Taku walked away from the kind of a career that most people dream of. He had proven himself at Sony Music, Apple and in his late twenties he was quickly rising thought he ranks at Amazon Japan. He and his friends knew they had an amazing career ahead of them, and that terrified them. At that point they knew they had to go out on their own and build something amazing.

Four years and two companies later, Taku has moved to New York where he runs Peatix, a rapidly growing event management and ticking platform with growing numbers of customers around the world and concentrated in America, Japan and Singapore.

We have a personal and heartfelt conversation about how entrepreneurship is really must a means to an end, and that end is not money. Taku explains starting a company is something to do when you have to not when you want to.

Show Notes

  • Starting up in Japan & the early days of Peatix
  • How a hardware problem lead to a industry changing innovation
  • How to build a global startup from Day 1
  • Why Japanese startups should not be Japanese companies
  • Some mistakes even large multi-nationals make in Japan market entry
  • The best reasons you should never start a startup
  • Importance of focusing on the similarities not differences
  • Which startups will survive the next crash
  • Why mistakes as some of your most valuable intellectual property

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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 a couple of glasses of wine and have a talk with Taku Harada of Peatix. It’s an honest and heartfelt discussion about how he ended up being an entrepreneur because frankly he had no other choices. We talk about the importance of a support network, not so much in business but in your personal life.

Now for those of you who don’t know Taku is the founder of Peatix. It’s a rapidly growing event ticketing and promotions platform that is expanding very rapidly not only here in Japan but in Singapore and in America, particularly on the East Coast. Now Taku is really an amazing guy. He’s someone who’s had a career that most people would kill for and he sat down and looked at his future which was pretty much guaranteed and was terrified by it. So this is a guy who walked away from a very comfortable executive fast track existence into the ma of grossly underfunded entrepreneurship and he’s doing great. He’s got a lot to teach to all of us quite frankly so rather than have me continue the introduction let’s get right to the interview.

Tim: I’m sitting here with Taku Harada of Peatix. Cheers.

Taku: Cheers.

Tim: The event ticketing platform which – you know every time I try to describe somebody else’s company I get it horribly wrong.

Taku: I think you got it right though.

Tim: Why don’t you explain what it is?

Taku: Peatix is and – we’re an event management platform. Global ticketing platform. We started out in May of 2011 out of Tokyo. We now have three offices the biggest one being Tokyo obviously but also in Singapore and New York City. So we’re about thirty plus people right now.

Tim: Do you have a specific market focus because there’s a lot of players in that space. Event Brightness in the US a lot of local companies here – Doorkeeper. Meet up is another one right?

Taku: Yeah and there used to be more. When I first started I think back then in 2011 Japan alone I thinking there were about fifteen of them similar companies. Including some big ones like Recruit and Yahoo would later come into the game. Worldwide I think there’s about sixty or seventy similar players.

Tim: What are you going doing? You must be doing something right if your one of the fewer and fewer men standing. What do you do that’s different?

Taku: That’s a good but thought question. I wish I knew. I’d like to say –

Tim: (laughing) that’s a good answer. No I respect that tremendously.

Taku: I think a couple things, one from the get go we built a good UI. We were always careful about that but also we weren’t like most of the other startups – our competitors I think a lot of them just built a product – you know that if you build it they will come type of attitude.

Tim: It does strike me as one of those products that seems simple when you first think about it.

Taku: Yeah but it’s actually very difficult in term of marketing and customer acquisition. There is no clear marketing channel. It’s not like you can spend a million dollars on Google or Facebook ads and just assume you’ll be reaching out to many many event organizers which are very hard to identify. Especially online.

Tim: So did you target a particular niche or are you still trying to go wide? Are you targeting like music events or industry trade shows?

Taku: The interesting thing is when we first started – I come from a music industry background actually. I started at Sony Music, was head of music at Amazon and then launched ITunes in Japan so we only sought you know we had the music segment in mind. We thought that like Indy music artist would flock to our site and start using us right away just like that but it didn’t’ really happen. Remember this is 2011 right after the earthquake like getting together and having fun was just not really encouraged at the time.

Tim: Oh so this was still in Japan?

Taku: Yeah this was still in Japan when we first started. We had a good team of we call them evangelists. We made an effort to go out into communities and attend events and build relationships.

Tim: So a lot of one on one doing things that don’t scale?

Taku: No I mean it’s hard in the beginning. It takes time. I think Event Bright will tell you the same thing, it just takes time. There’s no clear, again, no clear marketing channel. There’s no winning formula there you just have to build a relationship and start there.

Tim: I see you guys everywhere in Japan. When I was in Singapore a few months ago you guys were all over. You guys are doing great in the States as well. Do you have a different go to market strategy for each market or do you just kind of figure it out and pivot as you go forward in each market?

Taku: We try out different things. To tell the truth Singapore is amazing we started doing well very early on.

Tim: They love you there. I’ve heard nothing but good things.

Taku: We’re in New York City and the US is a little tougher but in the end we try out different things but it just comes down to the same thing. It’s about networking and building relationships. Building the relationships and building that trust. Going into these communities, building relationships so that when it time for somebody to hold an event Peatix is the first platform that comes to mind.

Tim: Now when you talk about building trust are you talking about building it on a very personal level between the organizers and your representatives or is it building it as a brand?

Taku: I think as we start to scale the approach becomes a little different but in the early days it’s really building those one to one.

Tim: It’s really personal. That’s interesting.

Taku: It’s really personal. What happens though if you get an event that lets say has a hundred attendees there’s always a number of people within those one hundred who hold an event in the future. So if you provide a good ticketing experience thru Peatix to the attendees chances are that when it’s time for them to hold an event they’ll use us. Initially in terms of numbers ninety percent of the events using Peatix were these events that were acquired by our team but eventually that organic acquisition channel starts to grow if you do it well. So today I can say that over seventy percent of all the events on Peatix in Japan come organically without us really going out and meeting these people.

Tim: That’s fantastic. I noticed one thing that you guys have that does seem quite unique was your color sync technology and that’s – again why don’t you explain it so I don’t butcher it but it’s fascinating.

Taku: Thank you. Color Sync is a new technology that helps you to if you were the event organizer it helps you to check in all the attendees very securely and quickly. We came up with this idea thru a painful experience we had in the past with a big event that was about thirty thousand people. It was a music festival in Osage and we had to securely check in thirty thousand people within like an hour or so. At the time – I mean still today we use it the QR codes as your ticket so we had all these scanner boxes out at the gate. The sunlight is getting in the way and this or that and it’s just very painful, it’s a heroin experience when your – well we had five guys maybe. You have to scan these things very quickly –

Tim: Well five guys trying to check in thirty thousand doesn’t sound like the math is working in your favor there.

Taku: We saw that and then our guys are starting to talk about, “Okay we need to produce more of these scanner boxes. Why don’t we outsource this to some manufacturer in Taiwan or China and we could sell those scanner boxes thru ecommerce.” I said, “Guys stop that crazy. That’s not going to scale so we need to come up with a secure quick accurate way to check people in at the door that’s doesn’t really rely on additional hardware. It needs to rely on something that people already have and that’s obviously a mobile device.” So color Sync is let’s say you’re the organizer at the door you’ve got your iPhone in front of you and its flashing colors red, blue, green, yellow in certain intervals and certain patterns. The attendee with the right ticket will be holding up his or her ticket and it will be flashing in the same colors at the same intervals.

Tim: So the guest’s mobile device and the organizers mobile device will flash colors in the same sequence to get together.

Taku: And that sequence is updated you know one pattern will be different ten seconds later so you can’t really replicate it. That color sequence is randomly updated.

Tim: And you can check in a whole group of people that way too?

Taku: The way it works is we’ve been doing a lot of experimentations that you know you’ve got a hundred people lined up. For the first twenty you tell them they show us your phones and if all twenty are fine then you just let them in but if there’s one guy who’s got a different sequence you sort of accost him and say hey what’s up let me see your ticket. It’s very quick it’s like boom twenty people, alright next twenty people boom. It’s just amazingly fast.

Tim: So it’s more than ten times as fast as trying to scan somebody with codes?

Taku: Absolutely. You know it’s still in closed data but we’re going to gradually release it out to the real world and hopefully by next year it will be the default ticketing format for all Peatix events because it’s just so simple.

Tim: When I saw that it was one of those technologies that is – what’s the word, sort of duh. It’s like and I mean that in the best possible ways when you see it you’re like that’s the obvious solution that no one ever thought of before. I love it.

Taku: It’s still like a proposal you know like this is the way it should be and we’re going to fine tune everything and we’re working out all the kinks right now and it will be ready pretty soon, next year hopefully.

Tim: Cool I look forward to that one. You once said that you don’t consider Peatix to be a Japanese company. What mistakes do you see Japanese companies making? What were the mistakes they were making that you didn’t want to make at Peatix?

Taku: Well we come from Amazon the cofounders and I. I joined Amazon in 2001. This is when they first came into Japan. It was very much an American company operating in Japan. Meaning its all English many nationalities, a lot of Americans obviously. I just like that atmosphere and I think as a team any strategic direction we all understood directly because we would converse in English. Jeff Bezos is saying this it didn’t need to go thru an interpreter. I’ve been at another company literally where top Japanese management each – and this is when Tim Cook came for – this is at Apple – Tim Cook for some strategy discussions literally I walk into the meeting room and each and every top manager on the Japanese side has his personal interpreter.

Tim: His own interpreter?

Taku: Yeah. This is absolutely crazy. These people are not understanding what Tim is saying. I mean they’re losing a lot of it along the way I saw it firsthand.

Tim: And they’re all getting slightly different takes on it anyway aren’t they?

Taku: Yeah and so I sort like the way Amazon had started out and then it at the same time you know this but Rockton, our biggest competitor at the time, it still is. They had aspirations to get outside of Japan but they were really struggling as a culture of a company culture because it’s very Japanese.

Tim: They’ve also gone all English all the time now right?

Taku: People ridicule that but I don’t – I have no intent to ridicule that but it seemed a little funny at the time to most people but we just saw how painful it is to try to become an international company after you’re so big in Japan.

Tim: So you wanted to start out on the right foot?

Taku: Right from day one we want to build a fundamental culture that is very multicultural and multinational so that we wouldn’t suffer. We were big dreamers but you know in five years and ten years when we become big it’s not much of an issue at that point.

Tim: You wouldn’t have to try and retro fit the culture?

Taku: We have to have these –

Tim: You worked for a number of pretty large technology companies, Amazon, Apple, and Sony. Did you always know you wanted to start your own thing or was there some trigger that inspired you?

Taku: Very specifically no I had no idea I would be doing anything like this. We were on a good career trajectory very early on and I was a senior manager at Amazon when I was twenty nine or something. Leading 25 people. At that point we could sort of see beyond the horizon what was going to happen to us ten years down the line and fifteen down the line. Okay I’m probably going to become a VP at a foreign subsidiary and it be like I won’t say easy but it will be very comfortable.

Tim: Not challenging? Bored or what?

Taku: We know many many people like that they move from head of this company to this subsidiary to this subsidiary. I could see that happening and that was sort of horrifying to us to see exactly what we’re going to be like in ten years or fifteen years. In our youth being able to predict everything was just horrifying. My co-founders and I were like I think we were in a Starbucks on the first floor in the Amazon office and we just started to talk about things that why we know exactly what’s going to happen in ten years and what do you think. And that’s when we first started getting together and talking about things. How do we want to live our lives going forward?

Tim: So a group of you just decided you didn’t like the path you were on?

Taku: I mean it was a great – don’t get me wrong we loved Amazon. We absolutely – that was my business school that was my MBA. That experience was wonderful and to this day we carry everything we learned there. But you know you only live once and I guess and we needed a new challenge. We didn’t even know what to do I think I have an Evernote or something we have a list of ideas and they’re all sort of stupid ideas. We knew we just wanted to jump ship and realization that –

Tim: It just wasn’t what you wanted to do.

Taku: Yeah. What are we doing this for? We need to build and operate a platform of our own.

Tim: When you made the big leap from amazon – I mean let’s face it the career path you were on is not a bad one. So when you made that leap did your wife did your friends did your family were they supportive? Were they surprised?

Taku: Supportive in the beginning. Sure do it. My father is a musician he’s a violinist so he – independence and being able to make your own decisions.

Tim: A little bit of a bohemian?

Taku: Yeah. Absolutely and I think he was a little proud of seeing his son take that step but then you know the struggle, money and hours. The reality of it I think nobody realized it was going to be that hard. I didn’t know either.

Tim: I think if most people actually understood how hard it would be no one would ever go down this road.

Taku: I don’t recommend it to anybody. When somebody asks me should I start my own thing I’m like well probably not is my first reaction, it’s my first answer. It’s damn hard. You’re probably going to shave off several years of your life expectancy but in the end if you still need to do it then you should but if it’s like, “Hmmm I don’t know.” Then don’t.

Tim: I think that’s a really interesting point there’s a lot of being a startup founder has become quite fashionable these days in Japan and it didn’t used to be that way at all. What advice do you have if someone – what do you say to the Japanese who want to start something now? What are the mistakes you see a lot of young Japanese making when they’re wanting to start a company?

Taku: Well the biggest one is that they think it’s easy. They think its somehow alright lean startups the cost of starting a company sure it’s a lot lower compared to when we first started but they think it’s going to be a cake walk. It’s really not.

Tim: So they’ve read the lean start up they’ve seen the social network they think they know what’s going on?

Taku: Yeah absolutely but you need to understand that relationships will be broken along the way. You might get divorced and it’s awful. I mean I’m sure maybe one out of a million it’s a cake walk but usually it’s not right for 99 percent of the startups. I would say very specifically either you’ve saved a lot of money or you have friends, relatives, family that you can rely on thru the hard times. Let’s face it –

Tim: You need that support – structure.

Taku: You do whether it be taking care of the kids once in a while because you can’t go home or money. You need to borrow money from your relatives and just plead on your knees we all did that? Unless you have that hotline right there when you need it I wouldn’t recommend it.

Tim: You guys moved to the US? You yourself have roots there but there is a going trend of Japanese startups moving to mostly San Francisco and New York. Do you think that’s a good thing? What kind of companies can benefit from moving there and which one do you think should just stay in Japan for the moment?

Taku: I can only speak about our experience. For us it was definitely the right thing to do. We were a Japanese corporation in the beginning and along the way after we launched Peatix and it was time to raise funds from both the US we went thru what’s called a triangular merger. We built a parent US entity on top of – we did that because we wanted investors from both the US and Japan number one. At the time at least no US VS would invest in the Japanese KK. This is 2011. Maybe it happens a bit recently but back then definitely not. We knew we wanted international talent in the US, Singapore – around the globe. So for those two reasons specifically we did that. I think you need to do it for the right reasons.

Tim: What are the right reasons?

Taku: For us it was those two things right in the beginning. Getting investors and talent. But I also know from several startups in Japan that set up a Delaware entity but they were not able to attract an US investors at all. They were a Delaware corporation so you sort of cut out the Japanese VC’s, certain Japanese VC’s as well so they’re like stuck in the middle.

Tim: So are Japanese VC’s still reluctant to invest in –

Taku: Without any validation from a good US investor I think it’s extremely difficult for them to jump on without it.

Tim: So they’ll be part of around investing in a US corporation but they won’t lead it.

Taku: So in that case I think it actually hurt them. I’ve seen that with a number of startups and I thought it was dreadful. it’s absolutely terrible so I think what you need to do is really take a good hard look at yourself and ask yourself, “Am I going to be able attract a good VC or investor form Silicon Valley in the US and Japan and what is the right way to do it?”

Tim: So the validation either from people in the industry or from an existing customer base.

Taku: I mean if you have revenues your –

Tim: Well that’s the ultimate validation.

Taku: Right but if your pre revenue then you need some sort of guarantee or tangible validation I think.

Tim: You spend a lot of time going back and forth between the US and Japan. What do you think that people outside Japan misunderstand most about Japanese startups?

Taku: The world is really becoming the same. Especially right now with the platforms and the smart phone has become everything becoming universal. People seem to dwell on the differences okay there might be some differences in the way that people pay for things for example, or how fiscal good are delivered but as long as you take care of those the rest I feel like is more or less the same. I don’t as a startup entrepreneur I really don’t want to dwell on or really focus on the differences from region to region.

Tim: Do you think that people in the startup community in America that you interact have an accurate perception of the startup community in Japan?

Taku: They don’t know I guess would be – they don’t come here enough. They may go on wrong hiring decisions for example.

Tim: How so?

Taku: I’ve seen that happen you know they build a big company – an auction company in the US when they came in I feel like they built the wrong team.

Tim: Famously.

Taku: Yeah but if your able to find the right team I feel like –

Tim: It’s when you’re talking to people in America what do they think about the Japanese start up equasystem or do they think anything at all about it?

Taku: It seems to me the perception – the general perception for an American Start up is Japan is a very cool place. A cool market that you absolutely want to be in sometime in the future but they just don’t know how. They always dwell on again the differences. It must be so different from the US.

Tim: So they still ironically in this age of like internet and instaneous communication Japan is still viewed as some kind of exotic market.

Taku: Yeah I think that’s the general perception. I’ve been preaching that no what works in the US should theoretically work in Japan.

Tim: This is something that I’ve said as well I think 90 percent of what works in the US will work in Japan and vice versa but I think what we’re up against is there are a number of people who’ve made a whole little industry of telling people, “No no Japan is completely different. You need to go thru me I’ll explain this strange weird culture.”

Taku: We know names too of people that do that.

Tim: We won’t mention any.

Taku: I think you really need to focus on the universal. Jeff Bezos, my demigod right, he always said there’s nobody on planet Earth who would ever say, “Oh geez I wish my product would be delivered later than sooner. I wish this product was more expensive. I wish Amazon had fewer products.” You need to identify the universal truths. If you have a good perception of what those are theoretically it should work anywhere in the world right.

Tim: I think that’s really interesting so it’s kind of the value proposition is universal. Maybe you have to tweak the positioning and marketing a bit.

Taku: communication. I think that’s all it is I think.

Tim: Has that been your experience at Peatix bringing it into all these different markets?

Taku: I think we’re still in pursuit. We don’t know all the answers but we’re always asking ourselves. Like at least for me I always tell my teams in Singapore or in New York or in Tokyo please don’t dwell on the differences. Please don’t come to me about this is why Singapore is different. I don’t care really about the differences we’re still as a young startup we should be pursuing the universal truths that is common among all event organizers and attendees across the globe. We still haven’t figured those out yet we’d rather focus on those than the local differences.

Tim: And if someone figures out a value in Singapore it probably adds just as much value to New York.

Taku: Exactly. You know Hoffman’s – what was his golden rule? You need to build things that will impact 10 percent or more of your customer base. If its 0.2 it’s not worth it and when people start dwelling on local differences and ask for resources on those things that might be used by a couple of customers in a put together market but nowhere else. It’s a waste really.

Tim: It’s distracting.

Taku: It’s distracting. What is a start up? A start up is a company with limited resources. Limited resources I mean time, money, and people so rather than spending time on local differences I think you really need to really focus on core truths and that’s my philosophy at least. I hope it’s the right philosophy that I have.

Tim: Well it makes sense. It really does. And also as a side effect of getting people focused on the positives where differences are they’re not necessarily negative but they probably tend that way. So over the last five or six years the startup community, the startup quietist in Japan has really transformed. You can barrel recognize it. Some good, some bad but –

Taku: Some stupid.

Tim: Yeah some stupid. Some overpriced. What do you see as the most positive trends right now?

Taku: You know you mention that it’s become a little fashionable I mean maybe it’s a good thing that people are starting to realize how do I – I don’t want to work for the same company for fifty years like my forefathers. It’s okay to take that jump perhaps.

Tim: So it’s becoming more socially acceptable?

Taku: People have been preaching that Japan will never accept failure and we need to change that and they’ve been doing that for four or five years. Okay maybe it’s changing as well and maybe small failures are acceptable relative to a decade ago. Perhaps.

Tim: I think so. I mean I see that as well. Small steps but I think especially among younger generation, people in their twenties, will view failure very differently from people in their fifties.

Taku: I mean you go to bookstores there are so many books that say literally the titles is, “It’s Okay to Fail.”

Tim: Our mutual friend has just published a book on that exact subject.

Taku: So that is changing but its go to because things were so dismal that many more startups need to come out and build new things.

Tim: I think that is the beauty of sort of startup math if you will is that even if 99 percent of the startups end in failure that’s enough. That one percent that’s enough to kind of get Japan back on the right track again.

Taku: Absolutely. Even today right there’s some big news about acquiring all these startups.

Tim: Yeah that was surprising. That’s great. There’s a lot more M&A activity than there ever has been in Japan.

Taku: And the IPO market doesn’t seem to be too bad either I think. Maybe it’s a little bubbly right now but I think it’s a great trend. It sort of gives me hope.

Tim: I think I agree with you bubbly in terms of valuations are high but I think after the 2000 crash the startup equisystem it disappeared it was wiped out entirely. My sense now is if we see another crash when we see another crash I think the equisystem that built up over the last 10 years will survive that.

Taku: At the same time there are several startups that I know of in Japan who really look at the big Silicon Valley startups and they say, “It’s okay to burn 700 or 800 thousand dollars a month or two million dollars a month.”

Tim: Well yeah there’s certainly some startups that won’t survive it.

Taku: Right and those may not make it but for the most part I think Japanese startups tend to be a little more conservative in their approach. A little more patient. That includes us we’re very patient. That’s got to be – I don’t know the 2000 I was what 24 or 25 years old. I have to believe that’s a little different probably.

Tim: To me it really does feel different. The investments are much smaller their more distributed among larger number of countries. There’s more people making them. There’s more viable companies coming out of it. There’s a lot of nonsense too but believe me you should of seen some of the stuff going on in 2000.

Taku: It was really stupid back in 2000.

Tim: Well you know I have to say this is the thing that the Japanese often don’t understand about Silicon Valley. Most of the startups there are pretty stupid too. Over here we only see the ones that make it.

Taku: Absolutely. I mean it’s the same in New York. Allot of startups that I meet you know you’re like your trying to sell dog food to cats.

Tim: Good luck with that. Its good a thing that 99 percent can still fail. Well listen this has been great. Is there anything you want to talk about? I’ve been kind of driving this whole discussion so –

Taku: These are great questions.

Tim: Believe me I’ve got a bunch of these sort of random think questions. Okay so I’ll just toss one at you. What was a decision that you agonized over and it turns out you made the wrong decision?

Taku: I don’t know the answer to that yet there might be. Some product decision along the way. Hiring decisions obviously. I won’t get very detailed about those.

Tim: I think we all have a couple of horror stories in that department.

Taku: Yeah. We’re really lucky we made huge mistakes in a small to mid-size mistakes along the way but we’re still here.

Tim: I think it’s best to make the mistakes early right? The sooner you make them the cheaper they are.

Taku: It’s really true. Everybody says this but you need to continue to make mistakes it’s so true. We have many many competitors in this field and what I always tell the team is that oaky whenever we make a mistake you know guys its good we made the mistake today and we’ve learned form it because our other competitors are going to run into it but a year later. We will have moved on. The mistakes we run into – the mistakes we’ve made today they probably did five years ago.

Tim: That’s a really interesting way of thinking of it. Most people think of like valuable intellectual property and being the wonderful features and patrons but there’s real value in the mistakes that you make too.

Taku: You learn so much more from something doesn’t go well. It’s really true. I don’t – every textbook says this I’m sure but really holds true for us. You learn so much and you become better in the end. As long as the mistake is manageable. I like to think as a start up it’s the experience of making mistakes every day.

Tim: Listen thanks for coming in and talking to us I really appreciate it.

Taku: It was a huge pleasure. Thank you.

Tim: Excellent.

And we’re back.

I hope you enjoyed that one. I think Taku had some amazing points about the importance of focusing on the similarities rather than differences. That’s not only in terms of market entry and globalization but I think that’s just good advice to living your life in general. It helps keep the stress and negativity down. I also thought he had an amazing point about how our mistakes both personal and corporate sometimes turn out to be our most valuable intellectual property.

If you want to get in touch with Taku or see any of the links we discussed on the show go to Disruptingjapan.com and all the resources will be in the show notes. And if you want to get in touch with us and have any ideas on how we can improve the show or people you think we should be talking to send us an email at [email protected] So until next time this has been Tim Romero and thanks for listening to Disrupting Japan.