Silicon Valley & Japan: Building a “KAKEHASHI” Bridge
The following is a summary of the breakout session “Silicon Valley & Japan: Building a ‘Kakehashi’ Bridge” at the 2015 U.S.-Japan Council Annual Conference in November 2015.
Mr. James Higa, Executive Director, Philanthropic Ventures Foundation & Mentor in Residence, Index Ventures spoke about the genesis of the Silicon Valley Japan Platform – Kakehashi (SVJP), which was founded to help connect Japanese companies to Silicon Valley. One of its major achievements was to invite Prime Minister Abe to Silicon Valley, where he met with a number of companies and delivered a policy speech at Stanford University. The Platform aims to promote relations between Japan and Silicon Valley, connect academics, and run an accelerator program in Silicon Valley for small- and medium-sized Japanese companies to become more global.
Mr. Higa then explained that the session would explore how Silicon Valley, which is such a small area, was able to produce so many global companies like Yahoo, Uber, Salesforce, among others.
Next, Mr. Higa posed a question to Ambassador John V. Roos, former U.S. Ambassador to Japan. He asked Ambassador Roos to explain the importance of tolerating failure in promoting entrepreneurship.
Ambassador Roos said that those in Silicon Valley thought big, took risks, and learned from their failures. “Failure” is not a negative word in Silicon Valley, because almost all great entrepreneurs have experienced failure at some point. Ambassador Roos said that Prime Minister Abe understood this point very well and often recounted how he failed his first time as prime minister and learned from it when taking up his second session as prime minister. Ambassador Roos said that upon hearing this, he told the prime minister how important it was for him to share this story with the Japanese society as much as possible.
Mr. Higa added that Steve Jobs’ story was also one of failure and redemption. After being forced out of Apple, he came back and revitalized the company to become the most capitalized company in the world.
Next, Mr. Higa said that when he and Steve Jobs were younger and looking to become entrepreneurs, they looked up to Japanese business people such as Mr. Morita of Sony or Mr. Matsushita of Panasonic. Now, young entrepreneurs look to become the next Steve Jobs or Mark Zuckerberg. He asked Mr. Tadashi Yanai, Chairman, President and CEO of Fast Retailing Co., Ltd., where these Japanese entrepreneurs had gone.
Mr. Yanai said he believed that the Japanese people of today place too much importance on stability and safety, and had become complacent. They no longer wish to take on risks and challenges, and to dream big. Mr. Yanai believed that Silicon Valley could change this, and said that if Japanese insight and Silicon Valley expertise were combined, great things could be achieved.
Mr. Higa agreed on the importance of thinking big. He then introduced Ms. Liz Wessel, Co-Founder & CEO, WayUp, and asked her to explain how she set up her company.
Ms. Wessel discussed her background and how she set up WayUp, a website that helped college students find jobs and internships. She left Google after two years working there, and she and her co-founder started WayUp with the goal of changing the world. She began by pitching to many different venture capital companies, eventually raising two million dollars in funding in two weeks. She then joined Y Combinator where they learned the importance of constant growth. Recently the company has partnered with Index Ventures, a venture capital firm, to conduct a new round of financing, raising eight million dollars this time.
Mr. Higa remarked that the ambition and sense of scale Ms. Wessel spoke about were hard to find in Japan.
Ambassador Roos disagreed and said that he had met many young people across Japan with dreams that were just as big. He believed the issue was to create the right environment to support these dreams. In addition, he pointed out that the entrepreneurial spirit was not limited to the private sector, small companies, or young people. Anyone can be entrepreneurial.
Mr. Higa said that SVJP was aimed at promoting just such a spirit and environment.
Ambassador Roos emphasized the importance of allowing second chances.
Mr. Yanai agreed, but said that to have a second chance, one first needed to take on some kind of challenge. He felt this was a missing element in Japan. Mr. Yanai believed that the reason he succeeded in starting his company was that he had nothing. He came from a poor mining town, and that encouraged him to look overseas and create a global company. Mr. Yanai believed that thinking globally and having ambitious dreams of changing the world were extremely important.
Mr. Higa asked Ambassador Roos to discuss the roles of various public and private enterprises in the Silicon Valley ecosystem.
Ambassador Roos thought there was a misperception that the ecosystem was driven by private companies. The public sector also has a very significant role to play, such as through public policy that encourages talent mobility, the establishment of incubation programs and education, among other means.
Mr. Higa asked Ms. Wessel to comment on the experience of women in Silicon Valley and if she had any words of advice for Japan.
Ms. Wessel said that statistics showed that the most successful investment companies usually had at least one female co-founder. As such, venture companies are increasingly looking to seek the opinions of female entrepreneurs or invest in their companies. Nevertheless she thought it was disappointing how few women were in managerial roles in Silicon Valley.
Ms. Wessel also offered some advice. She believed women were less likely to ask for a promotion or raise and encouraged them to do so. She also advised managers to be aware of this fact. With regard to her Japanese acquaintances, she noted that many were afraid to stand up to their colleagues or managers, or afraid of being the smartest person in the room. She encouraged them to stick up for what they believed and do so respectfully, if they thought what they were doing or saying was in the best interest of the company.
Mr. Higa then asked the panel about the importance of mentorship. Ms. Wessel said it was essential for startups to seek investors who could also provide advice and mentorship.
Ambassador Roos shared his experience from his own law practice. His law firm worked hard hours and lost many women employees who wanted more work-life balance. The firm therefore sought to implement many policies to allow more work-life balance. However, many male partners then stopped accepting women, thinking they cannot work long hours. To counter this, Ambassador Roos allowed workers to choose their own mentors, and all the talent flocked to those who allowed flexibility. He believed that the best argument for promoting women was that it was in a company or country’s economic interest and that doing the opposite risked driving away the best talent.
Mr. Higa spoke of how difficult it was recruiting people when he was helping to start Apple in Japan. He could not convince parents and grandparents to let their newly graduated sons or grandsons join the company. He therefore changed tactics and found women in large corporations who were not being used to their full potential and were eager to play a bigger role by joining Apple.
Mr. Yanai believed that there was some kind of invisible barrier in Japan that limited the kinds of people that were hired. He strived to do away with this in his own company and hoped that others would follow suit. Mr. Yanai also encouraged local governments to play a leadership role in this regard. Furthermore, he hoped that Japanese society would learn from the pioneering spirit of Silicon Valley and other parts of Japan and said that his company, which was started in a rural region, was testament to the fact that this was possible in Japan.
Mr. Higa touched upon the fact that the percentage of Japanese students studying abroad was continually decreasing, a phenomenon that truly worried him. He encouraged young people to go see the world and bring the best parts back, highlighting examples of Japanese business people being inspired by trips to the United States, such as Masayoshi Son, who saw his first semiconductor in Berkley, or Mr. Yanai, who was inspired by how a college bookstore sold books.
Mr. Yanai said that young people should travel the world, not just Silicon Valley, and see what successful companies around the world had in common. Furthermore, he emphasized the importance of experiencing failure and learning from it.
Ambassador Roos agreed with Mr. Yanai. He then commended Mr. Yanai for promoting opportunities for young Japanese talent to study overseas, such as by setting up scholarship programs. Ambassador Roos noted that many people in Japan said that studying abroad would actually harm their hiring prospects. He was therefore glad to hear that Keidanren had recommended changing Japan’s recruitment cycle, so that students can study abroad without missing the recruitment cycle. Furthermore, Ambassador Roos did not believe Japanese young people were inward-looking, rather they simply needed to be encouraged to study abroad and be shown that society viewed this as something positive.
Ms. Wessel spoke about an internship she had in Japan. She highlighted the fact that she was treated differently compared to male interns because she was a woman. This has never happened to her in the United States and it helped broaden her perspective of the world. Nevertheless, she has a deep appreciation for Japan and strong ties with the country.
She then asked Mr. Yanai what he believed had helped him be successful. Mr. Yanai believed that it was his persistence, saying that he never gave up even if he failed. He also stressed the importance of not clinging to any preconceptions.
Mr. Yanai then asked Ambassador Roos if he had any advice for Japanese companies to become more global. Ambassador Roos said that it was crucial that regulatory, cultural and other barriers between Japan and other countries be removed. He thought this was already occurring between Japan and the United States, and believed that they were the two most innovative countries in the world and had much to learn from each other. Ambassador Roos also said that many countries in Silicon Valley were interested in connecting with Japanese companies.
Next, Ambassador Roos asked Mr. Higa what quality he looked for in entrepreneurs. Mr. Higa believed that entrepreneurs had to have passion and fire in their hearts and would find a way to overcome any barrier they faced. Any endeavor that is worthwhile will eventually become difficult, and without passion, it would be impossible to overcome the challenges. This drive is more important than any business plan or anything else on paper.
Ambassador Roos commented that one of the largest barriers to becoming an entrepreneur was wanting to please one’s parents. He asked Ms. Wessel how her parents had reacted to her decision to leave Google, and asked Mr. Yanai how parents could be convinced to appreciate their children becoming entrepreneurs.
Ms. Wessel said she showed her parents how to trust her by the time she went to college. She said that she always sought their advice but made her own decisions.
Mr. Yanai said that early on he borrowed a great deal of money and opened multiple stores, and that his father was also against these efforts. He said he never sought stability, and believed that the idea that companies were stable was simply not true. He encouraged young people to go out and take risks, rather than seek stability.
In closing, Mr. Higa highlighted the innovation of small- and medium-sized companies and explained that SVJP sought to leverage and unleash this innovation. Finally, he summarized some of the key points from the session, including the importance of the pioneer spirit, risk-taking, second chances, and diversity, and said that he believed the U.S.-Japan Council embodied these ideas.