koichiro: Next challenge, next challenge.
Tim: I like that. I like that a lot.
Tim: What would be the advice you would give to young people today about starting a company?
Koichiro: You are not afraid mistake. Success or mistake become success. Afraid, not become success.
Tim: Mistakes can lead to success, but fear never leads to success.
Koichiro: Yes. Success or mistake. Good experience, good experience. But no challenge is truly mistake.
Tim: So no action is failure.
Koichiro: Yes. Yes, exactly.
Tim: Okay, that is a wonderful place to wrap things up. I want to ask if there is anything you want to tell our listeners about CrowdWorks or about Crowd Sourcing in Japan, or about start-ups in general?
Koichiro: I definitely say CrowdWorks become the most excellent company in Japan in 21st century I believe.
Tim: I believe this too. .
Koichiro: So listener, shall we join? .
Tim: We will definitely have a link to the CrowdWorks website on the page.
Tim: Both customers and freelancers can come and join.
Tim: Yoshida-san, thank you so much for sitting down and talking with me.
Koichiro: Yes, yes, yes. Okay, okay. . Conclusion!
We are back. Well, the theme for the day was complex issues expressed using very simple words. Koichiro approach to boot strapping, selling off everything you have, and cutting off all other options before starting a company is almost unheard of today. In a way it is very Japanese.
Not so much simply in terms of motivating yourself, but in demonstrating your complete commitment and to everyone involved. To someone as risk-friendly as Koichiro perhaps he really did need to cut off all other options to really feel the focus.
If you want to see the links and resources that Koichiro and I talked about, or to get in touch with Social Media, or even to sign up as a CrowdWorks Freelancer or Client. Go to DisruptingJapan.com/show017, and you will find links to all of that and more in the resources section.
Please leave a comment and let us know what you think about Crowd Sourcing in Japan or in general. If you get the chance please leave us a review on iTunes. That is really the best way you can support the show and really help us get the word out. Most of all, thanks for listening. Thank you for letting people interested in Japanese start-ups know about us.
This is Tim Romero, and thanks for listening to Disrupting Japan.