The Internet of Things is becoming so commonplace that it is almost almost invisible. About a year ago, Moff launched an extremely clever IoT toy called the Moff-band that allows kids to add sound effects to their every-day play. They toy had been successful, but for Moff to take the next step they need to create a platform around the toy.

Akinori Takahagi explains how he bootstrapped up Moff while receiving a steady stream of rejection from so-called experts in the field and how a successful Kickstarter project and enthusiastic children changed the industry’s opinion. Aki is based in Japan, but he explains the importance of launching overseas.

There is a lot of good advice in here about how to build a hardware startup, how to get international attention and how to make the big jump to nationwide (and international) retail distribution.

There is a lot to unpack in this interview, and I think you’ll enjoy it.

Show Notes for Startups

  • What’s Moff and why do kids need it?
  • Why the US still leads in wearables and IoT devices
  • How to run a Kickstarter project from Japan
  • Why relying on resellers too early is a mistake
  • Getting retail distribution in an over-crowed market
  • How startup ecosystems differ in different parts of Japan
  • The importance of having an early investor who “gets it”
  • The importance of creating a platform to leverage raw data

Links from the Founder

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Transcript from Japan

Welcome to Disrupting Japan, Straight talk from Japan’s most successful entrepreneurs. I’m Tim Romero and thanks for listening. This week we are talking about toys, well one toy in particular anyway. Today I am happy to introduce you to Akinori Takahagi founder of Moff and inventor of the Moff Band. Now we talk a bit about what the Moff band is during the show but I think I should explain it now so that the rock guitar solos, the light saber duels and the drum fills you will hear during the interview will not take you too much off guard.

The Moff Band is a wrist wearable device about the size of a watch that makes all kinds of programmable sounds based on how the wearer is moving their wrist. So kids can pretend they are playing tennis or slaying dragons and the Moff Band will generate the appropriate sound effects. Cool. But of course we do a lot more than just talk about toys. Aki gives some very practical advice about bootstrapping a hardware startup, what it takes to run a successful Kickstarter campaign and the rocky road to getting retail distribution both here in Japan and in the US. But it’s more, more interesting to hear Aki tell you about it himself so let’s get right to the interview.

Tim:    We are sitting down with Akinori Takahagi.

Aki:     Yeah.

Tim:    Of Moff who makes this incredible, wearable smart toy which I am not even going to try to describe without a visual representation, but Aki why don’t you tell us what Moff is because it’s pretty cool.

Aki:     Okay yeah cool, as you’ve introduced we are Moff we have given it for original wearable devices and this wearable device detects all the motion about, so position change.

Tim:    So it’s a device you wear on your wrist?

Aki:     Yes. That’s right.

Tim:    And it detects position changes, motion and just snaps right on there?

Aki:     Yes that’s right. So it snaps like this and connect it to the app using a blue tooth. Okay I have nothing in my hand but I can play an air play drum.

Tim:    Okay for the audience he’s just pointing at me and this sound is coming out.

Aki:     And I will change my body and I will change my position change.

Tim:    Okay. So the device on your wrist is actually sensing not only the motion of the arm, but which direction you are point.

Aki:     Yes.

Tim:    The orientation and it’s adapting the sound it’s playing from that which is cool but what’s it good for?

Aki:     Ah yes so, usually, you’d have to detect human motion change and position change usually we use imaging sensing such as connect. However, but there is a big problem with common imagine sensing for 3-D motion sensing. This kind of deceive needs a special devices and also human activity is limited in front of a camera.

Tim:    So this is more of a go anywhere take it anywhere?

Aki:     Yes that’s right. So if we us our Moff Band and just snap on the wrist I can go around freely.

Tim:    Right you don’t have to face the camera.

Aki:     Yeah that right.

Tim:    You don’t have to stay in sensor range.

Aki:     Yes.

Tim:    And I feel like we are leaving out the most important part here because the reason this is important is because that you and I don’t really use the Moff Band. All the people who use the Moff Band are kids, children right.

Aki:     Yeah, yeah, yeah. So now by using this technology we offer a new play experiences for kids. Now a days usually kids play with toys or apps so using this Moff Band we can offer the same play experiences as toys and also we can offer real play experience not using screens. So I think it’s, so we offer new play experiences both toy and apps.

Tim:    What is the target age of the children who are using it?

Aki:     So in terms of a toy we target age is 3 to 10 years old.

Tim:    3 to 10.

Aki:     Yes.

Tim:    So the 3 to 10 years old can put the Moff Band on their wrist they can by moving their hands they can be playing guitar or playing the drums or having a light saber fight.

Aki:     Yeah, yeah, yeah that’s right.

Tim:    Which is really cool.

Aki:     So I will show you interesting demo.

Tim:    Awesome.

Aki:     Everyone’s kids can become a rock star.

Tim:    Excellent. So a lot of your promotions for the Moff Band you’ve done a lot of promotion in the US. You’ve been to South by South West, Toy fairs. Was this a strategic decision to focus on the US or did it just work out that way?

Aki:     Ah okay, Thank you for a nice question so this is our strategy decision. We do many user tests and we found that for our devices that the US market will be the most appropriate.

Tim:    Why is that?

Aki:     This break experience using a big motion and big noise compare to Japanese kids. So US kids and the US people really love the big motion and the big spaces.

Tim:    Well I mean, I wouldn’t necessarily say that Japanese children are quiet.

Aki:    

Tim:    That in America the children they move more, their parents maybe are more comfortable buying them loud toys.

Aki:     Mhm.

Tim:    Interesting.

Aki:     Ah yes and also compared to Japan market in the US there are many wearable devices and IOT devices already sold mostly customers and the user can access our new great experiences.

Tim:    In the US?

Aki:     In the US. On the other hand in the Japanese market the IOT is wow, it is so difficult. It’s so unusual to see.

Tim:    This I find kind of sad because my background is in business to business software so I am used to Japanese businessmen being very slow to adopt new technology but it’s hard to believe that Japanese children are also slow to adopt new technology.

Aki:     Okay so–

Tim:    Maybe more their parents.

Aki:     Ah yes, the impact, any kids, every kids is audio adapter, innovators. However, parents is not.

Tim:    So the parents are the problem.

Aki:     Yes.

Tim:    That makes more sense.

Aki:     Yeah, yeah, yeah that makes more sense.

Tim:    So you launched Moff as a Kickstarter project.

Aki:     Yes.

Tim:    Why did you decide to go on Kickstarter rather than get distribution at home, here in japan or go on Camp Fire or one of the other Japanese crowd funding sites? Why Kickstarter?

Aki:     This is also our strategy decision. So we want to all launch our product not on the Japan market but also any other one, any countries.

Tim:    Right.

Aki:     Especially for US market even for Japanese startups Kickstarter is the best tool to show our product to worldwide.

Tim:    Right. Was that difficult for you because of the language barrier and Kickstarter so much relies on videos and storytelling?

Aki:     Yes.

Tim:    How did you overcome that? Did you have someone help you out or did you just do it?

Aki:     When I started Kickstarter project there are a few successful examples of Japanese startups. We searched for successful examples over US startups and I really searched what kind of story would be appropriate and what kind of video would be necessarily.

Tim:    Copy from the best.

Aki:     Yes.

Tim:    That’s a good way of going around it. So after the Kickstarter took you about six months to launch the product.

Aki:     Mhm.

Tim:    That’s great. Well listen do you have any advice for Japanese companies who want to start a Kickstarter campaign, is that the way to go if you’re an internet of things company in Japan?

Aki:     A Kickstarter is a best place for Japanese startups; however, I know of many unsuccessful projects. I think the different thing is to tell their story visually. Sometimes the story is not unclear.

Tim:    But then again that makes sense. If you are telling the story visually the language difference isn’t so hard.

Aki:     Yes.

Tim:    It’s not as important.

Aki:     So yeah, so in my experience most of about it was just watching videos or pictures, not reading a long sentence just showing images in the video it is very simple but very important.

Tim:    Okay, actually come to think of it, this wrist wearable design was not your first design was it? I remember seeing you at a pitch event years ago and I think you had actually made a toy of some kind.

Aki:     Oh, yes, approximately two years ago at that pitch event, at the time we don’t call “wearable” just a sensor devices. At that time we put our sensor devices on any product, so just a sensor device, attached sensor device.

Tim:    Ah so your original plan was to make the sensor and partner with toy companies to embed this in toys.

Aki:     Yeah.

Tim:    What made you change the strategy?

Aki:     Yeah so the problem with the original plan attached device is difficult to analyze motion sensing because the data depends on the location attachment.

Tim:    Okay.

Aki:     So here, here, here the data is totally different.

Tim:    Every new toy you would have to kind of re-engineer the product for it.

Aki:     Yes.

Tim:    So you just decided to go and make it yourself.

Aki:     Yes. So this is interesting because this original of any movement position change. We found it’s a better idea of attached devices, so wearable.

Tim:    Okay, well let’s see the current product was launched about nine months ago, almost a year ago now right?

Aki:     Yeah, nine months ago yes.

Tim:    How have sales been going for the last year?

Aki:     Fortunately we started to sell our Moff Band at Amazon.com and Amazon Japan and we rank in US second position in the category of a tech toy, and also rank in Amazon Japan.

Tim:    Congratulations.

Aki:     Yes.

Tim:    That’s a pretty good first year.

Aki:     Yeah so our launch year was so successful.

Tim:    So is your main distribution channel Amazon?

Aki:     Yeah last year, this year we expand our sales channel; especially for this year’s holiday season.

Tim:    Right.

Aki:     So this holiday season we distribute major retail chain everyone knows in US.

Tim:    All right, can you say the name of the chain yet?

Aki:     Ah….. Unfortunately not.

Tim:    Well we can wait for it.

Aki:     Oh yeah, yeah you can wait for it. But this very major retail chain.

Tim:    As you mentioned earlier most US retailers if you have a product that you have proven you can sell on your own through Amazon or through the web are willing to talk to you about stocking it and selling it. Have you found Japanese retailers are also willing to sell Moff? Or, are they still waiting for more proof of some kind?

Aki:     Actually in Japan Market two major retail chains start to sell our Moff Band, such as Bic Camera and Tsutaya.

Tim:    Excellent.

Aki:     Yeah.

Tim:    Are you still seeing most of your sales coming from America or is more coming from Japan?

Aki:     I think this year will come from the US so because this year will be much bigger.

Tim:    Right now are the markets are just Japan and the US? Are you looking to expand into other markets as well?

Aki:     Of course. Not only the US and the EU and Australia and China, there are many distributors who are in contact with us.

Tim:    Excellent.

Aki:     However we want to start step by step so Japan, and US and we expand to other areas.

Tim:    Okay, so a lot of Japanese startups and all Japanese investors are always saying startups should be thinking about going global from day one, Moff is a company that definitely went global from day one before day one actually. How important do you think that decision was? Do you think that you’ve had an easier time selling the product in Japan because you were successful in America? Or do you think that you would have had the same success in Japan if you had just focused on Japan at first?

Aki:     Actually before a Kickstarter project few people think Moff is good. Very few. But after a successful Kickstarter project many people start to pay attention to our product.

Tim:    So when you say people do you mean investors?

Aki:     Yes, investors and not only investors but also toy companies and retailers.

Tim:    Okay so at first only the children were on board in Japan?

Aki:     Yeah, yeah so children, so we did many user tests and many kids love the Moff Band and we know that not only in Japan but in the US, however also toy companies and the toy distributors “oh is this a toy, oh it’s strange, no, no you should do that.” So at the time our reputation was not so good, however after successful Kickstarter it’s totally changed.

Tim:    Everyone has changed their mind, as always grownups are the problem.

Aki:     That’s right, that’s right.

Tim:    Well listen let me ask you a bit about your own background. You were involved in marketing and product management at Kraft, Mercedes Bends, GM, what made you change careers and want to found company and why toys? It seems like such a shift in so many ways.

Aki:     Actually I love hardware and I believe there is a new position of hardware, especially IOT because when I worked for Mercedes Bends typical hardware companies. We sold a big potential of connected hardware I think three years ago I found this big potential and tried to start a new product with IOT and at the same time I had my first baby so I tried to develop up new IOT devices for my family.

Tim:    So suddenly you found yourself thinking a lot about toys.

Aki:     Yes.

Tim:    That makes sense. That’s a big change for you. What would you say is the hardest thing you had to learn in moving from large stable companies to a small IOT toy startup?

Aki:     I think living cost of having a salary.

Tim:    Ah yes.

Aki:     Having a startup is very good environment, however so salary is quite different from big companies. I think my current salary is lowest in my career history.

Tim:    But that must have been, how did you convince your wife that this was a good idea when you just had a young child? That must have kind of been a hard conversation.

Aki:     With my wife?

Tim:    Yeah.

Aki:     Ah yeah. So my wife totally backed me.

Tim:    That’s awesome.

Aki:     Because she said to me, “let’s do it because if you don’t later you said ‘I wanted to do that but I quit’ ” she said “I don’t want to hear this kind fucking thing.”

Tim:    For years and years and years in the future.

Aki:     Yeah that’s right.

Tim:    Well that’s great that your level of support though, I think that’s so important.

Aki:     And also my wife’s father supported me because he worked for big company for a long time but in his career he had to give up many challenges or many dreams. He said “you should do it”.

Tim:    Follow your dream.

Aki:     Follow your dream yeah.

Tim:    Yeah I think that it’s fantastic. It really does seem like the attitude in Japan is changing towards starting your own companies and to going out on your own. That’s a great thing.

Aki:     Yeah I think so, it’s a total change because to develop up a new thing for a company new challenges not good environment.

Tim:    Yeah no, in big companies people try to stay away from the challenging stuff. During the change what did you have to change about yourself to become a successful entrepreneur?

Aki:     Actually I wanted to just develop it up and create it. I don’t want to be an entrepreneur. So it’s a totally different scale in the type of mind. So if possible I want to be adjusted and a give it up creative producer. But if it want to develop up innovative things just developing is not enough because we need a great team and financing and it’s a totally different. So that is why I learn especially by myself team building and financing.

Tim:    So you don’t get the chance to program and develop much anymore?

Aki:     Yeah it’s true.

Tim:    Do you miss it?

Aki:     Yes totally.

Tim:    I do.

Aki:     Yeah, so developing and creating something is, for me it’s most enjoyable but I found we need a great team so I changed my mind and now I am focusing on creating a great team.

Tim:    Fantastic. Let’s see you went to college in Kyoto. Did you grow up in Kyoto?

Aki:     No, was born in Osaka.

Tim:    It’s interesting that Japan has a number of startup ecosystems. They’ve got, Tokyo is the biggest, Fukuoka has got a very healthy if small ecosystem there. There is a solid ecosystem around Kyoto. What are your thoughts on the different startup ecosystems in Japan?

Aki:     So the big difference between ecosystem is just a number of investors because if many investors are there some investors love your product. So there are many options.

Tim:    So you are saying if there are enough of them someone will understand that this is a great idea and believe in you?

Aki:     Yes.

Tim:    But you couldn’t find that at first in Tokyo right? Exact for the children you were saying that the investors didn’t understand what a great idea you had.

Aki:     Ah, but just one great investors understand our strategy so this is our investors Kamada-san.

Tim:    All right.

Aki:     He understood our product potential. Actually most investors don’t understand our potential but Kamada-san really understand.

Tim:    Well having an Angel investors or an early stage investors that really gets what you do is invaluable. The startup ecosystem in Japan if you could change anything; if I gave you a magic wand and said you can change anything about the startup ecosystem in Japan, anything at all to make it better for Japanese startups what would you change?

Aki:     I think there are many good things in the Japanese start up ecosystem; however, global point of view I believe is lacked in Japanese ecosystem.

Tim:    So you believe the founders need to start thinking globally sooner?

Aki:     Most Japanese startups see just Japanese markets; the Japanese take train and stuff like that. But I often go overseas conference and exhibitions such as CS and South by Southwest. And fortunately especially in the area of IOT Japanese, Japanese are getting old fashion.

Tim:    Thinking globally is not just global market, it’s looking at what companies overseas are doing, looking at the innovation around the world and being aware of that starting a company.

Aki:     Yeah.

Tim:    That’s pretty good advice because you will eventually run into that competition.

Aki:     Ah yeah.

Tim:    If you are successful yeah.

Aki:     So we are facing a global competition. Unfortunately there are many good startups in Silicon Valley with good technology and a good ecosystem. I often go to the Silicon Valley but every time I am so surprised in terms of this. So it’s a good impression and a good inspiration for me. Only in Japan market there is no inspiration but in Silicon Valley and in Europe there are many inspirations because there are many IOT startups.

Tim:    What do you think about IOT startups in Japan because I think and I’ve talked about it before on the podcast, I think Japan has the tools and the human resources to be incredibly strong in innovated other internet of things companies. What do you see happening now with other internet of things companies that are starting up in Japan?

Aki:     Unfortunately not optimistic.

Tim:    Not optimistic.

Aki:     I used to work for a hard ware company so business experience. So I think that the rule was totally changed. IOT is totally different from hardware and also software. IOT is a sad world, especially importance to buy software. Yeah so before IOT the important thing is to develop for a kind if system using the hardware and the software. The system from my understanding the system is very important but better than developing good hardware, just hardware.

Tim:    So you think right now the Japanese IOT companies are too focused on the Hardware?

Aki:     I think so. And I also including me, Japanese is not at developing a system.

Tim:    Interesting.

Aki:     System needs a totally different skills. System is very important but very difficult.

Tim:    So that is the new challenge for Japanese startups.

Aki:     New Japanese startups.

Tim:    Excellent. Let me ask you, now that the Moff Band has been out for almost a year, you are getting distribution on that, what’s next for Moff? Are you going to have upgrade products? Are you coming out with something new and exciting?

Aki:     Ah yes so our next challenge is to create a new system.

Tim:    It’s the exact thing you were talking about that’s so difficult.

Aki:     Yes so we have good devices and good recognition engine that we can collect good data from users. We already developed a kind of platform. So our next challenge is how do we create a new system using our Moff SDK and Moff technologies. This is a new challenge but this is just so exciting for me because we–

Tim:    Well it’s something to look forward too. Hey listen this has been fantastic. Before we kind of wrap up is there anything you want to tell Disrupting Japan listeners?

Aki:     My interest is to offer a new play experience with a new system. Now we want new member especially on the engineering side so yes. So we are looking forward to many applications.

Tim:    Okay, well listen Aki thanks so much for sitting down with me and telling our listeners all about Moff.

Aki:     Thank you.

Tim:    Yeah it was great.

Aki:     Thank you so much!

Tim:    Let me just turn off these mics and finish this beer.

Aki:     Okay.

Tim:    And we’re back. It’s interesting Aki was forced by the limitations in the Technology to create his own device rather than partner with executives at existing toy companies. But even without the technology issues it seems pretty clear that this would have been his only choice. Like so many other innovative products all of the experts told him that children would not be interested in such a toy even when actually children showed great interest. I think that if Aki had not struck out on his own and taken charge of his own sales and distributions this great little toy would have died in committee somewhere and the world’s children would be much less entertained if perhaps a bit quitter. It’s going to be interesting to watch Moff over the next few years as they try to transform from a company making a cool interactive toy into a platform company that leverages that toy and we will be sure to keep an eye on them.

If you’ve got an experience with the internet of things, toys or otherwise come on by disruptingjapan.com/show028 and tell us about it we’d love to hear it. When you drop by this site you will also see the links and sites that Aki and I talked about and much, much more in the resources section of the post. And if you get a chance please leave us an honest review on I-tunes. It’s really the best way you can help us get the word out and support the show. But most of all thanks for listening and thanks for letting people interested in Japanese startups know about the show.

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