TT-682 -- Entrepreneur Awards and Mentoring, ebiz news from Japan

* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.

General Edition Sunday, October 14, 2012, Issue No. 682


- What's New -- Entrepreneur Awards and Mentoring
- News -- New superconducting motor for EVs
- Upcoming Events
- Corrections/Feedback -- Bicycle parking
- Travel Picks -- Oyasu, Akita, and Happo-en, Tokyo
- Japan Business Q&A -- Godo vs. Kabushiki Kaisha
- News Credits

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There seems to be very little public statistical research
about Japanese entrepreneurs, so we were surprised
and happy to come across a Stanford University
paper, which offers some fascinating facts and figures
about the make up of the Japanese entrepreneurial
community. For example, did you know that:
* The average age of a Japanese entrepreneur is around 40
years old.
* Only about 4% of new companies started since 1998 are
headed by women, although that number is rising.
* The university that turns out the the most Japanese
CEO/founders of new companies is Waseda University.
* The second most common alma mater for new company
CEO/founders is not a Japanese university at all, but
universities (a bunch of them) abroad.
* Japanese start-ups are resilient, and are 35% more likely
to survive after being in business 5 years than are US
high-tech start-ups

All good stuff that we didn't know either, until we
stumbled across the Stanford study by Robert Eberhart and
Michael Gucwa. Although it is slightly dated, having been
published in 2009, given that the Lehman Shock didn't
impact Japanese companies to the same degree it did
elsewhere (although it has been almost solely responsible
for the persistently high yen as the US devalues its
currency), we expect that the results would be similar even
today in 2012. You can see the study, entitled
"Entrepreneurship in Japan: A Data Report",

The picture that the Eberhart/Gucwa report paints is one
where Japanese start-ups are highly focused on sectors that
have low hurdles to entry, such as importing and
wholesaling products, offering business services, and
creating software. Those companies that get past the
start-up phase are more likely to grow faster and be more
profitable that is normal for their sector, and
importantly, they become major employers. Needless to say,
they are notable for their innovation, ability to adapt to
sectoral change, and are particularly good at taking
advantage of regulatory change (echos of "Poor Dad, Rich
Dad"). It's not hard to think of examples, such as Rakuten,
DeNA, Gree, Cyberagent, and many others.

What is interesting about successful Japanese start-ups is
the foreign connection, be it education, money, technology,
business deals, or all four. We suppose that Softbank's
Masayoshi Son epitomizes the foreign connection, through
his having been educated partly in the USA; building his
first major business, that of selling software, by working
with foreign software publishers; then lending money from
Vodafone and foreign banks to do the gigantic Vodafone
Japan takeover, and now his possible push into the US
market through a takeover of Sprint's business. Other
examples include Rakuten's Mikitani, Monex's Matsumoto, and
Globis' Hori, who have all done well through their foreign
connections and who are now leaders in their respective

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[...Article continues]

Thus when we learned in 2010 of a new initiative uniting a
number of foreign-led programs nurturing entrepreneurship
in Japan, we got quite interested. The initiative is
called The Entrepreneur Awards Japan & the Entrepreneur
Mentoring Initiative (TEAJ-EMI) and is chaired by Patricia
Bader-Johnston and vice-chair Thomas R. Shockley. It
is supported by the ACCJ, BCCJ, British Council, JMEC, MIT
Enterprise Forum Japan, GEW and E&Y (as the secretariat)
-- so they have some pretty decent credentials.

Starting with the TEAJ part of the initiative, the
highlight has to be the involvement of US Ambassador John
V. Roos who hosts the awards at his residence and who has
also established a special US Ambassador’s Award to provide
support to the contestants through embassy events and
networks. Apparently Ambassador Roos has lots of hands-on
experience in start-ups, and his advice has included tips
on how to network back in Silicon Valley and how to go
about fund-raising. Certainly his involvement has given the
TEAJ credibility, helping them to attract such high-profile
judges and mentors as Taizo Son (Masayoshi's younger
brother), Mixi founder Eto Batara, and serial entrepreneur
William Saito.

But it's not just the luminaries that are involved, TEAJ
has attracted some bed rock members of the local investment
community as well. For example, the selection committee chair
is none other than Tokyo-based seed investor Jeff Char, who
was quoted after the 2010 program as saying, "Feedback
[Ed: through TEAJ] is a kind of tough love that helps
entrepreneurs focus on what will really make them
successful.” We imagine that Jeff was thinking about how
Japanese kids are schooled, and that "tough love" is not
something they have a problem with. :-)

A recent Ambassador's Award winner under the TEAJ program
was Reina Otsuka of Eco+Waza (, a
company which scours Japan for cool environmentally
friendly products and sells them online, in both English
and Japanese. Check out the website, it's a good idea and
we can imagine that the company will become well-known to
Japanese crafts connoisseurs over the next year or so.
Eco+Waza was started in 2006 and is still small -- in
fact, this seems to be Otsuka's strategy, since she
appears to want to concentrate on the unique and premium
side of Japan rather than building massive inventory and
having the lowest prices. This is a very viable business
model for the Internet -- consulting and research -- and
one which should help her meet her stated goal of becoming
a primary research center for Japanese and Asian
traditional craft goods over the next five years.

The second part of the TEAJ-EMI initiative is the EMI, or
mentoring, part. This was started in 2010 with the
intention of giving motivated but new entrepreneurs a way
of sounding out ideas and figuring out the risks before
being overwhelmed by them. The key is of course to solicit
mentors who are willing to give the time and input to
people they may never otherwise derive benefit from.
Usually this kind of interaction is hard to get done in
Japan, and so is frequently left to retired business
people and an NPO with the right connections. But
this means that the mentors are not necessarily
entrepreneurs, the structure is less mentoring than a
teacher-student relationship, the opportunity for
investment is small, and the information and introductions
are often out of date.

In contrast, EMI has been able to recruit some proven local
foreign entrepreneurs who are willing to share time,
insights, and occasionally investment. Amongst the line-up
of familiar faces include Brian Nelson, most recently CEO
of ValueCommerce in Japan and Catherine Porter, the head of
LinkedIn Tokyo. Among those who have been mentored, you can
include Nhat Vuong of the NPO “Ikufu”; Tsuneyuki Fujioka of
FUNFAM, whose company manufactures and sells bamboo eating
utensils and which are now becoming famous in Europe and
the USA; and Carl Sundberg of Smart Technology Partners.

We particularly like Carl's story, which we have mentioned
briefly in previous Takes. His STP company is converting
underutilized rural municipal buildings across Japan into
distributed cloud computing data centers. Carl opened his
first prototype data center in an abandoned school in rural
Fukushima in February 2011. Then, barely 3 weeks after
opening, the Tohoku earthquake brought STP refugees who
after being housed started helping out in the data center.
This unique confluence of events coupled with Carl's
entrepreneurship has attracted local and national attention
and provides Tohoku with an alternative to that of simply
rebuilding everything which was swept away. Carl loves the
start-up process and as a result, STP is now also helping
to incubate other start-ups from the hinterlands of
Fukushima, passing on the advice and know how that it
received during its own early phase.

The competition for this year’s EMI Awards opened on
September 21 and the application deadline is October 26. If
you think you have what it takes to be an entrepreneur, you
should submit the application downloadable from their site.
Four awards will be offered this year: The U.S. Ambassadors
Award, through which the winner will be taken under the wing
of the US embassy and who will be invited to all innovation
and entrepreneur focused events for the next year; the
Groundbreaker Award (this year sponsored by DELL), whose
winner will travel outside Japan to attend the Dell Women’s
Entrepreneur Network event (location still to be announced,
but in past years held in Rio de Janeiro and New Delhi);
the Venture Generation Award, will include a range of
mentoring activities and business support; and the ACCJ
Director’s Award, which will offer special access to
selected American Chamber events throughout the year and
our very own Entrepreneur Handbook seminar. Each awardee
will be assigned a mentor from the Tokyo business community
and lifetime membership to the EMI Alumni Network.

Details can be found on the EMI website at

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+++ NEWS

- US security ties give Japan confidence
- New superconducting motor for EVs
- Falling Chinese tourism from September
- Justice Minister mates with Yakuza
- Polymer factory explosion to cause diaper shortage

=> US security ties give Japan confidence

Interesting to see the Japanese ambassador to Washington
publicly stating at a presentation to the Brookings
Institute that since Japan's security treaty with the USA
covers the Senkaku's that he thinks it, "...constitutes an
important deterrent." The ambassador apparently continued
at some length to downplay the seriousness of the spat,
saying that Japan is not going to get emotional about the
Senkaku issue and that it is not expecting a full-blown
conflict to arise because of it. ***Ed: Still, "just in
case" it's nice to have the USA on your side, right Mr.
Ambassador?** (Source: TT commentary from, Oct 13, 2012)

=> New superconducting motor for EVs

Exciting new development from Sumitomo Electric. The
company says that it is developing a superconducting motor
for electric cars, and will have a prototype ready early
next year. The company reckons that a superconducting motor
will reduce electric vehicle power consumption by
20%-30%. They keep the motor cooled by sealing it in liquid
nitrogen, and by using high-temperature [Ed: Most likely
iron-based] superconductors. ***Ed: It will be interesting
to see how the liquid nitrogen tank holds up in a traffic
crash... you wouldn't want to be near it when it springs a
leak that's for sure.** (Source: TT commentary from, Oct 13, 2012)

=> Falling Chinese tourism from September

An interesting factoid from a recent nikkei article on the
tumble in Chinese tourists coming to Japan is that UnionPay
bank card company gets about JPY10bn in Chinese tourist
transactions per month. That's a pretty good chunk of
change for a bunch of tourists, and an obvious reason why
the government is working so hard to bring more Chinese in.
Unfortunately the Senkakus spat is more serious than first
hoped, and ANA has taken 28,000 seat cancellations for
flights departing China, for the period September through
December. ***Ed: No other data in as of yet, but it can't
be good.** (Source: TT commentary from, Oct
13, 2012)

=> Justice Minister mates with Yakuza

You really have to wonder about the IQ of Japanese
politicians... It has now emerged that PM Noda's new
Justice Minister, Keishu Tanaka, is in fact old mates with
a Yakuza gang member, after a tabloid magazine published
the fact he'd been a guest at his friend's wedding 30 years
ago. The new minister insists that it was long ago and that
he has not associated with any Yakuza member since. ***Ed:
This is the second "irregularity by Tanaka in just 10 days,
so we see him having to resign over this gaffe -- especially
with an election coming up.** (Source: TT commentary from
afp at, Oct 12, 2012)

=> Polymer factory explosion to cause diaper shortage

A serious explosion at the Himeji acrylic acid factory of
Nippon Shokubai may cause a global diaper shortage for
babies and the elderly. The factory was one of the largest
producers of the super absorbent polymer that is a key
component of diapers, supplying about 460,000 tons, or
20% of the world market. The company has said that it will
start sourcing the polymer from other producers, but
speculation is that it won't be enough to cover growing
demand. Nippon Shokubai was in particular one of the
leading suppliers of the polymer to Proctor and Gamble for
Pampers diapers sold in Asia. (Source: TT commentary from, Oct 1, 2012)

NOTE: Broken links
Many online news sources remove their articles after just a
few days of posting them, thus breaking our links -- we
apologize for the inconvenience.


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No events this week.



In this section we run comments and corrections submitted
by readers. We encourage you to spot our mistakes and
amplify our points, by email, to

=> In response to our piece on bicycles versus cars in
Tokyo in TT681, a reader tells us of his frustrations in
finding places to park even one small bicycle.

*** Reader says:

I couldn't agree more with your view on the recent bicycle
parking rules. Aoyama Dori is clogged with construction
vehicles yet we are not allowed to park our bikes there. It
annoys me no end :). I took a photo one day when I was
asked to move my solitary bike parked very carefully on the
side of an extra-wide sidewalk, due to it being 'in the
way'. I reluctantly moved it, all the while there was a guy
with a monster truck illegally parked on the other side of
the guard rail, who was having a nice afternoon snooze
while blocking the flow of traffic in the inside lane of
246. I notice the construction guys didn't ask him to



=> Oyasu Ravine, Akita
Where the Earth Comes Alive Through Steam and Heat

There are countless hot springs in Japan, but have you ever
seen a hot river? At the bottom on Oyasu Ravine, down 200
stairs (which means you’re going up later!) is a beautiful
scene. A crystal clear river cuts through the hard rocks.
Trees sprout out of the craggy cliff, providing a shady
heaven. Small waterfalls complete the serenity. Then you
see fog in the distance.

It’s not fog though, it’s steam. Water is superheated and
creates a cloud of steam rising from its surface. Walk
along the concrete path, turn the corner, and a wall of
mist stops you. The path you must take is sandwiched
between a heated river and cracked rocks that are shooting
steam. The only way to get through is take a deep breath
and power walk through the wall of mist. I would suggest
running, but the steam cloud is so thick -- though just for
a second or two in the middle -- that I almost hit someone
in my dash to freedom. After exiting the ravine, there are
several other must-do's while visiting the Oyasu onsen

=> Happo-En Garden, Shirokanedai
A blissful green oasis in the middle of Tokyo
[Photo Essay]

Just ten minutes` walk from Meguro Station on the JR line,
Happo-En is one of Tokyo`s most pleasant traditional
gardens. The name means `beautiful from any angle`, which
explains its appeal as a venue for weddings. Come here at
the weekend and you`re likely to see happy couples being
photographed with the garden as their backdrop. Designed
around a central pond, the garden includes venerable
bonsai trees, an ancient stone lantern, and a tea house
where you can enjoy tea and snacks served by ladies in
kimonos. Exquisite.


+++ JAPAN BUSINESS Q&A -- Godo vs. Kabushiki Kaisha

=> Question:
My friend and I have been thinking about starting our own
consulting firm. What is the difference between a Godo
Kaisha and a Kabushiki Kaisha? Which would be a better
choice for our purposes?

*** Answer:
The answer to your question will depend a bit on your
priorities. The company form called Kabushiki Kaisha (KK)
tends to have a bit more value in terms of recognizabilty
in comparison to a Godo Kaisha (GK), but it also costs more
to establish and requires at least one shareholder’s
meeting a year, which may not fit your needs. On the other
hand, the GK form is increasing in numbers due to its lower
incorporation costs as well as the fact that a GK has no
need to hold an annual shareholder’s meeting.

More specifically, the main differences between the two
company forms are as follows:

1. Stakeholder responsibility
The KK is a company format that allows shareholders to have
limited responsibility, by separating the company from the
directors, executive officers, and management that actually
run it. On the other hand, a GK also allows stakeholders to
have limited responsibility, but the stakeholders serve as
managing members running the company.

2. Corporate management
In the case of the KK, directors and executive officers run
a company under the Japanese Companies Act. They are
subject to the restrictions and business procedures that
are required under this law and therefore decision-making
may at times seem slow. Management will serve under
fixed-term contracts, and the KK may need to make their
financial statements public, adding an additional layer of

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