The Journal The Authority on Global Business in Japan

Japanese entrepreneur Rui Nagamori never imagined that she would one day be a cofounder of a startup. After all, back in 2010, she was married and had only recently given birth to her son. So, the idea of starting a business—let alone a startup—was the last thing on her mind.

But when her marriage began to hit the rocks three years later, she was left with few choices. One of them, she told The ACCJ Journal, was to start a company. But given her lack of business experience and her personal circumstances, she didn’t think she could do it.

“I was a nobody,” Nagamori said. “A single mom, a free­lancer for a long time, someone with a long career gap, and having no experience with e-commerce or apparel.”

In 2013, a year before her divorce, she teamed up with serial entrepreneur Kenji Yoshizawa to cofound CarryOn Inc.

An e-commerce marketplace, CarryOn’s customer-to-customer business model allows mothers to buy and sell children’s lightly used or unwanted apparel. “We operate an online platform for buying and selling ‘carry on’ children’s clothing. Our users are mostly mothers with preschool kids, and we have around 40,000 of them on the platform,” Nagamori said.

With Nagamori as chief operations officer and Yoshizawa as chief executive officer, CarryOn has expanded from a single room in an apartment to an office with some 30 staff in just a few years. They have also successfully raised seed and series funding.

Nagamori projects the number of items sold on CarryOn will reach 750,000 in 2020—up from more than 470,000 since the company’s founding. That makes the platform the largest service for sharing children’s apparel in Japan, she asserts.

Traction on the platform is trending upwards for sure, but has this always been the case? Far from it.

A year after CarryOn was created, few clothes were being traded on the platform, and monthly sales were an anemic ¥100,000 per month.

Needless to say, there was no profit during this period of stagnation, which Nagamori describes as their “dark age.” It lasted three years.

The company was close to running out of cash in those early days, despite their first and second rounds of financing—¥10 million in 2015 and ¥30 million in 2016.

But, by 2017, CarryOn began to gain traction. What changed? It was a combination of pluck, luck, and hard work, Nagamori said.

The financing certainly helped, as it allowed the company to carry out iterations on the platform and strengthen operations—including hiring key staff.

Then, in 2018, Nagamori found herself on national TV, in particular on Gatchi Monday, a popular show that airs on Sundays from 7:30 to 8:00 a.m. on TBS Television.

The program allowed Nagamori to tell the story of CarryOn—and mothers with young children across Japan listened. The result was almost immediate.

Mothers suddenly inundated CarryOn with requests to trade children’s clothing. The challenge for Nagamori and her colleagues then became how to meet the sudden spike in supply and demand.

“Our operation line was already packed, so we almost panicked,” she confessed. “But that is what may happen to startups when they’re picked up by a television program.”

The good news for CarryOn was that they had suddenly risen to the crest of a wave— and done so, apparently, unwittingly.

There are about one million children in the preschool demo­graphic in Japan, and as they grow out of their clothes and require new ones, it’s down to their parents—usually mothers—to source new apparel that fits and to get rid of the items they’ve outgrown.

Governments, industry, and others have recognized the general trend toward sustainability, including the recycling of clothes.

Indeed, companies such as Hennes & Mauritz AB—more commonly known to shoppers as H&M—have, for years, encouraged customers to return used or unwanted clothes free of charge.

This is in line with the United Nations’ Sustainable Development Goals (SDGs), a set of milestones outlined by the organization in 2015. There are 17 SDGs, to be achieved by 2030, covering areas such as poverty, inequality, and climate.

The 12th SDG—responsible consumption and production—challenges the world to improve resource efficiency, reduce waste, and mainstream sustainability practices across all sectors of the economy.

“The apparel industry is moving toward reselling items or gathering mass-produced items. There is a growing responsibility [being placed] on manufactures and customers to meet the SDGs,” Nagamori explained.

That said, the challenge for time-poor moms has always been how to get rid of—or buy and sell—the unwanted or used clothing of fast-growing children, and to do so in a frictionless way.

Despite the advent of smartphones and e-commerce markets such as Mercari Inc., which was created in the same year as CarryOn, the onboarding process and user experience for this segment had been less than ideal.

CarryOn was created to solve that problem for the niche market of parents with children’s clothing to pass on.

To have items listed on CarryOn, parents make a request for a free bag from the company. Having received the bag, they fill it with unwanted clothing and return it.

Upon receipt, CarryOn checks the items for quality, creates a digital profile, and adds them to its inventory.

Buyers simply log into the platform, select the required item, and head to the checkout.

The seller is paid in CarryOn points, which can be used else­where on the site. Payment using gift certificates are also an option.

In addition to their customer-to-customer (C2C) service, this year the company opened a distributor-to-customer (D2C) offering. On that end, CarryOn has created its own brand of children’s underwear, called kinico.

“We made unique kids underclothes with really great quality,” Nagamori said. “It’s a two-piece item made in collaboration with mothers in our community.”

But the company doesn’t just provide a C2C or D2C platform. A core value of CarryOn is to give back to the community. “We have unique collaboration with Japan’s Cabinet Office. We buy clothes and sell them, and the revenue raised is donated to charitable causes through a government-managed project to support disadvantaged children.”

Born and raised in Tokyo, Nagamori studied at Keio University, where she graduated with a Bachelor of Arts degree in aesthetics.

Shortly after graduation—desiring to see the world—she joined a shipping company based in Denmark. She worked in the company’s customer service division for five years.

When she relocated to Japan, she once again followed her heart—this time, exploring her love for the dramatic arts by joining a theater company.

“I loved drama and theater, so I took this once-in-a-lifetime chance to become an actress. But acting usually doesn’t make money, as you know,” she confessed.

In hindsight, she sees a silver lining across even those days of scarcity. “Even if the theater experience was a kind of ‘valley’ for me, I think every experience has helped make me who I am today.”

To survive during that period, Nagamori did side gigs as a bilingual master of ceremonies.

Four years later, with her acting career stagnant, she decided to leave the stage and get married. That was in 2008, five years before CarryOn was created.

Looking back at her zig-zagging professional and personal life, what does Nagamori think of her current status as a startup cofounder?

“I would say my startup life is the second chapter of my life.”

Even as she excels in her new reality, she acknowledges the people and programs that have helped her along the way.

One of them is Ari Horie, an entrepreneur and founder of Silicon Valley-based accelerator Women’s Startup Lab (WSL).

Shortly after raising ¥100 million in financing in 2018—and feeling the weight of responsibility that entailed—Nagamori sought out WSL for advice. In the end, she joined the accele­rator’s four-day intensive initiative, called the Global Innovative Leaders Program.

“I felt very unconfident after raising all that money. I got so stressed out and so scared, so I needed someone who could say something positive and helpful to me.”

During those four days at WSL, the recurring theme focused less on what participants did as entre­preneurs and more on who they are as individuals. The result? “Through the pro­gram, I knew that what I am, or what I believe I am, is always right. I realized that I don’t have to make any apologies to others for who I am.”

After participating in WSL and similar accelerator programs, Nagamori feels that she has matured both as a person and a company founder.

In an effort to pay it forward, she is now a mentor herself—including at Startup Lady, a startup community in Japan that has a goal of empowering women.

John Amari is a writer and editor from the UK who specializes in articles on startups, entrepreneurs, science, tech, and business.