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Author: Kenshin Fujiwara

Realizing Why I’m Doing What I’m Doing

This week I was back in my hometown Shiga, where I usually spend Obon break (お盆休み, aka Buddhist vacation) with my family every year.

Since my grandmother just passed away a couple of weeks ago, it was natural for my family members to talk about how she lived 95 years of her life.

My family background is a little bit complicated. I have 3 grandmothers, 2 biologically related and 1 non-related, and 2 grandfathers. I met all of them when I was a child but it was too difficult for me to understand why there are more than 4 grandparents in my family back then.

I never heard of the complete story about how she met my grandfather so it was a good opportunity for me to listen to her whole life story. Thanks to my dad for digging the story at the last moment she passed away.

In 1943 when my grandmother was 19 years old,  she was sent to Dong’an First Army Hospital near the Russian border (called Soviet at that time) as a rescue team member together with 23 nurses of the Japanese Red Cross Society.

On August 9th, 1945, Russia declared war against Japan. While thousands of Japanese soldiers were killed due to the attack by tank and fighter machine gun sweep, she took an escape route from Dong’an to Dunhua which she was told the only secure route. To avoid exposure to Russian soldiers, she had to move during night time only and she kept moving on foot for 2 months.

She and other nurses had their head shaved, painted their face with Chinese ink (墨, which is sort of mud), and made them look like a man soldier. They kept running away in the mountain with military doctors, medics, army nurses, red cross nurses and about 100 patients who were injured.

During the escape, she caught typhus and had a near-death experience. The person who took care of her was my grandfather. He was serving as a medic during the war.

Later they found that Japan was defeated, and became hostages of Russia. They were sent to different prisoner’s camps many times, transferred to Eighth Route Army (八路軍, Group of the National Revolutionary Army of the Republic of China) and forced to work at the hospitals while looking for an opportunity to go back to Japan.

In November 1946, my grandmother and grandfather came back to Japan. Luckily, they did not die. They got married and my father was born.

Below items were discovered when organizing my grandmother’s belongings. These are the photos of the nurses sent to the battlefield and handwritten notes about the entire rescue team activities, including the escaping part.

Long story short, my father is a by-product of the war in a sense so am I. Without war, my grandmother and grandfather never met and I don’t exist today.

I have lots of relatives who work in the medical field. I did not choose to be a doctor, but here I am. Instead, I studied computer science and now running a startup that provides AI for doctors and hospitals.

If there is something that interests you unconsciously, maybe it’s part of your family history.


Why We Switched from HubSpot to Pipedrive

For B2B startups, CRM is a critical tool not only to keep track of prospective customers but also to efficiently communicate with stakeholders including employees and investors.

At our startup, we send the most up-to-date pipeline of all prospective customers to the stakeholders every two weeks. This regular update helps me as a CEO to grasp the overall sales activity of the company and get proper feedback from them. Sometimes we get a direct sales channel via an introduction from the stakeholders. This is another reason why I encourage other startups to do the same.

I believe all employees at any level at an early stage startup should have access to CRM, understand what is going on at the company, and dive deep into an individual project if they want to. This is one of the fundamental rights that should be given to the people working at a startup.

We have been using HubSpot about a year and decided to switch to Pipedrive. This wasn’t the easiest decision to make because we knew what it takes to transition from one CRM to another from our previous experience when we migrated from eSales Manager (Japanese CRM/SFA developed by Softbrain) to HubSpot. But yet we moved to new CRM. Why?

First off, the price was just too expensive. Thanks to HubSpot’s startup program where they were giving us a 50% discount for the professional line of their product. Despite this discount, we weren’t able to add all employees to CRM because doing so would have resulted in nearly $2,000 per month just for CRM and it’s simply too much to pay for the early stage startup.

Next, I was not able to track all email conversations between our sales team and prospective customers in chronological order. Yes, I know HubSpot provides that feature called Team Activity in Sales Dashboard, but it limited to only the most recent 20 email conversations. If I were to look up any older email conversation, then I was forced to look into an individual project and see the conversation there. This was a very time-consuming task at least to me.

Lastly, HubSpot had lots of marketing features that weren’t relevant to us. Again, we know HubSpot offers a separate line of product for marketing purpose but we felt we were paying a bit extra for those marketing features bundled with CRM. We just wanted to use the CRM part of HubSpot and pay for it.

Amongst many CRM solutions available in the market today. Pipedrive caught my eyes. I knew about Pipedrive since 2015 or so but I thought it wasn’t for us because of a lack of Japanese support. However, when I saw this press release saying they opened the official Japanese website and support in Japanese, it changed my mind and made me test-drive this new CRM.

Long story short, now we are finally able to add ALL employees to the same CRM while maintaining the monthly cost significantly low as compared to HubSpot. I can see all email conversations at a single place called Email (Wow, it cannot be more simpler than that!) and Pipedrive excels in just one category, which is CRM. There is no additional marketing feature that we don’t use and don’t want to pay for.

For those who haven’t tried Pipedrive, here is a personal invitation from me. You will get an extended 30-day trial if you apply for a trial through my invitation. Let me know how you use this CRM at your organization.

Different Perspective of Domestic and International VCs

As I started having a conversation with international VCs and CVCs, I noticed there is a big difference in the way they ask questions when they meet a startup founder for the first time.

Domestics VCs or Japanese investors always start a conversation by asking a question like what kind of problem the startup is trying to solve, a product or service the startup is offering, and traction the startup is having at the moment. In short, they want to know a product/market fit and potential market size. Simple.

In contrast, those who are based in North America, the Middle East, SE Asia, and China tend to start a conversation by asking how co-founders meet, the background of each founding member, and a history of the company formation. Their focus is on the people, not on the product. This applies to a startup beyond series A stage that is ready to scale its business.

When I talk to domestics VCs, I never pay too much attention to talking about the founding member’s background because I’m never asked to do so. The slide about the founding members always comes at the end in the pitch deck and I often have to skip it by running out of time. However, I was recently advised to bring that slide to the beginning when I talk to international VCs because that’s what they want to know first.

Why the difference? My understanding is that the belief of the latter group of people is the best investment return comes from a strong founding team, not a strong product. This makes sense given that the startup might have multiple products or businesses in the future. Some might work out okay while others might not.

The startup can survive as long as there is a strong founding team even if all products fail. They can pivot or make adjustments according to changes in the market, and release a new product along the way. If the startup has a strong product but no strong founding team, then it will have to face serious trouble when a big company enters the same market or the product is not selling well anymore.

Maybe this difference is partly due to the fact that there are more serial entrepreneurs internationally than in Japan. VCs need to justify if the founder is a serial entrepreneur or not because that fact alone can change the success ratio of their investment a lot.

Not sure if I’m considered serial enough, but I like the way they treat entrepreneurs. I really encourage Japanese investors to take a hard look at the founder’s background and put more weight on the uniqueness of the founding team.

Book Review: Super Genba

I’m writing this blog post at my hometown in Shiga since we are in the middle of a long holiday (golden week) here in Japan. Just like every other entrepreneur, I’m spending most of my time reading books, learning new things and thinking about what our startup should do in the near future.

Among the books I’ve read, Super Genba caught my eyes. Although this book was written quite some time ago, I was advised to read it by one of our stakeholders so I did it.

What the book insists throughout all chapters is very straight forward. The company that can create a system to manage customer touchpoints and turn them into cash quickly wins.

Apple is a good example. The company manages customers touchpoints by operating its retail store worldwide, and its inventory period is less than 5 days. In other words, Apple can pull hundreds of dollars from your wallet and put them into its bank account very quickly once you decide to purchase any Apple products.

All Apple devices connect to iCloud every couple of days to send the usage data of products whether you like it or not. This is their way of understanding what the customer wants. There is no middleman in between.

A bad example is a typical Japanese company in which its sales activity heavily relies on middlemen like resellers and distributors, and its inventory period easily exceeds 60 days. Again, in other words, they don’t know who their customers are and what the customers really want, and they are paying billions of dollars to keep these inventories. There is no way for them to win against the company like Apple.

We are now living the age of the cloud where creating a direct customer touchpoint is easier than ever. If your competitors are understanding the customers better than you do, then you will lose. It doesn’t matter how good your product or service is. It all about managing customer touchpoints and how fast you can turn them into cash.

I strongly recommend this book to any CEO and entrepreneur running a company in Japan.

PS.
The Japanese edition is also available.

AI in Retail

This is my response to the latest TechCrunch article: Walmart unveils an AI-powered store of the future, now open to the public.

Every time I see this kind of AI-in-retail application, I somehow feel sad. It’s because of the introduction of retail AI is often designed to one particular goal, which is to encourage consumers to buy more foods and goods by analyzing the buying behavior and removing whatever obstacles between the seller and buyer.

To me, this is totally against a food crisis which we will face in the near future. Even worse, more food and good consumption lead to more logistics that will cause more gas consumption.  Electric trucks are coming, but it will take decades for every logistic company to adopt them.

In the ideal world, all foods and goods will be produced nearby a consumer neighborhood. Thanks to the innovation happening in plat factory and 3D printing, we are seeing some of them becoming reality. I’m a big fan of startups that are tackling a non-animal based protein problem.

AI should be used to foster the latter, not to drive the current consumption heavy economy. In the long run, the companies that use AI to create a sustainable economy will gain trust from consumers and eventually win.

What’s Wrong With Japanese AI Talent Education?

The Japanese government finally announced its policy for AI talent education. To me, this is just another instant reaction without thinking too much that we’ve seen many times in the past.

In 1987, the government said we need to educate software engineers because there will be a shortage of 40,000 system engineers and programmers by 2000. In order to solve this problem, the government launched a plan to train 16,000 teachers who would be responsible for teaching programming at junior high school.

Did Japan become a top country in this domain? Nope. India, China, Vietnam, and the Philippines are doing a much better job right now.

In 2016, the government said we need to educate security experts who can prevent the country from getting cyber attacks because there will be a shortage of 200,000 security experts. Again, Israel and Chine are doing a much better job. Do you see the pattern here?

When the government says ‘educate’, it means they are trying to create more users, not inventors. Creating more AI users, particularly people who can use deep leaning, do not make Japan the leading country in AI. In fact, it’s forcing people to become consumers of AI, not producers. There is a huge gap between the two.

Look at Canada. Why does this country host so many scientists who contributed to fundamental research in AI? To name a few, Yoshua Bengio, Geoffrey Hinton, Yann LeCun, and Robert Tibshirani (a core contributor of LASSO which my startup uses it a lot), they are either born, lived, studied or worked in Canada.

If Japan were serious about being the leading country in AI, then all investments should be made toward creating more researchers in statistics, mathematics, machine learning, and AI fields. I strongly feel sorry for our children who are obligated to go through this ridiculous education policy driven by the government.

We must do something about it.

Narrowing Down To Two Slack Channels

First off, I’m not exactly a big fan of Slack. I feel like I’m forced to find a tiny comment within a thousand lines of source code written by someone else. If you are a software developer, you know what I mean.

That feeling is coming from the fact that Slack is mainly designed for a software developer and it’s a very text-heavy product. Slack is an awesome communication tool when you use it properly in your organization. But at the same time, it can kill your time as CEO.

As a company gets bigger, you as a CEO get invited into so many Slack (or Facebook, WhatsApp, whatever messaging app) channels that you should not be part of. Even though I’m making my position crystal clear, I keep getting such an invitation from the people inside and outside the company all the time. When that happens, I simply share my above blog post and quit the channel with a little apology.

My ultimate goal is to narrow down my Slack channels into just two. They are not #general and #random channels, where you are a member by default. I’m talking about #whatceoisthinking and #troubleshooting channels.

The former is what the channel name says. It’s a place for the CEO to share his/her thoughts company-wide. The latter is the place for the employees where they can request a special assistance from the CEO in order to troubleshoot anything that’s preventing their job from getting it done.

Troubleshooting is the privilege of the CEO and not so many CEOs think that way. Let’s take a look at my typical day schedule. I will explain why.

Amongst the tasks listed above, everything except for the last item can be done by other people. You can delegate these tasks to your employees. However, there are types of troubles that can be solved by the CEO only and they range from fixing a relationship between employees to making an apology to a loyal customer.

You as CEO want to troubleshoot anything as early as possible because it gets really messy if you leave it for quite some time. In order to do so, you need a channel to watch out for any potential trouble within the company. This is the reason why you need a dedicated channel for it and you need to be open for feedback from the employees.

Hopefully, one day I can be the CEO who runs his company by dealing with these two channels only.

CEO Must Not Work More Than 8 Hours A Day

This is my response to the latest episode from This Week in Startups podcast. The talk was done by Joel Spolsky, a founder of Stack Overflow and Trello. The latter was acquired by Atlassian for $425 million as we all know.

During this 50 minutes long conversation, I particularly liked the below statement.

“I rarely worked more than 8 hours a day in my entire career because I figured if I’m working more than 8 hours a day then I have failed to delegate something.”

A delegation, in other words, letting someone else do a job for you is one of the fundamental tasks that a CEO needs to do. If a CEO can leave the office before anyone, it is a good sign that the CEO is actually doing the right job.

Instead, the CEO should spend 100% of his time for hiring people smarter than him and making sure a company doesn’t run out of money. Telling a vision and defining a long-term goal is another thing only the CEO can do.

If you are a CEO working more than 8 hours a day or doing jobs other than ones stated above, then you are not doing the right job. You need to hire people to whom you can delegate a job. You need to finance in order to hire these people. You need to tell them a vision and a long-term goal so they don’t lose their way.

English Education in Japan Is So Wrong

I’m hugely concerned about the recent moves made by the Japanese government and its direction trying to introduce more textbooks into elementary school.

Now, there are new programming and English textbooks. The amount of pages in the entire textbooks is increased by 10% and the children in elementary school have to deal with them for the same amount of time as before.

This kind of bombing does not help English education in Japan get better. Please stop.

Japan has a reputation for bad English education. Japan is one of the very few countries in Asia where people from outside have serious difficulties communicating in English. It’s nothing but shame on us.

What we need is not a textbook nor proper grammar even. Why not adopt iPad and online English lessons? We need to get rid of our common sense that teachers must have a physical presence in the classroom.

The number of good English speaking teachers and the number of schools in Japan simply don’t match. There are too few GOOD teachers and too many audiences. We must adopt new technology rather than keep pouring old fashioned textbooks into the classroom.

New Policy At Tokyo Stock Exchange

As anticipated, TSE (Tokyo Stock Exchange, Inc.) announced its new policy about the companies listed in the 1st section as well as restructuring plan for other 3 sections.

First off, I really like the ideas behind these changes. TSE 1st section has been criticized by foreign investors for so long by the fact that there are simply too many companies listed and very few companies are doing disclosure in English.

To them, the TSE 1st section is a hard-to-choose market and hence wasn’t appealing until now. Plus, there wasn’t a clear set of rules for the companies to be disqualified from the 1st section. Now that a company whose valuation is below $250M and not doing disclosure in English will be disqualified and forced to be out of the 1st section.

It’s not just a matter of IR. It’s a matter of CEO running a public company as well. There has been a clear message made by TSE, saying a CEO needs to communicate with foreign investors with his/her own words.

Apart from the new policy introduced in the 1st section, the other 3 sections will be merged into 2 sections, namely Emerging and Standard. I assume current Mothers and JASDAQ will be merged into one and the 2nd section will remain as it is under a different name.

What I would like to point out here is the existence of TOKYO PRO Market, which is TSE’s 5th section that no one ever knows about. The original inspiration of the TOKYO PRO Market was AIM (Alternative Investment Market) at the London Stock Exchange.

For those who don’t know history of TSE, TOKYO PRO Market was named after AIM and it was called TOKYO AIM back in 2009. Unfortunately, there wasn’t a single company that went public in TOKYO AIM for years. Eventually, TSE decided to change the name to TOKYO PRO Market upon dissolution with the London Stock Exchange in 2012.

To me, a concept of the TOKYO PRO Market is still valid and sounds promising. Japanese startups definitely need this kind of alternative market where only professional investors are allowed to participate. By professional I mean, institutional investors who make a decision based on a company’s long term vision and future value created by the company. Not ones who buy and sell a stock based on short term observation.

We still don’t know the exact criteria about the new Emerging and Standard sections. However, there is a rumor saying the hurdles for these two sections will be raised too. I’m hoping TSE will do something about TOKYO PRO Market so that startups can choose a proper market according to the nature of their business when going public.

If a startup is B2C, then what used to be Mothers where a lot of individual buyers/sellers participate might be appropriate. If a startup is B2B, biotech or R&D oriented, then TOKYO PRO Market might be the right one.

The biggest problem about TOKYO PRO Market is there is no unicorn listed there and the amount of transactions is nearly zero. It’s a chicken and egg problem, but it can be solved. We need to create demand first so having a unicorn going public in that market is crucial.