Start It Up!

Advice on turning your big idea into a successful business as an expat

Starting a business anywhere is a demanding endeavor, but doing so in Japan presents its own particular set of hurdles and idiosyncrasies. For those who can navigate the process, however, there are many rewards to be had.

Although the dynamics can vary widely depending on the industry, the top challenges facing startups in Japan include simply breaking into the market, language and cultural differences, the time it takes to build a customer base, bureaucratic requirements, and difficulties raising money. It’s also hard to find staff suited to the brisk-paced, rough-and-tumble, uncertain world of startups. That is according to 10 entrepreneurs and venture capital (VC) investors interviewed for this story.

“This is definitely playing with the difficulty level turned up,” said Jim Weisser, co-founder and chief executive officer of e-signature service provider SignTime KK. Weisser has launched five companies in Japan, some of which have succeeded and one that he says was a “complete flop.”

Yet, Japan also offers many positives and rewards for entrepreneurs—from the loyalty of customers and employees to the high quality of infrastructure and a society that is much less litigious than the United States.

Michael Alfant, founder and CEO of software solutions provider Fusion Systems Group—one of about 25 companies he has started here as well as in mainland China, Hong Kong, Australia, and the United States—said that Japan is one of the most challenging markets to crack, but not that much harder than elsewhere. One big advantage is that Tokyo by itself is the most “target-rich environment” in the world, he told The ACCJ Journal.

“People sometimes lose sight of the density of economic activity in Tokyo, which is the highest anywhere. You’ve got the third-largest [gross domestic product] in the world, and 35 percent of that is accessible to us via the subway,” Alfant said. “In Tokyo, I can easily do four or five meetings a day with clients. If I wanted to do that in Los Angeles, I’d better have a helicopter.”

Sophie Meralli of Eight Roads, a VC fund backed by Fidelity Investment, pointed out that Japan shows strong potential for new businesses in part because it is still in the early stages of digital transformation. “Japan’s economy provides entrepreneurs with numerous opportunities to launch new businesses,” she said. “Due to their position in the adoption cycle of new technologies, entrepreneurs can continuously innovate by transforming the way services can be deployed in Japan.”

It’s a Marathon

Nearly all those interviewed—representing a collective 180 years living in this country—agreed that two key qualities needed for an entrepreneur to succeed in Japan are patience and perseverance. That’s true of any startup, but the more traditional nature of Japanese society and business, which deeply values relationships and trust built over time, requires extra stamina, they said.

“I can guarantee there will always be hard times,” said Terrie Lloyd, who has lived in Japan for 38 years and is the founder and CEO of full-service travel services provider Japan Travel K.K. “If you’re not prepared for those hard times, then maybe you’re not cut out to be an entrepreneur.”

Alfant noted that starting and running a business in Japan is like running a marathon, whereas in other markets where he’s done business—especially New York and Shanghai—it’s like being in a boxing match. “When the bell rings, you have to be on your toes, totally engaged from the first nanosecond, or somebody is going to knock your block off. It’s intense for a shorter period, and then you get a break.”

But in Japan, “you put your head down and you keep putting one foot in front of the other—and you don’t look up for the finish line,” because it’s still a long way off. When you get to the very end, “and you hear the crowd yelling, [then you say] ‘Okay, now I can see the finish line.’”

Start with a Hunch (and Test It)

So how do you start that marathon here? What are the first steps? What lessons can be learned from entrepreneurs who have succeeded and failed in Japan?

“Entrepreneurship is not one size fits all,” Alfant explained. “In fact, it’s the bespoke aspect of entrepreneurship that tends to create value for, and appeal to, a certain kind of person. So, it doesn’t surprise me that you get different answers from different people.”

Lloyd, who teaches classes for would-be entrepreneurs, said that often the kernel of a business idea is simply a hunch. Three of his companies began that way, and all three have done well; two he sold and the third is Japan Travel.

The quality of the hunch is, of course, what makes the difference, according to Lloyd. So, to test out your idea, he recommends finding a mentor, someone who already has entrepreneurial experience and can help you “sort of BS-check your idea.”

Steve Bleistein, founder and CEO of consultancy Relansa, Inc., recommends doing something similar—talking about your idea with a lot of people who might become customers to validate whether it is a credible concept. Some entrepreneurs develop a business idea without really checking to see if there’s an interest in it. That, Bleistein said, is a big mistake. It is through those conversations that you gain valuable information about what exactly your potential customers want.

“This is a way you can mitigate risk,” he continued. “If you’re talking to 12 people who you think are likely buyers of your product, you understand exactly what it is that’s valuable to them. You find out that some of your assumptions were wrong, but some were right. Then you start to discover opportunities that you hadn’t realized existed.”

Some entrepreneurs worry that sharing too much information—even with a mentor—might lead to their idea getting stolen. If that’s the case, then ask them to sign a non-disclosure agreement (NDA), said Lloyd. He has signed NDAs with numerous people who have showed him business plans.

Already having business experience in Japan—and a deep knowledge of the target market—obviously helps with getting a hunch right. Seth Sulkin, who operates hotels and shopping malls and has lived in Japan for 27 years, came up with the idea for Food-e, the upscale food delivery service he started last year, as he was exchanging information about business conditions with struggling restaurant owners early in the pandemic.

But the idea didn’t come out of nowhere. He noticed a trend at his favorite restaurants during the pandemic: none of them delivered. When he began to ask about this, he found that higher-quality restaurants couldn’t rely on mass delivery services because the food couldn’t be reliably transported on time or without being shaken up.

“After talking with 20 restaurant owners, I could see there was a clear opportunity. And it wasn’t something I needed to test,” Sulkin said.

Compelling Idea vs. Fierce Execution

Lloyd explained that once you’ve tested and refined your idea, and it’s becoming a more realistic business concept, you need to ask yourself some key questions:

• How powerful is this idea?
• Does it engross you?
• Do you dream about it?
• Do you wake up thinking about it?

If not, maybe it’s not strong enough, he cautions.

“In years two and three, when things are getting tough, people give up. In fact, most new companies fail within the first three years,” Lloyd said. “But if you have something that’s akin to religion—and you can hold onto that dream—the idea will sustain you through the hard times.”

Alfant has a slightly different approach to this initial “hook,” as he calls it—an information advantage in the market segment he’s targeting. “That doesn’t mean inside information. It means I have access to knowledge and information that gives me an advantage over other entrants into the space.”

And while businesses do need a compelling concept, “ideas are a dime a dozen. Execution is what matters,” he added. “If the idea is so shallow that someone else can go and replicate it or beat me to the punch, God bless them. I view execution as the differentiating factor.”

This is a familiar debate in the world of startups, Weisser said. Some believe that the right idea can rule the world. Others hold the view that an idea doesn’t win without excellent execution, but execution can often lead to success even if the idea is not so good. “I’m firmly in the second camp,” he said, noting that this has been borne out in the US tech industry where “not-as-good” ideas executed fiercely and quickly usually beat out better ideas that take more time to take shape.

Timing Matters (But So Does Planning)

Sometimes, the biggest factor determining a business’s success is timing—particularly in something as fast evolving as technology, Weisser noted. In his case with SignTime, he had discussed the idea of creating a digital signature business for Japan a few years ago, believing that, at some point, Japan would give up its reliance on hanko (personal seals) and faxes. But he wasn’t convinced the timing was right. “A lot of companies have great ideas, but if it’s too early, they go bankrupt.”

When Covid-19 struck, and people were forced to work from home, he knew the moment had arrived. “We’d already laid the groundwork for the company, so getting it up and going, and doing some of our first pitches, was doable,” Weisser said.

The best time to start a business is at the bottom of the market, said Lloyd, who launched Japan Travel shortly after the Great East Japan Earthquake and Tsunami of March 11, 2011, and subsequent nuclear disaster, when foreigners left the country by the tens of thousands. “Thinking about how tourism was devastated after the disasters, I thought, well it’s a great industry to get into.”

Timing may be important, but not at the expense of careful planning, said Andrew Dunbar, who founded his wine importing business Iconic Wine Japan, Inc. about 10 years ago. He cautions against launching too quickly and without investing time in a well-thought-out, five-year business plan. He said having that gave him confidence when things got tough and helped him see the big picture.

“A lot of times, people jump into things quickly, thinking it’s going to work out. But it’s so much better if you have a full written plan and projections for how you’re going to build the business for the first five years,” he explained. “Make a good plan and be able to finance that plan in a credible way.”

Red Tape, No Tape

Once you’re ready to launch the business, the formality of incorporating the company with authorities is relatively easy. The task can be outsourced to a lawyer who can file the necessary papers for you, the entrepreneurs said. Getting approval takes anywhere from several days to three weeks, depending on the circumstances.

The two main options are registering as a kabushiki kaisha (KK), a stockholding company, or godo kaisha (GK), a limited liability company. Essentially, if you’re planning to bring in outside investors, you need to be a KK. If you don’t need a lot of money, you may want to be a GK. Most entrepreneurs in this story registered as the former.

For some businesses, such as consultancies, that’s all you need. But many other kinds of companies require various licenses and approvals specific to the products or services they aim to provide. Acquiring those can take a lot more time.

Anything to do with food and beverages, for example, tends to be heavily regulated in Japan. Having run hotels and shopping malls, Sulkin was familiar with the regulations, but he was still surprised by the amount of red tape he encountered in setting up Food-e.

Since he was using cars and motorcycles, not bicycles, he discovered that if his company wanted to hire drivers directly he needed a difficult-to-obtain license that required him to have his own garage and maintenance staff. So instead, he outsourced the actual delivery part to another company, which required a different license.

Then he was told that alcohol served as part of a delivery service was taxed at a different rate than when served in a restaurant. Initially, authorities said this meant restaurants needed to purchase and store the alcohol for delivery separately. Untangling all this involved several trips to the tax office with lawyers.

“There were just insane layers of regulation,” he said. Before starting a business, “I would highly recommend getting help from lawyers to investigate whether there’s any aspect that is regulated.”

In Dunbar’s case, he had to get a liquor license to import wine, which took about three months, though now it can take up to six months, he said. And he found that waiting times for such licenses can vary by location. Getting permission in Kanagawa Prefecture, where he was initially based, took less time than in Tokyo, which has a reputation for being stricter.

Once Dunbar had the license, the regulatory side of his business was pretty straightforward. It was easier than in the United States, where alcohol regulations are more complex, differing by state and requiring some wineries to hire entire regulatory teams to handle the paperwork, he said. Dunbar has no such headaches here and hired a customs broker to handle his incoming shipment paperwork.

Other businesses—many providing services—are much less regulated. Consulting, for example, has little regulation and is easier to get into because it requires little upfront investment—not even an office. “You need a phone, a laptop … and that’s about it,” said Bleistein.

Given that ease of entry, first-time entrepreneurs should try independent consulting for starters, advised Jeff Crawford, founder and CEO of Zo Digital Japan, which provides digital marketing services-related advice to foreign companies entering the market. “Put together a nice website that basically advertises your services and demonstrates that you’re an expert in some field,” he said. “That’s what I did.”

The finances at a consultancy are also simpler. Once you provide the services, the client pays you. You don’t have to worry about suppliers, delivery costs, or other middlemen as you do in a product business, which tends to be much more capital-intensive and requires owners to handle inventory, production, safety, and delivery. “If you’re looking to start a business in Japan, look really hard at services,” Bleistein added.

On the flip side, that also means there are few barriers preventing competitors from jumping into the same market, Lloyd pointed out. “There is no safety in having a low hurdle to entry. Yes, products are harder and riskier, but if you get it right you have a much longer run before the competition shows up.”

Breaking In

Perhaps the most difficult step in starting a business is finding customers, most of the experts agreed. Clearing this wall is do-or-die for a startup, and it can be particularly hard in Japan, where business is driven so much by long-term relationships. So how do you break in?

Here is where a mentor or consultant with an established network can be a big help by introducing you to potential clients. When Dunbar started his wine importing business, he hired a Japanese consultant who knew the alcohol industry and introduced him to people in the business. “That was a very important step for me, because I was new to the industry.”

That was a start, but Dunbar still needed to make hundreds of cold calls and visit a slew of wholesalers and other related companies to drum up business. While at times the rejections got discouraging, he knew that, to survive, he had to get out there and make connections. And he enjoyed sales, so that wasn’t a problem. He later discovered that he had started his business during a seasonal year-end ebb.

“The sales portion was not something that was scary to me. I’d much rather go and visit customers than almost anything else,” he said. “And in this particular business, it’s all about meeting people. We have to go out and visit our customers—they don’t come to us.”

Similarly, after he set up his consultancy website, Crawford started “pressing the flesh”—going to meetups where he thought he might connect with potential clients. He also attended other relevant events, such as those presented by the American Chamber of Commerce in Japan (ACCJ). “I’m a big fan of going to meetups, introducing myself, and handing out a ton of business cards,” he said.

Crawford, who worked at Microsoft Japan Co., Ltd. and Adobe KK in Japan after having worked in Silicon Valley, also started hanging out at online sites where digital marketers and search engine optimization experts would gather. He would field any questions about Japan to establish his expertise in his niche, and started blogging and creating podcasts. He tried to snag public speaking opportunities and was thrilled to be invited to do so at the ACCJ. Writing and blogging also helped him become more widely known within that business circle and paved the way for better initial conversations with people, he explained.

“If people see you on stage talking about a topic, they view you as an expert,” he said. “It’s great when people come up to you afterwards and say, ‘Hey, we read your content. You sound like you know what you’re doing.’ They already assume you’re competent. They don’t ask questions like, ‘Tell me about your clients.’ They just jump right into their issues. It’s like a level of trust is already there.”

In Bleistein’s radically stripped-down view of starting a business, there really is only one step: finding a customer. Everything else is secondary. Many entrepreneurs mistakenly think they need to have all sorts of systems in place before they launch, he said, but that’s not true.

“At the start, you’re going to be serving one customer—that’s how you get started, that’s how you learn. Everything else will fall into place,” explained Bleistein, who is author of the book Rapid Organizational Change. “There is no capability more important than client acquisition. I don’t care what people say about delivery, expertise, or product ratings. You have to have the ability to acquire customers.”

Branding Yourself

Fariza Abidova said that a key step to gaining clients at her first company, SOPHYS Corporation, a human resources and training business, was to attend events that catered almost entirely to Japanese. This, of course, required language ability. “I was just showing up and talking to people and sharing what I do and my passion.”

Abidova also paid close attention to how she branded herself, stressing and repeating key words and phrases that she wanted people to remember and spread among their networks. For SOPHYS, that was “cross-cultural communication.” For her second company, Trusted Corporation, which was founded in 2016 and helps clients with technological innovation, she stressed the key words “global open innovation.”

One way to divide Japan’s business world is to split it into a business-to-customer (B2C) market and a business-to-business (B2B) market, said Lloyd. The first functions pretty much as it does elsewhere, so is easier to enter, although you need to understand the Japanese consumer psyche, he said. The B2B market is much more political and based on long-term relationships and brand loyalty, making it much harder to break into.

“If you’re a new entrepreneur, my recommendation is to go B2C,” Lloyd said. “But if your expertise is in B2B, then secure your first project before you launch, because it’s going to be a long, hard haul.”

Still, these days, one good way to get business if you’re a tech entrepreneur is to contact Japan’s big, established companies. They are struggling to digitally transform their business, have money to spend, and are looking for people to help them make that transition, according to Annie Chang, founder and president of IT recruiting company AC Global Solutions Ltd.

“The hottest market is now IT, so there are lots of opportunities there,” she noted. “And I think foreign entrepreneurs have an advantage because they generally have more skills and can move more quickly in the market.”

When starting a business, it’s also important not to be too narrowly fixated on your niche or specific business solution, because there simply may not be enough interest in that, Chang said. When she started her company 32 years ago, she needed to be more of a nandemo-monoya, or a shop that sells anything, and be willing to accept a wider range of projects just to get cash flow, she explained.

“Later, when you’re in a better position financially, you can focus more narrowly.”

Language can also be a barrier for doing business in Japan. For Dunbar, being able to speak Japanese was absolutely critical to selling wine. “You need to get in front of your target audience and get them interested in your product. If you have difficulty communicating, that’s going to be a major hurdle to success.”

But in other businesses, particularly IT, language is less of a problem. Early on, Abidova used Japanese to engage potential clients, but these days she communicates in English with most of her customers at Trusted.

Raising Money

In addition to acquiring customers, the other big hurdle is funding your business. If a startup can break even after two years, it’s doing very well—unless you’re a tiny consultancy with very few expenses. During that time, you need to keep spending money.

Nearly all startups are initially self-financed by the entrepreneur’s savings, with additional help from family and friends as the case may be, experts interviewed for this story said. Some service businesses may be able to survive on that plus income generated from the new business—especially if the founder has received a large severance package from their previous job and wants to stay small.

But most product businesses or companies that plan to grow even modestly will need financing help from investors or banks once they get up and running. “If your company is growing at a fairly high pace, you’re going to need more capital,” said Dunbar. “That was especially true for me in a physical goods business.”

Most of the experts said they didn’t borrow from the bank, partly because they found that banks in Japan generally won’t lend to startups, particularly in IT or services. “The bank is the worst place to start unless you have a lot of assets and you want to do a collateralized loan,” said Bleistein. “Banks do not make money on business plans. That’s not their model.”

But there can be benefits to pursuing that route. Dunbar said he obtained bank loans and worked to cultivate relationships with banks as much as possible, and that the Japan Finance Corporation (JFC) is a good place to begin if you are looking for debt financing. Once you establish some payment history with the JFC, it is easier to work with commercial or trust banks.

“I found that even if you don’t need money, if the bank offers it, you should take it,” he said. “This allows you to develop a payment history with them. When it comes time for you to ask for bigger loans, it’s a much easier conversation than if you don’t have a relationship.”

More entrepreneurs said they relied on VC funding, but even that was often hard to obtain. “I think the biggest challenge in growing a business is raising money,” said Sulkin, who first raised money from outside investors 10 months after founding Food-e.

In his experience, Sulkin found that venture capitalists in Japan—despite their name—are very risk averse. “If you’re an unknown entrepreneur, even with the greatest idea ever, you’re still going to have a lot of trouble raising money. And that’s a problem for Japan.”

Fledgling Market

Japan’s VC industry is still small and young compared with that in the United States, but it has grown rapidly over the past 10 years. While it cooled off last year amid the pandemic, funding has bounced back so far this year.

The total number of startups that received funding in Japan peaked at 2,619 in 2018 before falling to 2,055 last year, according to Initial Inc., which tracks new deals. Total deal value slipped from $5.06 billion in 2019 to $4.89 billion last year, but it’s on track to reach a record $6 billion this year. That’s up sharply from the $660 million raised by 1,161 startups in 2012.

Since mergers and acquisitions are not common in Japan, 67 percent of startups exit through an initial public offering (IPO), Eight Roads’ Meralli said. But in recent years, there have been only 50–70 IPOs in Japan. In the United States, there were 407 last year alone.

There are very few second-time Japanese entrepreneurs who have successfully led their first startup to an IPO, Meralli noted. “The industry is quite young, and there is a need to take a bit more risk. When we get more of these, the ecosystem will become much stronger.”

Meralli sees recent growth particularly among the early-stage funds, especially seed and Series A rounds. But she sees a gap in the subsequent “growth stage” funds—Series B, C, D, and so on.

She explained that, while the Japanese government has tried to support the startup market through its growth fund, JIC Venture Growth Investments Co., Ltd., at an early stage, Japan also needs more accelerators—organizations that help startups define and build their products by offering mentoring, connections to investors, and sometimes capital.

Eight Roads Ventures is a global growth stage fund with more than $6 billion in assets under management that invests in technology and healthcare companies. Meralli, who is also an advisor to Tokyo’s Shibuya Ward in its efforts to bring in more startups, said that among foreign entrepreneurs in Japan, she looks for individuals or teams who have experience in their field, demonstrate cultural flexibility, are coachable, and are self-aware.

She said there are always questions such as:

• Why you?
• Why now?
• How big is the market?
• How defensible is your business?

“A lot of foreign businesses see things from their own country’s perspective,” Meralli added. “But do they have a really strong understanding of the Japanese players and market, and why their solution will be better?”

She and her colleagues look very closely at the founding management team when considering investment. One suggestion she offered is to bring on board one or two experienced people who have a local track record and can help refine the startup’s business.

Sulkin agrees. “If you really want to speed up your fundraising process, probably the best thing you could do is get someone who has worked for a famous startup company and borrow their credibility,” he said. “Get them on your board and call them a co-founder. That will jump-start your fundraising.”

Agile Mind

Another big challenge for startups is hiring good staff. This can be particularly hard in Japan, where the pool of talented candidates is smaller because many people work for one company their entire lives. Switching jobs is somewhat unusual, although it is becoming more common.

It’s also difficult to find people who may have experience in your niche, and startups generally aren’t able to use headhunters, because they cost so much.

Sulkin, who has eight employees at Food-e, said he relied on a variety of online recruiting services, some of which worked better than others. Rather than searching only for people with experience in food delivery, he looked for those with consumer-related online experience.

Key qualities he wants in individuals are flexibility and fast thinking—an agile mind. “Someone who can quickly adapt from whatever they were doing before to whatever I’m doing now,” Sulkin said.

Weisser said that, in a startup, you’re typically hiring “for potential more than for the past,” and are looking for someone “who can deal with change every quarter. That’s hard.”

Lloyd said it’s important to appeal to something bigger than simply the chance to make money in an exciting new venture. At Japan Travel, he stressed how the business would help Japan recover after the devastation of March 11.

“I was appealing up Maslow’s hierarchy of needs to self-esteem. That is way above the base level of physiological needs, which I equate with money. The weakest form of loyalty in an employee is how much you’re paying them,” he said.

“For fresh startups, you need an idea that’s so powerful that when people come to work for you, or when people do business with you, they’re thinking about the idea not the underlying economics,” Lloyd added. “They’re there because they believe in that vision.”

Lessons Learned

Entrepreneurship necessarily involves some failures and mishaps—and lessons to learn from them. For Fusion Systems’ Alfant, the biggest mistakes have related to choosing business partners who didn’t share his values. This created friction.

“That doesn’t mean they were bad people, but there was not a consistency of values, ethics, and approach to business and life,” explained Alfant. He added that, as a result of those experiences, at this point in his career, he won’t go into business with people he doesn’t already know and trust, and with whom he shares common values.

Another trap that entrepreneurs can fall into is getting distracted by “shiny new objects,” he continued. Entrepreneurs tend to see opportunities everywhere, so you must train yourself to stay focused. He likened the temptation to a crow building a nest and seeing a sparkling object on the road. When he flies down to pick it up, he gets hit by a car. “In the end, that sparkling thing wasn’t going to help with the nest, but it looked really appealing.”

Alfant has also seen business founders attack minor problems with their most valuable resources. “Intelligent people like to solve problems. But if you’re the captain of the ship sailing through dangerous waters and a small hole appears in the hull, the last thing you need is for your chief engineer and your guy who is the lookout to run down there and try to fix it.”

Crawford said one reason for the failure of a previous consulting business he started—that was designed to provide web advice to US dance and music schools—is his personal lack of interest in what they did. “I had no musical or dance talent. I was sort of in love with the solution and not really in love with the customer,” he explained.

At Zo Digital, he’s more interested “not just in the customer but in the kind of problems they face”—breaking into the Japanese market.

Lloyd likens running a company to flying a plane. You need to pay attention to multiple dimensions. Focusing too much on one will result in a crash. Just as a compass has four points, business founders need to attend to four key stakeholders: customers, suppliers, investors, and staff.

“Most people, when they start their company, worry about the money. So, they go after the shareholders. But after that’s done, they forget about them,” he said. That’s a big mistake, because those shareholders can make introductions, give endorsements, and provide more financing.

Similarly, many people get a deal from a supplier and then leave it at that, Lloyd said. “They don’t keep pushing the supplier to innovate, reduce prices, and provide alternatives.”

Listen … and Exercise!

Listening to your customers—and thinking about their customers—is vital to success, several experts said. Many entrepreneurs are eager to talk and sell their ideas to people, but that often means they can’t hear what potential clients want or see how they can adjust their businesses to meet those needs.

“Instead of spending 80 percent of the time talking and explaining my idea, I try to spend 80 percent of the time listening to what my clients or potential clients want,” said Alfant. “That’s extraordinarily valuable.”

It’s active listening that matters, he said. “I’m not thinking about what I’m going to say next. I’m trying to open up my mind and allow everything my counterparty is saying to come in before I formulate my next statement.” As a president emeritus of the ACCJ, Alfant stressed the many valuable and tireless contributions that entrepreneurs had made over the years. “They are the engines for a lot of the chamber’s activities.”

A final tip from Alfant is about health: the need for exercise. Being an entrepreneur requires physical and mental stamina. Keeping physically fit is an important part of that.

“We tend to lose sight of the fact that it’s not easy to work 60- and 70-hour weeks for years on end,” he said. “You’re setting the tone in your organization. You are the leader. You need to have stamina, be in good physical condition, and have good mental acuity and balance to do that. It’s important for young entrepreneurs to understand this, and allocate time so they can have a balanced lifestyle.”

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Entrepreneurship in Japan and Beyond

Oak Lawn Marketing co-founder Robert Roche shares his personal journey

When entrepreneurs consider entering the Japanese market, often they eye the nation’s capital as their starting point. The allure of Greater Tokyo, with its population of more than 35 million, is strong. But ask American Chamber of Commerce in Japan (ACCJ) Vice President-Chubu Robert Roche where you should start and he’ll invite you west, to the city of Nagoya.

It was there that the entrepreneur, investor, civic leader, and philanthropist got his start building businesses, and he believes that the capital of Aichi Prefecture, in the central Japan region of Chubu, remains one of the best places in the country for entrepreneurs.

He expanded on this while also sharing his personal business journey on September 3, during an event hosted by the ACCJ-Chubu Programs Committee. The virtual session was a one-on-one discussion between Roche and his longtime friend and ACCJ-Chubu External Affairs Committee Co-chair Michel Weenick. Together, in 1990, they helped found the American Business Community Nagoya (ABCN), a hub for the US and greater international business communities in Nagoya. The ABCN became the Chubu chapter of the ACCJ in 2000.

The Magic of Nagoya

Roche joined the session from China, where he currently invests and does business in addition to his US and Japanese endeavors. But he remains very involved in Nagoya. In 2018, he returned to Oak Lawn Marketing, Inc., the company he co-founded with Tadashi Nakamura almost 30 years ago, as executive chairman and president.

Although Oak Lawn Marketing, and its Shop Japan e-commerce brand, are well known today, their start is sure to inspire burgeoning entrepreneurs. Roche shared the story.

Recalling those early years after university, when he had recently married, he explained: “My wife’s family is from Nagoya, and they didn’t want me to be anywhere else. So, I had this constraint of needing to figure out something to do. I didn’t know what to do, but [whatever it was] I needed to do it in Nagoya.”

He soon met Harry Hill, a current ACCJ governor who has long been a leader in the Chubu community as well.

“Harry and I became partners pretty much the second day after we met, in 1990. He had his own business, and I had my ‘business’ that really wasn’t a business—it was just me kind of doing stuff,” he shared. “Then he and I formed H&R Consultants together, and that was really the beginning of a successful creation of a business. We are very complementary. He’s very good at stuff that I’m not very good at, and I’m very good at stuff that he’s less good at.”

Roche said that’s how he got started on the entrepreneurial front. At first, they made just enough money to survive. But after expanding H&R and earning a bit more, he got into the import–export business.

On Air

Initially, Roche was importing Tiffany products and L.L. Bean bags. His partner, Nakamura, being a local with lots of connections in Nagoya, was able to set up some meetings with a local TV shopping company.

“In the early 1990s, there was this show called Waku Waku Terebi Shoppingu. They would tape a one-hour program once a month and run it over and over on 25–30 stations. We were lucky enough to secure a four-minute spot for Tiffany,” Roche recalled.

Soon he found himself selling Tiffany items on television in Japanese—a stint that his mother-in-law enjoyed critiquing—and the seeds for Oak Lawn Marketing and Shop Japan were planted.

As a result of these appearances, Roche gained a reputation for having access to the country’s TV shopping market. One day, in 1992, he received a call from a company in Canada that was selling all sorts of products on CNN. Viewers around the world could call a local number in their country and order items such as the now-famous Didi Seven stain remover. But not in Japan.

The company saw Roche as their path into the market. They told him that he needed to have a call center, a fulfillment center, and all sort of other things.

“I didn’t have a call center. I didn’t have logistics ready. I didn’t have anything,” Roche recalled. “I said, ‘Sure we got it, we’re gonna go, you just let us know.’ And then they said that we had to make a minimum order. I asked how much, and we just scrambled to get the money together. And we ordered all this stuff.”

At the start, Roche and Nakamura just ran calls through their tiny 100-square-meter office. They stored products there as well. The calls started rolling in, and the business grew. Doing fulfillment from the office wasn’t easy. “One of the products was a stepper machine, and some days we’d send out 100. We were landlocked, trapped in the office until the Sagawa guy came and took the boxes away,” he remembered.

“If I was a better planner, I would have had all that stuff in place before the first call came. But we just had to adapt. And that was good, because we learned every key part of the business. The very beginning, that was fantastic.”

Accelerated Growth

The business grew incrementally until they were bringing in about ¥1.5 billion per year. At that point, something different was needed to take the next step.

“As entrepreneurs, we love chaos. We love to be the hero. We love for there to be a problem and then come in and solve that problem,” Roche said. “H&R Consultants kind of went through this. Harry and I ran it, and then we brought in John Coomes to run it, and then Scott Reid, and then Harry went back to the States and did a big development. When he came back in 2004, there really wasn’t a spot for either of us at H&R anymore.”

So, Hill joined Oak Lawn Marketing and this, Roche said, is when things really began to take off.

“The company didn’t need a firefighter anymore; it was getting pretty standard. We had a nice foundation, but what really moved it [to the next level] was that Harry just took over and he banged it out,” he explained. “I think that, from an entrepreneur’s perspective, there is always that time when, as a founder, you have to hand off.”

Fast-forward to 2017 and Hill handed back the baton. “But he gave me a much bigger platform than I gave him,” Roche said.

Making Connections

For the success they have had, Roche credits the environment of Nagoya and the easier access to top executives compared with Tokyo.

One of the things he said was most important to him about being a young entrepreneur in Nagoya was the access to people whom he never would have met in Tokyo.

“There were all these real leaders of Japanese industry who we had access to. We never did business with those guys ever, but we learned from their demeanor, and they told us little things like, ‘Don’t say it that way.’ You would say something [in Japanese] and they would kind of twist their head and you would think, ‘Oh, that’s not the way to say that,’” he recalled. “It was this almost subliminal teaching from true leaders [that helped], and we never would have gotten access to that caliber of leader in Tokyo. The big business guys of the ACCJ in Tokyo do, and now we do. But then? No way.”

To make the most of such opportunities, Roche advises entrepreneurs to learn Japanese.

“If you think you can do this without speaking Japanese, you can—you can be that unicorn—but I’ll tell you right now, it’s better to speak Japanese,” he said.

That’s because it’s the unplanned conversations you end up having with people whom you didn’t plan to meet that can make a difference and lead you down unexpected—and fruitful—paths.

“Learn Japanese if you’re going to do business in Japan, because there are all these seasoned guys like Nakamura, who could not have communicated with me in English. And I learned from that guy. That’s what really made a difference.”

More Advice

“Hire planners.” That was Roche’s tip when Weenick asked if he is a better planner today than he was 30 years ago, when he dove right into the pool of TV shopping. Often, entrepreneurs feel as if they can do it all. But to really succeed requires surrounding yourself with those who are more skilled in areas where you are weak, just as Hill and Roche complement each other in their business endeavors.

“My plan, basically, is to hire people to run the business who are better planners than me,” he said. “I hire people who can plan and not react—because I’ll react for them.”

Then Roche gave his biggest recommendation: Don’t take no for an answer. “I was told no every day, 10 times a day. You can’t do that. You can’t do that.” It’s one of the realities of Japan’s very orderly society—with its resistance to deviating from exactly what has been laid out—that can be discouraging to those wanting to explore new ideas.

But he encouraged people not to let the little things that sometimes frustrate expats get to them. “There is a tendency to get a little bit negative on Japan,” he noted. “We’ve all sat through those complaint sessions. Why do they do this? Why is it that way? Why are a bunch of things out of our control? But, really, it’s the positive nature of this that we should focus on. Japan is a very, very good market, because things don’t change much. And the reality is that most people in Japan want to see foreigners succeed.”

To sum it all up, Roche looked back at how, perhaps by lucky chance, he was accepted into the local business community, the mura (village), as he called it, and why it’s important to become part of the group.

“If you hang out in the village long enough, you understand the rules and you just get incrementally bigger and bigger and bigger. And then you can diversify. I do a lot of business in China, and I do a lot of business in the States, but Japan is a really, really nice base, if you can keep it going.”

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Nurturing Ideas and Creative Minds

We take a look at the entrepreneurial spirit in our business community

Ever since third grade, when my stepfather took me to a store where we bought a rubber stamp emblazoned with Jones Inc., the entrepreneurial spirit has been part of me. I used that little stamp for a company that wasn’t a company to mark the papers on which I captured my ideas for video game concepts. I had a couple of “employees” who contributed their own ideas, which we also stamped. In those days of Atari 2600 cartridges and visually enthralling 8-bit adventures, the idea of creating my own games was exciting. While Jones Inc. never came to be, a few other companies did as I grew up and found my footing in the world of media, design, and publishing. And I can trace those endeavors back to that support from my stepfather, who himself owned a small business.

This spirit is also the reason I enjoy working with so many talented and inspiring businesspeople through the American Chamber of Commerce in Japan (ACCJ) in my role as publisher of The ACCJ Journal. Our community is filled with stories of ideas brought to life and the determination to succeed as an expat in an environment filled with challenges that sometimes differ from those in our home countries.

This issue of The ACCJ Journal is all about taking an idea and turning it into a business, finding funding, navigating the red tape, and making the community better for everyone.

In two feature stories, we gather the experiences, insights, and advice of nearly two dozen ACCJ members, from companies large and small, to help you chart a course through the obstacles that may stand in your way. With the country’s digital evolution and push for more foreign direct investment and business, this is a wonderful time to be an entrepreneur in Japan.

MPowering Ideas

I couldn’t resist this playful title for our cover, inspired by the story of Japan’s first venture capital (VC) fund focused on environmental, social, and corporate governance. MPower Partners and its mission to “revolutionize Japanʼs venture ecosystem via greater globalization, diversity, and innovation” was launched in June by Kathy Matsui, former Goldman Sachs vice-chair; Yumiko Murakami, who previously led the Organisation for Economic Co-operation and Development’s Tokyo Centre; and Miwa Seki, who was head of asset management company Clay Finlay’s Japan office.

I had the pleasure of attending an ACCJ event in July at which the three general partners were joined by MPower Managing Director Eriko Suzuki, who we previously profiled here in The ACCJ Journal back in June 2019, when she was a general partner at VC firm Fresco Capital. I believe that what they are setting out to do is much needed in Japan’s effort to become more competitive on the world stage, and I’ve written an extended recap of the event starting on page 10.

Necessity Is …

Another bit of inspiration I got from chamber events over the past month comes from our Kansai chapter, where Oak Lawn Marketing, Inc. co-founder Robert Roche shared how the company and its Shop Japan brand came to be. What I love about the story is the way in which many of us can relate. Settling into a new life in Nagoya and needing to find a way to make money, Roche took bold steps that paid off. Turn to page 16 to find out just what he did.

Speaking of necessity, new ideas are very much needed if Japan is going to maintain the level of healthcare that so many of us appreciate as the aging society and demographic shifts put increasingly more pressure on the National Health Insurance system. The ACCJ is once again working to bring these ideas to the surface and make them a reality through the Healthcare x Digital (HxD) competition, now in its second year. We have an overview of HxD 2021 beginning on page 22. And just before that, on page 20, ACCJ Healthcare Committee Co-chair John Carlson outlines a new approach to the chamber’s biennial health policy white paper that will make the committee’s advocacy nimbler, allowing it to keep up with the ever-quickening pace of change in healthcare needs.

I hope you find inspiration in this issue of The ACCJ Journal. As always, if you have a story to share, I’d love to hear from you at cjones@accj.or.jp.

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Nagoya Means Business

Reflecting on the region’s supportive business climate

Now more than ever, Nagoya means business. The Chubu region, and specifically the city of Nagoya, has attracted many large tech companies and manufacturers—from automotive to aerospace—because it offers a skilled and talented workforce, affordable land, and a competitive cost of living. With a dedicated focus on creating an innovation ecosystem, Japan’s fourth-largest city has become an attractive location for small business owners and entrepreneurs.

Nagoya has traditionally been a center for manufacturing and industry, but as home to an innovative tech scene it is also fertile ground for startups. As an expat and a serial entrepreneur, I launched several businesses in the early 1990s, of which two are well-known today: Oak Lawn Marketing, Inc. and H&R Consultants K.K.

Oak Lawn Marketing was incorporated in Nagoya in 1993. Now, more than 30 years later, that small startup is a direct-marketing giant with more than 1,000 brick-and-mortar Shop Japan stores selling some 3,500 products in locations across the country.

Over the past three decades, I’ve managed, invested in, or founded more than 50 companies around the world. I chose Nagoya as the location for Oak Lawn Marketing because it’s where I lived when I first came to Japan. As an undergraduate and law student in the United States, I participated in study abroad programs at Nanzan University, where I met my wife.

Starting a business in a foreign country—in my second language—was challenging to say the least. Today it is much easier, and there are so many solid business reasons to choose the supportive environment of Nagoya.

Big Market for Small Business

With so many people from abroad now doing business in Japan, the business community in Nagoya has become much more accustomed to working with non-Japanese. It is also very open to entrepreneurs. While Nagoya is one of Japan’s largest cities, it is somewhat off the beaten track. Yet, with 2.3 million residents, it offers a market that is large enough to develop critical mass. In addition, the cost of living is a fraction of what it is in Tokyo.

Government support for small businesses and entrepreneurship has increased incrementally over the past 20–30 years, and these enhancements all add up to creating a solid environment for foreign entrepreneurs to do business in Japan.

In addition, the government fosters entrepreneurial collaboration through communal spaces, education, and networking opportunities. These include the Nagoya Innovator’s Garage, created by the Central Japan Economic Federation and Nagoya City, as well as Nagoya Connéct, powered by Venture Café Tokyo.

Local universities also provide educational and networking opportunities, while organizations—such as the American Chamber of Commerce in Japan’s Chubu chapter—offer outstanding opportunities for networking and mentorship.

Startup Ecosystem

Recently, I participated in a government task force on startups which brought local business leaders together to enhance regional entrepreneurship and innovation by combining different fields and creating new industries. The goal is for central Japan to expand beyond manufacturing into other industries.

I learned that, in 2019, startups in Aichi Prefecture raised the third-largest amount of funds in Japan. The abundance of ideas, technologies, and support services necessary for startups to grow is providing a tailwind for new businesses. Large companies based in Nagoya are instrumental in supporting the startup ecosystem, and smart human resources are further driving the local economy and actively engaging in innovation activities.

In 2020, Aichi–Nagoya was named a “startup ecosystem global hub city” by the Cabinet Office. This ecosystem aims to realize growth that drives the Japanese economy, and the creation of startups and new industries continues to promote innovation in this central region of Japan.

Government and local business leaders, as well as universities, are working together to form a globally cohesive innovation and startup ecosystem by utilizing the deep tech and manufacturing knowledge that is the strength of the region.

As a lifelong entrepreneur, I’m excited about the opportunities offered to a new generation of dreamers and doers. There has never been a better time to start a business, nor a better place to do it than Nagoya!

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Nagoya Resources for Entrepreneurs

Startup Guide Nagoya
Developed by the Nagoya Innovator’s Garage and Nagoya City, this guide—available in digital and print formats—shares practical information about startups, coworking spaces, business programs, schools, and investors.

Nagoya Innovator’s Garage
Created by the Central Japan Economic Federation and Nagoya City, this coworking space furthers entrepreneurial collaboration through social nights, innovation events, and more.

Nagono Campus
Located in Nagoya City, this renovated elementary school offers three types of offices and serves as an incubation space in which to encounter and blend with people to create new values and form new businesses.

Nagoya Connéct
Powered by Venture Café Tokyo, this innovation promotion and exchange program holds a free event on the fourth Friday of each month that includes panel sessions, workshops, and networking opportunities.

National Innovation Complex
Part of Nagoya University, the National Innovation Complex is home to the Promotion Office for Open Innovation, which aims to establish a structure that enables companies and university researchers to promote and manage large-scale joint research projects.

The Tongali Project
Offered by five universities in the Tokai region, this multifaceted program supports the next generation of entrepreneurs.

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