Startups exist to develop new solutions to problems.

But many of society’s biggest problems fall outside traditional startup business models.

Today we explore why that is, and how it might be changed as we sit down with Robin Lewis, co-founder of Mymizu, a startup focused on reducing plastic waste by encouraging reuse.

We take a deep dive into possible monetization strategies, why startups should be better at solving social problems than non-profits, and we discuss a possible roadmap for a middle path between startups and non-profits.

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

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Show Notes

  • The Japanese middle-ground between NGOs and for-profit startups
  • The hidden strategy behind beach cleanup programs
  • Mymizu’s current business model
  • The challenge of mixing environmental and social sustainability
  • When Tim became “The Destroyer of Dreams”
  • The unexpected (positive ) impacts of COVID-19
  • Why startups  should be able to do more social good than NGOs
  • How bottled water breaks economic theory
  • What happened to Japanese water fountains
  • One common recycling scam in Japan
  • A roadmap for the middle path between NGO and startup

 

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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.

Water, it’s one of the most common molecules in the universe and you personally are made up of about 60% water. There are a number of significant problems today that revolve around water but water is rarely the focus for startups, and today, we’re going to explore why that is and why that might be changing.

Today, we sit down in a properly socially distanced matter and talk with Robin Lewis, co-founder of Mymizu. The Mymizu app enables you to find places to refill your water bottles all over Japan, and the company itself exists in a very interesting space between nonprofit and a regular for profit company.

Robin and his team are already making an impact in Japan, and we have a deep dive into how startups can be a force to achieve meaningful social change. The challenges of balancing the need for revenues with staying true to your social mission, and we brainstorm about possible monetization strategies that could enable that, and also, you’ll learn something that will probably really piss you off about how recycling is done in Japan.

But you know, Robin tells that story much better than I can, so let’s get right to the interview.

Interview

Tim: So I’m sitting here with Robin Lewis, the co-founder of Mymizu, a water refilling app. Thanks for sitting down with me.

Robin Lewis: Thanks so much for having me, Tim, I’m excited to be here.

Tim: Actually, you can explain Mymizu much better than I can, so what is Mymizu exactly?

Robin: Mymizu, what we’re doing is we’re on a mission to help people live more sustainably, starting with plastic bottles. We accomplish that in, I’d say, four main ways. First, we have the app which you mentioned and it’s essentially a tool where you can find 200,000 locations around the world where you can take your reusable bottle and refill that for free, and so this includes public water fountains like in train station, in parks, and so on, but also, we have this network of what we call ‘refill partners,’ this is cafes, shops, hotels, and other businesses where you can walk in, you can get your water, and then walk out. It’s that simple.

Tim: So tell me about your customers on both sides, so what kind of shops are acting as these free refill stations and who are your users? Are they a particular demographic or particular age?

Robin: The main businesses that are passerby refill network as we call it, it really ranges from tiny mom-and-pop stores all the way to really big brands, so it really depends, as I say, we have everything from cafés, restaurants, hotels, fitness centers, tourist information places, so there is a huge range.

Tim: For the refill partners, why are they on the app? Are they hoping to get additional traffic or they’re concerned about single used plastics and they want to contribute to a solution? Why are they signing up?

Robin: So our pitch to the refill network partners is that it’s a really simple way to contribute to the environment. It also, as you say, brings in foot traffic. It’s a great way to get people through the door smelling the coffee, seeing the products, whatever it is, and that’s the first step to building a new relationship with potential customers, so it’s really simple. It’s free and it’s a great way to get new customers as well.

Tim: Yeah, actually, I want to really dig into the business model in just a minute, but just quickly, you guys, you’re not quite an NGO, you’re not quite a for-profit, you are sort of a uniquely Japanese corporate structure, right?

Robin: So in terms of how we work, we consider ourselves a full purpose organization and as you said, we are not a for-profit kabushikigaisha structure. we operate under what’s called a general Incorporated Association which is closer to the nonprofit side and in terms of philosophy, we are really trying to ensure that we can continue our work and scale up to a social business model, so we don’t necessarily rely on donations, we really have these kind of various projects that bring in revenue to ensure that we can continue what we do.

Tim: Okay, and I want to dig into the business model specifically in just a minute, but before that, I want to back up. You and your co-founder Mariko founded Mymizu pretty recently, you just launched it last year, and I heard that it was based on a trip you took to Okinawa, like the year before or something like that, right?

Robin: That’s right, so the story of Mymizu began in April 2018 and my co-founder Mariko and I were on a trip to Okinawa, just one of my favorite places in the world, and we are taking a walk along the beach one day and when we discovered this quite significant pile of rubbish that had floated in from the ocean – fishing gear, flip-flops, cosmetics, packages, all kinds of stuff, but the biggest culprit we found was actually pet bottles, and so kind of the pin dropped because we thought, hang on, there are so many pet bottles, many of them bottles of water in a country where we can drink the water around us. We are so fortunate to be in this extremely good situation with safe and drinkable water, so we thought, okay, we gotta fix this problem at the source.

Tim: Was that the startup or part of the open loop initiative where you were doing a lot of beach cleanups and things?

Robin: Yeah, I mean, at that point, we thought, okay, we have got to do at least two things. One is tackle the issue at the source, let’s ensure that we replace the current system in terms of buying bottled water, and then secondly, let’s get people together, build community, and for example, do beach cleans where we can actually remove the litter from the rivers, from the oceans, and also educate people, engage people, and create movement.

Tim: I mean, that’s awesome, but cleaning the beaches with the trash, it’s like Sisyphus rolling the stone up the hill, I mean, the trash washes in with every tide from God knows where.

Robin: No, I agree. I am under no impression that we could clean up the entire world, that’s a huge task and that’s why our main focus is really this reduction component, let’s fundamentally reduce the usage of plastic, but I think the power of, for example, of beach cleans is that it’s a great way to engage people and for people to see the impact with their own eyes, and that helps shift the behavior on a daily basis. I think if you sit in a classroom and you watch videos and you hear people talk, it’s one thing, but if you go to the beach, the river and you see all this crap in the oceans, then it really hits you, and after you spend an hour bending over getting sweaty and picking up these bits of cigarette butts and whatnot, you remember that, and it has an impact.

Tim: Okay, so the purpose of getting 30 people together to go clean up the beach is not so much just to clean up that particular beach but to motivate people to change and support environmentally friendly policies and vote for politicians who are supporting environmentally friendly policies as well?

Robin: I would say that, for me, is kind of the bigger goal, but I think the picking up of trash is a great way of visualizing the impact of people working together .

Tim: Awesome. Well, let’s dig into the business model. I mean, it’s easy to see why Mymizu is getting so much attention and you’ve been earning a lot of really well-deserved awards, but what is the business model? I mean, the app is free, the stores don’t pay for the foot traffic and the water is free, so how are you making money on this?

Robin: You know, it’s funny, I think I get asked this question every single day.

Tim: It’s not obvious.

Robin: No, and I think if you Google Mymizu in Japanese, the first thing that comes up is Mymizu, and then business model, so I think they’re really curious.

So to break it down, and I should be perfectly honest from the beginning, we’ve had to shift many times and we were kind of making things up as we go, but I think we have finally found a number of ways to generate revenue to continue what we are doing. So firstly, it’s our work with corporates. We do provide now a paid version of Mymizu, it’s called the Mymizu Challenge for companies. We currently have a company with, I think, 70,000 employees who are using the Mymizu platform, but the difference here is that you can create teams within your organization, so you have the HR division versus the tech division, versus sales division and they are all competing to see how many plastic bottles they can save by refilling their bottles, so it’s team building, it’s corporate social responsibility, and the best thing is we can also visualize the impact of each division and the company as a whole. So that is now a product that we are offering as a paid service. We also do other work with corporates including joint communications, joint product development, so on, all around sustainability, and so that’s kind of the corporate bucket.

The second bucket is we provide services to local governments. We can essentially work with local governments like Kobe who is one of our first joint projects where we are essentially increasing the number of referral points, we are helping them tackle pain points including plastic waste. It’s really expensive to get rid of plastic waste and also, the issue of, for example, dehydration and heatstroke, every year, we are getting more and more people here or going in a hospital and some of them are passing away because it’s getting hot and they don’t have enough water in their system, so we are now working with local governments as well.

And in the third bucket, this is the most simple one, we sell products like bottles, so we have Mymizu bottles available for sale on our online store and also, we have retail partners where we sell bottles in the physical store as well.

Tim: We’ll definitely put some links to that on the show notes. I see it is this classic conflict between NGO revenue streams and more traditional for-profit revenue streams. It sounds like you guys are sort of in the middle there.

Robin: Yeah, it’s funny, if I can go on a bit of a story, when I studied at university, I studied business and I remember that everything was about profit maximization, right? Everything was about maximizing shareholder value and of course, that makes sense, but to me, I’m thinking, like, surely, there sure is more to what companies provide to society. It’s not just about externalities like polluting, all this stuff, and then internalizing all the profit. Surely, there is a component where companies can actively solve social environmental problems.

Tim: That concept of maximizing shareholder returns is actually a pretty new concept in corporate governments. Up until the 70s, that was not, people didn’t think that way. The idea was that companies did have a responsibility to the community. So historically speaking, a relatively new development, and one that hasn’t necessarily taken route outside of the US and some of the Western world.

Robin: well, interestingly, I think Japan actually has a really unique model of responsible business, so there’s this concept called sanpo-yoshi, traditionally, this is taking back to the Meiji and Edo periods, there was a group of merchants called the oomi-chonin, the oomi merchants, with every transaction they made, they would ensure that there’s a value added to the buyer, the seller, and society. It’s a very kind of similar model to what we hear today about triple bottom line, all these things, so Japan is actually a very responsible business environment, I believe.

Tim: I think so as well, but yeah, I mean, it is a challenge and I think, I work with a number of social impact startups and it always is that challenge between environmental or mission sustainability and business sustainability. I worked in the energy industry for a while and very frequently, companies will hit a point where it’s like, well, if we turn left a little bit here, we could make a whole lot more money but we have to leave this social impact thing kind of behind and it’s challenging.

Robin: Yeah. I mean, the whole kind of social entrepreneurship or social business ecosystem, in Japan specifically, I think it’s really growing quite significantly. I mean, you’re seeing more and more accelerators, you see more and more investment, you see more and more entrepreneurs who are primarily tackling social problems, but of course, they have to generate profit and whatnot as well, so this whole purpose and profit intersection, I think, is growing.

Tim: It is, it is, but I’ve got to say a lot, so I mentored a lot of those accelerators and I always feel, I have a love-hate relationship doing it. I mean, I love interacting with startup founders almost in any circumstances but I’m always the guy they bring in to talking about, like, pricing and business models, and usually, they’re like university students who have gotten all of this validation that they’re doing good for society and everyone’s like, “Yeah, you should do that,” and I’m like the destroyer of dreams saying like, no, that’s not going to work, no one’s going to pay for that. It’s like, have you talked to people who told you they’re paying that? Then, they’re not going to pay for it. It’s hard.

Robin: But that reality check is also really, really important, right? I mean, I think we’ve had several people tell us that as well.

Tim: Well, yeah.

Robin: And we’re somehow still around, so I think it’s important.

Tim: I don’t know, I mean, there’s, do you want to brainstorm monetization strategies? I’m happy to.

Robin: Now?

Tim: Yeah, why not?

Robin: I’m always happy to have feedback, advice, ideas so clear, I’m more than happy.

Tim: Yeah, it’s just the two of us here, so go ahead. No, no, just off the top of my head, I’d say you need to look for where that information is valuable, so I’d say anything like maybe international sporting events, like when they had the rugby world cup or anytime you get a lot of travelers coming into a small area or coming into a city, the host of the event might pay for Mymizu and there’s chances to tie in with the event too with bottles and everything, right? And you might get venues that are actually willing to be part of the particular promotion.

Cities, actually, might pay yearly licenses to have it done all over a given city, and then you could actually provide data to them on, it’s a mix of public and private use, but I’m sure they’d want to have the data of where people are filling up so they’d know where to put water fountains, maybe?

Robin: This is actually an area we’ve been exploring. I mentioned that we’ve been working with local governments and we have had these kind of ideas. I would say it’s maybe a bit of a longer term project, but it’s definitely something that we’re considering.

Another thing we look at is also, for example, I’m not a tech guy and I can’t speak too much in detail to this but for example, the idea of making an API where we can share our data, we have quite a vast database of drinkable water, and so for example, having that connect with running apps, with cycling apps, with other apps where people need to hydrate as they’re out and about, that can be an interesting idea and we’re currently exploring that.

Tim: Actually, there’s a couple of towns that I know are making a real push towards inbound tourism for cycling and hiking, and has that whole eco-consciousness that would probably be really good to partner with and done right, I bet they’d pay for that.

Robin: I’d love to give it a shot.

Tim: I think there is a monetization model that you could stay true to your mission and still have a more sustainable business model.

Robin: Sure, so right now, one of our key focus areas when we’re talking about long term revenue and so on, is the Mymizu Challenge which is the paid version of Mymizu for companies, and I’d say the beauty of that is we get to work with big companies with lots of employees which means we’re automatically reaching more people and we’re helping them reduce their plastic footprint while also having a sustainable source of revenue. So it’s not just like, hey, we’re going to sell whatever and it’s not going to have a great impact on the environment. I think that really actually hits the sweet spot where we get the scale of large organizations, and then we also have this financial component too.

Tim: I like that. The reason I’d be nervous relying on that is that those kind of HR programs, there’s a lot of, like, novelty seeking, it might be something, and I mean, I don’t know in your case, I’m talking very general broad strokes that this type of an event might be trendy for a year or two, and then a new one comes in or, ah, we did that last year, we want something different this year. I think it’s a good one but I’d be nervous about relying too much on it.

Robin: No, fair enough, yeah, and I think that’s why it’s so important to always keep coming up with improvements and new ideas, and so on for our products and services. for

One other thing that we are currently exploring which is quite exciting is we are currently kind of in discussions with a beverage company about how we can do the same thing with not just water, essentially other beverages because that is a huge area of opportunity, and so we are kind of figuring out how we can make this work for the roadmap ahead.

Tim: Oh, awesome, that’s exciting times.

Robin: We’ll see how it goes. We are always changing, we are always kind of thinking of new ideas and whatnot but hopefully, these are some of the things coming up.

Tim: Well, and actually, this year, the Tokyo Olympics has been postponed until, let’s say next year, at least, but something like the Olympics would be, it seems like it would be an ideal use for Mymizu for all of these inbound travelers.

Robin: That’s one of the areas that we saw the biggest potential, is sustainable travel, right? I mean, pre-corona times, obviously, the tourism industry was booming and there were more and more people who were looking for sustainable travel options and tools, and so we thought this is a perfect marriage of both discovering Japan because you can find all these cool places on Mymizu and also reducing your plastic footprint as you go. So that was definitely an area that we are continuing to look into as well.

Tim: So you mentioned, I mean, the drop off on tourism obviously impacted your business. Has the coronavirus impacted you in other ways?

Robin: Oh, yeah, for sure. I mean, a lot of our initial concept was around being outside, so you can refill your bottle on the go, wherever you are, you can refill your bottle, so there was definitely the period where I thought okay, wow, this is quite serious for Mymizu specifically, but I think, actually, looking back over these past five or six months, we’ve seen the opportunities because of coronavirus. I know it sounds like a cliché but this whole Mymizu Challenge idea came because companies were looking for digital experiences for their employees and so on. We thought, okay, why don’t we provide that? You can’t do stuff in person right now, at your company, well, let’s use Mymizu and save plastic and build teams and do good things all remotely as well.

Tim: Yeah, I imagine that must be really, because yeah, everyone is trying to discourage random foot traffic coming in and out of small restaurants.

Robin: Yeah, well, interesting. I don’t think we had that many cafés and restaurants pulling out of Mymizu. I don’t think we had any if I’m correct.

Tim: Really?

Robin: Which is quite surprising. Actually, no, sorry, I should go back on that. We did have a few cafés and restaurants pulling out of Mymizu but I think net, we actually had growth in terms of our cafés and restaurants on board in the past, I’d say, five, six months, quite significantly, and my theory there is that the café and restaurant industry is obviously being very significantly impacted by the coronavirus, so signing up to Mymizu is, it doesn’t really expose you to any more risks than normal, and as a result, you get more foot traffic and it helps you to sustain your business, so we’ve actually seen positive growth in the past four or five months.

Tim: That does make sense because I mean, they are more and more willing to try new things, be more aggressive, try anything to get more of their own traffic coming through. Yeah, corona has really affected different start ups in different and sometimes very unpredictable ways.

Robin: Yeah, we have had lots of, so many late-night discussions and things about how to navigate, I’m sure, like many of your listeners and many other organizations are in the same position, and it’s been a real test in so many ways.

Tim: So in Japan, rules on NGOs are super strict, and I know you are not an NGO, but sometimes, it can be a very binary attitude of like, is this an NGO? Are you helping the world? Are you a company? Are you making a profit? Do you ever get pushback one way or the other?

Robin: That’s an interesting question. Honestly, I think we haven’t had that much pushback in that regard. I think people know that we are pushing for this mission, right? To reduce plastic consumption to help people meet more sustainable lives, and I can’t recall any specific challenges in that scenario, in that space.

Tim: That’s great because I mean, I can tell you, from a lot of the founders I’ve worked with that I don’t know if there is this image that if you’re making money, then you are not helping the world. I think that if you’re not seeing that, that speaks a lot of progress being made in that regard.

Robin: Well, interesting, I used to work for an NGO, this was probably three or four years ago, and I had a great time but I spent so much of my time essentially fundraising, I’d go out there, I’d talk to lots of people with lots of money, I’m trying, it just took so much time and it takes so much time to the point where you can’t do other things, and so that’s why I think the whole social entrepreneurship or social business model is just so much more effective in many cases – not all cases, so I would say, yeah, I agree to you, I agree to some extent, if you’re purely for-profit, then people may question, like, what do you really want? What the hell is going on here? But in our case, we’ve had, I guess, nothing super challenging in that scenario.

Tim: That is good because that is one of those things, there are some problems, like Mymizu and the different business models that you are exploring, that clearly, you can add good, you can do some good as a startup in that structure. I mean, even if you are a pure for-profit startup, you could do good within that structure, but there are probably other problems that you just can’t solve within that structure. Do you know what I mean?

Robin: Yeah, I mean, I think that the advantage of not being a purely for-profit company for us is that people want to jump in and help us out. I think is we’re, like, a KK, kabushiki geisha structure, you’d have less people messaging you saying, hey, I want to help out, this is really cool, and so I think honestly, it’s helped us having this structure that we have now in that it’s more of a neutral platform. I think that if we’re a for-profit company connecting people with free water points, I think people are saying, okay, where does my data go? Blah, blah, blah..

Tim: What’s your angle on this? Yeah.

Robin: Exactly, exactly, so I think in our case, it’s been very beneficial.

Tim: And you know, come to think of it, I’ve always thought that, like, the bottled water industry sort of breaks economic theory.

Robin: I love that, I’m going to use that on our website.

Tim: But you know what I mean? It’s one of those things that, like, the fundamental concept that underlies economic theory is that people make basically rational self-interested decisions. It’s just, they don’t, I mean there’s no –

Robin: So, funny story, now, whenever I talk to people in Japan, let’s say in their 50s, 60s, 70s, they tell me that buying water wasn’t really a thing 20, 30, 40 years ago. It was a public commodity that people just drank, people didn’t really pay fo, and now, there is a ginormous bottled water market that is growing significantly every single year, so something happened in this past, let’s say two or three decades where we see this huge growth of bottled water which is having a big impact.

Tim: What happened was the power of marketing, so it started out with Perrier as this high-end bubbly sparkly water and spread from there, but it was purely marketing-driven and brilliant marketing minds pushing it, but it costs, I don’t know, thousands of times more than tap water, it’s terrible for the environment, just like on every rational level, it doesn’t work.

Robyn: It is completely irrational, especially in a country like Japan where we have some of the safest and tastiest water in the world. Just to give you a few stats, we are working with waterworks in Kobe and their data told us that they have something like 50 criteria for safety and taste for their tap water. For bottled water, it’s much, much less, and it’s just from a very objective point of view. Tap water is actually safer and tastier, and healthier than bottled water.

Tim: And I’ve got to say, like I don’t understand how tap water has become almost the butt of a joke. I honestly believe it is like, the municipal water supply is one of the great achievements of humankind.

Robin: Exactly.

Tim: It really is.

Robin: I completely agree.

Tim: And I can’t quite figure out why people have devalued it so much. Perhaps it just became a victim of its own success that it was almost free and everyone has access to it, and so we just somehow devalue it or something. I don’t know.

Robin: Yeah, exactly, but I really think, as you say, it is the power of marketing, creating a market for a product or a need that in actuality, we have that product and it’s almost free. It’s quite incredible. The story, I think we will look back in 30, 40 years and we will think, wow, this is quite a chapter in the human story.

Tim: So you’re tracking these refill stations, so for example, are public water fountains disappearing? Are there more of them? Are there fewer of them? What’s going on with that?

Robin: Interestingly enough, I believe it was in the Tokyo subway systems where there was a significant decline in the number of public water fountains. Now, I think this was NHK who did that research, so this is not our findings, but I think the theory there was that it was due to sanitation issues or potentially even terrorism related issues, there is a decline in public water facilities in certain places in Japan. I was just saying now on the flipside, there is an increase in these quite well-designed and quite cool kind of water points around the city, so if you go to Yurakucho station just outside the Tokyo International Forum, you’ll see this really cool public water fountain which is specifically for reusable bottles and it’s like this beautiful blue machine, it makes noises, it lights up and there more and more of these things popping up, so this is the future, I believe, of the urban space, is these kinds of points where you can hydrate without a plastic.

Tim: Okay, so it’s still a public water fountain, you just have to bring a container, you can’t put your lips on it?

Robin: Exactly and these are popping up more and more.

Tim: Oh, that’s progress.

Robin: Yeah, but I’d say, the scale is huge right now and we need to scale up about 1000 times, to be honest.

Tim: Let’s talk a bit about Japan and the recycling here, so what actually is the situation with pet bottles in Japan? Because I find Japan in general tends to be very ecologically conscious, consumers have absolutely no problem sorting, ridiculous levels of recycling sorting going on, but you see pet bottles everywhere. Is that just my perception or is Japan better than other countries, worse than other countries?

Robin: Okay, so, Japan produces roughly 25 billion, with a B, plastic bottles every single year, so that’s enough to go around the world, I believe 128 times, so the amount that we produce is huge and yes, we do recycle a lot of those but what I can –

Tim: But that’s too big a number for me to get my brain around, I mean, but how does that stack up, like per capita to like, the US or Europe?

Robin: That’s a good question. I’m actually not sure the per capita comparison with other countries, but what I can say is that, and I mentioned this at the beginning, Japan is the second largest consumer of plastic packaging per capita, and I think the key here is that we often hear about this committed recycling, we put everything in the bin and everything gets recycled and life is all good, and interestingly, Japan’s recycling rate is officially, I believe, 84%, 85% which is much higher than the global average which is about 20%, right? And that sounds great, but this is why it’s so important to really dig around a bit and understand the problem. The truth is that we are burning most of the plastic we collect for recycling through a process called thermal recycling, so this is essentially where you burn – yeah, and you’re literally creating a .…

Tim: “Thermal recycling?”, that sounds like a bit of newspeak there.

Robin: Well, interestingly, I think thermal recycling is a Japanese term. In other countries, it’s called energy recovery, so the plastic that you can’t do material recycling or chemical recycling with, you burn for energy, right? Whereas in Japan, it’s considered recycling, so we are burning the majority of the plastic that we collect from households for energy. The other thing we are doing and I’m sure I can talk about this for three hours, so I’ll keep it super brief, is we are exporting a lot of plastic waste to other countries  We are the second largest exporter of plastic waste in the world, I believe, after the US, and so a lot of our plastic waste goes to countries in Southeast Asia where, in some cases, not dealt with in a very responsible way.

Tim: Yeah, I remember, I think it was just last year, China announced they would not be accepting plastics and other trash recycling.

Robin: Exactly.

Tim: And it caused quite a bit of problems within the recycling supply chain all over the world.

Robin: Exactly, and prices to dispose of plastic increased significantly, facilities are overcapacity, I mean, there was a huge knock on effect.

Tim: Wow, thermal recycling. No, that just doesn’t sound right.

Robin: And there is this one other anecdote, there is research that shows that if you have a recycling bin in a room, let’s say you take two rooms, like one has a recycling bin and another has no recycling bin, just a regular bin, people tend to use more plastic in the room with the recycling bin because you think, oh, it’s cool, I can use this plastic, I just chuck it in the bin and it will come out in a beautiful plastic product to the other side, so it’s almost making it worse if we believe in this myth and this is why we really focus on the reduction and not the recycling because there’s a big problem there.

Tim: That makes a lot of sense.

Well, listen, Robin, before I let you go, I want to ask you what I call my “Magic Wand” question and that is if I gave you a magic wand and I told you that you could change one thing about Japan, anything at all, the education system, the way people think about risk, the way people think about recycling supply chains, I mean, anything at all to make it better for startups and innovation in Japan, what would you change?

Robin: Where I would like to see the most change is in this space between for-profit and nonprofit. I guess I am in a fortunate position where we are doing something relatively unique, we are trying to solve a very serious problem, and what a lot of students and other young people ask me, how do you make that work? How do you do this whole kind of sweet spot between this and profit? So what I would love to do is to kind of encourage more dialogue and hopefully raise more awareness that you don’t have to choose one of the two because that’s what I thought when I was younger, I had to choose, so do I go make the big money or do I go work for an NGO, government, whatever? You can do this together.

Tim: So if more people knew about this kind of middle path, what would change? What do you think we would see happen?

Robin: I think we would see more strategic and systemic solutions. I know this is a very generic term but I think once you have these organizations who are working in this in between space, you have a more scalable and hopefully a higher impact way of solving a problem, right? So let me give you an example. If companies, say okay, the end of the year, we got some money left to donate to a charity who can then fix it, it’s a small impact on the grand scheme of things, but if you have, let’s say a startup that is really solving a social environmental problem in a big way that is highly scalable, then the impact it is in a completely different level. So I think for me, it’s just the chance of really creating big solutions to these problems that we meet today.

Tim: So that kind of middle path, so I can totally understand on the startup side, on the more traditional side, the profit motive, the relentless push for optimization and profit will lead you away from the mission. What is the challenge if you’re just operating as a traditional NGO? So what is the advantage of that kind of middle path over the traditional NGO?

Robin: There are a number of challenges. One is things like the financial resources, right? You’re always strapped for cash, you’re always trying to figure out how to make things work, whereas if you have that money towards a robust kind of business model, then that solves the problem. Secondly is also, I mean, potentially, talent is what I mean, the job market in Japan is so competitive with decreasing population and so on, so if you can make it more attractive and get the top talent from these big universities who want to join some exciting tech startup that is solving a problem, then you are getting the talent as well, so I think for me, it’s maybe those two things, the financial resources and the talent.

Tim: Alright, that makes sense and actually though, I think we are seeing more of these kinds of organizations. There’s a lot of accelerators that are focused on social impact startups, the Google accelerator we just announced is doing social impact startups as well. There is a huge interest in this kind of middle ground between NGOs and traditional startup business models.

Robin: No, definitely, and there are more and more young people who are getting really into this stuff, and just to give you an example, there’s something called the Hult Prize which is the world’s largest social entrepreneurship competition for students, and that’s really taking off in a big way here in Japan. There’s more and more of these kinds of training programs, resources, so I think it’s a fantastic time to be doing this kind of thing and I’d encourage anybody entrepreneurs or whatever to get out there and give it a shot. It’s a great time to be doing this in Japan.

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

Robin: Thank you so much, I had a great time.

Outtro

And we’re back.

Some of my most enjoyable interviews are the ones that go way off script and venture into tangents unknown. Oh, and by the way, the article I referred to in the show, the one that first introduced the concept that a company’s sole responsibility was to increase shareholder value, that was Milton Friedman in 1970 in the New York Times. The primacy of shareholder value was not accepted thinking before then and it’s falling out of favor now, but I’ll put a link to it in the show notes. It’s an important piece of economic history.

Now, I am definitely not an economist but I find economics interesting, but it’s hard to talk about economics. I don’t understand the minutia well enough to dive into the details that interest real economists and fellow economic dabblers are rarely interested in the parts that I find interesting. Mymizu for example is attacking a particular class of economic problems, one that almost everyone agrees is incredibly important that we seem unable to solve.

And I believe the reason is that there is a certain class of economic problems that capitalism simply cannot solve. Of course, diving into the limits of capitalism is practically heresy, at least in the circles I run in. You would be amazed at the number of times I’ve been accused of being a Marxist. I mean, I’ve built companies, I’ve sold companies, I’ve invested in companies, my day job is teaching others how to grow their companies. My hobby is Disrupting Japan where I sit down with startup founders and talk about running, growing, and selling companies. I think my capitalist credentials are pretty <beep> solid and yet if you find the problems with capitalism just as interesting as the benefits of capitalism, you tend to get labeled a Marxist.

But seriously, it comes down to this:

Capitalism is extremely good at solving problems that could be solved by additional consumption and almost useless for everything else.

Capitalism on its own would never have given us the municipal water supply, the power grid, or sewage systems, and capitalism on its own will never solve the problems of pollution and plastic waste that Mymizu is trying to address.

Now, I’m saying capitalism on its own, the profit motive most certainly could be used, and should be used, to help solve these problems, and that’s where startups like Mymizu can help push us towards a solution. But as Robin explained, awareness alone doesn’t work. The presence of recycling bins actually resulted in an increase in plastic consumption.

No, the profit mode cannot be used to reduce consumption but it can be used to prioritize consumption. Communities can act together to make undesirable forms of consumption expensive. This is the idea behind carbon taxes, cap and trade, requiring manufacturers to pay the recycling costs at the time of production or even old-fashioned $0.05 bottle deposits.

With these new incentives in place, the marketplace will respond in innovative ways to reduce the harmful consumption and channel those resources into more productive or at least less harmful activities. Total consumption still goes up but hopefully, we wind up in a better place.

Relying on the profit mode on its own puts us in a situation much like Robin’s beach cleanup crew, a small group of dedicated individuals diligently cleaning up our trash while 10 times more is washed up on the next tide. All of us really are in this together, capitalists, environmentalists, even the actual Marxists, and we need to work together to set things up so that today’s political and market forces can be brought to bear on these problems.

And then, the conflict between doing good and doing well disappears and creative startups like Mymizu can lead the way.

 

 

If you want to talk more about recycling or the wonder that is modern drinking water, Robin and I would love to hear from you, so come by DisruptingJapan.com/show173 and let’s talk about it. If you leave a comment, I guarantee, Robin or I, or maybe both will respond. And hey, if you get the chance, please rate and review us on iTunes or your podcast platform of choice, but even better, if you like the show, tell people about it. Disrupting Japan is my labor of love and we have zero advertising budget. People hear about the podcast because listeners like you enjoy it and they tell their friends about it.

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

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