We’ve been talking about smart homes and smart cities for a long time.

However, it turns out that we are not willing to pay very much for simple convenience, so the technology is coming into our homes bundled with different agendas.

We’ve seen this happen with the success of Alexa and Google Home, and we are now seeing it here in Japan with Nature Remo.

Today we sit down and talk with Haruumi Shiode, the founder and CEO of Nature, and we discuss not only what the future of home automation will look like, but who will be paying for it.

It’s an enlightening conversation, and I think you’ll enjoy it.

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Show Notes

  • The real motivation behind smart home purchases
  • How hardware entrepreneurship went mainstream
  • The one way in which crowdfunding is still relevant
  • Why Nature decided to launch English-first
  • How to outsource hardware production without going bankrupt
  • Nature’s real business model for the future
  • The importance of demand-response in Japan
  • The growing significance of corporate alumni networks in Japan
  • Why Kyoto might be Japan’s next innovation center

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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.

Smart homes and smart speakers have not really changed our lives in the way that was predicted. I mean, it’s not that they have not sold well. Amazon has sold over 100 million Alexa-enabled devices and the technology is a really amazing, but voice assistance remain a novelty rather than a real step forward, and here in Japan, even with Japanese language support, the adoption rate has been low.

I think a big part of that is the lack of conductivity, and by conductivity, I don’t mean the ability to connect to a computer or interact with other programs. I mean, smart speakers don’t connect us to each other in new ways. In the end, they are just an input device. They don’t provide something that we don’t already have in our lives. Well, today, I’d like you to meet Haruumi Shiode, the founder and CEO of Nature’s created a new smartphone device, the Nature Remo.

Now, the Nature Remo provides some immediate utility: the ability to control your life and your air conditioner from your smart phones or based on rules that you set up, but the real reason that Nature is so interesting is what comes next. It’s a lot more than just turning your lights on and off; it’s a new way of connecting with each other and a new way for power companies to manage the power grid during times of peak load.

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

Interview

Tim: So, I’m sitting here with Haruumi Shiode of Nature, so thanks for sitting down with me.

Haruumi: Thanks for inviting me for this podcast.

Tim: No, I’ve been looking forward to it. So, Nature makes the Nature Remo which is a really interesting device that you can probably explain a lot better than I can, so what is the Remo and how does it work?

Haruumi: Nature Remo is basically a very small tiny device that can turn your AC or TV, or lighting through smart device. It communicates with those appliances through the infrared and they connect to Wi-Fi, so that you can control from your smart phone or smart speakers.

Tim: Okay, so infrared means it’s sort of – it’s emulating the remote control for your TV or your air conditioning?

Haruumi: Yes.

Tim: Ah, okay, cool. So, if it’s infrared, and so if I wanted to outfit my apartment with these and control or my air-conditioning units and my TV, so would I need one Remo in each room?

Haruumi: Yeah, you have to have one device per room.

Tim: Okay, and since it’s infrared, it needs to be line of sight, so you mount these on the wall or high up in the rooms?

Haruumi: It will do anywhere. Yeah, yeah, it just has to be line of sight to the appliance.

Tim: Okay.

Haruumi: And, just to give some background to the audience, in Japan, most of the air-conditioners come with infrared control, and obviously, TV comes with infrared remote control, so when the Google Home or Amazon was launched in Japanese market, there was not many smart home devices that can speak with those smart speakers. The people wanted to have kind of a bridging device, so Nature Remo was exactly that one.

Tim: Okay. So, actually, anything with a remote control, it could control, right?

Haruumi: Yes.

Tim: Okay, that makes sense.

Haruumi: Infrared remote control, to be precise.

Tim: Infrared remote control, right. And, what do these devices, what do they cost?

Haruumi: So, right now, we’re giving a little bit of a discount, so it’s selling at around $70.

Tim: So, tell me about your customers, so how many users do you have and what kind of people are they?

Haruumi: So, our user base is getting close to 100,000. We just recently did the customer survey, and we got a response from more than 2000 customers. Majority of our customers are male and aged between late 20s to 50s, then many of them work or IT or the makers in Japan, so they are kind of tech-savvy.

Tim: Definitely the early adopter profile, right? So, is there motivation playing with cool new gadgets or what do you think the main motivation for your current customer base is?

Haruumi: Two big reasons why they buy the device: one is they have Google Home, Amazon Echo, they want to control their home appliances through their voice, so they buy our device, and the other reason is, our customers want to control those home appliances from those smart phone, like turning on the AC before they come back.

Tim: So, it’s mainly convenience?

Haruumi: Yes.

Tim: We will dive into the business model in a few minutes, but before that, I want to back up a bit and talk about you.

Haruumi: Okay.

Tim: Now, you quit Mitsui to go to Harvard Business School, and in another interview you did, I noticed that you said you went to Harvard to start a startup which just struck me as a really weird phrase, you know what I mean? I mean, I hear people who moved to San Francisco to start a startup all the time, but Harvard Yard MBAs tend to go into investment banking or consulting, so what were you thinking?

Haruumi: Even if I look at the stats, that is not exactly true because Harvard has been putting a huge effort to promote entrepreneurship and there’s a bunch of entrepreneurs, and if you think about the Japanese market, two big entrepreneurs are Harvard MBA alumni. One is Mikitani­-san from Rakuten, the largest e-commerce company in Japan, and the other one is Namba-san from DeNA. They are both from Harvard Business School. Before, you can’t name a big entrepreneur from Stanford Business School.

Tim: From Japan?

Haruumi: Yeah.

Tim: No, you’re right, I can’t, but I mean, yeah, Namba-san and Mikitani-san, their kind of entrepreneurial journey, it’s almost like the last generation of Japanese entrepreneurs, right? I mean, that was back when starting a company meant you had to have the right connections to the right people, and it’s different now.

Haruumi: Yeah, so I knew that I’m going to start my own startup when I was 10. My father was an entrepreneur, so I have been observing him like starting a company and a really exciting moment of launching his own product, so I have been preparing to start my company. The last missing piece for me was a global connection.

Tim: Looking at your website, it looks like the Harvard experience really helped you. You participated in a lot of startup programs and one a few competitions that were directly related to that school.

Haruumi: I think it helps in many ways, so probably the biggest one is that trust that I can get from typically, B2B partners. In Japan, everybody knows Harvard Business School. If I say – oh, I don’t need to say that, and then they see me on the website, and then they see that I graduated from Harvard Business School.

Tim: So, you founded the company while you were at Harvard. Your launch, so you founded in 2014, right? And in 2016, he launched a Kickstarter campaign, an IndieGogo campaign, and a Makuake campaign. All the same time?

Haruumi: No, we started from Kickstarter, and then moved to IndieGogo, and then started the Makuake campaign here in Japan.

Tim: So, what was the objective of the multiple platforms? Are you fund-raising or was this part of your marketing campaign?

Haruumi: Pretty much our marketing campaign, but there was a big trend in the crowdfunding circle starting with Kickstarter, and then shifting to IndieGogo, because Kickstarter is only 30 days, but IndieGogo, you can run as long as you want, so after you finish Kickstarter, people are doing the IndieGogo right after that, and Makuake, the reason why we did Makuake is there’s a bunch of Japanese potential customers who are not really good at English, so we wanted to reach out to those audience as well.

Tim: For marketing purposes?

Haruumi: Yes.

 

Tim: Alright. I mean, obviously, the Makuake backers were all Japanese, but for the Kickstarter and IndieGogo, where most of your backers from the US or from Japan, or from somewhere else?

Haruumi: Yeah, that’s another reason why we did Makuake, so after doing Kickstarter, we found a 50% of our backers are from Japan and 30% is from the US, and 20% is the rest of the world, so we saw a big fraction from the Japanese market, yeah. Then, we did Makuake to get customers.

Tim: So, you have 50% backing from Japan and your Kickstarter page, did you have a Japanese Kickstarter page or did you only launch in English?

Haruumi: In the beginning, we probably didn’t have the Japanese translation, but we created the Japanese one in the middle of the campaign.

Tim: Alright, that seems to have worked out well for you. Is that a path you would recommend for other hardware startups, this running through the procession?

Haruumi: So, depending on which market that they are targeting, because if they are just targeting the Japanese market, probably, they don’t need to go to the Kickstarter and launch the English website, so we ship anywhere, but we found difficulty answering the requests from the customers all over the world. When we think about air-conditioner, so in Japan, the biggest one –

Tim: So, the requests for being like, feature requests or complaints and bug reports?

Haruumi: So, it’s about support for the AC, so we prepared the preset for air-conditioner. Air-conditioner has a different infrared signal, so we have a database, so that the customer does not need to compute by themselves, all the setup is done, complete. So, in order for us to make it happen, all we have to have remote controller in our database. You think about a different market, the AC that are used in those countries are different from here.

Tim: Okay, and I imagine that it’s not difficult to support new types, but it’s just you have to do it, you have to get that information into the database.

Haruumi: Yes, yes.

Tim: When you launch your service, you launched it in English first, right? Why did you do that? Why did you launch in English rather the Japanese?

Haruumi: So, originally, we wanted to sell the device globally, so that’s why we didn’t want to limit to the Japanese market. As long as we do it in English, we can reach out to the global audience, but once we started, we just found that supporting everywhere in the world is very difficult, so we decided to focus on Japanese market first, but now, we are preparing to go overseas.

Tim: So, most of your customers and now are in Japan?

Haruumi: Yes.

Tim: Okay. The markets really are different, so most of our listeners would know about the Nest, the Smart thermostat that was bought by Google. One of the most important differences, I imagine in your market between the US and Japan is in the US, most new homes anyway have central air conditioning, central heating whereas in Japan, that’s pretty rare.

Haruumi: Yes, so most of the Japanese houses, and I think very close the 99% or 98% of Japanese houses have mini-split system, like the one that is hooked on the wall.

Tim: Yeah, so what has been your main sales channels? I noticed your selling on Amazon which makes sense since it’s compatible with Alexa. Is that your main sales channel or do you also cell in other places?

Haruumi: yeah, we so many different places. We sell off-line, so right now, our devices sold in more than 600 retail stores across Japan, but still, the AC is probably the strongest channel.

Tim: Yeah, I suppose so, especially with the early adopters, right? So, even in the stores they are selling it, are they Bic Camera or Yodabashi?

Haruumi: Yeah, Bic Camera, Yodabashi, Yamada Denki.

Tim: okay, so all the mainstream stores?

Haruumi: Yes.

Tim: Fantastic! Oh, that is great.

Haruumi: And, the good thing about it is that Google Home is sold in those stores, and our device has good fit with Google Home because Google Home user, they want to control home appliances, they find our device, so our device is sitting right next to Google Home in those stores.

Tim: Ah, right. So, is that the main way your users interact with Remo? Is it through Google Home or Alexa, or do a lot of your users use the app?

Haruumi: Yeah, a lot of users use app as well, and also, we offer the automated kind of rule, so they can say, “If the temperature goes more than 25°, just turn on the AC,” or “If there’s no motion in the room, just turn off the light,” so there is automation.

Tim: Oh, okay. Can it you do geofencing, so like when I’m five minutes away from home, turn on the air conditioning?

Haruumi: Yes, yes.

Tim: Oh, that’s great, especially in Tokyo summers. What about the production side, where do you manufacture?

Haruumi: Yeah, we do manufacturing in China. We have been spending a bunch of effort with total quality.

Tim: Let’s dig into that. So, let’s back up to the prototype first, so were you working with the Chinese factories even when you are developing your prototypes or were you developing your prototypes on your own?

Haruumi: Yeah, we worked with the Chinese factory for the prototyping, and so in the beginning, when we just launched in Kickstarter, we were supposed to use the manufacturer in Taiwan, but they didn’t work out and we found it after closing the campaign, so that was so brutal, so we spent two months visiting more than 10 factories in China, then we finally found a good partner.

Tim: How do you know what you have found a good partner? Because all hardware startups are trying to figure this out. So, every manufacturer in China and Taiwan will say, “Yeah, we can build that. No problem,” so what are you asking them? How are you vetting them to make sure that this is the partner you want to work with?

Haruumi: Yeah, so that was very clear for me when I first met with the partner. So, our device comes with a few sensors, including the motion sensor, and then other front cover also act as a lens for the motion sensor. It’s called Fresnel lens. The factory who can make the combined Fresnel lens with the cover is super limited, and then when we first visited the factory, Fresnel came up and he has shown a bunch of different samples for the companies across the world, and then he was the engineer and I thought he is someone we can trust, so we closed the deal in half an hour, we signed a contract in one hour, and we sent the money in two hours. That was very good for building a relationship as well, so he is telling the story to all the customers he met after us, is to convince them to work with him, and then he has supported a lot, so I think in the beginning, they did not make any money for us. We made more than 30 samples to make the cover white, so before us, there was not any completely white cover for infrared remote control. It’s typically black.

Tim: Why?

Haruumi: Because black has better transmittance for the infrared signal.

Tim: Oh, okay.

Haruumi: So, people make it black, but if you think about putting the device on the wall, it’s a lot better if it’s white, so we spent a huge effort for that.

Tim: Well, having gone through that, I mean, what advice would you have for other hardware startup founders who are just about to go through this process?

Haruumi: So, the lining for us is, depending on the stage of the company, depending on the quantity of your order, the light partner is different, so in the beginning, if you only have a few thousand quantity, you can’t get Foxconn work for you. With Foxconn, they always require a huge quantity, so you have to lead with a smaller factory, so the smaller factory is almost managed by the president of the factory, so if the president is someone who you can trust, probably that’s the right company that you can work. And then, once the quantity grows, you can start working with a bigger partner.

Tim: So, early on, that personal relationship is just as much or even more important than technical specifications and capabilities?

Haruumi: So, depending on how difficult to make the product, but if you are making not kind of rocket-science product, probably the relationship.

Tim: Yeah, but I think that’s – I mean, if you’re trying to do something that’s innovative and that’s new with hardware, I mean, you’re going to have to iterate. I mean, I think having someone who’s willing to work with you and willing to come back and say, “Hey, I know you want it like this, but if we changed this a little bit, maybe there is another way, maybe this is better.” I mean, I think –

Haruumi: Yeah, so in our case, there were some difficulties in the plastic manufacturing, but in many cases, you think about IOT device, the innovation is more on the software side, so in that case, the hardware is rather feeble. So, depending on your product type.

Tim: That makes sense. So, what is Nature’s business model? Are you just selling the devices? Do you sell a subscription? Are you collecting usage data in the same way Nest does?

Haruumi: Right now, our freemium model is basically selling this hardware, but we are not just doing it for being a hardware companies; I started Nature to change the energy industry, and we just recently launched a new product called Remo-E that is more like energy management, so we are trying to dig deeper into the energy side of the business.

Tim: Yeah, let’s talk demand response. The work you’re doing with Kansai Electric is super interesting, and well, tell me about it.

Haruumi: Yeah, so I think it’s from 2016, we worked with Kansai Electric and did the demand side management using the Nature Remo because it has access to a conditioner. The objective was connecting Nature Remo to a bunch of air-conditioners and creating the demand-side resources.

Tim: Alright. So, when power usage is really high, the power company could send out a request and all of the Remo devices would lower their air-conditioning by 1° or something like that?

Haruumi: Yeah, exactly, and just to give you some idea of the number, so in Japan, 30% of the consumption comes from the residential sector, and then 50% of the demand, peak demand, comes from AC, so as I said earlier, AC has almost 100% remote control – has remote controls. We can replace the remote controller with Nature Remo, then we can potentially have access to 15% of the peak demand in Japan, that is a huge number.

Tim: I see that as being a great thing for the power companies, but me as a selfish consumer, why do I want my air temperature lowered by 1°?

Haruumi: So, there should be a kind of a rebate system. We pay you and you collaborate, that’s kind of the model we have in thinking, but even before we reached that point, we realized selling this device as it is is pretty critical because unless we have a bunch of customers, we can’t offer attractive demand-side management resources.

Tim: Yeah, yeah. So, do you ever think you will get to a point where – because demand response is such an important thing for grid management, power grid management, around the world. Do you think we will get to a point where the electric utilities will be paying for these devices to putting in everyone’s homes for free?

Haruumi: That’s a good question. So, probably I should explain a little bit about the Japanese power market. When I started Nature, it was like, 2014, so it’s like three years after the Fukushima accident happened, so there was not any nuclear power plant running at that time, but the Japanese government made a policy and some of the nuclear power plants are coming up, so we have more baseload. We don’t have much shortage of the power consumption at that moment. Originally, we wanted to put the Nature Remo device in the home and monetize with demand-side management, but because of the government policy, it’s not that easy for us to monetize with the demand-side management. So, we pivoted a little bit and right now, focusing 100% on selling the Nature Remo device to the consumers, but with Nature Remo-E, however, a new device, we are trying to completely change the dynamics of the power consumption. So, instead of buying the power from the big old fire or gas-fired power plant, we want to connect the individual, so that they can exchange electricity locally.

Tim: So, would this be, for example, people who have solar panels on their roofs?

Haruumi: Yes.

Tim: Okay, so people are actually generating electricity as well as consuming it?

Haruumi: Yes.

Tim: Okay, fantastic. Wow, that really breaks into a whole lot of potential new business models in there, doesn’t it? But, the Japanese energy markets – well, energy markets all over the world are changing so much now.

Haruumi: But, I think Japan has a very interesting potential because of several reasons. One, the smart meter is getting very common, so even now, more than 50% of the houses have smart meters in the Kansai area.

Tim: Yeah. In fact, by 2020, it is supposed to be all of Kansai is supposed to be smart metered and by 2024, all of Japan, with Okinawa bringing up the rear.

Haruumi: Exactly. Yeah, and then the other interesting point is Japanese smart meters speak WISAN, and as long as we have a device that can speak WISAN, we can interact directly with smart meter, so that’s very unique in Japanese market.

Tim: And, why is that important, just for confirmation and billing, and monitoring?

Haruumi: Yeah, so as I said, we want to create a platform so that our consumer exchange directly, so you have to know the real-time consumption production. Unless you have a device that can speed directly with smart meter, you can’t get that data. Right now, even Tokyo Electric, they don’t have that data, so we want to push our Remo-E, and then get that data and create a platform.

Tim: Okay. Let’s talk about Japan in general. You used to work for Mitsui, and I’ve noticed that there is a lot of Mitsui alumni who have started companies. A number of my friends that have been on the show, Terada-san and Inada-san, and for a large Japanese enterprise, Mitsui seems like they are extremely supportive of entrepreneurs and people leaving the company. Do they have like a strong support network?

Haruumi: I think it’s more about the mindset. It’s more about culture, like we often control Mitsui and Mitsubishi. Mitsui is more like focusing on the people. In my previous work at Mitsui, I was working for kind of coal fire, like a big project, but that was very clear that my boss was trying to let me do the job I myself as much as possible rather than just giving a very precise instruction for all the details. Yeah, so I think Mitsui has kind of entrepreneur culture, and that was very clear. Even after the zaibatsu and to decompose around 50 or 60 years ago, there is a bunch of Mitsui-related company, but they changed the name, like for example, one of the biggest examples is Toshiba. I don’t think people really noticed that Toshiba used to be Mitsui’s group, so Mitsui supports kind of independence, but Mitsubishi, all the companies, you have Mitsubishi –

Tim: I’m very impressed. I mean, Mitsui is doing something right. I mean, they have that trading company DNA, so it makes sense there’s a lot of kind of innovators and dealmakers. I’ve been impressed at how friendly and connected they stay with the people who quit the company and start their own thing.

Haruumi: Yeah, but in that sense, I think the most innovative one is probably Recruit area and they maintained the alumni network and connect even existing employee with the alumni.

Tim: Well, I think it’s great to see it happening in Japan because in the US, this is such an important, like these alumni networks are so important for innovation in general and the way innovation filters up into bigger companies. So, your Japan operations are based in Kyoto, right?

Haruumi: I incorporated Nature Japan in the beginning in Kyoto.

Tim: Why Kyoto?

Haruumi: For several reasons. One, I thought Kyoto is the best place in Japan for a kind of global company because everyone knows Kyoto, Kyoto is a very good place to visit, and also for foreigners, and the second reason was, my parents were living in Kyoto at the time, so I could just borrow the address.

Tim: Well, that’s –

Haruumi: Incorporate the company.

Tim: There’s a lot of innovative startups in Kyoto these days. It’s becoming a real innovation hub in Japan, and a lot of hardware startups, come to think of it.

Haruumi: Yeah, I know several of them.

Tim: But earlier, you were telling me you have decided to move their headquarters to Tokyo.

Haruumi: Yes. Once– we started operation, we realized most of the things in Japanese business is happening in Tokyo, even if you think about hiring good talent, it’s very concentrated in the Tokyo area, and all the business activities, like meeting with partners and developing the business, it’s a lot more efficient when you’re in Tokyo, so we decided to give up the idea of having a company in Kyoto and doing everything –

Tim: I admit, the practical logical business decision is to move to Tokyo, that is the good call, but I’m amazed that is the number of successful startups coming out of like Fukuoka and Kyoto who kind of refuse to make the rational logical business choice. They keep headquarters in Fukuoka or Kyoto, and open like a sales office. I think it makes it harder for those companies, but I think it’s much better for those ecosystems, and I think that attitude, I think, is really good for those cities.

Haruumi: Yeah. So, if I had a better connection in Kyoto, like working for Nintendo or like those companies, then yeah, my decision might have been different, but I don’t know anyone in Kyoto, so I have a better connection in Tokyo.

Tim: That makes sense.

Haruumi: Yeah.

Tim: Well, listen, Haruumi, before we wrap up, 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 approach innovation – anything at all to make it better for startups and innovation in Japan, what would you change?

Haruumi: Yeah, I have a very clear answer for that, so it’s regulation.

Tim: Regulations?

Haruumi: Yeah, so how the government deals with regulation here in Japan is not really helpful for startups and it’s more like protecting large organizations. You think about Uber, the ridesharing, you think about AirBnb, Uber not come to the Japanese market. Even though they could not come to Japanese market, there should’ve been a Japanese startup doing the ridesharing business. So, the reason why we don’t have a big ridesharing business in Japan is because of regulations – it’s not allowed, so that’s why it couldn’t happen, and the same thing for the AirBnb. The Japanese government basically banned.

Tim: But how do you balance that because alright, I’m an American and Americans are… It’s easy to hate regulations, right? But you can’t just say all regulations are bad because a lot of them are there for a reason, so do you think there needs to be a better approach to making regulations or a better approach to changing regulations that exist? Because the thing is, most Japanese people seem pretty happy with those regulations, right? Like, most of the Americans kind of stood behind Uber and said, “Yes, we don’t want these regulations. They are bad,” and most of the Japanese though kind of stood behind the government and said, “No, no, we like these regulations. We don’t want Uber or AirBnb.”

Haruumi: I don’t think so.

Tim: No?

Haruumi: Okay, maybe to be precise, what I think should be changed is how we handle the existing regulations. For example, if I see the American society or culture, so if there is any gray lines in the regulations, if there is something that is not really forbidden by the regulation, you try and change the market and let the regulations accommodate the innovations that you have already made, but in Japan, I think mostly for the big corporations, they try to check everything you think and if it’s not clearly okay, they don’t do it.

Tim: Ah, okay. Yeah, yeah, yeah, so in America, that gray area, that you like means go ahead and try it, and in Japan, that gray area means stop, don’t try it.

Haruumi: Yeah. Especially for startups, trying is everything. You don’t really know when it’s right until you try. I mean, like market reaction and those kinds of stuff.

Tim: Do you see that changing in Japan? I certainly see that attitude changing among younger founders.

Haruumi: Yeah, for the younger founders, but there’s always politics and that is very highly-related with the economic growth or the innovation, so this political side is being the bottleneck for Japanese regulations.

Tim: Yeah, I guess it is challenging because for the last 70 years, regulations were made with basically the bureaucrats talking with the leaders of industry saying this is practical, this is what we should do, and for the last 70 years, it kind of made sense because the big companies were leading the economy, but now, we are in a position where we are having a lot of smaller companies, that is where all the growth and the innovation is coming from and they don’t have that government connection.

Haruumi: Yeah, the other example for Japanese politics is if you think about Japan as a country, we don’t have any fossil fuels, and then Japan is an isolated island, and we have the nuclear accident, but if you think about Taiwan and you think about Germany, they decided not to go with nuclear power at all, but here in Japan, we do have nuclear power plants coming up, but if you don’t have nuclear power at all, there is going to be more innovation that has to happen in this market.

Tim: I agree and I think Germany – you bring up Germany and that is such a good example of this because Germany has been so aggressive in getting off of nuclear and now, they are being every bit as aggressive getting off of coal. When they started the program, the utility companies were saying no, this is impossible, it will never work, but it’s been possible and it has worked, and it’s been hard. There’s been some weird things in the German power markets, but they have done it, and I think Japan could certainly do it if they focused on it and would take those risks, right?

Haruumi: Yeah, so that’s why the politics and the regulation plays a very critical role for the early-stage innovation.

Tim: Well, that’s fantastic. Listen, Haruumi, thank you so much for sitting down with me. I really appreciate it.

Haruumi: Yeah. Thank you, thank you very much.

Outtro

And, we are back.

One of the things I really enjoyed about my conversation with Haruumi was how it really demonstrated that entrepreneurship has become an acceptable career path, not just in the US but in Japan as well. Haruumi found support for his vision not just in America but in Japan.

His ability to convince Kansai Electric to run a pilot program with Nature demonstrates, well, it demonstrates his own sales ability to be sure, but it also shows us how open to innovation even large traditional Japanese companies have become, and that is important.

Now, getting back to Nature Remo specifically and smart homes in general, I think there is a lot of interesting things going on with smart homes and smart speakers, both globally and here in Japan, but it’s clear that the market is being driven by a very different forces than, say smart phones.

Sure, convenience or just plain fun is a motivation for many, but how many people are really going to spend $300 or $400 so that they can press a button on their phone rather than flipping a light switch or pressing a button on a remote control? I mean, I would, and probably a lot of Disrupting Japan listeners would as well, but let’s face it, guys, we are early adopters. We are not the mass-market.

So, perhaps, the future of smart homes will be financed at least in part by the companies that really benefit from the network effects. This might be electric utilities like Kansai Electric or TEPCO subsidizing the device so that they can better manage demand response or maybe cities themselves will chip in for smart home devices to better manage things like public transportation for water usage.

Of course, no one knows exactly how this will play out, but maybe we need to change our thinking, to broaden our thinking about the value of smart homes. Maybe the real value is not so much in the convenience that it brings us but in the value that we can create together.

If you want to talk more about smart homes and smart energy, Haruumi and I would love to hear from you. So, come by DisruptingJapan.com/show142 and let’s talk. If you leave a comment at the site, I guarantee you, at least one of us and probably both will respond.

And hey, if you get the chance, please leave us an honest review on iTunes for post about the show on Facebook or LinkedIn, or Twitter, and I’m not asking you to do this just out of some kind of vanity, but listeners like you talking about the show has been the way other people like us find out about the show. Word-of-mouth has really been the only way Disrupting Japan has grown, so it’s important. And, yeah, okay, it is a little bit of vanity as well, but helping out here and tell people about the show.

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.