Overview Of The Japanese Web And An Interview With the CEO Of Japan's Biggest Social Network Mixi (GeeksOnAPlane In Tokyo)

The second day of the Geeks on a Plane geeky spree in Japan was completely filled with (mostly) insightful presentations, panels and pitches from newly launched Japanese start-ups (here is an overview of day one). The Startonomics Tokyo event was held Tuesday at the offices of KDDI Web Communications (one of Japan’s biggest hosting providers) in downtown Tokyo.

What follows is a brief overview of what you missed during that day, followed by a quick summary (and full video) of an on-stage interview with Kenji Kasahara. Kasahara is CEO of Mixi, Japan’s biggest social network, and openly spoke about his success story (the interview was done on the third and final day of GoaP’s Tokyo leg).

But first, here is a summary of all the presentations and panels that the GeeksOnAPlane witnessed during Startonomics Tokyo. (Note: The following summaries are edited. In addition, the statements listed in the panel summaries don’t necessarily reflect the opinions of all the panelists involved.)

Presentation: KDDI Web Communications’s service Webnica, by Teppei Takahata from KDDI Web Communications

Background and key points:

• KDDI Web Communications is one of Japan’s leading hosting companies and serves 40,000 corporate clients.
• The company’s new “Webnica” web OS consists of two services, a cloud computing system and a recommendation engine.
• Webnica is especially suitable for creators, i.e. web designers or programmers.
• The cloud computing system automatically adopts to traffic without users needing to do anything.
• The recommendation engine analyzes user behavior in the background (communication with others, buying behavior etc.) and recommends actions based on the history it recorded.

Slides of the presentation:

Presentation: Overview of the Japanese online market: Web, by Tsuruaki Yukawa from Jiji Press

Background and key points:

• Generally speaking, Japan is a huge online market, even by global standards.
• With 94 million users, the country’s web population is the third largest in the world (just trailing China and the US).
• Japanese broadband is about 50% fiber (making it the world’s No. 1 nation in that area according to the OECD).

Slides of the presentation (partly Japanese):


Presentation: Overview of the Japanese online Market: Mobile, by Gen Miyazawa from Cirius Technologies

Background and key points:

• Japan boasts 100 million 3G users (size of the population: 127 million).
• 3G penetration rate: 96% (3.5G penetration rate: 35%).
• iPhone is doing relatively well in Japan, but it’s not killing.
• Japan’s mobile web traffic still grows faster than the PC traffic.
• Size of the mobile e-commerce market: around $1.2 billion (data from July 2008).
• Biggest players in the mobile web only-field: Mobagetown (13 million members) and GREE (10 million members).

Slides of the presentation:

Presentation: Overview of the Japanese online Market: Gaming, by Shuji Utsumi from Q Entertainment

Background and key points:

• Japan’s game industry was born in the 1970s.
• The sector grew quickly and internationalized heavily, starting in the 1980s.
• Japan used to be the world’s leading gaming nation but loses influence rapidly.
• Microsoft’s XBOX360, for example, is managing to beat Sony’s PS3.
• Japan loves RPGs and family games, while Americans rather play FPS and music games.
• The gaming industry is now bigger than ever as non-geeks nowadays play, too.
• Developers from China, Korea and Eastern Europe start entering the gaming market.

Slides of the presentation:

Presentation: Success Story – DeNA, by Shin Ikeji

Background and key points:

• DeNA is listed at the Tokyo stock exchange (current market cap: $1.5 billion).
• Mobage-town, Japan’s biggest mobile game community, was launched in February 2006 and now boasts 13 million members and 15 billion page views monthly.
• Revenue in 2008: $200 million, 70% profit margin.
• Mobage-town’s overseas version, MobaMingle, now has about 150,000 members.

Slides of the presentation:

Presentation: Kris Tate – American entrepreneur living in Tokyo

Key points:

• Tate started photo sharing site Zooomr as a teenager four years ago (in Silicon Valley).
• Tate’s new company is called BlueBridge (in Tokyo).
• BlueBridge successfully launched AM6 (a Japanese email news delivery service) and just started Keireki (a Japanese-only community “for grown-ups”).
• Foreign entrepreneurs have better chances regarding PR in Japan because they stand out.

Presentation: The Lean Startup by Eric Ries

Key points:

• The majority of start-ups fails miserably.
• Those that survive are often completely different in nature when compared to the initial vision of the entrepreneur.
• The key difference between success and failure is the number of iterations (agile (lean) product development).
• Ries’ former company IMVU pushed to production up to 50 times daily.
• Instead of doing PR work, companies should focus on customer feedback before they launch services (customer development).
• Start-ups building something no one wants will fail.
• Instead of multiple departments, start-ups should have a problem and a solution team.

Slides (highly recommended to get the whole picture of Ries’ approach):

Panel: Japan investment overview

Panelists: Shinichiro Fukushige from Mitsubishi UFJ Capital (moderator), Masashi Kobayashi from Infinity Ventures, Brian Nelson from Value Commerce and Yozo Kaneko from ngi group

Background and key points:

• Similar to the US, the investment climate in Japan is currently “difficult”, with valuations dropping drastically.
• 49 IPOs in Japan last year, after about 100 in 2007.
• Majority of Japanese VCs are structured like corporations/banks.
• Compared to the US, competition among Japanese VCs is weaker, leading to lower valuations.
• Before going public in Japan, the PE ratio should be higher than 60.
• Japanese VCs end up owning about 10% of their portfolio companies (US: 20-40%).
• Two attractive business fields in the future: mobile gaming and “graphical content”.

Panel: US Platforms & Social Networking

Panelists: Dave McClure from Founders Fund, Bradley Horowitz from Google and Dan Gould from Fox Interactive

Key points:

• Monetization and distribution are more important than features.
• Facebook is making a mistake in its attempt to copy Twitter, which is a less “personal” service.
• The US must try and take over Japan’s social payment infrastructure.
• America’s leading payment gateways are e-commerce sites like Ebay or Amazon (not social networks) because they offer “shit people want to buy”, meaning they don’t need social networking functionalities.
• Japan’s stored-value cards are very effective in linking the offline and online worlds.
• McClure sees huge opportunities in building a social network focused on families/moms/children in the US.
• Mobile: Horowitz views Android as work in progress and in an early stage in the product life cycle, that’s one of the reasons it currently has trouble following the success the iPhone currently sees.

Panel slides:

Panel: US investment overview

Panelists: Dave McClure from Founders Fund, Joyce Kim from Soompi, Ryan Pipkin from Angelsoft and David Troy from Popvox

Key points:

• The recession has hit the American VC scene harder than the start-ups, meaning VCs have a tougher time raising money now relative to the start-ups that have to live with lower valuations (minus 33-50%).
• It takes VCs 50% more time currently to close deals.
• Main focus is now on revenue and getting to break even, less on user acquisition.
• From an ROI point of view, the downturn means better news for seed funds, incubators and angels than for VCs.
• Start-ups can now get to proof of concept stage with less than $50,000.
• Micro-seeds ($100,000 max.) will gain ground in the near future.
• Only the good VC companies will survive over the next years.

Panel slides:

Lightning talks:
Lightning talks were held by a total of five Japanese start-ups. These were J-Magic (a mobile service provider image focusing on image recognition technology/more info here), AdLocal (a mobile advertising platform whose heat map geographically shows advertisers where they get impressions), Scigineer (recommendation engine provider/more info here) and Cerevo (an innovative photo sharing system/more info here). Jon “Yongfook” Cockle resisted the urge to pitch his social media ROI tracker Peashoot but delivered a presentation of the usage of mascots in Japanese web services instead.

On-stage interview with the CEO of Mixi (on Wednesday):
On their last day in Tokyo, the GeeksOnAPlane were given the chance to meet someone who can perhaps be described as Japan’s answer to Mark Zuckerberg, Kenji Kasahara. Kasahara became an instant billionaire at 30 when his company, Mixi (Japan’s No. 1 social network), went IPO in 2006.

Kasahara revealed what inspired him to launch Mixi (Friendster’s success), how he got the first users to join his site (Amazon gift certificates), how Mixi grew from 0 to 17 million members in a few years (hardly any ads) and how he values his personal wealth (it’s stocks, not real cash).

I myself wanted to know from him if the severe competition Mixi faces (particularly from domestic players) lets him sleep at night (listen to what he responds at 35:05 min.). This insolent question I put to Kasahara was easily topped by visiting geek Larry Chiang (at 42:15 min.) who asked how a billionaire like him usually scores chicks (“Do girls want to meet your money or you? Do people pretend they are you to get chicks?”).

View the complete on-stage interview with Kasahara in the video below (in English and Japanese, 51:37 min). He was interviewed by Ejovi Nuwere, CEO of Tokyo-based digital media company Land Rush Group.
http://www.ustream.tv/flash/video/1632731