Everyone talks about the importance of international markets and how startups need to think globally from day one. Few companies, however, build that goal into their DNA as completely as Miku Hirano’s Cinnamon.
Cinnamon’s core product, Tuya is a micro-video sharing platform where users share four-second clips about their daily lives. The visual nature gives Tuya obvious international appeal. However, Cinnamon has a core team of Japanese founders, with primarily Japanese backers, and they founded their company in Singapore, hired staff in Vietnam, and then moved to Tawain to launch the product.
These days language barriers are easily crossed and relocating the company for product launch is just part of the go-to-market strategy.
It’s a great discussion and I think you’ll enjoy it.
Show Notes for Startups
- What Miku learned starting Naked Technologies
- How Japanese companies can do better at post M&A integration
- Why it made sense for a Japanese team to found a company in Singapore
- Why the large size of the Japanese market is actually a handicap for some startups
- The changing relationship between producers and consumers
- When incubators can actually provide value to startups
- Why its easier for women to start a company in Japan
- Where Japan’s startup role models will come
Links from the Founder
- Cinnamon’s homepage
- Check out Miku’s blog
- Follow Miku on twitter @chottosokomade
- Friend her on Facebook
- And of course, check out Tuya for yourself. It’s strangely addictive.
Transcript from Japan
Disrupting Japan. Episode 44.
Welcome to Disrupting Japan. Straight talk from Japan’s most successful entrepreneurs. I’m Tim Romero, thanks for listening.
When most companies talk about going global they’re usually talking about either expanding into foreign markets once they gain sufficient traction in their home country or simply making their app available for download worldwide. To Miku Hirano and the team at Cinnamon however going global has a very different and much more modern meaning.
Cinnamon has a core team of Japanese founders with primarily Japanese backers who founded their company in Singapore, hired a staff in Vietnam and then moved to Taiwan to launch their flagship product. Now, that sounds like utter chaos and I’m sure that at times it was. But when you hear me to explain the process. It seems an entirely logical and even common sense approach, one where language barriers are easily crossed and relocating the company for a product launch is just part of the go to market strategy. And it seems to be working.
Cinnamon’s new micro video sharing platform Tuya is growing rapidly.
But I don’t want to give too much away. So let’s get right to the interview.
Tim: So I’m sitting here with Miku Hirano founder of Naked technology and Cinnamon. We’re going to sit down, we’re going talk a lot about what you’ve done so far. But before we do that tell us a bit about Cinnamon and the products you’re developing.
Miku: I founded Cinnamon obviously two to three years ago in Singapore. And we have some staff in Singapore and also we have a development center in Hanoi, Vietnam. So the project that we are doing is what it is called Tuya and it is a four second video sharing service. Actually it is more like video version of Twitter.
Tim: Okay what kind of videos are people sharing on this site?
Miku: Just like daily videos. For example while I’m like I was walking to come to this place there are so many moments that I can take, so for example like a video of my train is coming or like that kind of, Just like normal daily moments.
Tim: So your users are sharing videos in the same way that most people are sharing photographs. Four seconds is not enough to tell a story, it’s just, it’s like a snapshot right?
Miku: It’s just only four seconds and you makes you feel it is like too short to tell something but I found that if they can very different from like photo. And also we want to make it very easy. There are many video applications, all in the world. Most of video applications or it takes like really lots of time to make a long video.
Tim: I registered and I uploaded a video.
Miku: On Tuya?
Miku: Oh, thank you so much!
Tim: Of my wife’s little dog. But I understand what you’re saying it really is it’s as easy as posting a picture there’s no editing, there’s no, it’s just you take the video you want uploaded or not.
Miku: Yes, you can take four seconds video and then just adding a text, like for example now I’m meeting Tim and then post it.
Tim: I want to come back to the company and the business model a little later on ensure right now I want to talk about how about you. If your first company was Naked technology and you started that when you were in college right?
Miku: Yeah exactly.
Tim: What did Naked technology do and how did you choose that name?
Miku: Yeah, that is an interesting question, so I was in college and my major was computer science. But basically people felt Naked technology is like very geeky, like those nerdy, like those kind of like feeling so I want to have make more feminine or interesting.
Tim: Okay just sound very different for.
Miku: Yes so it’s just that reason.
Tim: Well it’s a good name everyone remembers it that’s for certain.
Miku: It is very easy to remember. Very beginning that we are doing is one more service for social network. Miki was like really like its founding, so I don’t…
Tim: And for our foreign listeners Mixi is sort of Japan’s Facebook.
Tim: Before there was Facebook.
Miku: Yeah exactly. Well when I joined Mixi there were only like three hundred thousand users so it was really little unclear. So if I still I could see the behavior that they users would have. Would be like really change. I also thought that marketing will be really changeable.
Tim: Okay certainly was an early platform for targeted marketing.
Miku: But actually it failed very quickly.
Tim: Why didn’t it succeed do you think?
Miku: Definitely was too early and also client could be only Miki.
Tim: Oh so it was is tied to the Miki platform?
Miku: Yeah yeah.
Tim: But it worked out okay because they ended up buying you. There’s more and more M&A activity happening in Japan now and that’s a great thing. But I’ve got to say in general Japanese companies don’t do a very good job of integrating the M&As. What was your experience at Miki once the acquisition happened?
Miku: Yeah so when Miki bought Naked Technology it was really very beginning of M&A in in Japanese startups.
Tim: Right, what year was that?
Miku: Yeah so I think almost like seconding. So basically when we talked with Richard Cathcalls, they didn’t assume acquisition as it was it.
Tim: That’s right, it used it be it was IPO or nothing.
Miku: Yeah. So basically I didn’t know how to work actually, because before I didn’t have a boss so there is no one to convince something. But I found in Miki I need to convince some many people so actually this was surprising for me and yeah…
Tim: You have to start using a Ringisho.
Miku: Yeah, exactly! But actually the acquisition of Naked technology was really successful I think because one of our team, his name is Asakura and he became a CEO of Mixi later on.
Tim: Oh, alright.
Miku: I don’t know about that now, what number now.
Tim: He completely changed the strategy of the company.
Miku: Exactly, exactly.
Tim: It sounds like it was probably a two way gap, you didn’t know how to behave in a corporate environment where you have a boss and approval process. And they probably didn’t know how to manage a team of start-up founders and engineers. M&A activity is increasing in Japan but Japanese companies do have a trouble integrating these acquisitions into them. So what do you think that big companies could do better?
Miku: I think just separate.
Tim: Let the team be more independent?
Miku: Yeah, exactly. Just, they’re to have more flexibility. You only get used to raise a fund. It is really find for us to write a business plan and to predict how it goes.
Tim: So maybe, a better way to manage them because Japanese management style is very heavy management in general. So it sounds like for managing a newly acquired startup it would be best to give them big goals, like long-term goals, like in the next six months we want to do this, and you have this much budget, tell me how you’re going to do it, kind of thing would be better.
Miku: Yeah, definitely.
Tim: Yeah, I think that would suit the strengths and personalities.
Miku: So actually, to raise a fund takes lots of time but if by staying in a corporate if I can cut that kind of time, that would be really great. And also actually budget that we need is not that much. So basically when a big corporate makes something, for example, like a new service the budget is very big. We do not need that much.
Tim: People always say it’s cultural, but I think it’s more a matter of trust. I think if large companies could trust a team to work independently yeah they probably could get by with much much smaller budgets and much faster turnaround time.
Miku: And if you hit this number or you can set small goals, like a milestone and if you pass it, bigger budget.
Tim: I think so, in some ways I think that kind of entrepreneurial group would be incredibly easy to manage. Of course we say that because we’re entrepreneurs. I might be a nightmare to manage for most Japanese executives.
Miku: The good thing about having entrepreneurs is we are really fast and really flexible. Separating those members into many team would be good as well.
Tim: I know that a lot of companies are struggling to find the right things to try with the acquisitions, but I think that would be a great start.
Miku: For entrepreneurs we have finally show incentive. So if a company buys founders to think about that way it would be also nice.
Tim: Yeah, the incentives and motivations are so different. So but after a year or so you were discovering that working at a big company wasn’t really for you and…
Miku: Yeah, it didn’t match to be honest.
Tim: Yeah, I know that feeling. So you went and you founded Cinnamon.
Tim: Cinnamon you founded in Singapore, not Japan. So why?
Miku: So Asia is very emerging.
Tim: Yes it is.
Miku: And I do have advantage to them because Japan is difficult country, we have only get use to so many internet sources. 10 years ago I tried to use social network, but still 3 years ago they started to use Facebook. I didn’t have advantage to know more internet services.
Tim: So how was that, because you’re not introducing like a clone technology, it’s a new technology, so how did the advantage help you? Just in terms of strategy?
Miku: For me it is quite obvious for Singapore, so at the beginning, Myspace it was more merci to write so many stars, but then it became Twitter, limited ticket and then photos, like Facebook or Pinterest, Instagram. So next thing would be video. So it is very obvious for me.
Tim: So the advantage of just following the trends, happening in Japan and the U.S. and being ahead of those trends in Southeast Asia.
Miku: Yeah, and also the coming the service, is like getting faster and faster than before.
Tim: So are most of your users in Southeast Asia or most in Japan?
Miku: Currently in Taiwan because we are doing marketing in Taiwan.
Tim: In Taiwan?
Tim: Okay, so you’re Japanese woman.
Tim: With mostly Japanese investors, founded in Singapore, with the primary market of Taiwan.
Miku: Actually we didn’t think we would be a Taiwan market. But we did know we will aim another market because Singapore is too small and also the culture is really mixed, multi-cultures, they’re Chinese and Indiana, and Maui, so I think Singapore is quite difficult.
Tim: It’s different from Japan, almost the exact opposite in that in Singapore it’s extremely easy to start a company, it’s very easy to raise funds, it’s very start-up friendly, but the market itself is so tiny, you have to look outside.
Miku: Yeah, exactly.
Tim: Where in Japan I think people are facing the opposite problem. It’s a little harder to start a company, it’s much harder to raise investment, but the market is huge and as a result many Japanese companies don’t look overseas.
Miku: Exactly, actually that is the reason that I register my company, my second company in Singapore, because Japan is relatively big, nowhere as big as China or the U.S. but still big enough.
Tim: It’s big.
Miku: And awesome the people spend so much money on the internet. So if I in Japanese market, probably I would aim Japan too much.
Tim: Okay, you get too comfortable.
Miku: Yeah, too comfortable and also I’m Japanese, so I understand Japanese culture, maybe a little bit too much. I would just ignore outside of Japan.
Tim: Did you found the company in Singapore more as a motivation for yourself? Or to signify to the world this is a global company? Or was there a simple business reason to do it?
Miku: I selected Asia and actually any place was fine to register company, but as a foreigner only countries that we can register a company easily are Singapore and Hong Kong.
Tim: Recently there’s a real trend of Japanese countries, there’s a lot of companies that are going to Singapore to raise money, there’s a lot, and moving the team there. There’s a lot of companies that are going to America to raise money and moving the team there, and leaving Japan. When is that a smart thing for startups to do?
Miku: If you are Japanese and if you are in Japan it is just very easy to raise a fund, you can adjust the product to the Japanese market itself. But I feel like Japanese market is very unique. If you think about Japan too much the gap between Japan and somewhere else, will be like bigger and bigger.
Tim: So it’s interesting, so basically what you’ve done is you’ve set it up so are a Japanese team, kind of doing a Japanese market entry.
Miku: Yeah, we are aiming China market, a lot of Southeast Asia market, if we get users in Japan that will be fine, but we do not to aim Japan market too much.
Tim: So right now do you live in Japan, do you live in Taiwan?
Miku: I live in Taiwan.
Tim: I remember your software development though is being done in Vietnam isn’t it?
Miku: Yeah exactly.
Tim: So you really are all over the place.
Miku: We really very separated.
Tim: And how big is your company now?
Miku: Around 15.
Tim: So 15 people scattered around in 4 or 5 different countries.
Miku: Three countries, just Singapore, Vietnam, and Taiwan.
Tim: Excellent, so let’s talk a bit about Tuya. Now, I used it a little bit, I shared a video of my wife’s cute little dog. What’s the monetization strategy for something like this?
Miku: It is like Instagram, so basically this is social network and so you will have a feed of what you, people who you follow, update.
Tim: So it’s to sell sponsored content and things like that.
Miku: Yeah, exactly, exactly. While you’re seeing the feed, one of them will be the advertisement video. And video advertisement is growing very rapidly.
Tim: And are you focusing on a particular user demographic, a particular type of person or are you going very broad?
Miku: All different type of people because basically I would like to make an innovation what Twitter did on video world. Before Twitter we’d have blogs, but took a long time to write an entry, right.
Tim: Right, it’s a very different type of medium.
Miku: So probably two to three percent of population wrote articles, the rest were just reading. So actually the user were like really separated to posters and readers. But Twitter is restricted it for 140 letters, so this made all the people write something.
Tim: The gap between writer and reader becomes much smaller.
Miku: Yeah, on Twitter there is like no gap between writers and readers.
Miku: So I want to make similar innovation on video world. Now basically it’s just like really hard, and it takes lots of time to make one video.
Tim: So the vision is to have everyone as a producer of content, everyone is a consumer of content.
Miku: Yeah, exactly. So I want to expand the user base to everyone.
Tim: Let me ask you some big questions about Japan in general and startups in general in Japan. For your first company when you were at University of Tokyo you got some government support, there was,
Miku: MITOH software.
Tim: So I’m curious because start-up founders tend to have very different opinions about government programs and government sponsorship. What kind of university programs and what kind of government programs do you think are most effective and most useful for Japanese start-up founders?
Miku: If we got in total $250,000 U.S. dollars, it’s just equivalent to seed money.
Tim: And that was a grant, an investment from the government.
Miku: It was a grant.
Tim: Okay, well that’s very helpful.
Miku: Yeah! We invested that money into the first company
Tim: You used that as your seed round right? Because after that you raised a series A with what you built. Hopefully that’s exactly what the government wants people to do with that money, go out and start companies. Did the connections and advice help from the program at all?
Miku: Very much. Yeah, so actually before that program, I didn’t think about founding a company at all.
Tim: Oh, really?
Miku: But my project monitor in that program, Kitani Hiroaki-san who is CEO of Sony Computer Science Laboratory, yeah he’s the CEO of a big company was he has his own companies as well. He pushed me a lot to start my own company and also the community in that program, someone started their own companies, so actually before joining that program, I didn’t know people who started their own companies.
Tim: Aside from the money it was very valuable from the connections and advise and are you still in touch with most of those people.
Miku: Oh yeah! So that project manager Kitani Hiroaki-san is our initial investor as well.
Tim: Oh, okay. When I started my first company in ’98, here in Japan there was no support for founders, so I think really the money is helpful but I think programs that actually provide that kind of support, on going advice, it’s far more valuable than the money.
Miku: Yeah, so I really appreciated that program a lot.
Tim: You mentioned that you didn’t originally want to start a company. People ask about woman entrepreneurs in Japan. And they tend to talk about it in big demographic terms and look at the numbers, but it’s really a bunch of individual unconnected stories. Let me ask you, what attracted you to computer science as a major and what made you decide to start a company?
Miku: The reason I went to computer science is that since I was a kid I wanted to be a pilot.
Tim: A pilot?
Miku: Yeah, so I went to go to pilot school for university. But I need to be one meter and 63 centimeters, so I didn’t have enough, I wasn’t applicable.
Tim: And you can’t study for that, it’s just yes or no, right?
Miku: I couldn’t study, well I want to study, so I need to give up my dream even when I was 15 so I couldn’t be a pilot so I thought probably I want to be an engineer to develop aircraft.
Tim: Okay, so an aerospace engineer?
Miku: Yeah, like that.
Tim: And so you became an entrepreneur when you stumbled across this interesting project?
Miku: Since I was a junior high school student or high school student I was totally in to internet. So I was spending most of time on the internet every day. But once I started computer science I found I can start a service by the programming. So before then I was just enjoying internet as a consumer but I found probably I can be a provider.
Tim: So it’s the same thing you were saying before, the gap between the consumers and the producers is getting smaller and smaller.
Miku: Yeah, thanks computer science!
Tim: That’s great, I think that’s one of the best reasons to start a company.
Miku: Eventually I got interest in making a service but when I was a freshman, then sophomore and junior, I applied that problem.
Tim: What did your parents think? Were they supportive of your decision to go out and start a company instead of joining a prestigious Japanese firm?
Miku: Actually they going to be have a life as Ojyou-sama.
Tim: Okay, so a proper Japanese woman.
Miku: Yeah, more like that. They didn’t want me to go to Tokyo University, because this makes girls difficult to get husband.
Tim: For our overseas listeners, Tokyo University is, people say it’s like Japan’s Harvard, but it’s actually more prestigious than that with in fact. So it makes it hard to get a husband in Japan for women who graduate from Todai?
Miku: I’m against about it, because in Todai the girls ratio is very low, so I was only the girl in the department, so yeah, if you think about demand and supply.
Tim: Now there’s an interesting point there, so do you think that being a woman in some ways makes it easier to start a company because you don’t have the same social pressure that maybe guys do?
Miku: Yeah, I think so. So I do not have responsibility to money for family, so it made me like easier to start my own company I think.
Tim: So it would be much tougher for a first born son to leave school and start a company then it would be for a woman to do so?
Miku: Yeah, so I think my parents were much more against if my brother were to start his own company.
Miku: Comparing with me.
Tim: With so much interest in Japan now, especially college age students, almost everybody says they want to start a company, most won’t of course. What advice do you have for students who are thinking of starting a company?
Miku: Additionally if they’re thinking about starting a company they should start their own company when they’re a student.
Tim: And why’s that? Low risk?
Miku: Because basically they do not have any risk. They can just hang around, or they can work as a part time job or they can start their own company. The older you get the more difficult that you get start the company. Because once you get used to get a salary probably then you would feel scared to lose that. If you get married or have kids probably then you would feel more difficult to start.
Tim: There’s almost no better time to do it when you don’t have responsibilities, you can live cheaply.
Miku: Yeah, and I think, especially good universities are almost like perfect place to find a co-founder.
Tim: Let me ask you what I call my magic wand question. If I gave you a magic wand, and I said you could change anything about Japan, Japanese society, the educational system, the way people think about risk, anything at all, to make Japan better for startups. What would you change?
Miku: I think to have more better examples as entrepreneur.
Tim: So more role models?
Miku: Yeah, people think to go to big company and to work there until they retire but why this makes. So we do not have enough examples or they are like a little too far.
Tim: When you say too far what do you mean, like the gap is too big?
Miku: Yeah, the gap is too big.
Tim: I’ve noticed this as well. So a lot of times for example at university student looks at someone like Son-san or Mikitani, they gap is just too huge, they can’t imagine. So you think it’s just university students and everyone just needs to know about these thousands of other start-up founders that are out there doing it?
Miku: I was really lucky. So I was in the community of the development program, right? And I could meet entrepreneurs who found their companies a couple of years ago. So they are more like early stage so I could see good examples as myself maybe three years later.
Tim: So someone just a few steps ahead of you?
Miku: Yeah, yeah.
Tim: Not too far, just going to help you…
Miku: Actually I feel like by looking at them, yeah, they can do it, so maybe I can do it.
Tim: Actually that makes sense, in fact I think you can probably learn much much more from someone who’s only a few steps ahead of you then you can from someone who’s way way ahead of you.
Miku: So actually any conference people tend to invite those big names, but if I meet Son-san or Mikitani-san I don’t know what to do. I don’t know what next action.
Tim: And also if you met Mikitani or Son-san, it’s been some many years since they were in your situation, they might not remember what advice to give you. It would be wonderful, and we’re starting to see a much better start up community in Japan, so it sounds like your magic wand is slowly already happening, and hopefully more so very soon.
Hey listen, before we wrap up is there anything that you want to talk about that we haven’t talked about yet?
Miku: Yeah, so about my product I want to talk about.
Tim: Okay, let’s talk about Tuya.
Miku: Yeah, so after I started Tuya, I found I can almost experience someone’s virtual life. Each video is much more powerful than a photo.
Tim: Yeah, I’ve noticed that too, just using it, 4 seconds of video doesn’t sound like much, and it’s not much really. But it is somehow much much more engaging than a still photograph. What I’m thinking about it now, we humans I think are programmed to notice motion. Do you think it’s just that deep human response saying, wait something’s moving, I’m going to look at it?
Miku: Yeah, of course. If something is moving of course our eyes go to that. So until everything is moving, we feel that is really real. And also I found with a video it is much more difficult to pretend which is not.
Tim: That’s true, it’s very clear what’s happening. You can’t get that really careful angle and everything.
Miku: Yeah, exactly. So for a photo you can try to find super best angle, with a video it is moving so it is more like real. If you see my timeline you’ll see what kind of life I’m really spending in Taiwan.
Miku: Like virtual life.
Tim: If a lot of that interaction is that deep human reaction to movement, how do people engage with the videos? So I notice you have for very quick feedback, but do you get long discussions happening around the videos or is it more of a quick and it streams by? Or do people really engage and discuss them.
Miku: We’re encouraging users to send comments a lot. We have 3 quick comments buttons, they’re wow, and like it, and Hmm. So he can just say “Wow”. They should have a conversation, wow so where is this? This is Ginza, or yeah that kind of detailed communication. I want quick like meant.
Tim: Just sharing an experience. Excellent. Your focus now is in Southeast Asia are you planning on?
Miku: We are focusing on Taiwan now.
Tim: So are you planning on launching in the U.S. or in Europe?
Miku: Basically we’re just putting it on app store so you can download it but…
Tim: Okay, well hopefully a lot of people will.
Miku: Yeah, please, please. Please download Tuya!
Miku: But Taiwan is a really mixed culture as they accepted to from Japan of course and of course mainland China. The culture is a little bit similar to Southeast Asia. So I think Taiwan is a very good place for to test run first. So that is the reason we selected Taiwan.
Tim: Hey well listen, thanks so much for sitting down with me today. It was really interesting.
Miku: Oh thank you so much for inviting thank you!
Tim: And we’re back, I think one of the most interesting points that Miku brought up is how the difference between producer and consumer is slowly going away. And I think to a large extent technology is always had this effect in print, from the mass production of paper and movable type to the industrial press to blogs to status updates, to Twitter. In music from live symphonies to the phonograph to cheap CD duplication to inexpensive digital recording and distribution.
At each step of the way content has become more egalitarian, but also, and necessarily more shallow. And that’s not criticism, we still have people writing books and even opera. But by definition the more popularized a medium becomes the simpler the messages transmitted by that medium must become, and in a sense Cinnamon’s Tuya is perhaps perfectly designed to be the most equalitarian form of video content, one that has far more in common with a casual pick than a movie.
I think we’ll be seeing a lot more of Cinnamon in the future, and we’ll probably be seeing it in little 4 second bursts.
If you’re got a four second story you want to share or maybe even something a bit longer about startups and going global, Miku and I would love to hear from you. So come by DisruptingJapan.com/show044 and let us know what you think.
And when you drop by you’ll find all the links and sites that Miku and I talked about and much much more in the resources section of the post. And most of all thanks for listening, and thank you for letting people interested in Japanese startups know about the show.
I’m Tim Romero and thanks for listening to Disrupting Japan.