288. Tech Competition between China, Japan, and Korea, Why IT is King in Japan, and When American Tech Should Expand to Asia (Tsune Shirota)

Tsune Shirota of World Innovation Lab joins Nick to discuss Tech Competition between China, Japan, and Korea, Why IT is King in Japan, and When American Tech Should Expand to Asia. In this episode we cover:

• Can you give us more of your backstory? Three minutes on your path to venture.
• What is WIL?
• How is the capital split up? Break it down for us at that parent level, and then also sort of the stage that you invest in check sizes when you’re investing direct.
• Are you generalists? Do you invest across sectors or are there certain themes or focus areas?
• If we could briefly touch on the LP side, what is the mandate when deploying into venture funds? You mentioned that you’ll invest in emerging funds. Are those that types of funds that have certain geographic thesis or, sector technology-based theses? What is the focus on the LP side?
• Tell us more about the interest of the corporates. Are you launching as these tech companies get to grow stage? Are you launching in Japan and are they helping and benefiting from that? What’s the motivating factor for corporate involvement?
• Is Japan a market that most tech companies should be thinking about? And why and when is the right time for expansion?
• I’d be curious to hear your take on consumer behavior in Japan vis-a-vis China. Are Japanese consumers resistant to Chinese-born companies, or is a Meituan and other super apps viable entering Japan versus a company like DoorDash?
• Are there behavioral sorts of resistance at all to companies founded in different Asian countries or is that not the case? 
• How do you think the buying behavior or corporate business b2b behaviors are different in Japan, then they are in the States, and how does that impact sort of the way that tech companies should approach this new market?
• What’s the state of venture capital in Japan? Can you talk about maybe some stats, data, or trends from a VC standpoint?
• Can you talk a bit about how you shape your views about, you know, global market opportunity for tech companies and products?
• Are there specific categories or sectors that lend themselves better to the Japanese market?
• What’s your take on sort of changes in in work remote work with COVID? And you said, This line is blurring? You know, we’re speaking over zoom now. What’s your take on that? How do you see that playing out?
• What do you know, you need to get better at?
• How can people reach you and follow along with WIL

Guest Links:

• World Innovation Lab
• Tsune’s LinkedIn
• Tsune’s Twitter

The host of The Full Ratchet is Nick Moran, General Partner of New Stack Ventures, a venture capital firm committed to investing in the exceptions.

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Transcribed with AI:

0:00
Tsune Shirota joins us today from Palo Alto. He is partner at the World Innovation Lab. WIL has invested in companies including Wise, Auth0, Asana, Algolia and MURAL. Prior to joining WIL, Tsune was VP of business operations and strategy at Evernote. Tsune, Welcome to the show.

0:21
Thank you. Thanks for having me.

0:22
Yeah. So I’ll give you a quick intro there. Can you give us more of your backstory? You know, three minutes on your path to venture?

0:29
Sure. Absolutely. Okay, let me start from the very beginning, right. I was born to a family of medical professionals in Japan, everyone in my family was either a doctor dentist, or a life science researcher. But growing up, I was more interested in the business and economy, how companies work, and why is this country more developed than that country and that kind of topics. And also, this is not always productive. But when everyone around me thinks something is great, and following your path, like I kind of naturally become skeptical. So when I saw my brother and cousins follow the family tradition and pursue a career in medical, I thought maybe there’s something else, or actually there should be something at least really interesting outside of that path. So anyway, I decided to deviate from the family tradition when I was relatively young. And then I majored in economics and finance and started my career in investment banking in Tokyo. And after a few years, I came to Stanford for an MBA that was 2010. And ever since I’m based in the Bay Area, and my original plan was to pursue investing career right after MBA. So I got an offer to join a large investment firm as an investor post graduation. But through my time at Stanford, I became really interested in entrepreneurship and venture. So on one hand, I actually spent a good amount of time working for an investment firm while at Stanford, and doing investment research and learning investment processes, which was a lot of fun, but I started feeling that I would like to see and work inside a high growth company. And I was feeling that that experience might actually help me become a good investor in the long run, because, you know, I thought I understand the subject better. Right. So um, you know, long story short, I ended up declining an offer to become a public equity investor and, and joined a company with 60, 70 employees. And the company was already funded by Sequoia and Morgan Taylor and was finalizing financing with Ameritech didn’t T. Rowe Price when I was interviewing with them, and that company was Evernote.

2:39
Wow, only 60 to 70 when you joined?

2:41
Yeah, so we were in a small office in Mountain View. And there are only I think, one or two bathrooms. And when I went there for interview, there’s always line. And the company moved to a bigger office in Redwood City, right around the time when I joined, so, yeah,

2:59
At least it wasn’t a garage.

3:01
It was another in the garage, that’s for sure. Yeah. So I was hired by Phil Libin, the co founder and CEO of Evernote, as his chief of staff. Basically, I was a generalist, you know, working on a wide range of topics from, you know, it’s really wide HR systems to customer support, marketing campaigns. But, you know, given my background in finance, and investment banking, and that kind of stuff, my, my focus shifted to analytics entirely. And eventually, I became VP of analytics and biz ops. So my team and I worked with product engineering and marketing to think about, where are we getting customers from? And how are they retained? And what’s the behavior of those users engagement and monetization? and so on? Yeah, I mean, that was good experience. I mean, good. Learning, gave me perspectives into a lot of key aspects of internet software businesses, right? The product model distribution model, the product engagement, monetization, and that kind of stuff, but also, you know, more broadly entrepreneurship and venture, you know, organizational behavior, culture, leadership, and so on. So I was there for four years in total, and then I joined WIL, so we go by WIL as a partner, and that was 2016. And yeah, and since then, I’ve been here for the last five years. And very fortunate to have invested in and work with companies like you know, the like you mentioned and Auto0, Asana, Wise, MURAL, Algolia, and so on.

4:33
Very good. So tell us what is WIL?

4:36
Yeah, WIL is Japan investing entity, but it has a few aspects in it. So let me let me talk about that. The first. Again, it’s it’s a financially driven investment firm. We manage about a billion dollars of capital and investing technology companies globally. And we also invest in venture funds too. We can talk more about that. But another aspect besides that, investment of WiL is that, you know, we providing consultative engagements consulting services for the LPS of the fund. So we are backed by roughly 30 corporates in Japan government, so corporates in Japan like Sony Nissan car company, Suzuki airline banks, insurance companies and so on so forth. And so the vision of the founder of the firm Gen Isayama is that, you know, serving those large corporates is a critical part of this organization. So we have somewhat unique set up like that. So our LPs, get financial returns by missing our fund, but also they work with a subset of our team on many projects. And, you know, we jointly create new products and sometimes launch jayvees the new businesses together, and we run educational programs for the LPS employees on technology trends and launching new products, designing products, so different topics. But yeah, so those different capabilities combined in one entity that that’s WiL

5:59
got it and how is the capital split up, it sounds like you do some of your own LP investing and allocate to funds, you also allocate to startups, maybe break it down for us at that parent level, and then also sort of the stage that you invest in check sizes when you’re investing direct.

6:17
Yeah, so most of the capital is dedicated for the direct investments in startups. And we have a dedicated vehicle for fund investments. It’s a new initiative, we didn’t disclose the size of that effort yet, but we are actively investing in venture funds, emerging ones and established ones. And for the direct investment side, we have in terms of the office location, we have Tokyo in Palo Alto, two locations, and the team in Tokyo primarily looks into the opportunities in Japan. And that effort is basically all in every stage, happy to dive into the state of that venture market there. But you know, the size is relatively small compared to the US and elsewhere. So they look at everything in anything. And Palo Alto location where I belong to, we look at me to late stage investments, you know, typically 10 to 30 million investments per per company, Series B, C, D, sometimes E. So those those mid to late stage rounds, and primarily software and FinTech,

7:21
and these will be tech companies based in the United States.

7:25
Yeah

7:26
yes

7:26
So us and we don’t care that much about the headquarter location these days, but you know, mostly United States and some in Europe. Okay, so one of the most recent investments I lead for the company is firm is Ivan, which is an infrastructure company headquartered in Helsinki. So our mandate is pretty global.

7:46
Very good. Very good. And are you a generalists? Do you invest across sectors? Or are there certain themes or focus areas?

7:55
Yeah, I have focused on three areas. And one is the I mean, let’s say so 80% software, and 20% more consumer oriented internet services. And within that 80%, split into half. One is developer oriented software, like Auth0, Algolia, Ivan, Gong, and the other half is collaboration, productivity software, like Asana and MURAL, and the the 20%, more of the consumer oriented services. Transfer is Wise is one good example. So those are the three areas that I have focused on so far.

8:33
Cool. And then if we could briefly touch on the LP side, so what is the mandate when deploying into venture funds? You mentioned that you’ll invest in emerging funds? Are those that types of funds that have certain geographic thesis or, or sector technology based theses, you know, what, what is the focus on the LP said,

8:56
Yeah, so we have a dedicated effort there. And the high level theme or idea is to create something complimentary to our direct investment efforts. And sometimes the means that different geography so we invested in funds in Asia. Again, our direct investment efforts outside Japan tend to focus on the US and Europe. So the fund investing in funds in Asia kind of makes sense to cover the cast wide net. And for the funds in the US and elsewhere. We tend to so far invested in early stage funds that take care of the investments that we don’t normally do, so that we can have a broader coverage, if you will.

9:42
Got it.

9:42
we’re not limited to just those early stage funds either. So we actually invested in growth stage wants to so trying to cover wide, wide areas through capital from Japan

9:54
are good and tell us more about the interest of the corporates. In Japan, you know, to invest in the fund. Are you launching it? You know, as these tech companies get to grow stage? Are you launching in Japan? And, you know, are they helping and benefiting from that? Or, you know, what’s, what’s the motivating factor for the corporate involvement?

10:17
Yeah. So I mean, there’s several aspects, but one is just pure financial returns from investing in our fund. That’s pretty straightforward. But that’s not the only motivation, obviously. And for strategic angles, there are a couple areas. One is to have exposure to the companies that we invest in. And there are always looking for new technologies that they can use, right. And whether the technology comes from Japanese companies or companies outside Japan, if it fits with their strategic agenda has a very good, right. And we serve as the sort of the research hub in certain areas for them. And we have regular dialogues about what could make sense for them to look into. And we try to have that conversation and then insights from those conversations in our investment research, too. So that serving as a research hub for them is a big aspect. And I briefly mentioned, you know, launching joint ventures and new products with them. So that’s one motivation to so we deploy certain part of our capital that we raised from the LPS into those efforts. So we launched the Smart Lock company in Japan, for example, from that was back in 2015. And that was a joint venture with Sony. So if there’s an opportunity where we can leverage the technologies and brands that these corporates have, and they’re interested in creating new businesses out of it with us, we pursue those opportunities too. And they’re interested in building those new initiatives with us to

11:51
is Japan a market that most tech companies should be thinking about? And why and when is the right time for expansion? We we’ve had some discussions on this show about expansion into Europe, and sort of that from a commercial standpoint, you know, the the percentage of revenues that should be coming from Europe at the time of IPO, you know, give us the case for Japan, if there is a case and when the right time is for expansion?

12:19
Sure. Yeah. That’s a very good question. So let me start from the market of Japan, right for high technology companies in Japan is the second largest country in it spending just by country, if you add up software data center IT services spending, the annual spending in Japan is roughly 150 billion or so 150, 160. And that’s about 20% of North America. And of that 150 billion, it’s actually a service heavy market. So 75% OF THAT IS IT services. And that 75% is much higher than North America, where I think 50, 60% is it service, what and what does it mean? Right, so it’s a sizable market in terms of the spending, but the transition from manual kind of services to software is ongoing, and it’s still early stage. And I envision that the spending would surely convert to more services, I mean, software over the coming years, which will create a lot of opportunities for b2b companies, for example, and technology change happens at a different rate, right at different country. And, but their secular changes, like you know, on the b2c side, the transition to e commerce has real secular trend that happens everywhere in the world, you know, marketplace, video based communication and enterprise side cloud transition to services, from service to software, API driven software, and those transitions will happen. It’s just that the timing is an interesting consideration. And the question is, who’s going to take this market, right, and we’re talking about billions of dollars of annual spending, transitioning from manual services to software over the coming years. And even today, right companies like Slack and GitHub, publicly announced that one point that Japan was their second largest country after the US and large tech companies like Microsoft, Amazon, AWS, Google, Apple, Facebook, all of them have really big business in Japan. Salesforce has $1.2 billion AR just in Japan, which is, you know, pretty meaningful business. So I think, you know, if you’re building a big, you know, large business, you would likely go there at some point, but the question is, when right to your right, yeah, so that’s a pretty nuanced and important question. And generally speaking, you know, I think the company feels ready to take on new initiatives like going to Japan or anywhere, right, new geographies or new initiatives, when they comfortably say yes to three questions. So that’s my perspective is one is, is there a good market opportunity? I mean, Do they understand the opportunity in the first place? And to you know, do they have ideas on the size and scope of the investment? Right. So what what does it take? And then finally, is the return profile? Interesting enough compared to other growth opportunities? So like if, you know, company constantly says, okay, yes to all of those three, I think the company is ready to go in. And unless that happens, regardless of the opportunity, or what I think the entry doesn’t happen, and the timing when the company gains confidence in saying yes to all those three, I think depends in large part of the business model. Right. So for some business models, it totally makes sense to delay that timing, but for others, it makes sense to go earlier. And so let me give you a few examples on starting with b2c model. All right. So DoorDash, just had a press conference in Japan yesterday, saying that they would, they would go there. And they’re now aggressively hiring in Japan or 10s of people’s people. And they have the net revenue of 4 billion and $50 billion market cap, I think, and they take 56% market share in the US, right? So I mean, they built really, really big business in the US, and I think they have Canada. But the point is, you know, they build a really huge business, and then they finally go to Japan. I think it’s their third or maybe fourth country, after US and Canada. And to me, that makes sense, right? Because it’s a local network business and invest a lot locally and dominate the local market and go one by one. And you evaluate the different markets that you want to go next internationally. And if the company says yes to those three questions that I laid out, they’ll go, but the timing is after they reach $50 billion market cap, but still makes sense to me. Whereas, you know, there are other types of b2c businesses where it makes sense to go a lot earlier. Right? So an example is Clubhouse, for example. It’s a new social platform, where creators generate voice based content, right. And the weekly active users for Clubhouse, I think was the highest in Japan, even higher than the US when I looked at the data from I think, Annie a couple months ago. So Japan is is the is the biggest country for them, at least when I looked at the data, and I joined a town hall meeting held by the Clubhouse team, for the Japanese users and the enthusiasm there was crazy people are sharing really passionately about the stories of connecting with their communities and fan base and all that. And that’s great, right, and people just came in the Clubhouse, I don’t think they need to push marketing or anything. And if that happens, I mean, why not hiring a local community manager there, and why not hiring a support person there? I think it makes sense for them to make investment in Japan to get that community going. Right, which is a stark contrast versus DoorDash, which reached 4 billion or $50 billion market cap. And then Okay, we’re gonna go and invest a lot. Versus Clubhouse just naturally, organically, the user arrived at the platform and use the platform. Right? I can I can just keep going.

18:20
Yeah, I remember DoorDash. I mean, one requires more infrastructure. It’s more localized more investment, right Clubhouse a bit…

18:29
For sure.

18:29
Horizontal technology that can scale quicker in NGOs. I’d be curious to hear your take on consumer behavior in Japan vis-a-vis China, right, like talking about DoorDash do that do the Meituans are Japanese consumers resistant to Chinese born companies? Or is like a Meituan? And, you know, other super apps? Are they viable? entering Japan versus a company like DoorDash?

19:00
Yeah, so I mean, for that specific market, there’s an incumbent in Japan called the M icon, which was majority acquired by Line, which is the WhatsApp in Japan. And, you know, Line is trying to create a super app, just like, you know, super app in China. And that’s the play. And so in that market demand Khan and Uber Eats is actually doing pretty well. And there’s DoorDash, that’s coming in right now. And Walt, the Northern European player in in food delivery space is coming into Japan market. So it’s going to be very interesting. But to your point of the domestic versus International, I think. I think it depends in we’ll see what happens in this particular market, but looking at the way how Uber Eats, you know, executing and growing by acquiring a lot of restaurant chains and you know, even to smaller restaurants and building out the infrastructure. I think there’s definitely a chance for international players. To win, I just don’t see, you know, Chinese players playing in that market. In China, you may come, right. So, for example, the ecommerce companies with Coupang from Korea, I think, are there, they’re looking into going to the Japan market, that’s what’s reported. So it’s it’s an opportunity again, so it’s a sizable market. But transition, the secular change in technology is ongoing. So there’s a growth opportunity for many, some markets are taken by domestic players, because of the nature of the market. But you know, you know, oftentimes there are opportunities for international players to

20:36
just just actually spoke in depth about Coupang, with Ben Sun from Primary that was a seed investor. But you know, again, on that question, are there between countries in Asia? Are there behavioral sort of resistance at all to companies founded in different Asian countries? Or is that not the case? You know, like, I know, here in the States, if a company is founded in Canada, I don’t think there’s any resistance whatsoever to us customers embracing it, if it’s the right tech, and I would think vice versa, you know, if it’s the right tech in the US, then Canadians would not be resistant. But is that a thing in Asia or not?

21:17
It might be. But I think what happens more is at least until at this point, right? So the players from non Asian countries did very well, in Japan. Not so much from the internet players from China, Korea, other parts of the world did very well in Japan. So we’ll see it may happen. But I think it’s still still not clear. But you know, speaking Line, which is a dominant messaging platform, it’s it’s a Korean owned business. So you know, and people just love the product. I think there’s a product merit meritocracy in that market, if the product is really designed well and suit the needs of the local people. And then there, if there’s a commitment on the company’s side to invest in the market, there’s definitely a path to thrive. So that’s my view.

22:14
Tsune, you’ve spent a number of years now in the states growing up in Japan, how do you think the buying behavior or corporate business b2b behaviors are different maybe in Japan, than they are in the States? You know, and how does that impact sort of the way that tech companies should approach this new market?

22:39
Yeah, that’s a very good question. Also, two things. One is, you know, Japan is a typical example of the high context culture, right? The communication is more indirect than direct.

22:50
Right.

22:50
And probably there are times when, you know, people from the Western countries think that Okay, so what happened in that meeting?

22:57
I’ve been there. I used to work for an advanced robotics company. And we had, we had some suppliers and some customers semiconductor and printed circuit board manufacturing. And we worked with a number in Japan. And it was, yeah, I mean, often we’d make requests, and we would get the answer. Yes, absolutely. But there was some reading between the lines that the experience folks in the business would, would allude to and stuff. So you can’t just always take things at face value.

23:25
Yeah. So in the culture, I mean, people tend to value Face Time and seeing how you behave. Again, communication is not only the words, but also the way how it’s delivered and expressed and all that. So like, speaking of Line, right, why did that platform do so well in Japan, is precisely because they prepared a lot of different options for people to express their emotions through emoji, like a very rich emoji emoji, by the way, is a Japanese word. And so expressing themselves in a really subtle way. I think that’s the nature of the country and culture. I think that’s one thing to probably keep in mind. And so sometimes, you know, it’s kind of hard to read. But my recommendation always to just show up and show your face and talk to the people audience directly and tell your story, right? Why you are doing what you’re doing, and why you are interested in doing business in Japan. And I mean, they are for sure, wondering if I invest in this dictum, Jose, is this company going to be around and support me for a long term or not? And I mean, who is this and can I trust this person or or company versus the local equivalent? So, again, my advice for the founders is to show up and we traveled Japan with founders of Auth0, Asana, Algolia, Wise, and many others. And, you know, what we did is, you know, again, tell the story show up as a human instead of transactional executive, and we help translate right, fatally and culturally, and people come out of the trouble often times after two rounds of interactions, saying that I actually understood and like this country and market, I think we can build a business here with the people there. So like, I think he requires a little bit the the face to face more direct interactions, and the commitment. But once once that’s there, I think often times, with good intention, there’s an opportunity to build a lasting relationship.

25:22
Yeah, I think it’s probably cliche at this point. But a famous story from from Phil Knight and his Shoedog book, his, you know, his…

25:30
For sure.

25:32
…exploits in Japan, right, getting his Tiger shoes created and all the relationship building and trust that was required. And in order to get that done.

25:41
Absolutely.

25:42
Tsune, what is overall, what’s the state of venture capital in Japan? Can you talk about maybe some stats, data or trends, you know, from a VC standpoint in, in Japan?

25:55
Yeah. So, sure. So let me start with the numbers, right. So it’s a $5 billion a year market growing at 20%, on average, for the last five years. So that’s the size and growth of the market. And let’s just compare that against the US, right us $166 billion market. But actually 76 billion of that is made around the huge rounds, that is bigger than 100 million, which doesn’t happen. I mean, really, in Japan, so let’s just exclude that 7076, the most comparable numbers, 5 billion in in Japan versus 90 billion in the US, and that 90 billion is growing at 8% in the US over the last five years on average. So that’s about five 6% of the US, if you think about that, that size, and that’s about the size of the Seattle summer between Seattle to New York market of the VC, I think, but growing much faster than the US average over the last five years. So that’s that’s the sizing and growth perspective. And in terms of the nature of the investments in Japan, right, so historically, I mean, startups in Japan, historically chose to go public early. And you know, the VC market was small. So there are not many, like huge companies in the first place to but I mean, there are not many opportunities other than angels seed and series A and maybe Series B misters. But that is changing quickly. For example, one over our series A investments, Smart HR just raised 150 million from the leading us based cross border crossover investors like Sequoia Capital Growth, global equities, Light Street, Whale Rock. And they publicly disclosed and reported that they have $40 million in AR growing at 100% plus in the large market in Japan, where they have really strong competitive advantage. So and some of the most explosive growth companies in Japan are building really impressive business like this, right? I mean, doing 10, 20, 30, 40 million US run rate with a strong underlying fundamentals and cost structure with with interesting market potential. So and then the founders of these emerging companies in Japan are hungry for learning about business models, and product models of technology companies outside Japan. But I mean, there’s a language barrier, so they tend to seek counsel in Japanese. And I feel that, you know, I fit with that description pretty nicely. So I increasingly more often meet with high growth companies in Japan these days. And I think he will grow from here to a lot is our expectation

28:45
Is it very Tokyo centric.

28:48
Yes, I would say so. I mean, there are some companies in other regions, for example, Toyota large car company is not in Tokyo, right. And so there are pockets of regions where there’s a big company and university, and they produce a lot of interesting ideas and talents. But mostly in Tokyo will be a kind of right oversimplification, I’d say.

29:13
Got it. Tsune, can you talk a bit about how you shape your views about, you know, global market opportunity for tech companies and products?

29:23
Sure. Yeah, I would say so. The first step is kind of really understand customer perspectives. From my perspective, right? Again, I do believe that there are universal tech trends like transition to cloud, SaaS, video based communication and collaboration, ecommerce, and so on, so forth, but the S curve is different, right? The adoption, timing and curve, the shape of that is different depending on the country. So that’s just the fundamental belief. But the question is, okay, what’s the real secular trend or the theme that I can believe in and just figuring that out is why Part. And the second part is okay, when he when when we think about helping them go global, especially in Japan, what’s the shape of the curve, but what’s the readiness of the market? So one example is the theme, right? one fundamental belief I have is, companies want to build more software, right? But they just can’t build as much as they want. I mean, that’s a real stickler pain, or theme that is relevant for any companies in the world. And I mean, at a given time, there are more things they want to build and fix. But engineering resources, that constraint. So every company needs to find a way to remove the bottleneck, and anything that can provide help. In that regard. I think he’s a great service for any companies in the world. Again, the S curve shape might be different, depending on the region a little bit. So the timing issue stays there. But still, I think that’s a global trend. So like, that’s the reason why, you know, we’ve invested in API driven companies like Auth0 and Algolia. I mean, you don’t need to build functionality, like authentication or search anymore. And just make your software use these functionalities through API. And, and boom, you know, you can focus on other stuff. Right. So which is a big leverage for a business? I mean, same for Stripe, same for Twilio. So I, we think it’s a very important trend. And this opens up a bigger opportunity for software business, right? Because now the users of the software is not human, the software you build is the user of the services. So this opens up the bigger opportunity for just the software industry itself as a whole. And that’s precisely the reason why we are super excited with these companies. And that’s a real global trend. And then Okay, so the question is, where are we, when we help these companies going to Japan market? What’s the shape of S curve? And what’s the situation? And what we tend to do is to start from the customers. Right? Okay. So we think this is the important trend for anyone competing in this world, and is their customer pool already. And so we have, I don’t know, group of 20, 30 CIO CTOs, at least I personally like keeping touch always in Japan, and they are building a really interesting businesses, sometimes large companies, sometimes, you know, startups, and then have regular conversations with them. And what do you think of this emerging product? And do you see yourself using these products? And so we create an opportunity for startup in them to meet and then talk about technology. And we’ve done a lot of those efforts. So that’s roughly the process like a think about a big, big trend and think about, okay, is this product ready from our perspective, or global expansion, and there are some natural organic adoption that happens, right? But again, a real kind of mainstream usage, can this go big in in Japan market, and fortunately for Auth0, for example, so we partnered in 2018. And you head to the CEO publicly tweeted about this, but they grew the Japan business 40x, over the last three years, and country was ready, and they executed really, really well. And so that’s, that’s just one example. But are that that’s the process?

33:12
Are there specific categories or sectors that lend themselves better to the Japanese market? Like you mentioned before IT services, you know, huge opportunity, are there others that are a better natural fit?

33:26
Yeah. So I mean, there are several aspects in it. One is, you know, what’s the distribution model of the product? Right. And so there’s a need perspective, and there’s a distribution perspective. And just starting from the distribution perspective, and even within just software products, you know, if we oversimplify there’s top down sales and bottom up more of the poor product lead growth. And if it’s product lead growth, I mean, it’s possible that people just pick it up and start using the product. Right. So it’s easier to have some kind of early traction, which helps companies to answer the three questions that I mentioned. Okay. So there’s, there’s something going on. So if the company has product lead or organic grassroot growth, then I think there’s a chance for people in Japan to just naturally pick it up and use. So that’s one aspect. The other aspect, I think, is the nature of the product. Right? And if the product is for example, addressing tax compliance in Japanese market, that’s very specific. Right? And HR law compliance, which by the way, he’s, you know, smart HR, the company that I just mentioned, is doing pretty well. Those are hard, right? And I think if it goes down to like less specific about the country’s specific knees, the better. So the infrastructure software, I mean, AWS is a really, really well in Japan. I mean, so they Auth0 right, and some of the more horizontal again, generic, general use case productivity software like Slack, Asana, Notion those products are doing really, really well, too. So I think, you know, whether there’s a specific country component, how big is that, I think is one consideration when you think about the nature of the product that could do well, or not so much in early stage of the company development?

35:23
What’s your take on sort of changes in in work remote work with COVID? And you said, This line is blurring? You know, we’re speaking over zoom now. What’s your take on that? How do you see that playing out?

35:36
Yeah, it’s a very interesting topic, right. And I think it will be hybrid, he’s my guess it’s not like one or the other, I think it’s somewhere in between. And because it will be very hard for anyone to say that, okay, so we have 10 person meeting, and everyone needs to be here. And something like one or two person may need to dial in from somewhere, because they people leave different places, people are allowed to travel going forward. And you know, the company tries to have intimate workplace so that people can build on each other’s ideas and collaborate better. But it’s my view is that it’s going to be very hard to force something. And there needs to be a space where people can actually dial in, even if it’s more in person. And then question is what would happen at that point, and the biggest challenge is not so much about a structural conversation. Okay, so let’s go through from like, one to 10. it, that’s actually easier. It’s more about brainstorming, and building on top of each other’s idea, and generate something new as a group, which requires live interactions and iterations among the group, which is really hard to do online, right? already. And I think in the hybrid world, that continues to be a big challenge. And we invested in this company called mural and mu r a l, which provides online workspace where people can contribute ideas easily, and people can move those ideas forward, just adding on to each person’s input. Because if you think about Scuba Doc, for example, it’s really hard to, quote unquote, mess up what other people wrote? Because it’s a little tricky, right? It looks so similar to define our product that people don’t people want to respect what others contributed. And there’s a long chain of comments on the right hand side, and I can’t see everything anymore. So there’s a limitation to that, that paradigm, like, Okay, so this is paper, right? The physical paper, and it’s converted online. That’s google doc and other documentation apps, we need something else. And we think that for example, mural name URL is one one good answer to that, which is very important for companies to get the best out of the employees intention and efforts and collaboration. So in the hybrid world, what would be needed is what I’m thinking constantly.

38:19
Tsune, What do you know, you need to get better at

38:22
eye management? Too many things to read? Do. And it’s a constant challenge.

38:31
And finally, today, what’s the best way for listeners to connect with you and follow along with? WIL?

38:36
Yeah, my email is first name, at wilab.com WILWIL ab.com. And I read every email that comes in, then we have the Twitter and social presence. So we try to broadcast what our what we’re doing and what our portfolio companies are doing. So it’d be great if you if anyone’s interested, follow our social channels like Twitter, Facebook, and all that.

39:05
Awesome. Well, we’ve we’ve got one portfolio company that’s had a ton of inbound customer interest from Japan. Looking forward to talking to you about that offline and finding one to work on together.

39:18
Absolutely. Yeah. Looking forward to it. And thanks for having me.

39:21
Awesome. Thanks so much. Appreciate it.

39:23
Thank you.

Transcribed by https://otter.ai