Here’s a popular belief: Japan is a big market, and startups from the Northeast Asian country do not need to consider going overseas.
“I think this perception is wrong, and can be potentially costly,” said Taku Harada, CEO and Co-Founder, Japan-based Peatix, an event management platform.
In an email interview with e27, he added, “… if you don’t prepare by going up against global competitors and figure out your winning formula, you might one day be swept off your feet when a big global competitor enters the market.”
Launched in 2011, after Japan was hit by a devastating Tohoku earthquake and tsunami, Harada saw an opportunity to increase “consciousness of social good” and a way to contribute to the community. “We saw a lot of meet-ups and gatherings around social themes, and were very fortunate to have been able to contribute to these movements,” said the entrepreneur.
Two years later, the platform, which allows anyone on the internet to create and sell tickets to any event, announced that it had secured a US$3 million round led by Fidelity Growth Partners Japan. The two parties had first met at TechCrunch Tokyo 2011.
While he and his team initially thought that they could hold off fundraising by maintaining secondary revenues with consulting jobs, it was later decided that they should speed up. “… We needed to move very quickly and grow Peatix immediately with a lot of competitors entering the market,” he said. “With proper fundraising, you buy yourself a lot of time in a space where speed is paramount.”
Of course, one of its major competitors in the space is US-based Eventbrite, which was founded in 2006. While EventBrite charges a 2.5 per cent and US$0.99 per ticket, Peatix, on the other hand, charges the same in the US, and 2.9 per cent and S$0.99 in Singapore, inclusive of credit card payment processing fees.
As the head of a company looking to become more globalised, Harada asked, “Can you name a single Japanese startup that has really ‘made it’ outside of Japan?” Immediately, my mind jumped to GungHo Online Entertainment, a game company which generates a daily revenue rate of US$4.9 million. Its smartphone hit Puzzle & Dragons has been popular overseas, having garnered three million downloads in North American markets (US and Canada), as of March 7, 2014, 1 million downloads in Hong Kong and Taiwan, as of March 11, 2014, among other markets. Across the globe, it has more than 27 million downloads.
However, he emphasised that most of the success had originated from the gaming sector. “Apart from several gaming companies, it (making it outside of Japan) has never been done. We want to be one of the first ones to accomplish this,” he added.
“We decided to jump out of Japan very early on because we observed that if you become big in Japan first, your company culture tends to become too insular and it becomes very difficult to pursue global markets,” he continued.
The team consists of talents from Japan, Singapore, the US, Germany and the Netherlands. “We might have Japanese roots, but I don’t consider ourselves as a Japanese company anymore,” said Harada.
In terms of localisation, he talked about some of the biggest challenges Peatix is currently facing. For instance, customers in Japan tend to be cautious of online credit card usage. To counter this, the platform allows cash payments at convenience stores.
However, it seems that most consumers, regardless of their physical location, face similar problems.”I like to think that we’re still pursuing universal truths across the markets we’re in. I still believe that event organisers and attendees are more or less concerned about the same things wherever we go,” he said.
He added that consumers usually worry about budgeting, filling seats and finding venues for their events. In the future, these users can look forward to functionalities that help people discover more events and a matching service for venues and events.
In conclusion, Harada also gave a few words of advice to startups heading into Japan. He said, “Japan has the most demanding customers in the world. They expect excellence with what you provide. In fact, don’t make the mistake of interpreting the concept of ‘minimal viable product’ in the wrong way; you still have to provide service at an exceptional level.”
This way of thinking — a distinct spirit of excellence — however, will probably allow startups to compete with an added advantage in other markets.