In the past year, there’s been a noticeable uptick in the Tokyo tech startup environment. There are several positive English-language commentaries around this (great stuff on: http://www.disruptingjapan.com/), and Japan could certainly use more entrepreneurial activity both for the economy’s sake as well as to inspire a new generation of innovators. However, I have a more nuanced view of things: Japan is becoming a great place to start a startup but remains an extremely challenging place to scale that company.

The main reason for the above is the relative lack of competition for resources for early stage startups vs. other ecosystems. When starting a company, the two most important resources are people and capital. On the people side, while Japan still lacks a large pool of risk-takers and many workers lack creativity, critical thinking and English skills- due to the country’s...

Hotel Tonight, Secret, Next Door, Postmates, Square. What do these companies all have in common? Along with others, they have all been cloned by Japanese companies sometime in the past year and a half.

Internet/software companies here are obsessed with cloning, and it’s important to know why. First, cloning seems like a low-risk strategy: the model has been proven elsewhere and all that’s required is tweaking it for the home market. Risk-aversion runs deep in Japanese business and society so this is understandable. Second, the cloning model- with select incremental improvements- has been extremely successful in other areas of the Japanese economy (e.g., cars, electronics etc.). A key difference with internet/software though, is that institutional protections- government and otherwise- historically enjoyed by other industries can’t be replicated: import taxes, industry associations...

LINE detailed their big push into Manga today, with emphasis on the potential to use their manga reading platform as a bridge to overseas markets (n Japanese:)….And they were not the only ones, as Softbank also announced the release of a new free Manga reader app (in Japanese). This follows DeNA who released MangaBox last December. Everyone seems to want to release manga readers, at the same time, for consumption at home and abroad. This pattern of companies releasing similar offerings at similar times is not new: whiteness the proliferation of personalized news reader apps (Smart News, Gunosy, News Picks- all with high valuations) from both startups and larger internet companies.

Certainly, startups outside of Japan also follow this pattern (chat apps, anyone?), but the scale of corporate investment into undifferentiated platforms seems unique here. A few quick thoughts that I hope to...

At the end of a meeting a last week to discuss a potential new project, the department head- one level down from the CEO- decided that the next step was to get in touch with someone he knows to get feedback on the idea. He closed the discussion by saying “I’ll send him a Facebook message this afternoon.”

I’ve repeatedly observed this behavior lately in Japan: many people tend to use Facebook over email or LinkedIn for professional communication. It’s possible that this is confined to the tech/media/startup space, but I’m not so sure. A few other instances I’ve run into this: My team was in the process of retaining an independent hardware design consultant; throughout the process he refused to use email to communicate with us- a leading public Japanese internet company- and used Facebook group messages instead. After every professional conference or dinner gathering, new Facebook friend...

There’s no particular way to start, so just to get it out of the way…