Koki Hayashi of Letibee is walking a difficult path by combining a startup business with social activism, but he just might pull it off. Japan is very rapidly becoming more accepting of those who are openly gay, and 2015 was a year of extremely rapid progress for gay rights.

Letibee has plans to capitalize on this movement, and to hopefully do some good along the way.

Letibee is an online gathering place for Japan’s LGBT community, and they generate revenues not only by selling advertising to companies wishing to reach the gay community, but by providing consulting services to Japanese corporations who increasingly want to understand how to better interact with their gay customers and employees.

The speed at which these changes are happening in Japan comes as no surprise to long time listeners. We know that, contrary to popular wisdom, Japan changes very quickly.

Koki’s an interesting guy, and I think you’ll enjoy the interview.

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Show Notes for Startups

  • The driving force behind Letibee and Nesty
  • LGBT corporate consulting in Japan
  • Why gay marriage is suddenly acceptable in Japan
  • Coming out to his parents
  • Why is hard to be openly gay and have a career in Japan
  • The advantages of being an outsider in Japan
  • Why conservative politicians are pushing for gay rights
  • The risks and rewards of mixing politics and business

Links from the Founder

The full transcript follows, but you can read a short summary of the interview here.

Transcript from Japan

Welcome to Disrupting Japan. Straight talk from Japan’s most successful entrepreneurs. I’m Tim Romero and thanks for listening.

I’ve always been of the opinion that business and social activism don’t go well together. Don’t get me wrong, I’m very pro business and I’m very pro social activism, many people are. But, when you setup an organization that tries to pursue both goals, the conflicts of interest usually bring each other down. It’s like ice cream and barbecue, separately they’re wonderful, but they just don’t work well when mixed together.

Koki Hayashi of Letibee however, has other ideas and in his particular case, I ‘m inclined to think he’s right.

Letibee has launched a product called Nesty and is rapidly becoming the online hub of Japan’s LGBT community. We talked in detail about his company and his business model of course, but we also talk a lot about how gay rights in Japan are changing and how the experience of being LGBT on Japan is changing. Like many changes in Japan, this one has been building up for a long time and is now happening very quickly. And Koki’s company is receiving more and more requests from Japanese companies wanting to better interact with the gay community and better understand their gay employees.

It’s a fascinating discussion and I don’t want to give too much away, so let’s get right to the interview.

 

Tim: So, I’m sitting here with Koki Hayashi of Letibee. Letibee runs Letibee Life, a media site that focuses on LGBT news, events, awareness and the Letibee app community portal. But, I think can describe your service and your company much better than I can. So, why don’t you explain to everyone what Letibee is.

Koki: Okay. Letibee is developing the app called Nesty that is the community app for LGBT people. Main feature is community that used to be existed in Mixi. Mixi is the social network and website that was really popular in Japan.

Tim: Right, very similar to Facebook until Facebook came in to Japan.

Koki: Yeah.

Tim: Now, Facebook kind of took over.

Koki: Yeah. When we decided to make the app we interviewed some LGBT people in Japan. Some of them are getting bored of gay apps like Grinder or Jack’d such gay for hooking up apps.

Tim: Ok. What is your business model? It’s one thing to develop a community and that provides a social good, but what’s your strategy for monetizing it? For making money? Are you selling ads or memberships?

Koki: Selling ads. So, our vision is to create a better society for LGBT people. We are trying to connect companies and LGBT people.

Tim: Oh, I see. So, it’s a very targeted avenue for advertisers?

Koki: Yes.

Tim: Alright. So, a community site’s a very general sort of a term, why would someone join?

Koki: Each community is called Nest and there are some Nests for example, for the guys who love Disney or coming out stories…

Tim: Divided by different interests, different topics.

Koki: Yes, interests, topics.

Tim: You guys also do some corporate consulting, right?

Koki: Yes.

Tim: Helping companies better understand gay employees and gay customers.

Koki: Yes.

Tim: So, what kind of clients do you have? What kind of companies are concerned about this?

Koki: For example, MynNavi, there’s a company called MyNavi in Japan and Galax and Metallico, that’s…

Tim: What’s driving it from the customer side? Do they want to reach a bigger market? Why is there suddenly a corporate interest in consulting, to better understand working with LGBT community?

Koki: The research made by Dentsu says, there is 60 million LGBT market in Japan, but companies don’t do anything about that, few companies did it and I guess Japanese companies can’t do something if someone don’t do it.

Tim: Yeah, Japanese companies tend to… everyone does something or nobody does it.

Koki: Yeah.

Tim: So, the Japanese corporations who are interested in this consulting are are mainly looking at the sales side? They want to increase revenues?

Koki: Revenues and I guess they want to employ many kinds of people.

Tim: I find that incredibly encouraging. What sort of training do you provide? How does this work?

Koki: We are training LGBT lecture programs. These lectures are based on firstly, basic knowledge about LGBT of course and LGBT situation in the world and in Japan. And second, when we started we try to provide same sex wedding services to LGBT people and we brought some lesbian couples or gay couples to wedding places and there was many difficulties.

Tim: The wedding venues just did no want to perform the services or —

Koki: That’s one of the problems and secondly they don’t how to provide services to them. For example, if the application says, husband and wife…

Tim: Oh, okay.

Koki: …gay couples and lesbian couples can’t write it.

Tim: You’re talking about explaining the basics, but what sort of misunderstandings, what are the most common misunderstandings you see? Other than some of the administrative issues like what to fill in the form.

Koki: The way of thinking to our LGBT people are not right. For example, if we watch Japanese show, there is some transgender people in Japanese TV show. In our lecture we have a quiz, “Is it okay to say something like this to LGBT people?” Or, “Is it okay to say something like this to transgender people?” Then some people make mistakes, some people don’t know what the best answer is.

Tim: So, they’re basing their experience solely on what they see, these entertainers on TV.

Koki: Yeah, yeah.

Tim: I see, I see.

Koki: So, they have knowledge about LGBT based on TV shows or such things.

Tim: But the thing is, there is a very large number of gay people in Japan. In fact, last year Dentsu did a survey and it was 7.6% of all adult Japanese, identified as gay, bi or trans and that’s a really high number! I mean, that’s much higher than the States or countries in Europe. If so many in Japan are identifying as gay, why is there such a gap in the understanding?

Koki: I guess, even if it’s 7.6% of the people identify as LGBT people, but I don think they are open. Some of them are open, but most of them are open. Because, until this time there was some people who are open, really open and more and more people are getting open, but before 2015 for example, most of them are closed.

Tim: I think last year was a very important year for gay rights in Japan.

Koki: Yeah. I think so.

Tim: It’s amazing now how fast things are changing. So, as you mentioned before there were, a couple of wards in Tokyo now accept same sex marriage. And in some ways, it seems that Japan is becoming more progressive than America in this way. There was a –I forget his name at the moment- but a politician who called gays, I guess abnormal, best translation, and there was this public outcry against him and demands that he resign. So, it really seems like something big is about to change in Japan. What do you think triggered it? Why now is this change happening?

Koki: It’s partly because United States started to say, “Okay” for same sex marriage that made big waves in Japan too and the biggest new was Shibuya Partnership. After Shibuya Partnership, some companies for examples, Live Net Insurance companies started providing the insurance service for same sex couples. And GMO Internet did advertisement in Shibuya, big advertisements, showing that we are supporting LGBT people. So, there was some kind of movement after Shibuya Partnership.

Tim: Everyone always says Japan changes slowly, but it doesn’t really. When change starts to happen here it changes incredibly quickly.

Koki: Yeah.

Tim: It’s been a long time coming and now it’s just this tipping point where the LGBT community is becoming mainstream and acceptable. I’m just really curious, did there always have been, there’s been gay entertainers, there’s been gay cartoon characters, Japanese society didn’t have a, how can I put it, a particular dislike of homosexuality it was just sort of ignored, it seems like.

Koki: Historical, before Meji era there was Kagemajaya or even Kabuki. That was male male prostitute place in Japan in other era and kabuki used to be, there was male dancing in kabuki. So in Edo era or even when there is some generals having war inside Japan, some generals had the relationship with males too, not just women. So, in the historically there was gay relationships in Japan.

Tim: Edo period and before, gay relationships were very open and accepted.

Koki: Yeah.

Tim: So, was it the Meiji period when things changed?

Koki: In Meiji era, when Christianity came to Japan, the whole thing was changed and after that, still now. So, because of Christianity coming to Japan the way of thinking towards LGBT, or gay or lesbian, same sex love is changed.

Tim: But a very small percent of Japanese are Christian. In fact, there are more gays in Japan than there are Christians in Japan, I think.

Koki: I guess so.

Tim: So, it changed in the Meiji era and it’s just changing back now? All of a sudden?

Koki: Half of Japanese don’t care about gay guys or such guys, because historically it’s not said to be bad. When Christianity came to Japan, Japanese government made it illegal to have sex between male and male.

Tim: And that was on the late 1800s, during the Meji Restoration?

Koki: Yeah, Meiji Restoration.

Tim: There’s always been a gay rights movement in Japan, but I’d didn’t seem to be very active or very large. And, I’m curious was that just because it wasn’t very active or very large or just that the media didn’t cover it until very recently?

Koki: In my opinion, my impression was after Shibuya Partnership everything suddenly started.

Tim: It certainly looked like that. In a period of a couple of months, there were a lot of companies making announcements, other areas in Japan announced that they too were registering same sex marriages. Let me ask you about you, I about you. I always ask people what their parents thought when they were first starting a company, but I guess I’ve got almost a two-part question for you. When you first came out to your family, what was their reaction?

Koki: Her first reaction when I said that I am gay to my mother, firstly, I said, I tested a little bit like saying, “ I’m gay!”

Tim: Just to see if she had noticed?

Koki: Seeing how would she react.

Tim: How did she react?

Koki: How did she react? She said something like, “Eeh. No, don’t say that. It’s disgusting.” Or something like that

Tim: Oh.

Koki: Yeah. She said “It’s disgusting.” So, I felt maybe it’s not time to come out to her now. And at that time, I was a college student too, I thought maybe I should come out to her when I graduate because I have the responsibility to explain what job I will take. So, at that time I just said that and nothing happened. And, she didn’t talk about that and I didn’t talk about that for a long time and when I graduated she asked me, “What will you do after you graduate?” I already decided to start this company Letibee at that time, so I just said, “Oh I will start Letibee, because I’m gay”

Tim: So, she had to suddenly accept that fact that both that you were gay and you were going to start a company and not get a proper job.

Koki: Yeah and I won’t go to the big company like Toyota.

Tim: It must have been kind of tough for your mom to absorb all at once.

Koki: Yeah. She was surprised like, “Eeh? Eeh?”

Tim: So, is it possible now for a person to go into a like, a Toyota or a Mitsubishi and be openly gay and have a career? Is that still too progressive for Japan?

Koki: I think it’s still progressive. Some of my friends are open in their company, but I have some friends who are closed in their company too. And the reason they are closed is it affects your career.

Tim: Yeah.

Koki: Yeah. Its partly because of career and partly because they saw another LGBT person in Japan where said badly or they heard something bad about LGBT guy.

Tim: Well, I guess the business, the commerce, the laws can change very quickly, but it takes a very long time for people’s individual attitudes to change.

Koki: Yeah, like acceptance towards LGBT people.

Tim: What were your friends’ reactions? Well, in college I assume most of your friends knew you were gay.

Koki: Yeah, in college…

Tim: Because in college it’s very easy to be open.

Koki: Yeah, it’s easy. Especially, I was in Keio University that is really open place.

Tim: That campus and Keio University in general, seems to have a tremendous number of startup founders that are graduating.

Koki: Oh really?

Tim: Yeah.

Koki: Yeah, especially people graduated from Keio FSC, many startup founders.

Tim: So, I guess your friends were mostly supportive of your idea.

Koki: Yeah, most of them.

Tim: Starting a company seems to be becoming more and more mainstream and more and more accepted in Japan.

Koki: Yes. I’ve heard from the senior Keio FSC, some of them saying that it used to be more passionate in Keio FSC. Now, more and more students who are going to a big company.

Tim: Oh really?

Koki: I’ve heard.

Tim: Innovation itself requires people to think differently, by definition. So, do you think the fact that you were sort of outside the mainstream of society, has helped think creatively and helped you in your startup?

Koki: Yeah. Maybe. I was always think that something that is in Japanese society is it really right or not? I was always thinking, for example, students are going to have interview with companies when they’re in third year, is it really the thing that you want to do? For me, it looked like sheep, a group of sheep, looks like almost the same and feeling scared a little bit.

Tim: Well, that makes sense and it makes you more willing to question why you’re doing things and why other people are doing things

Koki: Yeah. I have my boyfriend, he is from America, and sometimes he told me that you have good questions. Questions against something that is said to be right or is said to be normal.

Tim: The Letibee team is a mixed team as well, right? I mean, you’ve got Japanese, you have westerners on the team.

Koki: Yes.

Tim: I’ve heard both that that some times can be an advantage and sometimes a disadvantage. How is that working out? Do you think it’s an advantage or disadvantage?

Koki: So far I feel it’s just an advantage. All of them can speak English, so there is no problem about English. And, he is a really professional engineer coming from London. He has opinions about, whenever he tells me about what startup situation was in London, it helps me about thinking what we should do. And, one disadvantage could be, sometimes I think we have to think about what’s normal in Japan.

Tim: So, sometimes it gets too far?

Koki: Yeah, like sometimes to far. Or, for example, if you get funding like, 10 million dollars for Series A.

Tim: Wow, that’s a pretty good funding.

Koki: Yes, pretty good funding. But sometimes, like CrunchBase or something like that, I’m checking CrunchBase everyday and sometimes…

Tim: Don’t check CrunchBase everyday! Don’t do that! You’ll drive yourself crazy! Anyway…

Koki: There is like $10,000,000 or something like that. Sometimes with $1,000,000, we once decided, “Let’s get 10,000,000!” And brought it to our adviser at Adventure Funding and I remember she told me, “What are you talking about?”

Tim: Yeah, I know what you mean a $10,000,000 Series A…well certainly at the stage you’re at now would be very difficult to do.

Koki: Yeah it would be very difficult. Usually Series A in Japan is $1,000,000 to $1.5 million.

Tim: One of the things that I find most encouraging about the sudden acceptance of gays in Japan, is I think it’s does dovetail with startups and the importance of startups, in that Japan has always been a very conformist society. People are expected to act a certain way, to dress a certain way in certain situations, and there’s almost a rule book to life, right? In Japan.

Koki: Yeah, yeah.

Tim: And if you follow those rules, life is pretty smooth. But, traditionally Japanese have not been terribly accepting of people that don’t follow those rules. But, I think for any startup ecosystem to really survive, to really become powerful, it requires accepting people who are thinking differently, and behaving differently and saying that, “ We don’t want to follow these rules.”

Koki: In startups?

Tim: In startups. But, not just in startups, you can’t limit it just to startups. I don’t think it’s possible to say, “Okay, we’re going to be open and accepting about economic ideas, but not about political ideas or social ideas.” Perhaps, there is something changing in Japan, where suddenly people are becoming open to startup ideas, they’re becoming open to people who are thinking differently about business processes, thinking differently about lifestyle choices, you know. Maybe the change is something bigger than just the startup economics or just the companies trying to reach the gay community?

Koki: Maybe it’s the situation of a startup, it’s getting different from the previous time I guess.

Tim: So, last year was a huge year in terms of gay rights in Japan. How do you see things changing moving forward? Is this trend going to continue? What’s the next big steps and changes you see?

Koki: I think there are two cases in 2016 or in the future. One case is not thought about LGBT anymore. In 2015 there is criticism about the wave of LGBT, that it is kind of trend.

Tim: You mean there was criticism from the gay community saying they don’t mean it? Or, there was criticism from other people saying that it’s not important? Who was criticizing?

Koki: Especially from the LGBT community, like… Because Shibuya Partnership doesn’t have legal effect.

Tim: Well, that’s true, but Shibuya did all it could, that it had the authority to do, right?

Koki: Yeah, Shibuya say that we will accept gay rights or same sex right and there were other places said the same things. But at the same time, it is not enough. It is just saying that we will accept that and there is little legal effect. But, almost no legal effect to gay couples or lesbian couples. For example, if they tried to rent the room, if the landlord said, “No, because you are gay guys.” Then what Shibuya can do is to list up the landlord’s name on Shibuya homepage or something like that, not saying that you shouldn’t do it.

Tim: It’s an important symbol but it doesn’t have any real…

Koki: Yeah, yeah. That’s the main concern, it’s like symbol, but not effective.

Tim: Do you think we’ll see actual laws passed?

Koki: Yeah, that’s the second case. It is said that we have to think more about LGBT people. The day before yesterday the leader of Democratic Party, Jimin-To in Japan said that they will start an LGBT project team inside their party.

Tim: Really?

Koki: Yeah.

Tim: Well, that’s… and for listeners overseas, that the Conservative party, that is a very Conservative party in Japan. So, that’s a pretty positive sign.

Koki: Yeah. In the middle of the Democratic Party there was a group that was studying about sexual minority, started from 2013, but the day before yesterday that group was, the whole party that we would start the project team of LGBT so that’s really —

Tim: Okay. That’s very promising.

Koki: Yeah, promising. So, that’s the second case, with the Democratic Party we’ll think about LGBT issues more and at Tokyo or at such bigger prefecture, we’ll think about LGBT issues more and LGBT rights will progress more and more and that’s the second case.

Tim: Passing laws that guarantee real protection is important, but I think even having the LDP speaking positively about gay rights and the LGBT community in Japan would have a huge influence over people’s mindset.

Koki: Yeah, I think so.

Tim: Because, that’s.., it’s hard to get too much more conservative!

Koki: When same sex partnership started last year, the prime minster Abe was asked, “What do you think?” He said, “We should be serious.”

Tim: So, he said he should be serious in supporting gay rights?

Koki: Not supporting and not denying.

Tim: That sounds like a very political thing to say.

Koki: Yeah, it’s like Abe. And, in 2014 an LGBT organization asked each parties, what do they think about gay rights? At that time LDP told that, “We don’t have to think about same sex marriage rights.” In 2014 they said, “We don’t have to think about that.” And in 2015, when they asked, they said, ”We should be serious.”

Tim: Japan changes quickly.

Koki: Yes.

Tim: Do you plan on having Letibee, be part of this social movement as well? Or, is that something, that for the sake of the business, you stay out of the politics?

Koki: If LGBT rights are accepted by the government and if there is law about LGBT people then that means, that some companies can think that we should accept it, then the market of LGBT will grow because of that, because companies will–

Tim: That’s true, that’s true, yeah.

Koki: So, we should think about political things to grow.

Tim: That makes sense, yeah. In your case they’re not really separate it directly affects your bottom line. The more companies that aware of it and the more people who decide to be open about it, it will boost your business from both the supply and the demand side.

Koki: Yes. So, what we can do is, to collect LGBT users using our media website and app. So, we can provide our user data to government to have conversations based on data of LGBT people.

Tim: Things certainly look optimistic for gay rights in Japan right now and you guys certainly seem very well positioned and your timing seems to be excellent.

Koki: Yeah, our timing. Yeah, I think so.

Tim: Well, listen before we wrap up, is there anything else that you want to talk about?

Koki: What’s the difference between Japan and other startups industries, especially in United States and European countries?

Tim: I think the gap between Japanese startup founders and American startup founders is not as big as it used to be, but the gap between American VCs and Japanese VCs is huge.

Koki: Oh, really?

Tim: Yeah. I think another big difference in Japan that makes it kind of particularly tricky for startups, especially B2B startups which is what I always do, is Japanese companies don’t like to try new things. There’s not a lot of early adopters in Japan. On the consumer side sure; Japanese consumers will try new things very quickly, but in general like businesses, no, very slow to change, it’s very conservative.

Koki: Yeah, that’s the criticism in some consumers’ opinion. Sometimes I’ve heard –

Tim: It’s not really criticism, it’s just the way it is. You know, I can’t change that so I just have to work with it.

Koki: Yeah, that’s right.

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

Koki: Yeah, me too.

And we’re back. Long time listeners know that the axiom that Japan changes slowly is a myth. Oh, it might take a while for the pressure to change to build up, but once the change begins, it happens extremely quickly.

2015 was a year of incredibly rapid change for gay rights in Japan and 2016 is looking to be a year of even more change. Of course, the success of Letibee and Nesty are a separate matter. Content sites and community portals are extremely hard to make profitable and yet, I have to admit that Koki’s timing and positioning are almost perfect here. He seems to be filling a genuine vacuum in the social media space and Letibee could well find themselves as the trusted gateway to a highly desirable consumer segment. And, if they make that happen, well, we’ll be hearing a lot more from Koki and Letibee in the future.

If you’ve got a story about the treatment of gays or any minority group really in Japan, Koki and I would love to hear about it. So, come by disruptingjapan.com/show040 and let us know what you think. And when you drop by, you’ll find all the links and sites that Koki and I talked about and much, much more in the resources section of the post. 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.