Yusuke is from Nishimiya, Hyogo Prefecture. After attending a horse racing training center and working on training racehorses, Yusuke received his Bachelor of Laws from the University of Tokyo and joined McKinsey & Company. He then rejoined the company he founded while at the University of Tokyo, Naked Technology Inc., as the President & CEO. This company made an exit through a purchase by mixi, Inc., and he consequently joined mixi, later becoming the President and CEO and leading the company’s regeneration after a period of stagnation. After leaving mixi, he served as a Visiting Scholar at Stanford University, and is now a Visiting Scholar at the National Graduate Institute for Policy Studies. Yusuke also serves as an outside director at Septeni Holdings Co., Ltd., and is a partner at the Tokyo Founders Fund.
Why we focus on startups
I first became aware of startups (often called “venture companies” in Japan at the time) while I was in university. When I was in my late teens I wanted to be a racehorse jockey, and went on my own to Australia. I struggled with the weight restrictions and was in a traffic accident. At the time I felt that the life of an entrepreneur had many commonalities with the life of a jockey, as both have to survive on their skills and talent alone, and this evoked my interest. This was at around the same time that there was a great deal of attention focused on the involvement of two emerging companies, Rakuten and livedoor, in the Nippon Professional Baseball (NPB) league realignment.
While I was in university, I was on the founding team of a venture company engaged in educational technology (before there was the term “EdTech”), and I gained experience working with my friends doing social media planning and using social graphs. This was my first foray into playing at entrepreneurship. I was passionate, and while it felt serious at the time, compared to the level of the real businesses being launched nowadays by student entrepreneurs, I think it really ought to be considered play.
After I graduated university, I also graduated from the playing at entrepreneurship of my student days, and started work at the management consulting firm McKinsey. I learned a great deal at McKinsey, and during the several years I spent there essentially as a management consultant apprentice, I came to feel that there are broadly speaking three types of jobs in the world.
The first type job is protecting a large wealth pie. In this type of job, the goal is to protect an existing large pool of wealth, and prevent it from shrinking. This job is dedicated to defense.
I feel that many of the jobs related to so-called large companies tend to be this type of job. Of course, large companies also have many initiatives to generate new wealth, but their main job is to maintain their existing wealth pie, and maintain their frameworks and structures to create wealth.
The second type of job is creating a wealth pie that does not yet exist in the world. Or, how to take a wealth pie that is still very small and make it grow larger for the future, or creating something from nothing. Being involved in a startup should overwhelming involve these types of jobs.
The third type of job is dividing up an existing wealth pie and distributing it to the world. These are jobs involving the public sector, primarily government and bureaucracy. These jobs do not directly generate wealth, but instead think about the optimal distribution of wealth that is created every day, and implement that distribution in society.
This is quite a rough breakdown, but that was the rough way that I saw the world at the time.
Of course, these three types of job don’t have anything to do with high or low standing, superiority or inferiority. Which type of job a person chooses depends on their own preferences. But these three types of job differ significantly. If you choose a type of job that does not match your preferences and aptitude, then you may struggle to enjoy your work. At least, this was what I felt at the time, after several years in the workforce.
At the time, I only had a few years in the workforce to reflect back on, but I had realized that the first type of job, protecting a pie, was not a good match for me.
I also had a hard time imagining myself doing the third job, distributing a pie. I think this is an incredibly important job, but the conclusion I reached was that rather than trying to distribute out a shrinking wealth pie in Japan, I wanted to devote my life to spending time thinking about how to make the wealth pie bigger.
I believe that I arrived at this conclusion under the significant influence of the broader context of the times. I graduated university and entered the working world in 2007. The next year, 2008, was the year of the financial crisis.
I myself clearly felt the winds of crisis through the coming & going of people in my organization and the number of project cases. I believe that it was while looking back on the nature of the projects, many of them cost reductions mainly in large companies, that I realized that people have things they are good at, and not very good at.
I believe that it was a combination of the impact of those times and my initial desire to be involved in the creation of new pies that led me in 2010 to return to the company Naked Technology that I helped to establish with friends during my university days.
Now in 2019, many people have their eyes on startups, but at the time, among my colleagues from the same time at McKinsey, only two people including myself moved on to join the management of a startup. This was at the time where in Japan the name “startup” had not yet reached popular usage, with the name “venture company” still being used. In 2018 the total venture investment in Japan was reported to be over 400 billion yen, but around 2010 that investment was not even 70 billion yen.
But that is not to say that I was gifted with foresight. Regardless of the eventual result, looking back the decision to jump into the startup world right when the market was dried up immediately after the financial crisis may not have been wise.
Up until just before I returned to Naked Technology, I had planned to go study at a business school in the US. For those working at an international professional firm, going to business school is something like mandatory education, but overseas business school was also to an extent a cram school for changing jobs. If you are calculated about it, it’s an ideal chance for some career laundering. If you really think about that aspect, for someone whose career has not been significantly stained, choosing to go to business school would be a waste.
To put it bluntly, I lightheartedly thought that even if my startup went bust, I could use the experience as the subject for an essay when I reapplied, and that it would work out in the end. With just that unfounded optimism, I dove into the world of startups. Through the business school program I was hoping to learn about startups, so I think some part of my decision may also have been that I thought it would be faster to try it out myself.
In contrast to the present day, 2019, at the time there was almost no interest in startups from the human resources market. Working with startups at the time, compared with professional firms, there was a definite difference in the depth of the human resources layer. Sun Tsu’s “What the ancients called a clever fighter is one who not only wins, but excels in winning with ease” is a general principle that is both a good example of worldly wisdom for individuals and applicable to startup management.
Up to now, I have been involved with private startups, with what we call Post-IPO startups, and emerging public companies. I think that more often than not things didn’t go as I planned. I keenly felt my own lack of skill, and I have many difficult, unfortunate memories. But even so, I do not think that the decision I made in 2010 was a mistake.
At the same time, I feel that startups have a proactive reason for being in society, and play an important role.
What is the reason for being for startups? I believe that startups are an engine to create wealth, and startups are able to go through the incentive structure that is business to quickly handle social issues that arise with the changing of the times.
Of course, large companies can use their assets to handle a variety of social issues on a large scale. However, because they are already “haves,” they have existing entanglements. Their habits tend towards maintaining the status quo, and in general they are unable to quickly work to address newly arisen issues.
Startups are “have-nots,” and thus when new issues arise in the world, they have no existing entanglements, are light on their feet, and are free to provide a variety of solutions. Being “have-nots” is a particular strength for startups.
Also, by building businesses to solve a variety of social issues, startups can also create large industries to pass on to future generations. I believe that this is the most important reason that justifies the existence of startups in society.
Looking at the individual people involved in startups, many of them find pure enjoyment and love in their work providing services and developing products. At the same time, I think many of them also are engaging in business for the economic incentive of potential capital gains, and the fame. Without a flame to spark passion in people, no one would decide to be an entrepreneur.
No matter the motivation, as long as they abide by the rules and social norms, then I think we should welcome initiatives to try to create new wealth in the world.
Meanwhile, stepping back, I believe that the role of startups in society overall is to cause true impact on the world.
On a different subject, when I was in elementary school, I spent some time in the Boy Scouts. While in the Boy Scouts, we went into the wilderness, learning about Morse code, flag signals, knots, and other things that looking back I’m not sure are of any use, but generally gaining experience in nature. What I remember most strongly about the Boy Scout activities was the rule: “Always leave the campsite cleaner than you found it.”
The Boy Scouts train their members to clean up the campsites they use for their activities and leave them better than they found them, to express their thanks for using the site. The leader of my Boy Scout troupe was always repeating that phrase, so it has stuck with me even to this day.
Looking back on my reasoning for getting involved in startups, I think deep in my psyche there was a connection with the desire to leave a place better than I found it.
Before I knew it, I was no longer in my late twenties in the midst of a financial crisis, but already in my late thirties. Nowadays people often live to a hundred, but if you assume the traditional working career, then I am rapidly reaching the midpoint.
As I have gotten older, I have had new worries start cross my mind. Will the generations of the future receive any of the wealth pie? Will they be able to live healthily? Ten years ago, I would never have had such concerns, but now I wonder if we are behaving with integrity towards the future people of our children and grandchildren’s generations. I hope at least that we are not leaving anything to them of which we ought to be ashamed, and that worry brings forth a sense of responsibility.
Possibly due to my frustrated ambitions to become a jockey, or due to experiencing the 2008 financial crisis early in my career, I consider myself a pessimist. Despite my love for Japan, where I live, I am unfortunately unable to envision a bright future for it.
However, despite the many things I find unsatisfactory, compared to previous eras I feel that those of us living now are really blessed to have comparatively richer lives. If possible, I want future generations to enjoy the same type of rich life. Unless we do our utmost to make that happen, I don’t think we will be able to face those who come after us.
As I mentioned, startups are what will leave a true impact on the world. Startups are the ones who will create new industries that can be passed on to future generations.
Compared to large companies, the influence of startups now is miniscule. From the perspective of the establishment, the businesses of startups may seem very small, and their initiatives frivolous.
Even so, they have the potential to create a new wealth pie for the future. They have the potential to serve the necessary function of leaving the world better than they found it. That is why I decided to focus on startups.