This is a rather personal episode. We have no guests this time.

It’s just you and me.

Today, rather than diving deep into a specific aspect of startups in Japan, we are going to take a hard look at both what is and what is not working within the Japanese startup ecosystem as a whole.

And at the end, I’m going to answer the most common question I am asked by overseas audiences. “Where are the Japanese unicorns?”

You might already know about Japan’s two existing unicorns, but I’m going to explain where the next four will be coming from.

I guarantee that it’s from somewhere you would not have expected.

So let’s get right to it.

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Transcript

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

I’m Tim Romero, and thanks for joining me.

Once again, I’ve got a special show for you today. There will be no guests, no beer, no playful banter with someone speaking English as a second language. Today, it’s just you and me.

It’s been a while since I’ve done one of these one-on-one episodes. Way too long really. I truly enjoy doing them and they tend to be my most popular episodes, but man they take a lot of time to write and put together.

This episode, in particular, I had to rewrite two or three times, to make sure you would really understand what I am trying to explain. Because by the end of this episode you and I will definitely be in new and uncertain territory, and I for one love being in new and uncertain territory.

By the time we’re done, you’ll have a solid idea of where Japan’s next dozen unicorn startups will be coming from.

First, I want to tell you what inspired me to create this episode for you. In fact, it was kind of a strange situation. I mean twice a month we sit down and talk about innovation in Japan. I’m privileged to talk with and to introduce you to some of the most interesting founders and innovators in Japan. I spend a lot of time talking, writing and thinking about how the startup ecosystem is changing.

But. You know, I think I missed something. Something important. And, I think the reason I might have missed it was because I watch things so closely that when ….

Well, lets back up a bit so all of this will make sense.

Actually, it was my friend Allen Miner who first pointed out the change. For those of you who don’t know him, Allen was one of Japan’s first modern VCs and he also brought both Salesforce and Oracle to Japan. 

And by the way, if you have not listened to the Disrupting Japan episode where Allen tells the story of Oracle’s Japan market entry, you really need to go back and listen. Someday business schools will make proper case studies from that story, but until then, it’s a Disrupting Japan exclusive.

It’s a story of fake it till you make it on a multi-billion dollar scale. The plot involves intrigue, secret dealings, and … rock-concerts. What more could you possibly want?   

Go and listen to it right now. I’ll wait.

Welcome back. Did you listen to the episode? No, of course, you didn’t. Nobody ever does. It’s a silly conceit. I don’t know why we podcasters keep using it. We should stop.

Anyway, give Allen’s interview a listen when you get the chance. Now back to our story.

For the past eight years, the Japan Society of Northern California has given out annual innovation awards to startups in both Japan and the US. They are a really worthwhile organization that has been around for more than 100 years. I’m on the advisory committee for the awards, and last month in Tokyo I attended the awards ceremony for the Japanese startups.

The winners, by the way, were Mujin, Soracom, and Cloudian.  Ken, the founder of Soracom was on the show last year, and you’ll be hearing from the other two founders on the show soon.

So, Allen was making an informal speech at the awards and he made an observation that made me question if I had missed something big in Japan’s startup ecosystem.

He mentioned that for the past seven years there had always been a gap, a significant gap, between the quality of the Japanese startups who won the awards and their US counterparts. The American startups had always seemed to have expanded faster, to have more real-world deployments and to be frank, the US startups just seemed more innovative than the Japanese were.

But this year was different. The three startups that won this year’s awards could stand up with any silicon valley startup of the same age and industry.

And he was right.

I’m always talking about how fast the startup ecosystem is improving and how the quality of both founders and startups is rapidly approaching that of what we see in America. But what if it’s already happened and I missed it.

Disrupting Japan has always been about bringing you the best and most interesting things that  Japan’s startup landscape has to offer. But is it possible that I’ve missed the forest by focusing too much on the individual trees?

In these one-on-one episodes, I usually go deep on a specific topic that I think is very important but little understood, but today we are going to do the opposite. We are going to go wide. We are going to take a step back and take inventory of the entire startup ecosystem and see where we really stand. We’ll take a look at what’s working, what’s truly exceptional and what is still lacking.

We’ll look at the state of fundraising and financing, the changing social attitudes towards startups, the true state of innovation in Japan, and we’ll wrap up by talking about Japan’s future unicorn farm, and where exactly the second era of Japanese innovation will come from.

 


Startup Financing and Fundraising in Japan

First, let’s talk about fundraising and the availability of capital.

There is plenty of risk capital in Japan, and by all measures, the amount is increasing. Japanese venture firms raised more than $2.5 billion in 2017, which is more than a 400% increase from 2012. But numbers don’t tell the whole story. Sure, everyone like numbers, because they seem objective and it’s easy to think that you understand what they mean, but let’s look at what these numbers really tell us about the startup ecosystem.

The biggest effect of this increased funding is that is has made founders a lot more confident and aggressive, and a lot less stressed.

Years ago when I began asking founders why and how they started their companies, most had stories about how they had to convince their wives, or their parents, or their parent’s wives, to let them start a startup. Most founders had people begging them not to do it, and some even lost friendships.   

A decade or longer ago, when financing was hard and valuations were low. Most founders had to scrimp, to deprive themselves of basic necessities. One founder, Kanemoto-san from OKWave,  came on the show and explained that he was actually homeless when he was bootstrapping his company.

Another told me about how he had to secretly use his wife’s jewelry as collateral for a loan to get the money he needed to keep his company going, and by the way, he also told me emphatically.

“Tim, Tim. Your startup is important, but there are some things that you should just never do.”

This just doesn’t happen anymore. Newer founders rarely have a dramatic origin story. I mean sure, just like founders all over the world, they work hard, and they’re happy to talk about their passion and their vision, but newer founders also tend to receive social support. Family, friends and even co-workers encourage their efforts.

I’ve actually had a number of people tell me, “I had two VCs who wanted to give me money, and my friends and parents thought it was a good idea, so why not?”

And that is awesome!

Over the past decade starting a company in Japan has gone from “Am I really willing to bet my entire future on this.” To “Hey, why not? What’s the downside?”

And that’s the way it should be.

When you are not worried about your next meal. When you are not worried about making payroll next month. When you are not worried about gangsters trying to collect a loan secured by your wife’s jewelry, you are going to dream bigger. You are going to double down and roll the dice again rather than try to protect whatever gains you have already made.

You are far more likely to grow a billion dollar company with this attitude. 

And that’s exactly what we are seeing in Japan. From dozens of newly minted founders who are explaining how they are going to disrupt their industry, to iSpace, who raised over $90 million to commercialize the moon. Japan’s startups are finally dreaming big.

On the VC side, however, while the progress has been impressive, the transformation is less complete.

VCs everywhere in the world are basically skittish and risk-averse creatures, they are herd animals by nature. Oh, they like to see themselves as hunters, as lions scouring the startup savanna for stray unicorns, but in truth, they have more in common with the jittery gazelles.

We see the same dynamic in Japan, but its a bit more pronounced.

Japanese VCs are very willing to invest in standard startup business models with clear metrics. If you have B2B SaaS startup or a mobile marketplace with promising metrics, you *will* get funded. If your idea is a little more innovative, but you have a good pedigree; you come from the University of Tokyo or a top-tier investment bank, you’ll get funded.

And if you are more off the beaten path? Well, you’ll have to work a lot harder and raise money at lower valuations, but the money is there.

There is another odd effect that is a result of both the herd nature of Japan’s VCs and the fact that there are still relatively few deals. When a startup becomes a “hot startup” whether because they have proven themselves with rapidly growing revenues or because they have a great technology story, *everyone* wants in on the deal and valuations get kind of crazy. 

But hey, this is hardly unique to Japan, and we have a long way to go before we are anywhere near they nosebleed valuations we’ve seen for companies like Uber. Besides, fifteen years ago, these companies would not get funded at all, or they would be funded at much lower valuations than they deserve.

Well, what about the startups who are not Uber for X or Airbnb for Y? What about the companies that have genuinely new and innovative business models? Well, they exist here, and they do get funded, but more slowly and at lower valuations.

And frankly, I think these non-mainstream startups represent a fantastic opportunity for both angels and VCs who are more independent-minded and contrarian.   

 


The Changing Social Attitudes Towards Startups in Japan

Second, let’s talk about the how the social attitudes towards startups are changing.

We’ve talked about this a bit already, in how founders are finding their friends and family more supportive, but is that really representative of Japan as a whole?

The whole idea of a startup is a pretty new part of the general Japanese consciousness. In fact, the first time most Japanese had ever heard of startups was when the movie The Social Network was released here in 2011.

No kidding, that was the real beginning of widespread cultural awareness of startups in Japan. Of course, founders quickly found they had to adjust their expectations. Startup life is not quite that glamorous, and business deals are not closed while you are in techno-clubs surrounded by underwear models — at least the business deals I’m involved with aren’t. Maybe I’m just not in the right deals.

But things have changed, In the early days, there was a glorification and an annoying idolization of all things Silicon Valley.  Young Japanese who had spent a few years hanging out in San Francisco were suddenly experts in innovation. They were being invited to speak on the subject and getting lucrative consulting contracts.

Even small-time entrepreneurs and investors touching down in Japan from Silicon Vally were sought after. They were listened to. They were honored. People hung on their every word. Five years ago, there was a steady trickle of well-meaning US founders coming to Japan to show the Japanese how it was done, and they were welcomed with open arms.

Man, how things change!

Of course, Silicon Valley still has a cachet, other things being equal, a founder or programmer from San Francisco will be taken far more seriously than one from Sapporo, and they should be, at least until they start talking and you can judge for yourself.

New arrivals from San Francisco, however, are finding things a lot harder than those who arrived five years ago. Don’t get me wrong, Japan’s startup ecosystem is very welcoming and foreigners are playing a very large role in all parts of it.

It’s just that this seems to be how Japan, as a nation, learns new skills. Whether we look at the Meiji Restoration or the post-war reconstruction, Japan goes through a phase of learning everything, and I mean everything possible from the West. Once Japan has absorbed its fill, the focus becomes refining and improving on what has been learned.

I think Japan is now entering that phase with startups.

For years, I’ve played a little game at startup events in Japan. I will count the number of times speakers mention San Francisco or Silicon Valley and compare It to the number of times speakers mention Tokyo or Japan.  Mentions of San Francisco used to consistently outnumber mentions of Japan by three to one.

But this is changing recently. Startup events today talk more about Japan, and interestingly enough, the more knowledgeable the speaker, the less Silicon Vally tends to get mentioned.

And that’s how it should be.

But what about the attitudes towards society as a whole? Well, between a greater social acceptance of startups and larger funding rounds, many young startup founders are now recruiting senior managers from Japanese enterprises to work for them.  Fifteen years ago leaving a prestigious job to go work for someone 25 years your junior would have been unthinkable, but it’s happening more and more. A few months ago Kiguchi-san from Enechange explained this kind of recruitment was part of his competitive advantage.

In fact, Japanese enterprise is embracing startups and startup innovation. We have a long way to go before Japanese enterprises are as comfortable working with startups as their US counterparts, but the change is happening in a very Japanese way. I’ve talked about some of the things going on at TEPCO, and also things like Mitsui’s support of their alumni network. The growing list of ex-Mitsui employees who have gone on to found or join startups.

Now, if the Social Network starting the change of attitudes regarding startups among the general population, I have to give the Abe administration a lot of credit for changing the attitude towards startups among Japanese enterprises and universities.

It wasn’t any particular program or grant or tax incentive. It was mostly just having senior politicians and government officials as well as Prime Minister Abe himself standing up and saying things like “startups are the key to revitalizing the economy. Startups are the future of Japan.” That is a very powerful spotlight.

It made Japan Inc stop and say “Hey, maybe we had better look into this startup thing.”   And man have things changed. Twenty years ago when I started my first company, anytime I tried to land an enterprise as a customer, I was pushed down through three levels of sub-contractors.  Today, I don’t know of a single large Japanese company that is not making deliberate efforts to reach out to and work with startups.

That’s the good news. The bad news is that these companies are still not very good at dealing with startups. It’s improving, but so much of enterprise interaction with startups is nibbling at the edges. They are making exceptions to their preferred vendor list and procurement rules rather than rewriting the rules.

And I guess that leaves me with the one thing the government can do now that will really help. The promotions and awards are great, and the grants are always appreciated, but the Japanese government needs to start buying from startups.

Of course, it doesn’t make sense to put startups in charge of large systems or projects, but Japan needs something like America’s DARPA. DARPA challenges are open contents to solve specific problems and they are open to everyone from General Electric to two guys working out of their garage, and these kinds of programs have been responsible for a lot of the early internet technology and most recent advances in American robotics.

We need something like this in Japan, rather than agreeing on the solution before-hand, the government would have to admit they have a problem and don’t know what the solution is. If this sounds un-Japanese, I should point out that TEPCO has been running a program like this for a few years with very positive results, but a government program could be much larger, much broader and more long term.

So Abe-san if your listening, or if any Disrupting Japan listeners happen to know him, you might want to mention this to him next time you see him. 

Let’s make a Japanese version of DARPA!

 


Where Are Japan’s Unicorns?

Third, let’s talk about the overall quality of startups and innovation in Japan. I mean, that was the topic that inspired and kicked off this whole show.

I can tell you that without question the quality of startups I see everywhere from Startup Weekend to pitch events, to press releases about funding — the quality and competitiveness is going up.  Even the steady stream of email questions I from fans of the show have become more complex and subtle over the last five years.

But these are very soft and subjective measures. Is there something more objective we can look at?

Can we find a more quantitive measure of quality?

Well, let’s start with the most obvious one. The one criteria that comes up almost every time Japan’s level of innovation come up. The challenge that is put to me almost every time I try to explain the state of Japanese innovation to an international audience.

People ask, how come we haven’t seen a Japanese Facebook, or a Japanese Google or a Japanese Uber? Where are the world-changing companies?

Where are the Japanese unicorns?

First, I should point out that at the time of this podcast, Japan has two startup unicorns Mercari and Preferred Networks.

Second, and far more importantly, f*ck unicorns!

Seriously, I am so thoroughly nauseated by the pervasive, perverse praise for this utterly bland, boring mythological misfit.

Let’s face it unicorns have neither agency nor ambition and are perfectly happy to prance and preen while the sun is shining, but disappear the moment there is real work to be done.

Their smug narcissism and pretentious aloofness barely conceal the fact that these vacuous, rainbow-pooping four-legged narwals lack even the simple self-awareness to grasp that within the full fantasy bestiary they are little more than second-rate pegasi with a disturbing obsession with virgins that only thinly veils a deep-seated insecurity in their own horse-hood

In fact, the very image of the unicorn has a frivolity utterly unbecoming the extraordinary efforts involved in scaling a startup to a successful enterprise, and unicorns are far more appropriate adorning the posters on the bedroom walls of eight-year-old girls and the murals on the sides of vans driven by registered sex offenders.

But I digress.

The point is, counting unicorns is a poor way to measure the health of a startup ecosystem and an incredibly stupid way to measure innovation.  And yet, this seems to be the one metric that everyone understands. People like big numbers. They make great headlines. But it is not an indicator of innovation.

Think of it this way, there were no pre-IPO unicorns at all before 2009 and now there are about 300 of them. Does that mean we are hundreds of times more innovative now that we were during the PC or dot-com investment booms? 

No, of course not. The rise of the unicorns has more to do with changes to tax and securities laws than with innovation — but that’s a topic for another day.

However, it is undeniably true that any healthy startup ecosystem should eventually generate high-value companies and substantial economic activity. The important thing to realize when counting unicorns, however, is that the unicorn count is a trailing indicator, not a leading one.

Unicorns are a backward-looking metric. They tell us what has already happened rather than what’s going to happen.

But what is about to happen is far more interesting, and that’s what you and I are here to talk about.

Now, new products and technology get our attention, but product innovation rarely creates billion-dollar startups.  It happens of course, but most truly transformative startups are those that have innovative business models.

Google, Uber, iTunes, Facebook, and Airbnb have become wildly successful not because they have great technology, but because they defined new business models. They changed how people paid for, and how people were paid for services. They changed the way we interacted with the world.

And that’s what we are going to focus on.

Over the past 15 years, the Japanese startup ecosystem has transformed itself from something that basically didn’t even exist into something truly world class, and companies like Preferred Networks and Mujin are doing things in AI and robotics that are way out in front of their global competition.

But are they really going to change the way business is done?

We don’t see a lot of business model innovation in Japan, but in fairness, we don’t see a lot of meaningful business model innovation anywhere. Disruptive business models are exceptionally rare and tend to be very risky.  But when they work, those are the ones that change the word — or at least the way we interact with the world.

So where is this innovation most likely to come from?

I’ve been discussing this with a lot of well-informed people over the past few years. You would be amazed at the number of people, both Japanese and foreign, who tell me that Japanese people will always have trouble have business model innovation because the conformist nature of Japanese society discourages rule breaking or challenging the way things operate.

You and I, of course, understand that this is absolute horseshit. Fifteen years ago, people were using the same ridiculous excuse to explain why there were so few Japanese startups. It’s nonsense. Business model innovation will happen in Japan.

But where will it come from?

Well, I’m going to pull out my crystal ball here, because business model innovation is incredibly hard to predict.  I can’t tell you exactly what the new business model will be — if I could do that, I would go and start that company and become fabulously wealthy. However, I think I can tell you where it is going to come from.

 


Evocative Machines & The Birth of Japan’s Next Four Unicorns

There is a unique Japanese technology emerging from the nexus of artificial intelligence, robotics, and healthcare, and it is something that could utterly transform our world.

Machines are unquestionably becoming smarter, and recently there is a lot of good work being done on creating empathetic machines.

But there is different technology emerging in Japan. One I call “evocative machines”.

The distinction is that empathetic machines are those that can understand our emotions and empathize with us, evocative machines are those which evoke emotions in us. Evocative machines are machines that cause us to empathize with them.

So why is this useful, let alone disruptive? The whole point of automation is to get things done more simply. I don’t want to feel sorry for my refrigerator when it breaks down. I don’t want to sympathize with my Tivo about how hard it’s working when it records my shows. Life is stressful enough. Why spend our emotional energy on inanimate objects?

Well, when you focus on a single task, that line of thinking is absolutely correct.

But you know something? The Western approach to AI, automation, and robotics is hurting society. It’s grinding us down without us even realizing it, and Japan’s newly emerging evocative machines are the solution to this problem that we haven’t consciously realized we have yet, and it’s going to change the world.

The history of industrialization and of modern prosperity is very much the history automation.  We don’t want to walk past an ATM, stand in line, and talk to a bank teller in order to make a deposit.  Today we are all perfectly capable of operating our own elevators and pumping our own gas.  And 10 years from now, we will all have gotten used to self-checkout and self-bagging at grocery stores, or maybe we’ll skip the stores entirely and just order our groceries online or with an app.

Automation makes us all more efficient. It lets us do more with less.

But, you know, we also lose something. And what we lose is important.

I don’t mind buying things from vending machines in Japan or using self-checkout in the US. Adding people into the mix slows down the transaction and jacks up the price.

Hey, and Amazon is even testing supermarkets where there will be no human staff to interact with customers at all. You go in take what you need from the shelves and the items are automatically charged to your account and managed on your cell phone.

And that’s awesome. I mean, it’s mostly awesome.

The thing is, we humans are deeply social creatures. It’s not that any one interaction with a clerk, or retail staff, or co-worker, or ticket agent really means anything to us, but collectively all those little human interactions mean a lot.

The future envisioned by Silicon Valley is one where we work gig-economy jobs, conduct most of our social life online where we can be properly analyzed and marketed to, and where our purchases can be made friction-free at the tap of a button. It’s a future where inefficient human interaction is kept to an absolute minimum, and we can all get on with the task at hand.

But you know what? That’s not going to happen. That would break us as human beings.

There is a hopelessly misguided Western notion that what we really want is to be the center of the universe. That we want our needs catered to more quickly and more completely. Instant gratification is not quick enough. We want to have our desires fulfilled before we even concisely realize that we have them. We just need to keep running on our hedonic treadmills, and of course, we’ll be happy eventually. And if we are not happy right now, well that just means we have to run harder and faster.

It’s nonsense. After our basic needs are met. Even the most obsequious, fawning robot servants who can read our emotions are not going to make us happy.

We won’t survive the psychological strain of knowing that we are the bottleneck in every interaction. Understanding that whatever transaction we are trying to complete right now has been fully optimized and that we are the only thing slowing it down. Always being the weakest link. Always aware that we are holding things up, that we are the source of friction, and that the rest of the world is waiting for us to just finish our damn business and move the hell on.

We are not built for that kind of social stress. It would break us as a society. In fact, there are plenty of psychologists and social scientists who say it is already breaking us.

So what’s the answer? The Luddite solution of moving backward and undoing automation or even slowing it down won’t work. Not in the long run. Humans are expensive, and capitalism demands that we increase efficiency by using fewer and fewer people in any given transaction, and this pushes us relentlessly towards automation. 

And that’s a good thing. It improves the overall economic well being of society. Trying to fight this trend directly would be just a futile as when the original Luddites went around smashing looms in the 1800s.

The rational benefits from automation are overwhelming, so what we need is something to soften the emotional blow.

The solution is evocative machines. The solution is machines that can make us care about them.

It’s not immediately obvious why this is so. The idea first struck me during a discussion with my friend Shunsuke Aoki, who is a mad scientist and the founder of Yukai Engineering.

We were discussing the obstacles facing robotics in healthcare, and he mentioned that he thought we would someday interact with robots the same way we interact with our pets; understanding intellectually that they are not human and that they do not have human emotion, but treating them as if they did.

The future is in machines that allow, and even encourage us to form emotional bonds with them.

Think about it, many people buy a pet when they are lonely, and it works! However, when we buy pet, when we get a dog or a cat, we do not want to have something to love and care about us. No, we buys pets so that we have something to care for. To have something to love. More than almost anything else, we all need something to love.

I’m not talking about cute robots like the Aibo, Sony’s robot dog, or Softbank’s Pepper, or Yukai’s Bocco, or even the Jetson’s Rosy. It’s not about making robots look or act human or pet-like. It’s about giving us a new reason to interact with robots.

Making ATMs or more efficient and user-friendly is fine, but imagine how much more enjoyable life would be if we looked forward to using the ATM not because it quickly facilitated a necessary transaction, but simply because we liked the ATM. If we just liked it for what it was, and we enjoyed spending a bit of time with it.

Sure, each transaction would be a bit less efficient, but so what? We don’t really need more efficiencies in our lives. Think about anything you choose to do for its own sake, something you do simply because you enjoy it, travel, writing, fishing, watching movies, eating out, drinking wine, spending time with friends. No matter what it is, you never try to do it in the most efficient way possible.

Modern economies have long since moved from industrial economies to service economies and are now transitioning to experience-based economies.

Major brands spends billions of marketing dollars every year to try to associate their brand with positive feelings. Imagine if, for example, Toyota instead of trying to convince you that their car was fast or reliable or fuel efficient, developed a car that you simply enjoyed driving and cared about.  Again, not because of what you got out of it, but simply because you liked your particular car and enjoyed being with it – just for what it was.

Evocative machines is not a branding gimmick or a tactic for short-term competitive advantage. It’s a necessary shift that we are going to have to go though. A technology that is needed to allow increasing levels of automation, but enough emotional connection to make sure that we stay sane and society holds together.

If you want to keep an eye out for an early adopter, watch the healthcare industry. The entire developed world is facing an aging population, increasing health care costs, and a shortage of healthcare professionals. The only way to make this work is via increased automation and efficiency, but the only way automation will take hold in this environment where emotional connection is so important, is if we actually like the machines we are working with.

But healthcare is just the beginning. Evocative machines, machines that we form an emotional bond with, will change the way we interact with the entire world.

Japan is far ahead of the rest of the world in evocative machines, even thought they don’t call it that yet. Even though it is not yet a formal discipline.

In fact, you see this attitude in fiction. In Japanese stories, robots are almost always helpful and a force for good. We have Doraemon and Astro Boy. Even mecha-Godzilla wasn’t all bad. In the west however, from Frankenstein to Metropolis, to the cyber-men to HAL to the Terminator, robots are almost universally evil. Something to be controlled, not cared for. Or you can compare the cloyingly cute creations like Softbank’s Pepper to the nightmare-inducing robots from Boston Dynamics, and you’ll get a pretty good idea of how far ahead Japan is on the evocative machines path.

In fact, Amazon recently almost discovered the importance of evocative machines. A growing number of parents were concerned about how Alexa was affecting their children. It seems that by answering every question posed and by putting up with whatever verbal abuse the kids hurled at it, Alexa was teaching an entire generation of children to be a bunch of little assholes.

Amazon responded by adding an optional polite mode, which requires children to say “please” and “thank you” in order for Alexa to work. That’s great. It will not only reenforce good manners, but in the long run, will make the children’s interaction with Alexa more enjoyable and productive.

The only mistake Amazon made, was that this setting should not have been optional. Adults would also find Alexa more enjoyable if it reacted more like a living being. If we are rude to Alexa, she should pout and refuse to answer our questions until we apologize, and she believes we are sincere and will treat her with more respect in the future. Yes, that would be far less efficient and even a little annoying at times, but you know what? It would make us all much happier in the long run.

I mean, It’s not about the efficiency of the search transactions. The transactions don’t make us happy. Its about the relationship. It about having something that is worth caring for.

Japan gets this, and you see it in the way people interact with machines here. You’ll never see people kicking a vending machine. Perhaps it’s the concept of kami. Traditional Japanese belief holds that all things have kami, or spirit. Books, buildings, rivers, trees, pencils, computers, everything has some intrinsic spiritual essence to it and deserves to be treated and respected accordingly. That’s a theme that appears consistently in everything from ancient Japanese folk tales to modern anime.

But the Idea is universal. We are all willing to accept and care for machines when we are given the right opportunity. We are all not only capable of forming positive emotional bonds with machines, but actually, want to do so.

Perhaps a trivial example of this was the tamagotchi craze from 20 years ago. Over 75 million of those little tamagochi eggs have been sold, and literally, all they did was make the users care for a machine. Tens of millions of people have spent billions of hours interacting with a little machine that offered the users absolutely nothing exact the chance to care about something. To form an emotional bond.

This is the future. Evocative machines are the key to opening up an massive new wave of automation in every industry.

It’s going to come out of Japan first, and it’s going to change the world.