Startup founders claiming their company is going to “change the world” has become a cliche. But rarely do we see a product that can clearly and significantly make someone’s life better. D-Free is one of those products.
Atsushi Nakanishi and his team have developed a wearable device that monitors your bowels and bladder, pairs with your phone and notifies you a few minutes before you need to go to the bathroom. At first, this seems almost like a joke, a company solving a problem that does not exist, proof that anyone can raise funding these days. But it’s not.
There are millions of people all over the world who because of disability or disease, cannot regulate their bowels, and a device like D-Free would, quite literally, be life-changing for them.
Atsushi and I talk about his rather unique inspiration for the company and the team’s highly unusual path in testing and development, and the amazing growth since they first launched.
It’s a fascinating product and a great story, and I think you’ll enjoy it.
Show Notes for Startups
- Who needs to be told when to go to the bathroom?
- What is the potential market size?
- The (embarrassing) origins of D Free
- Why many Japanese startups are formed by High School friends
- The challenge of turning hype into reality and testing in the real world
- The challenge of selling to hospitals and nursing homes as a startup
- Why government partnership programs are important in Japan
- The advantage Japanese hardware startups have over their Silicon Valley counterparts
Links from the Founder
- Check out DFree
- DFree’s Facebook page (English)
- DFree’s Facebook page (日本語)
- Friend Atsushi on Facebook
Transcript from Japan
Welcome to Disrupting Japan, Straight Talk from Japan’s most successful Entrepreneurs,
I’m Tim Romero and thanks for listening.
I’ve got another great Disrupting Japan Selects show this week, and it’s going to help answer one of the most important questions I get about innovation in Japanese startups.
A lot of people, particularly Westerners will claim that they don’t see much innovation among Japanese startups. That even the most successful ones have products and business models that are similar to existing firms, and that the vast majority are simply copies of another start-up with maybe one or two small differences.
And you know something? They are right. It’s completely true. Few Japanese startups are really innovative, and most are highly derivative. But there is some important very context that you need to know if you really want to understand why this is true.
The truth is almost all startups everywhere are highly derivative and simply copying another company’s business model. No one who has spent time in San Francisco and seen all of the absolute nonsense that gets funded there would claim that most SF startups are innovative or worthwhile. No. It’s only a small percentage.
But those small percentage of successful startups are the only ones we hear about outside of Silicon Vally. It’s simple survivorship bias. Well, with the added effect of the survivors having huge marketing and PR budgets to tell the world how innovative they are.
But innovation is important. And when I get asked to name what sectors of the Japanese economy we are likely to find significant startup innovation. I usually point to ender care and the internet of things.
>Well today’s guest, Atsushi Nakanishi, is at the intersection of both of those categories. And their D-Free device is being used in nursing homes and hospitals all over Japan. I’ll give you an update after the show, but for now, sit back and enjoy a great conversation about IoT and future of poop.
This is a milestone episode of Disrupting Japan, Hemingway only published 19 novels, Shakespeare only wrote 37 plays, Mozart only composed 41 symphonies but as of today, Disrupting Japan has released 50 episodes. When I started this podcast, I never imagine that it would grow into what it is today and I want to thank you for listening and for your support. And also to let you know that we have some big things planned in the near future as well.
Before we get started with today’s episode, however, I want to give you an update on the Crowdsourcing My Career project where I asked you, the Disrupting Japan listeners for advice on what I should do next in my career. I received 82 emails with ideas ranging from “come and join my startup” to “working for the C’s or consulting firms” to some very interesting consulting ideas. Oh, and one multilevel marketing pitch. I still haven’t fully decided on what I am doing next but I appreciate all the creative feedback and I tried to be certain to answer all of emails individually, except for the multi-level marketing guy, screw that guy.
Anyway, on with the show.
Today we are going to be talking about poop, yes you heard me correctly. We will be sitting down with Atsushi Nakanishi, CEO and maker of DFree, an internet of things device that monitors your bowels and lets you know when you need to go to the bathroom.
Wait, wait. Stop rolling your eyes. This is not a stupid application, this is not proof that there is way too much money being spent on startups, this is real. There are millions of people who because of disability or disease, cannot regulate themselves. And a device like Dfree can literally be life-changing for them. Atsushi and his team are trying to build something genuinely new and have taken a rather unique path to get to where they are. In fact, as you will hear in the interview, the team has really suffered and struggled for their goals. And in that spirit of seriousness, I am going try to get all the way through this episode without a single instance of scatological humor.
But the longer I keep talking, the more difficult that is going to be so let’s get right to the interview.
Tim: So I am sitting here with Atsushi Nakanishi, CEO of Triple Japan and maker Dfree.
Tim: So thanks for sitting down.
Tim: Why don’t, before we get started, why don’t you explain what Dfree is because it is a pretty amazing device.
Atsushi: Yeah. Dfree is a device that will let you know when you need to go to the bathroom before you even realize it. The technology is based on ultrasound.
Tim: Before we get too far into, you got to explain because every time I explain this company, this product to people the first reaction they have is, “This is the stupidest use for technology I have ever heard of.”
Tim: So who really needs Dfree, who needs to be told when they have to go to the bathroom?
Atsushi: The are a lot of users like for incontinence and elderly people, we are getting huge inquiry to get Dfree all over the world. Many are caretakers or families who have dementia parents.
Tim: So they are caring for parents with dementia or who can no longer control themselves?
Atsushi: Yeah, yeah.
Tim: That is a huge number, huge number of people. So I guess people with like Crone’s Disease? All kinds of people taking medication that lead to incontinence, it is a huge market.
Atsushi: And spinal damage.
Tim: Oh yes, spinal damage, of course.
Atsushi: Spinal damage, yeah.
Tim: It is not, it is a huge market with a real need. So if I understand it correctly, Dfree which is a device which we got right here, it is an audio podcast, it is about the size of a matchbox and it is worn on the stomach of the user and it uses ultrasound to see how things are moving through the bowels.
Atsushi: As well as the changing size of bladder. So we predict urination as well.
Tim: Okay. How much warning does Dfree give?
Atsushi: Users can set the time.
Tim: Okay, so it can tell someone if they have 10 minutes more or 5 minutes more or…really.
Atsushi: But the accuracy is changing.
Tim: So it is more accurate for shorter periods?
Tim: Oh okay. So how big is this market in Japan?
Atsushi: We focus on adult diaper market as a first. So in Japan, $1.8 billion.
Tim: The adult diaper market is $1.8 billion?
Atsushi: Yeah, yeah.
Tim: How does that translate into like the number of potential consumers?
Atsushi: Consumer is about 4 million.
Tim: About 4 million in Japan.
Tim: Okay, that is not a small market.
Atsushi: Okay, yes, yes, that is right.
Tim: Excellent, I find this kind of technology coming out of Japan to be particularly interesting because the population of Europe and America, they will be hitting the same type of aging profile in 10 years, in 20 years that Japan is hitting right now.
Tim: It is a great chance for Japan to come up with technology for elderly care.
Tim: But let’ back up a minute. The idea for Dfree started when you were studying in US right?
Atsushi: That is right.
Tim: University of California?
Atsushi: Yes, yes Berkley.
Tim: I heard the story before but do you want to, just share it again because it’s…
Atsushi: Yeah, yeah no problem. One day when I moved to new apartment, doing that on the streets, I pooped my pants.
Tim: Just because you didn’t have time to get to a bathroom or you ate something bad for lunch or what?
Atsushi: Both, both, both.
Tim: Both, yeah.
Atsushi: I ate a very hot Ramen noodle with kimchi and a cup of chili.
Tim: Yeah, that will do it.
Atsushi: Yeah, yeah. Because the last night we have a Kimchi Hot Pot Party. There were a lot of leftover hot chili and the kimchi.
Atsushi: Yeah, so I ate that for lunch and I ate got heavy diarrhea on the street.
Tim: And so you just thought that there had to be some way technology could solve this problem?
Atsushi: Yeah, yeah. So I wanted to know when my poop….
Tim: Was coming?
Tim: Again it sounds like kind of a silly origin story but realistically this is not a simple goal, this is not something that you can get a couple of college students to put together a website for, this isn’t something you can go out and buy parts on Alibaba and put together a prototype, there is real complicated technology involved. So once you got the idea, how did you put the team together?
Atsushi: I am not an engineer. My task, I went to New York, I asked could you make prototype.
Tim: You met him at Berkley as well?
Atsushi: He worked at the startup in San Francisco.
Tim: Ah, okay, okay. So at first it was just the two of you putting this together?
Atsushi: Yes, yes.
Tim: How big is the team today?
Atsushi: All of the members are my friends, high school friends, or college friends.
Tim: You know I find that interesting, I find that is fairly common among Japanese startups.
Tim: In the US it seems to be founders are in there 20s, teams are in there 20s, it is all people they met in college. Teams in their late 20s or 30s, it is always random people they met in other startups or business.
Tim: In Japan there is an awful lot of founders who pull together teams they knew in high school.
Tim: Why do you think that is?
Atsushi: In Japan, investing program is not so busy so a friend of the university work hard but part-time.
Tim: So university students are not working together, they are doing part-time jobs and pursuing hobbies and things.
Atsushi: Yes, yes. That’s right.
Tim: Oh okay.
Atsushi: But in the high school days, we studied a lot and we take our time. We spend a lot of time together.
Tim: Well that makes sense.
Tim: Yeah, if high school is the time where you are working together to solve difficult problems…
Atsushi: Yes, yes.
Tim: that is where you can find the teammates you can trust.
Atsushi: Yes, yes.
Tim: Okay. I first met you actually about one year ago.
Tim: Mhmm. You were presenting at the Pioneers Festival.
Atsushi: Oh yeah, yeah, yeah, yeah.
Tim: And you won I believe?
Atsushi: Yes, yes.
Tim: And you got a lot of attention after you first announced, not only because you are doing something new and unusual but because journalists can resist the opportunity to make poop jokes.
Atsushi: Mhmm, yes.
Tim: But let’s talk about what’s happened in the last year, you know what you had to do to actually, to build this company and make Dfree a reality. This is a medical device; it is not a consumer social sharing app. So how do you go about testing something like this? Are trials expensive? Tell me about what is involved.
Atsushi: Dfree is not a medical device; it is consumer goods, an electronics device like smartphone.
Tim: Okay, so this is not considered a medical device.
Atsushi: Yes, yes, that’s right.
Atsushi: It is easier than a medical device for trials. At first we trial in our friends and our team members. Well it is very hard trials.
Tim: Well, sure. Like any startup you have to convince your friends and anyone to start wearing this device and keep track of…
Atsushi: Yeah, have a drug, laxative, wearing diapers over 3-4 days, like that.
Tim: You must have some really good friends.
Tim: I think you owe people a lot of favors at this point, holy cow, okay.
Tim: So you got you’re friends and family and staff member walking around taking laxatives and wearing diapers to test this.
Atsushi: Yes, that is right.
Tim: You got some good friends man, that is all I can say.
Atsushi: Yeah. Inside sausage from asshole like that and then we detect sausage by ultrasound.
Tim: Holy cow, alright.
Atsushi: Yeah, yeah.
Tim: That is hardcore.
Atsushi: Yeah it is hardcore. Very, very hard work.
Atsushi: As a resort we yeah.
Tim: Let’s say that get’s to you the equivalent of an MVP here but at some stage you got to do some real clinical trials, right.
Atsushi: Yes, that is it.
Tim: So when do you move on to those?
Atsushi: We completed our prototype and then we asked nursing homes in Japan so luckily by our exposure many, many nursing home managers have interest in our product…
Atsushi: And they contacted us so we bring our prototype Dfree to users.
Tim: This is really encouraging because whether it is startups or large companies trying to sell to hospitals or nursing homes, it is such a conservative difficult industry and the fact that they were so open to trying something new, I find really encouraging.
Tim: Do you think it was because you are solving a really unique problem or do you think that Japan is changing, they are open to trying new things and new devices in general.
Atsushi: It is both.
Atsushi: Yeah. This excretion care is very important programs and aging population is super huge…
Tim: And getting bigger in Japan.
Atsushi: But the worker is getting down, younger.
Tim: Yeah, right now in Japan about 25% of the population is over 60.
Atsushi: Yeah, yeah. So we have to find a more effective solution.
Tim: How was it working with these companies because I am sure they are not used to working with beta products and untested products.
Atsushi For Dfree, it is not difficult.
Tim: But for the nursing homes and for the hospitals….
Atsushi: No, no. It is easy for us. Our waiting list is more than 100,000 people.
Tim: That’s fantastic.
Atsushi: Yeah, yeah.
Tim: Are they mostly hospitals or are they mostly nursing homes?
Atsushi: In nursing homes.
Tim: Nursing homes.
Atsushi: That is it for us.
Tim: Alright. It has been a year since the initial announcement. You have been able to collect a lot of data…
Tim: What kind of accuracy does Dfree give?
Atsushi: We are developing now, we premade machine-running algorithms, the accuracy is getting better.
Tim: Okay. For example, as of today can you say a number in terms of the accuracy of to predict within the next ten minutes say.
Atsushi: Mhmm, so it depends on the people. The accuracy is not good for fatty guys.
Tim: Oh right, because it is ultrasound.
Atsushi: Yeah, yeah, yeah.
Tim: So it makes the fatter you are, the harder it is to see, ah, got it.
Atsushi: That’s right, that’s right. So yeah, we are collecting a lot of ideal people and getting data.
Tim: You are not ready to give a specific percentage of accuracy or false positive just yet?
Atsushi: Yes, yes, so far.
Tim: Okay. Fair enough. Do your future plans involve getting this certified as a medical device of some kind?
Atsushi: No, we don’t want to be a medical device. It depends on the market of course but now we don’t want….
Tim: And is that just because of the licensing and regulations involved.
Atsushi: Yeah, yeah it is too much for a startup.
Tim: I can imagine. Okay, so you’re still officially in beta right?
Tim: So when are we going into full production here.
Atsushi: We start the production in October.
Tim: I got to say congratulations on the new fundraising; you just raised about $5 million.
Atsushi: Yeah, yeah.
Tim: So I assume this is the capital you are going to use to go into full production.
Atsushi: Uh huh, that is right.
Tim: Alright, so you had to slip the release several times over the last year. What were the biggest challenges? What cause you to slip the release over the last year?
Atsushi: The most difficult is team building, Kuzuryu joined this April.
Tim: Your CTO?
Atsushi: Yeah, yeah, yeah. He had a lot of experience to manufacture. We did not have such a kind of people in our team this year.
Tim: The problem was just you couldn’t get the right staff or there were more and more technical problems than you thought at first, what kind of problems did you face that kept setting you back.
Atsushi: A lot.
Tim: That is a fair answer.
Atsushi: Like money and the products, yeah everything, everything. It is difficult to get the right person because a startup is too weak in Japan, especially a hardware engineer won’t do work at a big company.
Tim: Ah, so you are trying to pull out people who have a lot experience in this and you trying to get them out of Sony or Toshiba or Hitachi.
Atsushi: Yeah, yeah, that’s right.
Tim: In Japan it is still hard to get people to come work for a startup.
Atsushi: Yeah, yeah, that’s right.
Tim: But you managed to do it now.
Tim: So congratulations.
Atsushi: Thank you. Yeah, yeah we, the most successful we can hire a very good engineer from Toyota and Kuzuru as well.
Tim: You have worked with NEDO and other government programs, were those programs worthwhile for you?
Atsushi: Yeah, yeah. That’s nice because nursing home is based on government system.
Tim: So the NEDO program was really your key in accessing the nursing homes?
Atsushi: Yeah, kind of, kind of.
Tim: What kind of government programs do you think would be most useful to Japanese founders?
Atsushi: Yeah, this NEDO program is good for us because they give us a lot of money, almost $1 million.
Tim: Oh alright, well that is helpful.
Atsushi: Yeah, yeah, very, very good.
Tim: Was it mainly just providing funds and some intro to nursing homes?
Tim: Did you get anything else out of the program?
Atsushi: Yeah, they have connections with a big company elsewhere interesting in new business. We need government people to introduce me to them. It is easy to give a proposal to collaboration.
Tim: Being part of the government NEDO program gives you kind of legitimacy.
Atsushi: Yes, yes.
Tim: It let’s big companies and the nursing home take you seriously. In Japan today, I would say that is more important than the money.
Tim: There are a lot of sources for money but a lot of Japanese startups are struggling with legitimacy, they are struggling to get big companies to take them seriously and to do business with them so that might be the most valuable thing you got out of the program.
Atsushi: Yes, yes. That’s it.
Tim: Alright, what are your plans for going global?
Atsushi: Of course we focus on the global market because we are getting a lot of inquires to get from over 20 countries. At first, we focus on Europe market one of the biggest nursing home companies contacted me and they want to try it as well. Maybe in this year we go to there.
Tim: To Europe.
Atsushi: And then we are asking FDA if this is medical device or not.
Tim: How big do you think the global market is for a device like Dfree?
Atsushi: Huge, huge market. Just adult diaper market it is $9 billion.
Tim: $9 billion, really.
Atsushi: Yeah. And in 2020 that market is going to be $15 billion.
Tim: You mentioned trying to get FDA approval, do you think you are going to run into problems with certification overseas or do you think it will be much like it has been in Japan?
Atsushi: In Japan, I asked government, they told us it is not a medical device just consumer device.
Atsushi: So we can sell as a consumer goods. Maybe in Europe this is not medical device, it is not for cure diagnosis, not for medical.
Atsushi: But in the US, it is a very gray zone so we are asking some consultants for FDA now.
Tim: Let me back up and talk about just you for a minute, about startups in general. You spent some time in California, at Berkley working with startups in San Francisco, working with startups here in Japan, what do you see is the biggest differences, both good and bad, between what is happening in Tokyo now and what is happening in San Francisco.
Atsushi: In Tokyo, this is a good point in Japan because hiring for an engineer is very affordable.
Tim: Yeah, yeah San Francisco is a little crazy now.
Atsushi: Yes, yes, and this accommodation as well. There are auto and electric engineers in Japan.
Tim: Yeah, that’s true.
Atsushi: I think it is more than San Francisco.
Tim: I think you are right. In fact I think that this kind of internet of things is something that Japan is going to be very, very strong in, in the coming years, for that exact reason. There is a whole generation of people who just love to tinker and play with electronics.
Atsushi: Yeah, yeah, that’s right. Japanese engineer is very detailed so in total that costs to product is lower than you could buy.
Tim: Actually that is a really good point. Hardware engineering is different than software engineering in that point. Japanese engineers both hardware and software are let’s say a bit more obsessive than American engineers about getting it exactly right.
Tim: With hardware though, that attention to detail, it is really important.
Atsushi: Yeah, yeah.
Tim: Yeah, I think that is one of the reasons that IOT is going to be strong here.
Atsushi: Yes, yes.
Tim: Excellent. You started this company in San Francisco and moved it to Tokyo and there has recently been this trend of Japanese companies moving to Silicon Valley, why did you come back to Japan and why do you think so many Japanese companies are moving to California.
Atsushi: The reason I come back to Japan is because Japan’s BC wanted to invest to our company, rather than Silicon Valley. So that is why…
Tim: So you just had more investor interest here.
Atsushi: Yes, that’s right.
Tim: Do you plan on moving back to San Francisco or is Tokyo going to be your world headquarters?
Atsushi: Tokyo is our R&D center and then we plan to go to San Francisco again as our marketing headquarter.
Atsushi: And all over the world.
Tim: Alright, well listen before we wrap up, I want to ask you what I call my magic wand question. If I gave you a magic wand and I said you can change anything about Japan, the education system, the way people think about risk, anything at all to make it better for startups here, what would you change?
Atsushi: We want to change the regulation. If I get a certification of an electronic device, like Bluetooth, we can sell all over the world.
Atsushi: That is one regulation all over the world.
Tim: So Japan has a lot unique special regulations.
Atsushi: Not so special but we apply a lot of places … countries.
Tim: So what kind of regulations would you change? Would you change them or would it be better if there were global standards?
Atsushi: Yes, yes, yes, one upright.
Tim: So you would change, you would take your magic wand, make it work on the whole world.
Atsushi: Yes, yes, that’s right.
Tim: And just say well it’s a magic wand and just make it one regulatory system for everyone.
Tim: Well that would make everything easier.
Atsushi: And the one money, no Yen, no dollars, just one.
Tim: Just one.
Atsushi: I just want one. One language.
Tim: Well we will definitely need a magic wand for that yeah.
Atsushi: One language is fine.
Tim: Hey listen, thanks so much for sitting down with me.
Atsushi: Thank you so much.
Tim: It was really fun.
Atsushi: Thank you too.
And we are back.
Okay, Atsushi and the team are hardcore. From now on, anytime a founder starts complaining about how hard they are pushing themselves to get their product launched or how much they had to sacrifice and how they have no work life balance, I am simply going to say, well let me tell you about what some friends of mine had to do with a sausage in order to alpha test their product.
In all seriousness I think Dfree represents the most important kind of internet of things innovation. And one that is often overlooked in San Francisco because of its focus on flash and change the world ideas. Devices like Dfree coupling inexpensive sensors with the significant processing power with the mobile phone and backed up with some cloud cycles we needed to solve clear definable real world problems.
The internet of things does not have to be about massive sensor arrays or extensive social media involvement. The best IOT devices would be the ones that make our lives better without the intrusion of social networks or viral marketing. I mean, I am fairly certain Dfree will never need to connect to your social media accounts but it does bring a new meaning to the term push notification.
It will be interesting to see how Dfree does in production and what level of accuracy the team will be able to achieve in practice. In any event, they are a dedicated team with an innovative product and I am sure we will be hearing a lot more from them very soon.
Now for the important updates
D-Free, or rather Tripple-W, the name of ther actual startup, is one of those rare steady-growth startups where things actually seem to be working out as planned.
They’ve raided additional funding for continued expansion. They continue to grow their nursing home and hospital customer base in Japan. The product has won a ton of awards over the past two years including the Best of CES in the US this year. They’ve also expanded into both the US and French markets.
Now, what’s interesting about how the media has covered D-Free over the past few years. They actually seemed to get a lot more praise for being innovative from the press when they could be framed as the crazy internet of poop startup. Now that the company is maturing and growing and competing as one of many serious companies in the healthcare industry, the story seems somehow less interesting — or maybe at least less fun.
And yeah, yeah. I admit I’m guilty of this myself. Five years of podcasting and social media means my headlines can be a bit click-baity sometimes. I’m not faulting the media for trying to make everything seem new and revolutionary and innovative. That’s how the game is played. That’s how they attract readers.
But you and I, we know better. Innovation isn’t always cool. It isn’t always fun.
But innovation, progress, and profits are not supposed to be about being fun. It’s about adding value, and building businesses. And if we’re lucky, we get to have a lot of fun in the process.
If you want to talk about IoT, or poop I suppose, Atsushi and I would love to hear from you. So come by DisruptingJapan.com and let’s talk. If you get the chance, check us out on LinkedIn or Facebook, but even better. If you like the show, tell people about it. Disrupting Japan has grown not by social media marketing or advertising, but because listeners like you enjoy it and tell their friends about it.
But most of all, thanks for listening, and thank you for letting people interested in Japanese startups an innovation know about the show.
I’m Tim Romero and thanks for listening to Disrupting Japan.