Tokyo vs the Bay Area

This was drafted back in January amidst a fundraise that kept me busy, and I finally found time to complete it. Last December I was on a panel hosted by Innovation Weekend discussing the differences between Silicon Valley and Tokyo. Here’s a digest-edition of what I shared.

Startup ecosystems around the world understandably look to Silicon Valley — whether to gawk or be inspired. As access to capital gets easier regardless of geography, some of you may be considering your next entrepreneurial adventure and where to do it. Here are some personal perspectives gained after 10+ years traveling and working between the Bay Area and Tokyo. YMMV!

As an entrepreneur currently based in Tokyo who’s also lived and regularly visits the Bay Area, here’s how I see the advantages & disadvantages of being in Tokyo.

Opportunities / Advantages

It’s easier to be an attractive startup using new technology.

There’s still a large base of strong technology talent within the depths of enterprise technology companies like Sony, Toshiba, and Panasonic. These environments are less amenable to allowing new technologies like Golang, Node.js or services like GitHub, Datadog, or even Slack being used in production environments. Can you imagine trying to hire top engineering talent in the Bay Area for a team using CVS for source control management (or no SCM at all)? And yet, that’s still the case with traditional tech companies in Japan. Young engineers who’ve joined the established, big-name companies to appease their risk-averse families are realizing their entrepreneur peers are zooming ahead experimenting with and adopting newer technologies that are becoming defacto processes and tools in leading technology companies. And so these young, talented Japanese engineers perk up with puppy-dog eyes when they hear the possibility of using new tools and programming languages they’ve only read about. Done right, new tech and services can be a seriously competitive edge in building the right engineering team in Tokyo.

Awesome hack-a-thon locations — from temples to onsens to remote islands.

Hack-a-thons are not only fun, they’re important functions in growing a healthy engineering team. But why is Tokyo an ideal city for them? Because there’s no other city with the combination of 100Mbps internet available on serene Zen temple grounds accessible within an hour radius from the city center. With a bit more planning you could take your team to a different island, eat some of the healthiest cuisine known to man, and hack away.

A less diverse workforce.

The irony of a broadly less diverse work environment is that those who value it have a better chance of reaping the benefits. There’s less competition for the “eccentric” — the bilingual, tech-talented, sociable, engaging entrepreneur. It’s a lot easier to stand out and be helpful if you’re able to bridge languages & cultures. If you’re a foreigner in Tokyo, you can have an edge (whether it’s sharp or dull is up to you); who cares if you’re a foreigner in the Bay Area? The wave of US-educated Chinese returning to their home-country highlights a similar point. This advantage probably has the shortest lifespan though.

Measured simply by time-commitment, the Japanese workforce is more loyal.

Obviously there are a number of factors both controllable and not that affect workforce mobility, but in general I’ve found Japanese employees to be more loyal to their existing environment. Which means it can take longer to bring a desirable candidate in, but also means you’ll generally be given a few months notice if someone decides to leave. There are fewer surprises and less scrambling from the 2-weeks (and often less!) notice common in the Bay Area. There’s a flip-side to this of course, covered under disadvantages.

Tokyo is the world’s most livable city.

Clean, safe, world-class service, friendly people, something for everyone — Tokyo is the world’s best-kept secret (for now … ;) Enough has been written about the people and culture so I’ll just say no city is perfect, but if you can navigate the language, Tokyo is close to it.

Tokyo’s density allows for 2–3x the number of meetings per day.

In Tokyo, you can have a string of 1-hour meetings with 30min. between each. Start with a power-breakfast at 8AM, your next meeting at 9:30AM, then 11:00AM, 12:30PM, 2PM, 3:30PM, 5PM, 6:30PM, 8PM (dinner meeting). That’s 9 meetings. Yes it’s possible — I’ve done it before. I don’t recommend repeating this daily, but if you’re fundraising or hustling in sales, at least it’s possible. In the Bay Area there’s a lot of driving, even when many of the VCs are on Sandhill Road. When we were fundraising our seed round back in 2010, we maxed out at 4 meetings / day. You could probably do 5–6 meetings in San Francisco city proper, but you’ll likely be frazzled and sweating towards the end. More recently thanks to Uber you don’t have the stress of finding parking every time, but the traffic can still suck and be unpredictable. Tokyo’s impeccably reliable by-the-minute public transportation means you can pack-in a string of in-person meetings like no other. And nothing replaces f2f meetings when large sums of money are involved.

World-class cuisine — ramen, sushi, yakitori, shabu shabu

Tokyo has the most number of Michelin stars for a single city. And that’s not counting the chefs who declined to be listed because of the Michelin Guide’s tourist-friendly requirements that these chefs couldn’t be bothered to comply with. According to Anthony Bourdain, if you told any chef they would have to spend the rest of their life eating all meals in one city, all chefs would choose Tokyo.

Challenges / Disadvantages

Fewer experienced angels supporting early-stage endeavors

The pool of angel investors in Tokyo is significantly smaller than in the Bay Area. In fact, the few Japanese angel investors who supported Gengo in the beginning don’t even live in Japan. There’s a decent pool of wealthy individuals working in finance who have been known to angel invest, but the expertise and empathy they bring is quite different. One of my favorite personal stories highlighting the difference between a Japanese angel and SV angel goes back 5 years ago during our seed round. At one point during the hustle, a Japanese angel investor wanted to reduce his original investment by 50%; during the same financing, a Bay Area investor we emailed to schedule a call wrote back that he was skiing, confirmed that another angel he knew was investing, and said he would commit $50K — no meeting, no call, one email exchange. We were floored.

Some logistics are not supportive (保証人、礼金、etc.)

In particular, renting offices and apartments in Tokyo as an entrepreneur is a huge, distracting pain. The upfront cost, let alone the opaque guarantor system, is very expensive for a startup. Granted, Tokyo is seeing more shared-office spaces and even new startups addressing this need, so I imagine this problem to be relatively short-lived. But when we started, I basically had to sign my life to rent our first official office — which was not a pleasant experience!

The workforce is still too risk-averse

This is also changing somewhat, but mostly among the younger, less experienced demographic who are engaging with the riskier startup ecosystem. As we’ve grown the Gengo team in Tokyo, we’ve had to convince not just the desirable candidate but their family as well — and not just the spouse, but the parents of an employee too! We created a special pitch-deck just for the occasion :)

Underdeveloped startup career mobility

With the volume of startups in the Bay Area, one could conceivably have a pretty good career hopping from venture to venture every 2–4 years with a decent retirement waiting at the end. Given a 40-year employment period, that’s 10–20 startups. Putting aside all other variables (changing skill-sets, technology trends, etc.), if you’re financially responsible and even if none of the 15 startups is a unicorn, at least one is bound to have a decent enough exit to pad a good nest-egg. Unfortunately in Tokyo there just aren’t enough startups at various stages to make such a “startup-hopping career” possible — at least yet. I’m already observing a demographic who are on their second or third viable startup so it’s just a matter of time — maybe 5–10 more years?

Less serendipitous physical environment

Take a stroll down University Avenue in Palo Alto on any given afternoon and you’re bound to see a face you’ve seen somewhere before but can’t quite remember where. After a few minutes you realize — “Oh shit, was that the founder of Airbnb?” Or how about either of the Google founders? Maybe Paul Graham? In the Bay Area you have a much better chance of spotting a member of the tech world elite, but in Tokyo? I once heard Masayoshi-son rented out an entire restaurant just to have dinner alone without fear of being accosted.

Fewer ‘niche’ meet-ups (but getting better!)

The meet-up and events scene in Tokyo is infinitely better now than 5 years ago; but 5 years ago the Bay Area was already doing niche meet-ups — like one for crowdsourcing where at least 50 people showed up, in 2010! As soon as a new technology or platform or programming language or business model or startup role (think “growth hacker”) gets traction, you can bet there’ll be a meet-up for it next week with at least 30 people attending. In Tokyo, it takes quite a bit longer before a similar gathering takes shape — and usually only because it’s been running in the Bay Area for at least 6 months.

So there you have it, some perspectives on what’s great — and what needs improvement — in Tokyo’s startup ecosystem compared to the Bay Area. I’m looking forward to reviewing this in 5 years and seeing what still holds true!

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