Business cards are far more important in Asia than they are in the West. Business cards command the same level of respect and deference as the person they belong to. Here in Japan, there are many times when a business conversation cannot get underway until all cards have been exchanged and everyone knows exactly who they are dealing with.

It’s really no surprise then that Japan’s fastest-growing business-networking and CRM platform, Sansan,  uses business cards as their model. While LinkedIn, based on the Western notion of business networking, has been slow to gain traction in Japan Sansan has been growing at an amazing pace, and they are now expanding into the US and southeast Asia.

Chika and I sit down for a frank talk about business card culture and the challenges in moving into overseas markets.

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Show Notes

  • Today’s Japanese business card etiquette, and how it is changing
  • Achieving a good product fit across multiple markets
  • Why Chika’s decision to start Sansan in Japan rather than America helped him grow
  • Practical advice for big-company employees who want to start their own venture
  • How to get large companies to work with small startups
  • Some positive government  efforts to promote entrepreneurship in Japan
  • Japan’s new angel investors and how they are changing the venture capital game

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Transcript

Tim: Welcome to Disrupting Japan, straight talk from Japan’s most successful entrepreneurs. I’m Tim Romero and thanks for joining me. Today we sit down with Chika Terada of Sansan. His company’s got a really unique approach to managing business relationships on both a personal and corporate level through using business cards.

Those of you outside Japan have probably never heard of Sansan but you’re going to very soon because they’re expanding really aggressive into the US and Southeast Asian markets. Chika is a great guy and this turned out to be a really good interview. We’ll talk about his expansion plans into the US, the importance of business cards in Japan, and about his own challenges in moving from a really large Japanese multinational to start his own company. I think you’ll enjoy this one a lot, so here we go.

Tim: I’m sitting here with Chika Terada, the CEO and founder of Sansan, and thanks for sitting down with us today.

Chika: Thank you for having me here today.

Tim: It’s our honor. Rather than have me explain what Sansan does and the services you offer, why don’t you explain it in your own words.

Chika: Okay, sure. It is very simple, we do business card management. We provide business card management services now in Japan. By this I mean we help companies and individuals manage their relationship through business cards.

Tim: Okay. I think most people that are listening will know about CardMunch and what Evernote does, but the term “business card management” I think will be a new idea to them, so what you do is much more than simply scan in information, right?

Chika: Yeah, the part of scanning and transcribing may be similar to CardMunch and beyond that point, there is a big difference. We have two services, one for companies and the other is for business individuals. The company building is called Sansan, it’s the same name as the company and what Sansan does is provide a platform for you as a company to share and manage connections. It’s like a sharing solutions. In Japan we can compete with SalesForce.com, in the area of share and solution.

Tim: So it sounds like, by business card management, it’s really sort of a bridge between a simple scanning service like CardMunch and a more complete corporate CRM solution like Salesforce.

Chika: In a sense, yes. The idea is if you simply put the business cards that your company has, it’s going to be a **** database, right? Because if you like the person’s company but you don’t have access there, but with Sansan, you can do a search of your company’s database to see if someone in your company knows someone in that company, or an individual one. I mean, we designed this for individual, which is called Eight. Eight is business card management application and also it’s intended to become like LinkedIn, based on business cards.

Tim: Is Eight the full system, just without the sharing and collaboration?

Chika: Let me tell you how Eight works.

Tim: Okay.

Chika: Firstly, you’re required to register your own business cards. It’s going to be your profile card, we say, and then you start taking the photos of business cards you receive. Then like we do in Sansan, we transcribe all the business cards accurately in the background, then you get data on the cloud. Then how it is similar to LinkedIn is that you can connect with people on Eight. What that means is if you take photos of my business card, then I’m already on the network, so we connect with each other. After connecting with each other, you reframe to the cards that I register as my profile card. You can expect me to update. So if I move to another company, then you know.

Tim: Or if you get a promotion or change your phone number, all your contacts are updated at once.

Chika: That’s right. It’s the biggest database of professionals in Japan already.

Tim: That’s a fascinating approach. It’s interesting because the Japanese—well, Asia in general, but Japan in particular, view business cards in a very, very different way than say Americans do.

Chika: Yeah, yeah.

Tim: Can you explain a bit about that? Some of the most important differences?

Chika: Japanese people exchange business cards all the time, when you meet someone for the first time. I would say it’s like shaking hands for American people. You should give your business cards and you must receive the business cards.

Tim: The use of business cards has really changed, so I’ve been in Japan for more than 20 years and when I first started doing business in Japan, I had long boxes and boxes of hundreds of these business cards. The business card would tell you the person’s position, how you needed to talk to that person, what kind of questions it was acceptable to ask that person. Without the card, you really didn’t know how to start a conversation. Has that changed in Japan or is it still very formal that way, around business cards?

Chika: I think it’s still very formal. For example, in Japan, you are supposed to put the business cards in order on the table, as you see people sitting in front of you so that you match the card of the contents to someone and this is this person, that person.

Tim: Quite a complicated protocol, isn’t it?

Chika: Right, right. Well, that’s the way we still do in Japan. Of course people familiar with the US culture, with US business culture, I know LinkedIn is replacing the function of business cards somehow and people, instead of bringing business cards, they just connect on LinkedIn afterward, right?

Tim: Right. Actually maybe I’ve just been in Japan too long, I still prefer getting the business cards, it helps me remember who I’m meeting.

Chika: That’s right. As a tool to exchange business contacts, business cards are still a good way for you to exchange business contacts because it’s easy to bring and it’s easy to receive, contents there are pretty formalized.

Tim: In Japan, we were talking the business cards are very important to explain the hierarchy of the people you meet. Does the Sansan system also show that hierarchy? Does it model that hierarchy as well?

Chika: We do that in Sansan, but the service includes the function of drawing organization chart, all the business cards have the titles and groups, organizations that they belong to.

Tim: So it can actually help you figure out who the right person to contact in that organization is?

Chika: That’s right.

Tim: Although I have to say it’s getting harder—20 years ago there was a very small number of titles that everybody had, it was like the military, everybody had a rank.

Chika: That’s right.

Tim: Now there’s a lot of companies sort of inventing their own titles. It’s difficult to tell who people are sometimes.

Chika: This is true. So title doesn’t tell you that much compared to the before, that’s true. But still, it has some information or it has some level of content.

Tim: Now, Sansan is expanding into both the US and the Singapore markets, which is I’m sure both exciting and absolutely crazy at the same time. What’s been your experience in those two markets so far?

Chika: As to the Asian market, we are taking Eight to it. Eight is for Asian market and Sansan is for the US market.

Tim: So the Asian market you’re focusing more on the individuals and in the US you’re focusing on the corporate?

Chika: That’s right.

Tim: That’s interesting. What was the reason behind that strategy?

Chika: Well, first of all, like you said, business card culture across Asia is similar. People still need to manage their business cards and the people are seeking a great tool to manage business cards. There is a space for us to come in just by providing a great business card management application.

For the US market, like you said, people don’t use business cards that much, compared to Asian countries. But they still need to manage customer relationships as they use CRM solution, like Salesforce.com. Like I said, business cards are the best tool to manage customer relationship. The market itself is much, much bigger than Japan, bigger than any other Asian countries, so we don’t know yet if we can penetrate the market or not, but there should be a chance for us.

Tim: It’s certainly an interesting approach and I always love solutions that blend new technology with very traditional technology, like business cards.

Chika: Very traditional technology, yeah, you can call it.

Tim: So far, what has been your biggest challenge in moving into the overseas markets, either in Asia or in North America?

Chika: Our first challenge is the US market. What we’ve done is to change the business model, change the marketing model itself. Two years ago I thought about the US market a lot. At the time I thought about moving to the US myself.

Tim: Moving the whole company?

Chika: The whole company I move to the US, I live there, but that shouldn’t be successful, I think.

Tim: What made you decide to stay in Japan? Because a lot of Japanese start-ups are moving to the US.

Chika: That’s true.

Tim: What made you stay here?

Chika: There were several reasons. First of all, what I found was that we use all the applications from the US, Google, Gmail, in the company, in this company, or Yammer, Zendesk, Amazon Web Services, we use all of them. But I remember nobody came to us to sell them, we just bought ourselves because the product is great and the product itself is penetrating to us without any sales activity.

Tim: So you wanted your product to speak for itself.

Chika: Yeah, yeah. In Japan, how we grew the market was more of sales and marketing grind. We could do it because we knew the market, we could hire good people. We ourselves did the sales, marketing better.

Tim: You had your networks here.

Chika: Yeah, yeah.

Tim: That makes sense, you have to let the product speak.

Your background is very different from a lot of the entrepreneurs that I talk to in Japan. I mean, you spent most of your career at Mitsui, which is a very large, traditional Japanese company.

Chika: Traditional company, yeah, that’s true.

Tim: So what made you decide to leave Mitsui and found the company?

Chika: Well, even before joining Mitsui, I decided to start my own company, actually.

Tim: Really?

Chika: Yes. For the most of it. Maybe it was a natural choice for me to think about it because my father ran his own business and I was very ambitious even in my childhood so I should try something big. Then naturally trying something big means making a big business.

Tim: So why go into Mitsui?

Chika: That’s something, yeah. I don’t know if that’s the best choice or not, but at the time I thought about I first needed to understand or study about the mechanism of big Japanese companies. I wanted to build up my skill and experience in a big company.

Tim: Did it work? Did you get a chance to work with start-ups?

Chika: Yeah, my career at Mitsui is a bit different from usual Mitsui guys, I think. Mitsui is a collection of specialized business unit. It’s ranging from food, construction, style, …

Tim: It’s a huge conglomerate.

Chika: Yeah, huge conglomerate. I did necessarily, it was relatively a newly established one at the time and I joined that unit.

Tim: So did it have a lot of independence?

Chika: Yeah, yeah.

Tim: Oh, okay, that is good.

Chika: That’s why that was a good choice for me. For example, I spent one-and-a-half years in Japan and then after that I was sent to the US and I had a chance to live in the US for one-and-a-half years. My mission there was to find a permanent venture companies in the US and take them into Japanese market. So I visited many, many US start-ups at the time, so that was a great experience for me.

Tim: So you were already quite familiar with start-up culture and entrepreneurs by the time this—

Chika: Yeah, yeah. In a sense, yes. I got familiar with US start-ups

Tim: Even so, like jumping from working with entrepreneurs to doing it yourself had to be a big change. What was the most surprising thing you found when you started running your own company?

Chika: I had decided to start my own company. So even while working at Mitsui, I tried to not mix up my ability with the company’s ability.

Tim: Ah, yes.

Chika: At the time the way I think is that, I can do this because the company name is big. Mitsui has a big name, Mitsui has the big trust, that’s what I thought. But after I started, it was not true. I did feel you can do it yourself. So I tried to distance from the name of Mitsui, I committed to myself, I am alone. I need to do everything myself, I need to—so people maybe not friendly to me kind of thing, but as a matter of fact, people still very helpful and the people who got to know of Mitsui really supported me anyway.

Tim: Well, that’s good, so it’s nice to be surprised that way. So people were more helpful and supportive than you thought.

Chika: Yes, yes.

Tim: That’s great news. What was the reaction from coworkers and family when you left Mitsui to start a company?

Chika: Well, I declared that I quit Mitsui in a few years from day one to my peers or to my colleagues in a way.

Tim: Everyone is expecting it?

Chika: Yeah. I mean, yes.

Tim: Well, now wait a minute. I have friends who work at very large companies and they’re always telling me they want to leave this company and start their own. I think both of know that it’s never going to happen. So did they believe you or did they think you were just one of these guys talking?

Chika: You know, in the end, they believed.

Tim: Probably because you did it.

Chika: Yeah. Like you said, I said, “I’m going to quit,” again and again, and but still, even deciding to quit in the future, I mean, I committed really seriously to the company. In that sense, maybe they’re not serious about it.

Tim: Interesting. So are they a customer now?

Chika: Yeah, yeah.

Tim: Awesome!

Chika: Actually it’s one of the big customers.

Tim: Excellent. What advice do you have for people who are working at these large companies who are thinking of starting their own or dreaming about it?

Chika: If I talked to people working for big companies about changing jobs and about starting companies, what they say is there is something left for me to finish in this company, kind of thing.

Tim: So they think their work isn’t finished yet?

Chika: Yeah, yeah. But my advice to them is, your work never finishes. It will never finish. So you need to decide.

Tim: They just need to set a deadline and do it.

Chika: Yeah, yeah. Company always give you challenge.

Tim: Yeah, there’s always new work coming.

Chika: Yeah, yeah.

Tim: I guess that makes sense, I mean, if you have a real deadline, I mean, that’s the difference between like a plan and just a dream.

Chika: Yeah.

Tim: So were your parents and family very supportive of the idea when you said, “I want to start my own company,” they said, “That’s great.”

Chika: Yeah, I think so. I don’t remember that well. Yeah, they were proud that I joined Mitsui because Mitsui is a good company, anyway. But my father, after joining Mitsui, I had a lot of opportunities there and a lot of challenging assignments there, and my father always supported. My father, suddenly I said to him, “I am going to quit, maybe,” he was supportive in the best ways.

Tim: Every step of the way.

Chika: Yeah. Because maybe he worked for some big company 15 years, then he started his own company.

Tim: Okay. So maybe he knew what was going to happen.

Chika: Yeah, maybe. The time was much different from the time of mine because it was like 35 years ago, 30-40 years ago, so a lifetime employment was more popular.

Tim: It was solid, yeah.

Chika: Yeah, it was solid.

Tim: Nobody got fired from big companies 35 years ago.

Chika: Even though he started.

Tim: Right now, I think, is a very exciting time in Japan. The whole attitude toward start-ups is really changing.

Chika: That’s right.

Tim: Early on when you were talking to very large Japanese companies saying, “You should use our service,” were they pretty open to the idea of working with a small start-up they’d never heard of or are they still resisting that idea?

Chika: Still resisting. Japanese big companies tend to prefer it, proven solution, proven tools, they are reluctant to become the first users. It hasn’t changed a lot.

Tim: Really?

Chika: Yeah, but still—

Tim: But how do you get around that? Sansan has some very large, famous Japanese customers. How did you convince them to work with you and to give you a chance?

Chika: So that the one successful case speak a lot, to all Japanese companies. For example, Mitsui is using this, then other company in the same industry may be more interested in it. That should happen all over the world, but in Japan, that tendency is more obvious.

Tim: So the first one is really hard and then it gets easier.

Chika: Yeah.

Tim: These days, a lot of start-ups, even very early-stage start-ups in Japan have an idea that they need to go global. As a start-up company that really is going global, do you think that all Japanese start-ups should be looking at the global market?

Chika: In general, Japanese market is nice size. I mean, you can make money, nice money, only in Japanese market. So in that sense, you can forecast in Japanese market, that makes sense anyway.

Tim: You can be very profitable here, but you chose to move overseas rather quickly, so what was the reason for that? Why not stay in Japan and make lots of profit?

Chika: Maybe it’s because of our vision, our mission statement. Our mission statement is that: Creating a resource from everyday business encounters and transforming the way the world works. Or the vision is: Change the world to be a better place, we are simply saying.

Tim: Japan, I went to a panel discussion last week and a lot of VCs were saying Japan is in a start-up bubble and there’s too many start-ups here, but VCs always complain they pay too much. I think things are getting better in Japan. What are some of the most positive trends in Japan now for start-up companies? What’s going right in Japan?

Chika: In general, working people are more interested in working for venture companies or start-up companies and they are more interested in starting their own companies compared to before.

Tim: Why do you think that is?

Chika: There are several reasons. Again, these days you can find very successful entrepreneurs in terms of money, in terms of regression, and so on. Then it seems easier than before. The money is ready there, I mean, the VC monies more closed these days.

Tim: Yeah, there is a lot of VC money around.

Chika: Right.

Tim: But it seems like starting a company has become more socially acceptable than it was in the past.

Chika: Yeah, that’s right, yeah. Japanese government is supporting and that message from the Japanese government is changing the perception of start-ups, I think.

Tim: Okay. So do people think they are less risky or is it just they’ve become more of a mainstream occupation?

Chika: Mainstream?

Tim: Maybe mainstream is too strong a word.

Chika: Maybe. People still work in the companies, but yeah, start-ups are good to the society, that’s a message, are good to the economy on a whole, that’s the message coming out from the government.

Tim: So people see starting a company as a social good.

Chika: Yeah, yeah.

Tim: Well, that is important, and that is new, I suppose.

Chika: Yeah, that’s new. It’s really logical and reasonable. I mean, unless the government push the idea of starting companies, Japanese economy cannot be sustainable, in the end.

Tim: I think so. I think there does seem to be an agreement, at least intellectually, from the government, from the universities, from the big companies, that the future is in little companies.

Chika: Yeah.

Tim: But Japan has always been very good at top-down decisions and Japan has always had a lot of trouble with bottom-up decisions. It seems like start-ups are going to have to be a bottom-up movement.

Chika: Maybe the startup venture or venture company became popular in Japanese society was around 2000 or 2001, and it’s already been 15 years, so the generation, I mean, the industry is more mature, I think. So they now, you try to find recently, that’s a new phenomenon.

Tim: That’s true.

Chika: Yeah, then you have started companies here in Japan.

Tim: I have started a few.

Chika: But that you were not Japanese, right?

Tim: No.

Chika: There were a few native Japanese VCs these days, right? They are very supportive to the economy.

Tim: I think another really positive trend is that some of these serial entrepreneurs are now investing in new companies.

Chika: That’s right.

Tim: So we have a new generation of angels.

Chika: Yeah.

Tim: That are coming online.

Chika: So those money, I mean, those angel investors are not only about money, but also about real advice or real help that start-ups need.

Tim: That’s quite a bit different from traditional Japanese VCs.

Chika: That’s right. Traditional Japanese VCs mean the venture out of a big companies, right?

Tim: Right. The Jafcos and the banks.

Chika: All from big companies, they didn’t know about start-ups. But those new angel investors know about start-ups and they have money enough to invest.

Tim: Well, it sounds like you’re very optimistic about start-ups in Japan.

Chika: Yeah, I’m very optimistic. I can be optimistic about the future of Japan itself.

Tim: Okay, with all of the positive optimistic things going on, if you could change one thing in Japanese society or legal framework or way of thinking to improve start-ups in Japan, what would you change?

Chika: If I could change the perception of big companies, the executives of big companies, that would be great.

Tim: So change the way that large company executives look at start-ups?

Chika: No, look at their employees.

Tim: Oh, okay. How should it change?

Chika: In general, if you could, big companies, the company may think that you betrayed, them. Of course it’s changing a bit, but the, in my sense, in my thought, it’s better for the companies though. Yes, that is who you lose one talent but if you can accept him to come back in the future, you can build a ecosystem around your company.

Tim: A stronger network.

Chika: Yes, a stronger network.

Tim: I think that’s a really interesting point and there have been, some of the foreign companies have done that very well in Japan, Oracle has a very powerful alumni network. So does IBM for that matter.

Chika: Yes, yes.

Tim: So there are plenty of examples where this works in Japan.

Chika: Yeah.

Tim: Well, listen, Chika, thanks for sitting down and talking to me.

Chika: Thank you, thank you.

Tim: We’ll look forward to hearing great things about you and Sansan in America and the rest of Asia.

Chika: Was it okay?

Tim: It’s great.

Tim: Listen, if you want to get in touch with Terada-san or to see links to any of the resources we talked about during the show, take a look at the show notes at DisruptingJapan.com and leave a comment. If you like what we’re doing, please go to iTunes, leave us a good review. That’s really the best way you can help us get the word out and to support the show.

I’m Tim Romero and thanks for listening.