There is a very good reason B2B SaaS is huge in Japan right now.

Today we sit down with Chiemi Kamakura, co-founder and CEO of Agatha, and she explains why.

Agatha is a Japanese SaaS company that has been global from Day 1, but is leveraging some unique strengths developed in Japan. 

We talk about how Japanese SIs have responded to SaaS, why Japan is likely to see a lot more female founders soon, and  the fact that Japanese managers and regulators actually hate paper just as much as the rest of us, but there is one thing that keeps them from going digital.

It’s a great conversation, and I think you’ll enjoy it.

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Show Notes

  • The real reason Japanese hospitals can’t get away from paper
  • Why it’s hard to innovate from inside a company
  • Can Japanese SIs survive in the SaaS era
  • Agatha’s commitment to being global from Day 1
  • How global and Japan SaaS markets are different (and how they’re not)
  • How SaaS can thrive in highly regulated industries.
  • The importance of a personal network in high-trust products
  • How to develop more female founders in Japan
  • Some good advice on going global with a SaaS product

 

Links from the Founder

Transcript

Welcome to Disrupting Japan, straight talk from Japan’s most successful entrepreneurs. 

I’m Tim Romero and thanks for listening.

Today, I’d like to introduce you to Chiemi and to Agatha. Actually, Agatha is the startup created by Chiemi Kamakura and her co-founders to solve a global problem in the record-keeping required for clinical trials that are run by pharmaceutical companies. 

Chiemi tells a great story, and one that illustrates why SaaS is slowly taking over the business world. We talk about the challenges of launching a SaaS startup in a highly regulated industry, the advantages of thinking global from day one, and selling to Japanese customers who always seem to want customization. 

And Chiemi also explains that contrary to the stereotype, most Japanese workers and regulators don’t really like having to rely on mountains of paper. For the most part, they hate it just as much as the rest of us. And today, we’ll explain the two things that are actually keeping them from going digital. 

But you know, Chiemi tells this story much better than I can. So let’s get right to the interview. 

 

Interview 

Tim: So we’re sitting here with Chiemi Kamakura of Agatha, who makes clinical and regulatory document management for small early stage clinics and life sciences companies. And Chiemi, thank you so much for sitting down with us today.

Chiemi: Of course, thank you for inviting me to this opportunity, that’s a great honor for me.

Tim: The honor is all ours. So I gave just like a really brief explanation of what Agatha does, but can you flesh that out a little bit? Can you explain in more detail, what is it Agatha does?

Chiemi: We are offering Document Management Cloud Service for clinical trial for hospitals and pharmaceutical companies.

Tim: So is it just for the research stage, just for the trials themselves, or is it more for operational support as well?

Tim: Yeah. So main target is clinical trial business, but not only that, it’s from research and also marketing and manufacturing. So we are covering all stages. What we do, especially in clinical trial, for clinical trial is operated between pharmaceutical company and hospitals. There are many, many communications on trial, those communication still paper is used.

Tim: Okay. Well, let’s get into some specifics. So maybe tell me about your customers. If you’re improving the communication between the hospitals and the laboratories doing the trials, walk me through an example. How does that work?

Chiemi: Yeah. In hospitals, that people who are managing clinical trials, so that’s our user, and in pharmaceutical company side, also people in clinical trial department, they are our users. Let me explain what happens between pharmaceutical companies and hospitals. First, pharmaceutical company visit hospitals, and then request to conduct clinical trials at this hospital, and then send applications and other documentation. So there are really a lot of documents. I researched how much document is used in one hospital, two ton of paper are used in one hospital every year.

Tim: The medical industry is famous for generating huge amounts of documents and huge amounts of paperwork. But I’m sure there’s still a lot of actual paper being used, but it’s 2020, how are these companies solving these problems now? They can’t really be doing everything on paper now.

Chiemi: After COVID, it’s moving a little bit, but still, paper is used, because I think doctors and people at hospitals, they are really concentrate on patients and their family, so they don’t have enough time to think about IT system or new technologies. They are really focused on patients. Because if you use paper, you don’t have to think about anything.

Tim: The reason that it’s still on paper, it’s not due to regulations, it’s just the conservative nature of the industry?

Chiemi: Yeah, I think so. It’s a conservative — I’m IT person, but even if company who wants to implement new IT system, you need to do a lot of things. You have to change the process, you have to keep training for users, those many staff, you have to do that. It’s a barrier for hospital people, I think.

Tim: Okay. I really want to dive into the market itself. But before we do that, I want to take a step back and talk about you. Yeah. You started Agatha in 2015, right? 

Chiemi: Right.

Tim: What motivated you to start a company?

Chiemi: Yeah. Actually, I found this issue. There are so many paper in clinical trial. I found that in 2007, when I visited one of the hospital, at the time I was working at Hitachi. I was looking for a new business for Hitachi, and then I visited one hospital. And then in one meeting room, I saw that a lot of paper, like 30 centimeter paper per person, then they are for 20 people. So I was so shocked. What is this paper? And then I asked the person at the hospital, and then she answered, “This is a document sent from a pharmaceutical company, it’s for application for clinical trial. And then next week, there’s a meeting for that. And then after that, then everything will be destroyed.” I was so shocked.

Tim: I bet. But after that, did you go back to Hitachi and say, “Hey, we’ve got a great opportunity here to making new product”?

Chiemi: Yeah. Right. Exactly. I’m so chocked. So Hitachi should be the company who sort of solves issues by IT. And then what was that? Then I talked to my colleague and then he said, “Yes, Hitachi has great product that costs 2 million USD. All right. They cannot buy, they are not afford. 

Tim: So were beginning to see why these hospitals are using so much paper.

Chiemi: Right.

Tim: It’s not that they’re so conservative necessarily. It’s just they can’t afford to upgrade their — oh, wow. 

Chiemi: Yeah. That’s how I met this opportunity about clinical trial papers. And then it was 2007, there are still on premise system was used. Then after 5 or 10 years, many service moving to cloud, then if you use Cloud, there are many systems downsizing. So not only hospital or life science.

Tim: This is really interesting. I think, all over Japan now, we’re in the middle of this SaaS Renaissance, this Golden Age of SaaS, where customers are realizing, enterprises realizing that wait, we don’t need to go with RSI. We can bring in these little systems and we can experiment and we can try something new.

Chiemi: Right. That’s exactly what I thought. Hospitals are a little bit conservative. It’s always as the industry go first, and then coming to healthcare or life science. I saw that many SaaS startup companies bringing new innovation to many business processes. Then in 2015, I thought it’s the timing, we can bring the hospital and pharma.

Tim: Well, looks like your timing was good. 

Chiemi: Yeah. 

Tim: Let me ask you, why Agatha? Does that have any special meaning?

Chiemi: Agatha is a mission, is aspirations for good health and life. So there is a-G-A-T-H-A in that.

Tim: Okay. All right, right. It’s a very pleasant catchy name. Your blog is like Aggie’s Blog.

Chiemi: Yeah. I heard it from the name of a saint of ancient Greece.

Tim: You’ve been very fast and aggressive in your international expansion. So you’ve got offices in Boston and Leon, France. Were you international from the very beginning?

Chiemi: Yes, yeah. Co-founder is in Leon, France. So pharmaceutical companies are all working globally. So even if Japanese pharmaceutical company, once they go to market and then they sell their product as a country, they’re working, pharmaceutical companies are working globally. So therefore, Agatha also have to provide our service globally, otherwise, it doesn’t make sense for our clients.

Tim: But it’s a big challenge as a startup, how is the team spread out? Is it like most of the development in Japan or how many people do you have in each location?

Chiemi: Yeah. Now we have 40 people in total, and one-third is outside of Japan, so like 10, 12 in Leon, that’s our development team, and three, four people in US, that’s the marketing team.

Tim: And internationally, now obviously, in Japan you’re marketing yourself as a Japanese startup, you are a Japanese company. But when you go international, do you present yourself as a Japanese company or do you try to present yourself more as a local company?

Chiemi: Well, we really don’t specifically introduce ourselves as a Japanese company. I think in France, they are saying we are just French company, and in US probably they are saying US company. I don’t think that they know.

Tim: I was just curious, because many Japanese startups when they go abroad, they end up kind of changing things or rebranding a little for each market. But so for example, is the product the same in all the market? Is the value proposition the same in all the markets?

Chiemi: Yeah, it’s exactly the same for all the country. From the beginning, our product was in English and Japanese, and then built by European team. 

Tim: So let’s dig deeper into both the go-to market and the product itself. Because, okay, so when you were telling me you went to Japanese hospitals, and there’s these stacks of 30 centimeter high documents in front of everyone, okay, it’s surprising but it’s not that surprising. We’ve all heard stories like that of Japanese enterprise or government on paper. But I’m surprised to hear the same stories coming out of the US or France. Is the situation the same there or are you filling kind of a bigger need?

Chiemi: Probably a little bit ahead in US but it’s similar all over the world, I think. So when we ran exhibition booths in US a few years ago, there are many people from hospitals in the United States. And then some people said only the large hospitals are using systems but many smaller hospitals are still using paper. So I was also shocked.

Tim: It is kind of shocking. So there are lots of ways to share documents online. I mean, any company, even a tiny little company could use SharePoint or Dropbox, so what does Agatha give these companies that’s not available from the standard document sharing SaaS companies?

Chiemi: Regulation. It’s a regulated industry. So they have to use a system, which is complying with the regulation, regulation of Japan, US, Europe. So it is a key of our business, which is regulatory compliance.

Tim: Okay, okay. So it’s like the HIPAA laws in the US.

Chiemi: Right, right. So otherwise, they have to use paper. They can use a SharePoint, they can use Google Drive, but then they have to keep document with paper.

Tim: That makes sense. Let’s talk a bit about your go-to market, because this is such a specialized industry. It seems like an industry where everybody knows each other. There’s a relatively small number of buyers who all know what everyone else is doing. So what was your go-to market? How did you acquire your first two or three customers?

Chiemi: Yeah. I’ve been on this industry since 2007. So through those 10 years, I have met many people in pharmaceutical industry and hospitals, and got to know each other. I was always talking about we should fix, to talk to pharmaceutical company and hospitals. I found a big gap between hospital side and the pharmaceutical company side, so they try to fix the issues by themselves. But from a pharma perspective, they have to communicate with hospital.

Tim: It almost sounds like in Japan, it’s almost like your first customers develop the product with you. You were talking with them about it for so many years, right?

Chiemi: Yeah, yeah, yes.

Tim: That is a great way to develop a product with that level of customer input.

Chiemi: Yes, it was a lot of fun.

Tim: But how does that translate overseas, when you went to the US or France, you didn’t have those personal connections, you didn’t have that deep understanding of those target customers’ needs?

Chiemi: Yeah. But the business of a pharmaceutical company, it’s very similar worldwide. We don’t have to change our product at all. We can use same sales material globally. We just need to launch website. And then even first five years, we didn’t have any sales rep for worldwide, we just receive inbound leads from our website. Also, we knew some people from previous job.

Tim: Maybe that’s the advantage, because it is such a small industry that the US customers knew who the Japanese customers were. 

Chiemi: Right, right, right. 

Tim: They consider them very valid use cases.

Chiemi: Yeah, that’s true. 

Tim: Well, that’s a huge advantage that most startups don’t have. A lot of times startups find that they have to almost start from scratch when they go to a new market.

Chiemi: Right. Because myself and our COO in France, both of us knew we can sell the same thing worldwide.

Tim: Pharma is such a huge industry globally, and Japan has actually a much larger pharma industry than most people outside Japan realize. But looking five years into the future, how much of your market do you see is overseas versus how much of your market will be in Japan?

Chiemi: Now, the 30% of business is outside of Japan already. In five years, I think 70% business come from worldwide. Yeah, that market is much larger outside of Japan, so we can grow.

Tim: So you expect to just to flip from 70:30 to 30:70?

Chiemi: Yes, I think so.

Tim: Let’s talk a bit about Japan in general, if in general. So Agatha is about 60% women?

Chiemi: Yeah, 60%. Yes.

Tim: Was that a target you set or was that something that just kind of happened naturally? 

Chiemi: Yeah, it happened naturally, I think.

Tim: So the reason I asked is, so Japan has one of the lowest rates of women founders in the world.

Chiemi: Yeah, It’s so sad.

Tim: I know. Even in Asia, it’s one of the lowest. So what can we do? What should be done to encourage or to help more women start startups?

Chiemi: I think one of the good job to do the CEO of the company, you know, CEO can control how to work, what to do. So if you are employee, you have to — how to say —

Tim: Yeah, I can see it’s a lot more independence as a CEO. You can decide life on your own, your own control.

Chiemi: Right, yes. Yes, there are many challenges and tough stuff. But if you think you want to do something, you have things you want to do. I think the way is to be the founder of the company.

Tim: I agree. Actually a lot of women I talked to agree, but they’re still not starting the company. But in your case, for example, when you were deciding, when you were debating with yourself whether to quit your good job or to start a company, that’s a hard and a personal decision for everybody. But was there any time you were thinking this is good it’d be hard because I’m a woman?

Chiemi: I didn’t think so, I didn’t think about that. 

Tim: So just the regular difficult startup stuff?

Chiemi: Yeah, right. But I think that’s because we don’t have kids. So if I have a kid, probably different story but I don’t, so it’s easier, I think.

Tim: So do you think the best way to encourage more women to start companies is just to emphasize the independence and the control you have over your own life?

Chiemi: Yeah. You can make a decision. You can execute what you want to do. It is a lot of fun, I want to say.

Tim: I think so too. I really do. I’ve never understood why everyone isn’t doing this. Okay, let’s go back to going global. I’m going to ask your advice about all kinds of things today. So Agatha went global really fast, really early. What advice do you have for Japanese startups who are thinking of going global, who want to expand internationally?

Chiemi: If you are thinking about global business, it should be designed from the beginning. So once you start from Japan and expand to global, I think it’s extremely difficult, you have to change many things. But we were thinking from the beginning we will do global business, but just start from Japan.

Tim: That’s that seems like really good advice. But practically, as you were building out the product, as you were building up the services, were there any times where you had to think, “Oh, no, no, no, we don’t want to do it this way, because we want to go global at some point”? How did that affect the decisions day-to-day?

Chiemi: Yeah. Until now, it’s been seven years, but we have never developed any feature, which is used only in Japan. So everything we develop only the things which can be used everywhere.

Tim: Okay. So if even if a big customer comes to you with a feature request, it has to be something that can be deployed for the whole world?

Chiemi: Yes. We never, we never do that.

Tim: That’s something that’s very hard for a lot of Japanese companies to do.

Chiemi: I think if you think this is only this time, then it’s going to happen every time. 

Tim: Yes, exactly. There’s no “only this time”.

Chiemi: Right. It’s company philosophy, we develop the things for worldwide.

Tim: I think that is something that’s very difficult for many Japanese founders to do, to say no to a customer. I guess it’s difficult. It was hard for you too, I guess.

Chiemi: Well, it’s SaaS. So I think 10 years ago, 20 years ago, if you built a system for each company, it was more difficult, but now it’s SaaS so users are more accepting.

Tim: And again, I mean, hospitals are incredibly conservative. It’s very much old school systems integrators IT. Have they been accepting of you saying, “Sorry, we’re not going to do it that way because it SaaS”?

Chiemi: I wouldn’t say that, but we are thinking so the most important thing is customer experience and easy to use. So Agatha is designed for hospital users, can use without any trainings.

Tim: Right. And customization will just destroy that. More features, it makes it harder to use, right?

Chiemi: Right, right, right. Yeah. We want to do everything as most simple as possible.

Tim: So right now in Japan, med tech innovation and med tech startups, it’s a priority for the national government, it’s a priority of several prefectural governments. Did you participate in any of the government programs or the regulatory sandbox? Were you part of any of those programs?

Chiemi: Yes. Yeah, when we started the company, yeah, we got some funding from government, Home Marketing. It was very helpful.

Tim: Okay. Well, listen, Chiemi, before I let you go, I want to ask you what I call my Magic Wand Question. And the question is, if I gave you a magic wand and I told you that you could change one thing about Japan, anything at all, the way people think about risk, the education system, how badly customers want customization, anything at all to make it better for startups and innovation in Japan, what would you change?

Chiemi: If I have a magical wand, and then remove all paper from hospitals. 

Tim: Shouldn’t we put something else in first? 

Chiemi: Okay.

Tim: No, I’m sorry. But no, I know you’re right, Japan really is addicted to paper in every industry. Do you think the last two years of COVID and working from home, do you think Japan’s gotten better? Do you think we’ve started to move away from paper?

Chiemi: Yeah, yeah, I think so, a lot. Yeah. In Japan, many business process, many areas, they are moving from paper to electronic. But we do not move back again.

Tim: Well, you know, there’s two parts of it that kind of move independently. So there’s the laws, right? So recently, Japan has made digital contracts binding the same as paper contracts. They’ve eliminated the need for a hanko, those are all optional now. So those are important legal steps. But there’s also kind of the human nature and preference that sometimes takes longer. And in your sales, because your job is all about getting people off of paper and onto computers, how much of it do you think is people just like paper?

Chiemi: Well, yeah, they not necessarily like paper but they changing from paper to other thing is tough.

Tim: So they don’t like paper, they just dislike change.

Chiemi: Right. That’s I see it, changing from paper to computer, that’s tough.

Tim: I mean, that’s a good thing for you. What you’re saying is that if you show people a good enough reason to change.

Chiemi: Right. Yes. Now people are working from home, then they don’t have access to paper that is in office. So that is a good reason for us to move from paper to computer.

Tim: And as we are coming out of COVID and people are heading back to the offices, do you think this change is permanent? Do you think we’re going to have people decide, hey, now that I’ve tried it., it really is better without paper?

Chiemi: I think they don’t go back to paper. First, they move the computer, they don’t have to move to paper again. They have to change, so.

Tim: That dislike change working in your favor this time.

Chiemi: Right. 

Tim: Yeah. We can finally get that paperless society we’ve been talking about since the ’90s.

Chiemi: Yes, finally.

Tim: Listen, Chiemi, thank you so much for sitting down with me. I really appreciate it.

Chiemi: Thank you so much, Tim, for this opportunity. I really enjoyed that.

 

Outtro

And we’re back. 

Chiemi explained perfectly why there are such huge opportunities for B2B SaaS in Japan right now.

Enterprise IT is complicated. And I don’t mean complicated in terms of interoperability and scalability. Those kinds of problems are sometimes hard, but they tend to be pretty well defined or at least predictable, and they lend themselves to existing engineering solutions. 

No, no, what really makes enterprise IT hard is compliance. Any given business function might be subject to regulation by a dozen different laws enforced by two or three different agencies. And all systems must not only be compliant but be able to prove that they’re compliant. Naturally, most companies want to outsource these systems for both practical and career-saving reasons. Outsourcing development gives enterprises a much better chance of getting it right, and perhaps more importantly, someone to point a finger at when regulators start asking questions. 

For the past 60 years in Japan, systems integrators have played this role and done it well. But as Chiemi’s experience illustrates, they’re now often seen as abusing that trust, and this is why there’s so much potential for B2B SaaS in Japan. And Agatha illustrates this trend perfectly. Most of their customers tried to buy a system from their system integrator but they were quoted unaffordable prices. And then Agatha came in with a complete simple solution at maybe 1/10 the price. 

In addition, the deep specialization of SaaS companies like Agatha mean that they’re more likely to get compliance right in their niche. 

Now, if you remember, last episode, Yo Shibata and I discussed the possibility that Japan’s current SaaS boom will turn out to be temporary, and that the systems integrators will win out in the end. 

Well, maybe, but at the moment the SaaS tide is rising fast in Japan. Japan’s big system integrators may be able to turn it, but right now, it looks like the future belongs to smart, nimble SaaS startups like Agatha. 

 

 

If you want to talk more about SaaS and global expansion, Chiemi and I would love to hear from you. So come by disruptingjapan.com/show191 and let’s talk about it. If you leave a comment, I guarantee Chiemi or I or maybe both will respond. 

And hey, if you enjoy the show, tell people about it. In this age of omni channel advertising and reviews as a service, you would be amazed how much power your honest recommendation really has. 

But most of all, thanks for listening and thank you for letting people interested in Japanese startups know about the show. 

I’m Tim Romero, and thanks for listening to Disrupting Japan.