One Japanese startup founder is on a mission to change not only the way we think about the news, but the way we think about each other. The “filter bubble” is a term that describes the natural, but tragic, result of search engines and news services giving us more and more of what we want. We end up seeing only information that reenforces what we already believe. Ideas that contradict our beliefs, ideas that might make us uncomfortable, and ideas we have never been exposed to get filtered out in the process of “giving us what we want.”

Atsuo Fujimura and his startup team at SmartNews are working to change that. This comes as no surprise to those of us here in Japan since over the past twenty years Atsuo has launched a string of startups that have changed the news industry in Japan.

What he has in store for us this time is amazing, and with his recent international launch, he’s taking it global.

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Show Notes for Startups

  • The early signs that the Japanese publishing industry we doomed
  • The inside story of how Japanese publishers first tried to embrace the Internet
  • The founding, success and impact of @IT
  • How Japan’s two mobile revolutions changed everything, and how Atsuo tried (and failed) to adapt
  • The different ways in which we consume news on mobile devices
  • How SmartNews plans to burst the filter bubble
  • How Japanese publishers today are trying to survive

Links from the Founder

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Transcript from Japan

Tim:    Welcome to Disrupting Japan, straight talk from Japan’s most successful entrepreneurs. I am Tim Romero and thanks for listening. Today we sit down with Atsuo Fujimura, a man who more than anyone else in the country is reshaping the way Japan thinks about media. He founded Atmark IT, he IPO-ed IT Media, and now he is working with Smart News to change the way we discover and consume news.

Now Atsuo and I we talk about the effects of the filter bubble in this interview. Now for those of you unfamiliar with the term the filter bubble is an unfortunate side effect of search engines trying to show us what we want. By optimizing to what we like search engines end up not showing us news or information that contradicts our current thinking or could make us uncomfortable. Despite the fact that there is a tremendous diversity of information and opinions on the interest out Filter Bubbles provide us with a more and more narrow view of the world as they try to optimize our tastes. Fujimura Son and Smart News are trying to reverse this and it’s not always easy. After the interview he explained that some American Beta users actually got angry when presented with news from a source they considered to right wing or to left wing. But for any democracy to move forward to really function at all we need to have some level of common understanding of facts and information.

Now all our listeners in Japan will know this company names and most will be familiar with Fujimurasan himself, but many of our overseas listeners will not know him by name so please don’t let Atsuo’s humble and unassuming manner lead you to underestimate the impact that he and his companies have had in Japan over the past decades. Oh, and earlier this year Smart News announced their international expansion so this is a name you are going to be hearing a lot more in the future so let’s get right to the interview.

Tim:                Great we are sitting here with Atsuo Fujimura. And let’s see, you founded Atmark IT. You later became after the merger the CEO of IT media. You took that through to IPO. You are now working with Smart News, and run the Media Disruption Blog.

Atsuo:             Yeah, thank you.

Tim:                Thanks for sitting down with me. I think more than anyone else in Japan you really seem to be working to change the way people view news and consume media and I really want to talk a lot about that. But, before we get into that tell us a little bit about your own history and about Atmark IT and about what you are trying to do today.

Atsuo:             It’s been a long history. So let me explain before Atmark IT my career started in the 70’s. So first my career is very old style publishing company. Then very, very old style editorial work, but I was very boring with old style, old way so someday I came across the New Phenomena PC. This is very, very exciting for me.

Tim:                Back in the late 70’s early 80’s.

Atsuo:             Yeah, maybe more 80’s.

Tim:                So those days when you were in publishing was it technology publishing? What was the subject?

Atsuo:             No, no very usual economic kind of business.

Tim:                Very traditional, very usual.

Atsuo:             Very usual. So the company wanted to move to Computer Based Work Flow. So I joined special team to computerize the old company.

Tim:                So you were in sort of the newly formed IT department of the publishing companies?

Atsuo:             Right, yes.

Tim:                So that was back in the Dos V days wasn’t it?

Atsuo:             Yes that is right.

Tim:                I remember Dos V.

Atsuo:             Yeah, I am very curious about the mechanism kind of that so I tried to understanding how computing works. So–

Tim:                You were mostly just teaching yourself computers?

Atsuo:             Yes.

Tim:                Great.

Atsuo:             And a simple textbook.

Tim:                I guess at that time there was really no option you had to teach yourself.

Atsuo:             Yeah, right. So I am very excited about PC computing. So I want to change my career from old style publishing company to IT Company.

Tim:                So those days the image you had, the idea was still traditional publishing just the more efficient work flow with computers?

Atsuo:             Yeah, but I saw a huge difference between computing and publishing. So, my choice was to move to computing area. So I came across some small startup Windows based software company. I mean Windows 2.1 or 2.2 kinds of that. That was a very different world for me.

Tim:                Yeah I can imagine. How long did you stay in the traditional publishing industry?

Atsuo:             Almost 10 years then moved to very small startup.

Tim:                Was that IT Media or was that something before?

Atsuo:             No, no.

Tim:                Oh, what was before IT Media?

Atsuo:             Several companies.

Tim:                Oh really? Okay. I didn’t know that.

Atsuo:             So let’s skip the long history, I moved to small IT Company to ASCII cooperation. Do you know ASCII cooperation?

Tim:                Well ASKI cooperation at least today is extremely famous, I think it’s still the largest technology publication in Japan for technology magazines, technology books.

Atsuo:             It had a similar aspect of the company. I joined the software company of ASCII cooperation.

Tim:                Okay.

Atsuo:             But, two or three years after ASCII sold software business to another company. So then, I have no choice to move to publication business to ASCII.

Tim:                So you were back in the publishing business again?

Atsuo:             Yes. We turned into a publication business, but as you understand early 90’s we had a huge phenomenon of Windows and internet boom.

Tim:                Yes, changed the world.

Atsuo:             Yes. So, our publication business declined then the company wanted to move to an internet business. So, I still have three or four years career in ASCII cooperation. Then, I moved to IBM.

Tim:                So what made you decided to go out on your own and start Atmark IT?

Atsuo:             Mhm. Okay.

Tim:                Back in 2000 it was still a big risk you know? Entrepreneurialism was not social acceptable in Japan.

Atsuo:             Yes I think so, I agree with you. I have two reasons. One is very practical. Second is ideal.

Tim:                Okay.

Atsuo:             The first practical reason is I have several friends they have advanced vision; Allen Miner, Takagi Nagayama, kind of the people that want to make a new business in Japan. Not like At Mark IT they want to set up the cyber venture in Japan. Their dream is to make an online centric technical editor based on the internet.

Tim:                Okay.

Atsuo:             Yeah that is a very simple, practical reason.

Tim:                Those are some of the best names. VC’s at the time without question.

Atsuo:             And also they are very good friends of mine. Second idea reason is I want to encourage the technical people I am an engineer in Japan. SO, what is a very big important part of next IT age? Based on the product people, engineer and bounce the idea they have.

Tim:                You know this is a very interesting point because I think engineers in Japan, –software engineers in Japan don’t seem to have the level of respect that they do outside in other countries. When you look at hardware engineers, –so if you go to Toyota, automotive engineers are some of the highest levels of the company. If you go to Sony the hardware engineers are very influential within the company, but software engineers in Japan until recently really didn’t get much respect or attention at all did they?

Atsuo:             Those were the days.

Tim:                Yeah.

Atsuo:             Back in 2000 engineering people belongs to an organization. People is important, more important than organization. So, I tried to encourage the people for their own future. What is a way we can build is content and the community to set up the community? So I tried online publishing business and I also have an online invest community for engineers.

Tim:                Well it was a tremendous success and many of our listeners are outside of Japan so they won’t know how influential Atmark IT was. I have written columns for it, it is–

Atsuo:             Thank you.

Tim:                I was delighted to do it, and I got wonderful feedback from engineers and other technologist. It was really the first gathering place for professional engineers in Japan. I think you are being very modest, it was an unbelievable success.

Atsuo:             Thank you, thank you. I love the walls. Thank you.

Tim:                After you founded this online community it attracted the attention of Soft Bank and other investors.

Atsuo:             I have an idea I need more editorial people and I need more sales people so let’s make a big convergence to establish the purely online based media business in Japan. This was a very huge challenge for us. I consult with Soft Bank people then we made a big mergering with Atmark IT and Soft Bank, IT Media.

Tim:                And IT Media was, it used to be Ziff Davis in Japan?

Atsuo:             Right

Tim:                And then it became IT Media?

Atsuo:             Yeah.

Tim:                And then it merged with Atmark IT and then you took over. A few years later you IPO-ed that company.

Atsuo:             That is right. 2005 we merged then 2007 we went to go public.

Tim:                And after that success you left.

Atsuo:             Yeah.

Tim:                In japan I think even today most young founders their dream is to start a company it IPO it, and be CEO for life.

Atsuo:             Oh yeah, forever.

Tim:                Forever. So many Japanese still want to do that. So what made you decide that it was time to leave, to move on?

Atsuo:             I have a couple of reasons, one is economy crashes. I regret, I should set up more of the balanced business model.

Tim:                When you are talking about the financial crisis do you mean the 2009 Leaman Shock- or

Atsuo:             I mean so.

Tim:               Okay.

Atsuo:             That crises had a couple aspects. One is economy changing, but also very huge new phenomena highly mobile. But at that point we have no idea about the how to use the mobile.

Tim:                Did you find that IT Media was just a company too big to response to it?

Atsuo:             Yes.

Tim:                Why couldn’t you respond?

Atsuo:             Yes, I don’t want to critique but we had no idea how to move to mobile arena. So dilemma because we made a sweet web based business model like a big banner and advertise model but those business model were not useful for mobile area. People including me don’t want to move to mobile area for less money.

Tim:                Right, it’s the innovators dilemma.

Atsuo:             Right.

Tim:                Well it’s interesting to and we talk about Mobile Japan went through short of two mobile stages. There was the GaraKei the old style flip phones where japan was leading the world and IT media was still a very dominant force. And then there was the I-Phone and Android revolution which changed everything.

Atsuo:             Yes I think so. During GaraKei age we through that was a subset of PC’s. So we could ignore that revenue from GaraKei business but smart phone business I mean I-phone or android we can’t ignore that revenue affect. So, we have to change our self or still arrive in the PC area.

Tim:                Right, and the company was not able to change itself. So you left and you are now involved with Smart News; which is entirely mobile right?

Atsuo:             Right, right.

Tim:                Well let’s talk about that a little bit because I understand its news arrogation it’s using an algorithm to try and select the right kind of content. You explain it a little, probably better than I can.

Atsuo:             Back in PC based web age how to discover the great content we using search engine. In mobile area do you think so many people want to type in the search engine?

Tim:                That is right search engine is much more harder on a mobile isn’t it?

Atsuo:             Yeah, so mobile age moved to completely new content retrieval phase. So let’s seek totally new how to discover great content. They don’t want to type in a search engine. So we need a new push based media idea.

Tim:                There is certainly no arguing with success and smart news has got incredible traction in Japan, but I’ve always thought that effect of news aggregators it’s both good and bad. News aggregation allows people great convenience of showing them content they are interested in. It also sometimes has the Filter Bubble affect where people only see the content that makes them happy. But, sometimes they don’t see the content that is important. What are your thoughts on that?

Atsuo:             Our basic idea is how to break through the Filter Bubble. Why many people want news? They want to come across the new topics. It was not based on the personal.

Tim:                Okay, does smart news try to counter act the Filter Bubble? Does Smart News try to introduce people to content that maybe doesn’t make them happy?

Atsuo:             Yes that is right, we want to set up the completely new type of discover content.

Tim:                What is it really based on? What is the algorithm, –I mean I don’t want you to give away any secrets but for example some of the traditional algorithms for news are either social; we will show you things your friends like which is very Filter Bubble. It’s behavior which is we will show you things you like which is even more Filter Bubble. How do you choose what to show people?

Atsuo:             Our algorithm based on so many type of signal. Huge amount of social signal then we tried to arise what sort of people want. Then we provide a ranking in real time.

Tim:                So what is the ranking? What determines the ranking? Is it popularity?

Atsuo:             Yeah. It is based mainly on popularity but not only popularity, not only the simple numbers. We try to find out which has content quality. We analyze so much–

Tim:                So you are trying to, –your algorithm tries to objectively determine content quality rather than saying this is liberal, this is conservative; it’s saying this is high quality content and then rank it.

Atsuo:             Yeah.

Tim:                That is a really interesting approach. And this is available in English as well so I will make sure there is a link on the site. That Filter Bubble is a real problem in news today. Well actually let’s talk about News Media because I think that, –well I don’t think, it’s obvious the news model is being disrupted in good ways and bad ways. In some ways I find traditional news media in Japan to be refreshing. Again for our listeners over seas the Japanese news media is boring in a good way. People read the news, this is what happens today, it’s the same as it was in American like the Walter Concrit, Dan Rathare whereas the American Cooperate news media, –if you listen to American News whether it’s Fox News or MSNBC there is a lot of very angry people. But, the model is people getting angry. What is the way to, –and I do think there is huge value in the current Japanese style or the old strictly factual reporting but how do you stick a balance between a company that needs to make money and also providing that real public good of just giving people neutral information.

Atsuo:             Yeah good point, great point. First of all we want diversity we don’t want to provide single way. The civil point of view in the world wide bases. So we try to provide similar aspect of each single topics.

Tim:                And how have your users reacted to that? Do people appreciate the different opinions?

Atsuo:             Yes, I think so.

Tim:                that is very encouraging. I will tell you as an American maybe Thanks giving Dinners talking to family they don’t appreciate different opinions it’s lots of arguing. So people have been receptive to different ideas coming in?

Atsuo:             Mhm.

Tim:                that is really, really encouraging.

Atsuo:             Good.

Tim:                And I guess a more specific topic, we talk about well the terms is used way to much today. People talk about mobile games as disruptive but I think when we are talking about the media especially in Japan it really is an appropriate terms. The print publications still have tremendous power here in japan. The new media is very traditional but what do you think needs to change in change? What part of media really needs to be disrupted?

Atsuo:             Oh yeah, I think print media is not so easy to sustain because business model itself isn’t not good enough for media business.

Tim:                So is it just that the overhead costs are too high?

Atsuo:             That is right.

Tim:                Or that they can’t target a very narrow niche?

Atsuo:             Yeah that is right. The media want huge people for editorial for sales for backend. So each media company running cost is getting high day by day. But, another side advertising and the subscription sell based revenues are getting smaller.

Tim:                Well I think we’ve seen I happen already on, well with technical news Atmark IT lead that beginning of the change. The bigger change was have coming now is let’s call it hard news which is really what smart news is targeting. Let’s take the oldest of traditional media companies the Japanese newspapers. A tremendous number of people still read newspapers every day. Do you see the Japanese newspaper industry changing or do you think they are going to be disrupted?

Atsuo:             Yeah I think they are going to be disrupted.

Tim:                And do you think it’s going to be because of the cost bases or do you think it’s going to be targeted content? What do you think is the real driver behind the disruption?

Atsuo:             The cost factor is very important for old media company. They have suffered. So not so many publication companies especially newspaper can sustain or not. I think media business now a days is not sustainable.

Tim:                Have any of the traditional newspapers or publishers had successful experiments with online? I know everyone puts their content online but, have you seen any really innovated experiments from the newspapers and media companies in Japan?

Atsuo:             Maybe there is not enough case but Nikkei has a very strong subscription business model. They can survive.

Tim:                They have done well internationally as well. International subscription, their English.

Atsuo:             But mostly usually old style of media business cannot survive.

Tim:                Well let me ask you this then, so I will ask you to predict the future, pull out a crystal ball. So 15 years from now when people from Japan get up and pour themselves a cup of coffee in the morning they won’t be reading a newspaper. What will the media look like in the future?

Atsuo:             That is good question. In the future our point of view for news format with completely change because broadcasting, newspaper, book, magazine, radio; each media model based on the format, but these days we can ignore the several format distraction because movie or tech graphics we are all in the small devices.

Tim:                That is true.

Atsuo:             In the future that tendency goes more faster.

Tim:                So more convergences and less distinction between the media types?

Atsuo:             I think so.

Tim:                I guess the traditional media model in all countries, but Japan especially has been very top down. Do you see that changing? Do you see Japanese acting more citizen reporters and consuming media from not just the big names but individuals or pods cats for example, do you see that changing in Japan?

Atsuo:             Yeah I think so. But at this moment regulation is very strict.

Tim:                Oh right.

Atsuo:             So we cannot move, cross over not so easy. So news media, maybe newspaper need their own staffers and the TV broadcast need their own staffers and so on.

Tim:                In Japan is it illegal for the same company to be producing TV and newspaper with the same staff?

Atsuo:             Basically they are divided.

Tim:                Okay.

Atsuo:             But now a day Asahi Newspaper has Asahi TV it is just like tricky, that kind of distinction happened around War Second so small resource how to provide for each area the government decided that historical–

Tim:                And it is still with us today, like so many things in Japan.

Atsuo:             That is right, that is right. So 60 or 70’s this was very usual.

Tim:                But it seems so often every time I run across a very unusual confusing regulation in Japan it was some law that made sense in 1962.

Atsuo:             That is right.

Tim:                Well let me ask you about startups in japan in general because you have been, –I guess we both have been starting companies now for more that 15 years.

Atsuo:             Oh yeah.

Tim:                Things have changed so much in a good way and a lot of young people today still want to be entrepreneurs. With all of your experience now if you could go back 20 and give advice to your younger self what would you tell yourself?

Atsuo:             Okay, very good situation and a good condition for a startup because you don’t need huge money to start up. My experience back in 2000 we wanted to start up, we set up a technology intensive venture Atmark IT. We need around one million dollar.

Tim:                Yeah it costed a lot more money back then.

Atsuo:             The buy the sublevel database so many assets.

Tim:                And having full time staff to keep all of that running.

Atsuo:             that is right. But now a day you don’t need big money to use in the next work or cyber base. So very easy and you don’t need big money means that you should not necessarily to succeed the project.

Tim:                So keep trying.

Atsuo:             Yeah you can fail again and again.

Tim:                Well I think that attitude towards failure is something that is starting to change in Japan now especially among younger people they see it as more acceptable. But yeah smaller risks.

Atsuo:             Yes I think so.

Tim:                Well with all the improvements if there was, if you could change one thing about either Japanese society or attitudes or law or education to make it better for startups, to give them a better chance to succeed what would you change? If you had just like a magic wand.

Atsuo:             Yeah, even for me ambition and information is very important. So community is necessarily to start up. Right person, right information, I recommend young entrepreneurs first you have to have good ambition. The second how to get from good information.

Tim:                So you think there needs to be a more sense of community among Japanese Entrepreneurs?

Atsuo:             Yeah.

Tim:                Yeah, yeah I’d agree with that. We were talking a little earlier about how Entrepreneurs need to work with each other instead of just the venture capitalists of Japan.

Atsuo:             Yeah.

Tim:                That is good, and that is something I think we are starting to see change now. A lot of Entrepreneurs who have become successful and well like yourself and are now working with the next generation of entrepreneurs with good new projects. I think things are looking pretty bright for Japan.

Atsuo:             really?

Tim:                I do. Before we finish up I want to ask if there is anything you want to share with our listeners about startups in Japan or about disrupting News Media?

Atsuo:             Maybe that is all.

Tim:                Okay, well I guess we covered a lot. Well listen, that you so much for sitting down with me today I really appreciate it.

Atsuo:             Yeah, thanks so much.

Tim:   And we are back, you know the inventors dilemma is something that keeps popping up in these interviews. I thought it was amazing to hear how Atsuo was unable to lead IT Media to adapt to this new disruptive business model that the second generation of mobile devices ushered in. Despite his success in disrupting the publishing industry with new technology before and despite the fact that IT Media itself was born out of such disruption with the founders still at the helm and despite the fact that the founders saw the challenge coming way in advance the company still could not change to meet those challenges.

Now this is certainly not criticism of IT Media or of Fujimurasan, it’s more of a statement on how hard it is for any company to respond to and adapt disruptive technologies. Very, very few manage to pull it off. Practically in Japan once systems get put in place they can be very hard to change.

Also, Atsuo’s prediction of the demise of newspapers would be obvious when talking about newspapers in the western world. But, in Japan the print media in general and newspapers specifically still have tremendous influence, not simply social but also political. I think Atsuo’s prediction will come true but I don’t think the Japanese newspapers will be going down without a fight. It won’t be the quiet hollowing out that we’ve seen in the west.

If you want to see the links and the resources that Atsuo and I talked about during this interview or just to get in touch go to disruptingjapan/show014 and you will find all of that and more in the resources section of the post. And, if you have something to say about Smart News, the Filter Bubble, Japanese publishing or Japanese startups in general drop by and leave a comment, let us know what you think.

Also, don’t forget to like use on Facebook and review us on I-tunes if you get the chance. That is really the best way to help out the show and to get the word out.

But, most of all thanks for listening and for supporting the show and letting people interested in Japanese startups know about us. This is Tim Romero and thanks for listening to Disrupting Japan.