A Startup Scene That's Not So Hot: Japan's Entrepreneur Shortage

A Startup Scene That's Not So Hot: Japan's Entrepreneur Shortage

9:07am May 13, 2015
At Slush Asia, a new tech festival held in Tokyo in late April, the scene and the energy resembled a small-scale South by Southwest Interactive.
At Slush Asia, a new tech festival held in Tokyo in late April, the scene and the energy resembled a small-scale South by Southwest Interactive.
Elise Hu / NPR
  • At Slush Asia, a new tech festival held in Tokyo in late April, the scene and the energy resembled a small-scale South by Southwest Interactive.

    At Slush Asia, a new tech festival held in Tokyo in late April, the scene and the energy resembled a small-scale South by Southwest Interactive.

    Elise Hu / NPR

  • A concept demonstration at Slush Asia, a tech festival that brings together investors and innovators.

    A concept demonstration at Slush Asia, a tech festival that brings together investors and innovators.

    Elise Hu / NPR

Toshiba. Sony. Sharp. You know those brand names because they dominated the Japanese economy's global rise in the '80s. But that was 30 years ago. As the Japanese economy stagnates, it's unclear which new companies will replace them.

Doga Makiura is Japanese, and a startup founder. But he's not a startup founder in Japan. He created businesses in other Asian countries instead.

Why not be an entrepreneur in his native country?

"Cause I think it's boring," he said. "There's a huge, bigger market in everywhere in the world. Japan is a shrinking market and I don't really understand why you'd do business in Japan."

He's not alone. Only 6 percent of Japanese surveyed by the Global Entrepreneurship Monitor said they thought there were opportunities to start a business in Japan, and other indicators show the country has one of the lowest levels of entrepreneurship in the developed world.

Part of the problem is the past. After the success of the pioneering postwar electronics companies, the lure of working for established places created a risk-averse culture.

"[Entrepreneurship] is all about whether you take a risk or not, and parents have great authority and power in Japan. So parents say, 'No, you're actually getting into these companies that pay you a stable income,' " Makiura says.

As parents promote the promise of stability at Japanese giants, the economy misses out on the kind of entrepreneurship it needs.

A concept demonstration at Slush Asia, a tech festival that brings together investors and innovators.

A concept demonstration at Slush Asia, a tech festival that brings together investors and innovators.

Elise Hu/NPR

But lately, energy behind startups is picking up. At Slush Asia, a brand-new tech festival held in Tokyo in late April, the scene and the energy resembled a small-scale South by Southwest Interactive. With the fest's futuristic-looking blow-up domes for talks and demos, an endless line of food trucks, and a focus on bringing together investors and innovators, young Japanese told NPR they felt inspired.

"We're not allowed to wear suits, apparently. That kind of casual event is the first [of its kind] in Japan," Makiura says.

As things are now, young Japanese companies attract only a fraction of the venture capital that American startups do. But talk with venture capitalist Akio Tanaka, whose firm backs Japanese companies — and the outlook isn't so grim.

"Lately we are starting to see larger ideas," Tanaka says. "Ideas we like to back. People who are trying to change the infrastructure of how things are getting done."

He says Japan's economic downturn has helped encourage entrepreneurship.

"Young people now watch what's happening with Sony, Panasonic, all those companies and realize that none of those companies actually are able to offer the kind of lifetime employment they used to offer," Tanaka says.

"We really have to thank ... the failure of some of the big companies, because if they didn't fail, I don't think it actually [would] fuel this growth of startup industries," he says.

Among cheerleaders for this kind of growth is Prime Minister Shinzo Abe, who wants to make life easier for risk-takers. During his visit to Silicon Valley last week, he announced a new government-funded incubator. It will send Japanese companies to the Bay Area for learning and launch.

Abe said unless Japan focuses on the future, the country will get left behind. So policy changes to reduce bureaucracy and encourage investment are happening, and events like Slush Asia are aiming to show young Japanese workers a different path.

"One of the major purpose or goal of this movement is encouraging the younger generations, in the sense that the elder people are discouraging. That's why we need this kind of event," Slush Asia founder Taizo Son said.

It will take more than just one cool event, but if the burgeoning Japanese startup community can start humming, it'll make a traditionbound country a kinder place to create business.

Chie Kobayashi contributed to this story.

Copyright 2015 NPR. To see more, visit http://www.npr.org/.

Transcript

STEVE INSKEEP, HOST:

People in Japan are asking which new companies can do what Toshiba, Sony or Sharp once did. Those big brands made Japanese products famous around the world. What Japan does not have is a crowd of rising startups coming along behind, or at least Japan didn't until now. NPR's Elise Hu explains.

DOGA MAKIURA: My name is Doga from Japan.

ELISE HU, BYLINE: Doga Makiura is Japanese and a startup founder, but he's not a startup founder in Japan. He created businesses in other Asian countries instead.

Why not to be an entrepreneur in Japan?

MAKIURA: Because I think it's boring. There's a bigger, huge, bigger market in everywhere in the world. I mean, Japan is one of the - in shrinking market, and I don't really understand why we would do business in Japan.

HU: He's not alone. Only 6 percent of Japanese surveyed in 2013 said they thought there were opportunities to start a business in Japan. Part of the problem is after the success of the pioneering postwar electronics companies, the lore of working for established places created a risk-averse culture. Makiura explains.

MAKIURA: I think it's, you know, it's all about whether you take risk or not. And the parents have great authority and power in Japan, so the parents say, no, you're actually getting into these companies that pay you stable income.

HU: As parents promote the promise of stability at Japanese giants, the cost to the economy is entrepreneurship. But lately, energy behind startups is picking up.

UNIDENTIFIED MAN: Always question the status quo. I know your parents did not teach you this.

HU: That's a speaker at Slush Asia, a brand-new tech festival where we found Makiura. Imagine South by Southwest Interactive but on a much smaller scale. With the fest's futuristic looking blow-up domes for talks and demos, an endless line of food trucks and a focus on bringing together investors and innovators, the scene certainly feels young and hopeful - Makiura.

MAKIURA: We're not allowed to wear suits apparently. That kind of casual event is the first time in Japan for sure.

HU: As things are now, young Japanese firms attract only about one-twentieth of the venture capital money American startups pull in. But talk with Asian venture capitalist Aiko Tanaka whose firm backs Japanese companies, and the outlook isn't so grim.

AIKO TANAKA: Mainly we are starting to see larger ideas, which, you know, the kind of ideas we like to back. We see people trying to change the infrastructure of how things are getting done.

HU: He credits Japan's economic downturn for helping encourage entrepreneurship.

TANAKA: Young people now watch what's happening with Sony, Panasonic, all those companies and realize that none of those companies actually are able to offer the kind of lifetime employment they really used offer. If they didn't fail, I don't think it actually fuel this growth of startup industry.

HU: Among cheerleaders for this kind of growth is Prime Minister Shinzo Abe, who wants to make life easier for risk takers. During his visit to Silicon Valley last week, he announced a new government-funded incubator. It will send Japanese companies to the Bay Area for learning and launch.

(SOUNDBITE OF ARCHIVED RECORDING)

PRIME MINISTER SHINZO ABE: (Speaking Japanese).

HU: Abe said unless Japan focuses on the future, they'll get left behind. So policy changes to reduce bureaucracy and encourage investment are happening. And at events like Slush Asia, it's hard not to feel at least a little inspired. Taizo Son is the event's organizer.

TAIZO SON: One of the major purpose or goal of this movement is encouraging the younger generations in a sense that the elder people is discouraging. So that's why we need this kind of event.

HU: It'll take more than just one cool event, but if the burgeoning Japanese startup community can start humming, it'll make a tradition-bound country a kinder place to create business. Elise Hu, NPR News, Tokyo. Transcript provided by NPR, Copyright NPR.

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