The Magic Of Japan’s Micro-Businesses
What Americans can learn from Japan’s service industry
To find Gaya Bhaji, walk along a residential street in Tokyo’s Asakusa neighborhood until you spot a narrow gap between two compact houses. The gap opens into an alleyway marked by a thatched eave and a hand-painted sign. If you follow this alley to the back of the house, you’ll be greeted by the welcoming arôme of chef-owner Joshi Gayatri’s West Indian cooking, and your choice of seating among three tables and five counter seats.
A few weeks ago, Gayatri and her husband, Takumi Tominaga, prepared my first meal on a visit to Japan, and what would be one of its most memorable. I was offered a selection of three curries alongside rice, a fried egg and various pickles, which came served in a neat metal tray echoing a bento box. It was some of the best Indian food I’ve ever eaten, with attentive service directly from the chef in an intimate space, for about $10. I’ll never forget it.
More than “hidden gems”
Finding a charming, family-owned business is part of the joy of visiting any new city. In Japan, the urban built environment not only makes cities and towns pleasant to explore, but also makes possible an abundance of such hole-in-the-wall businesses, as Noah Smith writes about in his blog post, “Tokyo is the New Paris”.
Tokyo’s large arterial roads are dominated by gleaming high-rise buildings and glitzy depatos, but back streets shelter its innumerable hideaways where communities come to life. These streets are anything but boring, uniform or homogenous, words better suited to describing a typical suburb in America with its predictable line-up of Dunkin’, Starbucks, Chipotle and the usual big box stores.
Wandering the winding paths of a neighborhood like Daikanyama in Tokyo, you might pass a kitchen supply store, microgym, old-school café, and a coworking space, and eat one of the best omelets you’ll ever have within a few blocks.
While a few US cities like New York are denser in terms of people per square mile, Tokyo’s urban planning and residential patterns often create more exciting clusters of population and commerce. These clusters fuel a high concentration of shops and eateries within walking distances, creating that feeling of an endless depth of experiences to be had.
Navigating Tokyo’s unending maze of dense neighborhoods is one of the main reasons to visit, but the real magic happens indoors. Every business builds on the kaleidoscope of small shops that makes neighborhoods unique. Inside these shops, the quality and care of service are what make each encounter feel particularly special. Cities like New York also house a massive variety of establishments, and while it’s true that they also offer something for everyone, I often feel the nature of the service industry there to be more polished and transactional than it needs to be.
At a Manhattan restaurant, you might book a table on Resy before being shown your table by a host who hardly makes eye contact. At the gym I frequent in Brooklyn, I check in by scanning a barcode at an unmanned desk. Even establishments like hair salons, book stores and indie movie theaters have asked me to check out on an iPad requesting a 22% tip.
This isn’t meant as a critique towards individual businesses that likely struggle to survive in New York as much as they do in Tokyo. But it is a reflection on the differing values that produce urban cultures varied in terms of both physical appearance and human experience.
A personal touch
One thing that makes a visit to a Japan so soulful and memorable is the human touch provided by owner-operators who run an outsized proportion of service sector businesses there.
At almost any establishment you visit, be it a café, bar, hardware store or travel agency, there’s a good chance you’re being taken care of directly by the people who started the business. There’s something special that comes with that.
Small service-sector businesses are where the warmth of Japan’s hospitality really comes to life. In fact, it’s clear that business owners and consumers are willing to sacrifice some of the modern conveniences Westerners are used to in order to preserve this milieu. Small restaurants in Japan don’t use centralized reservation sites; instead, you call and ask the owner if a table is available, if they take reservations at all. Though trains have become much more accessible with the introduction of virtual IC cards, the travel agency I used hand-delivered tickets to my hotel so they were ready to pick up when I arrived.
Cultivating regular customers often feels like the main motive over, say, the profit generated by one visit. When I tried to order the butter roti at Gaya Bhaji, the owner asked me if I was sure, because I could already fill up on the bottomless rice I ordered earlier. Of course, I insisted on trying the roti, but the fact that the chef did not want to see food, or her new customer’s money, go to waste was, for this cynical New Yorker, unexpected and heart-warming. That said, the point of this piece isn’t to say one culture is better than the other, but simply to note one element of Japan’s society that might be worth understanding better as we seek to improve our own.
In my experience, Japanese businesses often transcend the stereotypes Westerners hold about them — that they are efficient, but perhaps a bit boring, stolid and stuck in the past. While Japan’s story is often told as one of economic stagnation, I leave feeling more inspired than ever to one day operate a small business.
The entrepreneurs I met brought to the table a fresh passion for service, excellence in products and the art of surprising and delighting the customer. Sure, their tech startups might not grab headlines as often as those of California, but for things that normal people care about day to day — an exciting new shop in the neighborhood, a livable community, the ability to work on something that excites you — Japan’s small business economy serves up some of the best experiences that humanity has to offer.
The building blocks of small business success
Policies around zoning and real estate provide an important foundation for this rich urban fabric. In cities like Tokyo, small micro-businesses grow almost naturally out of the existing built environment, allowing both entrepreneurs and the cities’ overall small business milieu to flourish.
Many businesses, mostly family-owned, operate in the same building where the household lives. This, combined with small, often miniscule, spaces generally mean lower rent and startup costs, making it economically viable for individuals to open small businesses.
A more human approach to the social safety net and a focus on family enterprise seem to encourage entrepreneurs and artists to operate this way. A man I was sitting next to at a bar in Kawasaki nonchalantly explained that he was working on his first jazz LP thanks to rent relief programs that finally meant he could devote himself to his craft full-time. He used to work in marketing, but thanks to Japan’s Housing Security Benefit, received about $1,000 monthly to cover rent. This benefit isn’t just available to people who were laid off — it also applies to small businesses that had to shut down, so this policy acts as a sort of extra incentive for entrepreneurs to take the risk of starting a business.
The charm of specialization
But it’s not all about policy — there’s a cultural appreciation for specialization and expertise in Japan that makes a lot of this desirable. The term shokunin (職人) captures the deep, life-long commitment many craftspeople have to perfecting a specific type of food, drink or artwork. This dedication, in turn, attracts a clientele with an appreciation for best-in-class products and services.
In quieter neighborhoods and residential suburbs, where locals are less exposed to tourists, businesses lean into their strengths to create a unique atmosphere rather than overtly cater to a cosmopolitan audience. I’ll always remember the owner-bartender of Osaka’s six-seat Bar Nemuri, who, with encyclopedic knowledge of Japanese whiskey, accompanied our personally selected pours with cookies she had brought back from her vacation to Seoul the week before.
To be sure, these experiences were not universal, and they might not be for everyone — so I’m not advocating other countries copy it piece by piece. There are lots of things about New York that I would miss if I lived elsewhere, like the diversity of its people, its non-stop energy and the strong individual character of neighborhoods. Even if we did want to replicate small business culture from another country, it probably wouldn’t be possible.
What should we take away from this?
You might be surprised to hear that the actual laws on the books regarding businesses are not all that different in a place like New York and Tokyo. Many of the differences play out due to cultural or historical differences, and the result of families handing down businesses over generations. Finally, it’s worth noting that the small business sector in Japan is often considered troubled, and many reject romanticizing it. It is sometimes cited as being a drag on productivity, and for workers who actually depend on it as a primary source of income, existence can be tough.
Still, my limited conversations with locals tell me that the value of having a third place for everyone is next to irreplaceable. Small businesses in Japan are deeply integrated into their local communities, providing not just a service but a sense of belonging to residents. This integration provides a more loyal customer base, which makes these businesses more likely to succeed as a source of income, but also as a source of personal pride and fulfillment.
Japan’s unique approach to space utilization, its appreciation for specialization, and a regulatory environment that, while complex, can be more navigable for locals, all contribute to a landscape that is particularly conducive to small, independent establishments.
I love startup and small business culture, and there’s a lot of inspiration we can take from other countries to keep improving it. We should find a way to help American cities re-discover their own sense of humanity and creativity, while bolstering some of the elements that have started to erode since before the pandemic: warmth, good customer service, businesses that value regulars, fewer chains and more independent establishments.
In fact, I’d highly recommend those who can afford it take a trip to Tokyo. Better yet, venture outside of the city center and into residential neighborhoods. Taking inspiration from Japan is about more than just policies; my real call to action is to my fellow founders to think about how we can counterbalance the aloofness that accompanies our cities’ too-cool attitude with a kind, service-first approach.
This ethos, if adopted in cities like New York, could reimagine our urban landscapes, making them not only more economically vibrant but also more human and connected.
