Japan's startup challenge: 7 reasons

Every day, another Silicon Valley business is bought for a billion dollars, making its founders rich while growing the economy and improving consumers' lives.

Google, Amazon, Twitter, and Medium dominate our daily lives. Tesla automobiles and Moderna Covid vaccinations.

The startup movement started in Silicon Valley, California, but the rest of the world is catching up. Global startup buzz is rising. Except Japan.

644 of CB Insights' 1170 unicorns—successful firms valued at over $1 billion—are US-based. China follows with 302 and India third with 108.

Japan? 6!

1% of US startups succeed. The third-largest economy is tied with small Switzerland for startup success.

Mexico (8), Indonesia (12), and Brazil (12) have more successful startups than Japan (16). South Korea has 16. Yikes! Problem?

Why Don't Startups Exist in Japan More?

Not about money. Japanese firms invest in startups. To invest in startups, big Japanese firms create Silicon Valley offices instead of Tokyo.

Startups aren't the issue either. Local governments are competing to be Japan's Shirikon Tani, providing entrepreneurs financing, office space, and founder visas.

Startup accelerators like Plug and Play in Tokyo, Osaka, and Kyoto, the Startup Hub in Kobe, and Google for Startups are many.

Most of the companies I've encountered in Japan are either local offices of foreign firms aiming to expand into the Japanese market or small businesses offering local services rather than disrupting a staid industry with new ideas.

There must be a reason Japan can develop world-beating giant corporations like Toyota, Nintendo, Shiseido, and Suntory but not inventive startups.

Culture, obviously. Japanese culture excels in teamwork, craftsmanship, and quality, but it hates moving fast, making mistakes, and breaking things.

If you have a brilliant idea in Silicon Valley, quit your job, get money from friends and family, and build a prototype. To fund the business, you approach angel investors and VCs.

Most non-startup folks don't aware that venture capitalists don't want good, profitable enterprises. That's wonderful if you're developing a solid small business to consult, open shops, or make a specialty product. However, you must pay for it or borrow money. Venture capitalists want moon rockets. Silicon Valley is big or bust. Almost 90% will explode and crash. The few successes are remarkable enough to make up for the failures.

Silicon Valley's high-risk, high-reward attitude contrasts with Japan's incrementalism. Japan makes the best automobiles and cleanrooms, but it fails to produce new items that grow the economy.

Changeable? Absolutely. But, what makes huge manufacturing enterprises successful and what makes Japan a safe and comfortable place to live are inextricably connected with the lack of startups.

Barriers to Startup Development in Japan

These are the 7 biggest obstacles to Japanese startup success.

1. Unresponsive Employment Market

While the lifelong employment system in Japan is evolving, the average employee stays at their firm for 12 years (15 years for men at large organizations) compared to 4.3 years in the US. Seniority, not experience or aptitude, determines career routes, making it tough to quit a job to join a startup and then return to corporate work if it fails.

1. Conservative Buyers

Even if your product is buggy and undocumented, US customers will migrate to a cheaper, superior one. Japanese corporations demand perfection from their trusted suppliers and keep with them forever. Startups need income fast, yet product evaluation takes forever.

1. Failure intolerance

Japanese business failures harm lives. Failed forever. It hinders risk-taking. Silicon Valley embraces failure. Build another startup if your first fails. Build a third if that fails. Every setback is viewed as a learning opportunity for success.

4. No Corporate Purchases

Silicon Valley industrial giants will buy fast-growing startups for a lot of money. Many huge firms have stopped developing new goods and instead buy startups after the product is validated.

Japanese companies prefer in-house product development over startup acquisitions. No acquisitions mean no startup investment and no investor reward.

Startup investments can also be monetized through stock market listings. Public stock listings in Japan are risky because the Nikkei was stagnant for 35 years while the S&P rose 14x.

5. Social Unity Above Wealth

In Silicon Valley, everyone wants to be rich. That creates a competitive environment where everyone wants to succeed, but it also promotes fraud and societal problems.

Japan values communal harmony above individual success. Wealthy folks and overachievers are avoided. In Japan, renegades are nearly impossible.

6. Rote Learning Education System

Japanese high school graduates outperform most Americans. Nonetheless, Japanese education is known for its rote memorization. The American system, which fails too many kids, emphasizes creativity to create new products.

1. Immigration.

Immigrants start 55% of successful Silicon Valley firms. Some come for university, some to escape poverty and war, and some are recruited by Silicon Valley startups and stay to start their own.

Japan is difficult for immigrants to start a business due to language barriers, visa restrictions, and social isolation.

How Japan Can Promote Innovation

Patchwork solutions to deep-rooted cultural issues will not work. If customers don't buy things, immigration visas won't aid startups. Startups must have a chance of being acquired for a huge sum to attract investors. If risky startups fail, employees won't join.

Will Japan never have a startup culture?

Once a consensus is reached, Japan changes rapidly. A dwindling population and standard of living may lead to such consensus.

Toyota and Sony were firms with renowned founders who used technology to transform the world. Repeatable.

Silicon Valley is flawed too. Many people struggle due to wealth disparities, job churn and layoffs, and the tremendous ups and downs of the economy caused by stock market fluctuations.

The founders of the 10% successful startups are heroes. The 90% that fail and return to good-paying jobs with benefits are never mentioned.

Silicon Valley startup culture and Japanese corporate culture are opposites. Each have pros and cons. Big Japanese corporations make the most reliable, dependable, high-quality products yet move too slowly. That's good for creating cars, not social networking apps.

Can innovation and success be encouraged without eroding social cohesion? That can motivate software firms to move fast and break things while recognizing the beauty and precision of expert craftsmen? A hybrid culture where Japan can make the world's best and most original items. Hopefully.

His story will inspire you.

“Google search went down for a few hours in 2002; Jeff Dean handled all the queries by hand and checked quality doubled.”- Jeff Dean Facts.

One of many Jeff Dean jokes, but you get the idea.

Google's top six engineers met in a war room in mid-2000. Google's crawling system, which indexed the Web, stopped working. Users could still enter queries, but results were five months old.

Google just signed a deal with Yahoo to power a ten-times-larger search engine. Tension rose. It was crucial. If they failed, the Yahoo agreement would likely fall through, risking bankruptcy for the firm. Their efforts could be lost.

A rangy, tall, energetic thirty-one-year-old man named Jeff dean was among those six brilliant engineers in the makeshift room. He had just left D. E. C. a couple of months ago and started his career in a relatively new firm Google, which was about to change the world. He rolled his chair over his colleague Sanjay and sat right next to him, cajoling his code like a movie director. The history started from there.

When you think of people who shaped the World Wide Web, you probably picture founders and CEOs like Larry Page and Sergey Brin, Marc Andreesen, Tim Berners-Lee, Bill Gates, and Mark Zuckerberg. They’re undoubtedly the brightest people on earth.

Under these giants, legions of anonymous coders work at keyboards to create the systems and products we use. These computer workers are irreplaceable.

Let's get to know him better.

It's possible you've never heard of Jeff Dean. He's American. Dean created many behind-the-scenes Google products. Jeff, co-founder and head of Google's deep learning research engineering team, is a popular technology, innovation, and AI keynote speaker.

While earning an MS and Ph.D. in computer science at the University of Washington, he was a teaching assistant, instructor, and research assistant. Dean joined the Compaq Computer Corporation Western Research Laboratory research team after graduating.

Jeff co-created ProfileMe and the Continuous Profiling Infrastructure for Digital at Compaq. He co-designed and implemented Swift, one of the fastest Java implementations. He was a senior technical staff member at mySimon Inc., retrieving and caching electronic commerce content.

Dean, a top young computer scientist, joined Google in mid-1999. He was always trying to maximize a computer's potential as a child.

An expert

His high school program for processing massive epidemiological data was 26 times faster than professionals'. Epi Info, in 13 languages, is used by the CDC. He worked on compilers as a computer science Ph.D. These apps make source code computer-readable.

Dean never wanted to work on compilers forever. He left Academia for Google, which had less than 20 employees. Dean helped found Google News and AdSense, which transformed the internet economy. He then addressed Google's biggest issue, scaling.

Growing Google faced a huge computing challenge. They developed PageRank in the late 1990s to return the most relevant search results. Google's popularity slowed machine deployment.

Dean solved problems, his specialty. He and fellow great programmer Sanjay Ghemawat created the Google File System, which distributed large data over thousands of cheap machines.

These two also created MapReduce, which let programmers handle massive data quantities on parallel machines. They could also add calculations to the search algorithm. A 2004 research article explained MapReduce, which became an industry sensation.

Several revolutionary inventions

Dean's other initiatives were also game-changers. BigTable, a petabyte-capable distributed data storage system, was based on Google File. The first global database, Spanner, stores data on millions of servers in dozens of data centers worldwide.

It underpins Gmail and AdWords. Google Translate co-founder Jeff Dean is surprising. He contributes heavily to Google News. Dean is Senior Fellow of Google Research and Health and leads Google AI.

Recognitions

The National Academy of Engineering elected Dean in 2009. He received the 2009 Association for Computing Machinery fellowship and the 2016 American Academy of Arts and Science fellowship. He received the 2007 ACM-SIGOPS Mark Weiser Award and the 2012 ACM-Infosys Foundation Award. Lists could continue.

A sneaky question may arrive in your mind: How much does this big brain earn? Well, most believe he is one of the highest-paid employees at Google. According to a survey, he is paid $3 million a year.

He makes espresso and chats with a small group of Googlers most mornings. Dean steams milk, another grinds, and another brews espresso. They discuss families and technology while making coffee. He thinks this little collaboration and idea-sharing keeps Google going.

“Some of us have been working together for more than 15 years,” Dean said. “We estimate that we’ve collectively made more than 20,000 cappuccinos together.”

We all know great developers and software engineers. It may inspire many.

It's kids' digital crack

TikTok is a destructive social media platform.

• The interface shortens attention spans and dopamine receptors.

• TikTok shares more data than other apps.

• Seeing an endless stream of dancing teens on my glowing box makes me feel like a Blade Runner extra.

TikTok did in one year what MTV, Hollywood, and Warner Music tried to do in 20 years. TikTok has psychotized the two-thirds of society Aldous Huxley said were hypnotizable.

Millions of people, mostly kids, are addicted to learning a new dance, lip-sync, or prank, and those who best dramatize this collective improvisation get likes, comments, and shares.

TikTok is a great app. So what?

The Commercial Magnifying Glass TikTok made me realize my generation's time was up and the teenage Zoomers were the target.

I told my 14-year-old sister, "Enjoy your time under the commercial magnifying glass."

TikTok sells your every move, gesture, and thought. Data is the new oil. If you tell someone, they'll say, "Yeah, they collect data, but who cares? I have nothing to hide."

It's a George Orwell novel's beginning. Look up Big Brother Award winners to see if TikTok won.

TikTok shares your data more than any other social media app, and where it goes is unclear. TikTok uses third-party trackers to monitor your activity after you leave the app.

Consumers can't see what data is shared or how it will be used. — Genius URL

32.5 percent of Tiktok's users are 10 to 19 and 29.5% are 20 to 29.

TikTok is the greatest digital marketing opportunity in history, and they'll use it to sell you things, track you, and control your thoughts. Any of its users will tell you, "I don't care, I just want to be famous."

TikTok manufactures mental illness

TikTok's effect on dopamine and the brain is absurd. Dopamine controls the brain's pleasure and reward centers. It's like a switch that tells your brain "this feels good, repeat."

Dr. Julie Albright, a digital culture and communication sociologist, said TikTok users are "carried away by dopamine." It's hypnotic, you'll keep watching."

TikTok constantly releases dopamine. A guy on TikTok recently said he didn't like books because they were slow and boring.

The US didn't ban Tiktok.

Biden and Trump agree on bad things. Both agree that TikTok threatens national security and children's mental health.

The Chinese Communist Party owns and operates TikTok, but that's not its only problem.

• There’s borderline child porn on TikTok

• It's unsafe for children and violated COPPA.

• It's also Chinese spyware. I'm not a Trump supporter, but I was glad he wanted TikTok regulated and disappointed when he failed.

Full-on internet censorship is rare outside of China, so banning it may be excessive. US should regulate TikTok more.

We must reject a low-quality present for a high-quality future.

TikTok vs YouTube

People got mad when I wrote about YouTube's death.

They didn't like when I said TikTok was YouTube's first real challenger.

Indeed. TikTok is the fastest-growing social network. In three years, the Chinese social media app TikTok has gained over 1 billion active users. In the first quarter of 2020, it had the most downloads of any app in a single quarter.

TikTok is the perfect social media app in many ways. It's brief and direct.

Can you believe they had a YouTube vs TikTok boxing match? We are doomed as a species.

YouTube hosts my favorite videos. That’s why I use it. That’s why you use it. New users expect more. They want something quicker, more addictive.

TikTok's impact on other social media platforms frustrates me. YouTube copied TikTok to compete.

It's all about short, addictive content.

I'll admit I'm probably wrong about TikTok. My friend says his feed is full of videos about food, cute animals, book recommendations, and hot lesbians.

Whatever.

TikTok makes us bad

TikTok is the opposite of what the Ancient Greeks believed about wisdom.

It encourages people to be fake. It's like a never-ending costume party where everyone competes.

It does not mean that Gen Z is doomed.

They could be the saviors of the world for all I know.

TikTok feels like a step towards Mike Judge's "Idiocracy," where the average person is a pleasure-seeking moron.

In simple terms, you probably don’t.

But try. Grandma didn't grow up with Facebook, but she eventually joined.

Perhaps the fear of being isolated outweighed the discomfort of learning the technology.

Grandmas are Facebook likers, sharers, and commenters.

There’s no stopping her.

Not even NFTs. Web3 is currently very complex.

It's difficult to explain what NFTs are, how they work, and why we might use them.

Three explanations.

1. Everything will be ours to own, both physically and digitally.

Why own something you can't touch? What's the point?

Blockchain technology proves digital ownership.

Untouchables need ownership proof. What?

Digital assets reduce friction, save time, and are better for the environment than physical goods.

Many valuable things are intangible. Feeling like your favorite brands. You'll pay obscene prices for clothing that costs pennies.

Secondly, NFTs Are Contracts. Agreements Have Value.

Blockchain technology will replace all contracts and intermediaries.

Every insurance contract, deed, marriage certificate, work contract, plane ticket, concert ticket, or sports event is likely an NFT.

We all have public wallets, like Grandma's Facebook page.

3. Your NFT Purchases Will Be Visible To Everyone.

Everyone can see your public wallet. What you buy says more about you than what you post online.

NFTs issued double as marketing collateral when seen on social media.

While I doubt Grandma knows who Snoop Dog is, imagine him or another famous person holding your NFT in his public wallet and the attention that could bring to you, your company, or brand.

This Technical Section Is For You

The NFT is a contract; its founders can add value through access, events, tuition, and possibly royalties.

Imagine Elon Musk releasing an NFT to his network. Or yearly business consultations for three years.

Christ-alive.

It's worth millions.

These determine their value.

No unsuspecting schmuck willing to buy your hot potato at zero. That's the trend, though.

Overpriced NFTs for low-effort projects created a bubble that has burst.

During a market bubble, you can make money by buying overvalued assets and selling them later for a profit, according to the Greater Fool Theory.

People are struggling. Some are ruined by collateralized loans and the gold rush.

Finances are ruined.

It's uncomfortable.

The same happened in 2018, during the ICO crash or in 1999/2000 when the dot com bubble burst. But the underlying technology hasn’t gone away.

Peter Thiel studied philosophy as an undergraduate.

Peter Thiel has $7.36 billion.

Peter is a world-ranked chess player, has a legal degree, and has written profitable novels.

In 1999, he co-founded PayPal with Max Levchin, which merged with X.com.

Peter Thiel made $55 million after selling the company to eBay for $1.5 billion in 2002.

You may be wondering…

How did Peter turn $55 million into his now multi-billion dollar net worth?

One amazing investment?

Facebook.

Thiel was Facebook's first external investor. He bought 10% of the company for $500,000 in 2004.

This investment returned 159% annually, 200x in 8 years.

By 2012, Thiel sold almost all his Facebook shares, becoming a billionaire.

What was the investment thesis of Peter?

This investment appeared ridiculous. Facebook was an innovative startup.

Thiel's $500,000 contribution transformed Facebook.

Harvard students have access to Facebook's 8 features and 1 photo per profile.

How did Peter determine that this would be a wise investment, then?

Facebook is a mimetic desire machine.

Social media's popularity is odd. Why peek at strangers' images on a computer?

Peter Thiel studied under French thinker Rene Girard at Stanford.

Mimetic Desire explains social media's success.

Mimetic Desire is the idea that humans desire things simply because other people do.

If nobody wanted it, would you?

Would you desire a family, a luxury car, or expensive clothes if no one else did? Girard says no.

People we admire affect our aspirations because we're social animals. Every person has a role model.

Our nonreligious culture implies role models are increasingly other humans, not God.

The idea explains why social media influencers are so powerful.

Why would Andrew Tate or Kim Kardashian matter if people weren't mimetic?

Humanity is fundamentally motivated by social comparison.

Facebook takes advantage of this need for social comparison, and puts it on a global scale.

It aggregates photographs and updates from millions of individuals.

Facebook mobile allows 24/7 social comparison.

Thiel studied mimetic desire with Girard and realized Facebook exploits the urge for social comparison to gain money.

Social media is more significant and influential than ever, despite Facebook's decline.

Thiel and Girard show that applied philosophy (particularly in business) can be immensely profitable.