The MakeLeaps Guide To Building a Startup in Japan

We’ve learned a lot about the entire process of creating and building a startup in Japan since we started MakeLeaps over three years ago.

As we’re heavily involved in the startup community, both in organising events, going to events, and doing mentoring at Startup Weekend, we’ve had the opportunity to see hundreds of startups trying to find their market, build their product, and grow.

Unfortunately however, the body of knowledge for startups in Japanese is sorely lacking compared to whats available for startups in English speaking countries. What’s considered obvious and old-hat in Silicon Valley are completely new ways of thinking for startups in Japan.

Although this situation is slowly getting better as more books for startups are being translated into Japanese, it’s still a shame as we’ve seen countless startups make similar mistakes over and over again.

As an effort to contribute to this body of knowledge for startups in Japan, I’d like to share some key important points that have made a noticeable difference for us, in the hopes that local startups navigating similar challenges can benefit from these guidelines.

Pick a single pain point and limit the details

The best guaranteed way to build a successful business, is to target a pain point. The worse the pain, the greater the opportunity for building an elegant solution to eliminate that pain.

In our case, it’s invoicing. Everyone hates something about invoicing. Most people hate the whole thing. Some people hate losing track of payments. Some people hate the manual data entry. Some people (all people) hate accidentally sending out invoices with mistakes.

If you ask any business owner in Japan about invoicing, the most common word you hear is “mendoukusai”, meaning troublesome/annoying work.

Perfect.

How does this apply to you?

Think very deeply about the specific pain point your product solves. How are your potential customers navigating this pain now? How are your competitors solving this problem for these customers?

Whether or not you realise it, you have competitors. Even if these ‘competitors’ are not a competing product. They could be a competing process or behaviour.

For MakeLeaps, our biggest competitor is Microsoft Excel, or more specifically people making their invoices in Excel. So, we need to define and understand the specific pain generated from making invoices in Excel. Incidentally, this understanding should drive our product development and marketing.

Focus

There is a common saying that is often applied to startup culture as often as project management, which is “Don’t try to boil the ocean”. It’s better to launch your product with one really great feature, than 10 average features.

If you’re thinking “I have to wait before doing any kind of launch… it’s not good enough yet”, you’re killing your chances for success.

You absolutely must launch as soon as possible, even if it’s alpha, in order to garner real feedback from real potential customers about how effective your proposed solution solves their pain point.

Get good at both getting feedback, and also saying ‘No’

This ties into the previous point. And you’re going to hate this one. We do.

We have a file at MakeLeaps with feature requests from users. It’s over 50 pages long, and it burns us up. We want to build every single one of these features, and make everyone happy.

However critically, when you try to satisfy everyone with your product, you’ll end up satisfying no-one. It’s better for a small group of people to absolutely love your product to the point of telling everyone about it, than it is for a larger group of people to be luke-warm about their bloated software.

So, in a case of unfortunate irony, you must encourage users to give you as much feedback as possible to generate a ‘top-down’ view of general customer needs as possible, while simultaneously not being able to implement most of this feedback. (For a bunch of tips on how to get feedback, check ‘Everything I’ve learned about selling SaaS in Japan’)

As the famous Henry Ford quote goes (the pioneer of the mass produced automobile): If I asked customers what they wanted, they would have said a faster horse.

You need to keep your pulse on what is frustrating your customers at all times, both in the real world, and in the context of using your product. The more this kind of information is bouncing around in your head, the better solutions you will be able to conceive and build to directly address your customer’s pain and frustration.

Side Note

Never, ever promise feature release dates. You will desperately want to promise a date. You will want to say “It will be done tomorrow!” but you can’t. Things beyond your control will pop up, and make it impossible to finish.

Some examples:  a bug will be found in your software, and you need to drop everything to focus on it. An opportunity will come along that will require 120% of your time for 2 weeks, but could be your big break. Someone will leave. Someone will join. You’ll get a call from a big potential customer. A big customer will threaten to leave. A million things can pop up to stop you from completing on-time.

This is why (unfortunately) the most you can ever say, is:

“Thank you for your enquiry, and we’re really grateful that you’re interested in our service. We understand how important this feature is to your business, and it’s on our product roadmap. We’re working very hard to bring this feature to you as quickly as possible, but unfortunately we can’t promise a schedule. We’ve put your name on our list though, and as soon as it’s available, we’ll contact you.”

Love your users

Any time someone who took their precious time to try your new and un-proved product, and has a bad experience, you should feel like you’ve been hit in the gut with a Mack truck. You must do everything in your power to find these unhappy customers, apologise in a human fashion, and make it right.

Your users are by definition the most important thing that can happen to your startup. Treasure and take care of them. They’ve put their faith in you and your ability to solve their problems. Don’t mess it up.

This means:

  • Monitoring social media to be on the lookout for how people feel about your startup
    • Topsy is good, and you can set up daily alerts.
    • Google your brand/startup name. Every 24 hours/ 1 week is good

    • Searching Twitter for your startup name/brand is good
    • Searching Facebook is good, but of course, only people who have set their updates to “Public” will be displayed.
  • Keeping track of incoming links into your domain is good. This will keep you on top of reviews/articles/blog posts written about you.
  • Ensuring your customer support is EXCELLENT. Your customer support is a direct extension of your marketing.
  • Keeping a close eye on ratings/reviews of your software in all the app stores.
  • Doing the right thing by people who have had a bad experience with your startup. As you grow and get more and more users, you will inevitably have a situation where things don’t go well for someone. How you deal with this situation can be a pivotal moment for your startup.

Put simply: love thy user.

Embrace the hustle

One mistake that seems very common in Japan is people getting together to work on a product, and completing neglecting the sales/marketing side of the business.

It’s often said that the 3 perfect people to start a startup are:

  • The Coder
  • The Designer
  • The Hustler

However in Japan there are many startups with 2 coders, or a coder and a designer, without anyone taking on ‘Hustler’ responsibilities.

This is a shame, because startups that have hustle baked into their DNA produce and enjoy far greater success than those that don’t.

What is ‘Hustle’?

Hustle is very analogous to hacking. If hacking is the ability to manipulate systems in a unique way that produces a desirable result, hustle is that same ability applied to sales, relationships, and marketing.

In the same way that very successful hacking can be ‘cheeky’, successful hustle is often cheeky as well. If you’re a coder in an early stage startup, and your sales/marketing makes you a little uncomfortable, that’s probably the perfect balance.

If you’re in an early stage startup, chances are you’re trying to sell a product or concept that has never been successfully sold into your market. That means you need to try everything you can, and capitalise on what was successful, and rinse and repeat. If no-one on your team is focusing on this, you’re going to have a much slower rate of growth, possibly to the point of never reaching inflection point.

If you can find a good hustler who is excellent at sales and marketing in Japan (who also understands software), do whatever you can to hold onto them. Unfortunately these people are extremely rare, and it can be difficult to identify, find and keep them.

If you can’t find one, encourage someone in your team to take responsibility for the sales/marketing. Someone who understands both engineering and sales/marketing can become a powerful force. The commonly accepted term for these people is “Growth Hacker”.

Understand your market

Can you describe a potential customer of your product in deep detail, down to their challenges, frustrations, personality and environment?

If you had to think for a moment, you need to be talking to more potential customers. This is where many people (especially developers) make mistakes. They focus on the product, the features, the back-end, rather than the people who would be using their software.

It’s not good enough to talk to just one or two people or companies. You need to be talking with 30, 50, 80, as many as possible.

This should ideally be done before you write a single line of code.

The only possible exception to this rule would be if you’re building a product to address a pain point or problem you’ve had in your own life or business. Even then, you need to get out and talk to ten’s of customers to ensure that people similar to you are actually experiencing the same problems.

As human beings, we tend to think that everyone is like us, and they experience the same problems in the same way. This is a huge potential pit-fall. Other people do not experience the world the same way as you do. Your worst problem may not be an issue for other people. Your proposed solution may not solve their problem, and hence they won’t be interested or pay you for it.

Get out of the house/office/incubator, and go TALK TO CUSTOMERS!

If you can’t find any customers to talk to now, how do you expect to find customers when the product is done and you’re ready to sell it?

Get into the habit of always finding and talking with customers.

Don’t be discouraged when you go through the ‘trough of sorrow’

The trough of sorrow is a concept made famous by Y Combinator founder Paul Graham. The key idea is after the initial Techcrunch coverage goes away, and the spotlight fades, your 50,000 vistors have turned into 40 signups, and 5 new active users, and 0 paying users.

You’re left sitting there, dazed, unable to process how this could possibly have happened. Traffic dries up, and user engagement is poor. The trough of sorrow is such a wide problem, with so many facets, it’s hard to know where to even get started. Website copy? Marketing? Application? New landing page? New features? Removing features? Improving features? Paying for ads? Stopping paying for ads? It’s easy to flounder.

This is common. Almost everyone goes through it. Even knowing all this, it still hurts. A lot. The feeling is: We poured our hearts and souls into building this product, and no-one cares.

Time spent going through this phase typically involves a lot of staring at walls. If you have co-founders (which ideally you should), this can also provoke a lot of difficult yet necessary conversations about the future of the company, and the next crucial priorities.

We went through the trough of sorrow when we launched our beta and after a couple of months we had about 5 ‘semi-active’ users. Around this point we were stressing out. We went through all the what-ifs:

What if:

  • Japanese companies will never use an online invoicing service?
  • Due to Japanese culture, Japanese companies will never change their invoicing processes because invoicing is too deeply mired in complex business manners to ever trust another company in the middle?
  • Our best feature, the ability to upload your company seal and have it appear on documents, is completely pointless because no-one will actually upload their seal?
  • Our marketing sucks?
  • Our application sucks?
  • This will never work?

It’s easy to get to a negative place quickly when things are looking bleak. However, here is a good quote and a good graph to keep you going.

“If you’re going through hell, keep going.”

Winston Churchill

Here is a graph describing the typical startup process.

The toughest decision when you’re going through this process as described by Eric Ries’s The Lean Startup is whether to pivot the business or persevere through the rough period. This decision becomes far easier the more customers you’re talking to, and the more you understand your target market.

We persevered, completed an acquisition of another company, and tried hundreds of different combinations of marketing, and now we have several thousands of companies using MakeLeaps.

Here is a graph of companies signing up to use MakeLeaps for their quoting/invoicing.

Keep going.

Conclusion

If you’re trying to build a startup in Japan, you’re in a weird place.

There’s not a great deal of information available to you. Society is not set up to support you. In fact, some people might even take a downright negative view of what you’re trying to do, encouraging you instead to ‘get a real job’.

Considering Japan’s culture of building things, and respecting those who do, this is a huge shame. Especially considering all of Japan’s biggest and most famous companies have come from similar humble roots. It’s encouraging however that things are starting to change.

More books and material are becoming available in Japanese in Japan about creating and building startups.

Startup Weekend is becoming more and more popular here, raising awareness about startups.

More and more co-working spaces are springing up, giving creators a place to collaborate and work together.

More and more startup accelerators are springing into existence to give entrepreneurs the support, money, and most importantly mentorship they need to be successful.

More and more events are happening in an effort to bring entrepreneurs together to build a strong and robust startup community. MakeLeaps organises the Hacker News Tokyo events, which commonly get between 50-80 founder/coder/investor/designer/hustler participants.

So, let’s continue building the startup community in Japan in order to support each other, change public opinion to make doing a startup a realistic alternative to joining a huge company, increase the available knowledge base in Japanese, and ultimately increase the number of successful startup companies coming from Japan.

The end-game is a bustling startup eco-system, full of entrepreneurs, successful companies, mentors and investors, leading to more globally successful Japanese companies and products, a more globally competitive Japan, and a revitalised Japanese economy.

Let’s all keep going.

Jay Winder

Jay Winder is the Australian Co-Founder of MakeLeaps. Jason came to Japan in 2001 to study martial arts, set up his first business called Webnet IT in 2003, and set up MakeLeaps in 2010 with the vision of unlocking the potential of freelancers and businesses in Japan with clean and powerful software. If you like, follow me on Twitter.

Other Posts by Jay Winder

This article has 1 comment

  1. Great article! When you were in the trough of sorrow, what was the main point of validation for you to keep walking through hell instead of pivoting?