It’s hard to make money with music apps. The competition is intense, and most people simply are not willing to pay much for music apps; either because music is something they only do casually or because if it’s something they do professionally, they probably don’t have money.

Akinori Fumihara of Nana, however, is succeeding despite the odds. Nana is a collaborative music creation app, where different users upload and submit different tracks to a song, which can be edited and remixed by others to create an unlimited number of arrangements.

Today Nana has a highly engaged global user-base that numbers in the millions, but it almost did not work out that way. Three months after the initial release, Nana was running out of money and was watching new installs trend towards zero.

How Aki and his team managed to turn things around is an amazing story, and one I think you’ll really enjoy.

Show Notes for Startups

  • Why “casual music” is important
  • How to develop an overseas user-base by word of mouth
  • Why teenage girls form the heart of Nana
  • How a YouTube video inspired an iPhone app
  • Why it’s hard to monetize a music app
  • Why startups in Japan (outside of Tokyo) struggle
  • The difference between Tokyo and Kansai startup founders

Links from the Founder

Transcript from Japan

 

Disrupting Japan, episode 80.

Welcome to Disrupting Japan, straight talk from Japan’s most successful entrepreneurs. I’m Tim Romero and thanks for joining me.

I’ve always had a soft spot in my heart for music apps. The competition in this space is intense, and almost every niche seems to be filled. So trying to differentiate a music gap calls for a lot of creativity. But it’s usually their quixotic quest for business models that is the most interesting. The problem is that people just don’t want to spend money on making music. The amateurs and the dabblers don’t spend enough time on the hobby to invest much. And the professionals, well speaking as a former professional musician myself, I can tell you that professional musicians never have money in the first place.

Well today, we sit down with Akinori Fumihara of Nana, and they might have just cracked the code. Nana is a collaborative music creation app where different users upload and submit different tracks to a song. Which can be edited and remixed by others to create an unlimited number of arrangements. Now Nana has become a huge hit with its millions of users. And just like Google, the name Nana itself has become a fully conjugatable verb in Japanese. “Nananu Nanateru, Nanata.” “I use Nana. I’m using Nana. I used Nana.”

Now I’ll warn that Aki’s English is not as good as some of our other guests. But the man is really excited about reaching out to foreign listeners and so he decided to make it work and come on the show. Nana is a very cool app, and Aki’s a pretty cool guy. He’s got an amazing life story, and he started a fascinating company. But you know, Aki tells that story much better than I can, so let’s hear from our sponsors and get right to the interview.

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[Interview]

 Tim: Cheers.

Akinori: Cheers.

Tim: So I’m sitting here with Akinori Fumihara, the CEO and founder of Nana. Thanks for sitting down with me today.

Akinori: Nice to meet you.

Tim: That’s great. Now Nana is a social music platform, but can you explain what is social music? How does Nana work?

Akinori: Nana is music collaboration. I’ve found and enjoyed that biggest feature is collaboration and over dubbing. For example, like the base line, boom, boom, boom, boom, boom, boom. Next, with the base add drums, boom, boom, boom, boom, boom, boom, boom, boom. So with the beat it adds piano.

Tim: So each user adds a new part to the piece—

Akinori: Yes, yes.

Tim: And they collaborate to build the song. To build the orchestration. Do they record directly into their iPhones? Or do they upload tracks?

Akinori: Yes, yes, yes. You can just use smartphone.

Tim: Okay, so are there editing features within Nana, or is everything sort of recorded live to layer on top of other tracks?

Akinori: User can upload and overdub.

Tim: Okay, so this really is a casual music app?

Akinori: Exactly.

Tim: So the focus is not creating a finished work, it’s really just having fun?

Akinori: Yes, exactly right. So in music is communication.

Tim: Well, tell me a bit about your customers. Who uses Nana?

Akinori: Okay, we have 3 million users and mostly teenagers.

Tim: Mostly teenage boys, teenage girls, a mix?

Akinori: Teenage girls.

Tim: Mostly teenage girls?

Akinori: Girls, yes.

Tim: Alright. Nana’s also available in English, right?

Akinori: Yes. In fact, we have 13 languages available.

Tim: How many of your users are in Japan, and how many are global?

Akinori: 2 million users in Japan, and 1 million is overseas.

Tim: Wow, so one third of your users are overseas. What are the main countries besides Japan that people are using this?

Akinori: 5 countries; Taiwan, America, Vietnam, India, and France.

Tim: Okay, that seems like a strange collection of countries. So why those countries in particular?

Akinori: I don’t know yet.

Tim: Okay.

Akinori: Because grows naturally. Yes.

Tim: So just word of mouth growth?

Akinori: Yes, yes.

Tim: Excellent. Okay, if we say teenage girls are the biggest user base, what are they using Nana for? Are these people who want to become professional musicians? Are they people who are just having fun with their friends? Why are they using Nana?

Akinori: I think everybody just want just to sing, and they’re both tweeting to their friends. And they want everyone to just listen to their songs. And they’re not wanting to be professional.

Tim: Okay, so it’s more of a hobby?

Akinori: Yes, hobby. Yes.

Tim: But I understand a lot of your users are very engaged. They have their Nana ID on Twitter profiles and social media quite frequently.

Akinori: Yes. Users who has energy engage to our app 10 hours a day.

Tim: 10 hours a day?

Akinori: A day.

Tim: Okay, that’s some pretty heavy use.

Akinori: Yes.

Tim: That’s not a hobby anymore. That’s— Let’s talk a little bit about you.

Akinori: Me? Okay.

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Tim: So you have a background in music, right? You used to be a professional singer.

Akinori: Yes, yes, yes. I wanted to be a professional singer. And I loved Stevie Wonder, and Bree Joab—

Tim: Excellent.

Akinori: —and Ray Charles—

Tim: That’s nice.

Akinori: —and Janis Joplin. I love jazz and rhythm & blues.

Tim: Was that your main motivation for starting Nana?

Akinori: Yes. But also I can post the video on YouTube. This was sung by 57 amateur singers all over the world. As a Haiti earthquake relief  and I was greatly moved. It’s awesome. People are united through the song and harmony. It was so amazing. But I don’t see any Japanese here. Yes. Then I realized that that concept: music uniting the world, is rather spoken yet it isn’t realized. I’d like to create that world without loneliness by connecting people all over the world with music.

Tim: Okay. Yeah, I remember that video. So it was this collaboration of people from all over the world who were creating this song—

Akinori: Yes.

Tim: —together.

Akinori: Yes. “We are the world” for Haiti, YouTube edition.

Tim: And so that was your inspiration for Nana?

Akinori: Yes, yes, yes.

Tim: Okay. Before starting Nana— What were you doing before Nana.

Akinori: I was a mature racing driver.

Tim: You were a race car driver?

Akinori: Yes.

Tim: Okay. Tell me about race car driving. How long were you doing that?

Akinori: 5 years. 5 years. And to 2004 to 2009.

Tim: Okay. From being a race car driver to starting a music start-up is a pretty big change. Why did you quit racing cars?

Akinori: At that time, my dream was become a Formula 1 Driver, but it costs so much so I had to quit.

Tim: You couldn’t get the sponsors?

Akinori: No, I had no sponsor.

Tim: Okay. So changing from race car driving to music. These are targeting things where there’s very little money. But okay, so once you got the idea and the inspiration for Nana—

Akinori: Yeah.

Tim: —you were a part of Movida’s early acceleration program?

Akinori: Yes. It brought me a lot of benefits. It works, and they have invested me when I haven’t established a business model so it was very, very helpful for me. But they wasn’t able to bring a financial side.

Tim: Oh, okay. So the amount of money they invested was very small, but I guess you were there learning how to run a company, and how to hire, and how to build the product. So you guys went live in November of 2012. How much traction did you get initially?

Akinori: At first, we achieved 4 thousand downloads in the initial launch, but that then decreased to 2,000, 700, 200, 100 [laugh].

Tim: Okay, so after the big announcement and the big release, you got a lot of attention, and then it just trailed off.

Akinori: Yes, yes.

Tim: Okay. Well, how did you turn it around? How did you start attracting users?

Akinori: It was by tuning UI/UX opposite app. And also after app store optimization grew our users’ pack.

Tim: What did you change about the UI?

Akinori: All.

Tim: So it completely changed it.

Akinori: Yes, immediate change.

Tim: So it’s very unusual for simply changing the UI to cause an app to suddenly become successful. So you guys also did a lot a social media outreach, and you even had some live events, right?

Akinori: The biggest reach was users sharing on SMS, Twitter.

Tim: Okay, so you added the ability for your users to share their songs and their collaborations, Okay, that makes sense. You also held a live collaborative—

Akinori: Yeah.

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Tim: —music festival, right?

Akinori: Yeah, Nana Fest. Yes.

Tim: Well, tell me about that.

Akinori: We did a festival created by Nana users. I wanted to provide a real place, a better place to enjoy music. In 2015, there were 1,000 people that came to Nana Fest. And this year, we are going to hold it in August.

Tim: Okay, is the festival also creating collaborative music, or performance, or what happens at the festival?

Akinori: Everybody is a performer. Everybody can join. They can listen, sing, play. And they can experience anything together.

Tim: That sounds awesome. So have there been any bands or records that have come out of Nana collaboration yet?

Akinori: Yes, there are many users who created a band together, or released a CD album, and became a professional.

Tim: Fantastic.

Akinori: They were even users who got married.

Tim: Really?

Akinori: Yes.

Tim: That’s great. I guess that’s the best result for collaborative music. Before, you mentioned that the business model was always challenging. It’s always hard to sell to musicians or to make money from musicians because they don’t have any money. So what is Nana’s business model?

Akinori: Basically with models. One is monthly subscription, and the other is in app advertisement.

Tim: What do the paying users get that the free users don’t get?

Akinori: Premium users get a special voice effect, they can search by most approved users, and hide app ads, and that’s all.

Tim: Well, it’s been five years since Nana launched. You guys have recovered from almost going out of business. So what are the future plans for Nana? What is the end goal here? Do you plan on selling the company for M&A? You planning on IPOA it? Or do you just want to keep running a music collaboration company forever?

Akinori: Our ultimate goal is to sing “We Are the World”. Actual the world. So in order to make my goal come true, we want to expand more globally, acquire 1 billion users.

Tim: That’s quite a big goal. Excellent. Well, let me ask you some questions about Japan in general. So you’re from Kobe?

Akinori: Yes.

Tim: Was Nana founded in Kobe?

Akinori: I had the idea in Kobe but moved to Tokyo to launch it.

Tim: This is interesting, so I want to ask you why?

Akinori: Why?

Tim: Because it seems so many companies from Kyoto and Osaka will either start in Kobe, and then move to Tokyo very quickly, or like you moved to Tokyo to start their companies. I know both of the cities really want to build up an entrepreneurial community. So why did you move to Tokyo? Why not stay in Kobe?

Akinori: In Kobe, people will talk about it, but they wouldn’t act. But in Tokyo, people actually act on the idea to actually establish a company. And people in Tokyo are were also able to gather people. This was the biggest reason.

Tim: Okay, so you could gather the team. Gather the funds in Tokyo.

Akinori: Yes, yes.

Tim: Alright, so I talked with governments and universities in Kansai.

Akinori: Kansai.

Tim: Well, Kyoto and Osaka, and they’re always saying, what can they do to build this start-up ecosystem there? So what kind of things do you think that universities and governments can do to help start-ups stay in that area?

Akinori: That is a very, very difficult question. I think that if there is any start-up in Kansai area, and that were able to raise their company like in Silicon Valley, then that might make a big difference. But that not easy to do. So I think creating a community of people that have a strong energy for entrepreneurship and creates a community bigger one by one, that might make a difference.

Tim: So it sounds like it’s something that has to happen naturally?

Akinori: Yes, partly naturally. Yes.

Tim: Okay. I guess in for Japan, for this start-up community, it’s best just to start in Tokyo, and then expand from there.

Akinori: I think so. People who you can meet in Tokyo from other cities, they all have a stronger purpose to stay in Tokyo. They have entrepreneurial mind, and you can find that many people which have the same mind outside of Tokyo.

Tim: Okay. Let me ask you about start-up accelerators. So you went through the Movida accelerator, and had a really good experience there. What kind of start-ups do you think should go to accelerators, and what kind of start-ups do you think should just grow the company on their own?

Akinori: I think people who want to grow their company bigger as quick as possible, they should use accelerator program. But people who just want to have many profit with their business, they should go their own way.

Tim: So by earn many profit, you mean just— So people who want rapid growth should go to the accelerator, and people who want to do a more stable, slow growth—

Akinori: Yes.

Tim: —business should go their own way?

Akinori: Slow growth at the beginning. Yeah.

Tim: That makes sense. Listen, before we wrap up, I want to ask you what I call my “magic wand” question. If I gave you a magic wand, and I said that you could change one thing about Japan. Could be the education system, the attitude towards risks, anything at all to make it better for start-ups in Japan, what would you change?

Akinori: Yes, that’s a good question. I want people to make Japan a world like Ghost in the Shell.

Tim: Okay. The anime?

Akinori: Yes, I love anime. I want to connect people’s mind together a ground so that you will be able to see or read their mind when communicating. Sometimes there are complications when people communicate like misunderstanding the words or how they say it. But if you can read their mind, you would be able to understand what each and every people are thinking.

Tim: Okay. Do you think this is a Japan problem, or is this for everywhere?

Akinori: Everywhere.

Tim: Everywhere?

Akinori: Everywhere, yes.

Tim: Well, it’s interesting. A lot of my Japanese guests have told me that it is easier for them to be direct in English than it is to be direct in Japanese.

Akinori: Well, for me, I need to be able to speak English more, so.

Tim: I think you’re doing great. Well listen, Aki, thank you so much for sitting down today.

Akinori: Thank you. Thanks so much.

Tim: Great.

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[Outro]

Tim: And we’re back.

Aki mentioned that a change to Nana’s UI is what turned around Nana’s falling download numbers and declining fortunes. But I think we need to dig into that just a little bit more. You see, version 2 added a social sharing component to the app. It added a legitimate avenue for viral marketing where each each user could share their experience with the app with many nonusers. Now this is really essential for anyone considering building a consumer app today. There are simply way too many apps out there, and the only way you can hope to garner any attention at all today is to either have a massive marketing budget or to incorporate a viral mechanism into your app. A way that users not only can share the use of your app, but that they actually want to do so.

Another point that came up after our interview was that while music may be a universal language, most of the collaboration on Nana happens within a given country. Japanese collaborate with other Japanese. French collaborate with other French users. I suppose it’s not too surprising since collaboration requires a lot of discussion about the music that is being created. Getting back to Nana’s core mission, however I think they’re getting back to the roots of what music really is. In fact, for most of human history, music has been participatory and collaborative. It’s only been in the last 100 years or so, after the invention of the phonograph and the emergence of the music industry, that music became something to be consumed passively. And where there was a clear distinction between those producing music, and those consuming it. Today, technology in general, and apps like Nana in particular, are blurring these lines again. And that’s the way it should be.

If you love music, and you’ve ever tried to collaborate online, well Aki and I would love to hear from you. So come by DisruptingJapan.com/show080 and let us know what you think. And when you drop by, you’ll find all the resources and links that Aki and I talked about and much, much more in the resources section of the post.

And hey, I know you’ve been meaning to do this for a while now, but when you get the chance, please leave us an honest review on iTunes. It’s really the best way you can support the show, and help us get the word out.

But most of all, thanks for listening. And thank you for letting people interested in Japanese start-ups know about the show.

I’m Tim Romero and thanks for listening to Disrupting Japan.