Startup Factory Meetup in TOKYO

Panel Discussion
Report

A Startup Factory Meetup was held in Kyobashi, Tokyo on December 12, 2018
(Click here for a summary of the meet-up).
The following is a report on the panel discussion that took place at this event, which was well attended by representatives of startup factories, startups, startup supporters, and government officials.

THEME

The Difficulties Faced by Hardware Startups,
the Fun They Have, and the Support They Need

The panel consisted of Osamu Ogasahara, a pioneer in support for hardware startups, and representatives of two hardware startups whose businesses have grown with Mr. Ogasahara’s assistance. It was a panel discussion packed with candid reflections, told with sometimes raw honesty, on the panelists’ actual experiences.

Panelists

  • Osamu Ogasahara

    CEO, ABBALab inc.

    Osamu Ogasahara has worked at the helm of a number of Internet businesses, including as the co-founder of SAKURA Internet Inc. In 2013, he launched ABBALab inc., an investment business specializing in prototyping for IoT startups. Since then, he has provided assistance for numerous startups, including the launch of DMM.Make AKIBA.

  • Eri Makita

    CEO, tsumug Inc.

    Eri Makita established tsumug Inc. in 2015 after working at companies such as Cybozu Inc., CyberAgent, Inc., and MOVIDA JAPAN. She is developing and manufacturing TiNK, a connected lock that will realize the concept of key sharing.

  • Yuya Kikukawa

    President, no new folk studio Inc.

    While enrolled in the doctoral program (Industrial Design) course at Tokyo Metropolitan University, Yuya Kikukawa commercialized the smart footwear, Orphe, that he developed as a research project, which prompted him to establish no new folk studio Inc. in 2014.

Moderator

Yosuke Kita, Researcher, Mitsubishi UFJ Research and Consulting

As a policy researcher at a thinktank, Yosuke Kita’s work involves research and studies of small and medium enterprise policies and startup policies. He serves as a member of the Startup Factory Project’s secretariat.

Kita

Firstly, I’ll ask each of the panelists to briefly introduce yourself. Mr. Kikukawa, would you mind going first?

Kikukawa

We are a startup that is developing smart footwear called Orphe. As you can see, they are shoes that light up. But, actually, they connect to your smartphone, so you can change the way they light up, and sensors inside the shoes detect your walking pace and play sounds. They can be used in a variety of ways, depending on the application. We set up the company in October 2014 and did the prototyping at DMM.Make AKIBA, which had just opened at the time. In 2015, after a successful crowd-funding appeal, we reached the stage of mass production. In some respects, we have followed a path that is very much like that of a hardware startup.

Lately, we have been working on the development of new services based on Orphe. We are building a system for converting all shoes to IoT, installing our sensor Module, ORPHE CORE, in the shoes of other manufacturers so our AI platform, ORPHE TRACK, can analyze the information about the wearer’s steps. We are conducting field trials of this system in collaboration with ASICS and Mitsubishi UFJ Trust and Banking, and pursuing plans for using that walking data in insurance services, for example.

Kita

Thank you. Okay, Ms. Makita, would you mind?

Makita

My name is Eri Makita and I am CEO of tsumug Inc. My company is a year younger than Mr. Kikukawa’s, but we are a startup that followed a similar path, namely receiving an investment from ABBALab and starting the company out of DMM.Make AKIBA. Originally, I was working on the startup support side at Taizo Son’s venture capital company. In that job, I sensed that the environment for supporting startups had been established, so I decided I wanted to try one for myself. I set up tsumug exactly three years ago.

The product we are making is a connected lock called TiNK. I think the product might be best explained by showing you a video.

This video is based on an actual experience I had, in which my former boyfriend made a copy of my room key without my knowledge and entered my room illegally after we broke up. The scene in the video is very amusing (laughs), but that experience made me realize that physical keys, something that I had believed were safe, are not actually safe. I thought that I could come up with a new innovation, so I started developing TiNK.

Kita

That’s quite a tough true story you’ve hit us with there (laughs). Finally, Mr. Ogasahara, would you mind?

Ogasahara

To tell you the truth, I am still very much a baby when it come to making things. I started becoming interested in manufacturing in around 2012 and that is when I became involved. Originally, I started up SAKURA Internet about 20 years ago, and I had always been in the Internet industry. About six or seven years ago, the Internet was full of games that were all about charging logic, nosy socials, and the like. The sense that everything began and ended just on the screen started to bore me. I wanted to create an internet outside the internet, something that people could operate, and that’s the reason I came over to the manufacturing side.

It was around about that time that I met Mr. Kameyama, the chairman of DMM. I put a proposal to him to create a manufacturing space, and, with his help, I launched DMM.Make AKIBA. It was when DMM.Make AKIBA first opened, around 2013 or 2014, that I first met Mr. Kikukawa and Ms. Makita. My first meeting with Mr. Kikukawa was virtually a shakedown. “I want to make shoes that light up, so give me 3 million yen,” he says. Hold on? Maybe it was more (laughs). With Ms. Makita as well, we quarreled every day when we were launching TiNK. We actually just had a fight about two hours ago (laughs). I’m sure they’ll tell you about it themselves, but for both of them, as non-engineers launching a startup, there were many things they did not know and they had many concerns. I hope that today’s discussion will inspire everyone to think about what the best kind of relationships are between startups and their supporters.

The “obstacles to mass production” faced by hardware startups.
What do startups have the most difficulty with?

Kita

We often hear about the obstacles to mass production that hardware startups face. Could I ask you about your own war stories in this regard, based on your actual experiences?

Makita

This is something that I am still having trouble with right now, but the experience that has left the strongest impression was when we first started. For a start, we couldn’t seem to make connections with factories. When we finally did find a factory, we had a lot of trouble communicating with them. When we asked them for a quote, it took them ten months to come up with one, and after making us wait for ten months, they still turned us down. For a startup, ten months is a very long time. It can even affect the company’s very survival.

Ogasahara

Yes, in most cases, it is a matter of not being able to agree on money and time.

Makita

That’s right. After all, we come from completely different backgrounds and different industries. I think the problem was we did not have much in the way of a common language for communication.

Ogasahara

Factories make things on the premise that they will tweak the product several times, but startups don’t think that way, so as soon as they are presented with something that is a long way off from what they had in mind, they lose trust in the factory. That seems to be the most difficult time.

Kikukawa

I think there are two problems. The first is an understanding of the startup business model itself. This business model has developed from one that was centered on Internet businesses, don’t you think? Mr. Ogasahara is from the Internet sector, and there are many people like you who start with an understanding of the start-up ecosystem, but people who come from a different industry have a hard time understanding how something like this can even work in the first place. In so many cases, it was a matter of “We were offered the work, so we took it.” In those cases, the differences in the sense of speed and what is required become quite apparent.

The other problem is that manufacturing and IoT are completely different things. IoT involves making “things” that will allow you to create new “experiences” while on the Internet, and it is not just about making products. There is quite a cognitive dissonance from the idea of “I’ll sell this many products to make this much profit.”