It’s often surprising to discover which problems are hard for AI. We hear stories about artificial intelligence being better than the most skilled humans at go, chess, Jeopardy, and better than many at driving a car, and we assume that computers will be as smart as we are very soon.

Then we discover how hard it is for AI to fold the laundry.

Shin Sakane and his team at Seven Dreamers have been working on this particular problem for 12 years, and they are now rolling out the first commercially available laundry-folding robot. They will be first to the global market and have secured a production partnership with Panasonic.

Shin and I talk a lot about AI and innovation in Japan, and also cover his rather unusual corse to innovation here. Seven Dreamers is not your typical venture-backed startup, and they might just provide a blueprint for innovation that many existing Japanese firms can follow.

It’s a great interview, and I think you’ll enjoy it.

Show Notes for Startups

  • Why AI can drive a car but not fold socks
  • Why starting a company in Japan is different today
  • Shin’s formula  for developing innovative products
  • How to work with large Japanese companies
  • Why the future of laundry is more disrupting than you imagine
  • Why big data wants to hack your washing machine
  • The need to go global quickly
  • Can Japan once again lead the world in AI

Links from the Founder

Transcript from Japan

 

Disrupting Japan, episode 81.

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

You know, the term artificial intelligence is thrown around far too loosely these days. Every start-up using decision trees, Bayesian algorithms, or the simplest machine learning techniques, label themselves as world leaders in AI. Now there’s no question that projects like Google’s driverless cars and IBM’s Watson have pushed the limits of what’s possible, and have introduced astounding innovations in AI over the past few years. But sometimes it’s surprising to take a look at the kinds of problems that are extremely difficult for AI. It turns out that folding laundry is one of those problems.

Today we sit down with Shin Sakane, CEO of Seven Dreamers and inventor of the Laundroid. The first commercially available fully automatic laundry folding robot. We talk a lot about AI in general. And the importance and the risk of attacking the really hard problems. And what he and his firm had to go through to make Laundroid a reality. It’s also worth noting that Seven Dreamers is not your typical venture back start-up. And Shin and I talk a lot about the role that mid-size companies have to play in kick-starting the Japanese economy and returning Japan to the global leader in innovation she was in the 60s and 70s. But you know, Shin tells that story better than I can. So let’s hear from our sponsor and get right to the interview.

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[Interview]

Tim: So I’m sitting here with Shin Sakane of Seven Dreamers, and we’ve been bumping into each other for a long time now.

Shin: Right.

Tim: So thanks for finally making time and sitting down with me.

Shin: Thank you very much for coming.

Tim: We’re here to talk a lot about the Laundroid. Now it’s a robot that folds clothes, which I guess is the simple way of explaining it, but why don’t you tell us more about what it is.

Shin: Okay. We’ve been working on this project for the last 12 years almost.

Tim: Wow.

Shin: Yeah. We started back in 2005. This robot really folds daily life clothes and separate by categories or by family members.

Tim: Oh, okay.

Shin: Yeah.

Tim: So it can put all the shirts in one pile, or it can put all of dad’s clothes in one pile, and mom’s in the other—

Shin: Well, actually the key feature of Laundroid is that after you dry your clothing, you just put up to say around 30 clothes into insert box at the bottom. Then artificial intelligence and robotics with vision analysis technology, robot arms pick one clothing by one, and then it folds and put in the pick up box. If you choose separate by clothing category mode, then Laundroid puts towels in the towel tray, and t-shirts in the t-shirt tray.

Tim: Okay, and since this is a audio podcast, I guess we have to— The Laundroid, it’s a large machine, it’s about— What, two meters tall?

Shin: Yeah, about that.

Tim: And about 75 centimeters squared?

Shin: Right now it’s a little thinner. About 60 centimeters deep. Yes. And then 87 centimeters wide.

Tim: Okay.

Shin: So it’s a little thinner and wider.

Tim: And it is literally a black box.

Shin: Yeah.

Tim: It kind of reminds me of HAL in a way.

Shin: Yeah.

Tim: Well, it does have— It’s this big black monolith.

Shin: Right. Exactly.

Tim: With a bright circle on the front of it.

Shin: Right.

Tim: So you simply put up to 30 articles of what clothes in the bottom?

Shin: Right.

Tim: And then it sorts it on the shelves in the middle?

Shin: Right. Exactly.

Tim: Excellent.

Shin: And then if you want to separate by family members mode, in order to use this separation mode, you have to do very simple one-time registration process for each family member. If I purchase Laundroid, the first day what I do is put everything into the box. Just myself— my clothes. And then with your smart phone, register as a father, “father’s clothes”.

Tim: Oh, okay.

Shin: Yeah, robot arm put up one clothes by one, and then it takes so many pictures of each item.

Tim: So it learns by example.

Shin: Yeah, exactly. And it does automatically. It can remember the features of each clothing.

Tim: The field of AI is fascinating from the inside, but it’s very interesting from the outside in that— So you guys have been working on this for 12 years—

Shin: Yeah.

Tim: —to get to the point where you’re ready for production?

Shin: Right.

Tim: Why is this a hard problem? Why does AI have trouble folding clothes?

Shin: It was very hard, but not that hard to develop a robot to just fold, for example, t-shirt, towels, and pants. It took us about 3 years about to achieve that. But the condition is that we have to place say t-shirt, pants at a certain place first, then robot automatically folds.

Tim: Oh, okay.

Shin: That wasn’t that hard. That was hard, but that’s not that hard. The hardest part was just dump random clothing in the box, and then robot pick up one shirt or one clothing, and then reorganizes if this is t-shirt, or pants, or towels. And then reorganizes it if it’s upside down, or flipped, or something like that, and then place in a certain location in order to start folding. That’s the hardest part.

Tim: Okay, it’s not the folding that’s difficult. It’s the getting ready for the folding that’s—

Shin: Right, right. It’s so easy for human beings, but it’s so hard for robots and artificial intelligence.

Tim: So for example, there is a group in Berkley who’s built a robot that all it does is fold towels.

Shin: Yes.

Tim: Towels have to be the simplest thing possible to fold.

Shin: Right.

Tim: They’re all the same shape. There’s no real upside down to them. And it takes about a minute and a half per towel.

Shin: Right.

Tim: It does seem like folding clothes is one of those difficult problems.

Shin: Well, yeah it is difficult. But there are already three organizations who tried it, who achieved doing this rather than Seven Dreamers. One is as you mentioned, Berkley. Also like Berkley, one of the Berkley group achieved to also fold t-shirt just by using two industrial robot arms. But even when they do it, they have to place t-shirt in certain place first, then they start folding, right? So they achieved that, and you can see that on YouTube. And we think it’s worthless because—

Tim: Right, right. By the time you take—

Shin: Right, right.

Tim: The time it takes to position the towel.

Shin: Right, right. I might as well just fold it after for additional 5 seconds. So there’s another organization or company called Foldmate which is a US based venture start-up company I think based in Silicon Valley. Their machine— or from the CG picture— I don’t know if it’s real or not— but also customer has to place t-shirt or towel in a certain place.

Tim: Yeah, I have seen that, you have to clip it in—

Shin: Yes, exactly.

Tim: —the machine, right?

Shin: That’s what it is. Yes. So that’s another thing that we had that technology already back in 2008 and we didn’t commercialize because we thought no one is going to buy it because it’s really hard to do it. You know?

Tim: Right.

Shin: It’s too much trouble— hassle doing it. The third organization is the University of Tokyo. They’re the one who tried to do something similar to what we’ve done. But they could not also pick up the clothing and place from the random—

Tim: Okay.

 

Shin: —so they gave up.

Tim: So that’s the hard part.

Shin: Yeah, that’s the hard part.

Tim: And so Laundroid can fold anything? Pants, and shirts, and socks, and everything?

Shin: Yeah, pretty much all the regular clothes including t-shirt, and long sleeved shirt, and pants, shorts, and towels. And there are three things Laundroid can not do. One is Laundroid can not flip clothes. Meaning that the t-shirt has to be—

Tim: If it’s inside out?

Shin: Right, right. Exactly.

Tim: Alright. Okay.

Shin: So the—

Tim: That’s fair.

Shin: Right, the mother in each home has to educate husband and kids to— you know.

Tim: Turn them right side out.

Shin: Right, right. Then just dump into the box, right?

Tim: Okay, that’s fair.

Shin: And then second thing is, Laundroid doesn’t do buttons. Polo shirt is okay. Polo shirt, you don’t need to do buttons and then still Laundroid can fold okay.

Tim: Right.

Shin: But shirt like that, you have to put maybe at least three buttons for Laundroid to fold nicely.

Tim: Yeah.

Shin: Right.

Tim: And I guess you really need—

Shin: Yeah.

Tim: —very dexterous fingers.

Shin: That’s very, very difficult task.

Tim: Okay.

Shin: And then third thing is something that Laundroid can not do at the moment, but he will do it within a year with a software update, is socks pairings.

Tim: Socks.

Shin: Yeah. So this is kind of funny, but it’s so hard. You know?

Tim: I’ve got to admit that it does seem strange that AI can safely drive cars all over San Francisco and Tokyo—

Shin: Right, right.

Tim: —but they can’t fold socks.

Shin: Exactly. So it could, but makes mistakes at a high rate. For example, very dark, navy blue socks compared with black socks sometimes pairs it. It makes mistake. Or the same socks, but one is shrunk— smaller than the other. It happens, right? And it makes— Laundroid reorganizes this as a different pair. Or the same black color but different textures. Laundroid still makes mistakes.

Tim: Okay.

Shin: So this is like AI machine learning, so with a software update maybe within a year, Laundroid will be able to do it.

Tim: Can you talk about the technology you use? I know up until now you guys have been very secretive—

Shin: Yeah.

Tim: —about what’s going on—

Shin: Right, right.

Tim: —inside this black box. Can you talk about that yet, or is that still—?

Shin: Yeah, I can not talk about the key technology there, but I can talk about briefly what’s going on. This technology has achieved by combining three different technology areas: one is robotics, the other one is artificial intelligence, the third one is vision analysis. So combining these three technologies, we made it happen. Basically, as I mentioned, that the reorganizing each type of clothing or the direction of what’s going on, that’s the hardest part. So initially robot arms pick up one clothes, and then vision analysis see with the camera, and AI reorganizes if t-shirt— what type of clothes that is. And if AI can not reorganize, then robot arms changes position, and then—

Tim: Try again.

Shin: —try again. So we repeat this many times, and eventually find, ‘Okay, this is t-shirt.’ for example. And then from that still vision analysis takes away the edge of the shirt. Away the center of the neck circle, for example. What’s the size of it? Then it folds one by one, and then just put into the pick up tray.

Tim: How quickly does it work?

Shin: This is the only thing that it doesn’t do well. It takes a long time to fold. 5 to 12 minutes per item.

Tim: Oh, okay.

Shin: This is quite long. It’s like ridiculously long. But we thought this would be the problem for the commercializing, marketing purposes. But we did intensive kind of interviews. In depth interviews with the many, many different potential customers, and most of them said that time is not an issue. Of course, they’d like to be quicker but—

Tim: So the idea is that since it’s running automatically by itself—

Shin: Right, right.

Tim: —they can just go about their business?

Shin: Right, right.

Tim: Okay, that makes sense.

Shin: So 5 to 12 minutes for 30 items means that it takes two and a half hours to say five or six hours total. So this means that they can just dump all the dried clothes into Laundroid in the morning so in the afternoon it is done and all of it’s separated. Or they can dump in before they go to bed, then in the morning it’s done. So we call “night Laundroid” and “morning Laundroid”.

Tim: Alright.

Shin: So they said if it’s completely automatic, it doesn’t really matter.

Tim: I guess as time goes on and the technology improves, that is only going to go faster and faster.

Shin: Yeah, definitely. So this is— Laundroid only works at the Wi-Fi connected environment. Just like your smart phone, it does software update regularly. And of course, it gets faster and get better, and better.

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Tim: Excellent. Let me ask you about you for a little bit.

Shin: Okay. Alright.

Time: Because you are not the typical start-up CEO we usually have, and Seven Dreamers is definitely not the typical start-up company we have on this show.

Shin: Right. So after I got PhD in the US, I came back to Japan in January 2000. And then I had 30-year plan to grow business. And in first 15 years, my aim is to learn, and also learn in the B2B technology oriented business.

Tim: Was that business a family business? Or how did—

Shin: Oh, yeah, yeah. So I had different choices. Of course, I was able to work for like for example, Sony, or Panasonic, or Toyota, wherever that is. But also luckily my father also started his own company back in 1983, and he was very successful. And he wanted me to join the company, but I was always denying. ‘I don’t want it. I don’t want it.’ But after I got PhD and I came back to Japan, I realized that maybe— probably the place where I can learn the most is at my father’s company. So I apologized and, “Can I join your company?” And he said, “Okay sure.” So I started my business career at his company. He said, “First five years, just follow me. Just carry my bag and you’ll learn.” And I said, “No, no way. That’s something I really don’t want to do.” So I asked him to let me do a new business development. So he created a new group, and I became the head of the group manager there. And then I kind of started new business and— Luckily, successfully I made new, good products for one of the medical device companies in Japan. And that business grew so fast.

Tim: Well, that’s true. You have— Right now you’re getting all the attention for Laundroid, but you also have two other very successful lines of products that have absolutely nothing to do with AI or with laundry.

Shin: Right, right. Yes, so this medical device called Nastint, is for the snoring and sleep apnea. Yeah. So my actually first new business is actually in the medical healthcare market. That B2B business turned out really successful. And after two— no, three years— So in 2003, my father said, “Whoa, maybe you can run the company.” And he left the company. And I became CEO of that company, and okay. And then I ran that company for 8 years as CEO. And in that time I grew the company, I doubled in revenue and that was very good. But that was all based on my father’s base foundation or base technologies. And then year 2010, we already had the base technology and base technology for Laundroid, and base technology for medical device, Nastint. So I asked my father that— My vision after 2015 is that we really want to challenge B2C business, consumer business. And in order to do that, bank loan is not enough. So I need to probably raise funds from venture capitals or other investors. And if we do that, we need to go for IPO at some point. And my father, at that time he was a chairman. And he said clearly, “Oh, okay. That’s not acceptable.”

Tim: Really?

Shin: Yeah.

Tim: Alright.

Shin: So okay, and the reason was my grandfather, my father’s father, used to have a really big company. He also started his own company, and he went IPO.

Tim: So third generation—

Shin: Oh, yeah. Kind of. Yes.

Tim: —of business here.

Shin: Not the same company but in that company was I think second level Tosho Tokyo stock exchange public company. And that company was bought by someone. How do you say that? My grandfather didn’t want that to happen, but someone bought a lot of shares.

Tim: Oh, so it was a hostile takeover?

Shin: Yeah, yeah. Exactly. And so our family— My grandfather lost his company. So my father saw that happen in the past, so he doesn’t want any investors’ money into my father’s company. So we had intensive discussions in 2010. And kind of we decided to sort of separate. So I started my own start-up company.

Tim: But you guys started the development of the Laundroid five years before that.

Shin: Yeah, right, right.

Tim: So you were funding this out of operations for a long time.

Shin: Yeah, yeah. Exactly. But I only spend money for this new business like Laundroid and Nastint just from my new business, which is healthcare B2B business. So I kind of separated new businesses and existing businesses, and I tried to do both. So in 2010, we finally kind of agreed to separate. And then let my sister run my father’s company. And she’s also a good business woman, and she was running subsidiary in the United States, and she was very successful. So we thought she can run the whole company. And I established Seven Dreamers in February 2011. Actually, in Silicon Valley first.

Tim: Oh, really?

Shin: Yeah, yeah.

Tim: Alright.

Shin: And then Seven Dreamers bought all the base technologies of Nastint and the Laundroid from my father’s company. Also Seven Dreamers acquired my father’s company’s subsidiary called, Super Resin, which is the—

Tim: Okay.

Shin: —carbon fiber composite manufacturer in Tokyo. And that company is the one that I acquired when I was a CEO of my father’s company. So what happens was basically whatever I created—

Tim: You kind of rolled it in—

Shin: Right, right, right. Yeah, and separated it.

Tim: So selling the— well at that point just developing the Laundroid, selling the anti-snoring device—

Shin: Right, right.

Tim: —and the carbon fiber golf club chaps.

Shin: Right, right.

Tim: It’s an interesting collection of technologies.

Shin: Yeah, yeah. Everybody thinks it’s so weird to have three different business areas.

Tim: Yeah, why? What led you to those three?

Shin: Yeah, to me it’s really normal, but it’s really weird from everybody else. So the reasoning is like R&D oriented manufacturing company, there’re two ways to develop new products. One is think about from the technology seeds. The other way is the needs. Right? In my opinion, all the things has to come from needs, not the seeds. Because innovation is what we want to do. This means that picking the theme is the most important thing for innovations. That may be the most important. Many people make mistakes there. But in my opinion, picking the theme for innovation has to be from the demands or needs. And then we have to really find the thing which is not available in the world, right?

Tim: Okay.

Shin: But something people want to have.

Tim: So you’re looking for very much blue ocean type niches where there’s not competition.

Shin: Right, right, right, right.

Tim: Where you’re inventing something genuinely new.

Shin: Yeah. We have three criterias to pick the theme, which we really, really value this. One is the theme has to be not available anywhere in the world. Something definitely new. And the second is something to really make people’s life better. And the third is something that has a very high technological hurdles. These three are the very important criterias when we pick things. And I’ve been thinking about this for the last 13 years, but I only found five good things. We come up with many new ideas, ‘Oh, maybe this is good theme.’ But most of the time, even if that product is not available in Japan, but maybe available in Europe or US already. Or even I the idea or product is not available anywhere in the world but if we do patent search, and article search, someone’s already doing it.

Tim: Already doing it, yeah.

Shin: So this is the most of the time is the case.

Tim: So what happened to the other two themes?

Shin: Two themes?

Tim: You said you had five good things.

Shin: Oh, yeah, yeah, yeah. We have five new themes ongoing.

Tim: Secret development.

Shin: Secret, secret, yeah.

Tim: Excellent.

Shin: Yeah. So in 13 years, I only found five, right? So it’s so rare.

Tim: Yeah.

Shin: So many people want to do something new. For example, if we only focus in for example, electronics market, then maybe chance of finding things is very low.

Tim: Well, this is something I think that most start-up founders— well, most young start-up founders don’t understand how incredibly difficult and how unlikely it is to come up with an idea that many people have not had before.

Shin: Right, right, right, right, right.

Tim: It’s really hard.

Shin: Yeah, it’s hard. It’s really hard, as you said.

Tim: But getting back to the Laundroid. You’ve been getting a lot of press attention recently. And you’re going to be taking preorders soon now, right?

Shin: Soon. Yes, yes. We’re going to open a show room called Laundroid Café in Omotesando Tokyo next month like March 16th.

Tim: Okay.

Shin: And then we’re going to take preorder end of May.

Tim: And when do you expect to start shipping?

Shin: End of the year. Yes.

Tim: Now you got— fairly early on you got some investment from Diawa House and Panasonic.

Shin: Right, right.

Tim: What do they see in Laundroid? Are they involved with development at all, or is strictly production and marketing?

Shin: Laundroid will be sold under Seven Dreamers’ brand. But what they can do is Panasonic is supporting us for the production preparation because we are good at developing new products, new technologies, but we don’t have much experience mass producing you know our appliances.

Tim: Right.

Shin: For example, like life testing. A lot of electronics testing.

Tim: So is Panasonic simply producing it for you or can we expect to see Laundroid integrated with Panasonic’s washer and dryers at some point in the future?

Shin: Yeah. Actually both.

Tim: Oh, okay.

Shin: Yes. So the folding part, we are the one who has developed technology. We are the one who have owns all the global patents but manufacturing— and also we don’t have washer and dryer IP at all. So it’s going to be a combination— combined work.

Tim: Alright.

Shin: Right. And Diawa House is supporting a lot of marketing research. And also they want us to expand Laundroid business into nursing homes and hospitals. They are really, really into that kind of business segment.

Tim: That is interesting because it does seem that nursing homes, hospitals, hotels would be the natural first adopters for technology like Laundroid.

Shin: Yeah, that’s what everybody says, but as I mentioned before, that I’m only interested in B2C market.

Tim: Alright.

Shin: So I never thought of it, but after we discussed, and after discussion with Diawa House I thought, ‘Okay, that’s a good idea.’ So we do it. But also my main aim to have a partnership with Diawa House is I want to create a Laundroid home building, which is we install Laundroid into homes. Once you put your dirty clothings into some kind of hole— Laundroid, then it washes, dries, and it folds, and it separates by family members. And then automatically brings into each family member’s closet.

Tim: Oh, okay.

Shin: So then— right.

Tim: That’s some deep integration into the home.

Shin: Right, right, right.

Tim: That’s nice. Right.

Shin: Yeah.

Tim: You’d wake up in the morning—

Shin: Right.

 

Tim: —the clothes would be folded, and you would just put it away.

Shin: Right. What we want to do is, for example if you have in a schedule Google calendar where you’re going to go picnic tomorrow, then in the morning— next morning, then— Google knows the weather, temperature, everything, right? And then Laundroid knows what you like in Spring for example, so then, ‘How about this, and this, and this?’ And then you see everything in there. And then you just wear it.

Tim: It’s getting really close to some Jetsons—

Shin: Right, right, right.

Tim: —Jetsons technology there.

Shin: But in order to do this, we have to have a partnership with a home builder.

Tim: Right.

Shin: And then Diawa House was a perfect fit for us.

Tim: Interesting. Now you mentioned before that Laundroid requires a Wi-Fi connection.

Shin: Yes.

Tim: So all of the AI and the analysis is being done offsite in the clouds somewhere?

Shin: Actually both because it really requires intensive calculations. So Laundroid itself has AI software in there. And also the Laundroid core— it’s our core server— central server also has AI calculation functions. So they communicate to each other, and then sending data each other, and then fold one by one, by one by one.

Tim: So it’s a collaborative—

Shin: Yes.

Tim: —effort?

Shin: Yeah.

Tim: So I guess it means that it’s very easy to push AI updates to existing Laundroids as well?

Shin: Right. So AI functions software in Laundroid core, and also Laundroid itself always updated.

Tim: Excellent. So even people buying the first model will get the sock folding software update when it comes out?

Shin: Right, right. So the first adapter, don’t lose.

Tim: Right. Cool. Are you planning on doing anything else with that data? Is there value in data on how frequently or what type of clothes are being washed and worn?

Shin: Oh, yeah, yeah. Exactly. So as I mentioned that the Laundroid remembers who wears what how often. Right? Of course this is always we have to really have a perfect control of the privacies. We don’t sell private information, but we can connect business to business using that big data. For example, apparel makers like Uniqlo, they know what kind of clothes they sell at each store, but they don’t know if that clothes— how long it was used, how often it was worn.

Tim: Well, that’s true. Everyone knows what’s being sold—

Shin: Right.

Tim: —but nobody knows what’s actually being worn.

Shin: Right, right, right. So we are probably going to be the only one who knows all that, so I’m sure this has certain value to it.

Tim: Interesting.

Shin: Yeah.

Tim: You recently raised about 60 million dollars—

Shin: Right, right.

Tim: —from SPI.

Shin: and by other.

Tim: Led by SPI.

Shin: Right, right.

Tim: Was that round mainly targeting global expansion?

Shin: Yeah, let me start from the Series A fundraising.

Tim: Okay.

Shin: Which I started January 2014. It took me more than one year to complete Series A. It was really difficult. But we raised 15 million dollars. But that was from a couple venture capitals and a few— CVC I should say.

Tim: Corporate VC’s.

Shin: Corporate VC’s.

Tim: Okay.

Shin: Yeah. Kind of, yeah. That 15 million dollars is mainly for domestic marketing of Nastint medical device—

Tim: Oh, okay.

Shin: —and also for development of Laundroid technology. And then after that, I started a Series B fundraising, which we completed in last year October 2016. So as you mentioned SPI, and Panasonic, and Diawa House. So then we raised about 16 million dollars. So that was mainly for Laundroid development and kind of getting ready for productions. And then right now we are under the process of Series C fundraising, which is not that as much as Series B. But this is for the global expansion—

Tim: Alright.

Shin: —of Nastint, and Laundroid, and carbon-fiber golf-club shaft. Actually three businesses.

Tim: Okay. Looking at the global market for Laundroid, there seems to be a lot of kind of press release competition. You mentioned Foldmate, there’s a whole bunch of kick-starter projects—

Shin: Right, right.

Tim: —but nobody seems to be shipping something yet.

Shin: Right.

Tim: Do you think there will be competition coming online soon? Or do you think the other companies are going to remain press release competitions?

Shin: It will be just press release competition for probably a few years. But eventually I’m sure the competitions will come just like any other products. We have a really, really big advantage in technology development. It took us 12 years to achieve this. So I’m sure even if other competitors have money and human resources, it is going to take a few years to catch up for sure. We want to always have the name of we invented this. And also we want to have the largest share. So my role model company is Johnson Johnson, so they launched One Day Accuview, one-day contact lenses in 1991. So since then, it’s been 20 something years, but still they have 50% share in the whole world. And their product is probably the most expensive one compared to other companies. Many, many other contact lenses.

Tim: If you’re so much ahead of the possible competition, what is the motivation to go global so quickly? Are there specific opportunities you’re chasing, or is it apart of a broader strategy?

Shin: One of the reasons is I really hate Japanese company to be always domestic.

Tim: Oh, yeah. Yeah.

Shin: I think we can do. We can expand globally. Japanese companies can do it, and I want to show. Even small start-up company like Seven Dreamers can globally expand. And I know— I lived in the US for several years, so I know even a great company like Google and Apple, when they launch new product, immediately they expand globally.

Tim: Right, right.

Shin: Immediately.

Tim: On the same days.

Shin: Yeah, yeah. But Japanese company, Japanese inventions stays here all the time. Forever, which I really hate. So that’s one of the reasons that we want to expand globally so quickly. And the second reason is I have the goal in 2030 the revenue is 3.5 billion dollars, and then the profit margin is 20%. That’s the goal that I set in year 2000.

Tim: And that can only happen globally.

Shin: Right. Japanese market way to small.

Tim: That’s a lot of laundry to fold.

Shin: Yeah, exactly. A lot of snoring patients we need. Yep.

Tim: Okay. Let’s talk about Japan as a whole for a minute.

Shin: Okay.

Tim: Because what you were just saying about the importance of going global. Right now, start-ups are getting a tremendous amount of attention in Japan.

Shin: Yeah, true.

Tim: But in terms of both people employed, the technology being produced, the economic impact, it’s very small. But looking at the technology that mid-sized Japanese companies have—

Shin: Right.

Tim: —like Seven Dreamers and like your father’s company, and perhaps your grandfather’s company as well.

Shin: Yeah.

Tim: What role do you think mid-sized companies have to play in bringing Japan forward and changing the economy, and changing the way innovation happens here?

Shin: Okay, well good question. First of all, why I chose R&D based manufacturing company to start is I thought that this type of business model or business segment has the highest probability or potential to grow big, really big. I probably could have a choice of establishing internet based company, but I knew that I’m going to be as big as Apple or Sony. So I think R&D based manufacturing company has the highest potential really, really grow kind of globally. But at the same time, money and time are the really, really, the big risk for this kind of business model.

Tim: Well, sure. I mean, it’s not like a sass market place that two college students can put up over the weekend.

Shin: Right.

Tim: You spent 12 years developing this.

Shin: Right, right, right.

Tim: What are your thoughts on the future of AI and robotics in Japan? Two fields at the core of—

Shin: Right, right, right.

Tim: —Laundroid here. Japan actually until very recently has always been on the leading edge of robotics, and I think over the last 10 years, the market has shifted from being very hardware focused to software focused.

Shin: Right, right.

Tim: Do you see Japan catching up?

Shin: To be honest with you, not easy.

Tim: Really?

Shin: Not easy. I think we’ll be okay, definitely. We’re not going to completely lose, but when it was industrial robots, we were pretty good just because it was a lot of mechanics and electronics, which we are really, really good at. But nowadays, robots has to be always together with the software artificial intelligence. That kind of algorithm software, I don’t think Japan is so good. And then speed of developing technologies are relatively slow. So it’s not going to be easy to be competitive. Yeah. I think.

Tim: Okay.

Shin: Even like many of our AI engineers are foreigners at Seven Dreamers.

Tim: Really.

Shin: Yeah. Mechanics, electronics, robotics: these fields we have really talented Japanese engineers. But when it comes to we call “core software”, which is AI part, one third of the team members are foreigners. And they are excellent. They are. Yeah.

Tim: Okay. Well listen, before we wrap up, I want to call you what I call my “magic wand” question.

Shin: Okay.

Tim: And that is, if I give you a magic wand, and I told you that you could change one thing about Japan, anything at all. The education system, the way people think about risks, the legal system. Anything at all to make it better for start-ups here in Japan, what would you change?

Shin: Can I answer two?

Tim: Sure. That’s your wand.

Shin: Yes, something we want to do, and something I want someone else to do.

Tim: Alright.

Shin: Two answers. One is something we want to do is definitely we want to show Japan can do it. We can make innovations. We can extend globally quickly. And once we do it, I’m sure many young followers will follow. And the second thing, one thing that I want someone else to do is really I want someone to change education system completely. This certain thing, Japan. Please. This is really, really bad.

Tim: What would you change about it?

Shin: Teachers. Well, I shouldn’t say that, sorry. But for example, about global thing— in a globalism, teachers have no experiences abroad. Like how people can teach about global experiences without having global experiences? It’s impossible.

Tim: This is something I think is true at all levels of the Japanese education system. At universities you have business professors who’ve never been in business. They’ve always been in academics. Or computer science professors who’ve never had to write a program in a commercial environment. Is that attitude from kindergarten all the way up to university?

Shin: Oh, yeah, yeah. All the way up. And I know that what’s really bad about this is seniority of the academic field. For example, in business field it’s getting better. Of course, the age really matters. But not as much as educational field. In educational field, it’s like a sumo wrestler, once you become your cousin, your neighbor need to leave. Once you become an executive professor at the university, you never need to leave. Even if you’re 75, 80 years old, you still are the best. How we could change the educational system, right? Even if a talented, new, young globally experienced professor come to the university, how they can change the whole system.

Tim: Yeah, it makes it almost impossible to get in new ideas.

Shin: Right, right. What’s great about the US university was— My professor was old, 70 years old. But he was really kind of senior professor, but he had his power in position just because he was raising fund from the government grant. But when I was there for five years, he lost so many grants and his power went down immediately. And we had a great office, but he shrunk his level so much, he was transferred to another really poor, cheap building with just his own office without no lab— without any lab, no students.

Tim: Really based on personal experience.

Shin: Yes. Yeah. And then new, very young professors took over his— all the great lab. And I felt so bad but I thought, ‘Oh, this is the strength. This is a power of a US education.’

Tim: And that can never happen in Japanese—

Shin: Never happen in Japan. I never seen such in any university so far. It might change in the near future. I hope so. But so far, it never happens.

Tim: So we don’t see that attitude changing in the education system. Do you see it changing in business?

Shin: Oh, yeah, yeah. Business, it’s changing a lot.

Tim: So you think compared to 10, 20 years ago, Japanese businessmen are being more flexible in their thinking?

Shin: Oh, yeah, yeah. Big time. Big time. It’s changed large, mega companies, and also changed this start-up environment. Big change. I’m very happy with it.

Tim: Well, that’s good to hear. Well, hopefully some of that change will filter back to the university.

Shin: Yes, I really hope so. Yeah.

Tim: Okay, hey listen, Shin. Thank you so much for sitting down with me.

Shin: Oh, thank you very much for your time. Thank you.

Sponsored by

[Outro]

Tim: And we’re back. You know, when I look at the Laundroid, I really can’t help but think of Stanley Kubrick’s 2001. Laundroid is shaped like the big black monolith from the opening scene. And its most visible feature is a big round light a little bit below eye level, which reminds me of HAL. Now I doubt that 2001 was the inspiration for the design. And considering the fact that HAL turned into a murdering sociopath, it’s pretty unlikely that Shin and his team at Seven Dreamers would appreciate the comparison. But the more I think about AI, the more I become convinced that the future is going to look a lot more like the Laundroid, and a lot less like HAL.

In fact, despite the progress being made in AI, and the concerns over super intelligent conscious AI being raised by such indisputable geniuses like Ray Kurzweil, Steven Hawking, and Elon Musk, I think the geniuses have it wrong. And that we are much, much farther away from AI with human like intelligence than we imagine ourselves to be. Ray Kurzweil has been talking about this the longest. He coined the usage of the term, “singularity”, to mean the point at which computer processing power will equal that of the human brain and computers would begin to equal and then quickly exceed human intelligence. I’ve been a fan of Ray Kurzweil for decades. He quoted me in one of his books once, and it put me in a good mood for an entire year. But with the utmost respect to Ray, I think there’s something fundamental that he’s overlooking.

The assumption that the brain is a computing engine is not really based on anything. It’s simply a metaphor that makes sense because we live in a computing age. If you look back into the era from 1900 to the 1930s, both science fiction and futurists were predicting intelligent, sentient robots based on complex gears and physical mechanisms. And just like today, they pointed to machines doing more and more tasks that used to require human intelligence. The dominant metaphor at the time was one of steam and gears and power. So it was natural to view ourselves in that light as a collection of moving parts that simply needed to be understood and replicated. That metaphor no longer works today. So it’s easy to see how it was incorrect. But somehow the idea that we will achieve human like intelligence or even consciousness once we get just enough operations per second. Enough computing power. That metaphor and illusion still persists.

Think of it this way, DNA is at the center of all life on earth. DNA is the storage mechanism for life. It controls how we develop and really most of the traits that define us. It’s an incredibly complex molecule. But DNA is really a physical representation of an extremely large base for a number or alternatively, a very long sequence of base for digits. Well, today we can read that genetic code. We can perfectly store that information on a USB drive. But that doesn’t mean that we can create and control life. Because even though computer storage is a good metaphor for what DNA does. It’s only a metaphor. That’s not what DNA really is. In the same way, a floating point operation is a very good metaphor for what a neuron does. But that’s what a neuron is.

Why am I confident making this claim? Well, because our most powerful AI computing systems have not produced anything approaching consciousness or general intelligence. Of course, AI researchers and advocates will point out correctly that the singularity is still supposedly 25 years away. So we can’t expect to see so much progress with today’s computers. But the thing is, we should expect that. In fact, we can simulate exactly how AI will behave when we have 100 times or 1,000 times the processing power we have now. We just have to wait a bit. We can time shift the results. We don’t have to observe AI in real time. So for example, a computer AI running for 42 days on today’s hardware will produce exactly this same amount of consciousness that a computer with 1,000 times that processing power will produce in an hour, which so far is not at all. Some day we might well create a genuine, general artificial intelligence, but we’ve been fooling ourselves when we think that consciousness or general intelligence is a matter of neuron counts and operations per second. I think we’re going to discover that intelligence is far more elusive and far more complex.

Computational and human thought processes are different and complementary. Computers can drive a car better than many people, and computers can defeat the world’s most talented humans at Chess, Go, and Jeopardy, but they still can’t match a pair of socks. We’re gong to see AI improve and out perform humans at more and more tasks, and that’s a great thing. I’m perfectly fine putting HAL in charge of folding my socks, but it’s going to be a very long time before we should put him in control of the airlocks.

If you’ve got thoughts on the Laundroid or that little AI monologue I just went off on, Shin and I would love to hear from you. Seriously, this is interesting stuff, so come by DisruptingJapan.com/show081 and let’s talk about it. And when you come to site, you’ll see all the links and notes that Shin and I talked about, and much, much more in the resource section of the post. 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.