I don't think describing one as risk-averse is fair when risk is different. When A and B are given the same risk, and A takes the risk and B doesn't, it is fair to describe B as more risk-averse than A. When A and B are given the different risk, and A takes the risk and B doesn't, it doesn't tell much about B's risk-averseness.
I think it is not that Japanese culture is risk-averse, but that doing startup in Japan is actually more risky. These two are not the same statement.
I also call bullshit on "lack of disruptive ideas". How can one even imagine such thing is true is beyond me.
To the author's credit, the article consistently says that "Japanese culture" is risk-averse, not that "Japanese" are risk-averse. If you have two cultures A and B, and A has rules or conventions that reward risky behavior more than B, then I think it's fair to describe culture A as more risk-tolerant and culture B as more risk-averse.
First, I don't think the author claims that the risk is the same; quite the opposite IMO. He clearly states that getting a high exit is very difficult here, that sales cycles are longer, ... which, all the same, make for a higher risk. It's however the task of the entrepreneur to take this into account and be successful within this frame.
Having said that, it is an undeniable fact that, in general, Japanese are culturally more risk-averse. Case in point are for example the low seed rounds that can be raised amongst the Japanese investors (i.e. VC not being an entrepreneurial endeavour), the popularity of the idea of life-long employment, ...
"lack of disruptive ideas" actually does ring with me, at least when it comes to web-based companies. "Unique ideas", no doubt about that. But disruptive ideas as 1) having a major impact, 2) being viable, and 3) not a localised clone of a successful foreign company... I do challenge you to name me some.
I think it is not that Japanese culture is risk-averse, but that doing startup in Japan is actually more risky. These two are not the same statement.
No, they're not the same; however, I think both are largely true Japan. The culture is risk-averse in that no one wants to be wrong or different, or to be labeled wrong or different, to the extent that their reliance on consensus and avoidance of commitment and confrontation can fairly be called risk aversion.
Part of the risk of attempting a startup in Japan is that it marks you as a nonconformist, particularly in terms of your employment history. The drastically reduced chances of finding stable employment if you spend any time outside of the corporate world during your working life very reasonably feed risk aversion.
Pretend you live in an alternate universe America where the following is true:
Google, Facebook, Microsoft, Amazon, Apple, and substantially every other company you want to work for has an elite class of employees. They get a salary and they're mostly men, so let's call them salarymen. Salarymen are hired right out of undergraduate, almost exclusively. In fact, it is so rare to have someone hired mid-career that an e.g. product manager who managed that would probably rate an article in TechCrunch.
There is a large culture built around salarymanhood, but distilling it to the essence, it is loyalty above and below. Above, your company affords you job security comparable to that enjoyed by tenured academics or career civil servants. Below, there is only one thing you must never, ever, ever do: quit. If you stab a company in the back by quitting after they've given you the brass ring of salarymanhood, that is a worse black mark on your future employment prospects than being convicted of embezzlement.
Americans don't worry about credit reports. The only FICO score in our alternate universe is the name on your business card: if you belong to the elite fraternity of first-class corporations -- much like first-class colleges, there are wonks who keep lists but realistically you could ask any twelve year old and they'd know -- you have sufficient credit to receive loans or to rent apartments. If you don't, you will need to have someone who does cosign for you if you want to e.g. live in an apartment. There exist companies which will basically sell you "I am not a salaryman but I have a surety bond so please let me stay in your building" insurance. This costs several hundred dollars a year.
People in the United States love the institution of marriage, and having a good match is considered to be crucial to life happiness, particularly for women. Women largely prefer to marry salarymen, because salarymen mean material stability. Their parents, whose advice women frequently listen to, are virtually universal in preferring this. This is not simply an aesthetic preference like "women prefer men who are tall." Women do prefer men who are tall, but you will not be asked to provide a copy of your last physical attesting to your height when meeting your bride-to-be's parents to discuss your intention to marry her. You should, however, pack your resume [+].
America has a very low bankruptcy rate, principally because it is treated as a social sin somewhere between notoriously cheating on one's spouse or doing something really dastardly like backstabbing a company by quitting it. If you go bankrupt, you will lose friends, and your employment opportunities will be circumscribed in a manner similar to being on a blacklist. (Someone from a foreign country might wonder what happens to a salaryman who goes bankrupt. What a silly question. Americans of proper breeding and with the educational attainment and moral worth to become salarymen would simply never go bankrupt. And if, through some strange combination of unavoidable circumstances, they were threatened with financial ruin, the company would certainly take care of that.)
You presided over a corporate bankruptcy? Oh dear. That's even worse than a personal bankruptcy. Not only did you fail personally, you ruined the lives of people to whom you owed society's highest form of loyalty. Hopefully your children will be able to pay off your accumulated debts, you disgraceful excuse for an American.
Foreigners, like those plucky Japanese, occasionally describe Americans as plodding clock-punchers without a risk taking bone in their bodies. They just don't get it. Americans love successful entrepreneurs like they love miracles -- sure, most of them happened in ages past, and you'd be absolutely insane to stake your life on one in the present day, but people still tell stories about them.
[+] I am very rarely believed when I say this, but it is literally accurate that I had my resume and a stamped copy of my most recent tax return the first time I met Ruriko's mother. I'll elide the specifics of the conversation, because after all she is my mother-in-law, but suffice it to say I was able to bring her around regarding my proposal despite my uncertain employment prospects.
Wow, I had no idea its that bad. I have never worked in India, but my Indian friends describe a similar environment in the Indian public sector - jobs for life, generally no job-hopping, no worries about money, company homes, company schools, company hospital, servants provided for, essentially just punch the clock, pretend to do some work & go home.
I wonder how the salaryman culture gels with the Japanese being so innovative. In Rising Sun (both the bad movie & worse book by same name), Michael Crichton make the claim that the Japanese are light years ahead of the US viz-a-viz computing/tech/optics/physics. There's a scene where Sean Connery walks into a physics lecture hall in ucla & points out that all the students are Asian while Americans are missing because they avoid hard subjects. If they are all boring homogenous salarymen, what's the impetus for being so innovative ? Any innovation by definition rocks the boat, so why do that ?
"I wonder how the salaryman culture gels with the Japanese being so innovative."
But that was answered above:
"You presided over a corporate bankruptcy? Oh dear. That's even worse than a personal bankruptcy. Not only did you fail personally, you ruined the lives of people to whom you owed society's highest form of loyalty."
They are highly motivated to engage in enough innovation so as to stave off bankruptcy.
As to Japanese companies leading in innovation and successful business/manufacturing/etc practices, I will defer to those who are more familiar, but I believe a big part of it is rigorous frameworks that look at the situation, take a long (LONG) term view, and methodically remove failure points and find ways to reliably achieve success.
Patrick has discussed this a number of times, here is a representative quote[0]: "Keep doing this whole "Learn from failure and overcome it" thing for a few decades and you end up the biggest car company in the world and make the competition look like sniveling amateurs."
If you want to learn more, look up "Kanban," "Kaizen" (continuous improvement), "5 Whys," or search HN for "patio11 toyota."
As someone who has done time as a salaryman in a traditional, very large Japanese company, in Japan, as a Japanese person (even though I'm American, I was expected to behave as a Japanese, since I look and speak like one), I fully back everything Patrick said above. The post is really astoundingly astute, despite its sounding quixotic.
I feel like my brain has encrypted good chunks of my experience from that time (since it was quite traumatic tbh), but perhaps I'll write about it some day...
Problem is, it's hard to write it without sounding overly derogatory :P
A very good description! I wanted to add a few things that I noticed to balance off what you said. For context I did a 2 month internship at a Japanese company near Tokyo ( a major multinational, very very salaryman-oriented). I'm clearly not at informed as you, but I think it will be useful.
1 - Management was very very good. It was a little rigid at times, but everything was well organized and I had no complaints. Some things like bells for the start of the work day, start of lunch, end of lunch... were a little eerie at first, but once you got used to it, it was actually fine.
2 - The company is mother the company is father. You're absolutely right that the company takes care of you. It's sorta like a family - though an awkward family. Awkward in part because you have an employer-employee relationship and also because Japanese people are a little more awkward (especially tech people). Anytime someone is transferred or hired in your division (about once every two weeks) you all go out to drink/dinner/karaoke together. It wasn't anything too crazy, but it was generally a really nice restaurant every time and there was a special company account that pays for it. It never felt like the company was being stingy with you (though we didn't have very top of the line hardware to work on...) One time I had some miscommunication about when I was coming back from a short break and my boss was honestly concerned, some phone calls were made to the hotel etc. etc. They really do care about their employees.
3 - You aren't stuck doing the same job till you die. People are constantly shuttled around internally. I think on average people were moved every two years. If you didn't work hard, you could get transferred to a crappy job. If you did really well, you would have say in where you were transferred. In fact since no one is fired the way they squeeze you out is by constantly reassigning you and giving you crappy positions.
4 – For historic reasons people ended up working insane hours. 12 hours days are the norm for a lot of people... But strangely enough there wasn't any explicit requirement to work that long, and it wasn’t really rewarded. In fact the company was pretty concerned about it and was trying to get people to go home earlier. Wednesdays you were explicitly forbidden from working more than 8 hours. Strangely on the whole people didn't see to be in a rush to go see their families, and to be honest the men didn't seem very close to their families. I only saw one guy who worked 8hrs/day every day. No one gave him shit though
5 - US multinationals are on the scene and are causing major changes. I talked to a girl working a Oracle in Japan and she said that there are many new "hybrid" companies that have elements of US and Japanese management. It seemed that they were very successful. The Japanese management style has a lot of good elements, and the US system has a lot of problems. I could see the right mix being great.
The US is not San Francisco, and this is an opinion piece that doesn't really say anything interesting about the comparison you're making. I agree with you that it's riskier, but this link is not what I'd call particularly compelling with respect to your point.
When people talk of startup culture divide between US and Japan, by US, they mean San Francisco. US does not have a uniform startup culture over its territory, does it?
This was one of the better articles on the subject of the entrepreneurship problem in Japan, probably because it is one of the rare cases where the piece was written by someone who personally wet his feet in the scene there (as opposed to journalists or bloggers, who are complete outsiders).
That being said, the discussion is largely a repetition of what we've heard many times before (Though the parts about long sales cycles and the non-entrepreneurial VC was interesting, since these are the only two parts that came from the author's own personal experiences). There's a limit to how much astute insight can be drawn from Japanese Americans (which he must be) like the author or myself, because in the end, we are outsiders and will never be completely immersed or invested in understanding the intricacies of the socio-cultural issues that pervade the scene there.
I've of course thought about these issues in Japan myself, and my current assessment is that the best talent in the country have so much to lose and so little to gain by leaving their larger company posts and creating their own thing. The incentives and rewards are completely different than just 40 years ago, where there was very little to lose by being brash and taking outsized risks, both inside and outside large companies.
I imagine it was much different before (and during?) the bubble. There are amazing stories of entrepreneurship from that time- with things like the founding and fantastic growth of 7-11 Japan, and Softbank. These companies are huge now, but getting them off the ground involved a large amount of risk and a group of people that accepted that. Masayoshi Son (of Softbank) is still seen as a maverick even now despite his well-established success; if he was just starting out now I imagine he would have a harder time than he did in 1981.
Softbank's success is a bit of a red herring. They have basically never been profitable, but have made enormous gains in their investments in things like Yahoo! Japan and Chinese internet businesses. By the time the real estate bubble was truly underway, people were by in large comfortable with the huge companies throwing money at their feet to join their firm (stories of college recruiting are downright ridiculous -- they go way beyond the wining and dining of new grads by consulting and finance firms in the states).
The truly ridiculous wave of entrepreneurship was in the post-war era, where the country had very little in its possession and everything to gain by trying very new things.
Japan isn't the only country where developing a startup culture is difficult. Many Asian countries have a much more heirarchical culture where simply following what your boss or political leader says to do without question is strongly ingrained. I was part of a team under John Roese at Huawei that was trying to help Huawei learn how to be innovative. Their executive leaders understood the need, but there turned out to be too big a cultural divide across the bulk of the company to get the support and engagement needed, so the effort collapsed after a couple of years and most of us moved on to more productive efforts. It was however a very insightful period in my career since I learned a lot about where China (in general) has advantages over the US and where the US (in particular Silicon Valley) has advantages over China. The willingness to openly share and "give before you get" is definitely some much more common in the US and leads to much more effective collective efforts here. On the other hand I have never seen more effective "manufacturing-like engineering" at scale than I saw at Huawei. In an ironic way we are often able to leverage the power of numbers (i.e crowd sourcing, open source, cross-collaboration, etc) more effectively than the country that has the numbers but not yet the understanding of how to best leverage them.
A teenage girl spends much of her time reading books that interest her and is drawn toward writing fantasy fiction on her own. This runs against the grain of the cultural norm of devoting herself to studying for university entrance exams.
She is inspired by a boy her age devoted to making and playing violins, who goes to Italy for a year to pursue this dream. His family supports and encourages him in this endeavor.
Her parents are understandably worried about her choice to pursue this risky dream, but decide to support her choice in the end.
The movie really drew me in emotionally to what it must be like to choose a more creative path in a society with a strong norm of conformity. It made me think of how the animators must have felt telling this story, as it must have mirrored their own past.
It also makes me wonder how so many creative people have managed to flourish in Japan, and what path they took to arrive there. There is so much creativity in manga, anime, video games, and all the other cultural artifacts of Japan so popular throughout the world.
And what about the Japanese who do manage to successfully start new businesses? How do they manage it?
One thing that perhaps Americans always miss out or under rate in their own startup culture is the support ecosystem, especially the media
I see that in US, there is a media circle that continually builds itself around entrepreneurs and celebrates local innovation (like how TC began as such an idea), as the old ones grow bigger, younger ones come in and keep even the fringe entrepreneur in the lime light
In addition to the Tech industry you can also see this in the US sports industry. No other country perhaps has made sports such a successful business endeavor as in US. A great part of credit goes to its media.
Another big plus for US startups is 'local adoption', I consider this a huge advantage for all of them. Perhaps you have never felt it as you have never seen the other side of it. For e.g. you can never take it for granted in India, in fact being local startup has a good chance to work against you with customers. The positive news is that there is a sea of change in enterprises here, I have had recently a large corporation go for our product vs that of IBM/SAP. This alone can be a start of good times for Indian startups.
I agree with sanxiyn's take, especially regarding disruptive ideas. There have been some incredible Japanese inventors, and groups that are willing to take huge risks. The multiple innovations in both the Prius and Wii are two high-profile examples.
Three other points I would like to share come from discussions with Japanese friends over the years:
- For men in certain industries, there is a strong social encouragement of working for large companies for decades, and the expectation at many (but not all) corporations is that once you are hired, you are in for life. The companies make it easy to do so -- I have a friend at a large electronics company who said they took care of housing, relocation, even a company hospital ("hospital" was the term he used, although I suppose it could have been a clinic).
- Entrepreneurs are seen as somehow tricky or ethically lacking. This was expressed to me by middle-aged salarymen at giant multinationals a few years ago, so I don't know if the attitude has changed.
- Large companies have extensive and deep supplier relationships that discourage taking a chance on an upstart.
I'd like to hear the observations of other HNers who are Japanese or have long experience in the country.
I know someone who worked on software side of PICA200 GPU at Digital Media Professionals. It is a pretty cool (and successful) startup comparable to Falanx Microsystems of Norway. Maybe not innovative enough for some, but then I don't see what is innovative about much of so-called disruptive innovations.
It's more like a clinic, but they have a pharmacy, doctors and nurses on staff, and conduct yearly physicals for all employees on site, including blood and urine tests.
I don't think describing one as risk-averse is fair when risk is different. When A and B are given the same risk, and A takes the risk and B doesn't, it is fair to describe B as more risk-averse than A. When A and B are given the different risk, and A takes the risk and B doesn't, it doesn't tell much about B's risk-averseness.
I think it is not that Japanese culture is risk-averse, but that doing startup in Japan is actually more risky. These two are not the same statement.
I also call bullshit on "lack of disruptive ideas". How can one even imagine such thing is true is beyond me.