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Author: Kenshin Fujiwara

Welcome to 2019

Happy new year, everyone. I’m writing this blog post in my hometown (as you see it in the above picture) in far north Shiga. This year there is less snow than previous years so it looks like I don’t have to help my dad and younger brother do a thaw work, which I used to do a lot every year in this season. Thanks to global warming, maybe.

For the past few years, I always started my first day of January by reading blog posts written by the people I follow. Most of them are venture capitalists, some are thinkers, and others are just my friends. But this year I’m doing something different. I’m writing one myself.

From my frame of reference, I’d like to make some predictions for 2019 at both macro and micro levels.

China: The country faced (and still is facing) a political difficulty raised around an arrest of the chief financial officer in Canada. Instead of giving a backslash to other countries, my guess is that there will be a lot of M&A initiated by Chinese companies in 2019. Some will be direct against US companies while others will be indirect. Anyhow, China will try to get into foreign markets by leveraging the huge amount of cash reserved by domestic companies and spending it for acquisition. All startups CEOs need to be aware of that.

Japan: Unlike China, the domestic economy will keep shrinking and big companies will also keep their cash as retained earnings rather than spending it for international M&A or acquiring technology asset from startups. To me, it’s nonsense to create SaaS or any business that’s specific to this country. We’ve seen many ‘domestic’ startups raising multi-million dollar investment from VCs and CVCs in 2018, but theoretically it’s just a matter of time for them to go international since there is only limited market here. Startups without proper internationalization and global mindset in place will hit a hard wall.

Concentration: I think we will see more concentration of assets globally. Successful businesses aka GAFA & unicorns will attract more investment and appreciate an influx of talents while others do not. We’ve been in same situation before, but this trend will accelerate even more. On top of that, we need to be aware of concentration of information (or data) as well since it will be the most important asset apart from cash and human resource for next 10 years.

AI: 2018 was definitely the year we recognized that deep learning can do something meaningful to our society, but at the same time we learnt it has certain limits. In 2019, we will see a big edge-AI race between China and United States. I don’t think there is any room left for Japanese companies to jump onto this bandwagon. It’s just too late. However, this is technically “inference on edge side” race so there is still a room for learning on edge side, that is often considered as a true AI.

Venture Funding: As every entrepreneur I know is talking about it already, there may be some crash in venture funding in 2019. I din’t know what will trigger it exactly. It might be so called unicorns with too high valuation facing difficulty for going public. It might be startups raising too much money and missing key milestones that companies promised to their investors. Again, we’ve been in same situation before, but this time an expectation vs. reality gap is huge since more and more venture money was poured into the startups. Thus, all startup CEOs should stick with this founder’s principle: “Raise as much as money while you can.”

I’m feeling a bit sorry to see our country will face yet another economic downtime. But as startup CEO I need to overcome that situation, which will force me to spend more time outside Japan and look for potential deals and markets internationally in 2019.

As I wrote in the previous post, I decided to write all future posts in English only. This decision was made partially due to my above prediction. I need to globalize myself for sure.

Goals for 2019

2018 has been yet another significant milestone for business and personal life. As for business, we just released our first AI-on-chip called HACARUS-X Edge, enabling both learning and inference to be executed on FPGA where a typical deep learning based chip can do only inference.

For those who know a little bit history about ourselves, we started as IoT company initially. We even did a crowdfunding campaign which did not go well, but learnt a lot from it. Thus, the release of above AI-on-chip feels like going back to square one to us.

As for personal life, I and my wife were lucky enough to welcome new family member this year. Nothing makes us happier than inviting new one to our home and live together. We also moved to new place after living in the previous area for more than 5 years, giving us a totally fresh feeling to everyday life.

That being said, the following is a list of goals that I’d like to achieve by the end of 2019.

  • Produce more techno/EDM tracks
    This has been my hobby for the past 30 years. I bought my first synthesizer when I was in high school.
  • Do at least one gig
    Running a startup as full-time CEO is tough business, but it’s not excuse for me that I cannot do a gig. I’m looking forward to do live performance using my own tracks.
  • Write article in English only
    I used to write articles in both Japanese and English. This is my statement of intent going global.
  • Spend more time with family
    Work-life balance is a challenging thing at growing startup. However, a great CEO is always top business man as well as family man.
  • Spend more time outside Japan
    Now, this goal somewhat contradicts above goal. This is required for me to think big and look at the long term.

What’s your goal for 2019?

Difference between CTO and VP of Engineering

This is a consecutive post to Difference Between Co-founder and Founding Member. In fact, the previous post is one of the most read articles on this website indicating many people are constantly looking for the answer to it, which lead me to write this post because I have my own definition between two.

First, I’d like to make my version of concise definition as below.

“CTO is a person who has the most technical knowledge in management team. VP of Engineering is a person who manages engineering team.”

Now, let’s break them into smaller pieces. Amongst many differences between these two types of people, there is a clear distinction in terms of which team in the company he/she belongs to. CTO is considered as a member of management team or often board members. Thus, CTO belongs to the same team to where other C-level people belong including CEO.

On the other hand, VP of Engineering is considered as a member or head of engineering team. Therefore, VP of Engineering belongs to the same team to where other employees belong. Perhaps, there are few startups or companies that appoint VP of Engineering to be a board member.

To make it even clearer, the biggest difference is what these two types of people represent. CTO represents a management team and speaks to employees. VP of Engineering represents an engineering team and speaks to the management team. A direction of communication is completely opposite each other.

More importantly, this is my own perception by the way, CTO was chosen just because he/she happens to be the most technical person in other C-level people. Due to this nature, a language spoken in two parties is also different.

In management team, the official language is business. Everyone in management team talks from business perspective since other C-level people most likely may not understand technical terminologies so that CTO should not use these technical terminologies in board meeting. In engineering team, the official language is of course technical. They are allowed to use any technical terminologies in order to proceed their projects.

A role of CTO is to come up with the means to implement a business decision made by the management team based on outcome from engineering team. A role of VP of Engineering to come up with and experiment the technical solutions toward a problem given by CTO and provide the best possible solution to CTO with reasonable explanation.

Sometimes I happen to encounter a startup lead by young CEO where their CTO is constantly talking about technical details in board meeting. If it’s absolutely necessarily, then it’s okay. But most often, it’s just CTO doing a job of VP of Engineering.

If CTO continues this behavior, then VP of Engineering will start doing a job which people at one level lower are supposed to do. Eventually, the startup will end with paying salary to a whole engineering team where everyone in engineering team is doing a job on which people at one level lower should be working. This is the situation to be avoided, particularly for startup with cash constraint.

Remember, the official language CTO is supposed to use in board meeting is business, not technical. Otherwise, he/she won’t be able to communicate with CEO/CFO/COO/CMO and other C-level people fully. In other words, if VP of Engineering wants to step up to CTO, then he/she must be equipped with some business knowledge at least.

a16z Podcast: Taking the Pulse on Bio

As a CEO of digital health startup, I could not miss this one.

Bioengineering can also benefit from unsupervised learning approach as discussed in another a16z podcast by letting AI show us the unique features that lead to a theory (or CRISPER) rather than having a human ‘guess’ it. There is no doubt that quantum computing will play an important role here in the near future.

I’m 100% certain that new type of entrepreneur who understands both bioengineering and computer science (perhaps, quantum computing) will attract so much attention from VCs as a bio industry needs this kind of talent.

Well, I gotta go back to college and study bioengineering again. :)

American startup disrupting Japanese sushi industry

This Week in Startups episode 783: Jason speaks with Finless Foods co-founder and CEO Mike Selden about how his company produces real fish meat from stem cells, the increasing scarcity of healthy and affordable seafood, more

Finless Foods looks very interesting and promising to me, but at the same time the existence of this startup concerns me being a native Japanese loving sushi so much.

This kind of innovation should happen within Japan, a country surrounded by sea and lived with it for long time, not America. Looking at it from different angle, what we are seeing here is a American startup disrupting Japanese sushi industry.

I’m not talking about Japan vs the rest of the world or anything like that. I’m talking about Japanese government and Japanese startups only trying to ‘rescue’ the people in fishing industry either by pouring millions of dollars of grants into the industry or partially automating the process where human used to do with the help of IT and robotics. Needless to say, both are not considered true innovation.

I’m based out of Kyoto, and we have a top-notch stem cell scientists at Kyoto University which is known as the driving force behind a Nobel prize winning iPS (induced pluripotent stem cell) technology.

Why aren’t we seeing a startup like this here? Should I convince someone to do that? Should I make an angel invest into the startup working on a similar topic and turn around? Or, am I the one who is supposed to get it done myself?

Hmm. There are so many things to work on, but I got a single life to spend. Life is too short indeed.

a16z Podcast: AI, from ‘Toy’ Problems to Production

I like this “end of theory” approach. Some businesses might not need a theory about what’s correct outcome will look like. In other words, AI deployment in the future will always start with unsupervised learning, let the AI tell us unique features, and then define a problem to solve from what the algorithm told us.

Plus, it’s no more about how to implement AI or what technique to use given that the technologies like TensorFlow are available for everyone today. As the podcast says, a couple of data scientists can start a real AI business within few days using these ready-to-use technologies.

It’s about how you pick which business problem to solve in terms of ROI. If you apply a cutting-edge technique to a problem that does not have a meaningful business impact at the company you are talking to, then the whole project is considered as ‘failure.’ You are simply solving a wrong problem.

So my conclusion is that as AI technologies are commoditized the startups whose strength is only technology will eventually go out of business. Instead, the startups that can tell a customer which problem to solve and contribute to the customer’s ROI will stay in business. Sometimes it results in denying what the customer wants to do with AI.

To do that, what you need is not a data scientist or software developer. You need a new type of business person who can take advantage of unsupervised learning and lead a customer in the right direction.

I also agree that a key differentiator will be domain expertise and not AI technology itself, meaning that a startup with the specific vertical focus such as medical imaging will stand out from others. I think this is true for both supervised and unsupervised learning.