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.

My colleague Ilana Ovental and I examined pandemic media coverage of education at the end of last year. That analysis examined coverage changes. We tracked K-12 topic attention over the previous two decades using Lexis Nexis. See the results here.

I was struck by how cleanly the past two decades can be divided up into three (or three and a half) eras of school reform—a framing that can help us comprehend where we are and how we got here. In a time when epidemic, political unrest, frenetic news cycles, and culture war can make six months seem like a lifetime, it's worth pausing for context.

If you look at the peaks in the above graph, the 21st century looks to be divided into periods. The decade-long rise and fall of No Child Left Behind began during the Bush administration. In a few years, NCLB became the dominant K-12 framework. Advocates and financiers discussed achievement gaps and measured success with AYP.

NCLB collapsed under the weight of rigorous testing, high-stakes accountability, and a race to the bottom by the Obama years. Obama's Race to the Top garnered attention, but its most controversial component, the Common Core State Standards, rose quickly.

Academic standards replaced assessment and accountability. New math, fiction, and standards were hotly debated. Reformers and funders chanted worldwide benchmarking and systems interoperability.

We went from federally driven testing and accountability to government encouraged/subsidized/mandated (pick your verb) reading and math standardization. Last year, Checker Finn and I wrote The End of School Reform? The 2010s populist wave thwarted these objectives. The Tea Party, Occupy Wall Street, Black Lives Matter, and Trump/MAGA all attacked established institutions.

Consequently, once the Common Core fell, no alternative program emerged. Instead, school choice—the policy most aligned with populist suspicion of institutional power—reached a half-peak. This was less a case of choice erupting to prominence than of continuous growth in a vacuum. Even with Betsy DeVos' determined, controversial efforts, school choice received only half the media attention that NCLB and Common Core did at their heights.

Recently, culture clash-fueled attention to race-based curriculum and pedagogy has exploded (all playing out under the banner of critical race theory). This third, culture war-driven wave may not last as long as the other waves.

Even though I don't understand it, the move from slow-building policy debate to fast cultural confrontation over two decades is notable. I don't know if it's cyclical or permanent, or if it's about schooling, media, public discourse, or all three.

One final thought: After doing this work for decades, I've noticed how smoothly advocacy groups, associations, and other activists adapt to the zeitgeist. In 2007, mission statements focused on accomplishment disparities. Five years later, they promoted standardization. Language has changed again.

Part of this is unavoidable and healthy. Chasing currents can also make companies look unprincipled, promote scepticism, and keep them spinning the wheel. Bearing in mind that these tides ebb and flow may give educators, leaders, and activists more confidence to hold onto their values and pause when they feel compelled to follow the crowd.

Are you one of these Zoom dogs?

The Person Who Is Apparently Always on Mute

Waffles thinks he can overpower the mute button by shouting loudly.

The person who believed their camera to be off

Barkley's used to remote work, but he hasn't mastered the "Stop Video" button. Everyone is affected.

Who is driving for some reason, exactly?

Why is Pumpkin always late? Who knows? Shouldn't she be driving? If you could hear her over the freeway, she'd answer these questions.

The Person With the Amazing Bookcase

Cicero likes to use SAT-words like "leverage" and "robust" in Zoom sessions, presumably from all the books he wants you to see behind him.

The Individual Who Is Unnecessarily Dressed

We hope Bandit is going somewhere beautiful after this meeting, or else he neglected the quarterly earnings report and is overcompensating to distract us.

The person who works through lunch in between zoom calls

Barksworth has back-to-back meetings all day, so you can watch her eat while she talks.

The Person Who Is A Little Too Comfy

Hercules thinks Zoom meetings happen between sleeps. He'd appreciate everyone speaking more quietly.

The Person Who Answered the Phone Outside

Frisbee has a gorgeous backyard and lives in a place with great weather year-round, and she wants you to think about that during the daily team huddle.

Who Wants You to Pay Attention to Their Pet

Snickers hasn't listened to you in 20 minutes unless you tell her how cute her kitten is.

One who is, for some reason, positioned incorrectly on the screen

Nelson's meetings consist primarily of attempting to figure out how he positioned his laptop so absurdly.

The person who says too many goodbyes

Zeus waves farewell like it's your first day of school while everyone else searches for the "Leave Meeting" button. It's nice.

He who has a poor internet connection

Ziggy's connectivity problems continue... She gives a long speech as everyone waits awkwardly to inform her they missed it.

The Clearly Multitasking Person

Tinkerbell can play fetch during the monthly staff meeting if she works from home, but that's not a good idea.

The Person Using Zoom as a Makeup and Hair Mirror

If Gail and Bob knew Zoom had a "hide self view" option, they'd be distraught.

The person who feels at ease with simply leaving

Rusty bails when a Zoom conference is over. Rusty's concept is decent.

A TECHNICAL THOUGHT

The IT giant is seeding the digital Great Renaissance.

Recently, technology has been dull.

We're still fascinated by processing speeds. Wearables are no longer an engineer's dream.

Apple has been quiet and avoided huge announcements. Slowness speaks something. Everything in the spaceship HQ seems to be turning slowly, unlike competitors around buzzwords.

Is this a sign of the impending storm?

Metas stock has fallen while Google milks dumb people. Microsoft steals money from corporations and annexes platforms like Linkedin.

Just surface bubbles?

Is Apple, one of the technology continents, pushing against all others to create a paradigm shift?

The fundamental human right to privacy

Apple's unusual remarks emphasize privacy. They incorporate it into their business models and judgments.

Apple believes privacy is a human right. There are no compromises.

This makes it hard for other participants to gain Apple's ecosystem's efficiencies.

Other players without hardware platforms lose.

Apple delivers new kidneys without rejection, unlike other software vendors. Nothing compromises your privacy.

Corporate citizenship will become more popular.

Apples have full coffers. They've started using that flow to better communities, which is great.

Apple's $2.5B home investment is one example. Google and Facebook are building or proposing to build workforce housing.

Apple's funding helps marginalized populations in more than 25 California counties, not just Apple employees.

Is this a trend, and does Apple keep giving back? Hope so.

I'm not cynical enough to suspect these investments have malicious motives.

The last frontier is the environment.

Climate change is a battle-to-win.

Long-term winners will be companies that protect the environment, turning climate change dystopia into sustainable growth.

Apple has been quietly changing its supply chain to be carbon-neutral by 2030.

“Apple is dedicated to protecting the planet we all share with solutions that are supporting the communities where we work.” Lisa Jackson, Apple’s vice president of environment.

Apple's $4.7 billion Green Bond investment will produce 1.2 gigawatts of green energy for the corporation and US communities. Apple invests $2.2 billion in Europe's green energy. In the Philippines, Thailand, Nigeria, Vietnam, Colombia, Israel, and South Africa, solar installations are helping communities obtain sustainable energy.

Apple is already carbon neutral today for its global corporate operations, and this new commitment means that by 2030, every Apple device sold will have net zero climate impact. -Apple.

Apple invests in green energy and forests to reduce its paper footprint in China and the US. Apple and the Conservation Fund are safeguarding 36,000 acres of US working forest, according to GreenBiz.

Apple's packaging paper is recycled or from sustainably managed forests.

What matters is the scale.

$1 billion is a rounding error for Apple.

These small investments originate from a tree with deep, spreading roots.

Apple's genes are anchored in building the finest products possible to improve consumers' lives.

I felt it when I switched to my iPhone while waiting for a train and had to pack my Macbook. iOS 16 dictation makes writing more enjoyable. Small change boosts productivity. Smooth transition from laptop to small screen and dictation.

Apples' tiny, well-planned steps have great growth potential for all consumers in everything they do.

There is clearly disruption, but it doesn't have to be violent

Digital channels, methods, and technologies have globalized human consciousness. One person's responsibility affects many.

Apple gives us tools to be privately connected. These technologies foster creativity, innovation, fulfillment, and safety.

Apple has invented a mountain of technologies, services, and channels to assist us adapt to the good future or combat evil forces who cynically aim to control us and ruin the environment and communities. Apple has quietly disrupted sectors for decades.

Google, Microsoft, and Meta, among others, should ride this wave. It's a tsunami, but it doesn't have to be devastating if we care, share, and cooperate with political decision-makers and community leaders worldwide.

A fresh Renaissance

Renaissance geniuses Michelangelo and Da Vinci. Different but seeing something no one else could yet see. Both were talented in many areas and could discover art in science and science in art.

These geniuses exemplified a period that changed humanity for the better. They created, used, and applied new, valuable things. It lives on.

Apple is a digital genius orchard. Wozniak and Jobs offered us fertile ground for the digital renaissance. We'll build on their legacy.

We may put our seeds there and see them bloom despite corporate greed and political ignorance.

I think the coming tsunami will illuminate our planet like the Renaissance.

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Adopt Elon Musk's learning strategy to succeed.

Medium writers rank first and second when you Google “Elon Musk's learning approach”.

My article idea seems unoriginal. Lol

Musk is brilliant.

No doubt here.

His name connotes success and intelligence.

He knows rocket science, engineering, AI, and solar power.

Musk is a Unicorn, but his skills aren't special.

How does he manage it?

Elon Musk has two learning rules that anyone may use.

You can apply these rules and become anyone you want.

You can become a rocket scientist or a surgeon. If you want, of course.

The learning process is key.

Make sure you are creating a Tree of Knowledge according to Rule #1.

Musk told Reddit how he learns:

“It is important to view knowledge as sort of a semantic tree — make sure you understand the fundamental principles, i.e. the trunk and big branches, before you get into the leaves/details or there is nothing for them to hang onto.”

Musk understands the essential ideas and mental models of each of his business sectors.

He starts with the tree's trunk, making sure he learns the basics before going on to branches and leaves.

We often act otherwise. We memorize small details without understanding how they relate to the whole. Our minds are stuffed with useless data.

Cramming isn't learning.

Start with the basics to learn faster. Before diving into minutiae, grasp the big picture.

Rule #2: You can't connect what you can't remember.

Elon Musk transformed industries this way. As his expertise grew, he connected branches and leaves from different trees.

Musk read two books a day as a child. He didn't specialize like most people. He gained from his multidisciplinary education. It helped him stand out and develop billion-dollar firms.

He gained skills in several domains and began connecting them. World-class performances resulted.

Most of us never learn the basics and only collect knowledge. We never really comprehend information, thus it's hard to apply it.

Learn the basics initially to maximize your chances of success. Then start learning.

Learn across fields and connect them.

This method enabled Elon Musk to enter and revolutionize a century-old industry.