Japan Tech Learnings - Fall 2024

I hosted a some dinners and meet-ups in Tokyo last week with startups and VCs. My first business trip to Japan since 2019. A lot has happened since then, and also not a lot ?? but these are a few fascinating things I learned:?

• The Japanese government is investing 10x in startups. Currently they have put in US$7B, and plan to go all the way to US$70B by 2027, in comparison Hong Kong just announced a US$1.3B fund. Also foreign companies are investing 70% more than they ever have thanks to geopolitical tensions with you-know-who.
• You’ve heard of Station F, in Paris? Softbank just opened Station AI in Nagoya.
• There is a beautifully designed CVC co-workspace, a place where corporates go to be work on innovation and some big non-tech Japanese brands are there like Asahi, Canon and Takara Tomy.?It’s beautiful and in Toranomon Hills part of the Mori Building’s trinity of super tech complexes that include Roppongi Hills (Where Apple and Microsoft are) and Azabudai Hills (The VC area).

• Japan has been an engineer focused tech ecosystem - not a software one - and they are taking time to figure out how to shift to what they are good at in building startups. So much about this makes sense as to why Japan isn't flush with tech companies, Hardware/IoT is hard to do today with other countries moving faster than ever.
• What tech in Japan will look like in 5 years is the same as today unless something big changes. I’ve been hearing this for years and yet there are still some interesting startups coming from Japan. There are 14 unicorns list in Japan including some new ones I learned about like Playco, DiNii, Spiber and Sakana AI.
• Interesting Viewpoint: The next big Japanese startup, will not be from Japan. It's easy for foreigners to get a work visa in Japan, there are 120mm people here (25% are under 30) and are seeing Korean and Vietnamese companies enter the market plus work/life balance doesn't get better than being based in Japan.
• One founder I met in Tokyo came to Web Summit last year part of the JETRO program and is returning this year - he started his career at Rakuten and recently started his own AI startup called gigalogy.com. He is NOT Japanese, he is Bangladeshi. He is coming back to Web Summit Lisbon next month (this time without government support). There are more and more like him.
• Gamers and Vtubers are developing on Unity because it was in Japan first, and not?Unreal Engine which most everyone else in the world uses. The rise of the Vtuber is heading to a US$40B + market in the next few years. This is not AI this is virtual idols on camera while a human (or I guess an AI) controls in the background. Never get old, never get cancelled.

• DX is a thing. Digital Experience aka Digital Transformation - something the government has been pushing since 2018 and I see it in people’s LinkedIn bios and in ads in the subway! Definitely aimed at the massive amount of older Japanese executives - the Golgo 13 manga was created in the 70s!

• Only 9.1% of individuals in Japan use generative AI, compared to 46.3% in the US and approximately 47% of companies in Japan utilize generative AI, which is significantly lower than the 84.7% in the U.S. and Currently Claude is the most popular one because it’s easy to prompt in Japanese and the results are good. I wouldn’t sweat this one though, when Japan is ready it just flips a switch AND they have little friction against AI unlike the US.
• On the consumer tech side, I saw a lot of Konbini (convenience stores) using self checkout. I did see some eScooters and I love that the parking areas were so discreet that I didn’t know they were even there until one zipped by me. No driverless cars, but a big ad campaign for UberTaxi.
• The Cultue-prenueurs are coming and are a cover story on Forbes Japan.

• Read James Riney's insights blog on VC investment (Google translate it - the post on Moonshots in Japan was worth it) and Kenneth Jeng 's Venture in Japan to see what these VC's are seeing in Japan.

I personally would love to see a Web Summit in Japan - it’s a great event destination, with fascinating entrepreneurs and so much to spotlight beyond its food and culture.

On my last night after meetings with government people, in the distance I?heard Irish music being played, I walked closer and closer until I saw where it was coming from - I do believe in prescience, I do believe in Japan.?

I'll be back in December! Stay tuned!