Global Startups and the Japanese Market: Top Venture Capital Investor Explains How Startups Can Successfully Expand to Japan and the World | Phil Wickham, Sozo Ventures | E10

Speaker A: You know, the first question is, do you care about being a winner globally? Because you can be very successful just going after the US Market. Global category leadership goes through Asia, and we would argue that Asia goes through Japan. If you can actually engage intelligently and early in Japan and be successful there, your validation across Asia is much, much more powerful. All right, so Ko and I, my co founder Koichiro Nakamura and I have both spent our entire careers building bridges between Japan and Silicon Valley. We consider ourselves after 15 years as a venture fund, to be really still thinking like a startup if you're aspiring to be a global category leader. Okay, well, let's, let's try to understand what could the opportunity look like in Japan. What sort of things can we lay the groundwork on? And let's, if we're an investor in you, let's help you make the right decision, the right way at the right time. What we don't want them to do is fall into one or two extremes and that's almost universally a disaster. So there's just a way to progress through the market in an intelligent way. And we try to help companies know when they're, when it's the right time to go.

Speaker B: Many companies, including really large and famous companies, have attempted entry to the Japanese market and failed disastrously. It's a notoriously very difficult and very different, uh, business ecosystem. And then the US or really anywhere else. How can startups successfully navigate entering the Japanese market? In this episode of Next Unicorn Podcast, I talk with Phil Wickham, the Executive Managing Director at Sozo Ventures, a venture capital firm in Silicon Valley with deep connections in Japan. They've been investors in many successful startups, including Twitter, Coinbase, Palantir, Zoom Square and others. They've helped those startups access the Japanese market and other international markets through their deep connections with large Japanese corporations which are also investors in their funds. Phil also served for many years as executive chairman, President and CEO, um, of the center for Venture Education, which oversees the Kauffman Fellowship program, the most prestigious venture capital fellowship program in the world. Previously, he was also a fellow in the inaugural cohort of the Kauffman Fellowship Program. Phil also served as an early advisor to the well known Swedish venture capital firm Kriandom, which has been an early investor in successful startups including Spotify and Klarna. Um, in this interview we talk about how Sozo Ventures helps startups access the Japanese market. What kinds of startups are best suited to access the Japanese market, and at what stage and special challenges and considerations before attempting to access one of the world's most notoriously difficult and unique foreign markets for non Japanese companies to access. Then we also talk a little about the current state of the Japanese startup ecosystem. Later in the interview, we discuss Phil's personal career background. Background. Also stick around to the end because Phil participates in the next unicorn bonus round. Phil, it's great to have you on next Unicorn podcast. Thanks so much for being here.

Speaker A: Thanks for having me, Phil.

Speaker B: I want to start by talking a little about Sozo Ventures. It's a really unique Silicon Valley venture capital firm. Just tell us a little bit, a bit about Sozo Ventures and what makes it unique among venture capital firms.

Speaker A: Well, I'll tell you about Sozo. People can determine whether we're unique or not. We're a fund that focuses largely on enterprise software. We tend to invest at the intersection of data performance, data functionality, AI and industries that are being disrupted. So if you look across our portfolio, that tends to be what we're very attracted to. We like really big problems and I think that's been part of the reason we've had some of the successes that we've had. Um, what might make us a bit unusual is the approach that we take to the business. So we came out of the womb as a venture fund with this idea of being more like an operating company. We're not a collection of individuals and glass offices. Um, you've been to the office. We sit in a pit together and little cubicles. We go after every deal as a team. Um, we have an unusual approach that we have a large professional business development team that we actually utilize in the diligence process. So as a, as we meet companies, our primary way of diligencing them is to help them figure out how to understand, uh, the context of their opportunity overseas, especially in Japan, and to actually help them with introductions into distributors and customers. And we might do that for up to. We've had some cases. We've done that for two or three years before we've invested in a company. And we just do that as part of our approach. Um, that's kind of the way we go after it.

Speaker B: From what I understand, you're really specialists in helping startups strategize their international expansion, particularly through Japan and Japanese large Japanese corporations, which are often also your LPs, your investors and your funds. How would you sort of just any, Is there any further way you would define that or introduce people to that idea?

Speaker A: Yeah, I can give you a little bit of background and it might explain it. And I think like, like uh, any startup, and we consider ourselves after 15 years as a venture fund to be really still thinking like a startup. It stems from the personal interest and expertise of the founders. Right. So Ko and I, my co founder, Koichi and Nakamura and I have both spent our entire careers building bridges between Japan and Silicon Valley. He from Japan to the US and me from the US to Japan. So that started the interest. And so there's sort of two approaches that you take in the startup. One is, I really love to do this. These are the problems we want to solve, these are the puzzles we want to solve. But from there you have to justify any startup idea. And the way we think about it is pretty simple. Let's only work with companies that aspire to be global category leaders. Let's start there. And we're pretty good at assessing that. You can assess that from the mindset of management, you can assess it from the technology platform. Can it be adapted globally? Sometimes it can, sometimes it can't. So we start there and um, our simple algorithm is global category leadership goes through Asia and we would argue that Asia goes through Japan. Now there is definitely a pattern of Asia going through places like Singapore, and I think that's Singapore's fabulous. Um, but I think it's a bit of a path of least resistance. Japan is much harder. But if you can actually engage intelligently and early in Japan and be successful there, your validation across Asia is much, much more powerful. So that's how we think about it. So we're coming at it from a global mindset, but trying to give them a very special leverage to the Japanese market.

Speaker B: Let's talk more and dive deeper into this idea of expanding internationally through Japan. Can you just first outline why a startup, especially in the early stages in the US or Europe, should be even thinking about that? We often hear of the US is such a large and cohesive market that a company should really master that before expanding. What's the sort of, what's your sort of view on expansion strategy from that, even in the early stage?

Speaker A: Yeah, I think if, you know, the first question is, do you care about being a winner globally? Because you can be very successful just going after the US market. So once we've established that, then I think the approach can be the way you would approach any sort of major event in the growth of a person. For example, so when, when do you, as a parent or as a, as a child, start thinking about college and where you want to go to college? So just because some kids think about college when they're 10 that doesn't mean they're going to college, but they're starting to research, they're trying to understand the context, and they may investigate colleges for quite a few years before they make the final decision, when they're 17 or 18, when they're ready to go. And, and so our, our approach to that is, if you're aspiring to be a global category leader, okay, well, let's, let's try to understand what could the opportunity look like in Japan. What sort of things can we lay the groundwork on? And let's, if we're an investor in you, let's help you make the right decision the right way at the right time. It might be, there might be a transaction in the diligence process. We've had that happen with companies. We've also had companies be very successful in Japan, but it's taken them five years to crack the code. What we don't want them to do is fall into one or two extremes, which is either just ignore it and wait until someone from Japan comes knocking, which is almost a, uh, guarantee you're missing an opportunity. And the other extreme is let's just drop boots on the ground in Japan and spend a bunch of money and start chasing whatever we can chase. And that's almost universally a disaster. So there's just a way to progress through the market in an intelligent way. And we try to help companies know when they're, when it's the right time to go.

Speaker B: So, as you alluded to, many companies, including really large and famous companies, have attempted entry to the Japanese market and failed disastrously. It's a notoriously very difficult and very different, uh, business ecosystem than the US or really anywhere else. Um, why, like, how can startups successfully navigate entering the Japanese market?

Speaker A: I mean, there's no, there's no axiom, but I would say probably one of the first. I can give you some examples of some things that I think highlight what success can look like in Japan. So the biggest mistake that anybody makes, and anybody who's traveled internationally would understand this. If you land in a country and you apply the same assumptions of how to do things, for example, the way you would do them in Ohio and apply them in Tokyo, you're going to run into a lot of surprises and resistance and things. So there's abandoning some, at least being open to the fact that some of your assumptions might not work, um, is a really good way to start and, and understand how, uh, Japanese companies make decisions. So, so a simple example is when we took first company, we worked on At Sozo was Twitter. Um, and Twitter went into like that. Twitter was an, was an advertising platform and generated revenue off of advertising. And what, what we saw the opportunity in Japan was actually the data and so the data that Twitter developed. And so what we did was we did a partnership with a convenience store called Lawson, about 14,000 stores in Japan at the time, and a loyalty point retail card called Punta. And we created a platform for people to opt in and basically say if you, if you opt in to this new program on, on, on Twitter and you open up your data from Lawson and from Punta, you'll get all of these extra points that you can use at retailers. And what that allowed us to do was have people opt in and provide three different axes of personal behavior that we knew what they were buying at Lawson and when they're buying it. Um, we know where they're buying other things, we know what they're talking about on Twitter, we know who they're following and who's following them. And you could construct a pretty interesting profile of the consumer. And that data turned out to be very valuable to consumer packaged goods players. Now I think if Twitter came in and just tried to be Twitter in Japan, that behavior wasn't there, but the consumer behavior was right. And then once that groundwork was laid when the tragedy of Fukushima happened, then Twitter, then it got, then actually some, some sad luck there but it became actual a big part of the national emergency broadcast system to manage the, the um, individual location, families connecting with families. It became a really important part of Japanese behavior and now it's, now it's a very powerful standard in Japan.

Speaker B: I was actually, I was in Tokyo during that um, whole period with the earthquake and Fukushima.

Speaker A: That was crazy.

Speaker B: It was quite an intense period.

Speaker A: If you want I can expound a little bit more on

Speaker B: a couple of

Speaker A: rules of thumb that we always advise companies to think about. Um, so Japan is very, very status driven. Almost like a caste system. It's not quite as obvious as other cultures, but there's a caste system. And so companies, startups that come from the US and go to Japan, they might recognize a really big brand in Japan. There's a bunch of global brands, but they may not understand that that brand is in service of where they want to go long term. Right. Um, and I don't want to name names, but a company we did not invest in really, really high quality e commerce content brand in the US they went to Japan, they took a um, big investment from a really well known brand, um, and they became A channel partner for them. This was a retail brand, but it was more like um, a Walmart.com and, and it's probably something they didn't fully understand. And they came to us and they said, boy, we'd really like to go after one of these high brands in Japan on the department store level like a Takashimaya or something equivalent to like a Bergdorf Goodman. And we couldn't really get through to them why this stigma of this group that they were associated with would, would prevent them from ever really being taken seriously by this brand. They, but they didn't know the difference. They really didn't know the positioning of this company. So our, a lot of our guidance with companies is there's a very small subset of players. Once we do the market study and the context study, we can identify four or five players. This is where you need to go. These are the companies you should associate yourself with. You can cascade down but you cannot in the US you can practice on your, you know, uh, you don't practice on your, your A list customers is one of the sayings in the US it's exactly the opposite in Japan. You have to go after the A list players. They're easier to go after, they're more sophisticated, they operate more globally, they operate in English, they're uh, much easier to get into and deal with than the second or third tier players. But once you associate with a second or third tier player, you are a second or third tier player and you will not climb. You'll have a very hard time moving up from a second tier bank to a first tier bank, from a second, second tier retailer to a first tier retailer. So being patient and, and, and understanding those basics, things like that, if you acquire one of those tier one customers, let's go get a couple more. And if you can operate, you can pick those companies and manage them from the US you don't need boots on the ground yet. You get to three or four of those, you're starting to create a critical mass. Then you might start thinking about what uh, an investment in Japan could look like. Single country manager to handle those. If that's a decision the company and the board wants to make. Now, hiring somebody when you're an unknown player with no customers in Japan, which a lot of people do, versus hiring somebody when you've got three or four tier one customers which are semi royalty in Japan, you're talking to a very different caliber of country manager. First, first hire on the ground in a country is a big determining factor of whether you're going to be successful long term. So it's just getting the steps in the right order is, is really important. It's, I don't think it's any more complicated than selling and marketing in the us it's just a different formula.

Speaker B: So interesting because you know startups obviously struggle even in the US to get lighthouse customers that are really big name brands, large companies. And we hear anecdotally that in countries particularly in Japan and elsewhere in Asia and the world maybe uh, large famous companies are even more hesitant to work with early stage startups that don't really have a track record and you know, it may have problems potentially delivering or you know, the concern of the large companies often like is this going to be high quality consistently or give us problems that will reflect badly on us. Why is that? Actually you outlined some of the reasons why that's easier. You mentioned some of the reasons why that's easier in Japan to land those tier one customers and it makes sense. But there must still be some pushback to early stage startups serving large lighthouse customers there. Isn't that the case?

Speaker A: Uh, absolutely. I mean I think you're first of all dealing with large corporations and not to throw a broad blanket over, but most people who operate long term in a corporation are a little more conservative. They're more cautious about making a mistake. There's not as much reward for taking risk. So you're running into classic corporate risk. And then corporations in a country where that's just taken to a higher level. Japan is very mistake averse and so uh, there's a higher bar. And so what we're trying to do for the startups that we work with is take advantage of the infrastructure we've built in our LP base. So our LP base is about 40 corporations and depending on how much people know about this, we have representation across all three major banking groups or called Keiretsus, Zaibatsu before the war. But they're these families of companies and they don't like to work together. But we've managed to construct a portfolio that has representation from all three. That's super critical because that helps us get a broader reach into the market. And the other part of our engineering is to make sure that we have very high level buy in at the LP decision making. So CEO or number two on the board, not just through asset management. And the reason that's important is that if we bring something really interesting, we can check in with that mentor, that contact at the board level and say we think this is very interesting for Your company. Now that person will get us to the middle manager in the corporation that actually has clout, that actually has budget, that actually gets things done. Because the, one of the things to understand about a Japanese corporation, this, this is really inside baseball. But I think it's really useful to know is, is that when you come out of college and you get hired by a middle manager, you work for that middle manager the rest of your life. You can get transferred to other divisions, you can get transferred to other countries and you'll have bosses you report to, but you're always really attached to that original manager. Your career goes as that middle manager career go. If, if he or she gets promoted, you get promoted and promotions you can, you get promoted and get a title, but you're not promoted, if you know what I mean. There are threads through a Japanese corporation where there's power structures and there's groups that have just been completely neutralized as a startup. You don't know who they are. And you'll get a very well meaning, well intentioned person who wants to do something with you. And you don't know that person has zero ability to get that done. So we want to make sure that when you're talking to that middle manager, they're one of the stars in the sphere of that CEO. And then we know that has a blessing. Now it doesn't always work, but it works at a pretty high level. So you want, that's, those are the kind of things that we want to be able to do very quickly is get, probably get to a no for a startup 80 to 90% of the time. No, not right now. This is not the time to go. Here's why, here's the context. Now let's you do this and you will do this and let's reconvene on this in the next year. It's very rare that something just hits the ground and runs. But look, if you're going to build a startup, you're committing I think 9.8 years on average to get to IPO. If you're going to win in Japan, you better be committing a uh, similar amount of time. There's just no silver bullet there. And that's, that's our message to the entrepreneurs is like we will go on this journey with you and we'll keep working and we'll keep trying to solve it and you can go talk to the other entrepreneurs that we've backed and they'll tell you how we do that.

Speaker B: If you could just dig a little deeper into what types of Startups at what stage, um, are really ready to, or appropriate, uh, or best place to enter the Japanese and international markets. What are you looking for?

Speaker A: So I like the question and I think it goes to the heart of really important part of our strategy, which is we don't use the classic three dimensional positioning of stage, sector and geography necessarily. We're completely indifferent, um, on geography as far as where stuff is sourced, where it's operated, where it's built, where it's sold. That's how companies work these days. So we don't spend a lot of time limiting ourselves on geography. Hurdles higher if it's a more exotic location, um, sector again, where we do a lot of different sectors, but there's always a really big data advantage in the companies that we invest in. The readiness stage is a phrase we actually use with entrepreneurs. So we don't call ourselves seed or early or mid stage or growth, we call ourselves readiness stage. And you know, a simple way to think about it. Let's say you, you know that you lived in Europe and you've traveled to Europe 20 times and you have, you know, two, two friends, two couples that are going to Europe and you just say, tell me about your planning and your trip for Europe. There's a likelihood that you would meet with one of the couples and say, gosh, they haven't budgeted properly, they're not staying in the right place. They, they're not, they're more Disneyland than maybe, you know, Paris. And you would look at them and say, you guys just not ready to enjoy Europe, not ready to be successful in Europe. And you could have a similar age couple where they're just, they've done their homework, they're staying in the right places, they budgeted properly. You know what their tastes are. They've matched what their tastes are in art or history to what they're doing. Uh, that couple's ready. It's a little bit of an oversimplification, but it's actually not that different. You can look at the mindset of a CEO, you can look at the nature of the problem they're solving. Um, for example, if it's cancer, like, well, cancer's cancer, everybody has cancer. Maybe that will work. Now. It depends. Is there regulatory? Is there not regulatory? Those are some of the structural hurdles you'll look at, but then you're really getting inside the mindset of the manager. And have they been global? A lot of the CEOs that we back come from other countries and they've assimilated successfully in the US and they understand the jump from India or China or Denmark to the US and like all of these little things sort of add up. Um, but some of it is also like you, you fall in love with the company, you want to invest in the company and a lot of it is just looking the entrepreneur in the eye and you know, I'll do this, if you do this, I'll go on this journey and I'll give it my all if you're really serious about this. The beauty of our diligence process is that we've had instances like with Coinbase, um, like with Square, like with a company called need, which is new to our portfolio, where one and a half to three years of working with this, these companies before we invested. So we know because we've built the business with them. Right. And that, that's so, so that's, that's super important to us. What's happened in our history is if you look back like I, I was doing this at Jafco in the 90s and the companies that we took into Japan when the risk resistance much higher, we're all pre ipo, let's see if we can get a customer in Japan and put that in the book when they go public. That adds some real juice um, to their value. And when we started here, Twitter, Square, Palantir, MongoDB were relatively late stage deals, sort of C to E, sort of rounds. Um, and as the years have progressed we've been able to do more. The consuming corporations have gotten much more aggressive on looking at early stage technologies and the companies themselves and the generation of entrepreneurs are much more sophisticated. So we've come down to the point where we're pretty agnostic on the growth stage of the company, but we're heavily biased towards seed and Series A just because we can tell when they're ready. And as everybody knows, if, if you really miss a hot company today, you've missed the company.

Speaker B: It sounds like a lot of what you're describing is sort of the mindset of the founders and the executive team and their sort of knowledge and preparation and strategy for international expansion. What about aspects um, of the actual product and business model? Are there certain types that work much better in Japan than your experience?

Speaker A: I mean there certainly are. And three examples of the extreme of that are three American companies that we've invested in that actually launched in Japan because the nature of what they were doing was far more amenable to Japan. One was in the crypto space, one was in the gaming space and one was in the cancer Insurance space and those, each of those are more consumer oriented or B2B2C. So there's a, there's a corporate partner in between, you know the customer delight of the end, the end consumer. And that's, that's just something that I had never seen in 30 years that there, that there are these products that are just more, there's just more behavior and behavior patterns to consuming them. Um, I would say when, when you look at our enterprise plays like uh, like a Palantir, um, Square for us was an enterprise play. We were, we were moving that into large retailers. We weren't dealing with the end behavior or the small company lending that that square was doing. I, other than, other than understanding things at the beginning that for example even 15 years ago a lot of stores did not actually take credit cards and credit cards were still not that common in Japan. It was still a cash business. That's changed a lot in 15 years. So it's things like that. But uh, I don't see a lot of difference in terms of what will work and won't work. Just I think one of the big things to understand about Japan is most people don't commute in a car. Most people commute on foot and train and bus. And that really has a big effect on how you think about serving that kind of a consumer and why you have you know these massive malls at train stations and why you have um, the kind of data collection and fintech services you have in Japan that wouldn't make any sense in the US for people who are driving around and vice versa.

Speaker B: Does that make European startups uh, a little more relevant often for the Japanese market?

Speaker A: That's such a good question and I ask myself that all the time. I have, you know, have a few European funds I'm very close to as founding advisor in and I was part of a European fund and I, it is the strangest thing but I anecdotes just anecdotal and I could get shouted down for saying this but I just don't see the kind of appetite for Japan and Asia out of European startups that I see in Silicon Valley. So I think because Silicon Valley is an older ecosystem, there's just so much track record of how do you go into Europe. Right. And there's some fundamental strategies of where the leverage points are usually the UK and Germany and it's an, it's arguably easier for a Western company for the most part to penetrate. Um, and now we have this, we have a long history of going into Asia. Yes, the Answer. Sorry, it's a long winded answer. But yes, I think a lot of them could be relevant. Haven't seen the appetite and I'm not sure that Japan is awakened to how robust the European startup ecosystem is. There's still this fascination with the US and this kind of, you know, religious kind of faith in that, you know, we're European, we should go to the U.S. you know, we're, you know, we're Japan, we're more consuming, we should take them from the U.S. i think there's some validation, but I think people are behind the times a little bit.

Speaker B: You mentioned the zaibatsu and now the Keiretsu. That's a pretty complicated, complex, um, idea. Idea that one could go spend a whole podcast on. But you know, just briefly, as you mentioned, like the keiretsu is the, the modern form of the Japanese corporate entity that has a lot of um, you know, overlapping interconnected business entities. And that replaced the, as you mentioned, the, the zaibatsu, which was pre war, that MacArthur.

Speaker A: Right.

Speaker B: Basically after the war because it was more of a top down hierarchical, um, um, conglomerate structure that he thought was too powerful, so it was dissolved. But this keiretsu, modern, modern structure that's been since the end of the war is quite complicated and quite difficult for Western nerds to wrap their minds around. Has a lot of like, you know, different companies sort of within the each sort of company family, uh, even owning different parts of these different sub companies. It's pretty complicated. How does that play into your sort of strategy and how do you explain that to um, startups that you work with or how relevant is it?

Speaker A: It's relevant. And since MacArthur dissolved or disassembled them or diluted them, I guess is a better way to think about it. And again, I'm not by any means historical expert on this, but I think it's safe for me to say this, that the idea that you would weaken those ties in those companies, um,

Speaker B: was

Speaker A: probably a smart idea. And then those ties have just slowly diluted over time to the point where you will actually see partnerships across those keiretsus. And I think if you look at the common sense origin of these things is Japan. If you're, if, if a Japan is going to become a global industrial power, they're going to have to do it through trade, they're gonna have to do it through sourcing because they don't have this crazy piece of real estate that we have in the US where we're very self sustaining with everything that we need. Japan has almost none of that. So they've always been a trading nation and you, you can have this chicken and our chicken and egg argument with the experts to say, well, are the, are the keiretsu is driven by the banks like Mitsubishi bank, or are they driven by the trading companies like Mitsubish? I don't think that matters so much. But the trading companies need the banks to finance their trading. And then these extensions grow like, oh, let's do real estate, so there's Mitsubishi estate, let's build airplanes. So you have Mitsubishi Heavy industries and on and on. And so they'll stem from the collaboration of the banks and the trading companies to develop new businesses and those businesses get developed under them. So it's almost like a giant GE or something. Right? Um, where it becomes important is just knowing which family a company is talking to. So a common problem is you might go to docomo, the big number one wireless carrier, and have a meeting and go to Mitsubishi and talk about your meeting with docomo, not realizing that docomo is banked by Mizuho, not by Mitsubishi. And it can just be awkward. Now you can talk about that, but you might get some advice and like, hey, should we talk about docomo and then we can advise them and say okay, you're talking to this person, they're pretty open minded. If you talk about docomo also, you know, talk about KDDI or you know, make sure, make sure you soften that and that you prep them properly or by no means should you say that to this person. Just keep that separate. So just knowing, almost thinking like NFL, NBA, NHL, like you know, don't, don't go into an NBA team and, and, and talk to them like they're a hockey team because they're going to think you're kind of an idiot. Right? So it's, it's these kind of things that almost all of our context setting is mapping. We have maps, uh, industry maps and, and corporate maps and keratin maps coming out of our ears that we'll walk, entrepreneurs do. And again, this also becomes the readiness test. If you start pulling out maps and they're just like rolling up their sleeves and they're ready to dive in. That's a really good signal. If they're dismissive, we're like, oh, you know, just like you might be dismissive of a, of a mountain climber who doesn't want to study the, the cliff face they're about to climb. Like I don't think I want to be on a rope with that person.

Speaker B: So you mentioned to Me before that, you view Japan as a great, um, entryway to global expansion in many other countries. I assume that's because of this extreme, um, um, sort of trading network that the Japanese have set up largely through their trading companies. Um, can you dive a little deeper into explaining why you see why that's your perspective and how that works in terms of actual practical working with startups to expand to Japan and elsewhere via uh, Japanese corporates.

Speaker A: Sure. So I explain it. There are at least three obvious reasons that you might want to look early and intelligently at the Japanese market. One is second largest market in the world because China's not an available market to almost any startup. So whatever China is is its own planet. Right. So Japan's by far the number two market in the world. Very high margin, very hard to get into. But once you're in there's tremendous loyalty, there's not a lot of price sensitivity if you deliver extraordinary service and quality. So once you're established and you've established your margins, you start to look like a salesforce, which is a, a real beast. M in Japan they've done extraordinarily well. There's a bunch of those stories, um, with companies that have made the right investment. So, so it's a straightforward business argument for number one. Number two is that if you want to sell into the growth markets in Indonesia or Malaysia, Singapore, Vietnam, if you walk into a bank in one of those countries and you are embedded in Mitsubishi bank or Sumitomo, Mitsui bank or Mizuho bank, one of the big banks in Japan, you just get immediate political air cover and validation and it will accelerate your growth. Not to mention that those big banks often own a percentage of those regional banks in Southeast Asia. There is a, as you know, a sensitive history between Japan and Southeast Asia. But there's no question that the respect that Southeast Asian corporations have for the Japanese is unbelievable. So you're getting a validation. And the third piece, and this is the thing that I don't think people appreciate, is. If you, you know, if you want to be a world class startup, you should engage with Japan because it will force you to be better. You will not get away with anything. And the level of discipline you'll be forced to deliver from a Japanese corporation is higher than anything you'll run into because the engineers are excellent and again they are mistake averse, you know, to the nth degree. And there are so many stories of all kinds of products that went into the Japanese market and the Japanese just wouldn't I get one Story of a, of a golf club company where their, their putters were, the yield on their putters was really sloppy. And so you know, yeah, the angle of your putter has to be right. The tolerance. The Japanese wouldn't accept it and so it forced this company to fix their putters and fix their yield. And after they did that the manager responsible for this in Japan got calls from all over the world like thank you for doing that. We've had complaints about this forever. Our sales are going through the roof now. And you'll see that in anything that you do in Japan. It's just going to make you be uh, a better company. It's going to make you more self aware of what your culture is and what your company does and how you need to communicate. Um, so we've seen that a lot and so it's a mindset that you would see in any performer. If you're a violin player, you know, go to Carnegie hall, you know, go, go to the places where the very, very, the most demanding um, audiences are and see if you can make it there. If you don't think you're ready for Japan, don't go.

Speaker B: You mentioned earlier that it's really important to be very mindful of the different sort of families of businesses you're addressing, if that's the right phrase. Um, but you also mentioned earlier that uh, within your LP base of investors and your funds, uh, you have competing

Speaker A: uh,

Speaker B: uh, large Japanese corporates. So how have you managed to have these competing uh, Japanese corporations uh, in, in the same fund and working with the same startups?

Speaker A: I have to give credit to my co, founder, co 100% for that. And I'm not entirely sure how we did it. Um, I did say to him early on it would be unbelievably powerful if we could have this broad representation because it would allow us to offer so much more to entrepreneurs and it would also make sure that the power stays with the entrepreneurs. It's in the best interest of everybody. The corporations would love to have exclusivity on these startups but that's actually bad for them and it's really bad for the startup. What's better for the corporation is to know they have to compete. They have to think do they really want to employ this technology? Do they really want this company? And they don't get to sit back and relax. So that was the theory behind it. And Ko went out and he was able to construct this over 15 years. It's an extraordinary ecosystem of LPs and the way That I use this, it's kind of a joke, but it's actually, I think a really effective way to think about Japan going back to this mistake averse culture. Fear of mistake is very powerful in Japan and so jumping into something is hard to do. What I would argue as an outsider that is more powerful in Japan than even the fear of making a mistake is fear of missing out. Being in the circle, being inside the group, whatever that group is, is so fundamentally powerful in Japan. So we have this, as we were building this up, we would use this um, phrase, I would use this phrase with COVID like we have to acqu. Acquire beachfront property. And so if we would acquire a great banks, like, wow, that's a nice, nice piece of beachfront property. How do we convince another bank to come in? And the way that we would do that is by first of all letting this other bank know that we are not going to limit this to anybody. Everybody's invited to be a part of our LP base. And then what we would have to do with the competitors is show them that the little universe we built at Sozo is so unique and valuable that you have to be inside this because one of your competitors is getting all this advantage. And that's just a lot of, you know, sort of hand to hand combat of like getting, you know, winning these things one after the other. But then each one you add to whatever brand you add makes it a more powerful circle and makes that fear higher and also makes it easier for people to come in. So now we're at a point where we've got so much representation that we don't run into any resistance now. But it was that kind of a, it was that kind of a process to bring them in. And you know, I would say this is, this would be akin to getting Google, Facebook, Apple and Microsoft to all invest in the same venture fund. I don't know how you would do that. I don't actually know. I watched CO do this and I'm still amazed that he pulled it off because no one else has been able to pull it off and it's a massive competitive advantage for us.

Speaker B: Yeah, that's very unique and very, very powerful and helpful for your portfolio companies.

Speaker A: It's like 93%, uh, if you look at life insurance, anything happening in life insurance and insurance tech, we have like 93% of the Japanese insurers in our LP base. We have everybody that matters. And that really helps because when something comes in we can assess it very quickly.

Speaker B: So since you started Soza Ventures, I Think a lot of things have changed. The Silicon Valley startup ecosystem has changed. We had a lot, you know, sort of a consolidation of um, venture capital in mega firms. Uh, situation in Japan has changed a bit. There's a lot more receptivity, um, and at least lip service politically, uh, about the need for startups to become a major part of the Japanese

Speaker A: economy, um,

Speaker B: or business landscape at least. Um, how has your strategy changed over

Speaker A: time with regards to what's happening in Japan or just as we've globally to

Speaker B: the global ecosystem, I guess, just in general. I mean like how has your approach changed over time, um, since you began and why.

Speaker A: Change is probably too strong a word. I think like any venture fund, you have to be in a constant state of evolution. And I think a lot of venture investors would like to believe that. They sit around and they plan out the future and there are some rare players that I think can do this. But I think the vast majority of us kind of know what we know. And what we know is a very, very small piece of the world. But that can still be very valuable if, you know, you're a genius at that particular little world. And, and then we're shaped by the entrepreneurs that you know, walk into our world and you know, you see, you see people doing data, um, centers in space, you see people doing systems of underwater nuclear power plants and you start thinking about, oh, energy consumption and where is that going. And so as you go out and meet all these people, at least for us, you know, you're, you're starting to think like what, what is the trends here, what's happening here? But ah, we're not, you know, so we're, we're adapting to the changes that these entrepreneurs are bringing to us. And, and I think the, you know, I think what's, what's happened for us over 15 years is we've started going a lot earlier and we're more and more ambitious about the kinds of projects that we're going after. And we've just, I don't think we've changed that much more from the outside as a fund. Um, I do think that we recognize and we work very hard on having a very specific kind of culture, um, where like truly radical transparency and we're, I don't know if we're that good at it yet, but we're kind of like, you know, the old joke about two people getting chased by the grizzly bear. You know, you don't have to outrun the grizzly bear, just outrun the other guy. We're kind of like that, I think we do it a lot better than most because what we want, what we want is we want the entrepreneurs to write back to us. And we get this a lot want them writing back to us, even in a first meeting, to say, you guys treated us unlike any other venture fund. That's, that's kind of where we want to get to. And that's a reflection of culture. And so if the culture's working that way and you're treating every entrepreneur that way and you're treating, and that gets fed back into your syndicate partners at the best funds, you just see more and more interesting things. And then it's our job to kind of keep up with that radical pace of, uh, company development from those entrepreneurs.

Speaker B: Tell us about what's so different about a first meeting with Soza Ventures than with another firm?

Speaker A: I don't think it's very different. I mean, maybe it is. Um, we're pretty selective about the companies that we'll meet with because we do need to see a strong signal that they're both, um, they've got the raw capability and the mindset to be a global category leader. And that eliminates a lot of companies. So when a company does come in, we make best efforts to get all 4 MDs here, to get all 4 MDs on the call, but we will at least get 3, and we'll have an associate on the call and we'll have at least one of our BD professionals. And so, first of all, we show up already, um, and we just send a message to the entrepreneur like this. You know, you are important to us. And it's not a, you know, it's just because we're really interested to meet the company and see if we can help them. And we always bring, um, some pretty deep bespoke research because again, there's a hurdle that we, we won't meet with the company if we can't sit with them and say, here's what we think. The first glance of the context of what the Japanese market looks like for you. Here are some interesting end users and why. Here's some ones you might have thought of. Here's some ones. You requested an email before the meeting. We've dug out some things. Here's some things you didn't think of. Um, and we'll create a deck for them, maybe 12, 15 pages, and we run them through at the end of the meeting and, you know, they'll say something like, gosh, is there any way you could share that with us? Like, yeah, we'll send it to you after the meeting and then that will get messages from their board member or them saying, wow, thank you for treating them that way. But it, for, uh, like for us, the advantage is if you're, you know, if a company's coming in and you know it's a world class management team from reputation and you know the people on the board and you know they love the company and it's a really high quality fund, like high quality investor. You're already in probably looking at a company that you should think very seriously about. If you don't do it, someone really good is probably going to do that company. And if you can get quickly through a decision making process so three or four of the MDs come out of the room and go, oh, we got to, we got to dive into this thing, then you're right, you're right in it and you're moving much faster. You have a huge competitive advantage than dragging them through one meeting after the other, which I think can happen in some larger firms. Um, and the fact that we want the entrepreneur to know, hey, we're here to help take this. There's no implied agreement, like, we're happy to help you and if we're the kind of firm you want to work with, we'd love to pursue that. If we're not the right fit, we understand, but we'll run into each other down the road and we're happy to try to help you be a little smarter. And you certainly. They make us so much smarter. So it's good all around. I mean, just, it's, I think it's just a basic service mentality. I don't, I don't, you know, it's, you know, we, we, you know, we, we've had a long history going back to my Kaufman days with the Four Seasons. And we do our events, our team events at the Four Seasons and we actually have the Four Season service staff come out and talk about philosophy to our team and all of the nuance of Four Seasons services and like, that's going to win you more deals than reading 59 white papers on AI. If you just treat people really well and you can't really be in our firm if you're not service oriented, we'll help you find another place to go.

Speaker B: Yeah, I couldn't agree more. I think that's an amazing mindset for running a VC firm and I think it's very compelling to have all the top, uh, people at the firm on the first call. And I think I love the idea that you that the VC firm itself is making a deck for the, for the startup on the first call. Yeah, that's a pretty unique, uh, unique.

Speaker A: Well and think of the IP as a firm we have after doing 500 of those there's just, it forces us to really understand what it is we're selling. Right. And because when we go in and do that, just like anything else, we go in and go, we surprise ourselves with the things we learn. So yeah, uh, it's just a, it's. I think when you look, when you look at most of what's happening right now, I think one of the things that's interesting in our world is the rise of coaching and the rise of awareness around behavior. And you know if you look at it, it's just, it's just basic fitness fitness like you would be physically fit. There's a few habits that you really want to buy into and if you buy into good diet and exercise and sleep and you know, flexibility, et cetera, you're going to become a fit person. And I think there as far as behavioral fitness, there's a handful of things you practice and all of a sudden you start to see this flywheel of positive momentum. Um, and that's, you know we've, we've had, we've had really interesting companies come to us because of how we treated somebody. So I probably shouldn't be telling the world this because it's one of our secret sauces but you know, I mean,

Speaker B: I guess uh, other VC firms and early stage VC firms might, might push back. I mean obviously I think anyone can have a service mentality and treat people really well. I think that's, personally think that's super important. At a VC firm. There's a lot of, plenty of founders been through really frustrating situations where it's really disrespectful, um, and frustrating to deal with certain investors. Um, I think some firms probably would push back and say that they need to have so many calls to filter out and try to figure out who they might want to invest in. Talk to every startup that's doing something a certain sector. Um, do you have more of a luxury about taking less calls because you're sort of pre selecting based on um, the portfolio, whether a company's in the portfolios of certain um, high level VC firms already.

Speaker A: Yeah, and I should back up and say like as a venture fund. As a venture fund, one of the benefits I had in being involved as a student and an evolving leader at uh, the Kauffman fellows program for 25 years is I spent 25 years listening to the best thinking of the best people in the industry non stop. I mean the amount of sort of best practices I absorbed is probably unlike anything anyone else in the world has. So what, you know, Sozo is really just built on a set of the best, you know, the greatest hits of the best practices of the best firms. So you know, firms that we really admire like, like Benchmark and Floodgate, you know, we learn so much from and there's many, many others that we just learn from and we admire. But I think what's interesting about those firms, they are at a service disadvantage because they're so dedicated to the early stage and they just have to basically kiss so many frogs. But that doesn't, you know, that doesn't prevent those really good firms from treating entrepreneurs extraordinarily well. Um, we do have an advantage because we can pre filter because, because we don't have, we just decided not to have the same constraints around stage or ownership. You know, our best investment on a multiple which is VAT, way over 100x. We owned 1.8% of the company at, at the investment and a lot of firms won't do that. But we, it was a fairly expensive deal but we saw a ton of upside and we got right on that when we've gotten those wrong of course a lot of times. But I do think we have an advantage. Like I don't think there's any early stage firm where all of the MDs can be on every meeting. That's just, that's just impossible. But I think what you'll find in, in those firms is that once someone's made that first cut, they're terrific at ah, you know, at getting at, at really getting in front of those, those firms. But yeah, we, I think we have a little bit of an advantage there. But we, we also have an eight person team in Tokyo that does all of this research for us. So we make a huge investment on that side of the business. So it's, there's a lot of, you know, there's, as I say, you know, there's a lot. The ducks are paddling pretty hard under the surface of the water here.

Speaker B: You mentioned the Kaufman Fellows program, which I believe you ran for a long time and grew quite extensively and which is of course um, probably the premier um, venture capital fellowship program for I guess you would say early and mid stage venture capital professionals. Is there anything else you want to say about growing that program, what that involves? It sounds like a lot of the top people in venture capital. Come and speak to the fellows.

Speaker A: Yeah, I mean that talk about, talk about its own podcast. I think it's the, I look at the fellows program in a sense. Um, the metric of any nonprofit initiative is what did it do for society? I mean, that's what a foundation is supposed to do, right? Supposed to fill the gap between government services and the private sector. And I think our contribution to venture was largely bringing like creating an awareness around the service philosophy of what venture should be. That because the industry was so small and it was not secretive, but it was just a little isolated cottage industry and it was largely high net worth families making random checks to entrepreneurs until some of the professionals came in. I think the fellows program accelerated a lot of things that needed to happen. One is, you know, the gems of this whole thing are the entrepreneurs like they are, they are the ones that matter and it's our job to serve them. Sounds simple, but I think that we accelerated that. That was happening especially in Silicon Valley as entrepreneurs sort of either started new companies or recycled their wealth and started to teach the younger entrepreneurs, you're more important than those guys with the checkbooks. That was critical and I think we accelerated that. We certainly accelerated the diversity of talent in the industry. Um, I believe my class in 1995, we had 13 people. Three women, um, threw into my class. Um, Karen, Azita and Suzanne, I believe doubled the number of women in the world in venture capital. I think there's three at the time when we started that in 1995. Now for some of the people attract, there's like 2,500 women just in the US and overseas. Really, really strong diversity. And same goes for people of color underrepresented. And I think we also opened the doors to this idea that entrepreneurs will go where they need to go to source, build, operate and sell their companies. And therefore we need to be ahead of them. So I think one of our great strengths was building this kind of global mesh where we have a philosophy at Kaufman where you get a, um, message from a fellow, you answer in 60 minutes. And so if you need to figure something out in Bahrain or in Colombia or, I mean we have some people in some amazing places, North Korea, believe it or not, like you can, you know, of course we're highly populated in the, in the venture, the major venture ecosystems, but you can get answers and insights so quickly in that network. And so I think that was also something. And we've created, I think out of a thousand fellows, about 300 startup funds. And those funds have become very I think very important and very successful. So, yeah, I, uh, could go on for more, but I think those are the high level sort of observations of that 25 years.

Speaker B: Getting back to our discussion of, uh, startups expanding into Japan and abroad, if there's startup founders listening to this podcast, or even aspiring founders or investors in early stage startups, what are the top things people should really take away from this conversation? Um, about the most important things to think about in terms of strategizing and entry into the Japanese market and why and when, and even further than Japan into other countries.

Speaker A: Well, sure. Uh, let me back up. And even the answer is going to be built around the concept of empathy and curiosity. So let me back up to a basic, basic piece of advice I would give any entrepreneur. So if you're reaching out to any venture fund, us or anybody else, the first thing to realize is that you're auditioning your sales skills. Because your proposal to us is, I am building something for a customer base that doesn't even know they need it. They probably think they don't want it, but I'm such a good visionary and salesperson, I'm going to convince them to buy it and you're going to invest in me and you're going to do really well by investing in me. So you're auditioning and your outreach to us in this world, don't cold email me. I have 9 million contacts in LinkedIn. It's not that hard to get some kind of a warm reference. And it doesn't matter, doesn't have to be my best friend. You and I have worked a little bit, but if you send me something, I'm more impressed that the entrepreneur made the effort to find somebody. So little, things like that. So as you, then you progress and you say, okay, I'm going to go and I'm going to sell to someone down the street. I'm going to sell to Google or I'm going to sell to Cisco or whatever. If you were a good entrepreneur, you would find people who are experts at those places and you would start asking questions, how does this work? How are decisions made? Who holds the purse strings? Who has influence? I'm talking to this person. Who else do I need to be talking to? Basic sales press. You're qualifying your pipeline. So when you go into Japan, it's not that different, right? But you don't want to go into Cisco and get advice from somebody from, from Walmart. You want to get the advice of somebody who spent 20 years at Cisco who knows how things work. Are they going to give you perfect information? No, but you're probably going to get better information than the person who worked at Walmart in Arkansas. And same thing here as you. As you. If you're going into Japan, you can find a lot of people. You've spent time in Japan, I've spent time in Japan. We do some stuff. There's a lot of people who do that, like, start picking people's brains, start looking for connections and understand, you know, what, what it is you're getting yourself into. You can find there. There's a ton of great people that have taken companies into Japan as CEOs or as Chief revenue officers. I find them all to be incredibly generous. You know, they'll, they'll give you some advice. You can find their content on podcasts or whatever it may be, but just approaching it with respect and approaching it with empathy and curiosity and I think is, is just like so many people get that wrong that I'm not sure getting into like, really gory details is that helpful.

Speaker B: We. You gave some examples of, you know, what your actual on, um, the ground strategies of expansion into Japan and partnering with large existing companies look like. I think a lot of people, you know, maybe when, when, you know, startups are thinking about expanding, they maybe have. It sounds like a pretty high bar to set up a whole team in Japan and, you know, you probably, you know, that startup's your baby. You really want to, you know, keep control over, um, what the product is and what the delivery is, as different as it may be in another country and market. What are some examples of like, is that accurate? Is that perception accurate? And what are some examples of like, what actual on the ground expansion to Japan means? Is that sometimes like a licensing or, uh, or do you actually. Or do you use the existing staff of a large corporate partner, or do you really need to set up an entire new entity? Or can you just kind of walk us through some methods that have been successful, what that really means on the ground?

Speaker A: Sure. And the answer, the answer is you would probably expect is it does. It depends on the case. But there are some, some rules. And I think if you went back to my days at ah, Jafco in the 90s, you would almost always look at some kind of a JV with a trading company because it was so hard to access anybody. There was just no interest in startups out of Silicon Valley. And so you kind of had to sell a piece of your ownership to somebody who would guide you through that. Um, and that was very common in a lot of like high end consumer goods, fashion, um, brands, things like that as well as technologies. And you know our fundamental advice right now is, is you don't. It's, it's a lot simpler in general, especially in the software world. Again focus your first efforts on going directly to your end customer. They have people there who are interested and capable to buy. And at some point if you do create some critical mass in the market, you can set up, you know, a KK Kabushki Kaisha. Kabushki Kaisha. And um, office space, we work type, flexible office space is just, you know, all over Japan. It's just very easy to set up these days. Um, I, I don't want to make, you know, I don't want to, I don't really see any of our companies doing anything really complex unless we're starting to see with some of the companies that have more governmental involvement and um, what we call peace tech, you know, um, kinds of technologies where you're getting involved with high um, levels of government. You, how you partner is, it requires some thought but structurally it's not going to be any different. But you might need to have a stronger kind of partner to navigate that part of the world in large part because it's new. They're you know, government entities. The you know, the Japanese Defense Forces, this is all very new to them. Right. We're, we're sort of 5ish years into really heavy involvement with the government here in the startup world and they're getting a lot more sophisticated. For Japan it's new but they're a big buyer and consumer of that because of the dynamic geopolitical dynamic in Asia right now.

Speaker B: And I mean right now I think the Japanese currency versus the dollar is such that um, costs are for in US Dollars. Costs in Japan are lower than they've been previously most of the time. But um, maybe cost of a US product for Japanese companies is, is higher with the current currency conversion. Is that affecting your strategy these days?

Speaker A: We haven't seen that and I can't think of any of our entrepreneurs who are getting pushback on that. Um, boy, again, that's another rabbit hole we could go down. Um, I think the Japanese government has gone to extreme efforts to minimize the impact of inflation and a lot of that has been through printing money. Um, but right now we haven't seen that. I think Japan's economy since I lived there in the 80s has been like a giant, giant balloon where air has just been slowly let out of this thing for the last almost 40 years. So I Don't think anybody really feels any sudden pain. But, but when you talk to the average Japanese, very well educated, who has a really nice job, um, their level of salary and resources is pretty painful. Like where, you know, where their standard of living is relative to um, other parts of the world. Considering where they were in the 80s and 90s, is there anything you want

Speaker B: to say about AI in Japan and how that's being rolled out or how um, this new wave of AI startups might want to think about Japan?

Speaker A: One of the things I think about, um, we were talking about this yesterday and one of the things I think about going back to the 80s was, I don't know, you're probably too young to remember this, but there was this wave of appliances from Japan using fuzzy logic. So you can find fuzzy logic rice cookers, fuzzy logic vacuum cleaners. And it was this attempt a machine learning application I think. But it was, Japan had this kind of consumer facing notion that people would want a rice cooker that could help you think you, you could do some of the thinking for you could make better rice without, you know, without really, really micromanaging the process. Um, so, so Japan in, in a lot of cases is the same with the human genome and a lot of other technologies. There's this kind of lead in basic research, in some attempts at commercializing, but they don't really work very well. We don't see a lot of leadership right now commercially in AI in Japan. Um, I think we're still at the point where if you step back and you look at startups, I would argue, and I don't think this is any great insight, that innovation is really about business model. It's not technology, it's not the AI itself. I think this has been the thing that's held crypto and blockchain back, which is extraordinary architecture. But that architecture hasn't had the impact on business models. For example, the way the transfer protocols of the Internet have had. I mean almost everything we do, everything in our little, you know, remote control for life we call a smartphone is all enabled by the Internet. Um, and so we, we look at things like we've been invested in AI for about 10 years and Grammarly is a really interesting AI. Um, we're in and out of a company called Chorus AI which used artificial intelligence more I would argue machine learning for um, CRM applications. I don't think there's any great insight. I think everybody right now, at least the conversations I'm in is looking at AI and going, okay, we kind of hit the top of the hype, there's a ton of overinvestment but there really isn't any home run application. I just uh, it's not a, it's not a big part of what we talk about when we, when we talk to our LPs. They do ask about it. Like look, we've been doing it for 10 years. It's been part of, of data evolution, um, and where exactly the boundary is between machine learning and AI. I don't think anybody, maybe there's 20 people on earth who could really explain that. I don't, I don't think most people can. They just think of AI as ChatGPT and I don't think ChatGPT is going to change the world. But the things, it's the things we are not imagining that are going to be really exciting. But nothing much happening in Japan on that front.

Speaker B: Do you think the kind of ah, um, in terms of aspiring AI founders, are there startups or types of applications for AI business model that you think would be particularly relevant to Japan? Maybe even more so than in the US?

Speaker A: I do, um, I can't go into great detail on it but one of our companies is doing some extraordinary applications of AI in gaming. And I think where gaming can go, gaming itself is kind of, it's always played on the edge of artificial intelligence. And now you start applying some of these language models and algorithms to gaming, it gets super interesting. And where those games can go from entertainment to education, um, to industrial applications I think is, could be really, really interesting. And the gaming infrastructure in Japan is just astonishing. So that's, that's where we see some of the really like, kind of wow applications. Like that's unreal.

Speaker B: I think I uh, would be remiss if I didn't ask you a little bit about the current startup ecosystem in Japan. There's been a lot of, as I said, a lot of at least lip service from government leaders about the importance of that. There's a lot of sort of, you know, seems to be a lot of changing public sentiment of how important that is. Maybe even a lot of uh, changing openness to younger people joining startups and that being okay with their family. Um, and um, you know, certainly seeing maybe some more startups in Tokyo. I'm not sure, I'm not sure how much the reality actually meets the, the perception or the, the desire. But I'm just wondering if you could speak to you know, you know you, you obviously are in, in Tokyo a lot. You're you know, working with companies on the related to, um, making use of startups. How do you see that evolving at this moment in time?

Speaker A: So it's certainly something I think a lot about. In fact, I just finished a book on this, a second book in Japan. Um, it's a lot to say. Let me see how I would organize this. So, yes, over, over the years, I think you picked on something really very important, nuance, which is social and family support of the startup. Um, and I remember I always ask kids when I see them doing a startup for the last 30 years, hey, what do your parents think? And 20 years ago they'd be like, my parents don't speak to me. Um, ten years ago I talked to a kid, he goes, my parents are fine, but they think I work at Sony. You know, like these stories. There's a really interesting entrepreneur at a company called euglena, and he's mid-40s and he left a very prominent banking job to start this really cool algae company that's now public. And I said, how did your parents handle that? And he said, my mother was in bed for two months. So these were the forces working against the Japanese. I think that has changed a lot. It's changed a lot because young generations have evolved the same way other global generations have evolved. Um, they're more inclined to do things that they really want to do. And I think the shine has come off of the lifelong employment of the big corporations. And now you're starting to see some infusion of best practices. Um, one of the things that certainly has happened in the last few years, and I used to say this to people, maybe you've had this observation as well, your time in Japan. People would say, japan changes very slowly. And I would say, no, I think it's different. Japan doesn't change until it changes. Then it changes like a step, uh, function. And this has happened in innovation. Five, six years ago, everybody needed to be in venture capital. I think there were 430, 440 different corporations, VC groups that popped up. I don't think that was a very good experience for them. That's kind of fallen out of fashion. But now the startup world is in fashion. So you've got this. It's a fashion. And the spirit of the book I wrote was, well, I've had this really unique experience of seeing all these things get done in best practices. Here. Here's what I've seen work, for what it's worth. But if I go back, I wrote a book a couple of years ago, and one of the things that gave me a lot of hope was I wrote this book, 35 chapters on um, 35amazing venture capitalists around the world telling the stories of creating their fund, some of their best deals. And the one the Japanese really glommed onto was the story of Kriandom in Sweden and their early investment in Spotify and the ecosystem, the society, the norms of the Nordics looked a lot like Japan. And it's really just this one young entrepreneur and one young partner, Krandom made a bet on Spotify and they made it clear that once that had happened it changed the entire mindset of the region. And now you see the Nordics punch way above their weight when 20 years ago they had sort of had Skype and sort of had MySQL. So Japan's going through that right now and that's something that I, that I'm really trying to get them to focus on because the mistake that I think they're making is they're allowing the government ministries to try to address this using very traditional backwards looking industrial processes. Let's train armies of innovators. And this is really good for a mistake averse culture because we're going to identify the rules, follow the rules and we're going to get an outcome. But we're not yielding a manufactured process. We're actually doing radical experimentation which requires letting go of language like mistakes and right and wrong and just saying we're going to design the experiment, run it, look at the outcome, we'll guess at what the outcome is going to be and uh, we'll look at it and then we'll learn from the outcome. Not necessarily judging that it did better than we expected as a success or worse and it's a failure. Those could be false short term, false negatives, false positives. So getting into that mindset of first of all you have to be experimental and second of all you don't need a lot of people. You actually don't need to train anybody. You've got them, you've got creatives all over Japan. You can see it in architecture, you can see it in movies, and you can see it in games, you can see it in toys. The Japanese are extraordinarily imaginative and creative, but there's no channel for business creativity that gets suppressed by the big sort of military cultures of these organizations. So that's, that's, I think we're trying to help with that. The other thing that's missing from this top down central planning of innovation is you've got this really interesting wave of tech immigrants that have moved to Japan because of quality of life. You saw it happen in Berlin, you saw it happen in Sao Paulo, you saw it happen in Tel Aviv, you saw it happen in London, you saw happen in Singapore. Like you get a mix of really interesting global minded tech immigrants move to a city and they identify the really cool, innovative freaks in Japan who don't need to be trained on anything. But they get connected into these groups, they learn best practices, they connect it to the outside world. Uh, once they ring the bell, once there's a Mikado Libre or a new bank in South America, once there's a Spotify in Europe, so many home runs in Israel, everybody looks and goes, if that person can do that, so can I. And that's what Japan is lacking. But there was, there's literally I was on a panel with the governor of Tokyo and I made this comment and then they started getting excited about Sakana, uh, which is this cool AI company. It's gotten backed by some good firms in the US and finally one of the, one of the people on the panel, you know, said, well this is a good point because it's a. Japanese are raving about Sakura. This is our deal, this is going

Speaker B: to be our home run deal.

Speaker A: This is going to be our Spotify. And one of the people on the panel was an investor and said by the way, I'm an investor in the company. And all three of those founders are tech immigrants to Japan. And the whole, the Japanese members like what? They just don't know, they don't know how that formula works. So getting them out of that backwards looking industrial mindset is if that can happen, great. But what's going to happen is there's going to be a cool company that comes out of Japan and it's not going to be because of the government. It's going to be because like anywhere else, some combination of locals and tech immigrants built something cool. It might be Sakana. Uh, there's probably 50 other companies like that that we all, we don't know about. One of them is going to rise up and inspire and then, then it's game, then, then it's a whole new ball game. And all the, you know, all the venture investors are going to have to up their game. Um, new venture funds will get founded. Just like I don't think it's going to be different from any other ecosystem. What I think is exciting is when it happens it's going to be amazing because of all of this capability in Japan that's suppressed.

Speaker B: I think, you know, I, I should to the things that I'm thinking of while you're, while you're talking about this is that, you know, one, um, in terms of uh, tech entrepreneurs, uh, from other countries as an important part of this ecosystem, of course Japan is famously anti immigration, um, and there has been some moves to you know, within specifically the different wards of Tokyo to like create startup visas. But I've actually looked into those and it's a pretty high bar in terms of like you actually need like a committee, a very like, you know, sort of bureaucratic committee to approve your startup idea in order to get the visa. And like it's, it's quite a process. Um, so that immigration element seems like quite a sticking point. And also I think in order for those kind of big wins in a startup ecosystem to really promote um, other, that spawn other companies, uh, it seems like there needs to be some pretty significant stock option, um, payouts for early members of the team. Um, and I'm not sure what the current, in many early startup ecosystems there's not really a good um, legal uh, situation or precedent or even uh, sometimes cultural awareness of stock options and value of them. What's the current situation for both of those issues in Japan?

Speaker A: It's a very insightful question, Sasha. Um, so if you back up and you look at, and this goes back to the U.S. one of the great suppressors of innovation was, and again not to cast aspersions on a big group of people, but almost always the early investors in an ecosystem come more out of the banking and consulting industries and they're very transactional and Japan's no different. And some of the term sheet patterns we see in Japan are really about ensuring that the investors make money no matter what. And that might be a 2 or 3x. They're happy with that. But there are so many terms that are suffocating in those term sheets, um, that companies never have a chance to know if they're very good. Right. So forget stock options. Stock options is the right question, but it's a third or fourth order sort of problem because the fundamental basics of alignment aren't there. And so what happens, and this is the case of a creandum or many other firms from, in different ecosystems is they come in with an approach that is world class, um, and again evolved from Silicon Valley, from our big group of immigrants that have built those funds, um, and they will have some basic rules. A lot of the early stage funds from international will say we really want our portfolio companies to have a Delaware Topco out of the Gates we want them to operate in English, we want them to use gaap, because that's how you optimize your chances of accessing our capital markets here, which are significant. Like you as a startup, you are probably not going to be a world beater without, uh, accessing our capital markets here. So these are all the things that are happening. What's beautiful about that is all it takes is one outside firm or a new firm inside of Japan that does it the right way to show it, and then that becomes the standard. And what typically happens in those ecosystems is the existing players who've been doing it their way do not survive and they're replaced by a wave of new funds. We've done some LP investments in a couple of really cool early stage focus funds in Japan. And I've seen this enough. Like, will one of these two funds ring the bell? Well, it's a good possibility, but if it's not them, it's going to be one of another 20 funds that get formed by other people, um, that, that are happening right now. Right. So it's, it is, it is completely broken in a sense, but historically in other places it's been relatively easy to fix. Um, you know, it's, it's starting to. A friend of mine this morning we were talking about, you know, an organization was struggling and, and I think sometimes where, where Japan is right now is they're kind of like, they're like a team in a bad losing streak and they're trying all these different things and all these different programs. They're throwing everything at the wall. And you know, sometimes a team just needs a win, you know, something that needs a win to just change the spirit. And I think right now there are companies being built and being funded by top company, top firms out of the U.S. one of these companies is going to merge and become the case study, and then that's going to, uh, really energize the country. We just don't know exactly which company that is, of course, but it's going to happen.

Speaker B: All right, so currently, stock options are not really set up well in Japan, but you're saying it's not really that important. The more important that will get worked out eventually. The more important thing is one big homegrown win they may or may not,

Speaker A: I don't know much about because I don't track those term sheets in Japan. Um, I'm sure they have stock options. But if some of the controls that are put on the company that prevent it from ever becoming an interesting exit, the stock options have no value.

Speaker B: When I talk to investors and startup folks in Japan, when they talk about this desire for a big success, they often seem to have the bar being a, uh, global company, a global startup that comes out of Japan that's competitive in all these international markets. And traditionally in recent decades, that's been a really difficult thing precisely because, um, looking from the opposite of how we've been discussing US Startups coming to Japan, it's a very difficult thing because the Japanese market is so unique and particular and then, and having a very Japanese mentality and then for a startup and then going to another market can be very challenging in, in sort of the exact opposite way that the US Startup coming into Japan can be challenging. Um, and maybe as you mentioned, having these sort of mixed, um, international and Japanese teams to start with for startups in Japan can be of potentially powerful combination. Um, how do you see that, um, potential major, um, winning startup of the future that you're, that you're envisioning? How do you see that, um, that aspect of expanding into a Japanese, into a global market as like, how would you envision that happening and being successful? And do you agree that that's a major component of it, of it being the Japan Spotify, for example?

Speaker A: It's a portfolio puzzle. You know, it's a portfolio game. If you look at that, no different than, you know, arithmetically, no different than the portfolio strategy of an individual venture fund. We talk about this a lot internally. I talk about it with the young people. It's like, it's that the system that maximizes the quality of the 25 or 30 companies in your portfolio is the important piece. There's no value in trying to guess which one of those companies is going to be the one that rings the bell. But if your portfolio is constructed right, and the filters are right, you're going to get wins. Right. Um, and you can see this in professional sports is like, why are there certain teams, you know, is the era of the Seahawks or the era of the Detroit Red Wings, where they had these scouting these, these scouting, uh, leaders that would just, they were just producing these draft picks after draft picks that, you know, in the third and fourth and fifth round that became all star players? I think that's the way really good venture funds succeed. Right? Is everything they pick has a chance to be a Hall of Famer. Right. Um, Japan, I think is just getting in its own way by emphasizing the things that don't really matter. So if you do a, if you go through a Japanese training in entrepreneurship, oftentimes the trap. And I think you know this from living in Japan. Sometimes things become too much of a accepted uh, pattern. Um, what you're really gonna, what they're really gonna get is an emphasis on your deck. Gotta have a great pitch. Just have to have a great pitch and the pitch and no one asks any questions. And then I guess there's some evaluation made to the pitch. Maybe it's like Shark Tank or something, right? Where we know that if you go into a pitch in the US you're probably going to have 12 slides, 15 slides in your deck, 300 slides in your appendix. And you might be lucky if you get through two slides because there's going to be this Q and A, an investigation around the background of the team and the quality of the product and the traction you've got and all these things. It just isn't like it's that off kilter now that's changing uh, in these smaller groups where you've got international angels and stuff coaching them up. But I think infrastructure wise it hasn't been standardized yet that you have to think through all the elements including the legal structure and, and the fact that you are set up to get funded by a US entity. Day one when I talk to uh,

Speaker B: you know, venture capitalists at top VC firms in Japan, um, and I have talked to many of them, uh, one of the things they mentioned as being particular about the startup ecosystem there and at least until now has been that um, whereas in the US uh having an IPO is really difficult and there's a high bar and you need a pretty high amount of revenue. In Japan it's been quite easy to have an ipo, um, on, on I think Mother's Market it's called uh, and that's been the preferred liquidity event. And, and because it's so easy and the bar for revenue is so low, um, um. It's sort of in their view put a sort of artificial dampener or how to say it, it's sort of artificially lowered the startup success numbers because um, a lot of the startup successes in Japan have sort of been hidden by becoming public companies really early, much earlier than in the US and uh, at the same time becoming a public company has put a lot of sort of onerous restrictions and processes in place that have prevented uh, um, innovation and um, continued uh, sort of unconventional growth to the level that may have been able to occur if those companies hadn't gone public so early. And it sounds like there's more and more emphasis these days on firms in Japan, identifying that and like coming up with more growth, private growth stage VC funding so that they can keep these companies long, uh, sorry, private longer in Japan and sort of go down a more American style VC growth route. Uh, and I think there's a lot of sort of hope that the, the startup successes that have been hidden in the public, public markets will now be like the new startup successes that would have gone public early, will now be private longer, will be much more obvious that there's these sort of hidden unicorns, uh, companies in Japan. Would you agree with that?

Speaker A: I don't study it as much. It makes a lot of sense and I'm seeing some evidence of that. I think if you go back to the, these mother, I mean going back even further, the fascination with the IPO is unhealthy in Japan. Uh, an IPO is a funding round and we know this, that you know, even really good tech companies that go public need it on average another five years to really establish themselves as a player. And so it's just a financing round. And of course it's symbolic of a lot of cool things and it's something to be proud of as an entrepreneur, but it's not the goal, it's just part of the journey. And I think there's an un healthy fascination with the IPO. These mother's IPOs boggle my mind. Who keeps buying these things? Right? And I think if you look under the COVID at the distributions, you might look at who's making the money in those transactions. What are the payout schemes and waterfalls? Um, you what, what does it leave the company with? What are, what are the lockup periods, if any, for the investors? I think you'd be troubled by some of the patterns that you would see there in terms of the idea that you're investing in this entrepreneur to help them build a global category leader, basically taking them to an ipo and oftentimes that's a graveyard. So it, of course what's going to happen is, is you're going to get good knowledgeable people come in and say, wow, here's a market opportunity. There's a whole wave of interesting companies that should be funded privately and grown more and taken to the next level. And so the challenge though, and this is the whole point of coming out of the gates with the right structure is if you're, if you're sozo, do you really want to go in and restructure those term sheets, like to just want to do the headache of restructuring that term sheet and figuring out what does their accounting really say about their story because they're not using the same accounting rules we use. It's an impediment, it's a big friction. But someone's going to go in and figure that out. That makes a lot of sense to me. Um, just because nature abhors these kind of vacuums.

Speaker B: Before we move on to some personal questions, is there anything else you want to say about startups in Japan or US or European startups expanding into Japan, or maybe how, what the best way for startup founders to contact you would be?

Speaker A: I'm on record that I think within the next eight to ten years Tokyo is going to be its own very unique major center of innovation. Um, and that's going to be both inbound and outbound. I'm a big believer in that and I stand by the statement that I think your path to global leadership goes through Asia and Asia goes through Japan. So that's something that I think is really interesting. As far as reaching out to me or to us, um, we welcome it. Um, we like to see write ups and whatever method somebody uses, you won't get very far. With cold outreaches, it's just in the same way that entrepreneurs struggle now with cold outreaches from venture capital, you talk to any hot company and they'll say, my Gosh, I get 60 cold emails a day offering this, offering that, offering this, offering that. We never do that. We go through the board, we go through an executive or somebody we know. Just show us how you sell and you know, however you do it, like you just do that. For us, I think anybody's going to require that. Um, but for us it's, you know, keep in mind that we're looking for a very particular mindset and just show us that and we'll pay attention.

Speaker B: Tell me a little about your personal and career background. How did you get to where you are today?

Speaker A: Well, I, I, so I grew up in upstate New York, small town, small city called Binghamton, New York. And I think I, I had wanderlust. I went west for college to Tucson, Arizona. Um, had through a couple of really weird, cool childhood experiences, some exposure to Japan. You know, it wasn't a lot of Japan in upstate New York in the 70s. Um, when I was a kid and I worked for about a year and I just realized I gotta go to Japan. And this is 1988. I'd made this decision, I gotta go to Japan. I didn't even really know why. I just had to go. And so I went and I ended up as a tell the story, it's pretty fun story. I accidentally stumbled into a startup that was by all measures successful and then didn't know what I was doing. Then another one where I really knew what I was doing. I had money and some experience and by all measures it was an abject failure. And I think that kind of set the DNA for. I just became fascinated with the startup world. Um, I knew I didn't, I had, I had what. You know, I know this now about one of my daughters, maybe both of them. But like one of my daughters is very neuro, very neurodiverse. And as we've studied her and helped her, I realized like, oh, that was me. And so back then you just didn't fit into anything. Like I couldn't process a corporate job or anything. So I've never really had a job. But then I went to graduate school. I did some studies around early, um, startup concepts at rpi and that led me into the Kauffman foundation. And I just became, with the Kauffman Fellows, I just became kind of obsessed with the DNA of a successful startup and what is the role that venture capitalists play. And I thought I wanted to go back into the entrepreneurial world and I always stayed in venture. But then I kind of realized everything I did in venture was kind of new and entrepreneurial. So I was always like trying to reinvent the process and, and over time I just became more confident. Like there's a, there's a thing I know how to do and there's a thing I really care about and there's people, there's a kind of person in a way, I like working with people. And then that like three circle Venn diagram is where I've always tried to play and just kind of trusted that things will work out. And you know, they usually work out. I wish I had a, you know, deeper philosophy, but you know, it's, it's, that's, that's, that's how I've, I've done it.

Speaker B: Can you just add a little about starting Sozo Ventures and you know, when that happened and how that came about?

Speaker A: Yeah, it was a really cool kind of semi happy accident. So, you know, I had, I had. The two companies I had started in Japan were both educational. And so when I joined the Kauffman Fellows program, one of the things I noticed was my other 12 classmates were obsessed with the partner track in venture capital. And I didn't actually really know what venture capital was like. I thought I knew they were people that invested in companies But I didn't go. I did an engineering degree at rpi. I didn't go to Harvard Business School. I wasn't exposed to the industry. And so I was just fascinated with the Kauffman foundation and how they were building these educational programs. And that got me sort of more involved in the founders and the leadership and interviewing. And so I became very involved from 1995 on. Um, and one of the things that evolved in Kaufman was the first thing was Kaufman fellows started to make it to partner and general partner. Like, wow, this thing's actually working. And then there was a wave of, like, that isn't good enough. I'm going to start my own fund. So my classmate Thomas Darden was the first to jump. Might have been Mark Mendel, one of those. They both started about the same time. And that was like the biggest news in Kauffman. Wow. Kauffman Fells are starting their own funds. So you fast forward. I was involved in the spin out. And I was on the board of the spin out and eventually became the CEO. But I was always involved for about 15 years and had been a general partner and founded a fund. And people started coming to me, um, and to a handful of the others, hey, I'm thinking of starting a fund. So I saw this a hundred times, um, including Crandom and some others. Um, then CO came and I had been at Jaffco, which is a sub of Nomura. We had done just this model. And I thought we had a great opportunity. The senior team. I was a junior partner. The senior team kind of blew up over time. Um, but I had kind of written this white paper to myself of like, this is how this could be really, really successful. And when CO came to me, he said, I'm thinking of starting a fund. I thought he was a Kaufman fellow. I didn't know him that well, but I had seen him do some interesting stuff. And I handed him the white paper and I said, if I were you, this is how I would do it. And then he looked at it and he was interested and he put his ideas into there. And I just coached him for a while. Um, and one of my standard processes with anybody who comes into my office to ask about starting a fund is I would say, okay, write the 10 private companies you'd invest in. Today, if you had $100 million back when $100 million was a lot of money, and if they couldn't write those 10 companies, you don't take them very seriously. If they could, then you say, circle three, cross out seven. All right, now go get one of those three and invest in them. And they'd be like, don't make a fund. Like, go do a deal. See if you can do it. See if you can raise the money. See if you like it. See if you're any good at it. And a lot of them didn't like that. But it's, like, ridiculous to start a fund until you've proven yourself. And that's when CO went. We threw a couple names up there, like Facebook, LinkedIn, Twitter. And he went and did this amazing project with Twitter for two years, um, without paying. And eventually we had this opportunity to take a big chunk of secondary, um, prior to the IPO, and we went and raised $25 million. And I was just helping them as the head of Kaufman and coaching them. But I didn't realize in the minds of the Japanese and the Japanese investors, I was optically as much a part of this as he was. And so that led to a conversation with my board chair, Kaufman, saying, I've created a little bit of a problem in that, um, I've created this impression. What do I do? And he was great. And he just said this amazing guy named Brian Dovey from Domain who just passed away. And Brian's like, just try both. See how you do. It'll make you better at teaching. If you're running your own fund, and if it gets overwhelming, we'll deal with it then. But I think you can do both. And that's what I did for about four years and then groomed a successor at Kaufman. And after about four years of Sozos, we raised the second fund, because first fund was about 98 million. Second fund was 200. As that was coming together, I'm like, I can't do this anymore. And I had groomed a really good successor at Kaufman, and he took over, and, you know, the rest was history and off and running. So it was one of these things where, um, it was kind of strategically intentional, but tactically an accident, if that makes sense.

Speaker B: Was there anything unexpected about your career journey?

Speaker A: That's it. I think it's easier to answer if there's anything expected. I'm, um, the youngest of three children, and I really love that gig. I love the freedom and, you know, and I think, interestingly, we're right in a row. My parents were older, and so my brother's a year older, my sister's two years older. And I think that just created an environment where, like, I got everything I needed, but no one ever messed with me. And so I don't think I grew up. You know, I struggled in schools. I found school unbelievably boring. Um, there are parts of engineering I really liked, but I found the school boring. And I just. It just never. I never got the institutional bug. Like, I need to do this, to be part of this institution or part of this institution. You know, I was a mechanical engineer, but a year after that I was, you know, in Japan doing an education startup. And that made perfect sense to me. Um, like, it's. This is really interesting and I'm adding some value, and I'm making a lot more money than anybody else my age that I knew at 24. Um, and so I think I learned early that if, like, do something no one else knows how to do, that was number one, because no one can mess with you. And there's always somebody who will find that experience valuable. Um, do something that you really care about. Everything I've done, like, everything I've done has been basically colored very deeply by education. I've always just. I've loved education. I just do not like the way education is often delivered. So I like playing around with pedagogy and philosophies of education and so that if it's. If it's got a big educational component and everything we do here, we're constantly educating ourselves and educating our customers and educating our partners, as I said, like, trying to prepare for our. Our. Our meetings with entrepreneurs. We have to go learn, you know, basically what they need to do. We know that. We know the 70% of it, but the 30% or 20% is where the value really is. Right. Um, and then just like, trusting the fact that I'm with the right people, um, and then it's, you know, people will look at my career and go, you know, maybe it looks a little bit nonlinear, but it makes total sense to me. Um, you know, but I don't. I. I think the. I think the unexpected, I guess. I guess the every time. And this, this colors how I teach it, colors how I coach the team here, colors how I taught it at Stanford and at Kauffman. Um, every time I've gone into something focused on the outcome, it's always disappointed me. When I focused on what the inputs are. And trusting the system and the inputs, it's always radically exceeded expectations. And I think that's how the future of things are going to work. Because if you go back to. I have daughters who are in 23 and 25, and, and we've talked about this since they were little Kids. If you go back to like 18, 40, I have to find this white paper because it's really cool. Human lifespan was identical to wild chimpanzees. 37 for men, for males, 33 for females. And then it gradually increased like four months a year almost according to this paper, to the point where now the life expectancy for kids being born today is well north of 100. And the, I think at the same time think it's clear product life cycles have compressed from, you know, how long was the product life cycle of like a cotton gin or a steam engine, you know, 40, 50 years. People are dying in the 30s, there's no change. And now people are going to have 60, 70, 80 year work careers when we're having a, uh, major revolution, you know, every, every five years, like for me, like a big revolution was the BlackBerry, right? Like blackberries were so cool. And now you think back, like it was a blink of an eye. Blackberries came, revolutionized phones, and now they're gone. You know, we've seen. And so I think it's, you know, uh, from an educational standpoint, having this experimental mind frame, not thinking about failure or success, thinking about design the experiment, run the experiment, learn, feed it back, redesign, run again. And, and the success is in the loop, the speed at which you run those experiments and measure the outcome.

Speaker B: Right.

Speaker A: That, that's philosophically, I think what, that's, that's how I think you're going to have to navigate the future because you can't, you can't hang your hat on anything other than your ability to adapt to the changes that are, that are happening.

Speaker B: Yeah, I just, I just had an interview with, uh, Ian Chu, one of the managing directors at OWL Ventures, the largest ed tech or education technology venture capital firm in the world. And he also mentioned that now it was necessary on average to retool, uh, in your career and re educate in your career every five years. Uh, so we're in this new, rapidly changing era.

Speaker A: That's crazy.

Speaker B: All right, before we end, I just want to ask you the next Unicorn podcast bonus round questions. Are you ready?

Speaker A: Yes.

Speaker B: All right. What really drives and motivates you?

Speaker A: I think it's those, uh, moments where whoever I'm with, we've both just learned something incredibly disruptive from each other. So making sure that I'm in environments where that kind of transparency is happening

Speaker B: and what really excites and inspires you

Speaker A: at the highest level, I'm an optimist and I think it's what does the world look like if Things go right. I mean, if all of the things that we're inventing and putting together, what if it all went right? What would life look like? That really excites me.

Speaker B: Is there something about you that most people wouldn't expect?

Speaker A: I'm a very nervous Nelly. I constantly worry. I constantly, scenario, plan. But I think one of my methodologies, and this is probably from doing all this weird stuff my whole life, is I always go to the worst case scenario, create a plan, go, okay, I can do that. I can handle that. If it goes that badly. It never goes that badly. Um, but it's always good to be prepared. And then I can relax into the future. And everyone goes, oh, you're so relaxed and you're improvisational. It's like, no, I'm really nervous, and I've thought all this stuff through, and if you want to know what I'm really like, see what I'm like when I'm surprised. I'm not a pleasant person. I don't like to be surprised because I am so kind of controlling and nervous. And only I have people who've worked with me for, like, 16, 17 years, and they're like, they know exactly what I'm like. It's pretty funny because most people get it wrong.

Speaker B: Do you have a view on something that most people would disagree with you about?

Speaker A: Well, one of them was, it was the first question I got asked at Kaufman, um, what is it about the Japanese that most people disagree with? And I said, they're far more creative and innovative, inventive, imaginative than Americans.

Speaker B: What's some advice you would give your

Speaker A: younger self that's so easy? Um, and I'm probably. Everybody suffers from this, but, gosh, the burden of, of shame over things I shouldn't have been ashamed about. Um, and how crippling shame is. I, I, I wish I, I think I was stoic as a little kid, and I don't think people knew, but, yeah, that would be the one, because that's probably slowed me down more than anything else. And, you know, the thing you would go back and tell yourself as a young kid is as adventurous as it's been for me for 60 years. Like, I should have gone way faster, but I slowed myself down. So don't. As one of my brilliant coaches says, don't should on yourself. Uh, should have done this, should have done that. But that's the one thing I wish I did differently.

Speaker B: Can you explain that a little bit more? What would you recommend as far as the shame piece does not having guilt, uh, and Shame about things you did wrong.

Speaker A: Oh, I think it could be a mistake I made when I was 13 years old and carried the burden of that with me for two or three years, allowed it to alter my behavior, um, pull me back from doing things instead of just realizing I tried something and it didn't work. Kind of a bad loser, you know, maybe like I didn't handle loss very well. Things like that, um, some, some bullying or abuse that you might be subject to and, and your 10 year old self or 13 year old self will immediately go to, what's wrong with me? And you wish there was somebody there that you told who would say, there's nothing wrong with you. That's just who that person is. And getting over that more quickly. Just things like that. Making like, you know, it's interesting adventure though, because one of my mentors who is amazing, you, uh, know, he said, you know, when push comes to shove, um, if you love a deal, do it. He goes, because you'll forget the bad deals, but you will take the good ones you passed on to your grave. And I always think of him when I'm going through an old bin or something and I find the $5 million golf shirt, because that's all you have from the $5 million you invest. I go, gosh, he was so right. I forgot about this company. But I still remember passing on Salesforce. I still think about that all the time.

Speaker B: When you're gone from this earth, what would you like to be remembered for?

Speaker A: It's something I got in a 360 recently. That was the best thing I've ever heard. I wasn't aware that I was doing it, but a lot of people have said this is true is that the quote was something like, phil, you reflect my genius back at me with such clarity that I believe in myself much more. I'm like, whoa, okay. I do. I'm totally fascinated with really mining for genius and helping people mine for genius. And I thought that's, if that's what I do, great. And I hope it's. I hope it's infectious. I hope they carry it forward.

Speaker B: All right, Phil, Will, it's been really great to have you on the podcast. I'm so glad you made time to come on as a guest. I really appreciate it and thank you so much.

Speaker A: It's really fun and credit to you for, um, you know a lot about Japan. You ask questions that people don't know to ask and that makes it really fun. So this is just time flew. This is really fun.

Speaker B: All right, Sounds great. Thanks so much.

Speaker A: Thanks, Sasha.