The Real Reason Japan Can’t Innovate & What to Do About It – Xenoma

Links from the Founder

• Everything you ever wanted to know about Xenoma
• A deeper dive on e-skin
• Ichiro’s personal blog (in Japanese)
• Follow Ichiro on twitter @ichiroamimori
• Friend him on Facebook

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Transcript from Japan

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

You know, Japan has always been the land of cool hardware, from the Zoom recorder I’m talking into to the Gameboy, to the Play Station, to the Walkman, to the transistor radio. Japan has always been a mecca to gadget geeks. Of course, things have changed in recent years, the falling price of not just computing, but of manufacturing and prototyping has resulted in some amazing connected devices appearing all over the world.

And Japan, if we’re being honest with ourselves here, is falling a bit behind.

Ichiro Amimori is a small part of the solution to this. He left a 20-year career in material science to found a company that produces what they call e-skin. It’s a tight fitting shirt that can sense the movements of its wearer and act as an inexpensive, accurate, motion capture device. It’s price and durability is something you might find a little bit surprising.

Of course, with a cool hardware available now, attracting developers to your new platform, no matter how cool, is something of a challenge these days. Even Google is having problems in this area. Ichiro and I dive into some detail about how Xenoma is solving this. We also talk about the challenges that Japanese enterprises and universities have turning fundamental research into real products. And the steps that they’re taking to solve them.

But you know, Ichiro tells that story much better than I can, so let’s hear from our sponsors and get right to the interview.

Tim: I’m sitting here with Ichiro Amimori of Xenoma. You guys make e-skin. It’s like clothing, it’s motion capture, it’s just a shirt, really, but thanks for sitting down with us.

Ichiro: Nice meeting you.

Tim: Tell us more about what Xenoma is, and what this shirt really does.

Ichiro: So we are a startup company from the University of Tokyo, and we established a company November 2015. What we are making is the e-skin, which is a smart apparel. We are not saying it is wearable, because shirts are obviously wearable. As you can see here, this is just a shirt. Stretchable shirt.

Tim: Right, and it’s an audio podcast, so it’s kind of hard to explain. But it just looks like normal, stretchable, workout wear with kind of a Tron design to it.

Ichiro: Right, everybody says that. Actually, so this Tron design, you see the silver stuff, is the electric circuit, which is stretchable. So in here, there is wiring and sensors, you can touch.

Tim: We’ll put pictures on the website, so everyone can know what it looks like. But, the circuits don’t seem to be wires. They’re printed on here and, are they printed? Stitched?

Ichiro: We are not saying the manufacturing process in detail, but we are using many kinds of manufacturing process which is conventional. The point is that… you see this silver stuff, so many people say, “Is this conductive?” Actually, the silver stuff is not conductive. All the conductive part is in the silver stuff, because when you sweat, you may have an electric shock due to the water. Then all the electronics is well-insulated on both sides. This silver stuff is one insulation layer.

Tim: So the silver stuff is really just to make it look like Tron.

Ichiro: Yes, it is just a design. We could make it black, but why don’t we make it like Tron?

Tim: So the sensors really work by the stretching of the fabric.

Ichiro: Yes. We are saying that this is a motion capture shirt, without using camera. What we are doing is not just capturing motion, but we are measuring the deformation of the shirt caused by motion. For instance, when we bend our elbow, the elbow part is stretched. Then we see that the shirt, the elbow is bent. So that is the principle that we are doing.

Tim: That makes sense. Is it washable as well?

Ichiro: Yes of course. Right now, you are not seeing this part, we call it hub, which is a controller. And when we are using it, we need to attach on the shirt like this.

Tim: For the listeners, this is a small barbell shaped device that you attach across the chest of the shirt.

Ichiro: Yeah and this part is not machine washable. But we can take it off and then all the rest of the shirt is machine washable.

Tim: By the way, how do you determine machine washable? Is there a standard for this?

Ichiro: That is a very good question. I did not know that, but there is an ISO standard that is for machine washable. ISO A, and ISO B, and ISO C.

Tim: So three levels of machine washable.

Ichiro: They also have ASTM, American style test. What we chose was ISO C, which is closer to ASTM. What we did was, we washed in 40 degree hot water for a hundred times.

Tim: A hundred times? They have got standards for everything. That must have taken a while.

Ichiro: That actually took two and a half months. Why we stopped at 100 times is not from breaking, but just the time.

Tim: Traditional motion capture equipment has wires connecting the user back to the computer. But obviously, there are no wires, it’s all wireless. So the snap on controller obviously has a wireless transmitter in the device. Are there other sensors in there?

Ichiro: Actually in this controller, we named it the hub, there is an accelerometer and gyro in here to measure the moving of the center of the body.

Tim: Things that wouldn’t stretch this shirt.

Ichiro: Also, in here, there is a battery and a (8:06) computer and Bluetooth as their transmitter. This is kind of the CPU of this system, and once we take it off, we can wash everything. This is the most important part of that.

Tim: Looking at it, can this also be used to monitor breathing or heart rate?

Ichiro: We can measure breathing, respiration. Because when we are breathing, our chest is moving and then we can measure respiration. Unfortunately, we cannot measure heart rate. I can say that, at this year’s (8:48) in Las Vegas in January, we demonstrated the baby monitoring system. We named it the e-skin cool, which contains the temperature sensor, which is a digital sensor. Once we can plug in the digital sensor on the shirts, we can change to anything. For example, heart rate sensor, SPO2 pulse sensor, or even motion sensor can be embedded in our shirts.

Tim: So the baby device, it’s just a little wearable shirt to let parents know their baby is still moving around. I want to drill down into the different uses of this later. But right now, let’s back up a bit. I want to ask a couple questions about you. You seem like a pretty non-typical startup founder. You got a degree from Todai, you got a PhD in material science from Brown, you were at Fujifilm for 20 years. What made you decide to leave a successful career at Fujifilm and start this crazy startup?

Ichiro: It might be crazy, I agree. Actually, when I was in Fujifilm, I had been working on making new businesses for 18 years. When I joined Fujifilm and started my career, the photography film business was nearly gone. I had a chance to start a new business in Fujifilm. So for me, making new businesses in big company or making new businesses in a startup is almost the same. What I felt when I left Fujifilm was, since I had been working for a long, long time. I was too tired of using a long, long time for decision making by someone else. I thought that I could make it by myself. I think it was a good time for me to start by my own power. Then I left Fujifilm.

Tim: So Fujifilm is not involved in this startup at all. It’s completely…

Ichiro: Recently, actually, they’re a good company for innovation. They’re starting pharmaceutical businesses and healthcare businesses.

Tim: Actually, Fujifilm is a very interesting company in terms of innovation. If we back up 20 years, when digital photography was just starting to take off, both Fujifilm and Kodak were extremely big and powerful companies. Over the last 20 years, Kodak’s pretty much… they still exist, but they’ve lost most of what they used to have. But Fujifilm has managed to innovate and change and develop new businesses. You were there during this time, how did they manage to innovate when they say their market disappearing? It’s such a hard thing for a big company to do.

Ichiro: I think so, this kind of pressure was always coming to Fujifilm, but from my point of view, one of the good things was… about the late 1990, huge LCD business was coming. Fujifilm was kind of a good company to supply to that, even small markets, then they had a chance to shift their business from the photo film to the LCD business. That was the big difference between Fujifilm and Kodak.

Tim: They obviously had teams devoted to developing new products, and that’s what you were doing there for 15 years.

Ichiro: That was a really lucky thing for me.

Tim: Now that you’re at Xenoma full-time and making these cool shirts, let’s talk about the use cases. Actually, first of all, how much is this going to cost?

Ichiro: From February 1, we are going to sell this shirt with the SDK, software development kit, and that one costs about 5,000 USD. But that is a platform to allow them to make their own applications. We will not charge for applications.

Tim: What’s your target price for the end user?

Ichiro: I think around April or summer, we will start to sell to the consumer. The price is going to be cheaper than 1,000 USD.

Tim: So under a thousand. That’s a pretty expensive price point. It would seem that it would mostly be focused on commercial or industrial applications.

Ichiro: For now, I have to say, yes. But I am still expecting it to be bought by a gamer, or something.

Tim: It would be pretty serious gamers to…

Ichiro: Yea.

Tim: But, there are a lot of very serious gamers out there. Long term, what do you see of the applications here? The obvious use in gaming, as a VR controller, do you see applications in sports or medical monitoring? What are the end uses you see?

Ichiro: Actually, we are thinking about using this for more than 40% of the people to monitor their life. We can monitor the whole body with only one controller. So this is the most different part from the watch type, glass type wearable devices. We can make any kinds of shirt with the sensors on the whole body. Then we can monitor any part of the body with one controller. But for now, this is too eccentric.

Tim: It’s, well you know, we’re just starting on this. It does look a little strange for most, everyday uses.

Ichiro: The final goal is for all people to wear the e-skin. But for now, we are thinking about just gamers or sports player. Those kind of people have a keen need for this kind of thing. For now, we can measure the motion capture, but in the near future, we are going to put in there the heart rate monitor, as you said, or ECG or something else. And luckily, or unluckily, if one gamer has a heart attack, if we can measure the ECG before he or she gets the heart attack, so that one is very suitable in preventing diseases.

Tim: Ok, your SDK is written on the Unity platform. So that seems pretty heavily targeting VR and gaming.

Ichiro: Yes, correct. For now, we are thinking about gaming, because we want to increase the users. Those kinds of early adapters in the gaming industry and sports industry. So for now we are focusing on game and sports industry. At the same time, like a hospital or a healthcare company are interested in these shirts for monitoring health conditions.

Tim: That makes sense. But what’s your strategy for this? Because there is so much really cool hardware coming out these days. Different types of controllers, different types of wearables… how do you get the attention of developers and get them to develop for this hardware?

Ichiro: I think the point is that since we can measure our whole body with only shirts, just one device is useful. In terms of motion capture, usually motion capture is a camera system. So they have to stay in front of the camera, and then they can capture the motion. But in the case of gaming, they sit down in front of the big monitor.

Tim: I understand the unique advantage of using a device like this. But to get developers developing for your platform, is it enough to simply go to trade shows and let people know you exist? Or do you have another strategy to build up awareness among developers.

Ichiro: We are actually making our own applications as well. So this is a radio, people cannot see it but I can show you some demonstration movies like…

Tim: This is actually as you’d expect from a gaming controller.

Ichiro: But you would not see how tired this gamer is. Actually, recently e-sports is coming to the US market. Usually, gaming is using a controller and it’s not very hard to work. But, in this case, we can play more than one hour.

Tim: I can imagine jumping around is really jumping around.

Ichiro: Yes. So now, the gaming is turning into the fitness.

Tim: I think it’s clearly the next step beyond what Nintendo Wii brought. It’s a closer mapping to what your body is doing to what’s happening in the game. How much interest have you received so far from developers?

Ichiro: There are many gaming companies and e-sports related companies that are asking us to use this.

Tim: That’s fantastic. Are most of those companies in Japan or are they in the US?

Ichiro: Unfortunately, most of the companies are in the US.

Tim: That doesn’t surprise me much. Why is that?

Ichiro: I’m Japanese, so it’s really hard to answer. In general, not so many early adopters are in Japan, and they tend to be kind of followers. Of course, America has a lot of early adopters, also Chinese there are many early adopters as well. So they are pretty aggressive. Last year, we had an exhibition in China and we also found many early adopters there.

Tim: Okay, so it’s been the trade-shows in like China. I know you went to CES and the Ware Conference. So that’s where you got all the notice and the attention from developers. Unfortunately, not too much in Japan.

Ichiro: Unfortunately.

Tim: That is kind of disappointing, because on one hand, there is so much cool hardware and controllers being developed here. At one point, not that long ago, Japan really was the world leader in video gaming. What happened?

Ichiro: I have some friends working in the gaming industry. As you said, now the gaming industry’s center is moving from Japan to Asia. I think the working situation, just salary or those kinds of things, is not as good for one reason. Still, Sony and Nintendo are in a good position. But now the value of the gaming industry is shifting from hardware to software. I think that’s the big issue. Even if the application itself is free of charge, they can charge in any places because the OS is now on the iPhone, iOS Android. OS itself is a platform and they can charge more than 30% for each application. So they can have lot of money by making other people’s software. We can’t do that.

Tim: So if you’re not getting development inquiries from the gaming industry in Japan, are you getting inquiries from other industries?

Ichiro: In Japan, the average age is very high. We have very elderly people in society. Some facilities that run nursing homes, those kinds of people are very interested in using ours, so they can monitor the behavior of the elderly people without using the camera. We have less privacy issues than the camera system.

Tim: That’s interesting. So you still have a lot of interest in Japan, it’s just coming from completely different industries than overseas. Let’s talk about Japan in general. Xenoma is a startup spun out of Tokyo University, and there’s a lot of stuff Todai is doing these days to help entrepreneurs. Were there any particular programs that helped you?

Ichiro: Actually, we are not using that kind of program. When we started our company, there was a program to take us to South by Southwest in Texas, Austin. And last year, we could go to Austin as one of the Todai members. Recently, Todai started the acceleration program within the university so students can join to start their own company. I think from not only the financial, but this kind of support system, now Todai has a very nice program.

Tim: Is the technology based on the work done at Tokyo University?

Ichiro: Yes, I didn’t mention that. Actually, our company started from JST Erato program, which is a national scientific program, for five years. At that time, Todai was making the ultra-thin electronics and stretchable electronics. Professor who run the project, named Professor Somea, he is my friend, actually. Then he asked me to join the project to start his own company. But he did not want to directly run the company, he wanted to have someone else. Then he picked me up and I joined.

Tim: So that’s the Todai tie-in. Japan has always been really strong in basic research, both in universities and industry here. But recently, certainly in the last 20 years or so, it seems that both universities and industry are struggling with productization. To turn this research into products that people want. Are these kinds of programs the way to fix it?

Ichiro: Actually, that was my interest, when I was in FujiFilm. As you mentioned, and I agree, there are so many interesting academic results in there. But in some reasons, they cannot make it, bring it to industries. That time I was at the industry side, but at the same time, I could not do that by myself. That is one of the reasons that I left FujiFilm, and I start by myself. About your question, so-called Japan Entrepreneurship 2.0, in Japan there are so many manufacturing infrastructure. Not only just machines, but also the people. At the same time, the state of art knowledge design is in universities. I think we do not have a good function to mix these two. To bring to the market.

Tim: So to take the work being done to actually create a product to bring to the market.

Ichiro: Japanese big companies are too conservative to enter the new market. So they are always waiting for someone going to first. Then they are going to follow, because they cannot determine by themselves.

Tim: That is the opposite of innovation.

Ichiro: Yes. The funny thing is, while you are the follower, you already have the technologies there. So why are you a follower? Then the engineers say we have the technology to do that, but you did not make the decision.

Tim: So that was your experience for 18 years at FujiFilm?

Ichiro: Yes.

Tim: It sounds like it’s really falling on startups to handle the innovation in Japan.

Ichiro: For now. I want to make Xenoma as one of the role models. Then the small startups in Japan can work both with universities and big companies to bring their good parts to make one business. The exit is not only from IPO, but the monetary aid is also very good. Because if the big company can buy and the business has a good synergy with their current business, that will be okay.

Tim: This is interesting, very interesting too, because I think that the same risk aversion that prevents big Japanese companies from innovating also prevents them from doing strategic M&A. Even now, Japanese companies are very hesitant to acquire innovative startups. Do you think that’s going to change?

Ichiro: I think.

Tim: I think we’re seeing a little bit of changing on that now.

Ichiro: What if the economic situation is going bad? As long as they still have money, and if they can’t make it by themselves, they have to make a decision at some point. And as long as they have money, I think they will do it.

Tim: That’s encouraging. And I hope we will see more of it. What about open innovation programs? Do you think that open innovation programs are going to be the key to driving innovation in big companies? Or do you think it’s going to be more likely strategic M&A?

Ichiro: Actually, it’s kind of a buzzword of the open innovation. It seems to be that open innovation itself is not open enough.

Tim: What do you mean?

Ichiro: For instance, they’re always choosing to show what they can do. They are not quite open to work with.

Tim: They’re not really taking on innovative products to change the company. It’s just for show to make a powerpoint presentation with the CEO…

Ichiro: Yea. At some point, they have to make some sort of decision. So far, I did not see lots of those kinds of cases.

Tim: I think this is the core problem. Large Japanese companies simply cannot make decisions.

Ichiro: No, they cannot. That is an issue.

Tim: Whether it’s open innovation, strategic M&A, or product development.

Ichiro: But I can say that, from 2000 to 2010, they are still investing in their own R&D but now they are shifting from their own R&D to CVC . So they are keeping some money, not for their own researcher but for outside. This is a big change. We can already see it.

Tim: That’s encouraging. I guess in Japan, you have to just be used to small baby steps sometimes.

Tim: Before we wrap up, is there anything you want to talk about? Any question that I should have asked you that I forgot about?

Ichiro: I heard that the people who are listening to this are already interested or involved in startups. I’ve said that, especially in Japan, we need more mature entrepreneurs. We seem to have very many young, nice entrepreneurs. And that is a good thing. But at the same time, from 1990s or something, we did not have lots of young entrepreneurs at that age. So what happened was, if real experienced entrepreneurs already exist, young entrepreneurs and experienced entrepreneurs can work with each other.

Tim: So more mentoring.

Ichiro: Yes. Not only mentoring, but also role models.

Tim: Right.

Ichiro: Unfortunately, we don’t have those kinds of things right now. At the same time, my age, I’m 48, it’s not very good for them to work in the big company as long as they cannot be a director or a CEO of something. Their situation is going to be really bad. They might be able to find the job in China or Southeast Asia, but at the same time, definitively in Japan we have a great potential to start a company. They already have lots of experience, if they have, they can be crazy as you say. Definitely, they have a chance to be.

Tim: Before we wrap up, let me ask you my magic wand question. That is, if I gave you a magic wand, and I said you could say one thing about Japan. Anything at all; the education system, the way people think about risk, anything at all, to make it better for startups here in Japan. What would you change?

Ichiro: The key word is risk. Risk taking. I’d say the good way to do this is to eliminate the importance of the economic potential. In reality, the people who can join a good company or have a good position were usually a graduate from a good university or graduate school. But when I was working in this startup, academic credentials were not a big point. But what they can do by themselves is much better, even the technical college students were really good. But university graduate students were sometimes… they can do nothing.

Tim: If Japanese people can no longer use academic credentials to evaluate someone’s suitability for their job, what should they use?

Ichiro: First, they are going to start working, rather than looking for what is suitable. They are always asking what is suitable for my job. But if they can make a decision, why don’t you start working. And then they are going to find something they can do.

Tim: Right now they just don’t make that decision. It sounds like a great use of the magic wand would be to make Japanese people better at making decisions.

Ichiro: That is very simple.

Tim: So if they did that, you would have many more university students and young people creating companies and trying to do things. That’s important. I guess we are seeing more of that now. More young people are starting their own things and deciding not to go into the corporate life.

Ichiro: Recently yes. Some of them are already starting. It seems to be very nice.

Tim: It sounds like it is all on the right track. Listen, Ichiro, thank you so much for sitting down with me, I really appreciate it.

Ichiro: Thank you very much.

And we are back.

You know, some things are just to describe on an audio podcast. But I think you get the idea of what Xenoma’s e-skin is. It’s undoubtedly cool tech, but that thousand dollar price tag is going to limit its applications. At least at first. I mean, it’s an order of magnitude cheaper than the current motion capture systems. And there are more than a handful of hardcore gamers who would shell out the money for a controller like this. But the bulk of the applications, and certainly the more widespread ones, will have to wait until the prices come down. Which of course, they will.

Talking with Ichiro after the interview made it clear that, not only is the technology advanced too quickly, but they’re learning more about how to optimize production with every batch they make. A decade from now, Xenoma’s technology might be so inexpensive, we might see it woven visibly into everyday fashion.

I did, however, find it disappointing, but not surprising, that Xenoma’s early adopters were all in the US and China. Japanese firms really seem to have lost their desire to innovate. Ichiro’s 20-year career at, and frustration with, FujiFilm, was fascinating and a snapshot into the innovation trap that so many Japanese enterprises find themselves. For the record, FujiFilm innovates more quickly than do most large Japanese forms.

The problem really seems to be one of motivation, not ability. These companies continue to do fantastic basic research, and have significant cash reserves. But they find it hard to take the risks on new products. Perhaps it’s because their survival is not in question and they do not feel enough urgency. And that’s why, after 20 years, Ichiro has to quit and start his own company to finally bring an innovative product to market.

Since we’re talking about innovative products, that means it’s time for Listener Mail.

Lester from Texas writes, “I’m an experienced creative director looking to move and continue my career in Tokyo. Is there any insight you can give me regarding establishing myself or connections you can provide? Thanks again, and thanks fro the show.”

Lester, I get a lot of inquires like this. Tokyo is a great place to live and work and a lot of people want to come here. So I’ve got some good news and some bad news for you. First, the good news is it’s never been a better time to be a creative in Tokyo. There are a lot of companies looking for graphic designers and UFUX guys as well. Now the bad news is, it’s really tough to find those positions before coming to Tokyo. But it’s a creative… a few things you may want to try before you get here. I would check out the Canvas online community of creatives here in Tokyo. It’s Canvas.co.com. that’s probably your best bet to make connections with the bilingual design community in Tokyo. Once you get here, and if you’re serious, you really should get here, there are a lot of meet-ups that are worth attending to connect with startups here. I’ve listed some of the best ones, and the ones I go to, on the website under the Connect With Japanese Startups tab. Please check those out and hope to see you in Tokyo sometime soon.

Connie from San Francisco writes, “Hi Tim, my name is Connie and I’m working on a startup called Co-Chrysalis. We plan to launch in Japan around May this year. Just by the sheer number of companies and people in Tokyo, it makes sense to start the business in Tokyo. However, I also see great things happening in Osaka and Fukuoka, especially with startups. My question is, where would the best place to create our startup? Appreciate it if you’d post the question and/or answered this on your show. Thanks in advance, best regards, Connie.”

Well Connie, your wish is my command and the answer is relatively straightforward. I know my friends in Fukuoka are not going to like this answer, but really, unless you have a compelling reason, I’d say that 99 times out of 100, when you’re coming into japan, you’ll want to use Tokyo as your base of operations. The size of the market is just so much bigger than it is in Osaka and Fukuoka. That’s not to say that they don’t have really good startup communities. There’s a lot of good stuff happening in both places. Unless you have a really compelling reason, like a major client that is in one of those cities, or you’re close to a supplier that really needs your input, I would say it’s best to start in Tokyo, simply because if you’re doing a market entry, your goal is to sell as much as you can as quickly as you can. Tokyo makes it easy to do that.

Apologies to my dear friends in the beautiful cities of Osaka and Fukuoka, but I have to recommend starting in Tokyo.

If you have got an idea about the future of motion capture devices, or would like to play with Xenoma’s, come by DisruptingJapan.com/show77 and tell us about it. We’d love to hear from you. And when you come by the site, you’ll see all the links and resources that Ichiro and I talked about and much, much more in the resources.

And most of all, thanks for listening and thank you for letting people interested in Japanese startups know about this show. I’m Tim Romero, and thanks for listening to Disrupting Japan.