‍Rachel Chalmers:

Today, I'm delighted to welcome Noriya Tarutani, the executive director of the Japanese External Trade Organization here in San Francisco. In his 15 years of experience in international business and new market strategy, Noriya has helped more than 500 Japanese companies to expand their business all over the world, and over 100 North American companies to set up offices in Japan. He's also helped more than 300 Fortune 500 companies, value added resellers, distributors and original equipment manufacturers find success through strategic partnerships. Noriya has deep domain expertise across artificial intelligence, deep learning, fintech, health care, manufacturing and the environment. Nori, thank you so much for joining us on the show today. 

Noriya Tarutani:

Yeah, thank you for having me, Rachel. I'm so excited to be part of the AlchemistX Innovator podcast and happy to chat with you and share my experience for listeners.

Rachel Chalmers:

It's great to have you. Can you tell us the story of how Jetro came into existence?

Noriya Tarutani:

Yeah, sure. JETRO, The Japanese External Trade Organization, is an independent administrative institution that promotes trade and investment between Japan and the rest of the world. We were originally established as a nonprofit organization by private sectors in 1952, so our DNA is private, and reorganized under the Japanese government in 1958 to promote Japanese exports abroad. Then JETRO was later reorganized as an independent administrative institution in 2003. Our core focus ever since has shifted toward promoting foreign direct investment into Japan and helping startups and Japanese corporations maximize their global expansion potential. Now we focus on the startups and innovation activities. We could say we are ecosystem builders for supporting any type of innovation players, whether it be Japanese startups, U.S. startups, corporations, or universities. We are happy to help.

Rachel Chalmers:

And that's where you come in. Of all of the many companies you've personally helped, Nori. Which do you think had the best outcome?

Noriya Tarutani:

That's a great question. Actually, we've seen a lot of our clients going public IPOs in the Japanese stock exchange. From the viewpoint of track records, those companies may be our best success stories. However, we are a nonprofit organization and one of our most important KPIs is creating global mindsets, buying these startups. In this context, we really want to help Japanese startups getting the first traction abroad, especially in San Francisco and Silicon Valley. So if they get fast-traction data on how to approach investors or potential companies, I believe the process will be somewhat repeatable.

For example, a Japanese startup named Atonarp is one of the best examples for us. They manufacture a crowd-connected mass spectrometer intended to analyze chemical processes in real-time with details. So we helped them to fundraise the first round from U.S. investors through our first exploration program in 2013. They are now global minded startups that just raised Series C funding and with offices globally, including Tokyo, Bay Area, and India. Actually, when we met them for the first time, they were really, really product focused. I’m sure you understand, Japanese startups are always product focused. All Japanese startups – for our first batch – all companies focused on the technology and the products, they treat their products like a baby.

Through our oxidation program, all startups, including Atonarp, could shift from having the product focus to having the customer focus. All startups, including Atonarp, learned a lot of things from our Silicon Valley mentors or experts or VCs, and got connections to insiders in Silicon Valley which leads them to success. We have a lot of similar success stories like Atonarp’s case.

Rachel Chalmers:

It's so satisfying to see a company go from that maniacal focus on tech to a much broader understanding of the customer problem. It's really an exciting story.

Which company taught you the most? I know it's not always the successes, sometimes it's the frustrating ones that teach you the deepest lessons.

Noriya Tarutani:

Yes, it's not from our portfolio startups. However, I think I have learned a lot from the case study of the Japanese first unicorn named Mercari. Have you ever heard of Mercari?

Rachel Chalmers:

Yes.

Noriya Tarutani:

For those people who don't know about Mercari, I just want to explain. Mercari is a global e-commerce company founded in 2013. It's like Japanese eBay. They expanded to the Bay Area in 2014 just one year after incorporation in Japan. It was not a common case for Japanese startups coming to the Bay Area at a very early stage. Usually they come to the U.S. or they go abroad after getting enough traction in Japan or going public in IPOs in Japan. Because this is a rare case, some key opinion leaders suggested that they focus on the Japanese market only, since a lot of investment is required for the U.S. market. But that company CEO showed a strong commitment to the U.S. market from the beginning, and they finally became profitable in the U.S. market this year.

I think their success comes from the fact, their CEO or management have committed to the U.S. market from the very beginning and have gotten a lot of feedback from U.S. customers. I've helped a lot with Japanese startups, with various stages from pre-seed to seed, and Series C or even the unicorn companies, including IPO companies, and the most challenging things are full or late-stage startups coming to the U.S., they have to change the business model and go through the entire process from scratch.

It might even remind them of their early days when they were figuring out if their product market fit in Japan. I see a lot of startups and we have a lot of universal problems. So that's not the problem. It's just a case that they are not adjusting products for the U.S. market. They have to achieve products that fit the U.S. market, not the Japanese market.

Rachel Chalmers:

That's really insightful and it's why we teach that customer discovery is an iterative process throughout the life of your company. You have to revisit your basic assumptions and make sure that they're still valid.

What are some of the other things that Japanese companies don't know when they come to America?

Noriya Tarutani:

That's a very good question. There's a lot of things they have to learn. Whether a corporation or startups, we’ll be seeing a lot of challenges they face. We could say there are five common reasons Japanese companies fail in the U.S., especially in Silicon Valley. First thing is a failure to find answerable customer pain. Next thing, we said already, the product market is untested. Thirdly, the target market is too broad. Fourth, not having a Silicon Valley business mindset. And finally, the most important missing factor is not the right team; team building.

You cannot find the customer, person or body proposition without having the right broker team in the different market. Japanese companies or Japanese startups have limited access to the local ecosystem, and this is a reason why we focus on the program that allows Japanese corporations or startups to access U.S. based mentors or investors.

An example, one of our Japanese startups clients named Bespoke to provide a chatbot service, could get access to high level networks in the U.S. through our program. Firstly, we introduced a mentor who specialized in customer acquisition for early-stage startups. He is based in the US, raised in Silicon Valley, and he guided them to find the right customer persona to narrow down the target market. A.I. chat bot can be used in a lot of sectors like education, government, hotel, or airports, but they finally decided to focus on the public transportation sectors, and the main interest is a former higher government official. And then they could get the first structure of a city metro in the U.S. Now they are partnering with the Star Alliance of Vienna Airport and other international public sectors. It is a very good success story for us. The success is to find the right mentor and to invite former government officials to their team, and they actually hired a local person as the COO.

Rachel Chalmers:

Very cool. And lest we think that California is the center of the world, which is always a temptation, what is something that surprises North American companies when they move to Japan?

Noriya Tarutani:

I think the most surprising thing is the unique working culture and the employment system in Japanese companies. JETRO helps U.S. startups set up offices in Japan and we probably have over 1000 companies, and we helped 10 companies to go to Japan. The latest success story is a DoorDash or Standard Cognition or Asana. We have a lot of unicorn companies, including Tesla as well. They are all companies that said, “It's quite difficult to hire the country manager or local manager in Japan.”

My client used to say he could not understand why Japanese employees are trying to continue working for the same company. He got a better offer from another company. My client has been offered a position at a famous automobile parts company, with two or three times more than he earned at that time. Three times the salary but he declined the offer, and the American company was very shocked to hear the reason. He just wanted to work for the same company. Since he feels loyalty to his company, it's quite difficult to understand for the U.S. people or European people.

Although it's been changing dramatically, especially in the startup ecosystem, two types of culture exist: Japanese traditional working style or Western working style. Traditional Japanese working style on the environmental system will cause a lot of unique cultures or working in a group rather than individually, in data communication style or bottom up system style. I think that understanding the purpose of the decision making process is pretty important for successful business collaboration with Japanese companies.

Rachel Chalmers:

And of course, the Japanese culture has been incredibly influential on Silicon Valley by way of the Toyota production system and its influence on the lean startup. Startups absolutely see value in the bottom up culture and the loyalty to the team, so it's interesting to contrast that with the experience of the corporates going in.

Noriya Tarutani:

Yes, yes, I think that American companies and Japanese companies have to understand the cultural difference. JETRO’s core value is to fill the cultural gap between the Japanese corporate and U.S. corporate. We also have to help in these aspects in addition to a warm introduction to potential clients.

Rachel Chalmers:

Very important role.

When you look back on your career to date, what are you proudest of?

Noriya Tarutani:

Actually, I'm always thinking about the importance of creating a diverse environment where people can discuss with each other. This will also be a key factor to generate innovation, I believe, and I don't think any one person has a right answer to create a startup ecosystem. We may have the best practice for startup to scale and startup mindset we have to follow, but it's not a cookie cutter model, and we're always changing year by year. It depends on what the startup business model stage is all about.

The most important thing for us is to cultivate a diversified environment and continue to introduce new programs for startups to access different communities or to get feedback from a diversified environment. In that sense, I launched a lot of programs from the dot com era, even during the recession period. I continued to launch new programs and support startups continuously. That would be something I'm proud of. Actually, it was right after the dot com bubble crisis I was onboarding an established Japanese incubation center in San Jose and brought over a hundred startups to Silicon Valley through that project.

After the 2008 crisis, I came up with the idea that JETRO should introduce an international acceleration program to Japanese startups. In the period YCombinator and vibrant startups and textures or AlchemistX, did very well in the Bay Area. It's a very rare case for a Japanese startup to be qualified for those accelerators. In Japan, although there was some acceleration program organized by private accelerators or venture capital or corporates, they focused on only the domestic market. I want to run the entire program to connect Japanese startups to various ecosystems. Why don't we round the international tax system to bring Japanese startups to the Silicon Valley ecosystem?

This is something I should be proud of. I always introduce a new program to Japan and also now we have the COVID 19 crisis and everything is going online. It's a challenging time, but we see numerous opportunities to bring Japanese startups to premium acceleration programs. That is the reason why we recently launched the sector-based program with AlchemistX, for B2B sectors and also textiles for clean tech, crime tech, Skydeck for deep tech. We are happy to work with those premier accelerators like you.

Rachel Chalmers:

We are delighted to be working with you too. And I do think it's an underappreciated upside to the recessions that really those down times when the easy money goes away are where the really great companies get built. When founders have to be very ingenious and very scrappy to keep their companies alive through a recession, that's where we see really durable unicorns being created.

Noriya Tarutani:

Yes, exactly. I totally agree with you.

Rachel Chalmers:

If you had one do over, what might you have done differently?

Noriya Tarutani:

I will do the same things one more time. I think more quickly. When I came to Silicon Valley I was so surprised that entrepreneurs fail so fast and I really like the words fail fast. So I launched a lot of programs, but if I fail fast, I could launch more projects. So first, failure achieves the desired result after the perfect solutions. I think this is something I and Japanese companies should learn from Silicon Valley.

Rachel Chalmers:

How would you distill all of this experience into one or two lessons for our listeners?

Noriya Tarutani:

Well, I've recorded over 1000 business meetings between foreign companies and Japanese companies, and I've heard US companies say it's a bit difficult to succeed in Japan. To succeed with Japanese companies, I think it results from the different working culture. I always taught traditional Japanese management style or language barriers or even demanding customers in Japan. So if you understand the background of cultural differences, it will become easier to do business in Japan.

Also, those unique programs have been changed after the pandemic. So many Japanese companies are starting to shift away from traditional business norms. They actually used to prefer face-to-face meetings. Even if it's only a 15 minute meeting, 30 minutes meeting, we have to visit our customers. Why don't we use a Zoom meeting? They’re actually conducting business online right now and opening up to digital solutions that U.S. startups and U.S. companies offer. So why don't you do business in Japan, because it's dramatically changing? This is a strong opportunity for the U.S. companies.

Rachel Chalmers:

It is a really exciting time.

You work so hard, Nori. How do you avoid burning out?

Noriya Tarutani:

For me to avoid burnout, I try to allocate my time to spend with my family and friends, run on the trail, camp in the national parks, and hike the mountains – off of the internet or off mobile, off the grid, very important to surviving Bay Area, right?

Rachel Chalmers:

That's the flip side of Silicon Valley is we’re one of the most beautiful places in the world, we have the Pacific Ocean, we've got the redwoods, we've got the mountains. We're very, very fortunate.

Noriya Tarutani:

Personally, I like to do something different. When I was a university student, I played cricket. You are from Australia, right?

Rachel Chalmers:

Yes, that's right.

Noriya Tarutani:

There were only three hundred players in Japan at that time. And the reason why I started cricket is because it is the second largest after soccer, so I thought it should be an interesting sport. And I also thought it'd be easier for me to be on the national team. So that's why I started playing cricket. I always try to do something different from others or something new. Yeah, this is a solution to avoid burnout.

Rachel Chalmers:

Yeah, that's a good one. What is the best way for our listeners to connect with you or to follow your work?

Noriya Tarutani:

Social media, including LinkedIn, is the best way to contact me for my work. My name is very unique in Japan. There is only one person named Noriya Tarutani over the wall, so listeners can easily find my account.

Rachel Chalmers:

Easy to Google.

Noriya Tarutani:

Yeah, easy to google. Also I post our events, including an online seminar or demo day or a networking event or investors watching event or any international story which happened in the Japanese ecosystem. So please follow my LinkedIn account and also, you may want to follow my company's social media account, JETRO’s Account, Twitter, Facebook and LinkedIn.

Rachel Chalmers:

What does the future look like for you personally? Are you planning to stay a JETRO long term?

Noriya Tarutani:

What I want to achieve in my life is to create more diverse environments, and I am a strong believer of diversity in any environment such as, startup teams or local ecosystems or corporate workplace or even my company, JETRO. I will continue to be a bridge between Japan and the rest of the world, and I'm not sure whether I should continue to work for the JETRO, but this is something I want to achieve in my life.

Rachel Chalmers:

Yeah, it's a great platform for you.

If you could have everything go exactly your way for the next five years, what would the world look like in 2026? What would change?

Noriya Tarutani:

Five years' goal is to attract more U.S. investors to the Japanese ecosystem. So I want to try some old famous venture capital or accelerator or CBC. I want to encourage them to contact the U.S. startup as much as possible. Recently, the Japanese ecosystem is growing year by year. So I feel like everybody will be more interested in the Japanese ecosystem in five years.

Rachel Chalmers:

That sounds good. Is there anything else I should have asked you?

Noriya Tarutani:

I think that's it or is there anything you want to ask me?

Rachel Chalmers:

This has been a great conversation. Thank you so much for coming on the show. It's been a pleasure. I'm so looking forward to our collaboration and I hope we can have you on the show again sometime in the future.

Noriya Tarutani:

Thank you very much. I appreciate it.