Fewer than 1% of Japanese consumers have ever purchased a product or service from a sharing economy platform.

It’s actually quite puzzling. Social and economic factors all seem to indicate that Japanese cities would be ideal for sharing economy businesses, but for a number of reasons sharing economy startups have not really taken off here.

Today we unravel a bit of this mystery as we sit down with Chika Tsunada, founder of Anytimes and the Director of the Sharing Economy Association Japan.

Anytimes is a P2P sharing economy startup with a unique and participatory business model. Chika explains why she chose that model and the challenges it presents. Even under ideal circumstances, building a P2P marketplace is hard. It’s one of the most challenging business models to execute, and to succeed today requires doing something truly unique.

Chika has chosen an unusual path both for herself and for her business. It’s a great discussion, and I think you’ll enjoy it.

Show Notes

  • The best strategy for building a two-sided marketplace
  • Why even Japanese entrepreneurs discourage their children from joining startups
  • How to start a web-startup when you are not a programmer or designer
  • Is it better to go deep or go wide in creating a marketplace?
  • One technique for fighting online review fraud
  • Why the Japanese labor market is unique in regards to the sharing economy
  • Why freelancing has not yet taken off in rural areas
  • The spark that will ignite the sharing economy in Japan
  • How licensing and administrative guidence stifles innovation in Japan

Links from the Founder

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Transcript

Welcome to Disrupting Japan, straight talk from Japan’s most successful entrepreneurs. I’m Tim Romero and thanks for joining me.

You know, when I run startup workshops and classes on entrepreneurship, by far, the most popular business model used by the students for their startup ideas are two-sided marketplaces. Everybody wants to be a marketplace. Why not? There’s a lot to love about being a marketplace if you can pull it off.

Aspiring founders imagine themselves running a platform that matches up buyers and sellers and takes a small piece of each transaction. They imagine dozens of other ways to monetize both the relationships they have with the participants and the data and the insights they gather about the market itself, and they all scale up easily and can be run with a relatively small staff.

Really, online marketplaces seem like the ideal business model, and on paper they are. The reality, however, is that marketplace businesses are hard. I mean, really hard. Sure, once you have millions of users, marketplaces can be insanely profitable. The problem is getting that first 1,000 or maybe 10,000 active users. That’s hard.

To do that, you need to be doing something unique. Well, today, we sit down with Chika Tsunoda, the CEO of Anytimes and the director of the Sharing Economy Association of Japan, and she explains how she’s been building a P2P services marketplace with a unique Japanese twist. It’ been a bit of a crazy journey for Chika so far but she thinks that Anytimes is positioned to take advantage of a unique aspect of the Japanese labor market. But you know, Chika tells that story much better than I can. So let’s hear from our sponsor and get right to the interview.

 

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[Interview]

Tim: I am sitting here with Chika Tsunoda, the director of the Sharing Economy Association in Japan and the fearless founder of Anytimes. Thanks for sitting down with me.

Chika: Thank you for coming and thank you for interviews.

Tim: Anytimes is a skill-sharing and a skill-matching platform but I think you can probably describe it much better than I can.

Chika: Anytimes is a skill-sharing platform to connect people who need help and those who want to work in the neighborhood such as everyday household chores, pet care, assembling furniture, language lessons, and so on.

Tim: Tell me a bit about your customers. Who uses it? What are the most popular services people are sharing?

Chika: Yes. Most popular customer is housewives, and university student, and seniors.

Tim: What kind of skills? What are people doing? Are they putting together furniture for people? Are they cleaning homes? What are the services that are being offered?

Chika: Most popular category is house cleaning, and next cooking, and next assembling furniture. But we also have other categories. For example, pet care, English lessons, Chinese lessons, guitar lesson.

Tim: How much does something like that cost?

Chika: The price average is one hour ¥2,000.

Tim: Okay.

Chika: So, not high cost.

Tim: Right, right. The platform takes 15% commission?

Chika: Yes. Yes, 15% commission is our sales revenue.

Tim: Okay. How many active users do you have now?

Chika: Active users is our secret. I cannot say that. I’m sorry.

Tim: Okay.

Chika: But our user is 30,000 users.

Tim: How many people do you have that are offering skills?

Chika: Yes. 30,000 users because if you register Anytimes, you can be client and supporters, both of them.

Tim: But like for example, right now, today, on the website, how many different offerings are there?

Chika: There are also clients and supporters. Sometimes, they will be clients but sometimes, they want money, they will be supporters.

Tim: I see. So the idea is really that everyone on the platform should be both buying and selling something on the platform?

Chika: Yes, that’s right. Thank you.

Tim: All right. Do most people do that? Are most people buying sometimes and selling sometimes?

Chika: Yes. This rate is really important so next, our KPI is this late.

Tim: That’s an interesting design for a marketplace. Most marketplaces have many, many more buyers and only a few sellers. Has it been difficult to get everyone to get everyone to be a seller?

Chika: Yes. Our first KPI was seller KPI. First, we need seller. Especially in Japanese labor market, there is few labors. So, this is Germany’s big social program. So if we get sellers, this is very important thing.

Tim: I would imagine most of your users are not professionals, they’re just using it to earn a little bit of extra income. Is that right?

Chika: We also have professional and only hobby. But the people, they use as hobby but the hobby will be work and monetized.

Tim: Is it more men or more women? Is it more based in cities or in rural areas?

Chika: Men-female is 50-50 percent, so same. And then, areais 70 percent user living in Tokyo.

Tim: I guess that makes sense. You need a certain density of people before you can do this.

Chika: Yes. This is very important. Yes.

Tim: Right. Okay. Actually, before we dive into more detail about Anytimes, I want to back up a bit and talk about you. You graduated from Keio Law School. You worked at Nomura for a while and CyberAgent. These are big stable companies. What made you want to go out and start a startup?

Chika: Yes. This is a long story. When I was little, I wanted to work about 82 developing countries. I wanted to work in United Nations, like UNESCO, UNDB but after graduate university, I thought I should have experience. I wanted to learn business and finance. I thought there is many social programs in Japan.

Tim: But on a personal level, why did you decide instead of there’s a lot of things you could have done, you could have gone to work for an NPO like you were planning, you could have joined a division of a company that’s focused on those problems. Why start a startup?

Chika: In Japan, there is many social programs. I thought I should serve these programs in Japan. That’s why I decided to found this company, Anytimes.

Tim: Okay. But it’s a big change. What did your family think of the change?

Chika: Actually, my parents didn’t like founding a company because my father was also an entrepreneur and my mom was a programmer.

Tim: Okay. So seems like they would be more excited and supportive of you starting your own company.

Chika: No. Because my father knew about how it’s hard to —

Tim: He knew how much work it really is. It’s true.

Chika: Yes. And because he was also an entrepreneur. First, he said he that he worried about me, and my mum too. But if I decide one thing, they know I don’t accept other opinions.
;

Tim: You’re stubborn.

 

 

Chika: Yes.

Tim: That’s actually very useful, for a startup founder to be stubborn. What do they think of it now? Have they come around and they think it’s a good idea now or do they still worry about you?

Chika: I think a little worried but they always support me and always care about my health.

Tim: That’s good. When you were starting to put the company together, you’re not a programmer or a designer yourself.

Chika: No

Tim: How did you build the team? How did you pull the team together?

Chika: Yes. The first year, I did only me and crowdsourcing services. But after one year, I started to hire people. The first employee is my sister-in-law, my brother’s wife. And then, my other friends, my friends’ friends.

Tim: So just your personal network?

Chika: Yes, yes, yes.

Tim: How did that work? Because I know a lot of people who are not programmers or designers but have an idea and they want to start a startup, it seems in theory very simple to go unto lancers or freelancer.com and say, “I want this done and this done.”

Chika: This was very difficult because I didn’t have experience of direction. So everything was my first experiences. This is difficult and very slow development. So after two years, I stopped outsourcing and then I started to hire programmer and designer.

Tim: For someone else in your situation, someone with a good idea but who’s not a programmer or a designer, would you recommend that they use outsourcing from the beginning or would you recommend just go out and hire a team at the beginning?

Chika: Depend on CEO, depend on founders. If like me, should hire programmer and designers. But if you have experiences on direction and management and the development, I think you should use crowdsourcing services.

Tim: To keep cost down?

Chika: Yes.

Tim: I like the idea of the skills-sharing community.

Chika: Thank you.

Tim: But building a company around that, any time you have a marketplace, it would seem like sometimes, you’re going to get people who only want to buy.

Chika: Yes.

Tim: So maybe I only need someone to look after my dog but I don’t want to sell anything. What happens with people who only want to buy? They don’t want to sell anything?

Chika: This is okay. No problem. First, only use Anytimes as a client but few months later, one year later, they started to use as supporter.

Tim: Do you know what percentage of people actually do both?

Chika: 8%, 7%, yes. But we are thinking about more.

Tim: Okay. Let me ask you a general strategy question for these kind of marketplaces. There’s basically two approaches. Either go broad or go narrow. It seems like most marketplaces, they go very narrow.

Chika: Yes.

Tim: For example, they’re just about pet care or they’re just for cleaning. The logic is usually by going very narrow, it makes it easier to advertise. It makes it easier to brand and get attention. So what made you decide to go as a broad market instead of a very narrow market?

Chika: That’s why we are thinking about community platform, not only pet-sitter matching service, not only house cleaning matching service. We are thinking about community platform. So many kind of skills.

Tim: Okay. I see. That makes sense. So the vision is not necessarily the transactions. The vision is building the community.

Chika: Yes.

Tim: All right. In Japan, the expectations of quality and customer service is really, really high. Have you had to educate your customers a little bit? Have you had any problems when people deliver a service themselves, maybe it’s not as high quality as pros do it?

Chika: Yes. Our service has mutual reviews. So, next client can see reviews.

Tim: Okay. Yes. I think in the sharing economy in general, the mutual rating system. It’s at the center of the whole sharing economy. But something very interesting has been happening with ratings in at least in the US services. Almost everyone gives 5 star ratings. Ratings can be very, very high. Do you see that happening? Do people in Japan still do very carefully considered ratings or do they tend to just be very high?

Chika: Our matching category is only small things, not professional matching, not big difference. It’s person A, person B. Not big difference because household chores and small things. Second point, review start alliance with local government and companies. They will do review for their earlier users.

Tim: Okay. Do you have any plans on going global? Do you think this is a model that would work in other countries?

Chika: Yes. First, of course, we are thinking about Japanese market but we are thinking about going abroad. So this is also difficult because Japanese labor market is very unique in the world. If we customize Japanese labor market, it’s difficult to go abroad.

Tim: What about the Japanese labor market makes it so unique?

Chika: Most Japanese has many stereotypes. For example, big company is great. One company for your whole life]. So if we customize to Japanese market —

Tim: In Japan, people do tend to want to work one job for their whole career. It would seem that this kind of a company would be more difficult to make in Japan than overseas. Okay. Well, let’s talk about Japan in general then. Because I think it’s very interesting how the image of freelancing has changed just in the last 10 years or so.

 

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Chika: Japan already has changed about freelance and labor market a little but I think only little and only in Tokyo, center of Tokyo. I have many work trip to many areas in Japan but I always think this change is only Tokyo, center of Tokyo.

Tim: Why do you think that is? Do you think that’s cultural or just because there’s so many more job openings in Tokyo?

Chika: I think freelance and especially programmer, and designer, and writer can work from anywhere. Outside, living cost is low. Anything can work online. So I think so much opportunity in countryside.

Tim: It seems like it is an opportunity and it’s been very interesting watching like 10 years ago, politicians were saying these freelancers and NEETs are pushing the economy down and they should just get a job and help the economy. Now, everyone sort of understands that having these freelancers is really helpful for the economy.

Chika: Yes.

Tim: Especially for creation of new businesses and new business lines. So in theory, yes, we should see a lot of people programming and writing and designing in not so crowded places like Tokyo. In reality, is that happening?

Chika: I don’t know exact number but I think still really few because this is mind. City people, especially center of Tokyo people, more international and more flexible. Countryside mind is very old but depend on people. If city, Tokyo people think about to move to countryside, very different culture. That’s why it’s difficult to move.

Tim: Well, also, I imagine most of the programmers and designers and such tend to be younger and would more likely want to live in Tokyo or maybe if recently graduated university at Tokyo or one of the other big cities in Japan. I live in a little bit of a bubble. All of my friends are startup founders. I started companies myself. I see lots of people that are freelancing and are using sharing economy type of companies. But like I said, that’s just my bubble. In the real Japan, what is the attitude towards the sharing economy business model, whether it’s something like freelancing or house rentals, what’s the average Japanese think of it?

Chika: The people who have experiences using sharing economy services are 1% in Japan.

Tim: Only 1% have used?

Chika: Only 1% in Japan but US, 25% or 30% people in US. In Japan start to grow struggling economy market, so maybe same as 10 years ago US.

Tim: I mean, sharing economy is such a broad term but I’ve noticed most of the use of sharing economy is mostly like crowdsourcing. Its business is using freelancers and we haven’t seen much consumer-to-consumer sharing economy services yet in Japan.

Chika: Yes. Still there is few platform about C2C.

Tim: Do you think that’s just is there something culturally that makes it difficult to accept or do you think it’s just a matter of time until people are exposed to it?

Chika: I think we need more, more time.

Tim: Just time?

Chika: Just time. In 5 years or 10 years. But after that, C2C sharing economy is same as old Japanese help each other system. Not internet, only help each user in their communities. This is normal but now the direction of community, community helping is dilution.

Tim: Okay. So it’s not as common an attitude as it used to be?

Chika: Yes, yes, yes.

Tim: When you think about it, it seems like Japan would be set up very well for sharing economy companies particularly in the cities. It’s very high density of population, apartments and houses are small so you don’t really want to buy a lot of things. There’s, in general, a high level of trust among the population. It seems like it’s almost ideal for consumer-to-consumer sharing.

Chika: Yes. It’s why I think sharing economy system is really fit to Japanese people but Japanese people doesn’t like internet very much. Japanese people doesn’t like new service, new platform that’s why it’s difficult to penetrate this system soon. But I think this is very fit to Japanese people.

Tim: Yes. So it’s really just a matter of time?

Chika: Yes.

Tim: I hope so. Looking back at it from when you first started, and you were outsourcing everything to onboarding and your fundraising and your growth. What would you do differently if you had to do it again?

Chika: First, team. I think I should have a house team as soon as possible. If I’m back five years ago, I would make development team first and then I found company.

Tim: So build the team first then find the company?

Chika: Yes, yes. Yes. I think this is important.

Tim: I think so. I think that makes a lot of sense.

Chika: That’s why I spend years. But I think this is also very good experience.

Tim: Yes. I mean, the only way you get experience is by making mistakes.

Chika: Yes. I think mistakes equal experiences. So I think this is very good.

Tim: In another interview you gave, you mentioned that government regulations were one of the biggest challenges for starting a new company. What sort of regulations?

Chika: Exact regulation, we don’t have it. But for example, car regulation and minpaku regulations.

Tim: I see. So not regulations about startups but regulations about specific industries makes it hard to innovate?

Chika: Yes, especially houses, and car, and elderly care, child care. So many regulations, many rules. So they difficult to innovate. Even if tourists, if I want a guide to foreigner friends, I need —

Tim: You need a special license.

 

 

Chika: — special license. But this regulation has changed.

Tim: So you think that Japan, it’s getting more relaxed with the regulation now?

Chika: I think so too, yes.

Tim: Slowly?

Chika: Yes, slowly. But this is big change in Japan.

Tim: Okay. Well, listen, before we wrap up, I want to ask you what I call my magic wand question. That is, if I gave you a magic wand and I told you you could change one thing about Japan, anything at all, the education system, the legal system, the way people think about taking risks, anything at all to make it better for startups in Japan, what would you change?

Chika: Education.

Tim: Education?

Chika: Yes.

Tim: What would you change about it?

Chika: Currently, Japanese education system is very strict and no flexibility. I think flexibility is really important to innovate.

Tim: So with flexibility, you mean for example, this week, every Japanese third grader is learning exactly the same history lesson as every other Japanese third grader?

Chika: Yes. And same textbook and same teaching and same content.

Tim: Do you think we need to change the content of the education or do you think we need to change the method, how children are taught?

Chika: I believe people should have options how to live, how to work. This is important and then they can choose many work and lifestyles.

Tim: By nature of the education system being so strict, it makes people not realize that there are flexible options for life?

Chika: Yes.

Tim: So how can you teach that kind of creativity? What would you do?

Chika: It’s difficult. I’m not a teacher. But I think first, textbook. All Japanese students use same textbook. Depends on schools, I think children can use different textbook. I think they should have options.

Tim: But you know, even if they let different cities choose textbooks, Japanese people would experience more differing opinions when they talk to other people.

Chika: Yes. And then I think not only textbook. They should have experiences about work and about agriculture, about I don’t know, about many things.

Tim: So more hands-on approach?

Chika: Yes, more hands-on approach, not only textbook. Japanese education system is only on the desk.

Tim: Yes. It’s very abstract. That’s really true. Even all the way up through university, there’s a lot of business professors who’ve never run a business, and computer science professors who’ve never had to write software commercially. So it’s a level of abstraction. That’s actually the opposite of startups, where we need people to just do things.

Chika: Yes. I think Japanese people needs more creativity and flexibility. So for example, Japanese exam, only memorize. If I memorize, always 100. For example, I was very good about English but only writing and only reading.

Tim: I have met several English teachers who could not speak English.

Chika: Yes. My teacher couldn’t speak English but only reading and writing and difficult words. But I cannot speak English, so this is the result.

Tim: I think you’re doing fine. Do you think that’s changing because in the last 10 or 15 years, we’ve seen so many more Japanese entrepreneurs? Do you think the education system is changing? Why do you think we’re seeing so many startups now?

Chika: Yes. Two points; first, Japanese education is changing a little. This is very a good thing. Second, internet. Internet technology effect is really big for children.

Tim: So they can study themselves?

Chika: Yes. My entrepreneur friends studied internet and programming by themselves.

Tim: Okay. So it is starting to change.

Chika: Yes. I think this is a very good thing, not only bad things.

Tim: Right, right, right. You don’t have to change education system. People can find out on their own now.

Chika: Yes.

Tim: Well, listen, Chika, thanks so much for sitting down with me. I really appreciate it.

Chika: Thank you very much.

 

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[Outro]

And we’re back.

You know, I’m a developer. In all of startups, I’ve started by programming up a barely functional prototype and getting customer feedback and maybe even a few sales before going into development. I have some designer friends who operate pretty much the same way by creating stunning mockups that wow potential customers.

Most founders without development or design skills usually seek out a founder that has them. Chika, however, walked a very different path. Lacking programming and design skill, she simply outsourced both of these functions. That almost always ends in disaster. But to her credit, she managed to pull it off and over a three-year period, pulled all the programming and design in-house. She admits she would never do it that way again but she deserves props for making it work.

The bigger question around Anytimes and really around the sharing economy in Japan in general is a matter of customer acquisition. As Chika pointed out, less than 1% of Japanese have ever used a sharing economy product or service and many Japanese are still unfamiliar with the basic concept and yet Japanese cities seem like the perfect place for sharing economies to thrive. There is a high population density, so people are close. Houses are small, so being able to borrow rather than to buy things is a huge advantage.

And although this is really hard to quantify, there is a high level of trust in Japanese society. The respect for other people and their property is almost unequaled around the world and yet the sharing economy has not really taken root here. I think it will. It might just take time or there might be a triggering event or a hitting of critical mass or we might just be waiting for that killer app. But sooner or later, we’re going to see the sharing economy flourishing in Japan.

If you’ve got thoughts on the sharing economy, Chika and I would love to hear from you. So come by disruptingjapan.com/show099 and tell us about it. And hey, guess what? Our big third anniversary live podcast is coming up on September 19th. It will be at SuperDeluxe in Roppongi and we’ve got a panel of some amazing Japanese startup CEOs and it’s going to be a great time to have a few beers and talk with everyone who’s anyone in Tokyo startup community. I

can’t really believe that it’s been always three years. I mean, sometimes it seems like I just started Disrupting Japan a few months ago and sometimes I feel like I’ve been doing this show forever but I love doing it and I love talking with you about Japanese startups. So if you get the chance, come out and have a drink at our third anniversary show and let’s talk there. The details are at the site, disruptingjapan.com.

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.