Too many things that are labeled as “cultural differences” have much simpler explanations. There are perfectly rational (and even mathematical) reasons why we have not seen a lot of entrepreneurship in Japan over the last 50 years, why we are starting to see a lot more of if now, and why we are likely to see an explosion of Japanese startups in the coming decade.

In this episode, we look what happens in Japan when the gatekeepers who stand between the creative people and the broader public are removed. It happened before in movies and anime and it is just beginning to happen now with startups.

The current unleashing of creativity, the changing nature of risk, and the introduction of repeatable, documented startup processes are coming together to change the face of innovation in Japan.

Let me explain how…

Podcast: Play in new window | Download | Embed

Subscribe: Google Podcasts | RSS | More

Links from the Founder

 Leave a comment

Transcript from Japan

Once again, I’ve got a special show for you today. There will be no guests, no wine, no playful banter with someone speaking English as a second language. Today it’s just you and me. For the next 20 minutes I’ll be whispering i your ear about a topic that well, is a lot more personal than most of the topics we cover on Disrupting Japan.

There will probably be more than a few things that you probably don’t agree with, but hey that’s what these special episodes, and I suppose our comments section, are for.

You know, when I started planning for this podcast, I had a good and simple idea.  And like most of my good and simple ideas, they never work out the way I plan. They always, work out of course, they just never work out the way I plan.

This episode is no different. I intended this to be a question and answer show. A show where I take the time to answer some of the most common, and most confusing questions I get asked about the show.  Some of them lighthearted, some serious, most of them pretty interesting.

But, as I started drafting the show notes, my answer to one particular question began getting longer and longer. And it started to became more and more significant until it became clear that the answer to this particular questions would not only consume the entire show, but also explain one of the reasons I am so optimistic about the future of Japan.

The question itself seems trivial. The sort of thing that might get thrown around in conversation when you don’t feel like talking about the weather. The odd thing is, however, that any foreigners living in Japan find the question, however, innocently asked, to be extremely irritating. A few even get offended at being asked.

When I tried to put together a complete answer to the question, however, like so many of the seemingly simple issues we deal with on Disrupting Japan. Once I I began pulling on that thread more and more cloth kept unraveling until something that started out quite mundane turned into something, at least for me, rather profound. 

Actually, a lot of Japan stories work out that way. They start out simple and wind up in a very different, and better place. Hopefully we’ll have a lot of fun during the trip.

The question is “Why do you stay in Japan?”

Now, most of the foreign residents in Japan listening to this winced just now. But to my overseas listeners, and probably my Japanese listeners as well, I really need to explain why many foreigners find that questions so annoying and then I can get on with answering it.

I will always be an outsider in Japan. Don’t get me wrong, I’ve started businesses, I have a lot a close friends, and a large circle of personal and business friends who I enjoy spending time with and who enjoy spending time with me. But social networks run very deep in Japan. Your school. Your extended family. Your company. Someone moving to Japan as an adult will simply not have these connections. They won’t really every completely fit into the system. You’ll have friends, lovers, colleagues, live goes on normally, but every once in a while, you’ll find yourself on the outside because you don’t fit into any of the existing circles.

For many westerners, these occasional reminders that they don’t really fit in are, well painful. And understandably so. And these individuals, when they are asked “Why do you stay in Japan.” Even when that question is asked innocently, as it almost always is. They just hear a reminder that they don’t fit in and are expected to leave Japan one day.

Now, in my opinion, not really fitting in has a definite upside. You are freed from the obligations that being part of all these social circles involve, and those obligations can be substantial. Not really fitting into one specific social circles allows you to move between them much more easily than Japanese can, and gives me great latitude to be, shall we say, eccentric. Most Japanese expect us foreigners to behave slightly differently and are often quite disappointed and a bit suspicious when we do not.

In fact, over the years, I’ve noticed that the westerners who try the hardest to fit in, the ones that really feel a need to be accepted, are the ones that have the hardest time in Japan. I don’t mean simple common sense things like learning the language and understanding and following basic business and social etiquette. You can’t really function in Japan without that.

No, I mean the foreigners who claim that sitting in seize is more conformable than sitting in a chair, who insist on eating only Japanese food and lament that young Japanese today simply can’t speak formal Japanese correctly. Which is actually true, and it’s is a very common complaint among Japanese businessmen in their 60s, but it seems odd coming form a Westerner in their 20s. 

No, the whole nation of Japan is like a small town in that way.

Your parents might move there when you are five years old. You can live your whole life there. Make friends, have a family, become a valued and respected member of the community, but even in your 60s or 70s you’ll occasionally hear people remark “He’s a great guy, but he’s not really from here.”

I hope it’s obvious that none of this is criticism. Unless you’ve grown up in Japan, this is just the way things are, and I think that’s fine.

Now, back to why I stay in Japan. The short answer is that until very recently, my decision to live in Japan had never been about Japan itself. Every time I considered moving back the the US some new project would arise or some new business opportunity would present itself and I’d get excited about it and stay.

Trust be told, I’ve always had a bit of a love-hate relationship with Japan, and in fact, I’ve left Japan for good twice. But I always ended up back in Tokyo.

In fact, earlier this year I had a great offer in San Francisco, but I decided to stay. This time, because of what I see in the country. For reasons we talked about many times on this show, I think the next five years in Japan are going to be far more interesting than the next five years in San Francisco.

But it’s not just the changing attitudes towards risk and startups. It’s not simply the huge uptick in starts and funding. It’s not simply that we finally have successful Japanese entrepreneurs investing in and mentoring the next generation of startup founders.

Those are all important trends that make me hugely optimistic about the future of Japan. The disrupting is coming, but a few years ago, I saw something that convinced me of something equally important. That Japan will be able to harness this disruption and turn it into something good for society as a whole. Those who study history know that economic disruption is not always a good thing.

On March 11, 2011 we saw another kind of disruption when a massive 9.0 earthquake and several large aftershocks slammed into Japan. What I saw in Tokyo that afternoon demonstrated the absolute best aspects of both Japanese society and the Japanese people themselves.

I was working at Zurich Financial at the time. I was walking down a long, narrow hallway and was in mid-stride when the first quake his. It tilted me off my leg an into the right wall and then into the left and the floor as I tried to regain my balance.

The entire hallway was moving side-to-side and actually twisting a but. I walk-bounced down the length of it like some kind of third-rate carnival ride to get to the main room, out the fire exit and down the stairs.

Like everyone living in Japan, I’ve been in lot of earthquakes, and even a few pretty big ones. They are not exactly pleasant, but they are not usually particularly scary either.  We all milled about outside the building talking and smoking cigarettes. Waiting for the announcement that it was clear to go back in the office and get back to work.

A few of my Japanese co-workers were wearing white hard-hats. We had been issued these hats and some other safety equipment when we joined the firm. I considered it a curiosity at the time and had completely forgotten about it until this moment. Zurich would undoubtedly run a series of disaster preparednesses inspections once the danger passed and things returned to normal.

We had just been cleared to go back in when the aftershocks began hit.

You know, it’s funny, you really don’t know big an earthquake is when you are in the middle of it. But as we all watched the big plate-glass display windows on the ground floor begin to twist back and forth, the decision was made to move to the formal evacuation area. A handful of people in our group knew where it was, and the rest of us, perhaps a 150 people, followed them.

The company clearly had a formal emergency plan in place, but none of us really knew exactly what it was, and that fine.  An informal network of chatter (and a bit of gossip) soon confirmed that everyone was out of the building and accounted for. A few of the foreign managers had worked themselves into a near panic trying to take charge of the situation, but overall everyone was surprisingly calm. Not a relaxed calm. It was more of a resigned calm. This was the situation, and we had to make the best out of it.

The weather was clear and warm, so things could have been worse.

Months before I had teased one of my co-workers for buying a huge piece of equipment that allowed her to receive network TV stations on her phone. Turns out she made the right call. With phone and mobile networks overloaded and useless, this silly-looking device was our only source of information as we waited in the evacuation area.

We began to understand how bad things really were. But we wouldn’t really know the full extent of the damage for several days.

The damage up North was horrible, Here in Tokyo, people were shaken up. You could see a fair amount of property damage, but for the most part the building were all still standing and the roads were clear.

At last Zurich decided to send everyone home. It was a sensible decision, of course, but it was really the start of another problem.

You see, not only were the phone and mobile networks shut down, but so was all public transportation. No trains. No busses. The taxi drivers had already headed home to be with their own families hours ago. If you had a private car, you were in for a once-in-a-lifetime traffic jam, but you would get home OK. But really, not many people in Tokyo drive to work.

No. My colleges and I, and 8 million other people, set out for home on foot. This wan’t that big a deal for me, actually. I lived about 11 kilometers (about 6 miles) from the office, and more than a decade of riding a motorcycle in Tokyo had taught me all the surface roads. I know where I’m going and will be back and able to check on my wife Ami (God, I hope she’s was home, or at least able to get back) in a few hours.

Almost everyone else, unfortunately, had much further to go. Two-hour train commutes into Tokyo are fairly common, so a large number of people would not be arriving home until early the next morning.

My colleges and I slowly scattered. Each of us heading in whatever direction we figured would take us home. The sidewalks were packed and become more and more crowded the closer you got the major streets and large intersections.

I few people whipped by my on new bicycles. Clever bastards! When public transpiration shut down, the quick-witted ran to the store and bought a bicycle. They’ll be getting home quickly, and the stores have long-since sold out.

Oh well, I’ll get home soon enough. I just wish I could contact Ami and make sure everything is OK. Phone and networks down. I can’t call. I can’t text. But I keep trying. Yeah, I know that’s just making it worse. I don’t care.

Nishi-azabu crossing is one of the largest intersections in this part of Tokyo and it’s about half-way home. As I approached it, I noticed something astounding. Or rather, it finally dawned on my how astounding what I was seeing all-along actually was.

The sidewalks are really packed at this point. A mass of humanity all trying to make our way home. You could see the stress on everyone’s face. No one really knew what was going on, or if their loved ones were safe.

Despite all this there was no yelling. No pushing. People waiting impatiently at crosswalks for the signals to change, but they waited. People are queued up in grocery stores and convenience stores to buy food, water, toilet paper…well everything really.  But there’s no shoving. No real signs of anger or hostility. Everyone waits their turn, pays for their goods and continues on their way home.

After one of the worst disasters in decades, 8 million people were calmly walking out of Tokyo and going home.

I crossed the intersection and continued. My phone vibrates. A text reply from Ami. Looks like a few packets got through. She’s fine. Everyone’s fine. A couple of bookcases knocked over, some broken glass. That sort of thing. A small tiki I had bought in Hawaii had been utterly destroyed. Hummm. Ami always hated that tiki.

I’m less than 30 minutes from home and about to cross Tengenji. Someone’s trying to figure out how to get to Roppongi-dori, so I stop and explain.

“Just go down this road to — I think — the third stop lights. It’s a huge street with the expressway above it. You’ll see it.”

People began to queue. “Shinagawa? That’s pretty far. But the simplest way is to probably keep walking down this road and then follow the street signs. You’ll see them at the next big intersection.  It’s not the most direct way, but you wont get lost.

See mom. Riding a motorcycle around Tokyo all those years turned out to be a good thing after all.

I stayed there giving directions for about 20 minutes, until people stopped asking. Everyone was anxious and stressed, but unfailingly polite. No one at the time (including me) seemed to think it odd that a blue-eyed Westerner was the one giving directions. Strange thing was that almost everyone seemed to be headed in the right direction already.

I arrived home and everyone was fine. Shaken up, but fine. In fact, it turned out that almost everything in Tokyo was going to be fine. The real damage, where things were decidedly not fine was up North.

It took me a day or two for what I saw in Tokyo to really sink in. After one of the worst disasters in decades, with transportation out, communications off-line, and the entire city shutting down. There was no yelling, no fighting, no stealing, no pushing.  Eight million people calmly walked out of Tokyo and went home.

It would not have gone down like that anywhere else on the planet.

It’s not simply that the social order did not break down. I mean, there was no one giving instructions and no one was looking for orders to follow. The police were active, of course, but they were focused on helping people who were stranded in trains and elevators that lost power when the quake hit, directing traffic and pointing lost pedestrians in the right direction.

It was an amazing display, and perhaps a unique one, of the collective understanding that we are all in this terrible situation together, and we’ll all better just make this work.

I realized that Japan would not only get through this earthquake but that somehow despite Japan’s current economic problems, and there are a lot of them, that Japan would make it work. Japan will be OK.

There is no doubt that a lot of things need to change before Japan can once again become a global leader in growth and innovation. But those who say that Japan is too risk-averse and too hostile towards startups simply don’t see the changes that are already taking place here.

But as much as we love to talk about disruptive technologies, disruption alone is not enough to remake an economy. Disruption tears down the old and replaces it with something smaller and more efficient, but society as a whole needs to coalesce around the new.

The transformation required is something that will radically disrupt the way business is done, and the way technologies are adopted, but maintains a social cohesion, that does not forget that society is made up of individuals and that most of those individuals need to benefit from the economic disruption.

It seems like pointless and contradictory goals to those immersed in Silicon Vally or Wall Street culture, but this is how things will likely play out in Japan, and we are already seeing the beginnings. Japan will do very well and the next few decades, and as I mentioned before, the next five years in Japan are going to be far more interesting than the next five years in San Francisco, or probably anywhere else. 

And that’s why I stay in Japan.

It’s exciting and the startup and investment opportunities are huge here.

Japan is a very comfortable place to live and it’s easy to make friends. And sure, I’ll always be a bit of an outsider here, and that’s fine with me. Those deep social networks for many foreigners find so frustrating, and which sometimes slow down the adoption of new technologies.  Is exactly what will enable Japan to survive , but to thrive in the coming period of Disrupting Japan.

==

If you were in Japan during the earthquake (or if you want to take me to task, for some of the many things I left out) please drop by the site and tell your story at disruppringjapan.com/show031. We’d love to hear form you.

And if you get a chance please leave us an honest review on iTunes, it’s really the best way you can support the show and also really help us get the word out. 

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 listing to Disrupting Japan.