SPEAKER_00: younger generation is becoming entrepreneurs and you know startups are becoming cool so the traditional kind of stereotype image of japanese wearing suits being what we call salary man yes you know lifetime employment that's totally gone right now totally gone for young people for young

SPEAKER_01: people yeah they still have it as an option yes but they're now it's number two on the list number

SPEAKER_04: three on the list of possibility yeah maybe so another kind of a showcase it's like a joke but i always tell number one job thought after mckinsey is now startups mckinsey used to be number one uh

SPEAKER_00: you know it's one of the prestige you know yes jobs you can get and you know typically people might join a big japanese blue chip company to become one of the you know top management or something like

SPEAKER_12: that that was high status yes and now high status has shifted for young people to being a founder or even associated with startups yes exactly this week in startups is brought to you

SPEAKER_20: by uber ai solutions your trusted partner to get ai to work in the real world book a demo with them today at uber.com twist deal foundership faster on deal set up payroll for any country in minutes and get back to building visit deal.com twist to learn more circle.so circle gives you everything you need to build and scale your community-led business twist listeners get one thousand dollars off circle's

SPEAKER_22: professional plan at circle.so twist all right everybody welcome back to this week in startups

SPEAKER_24: i'm your host jason calacanis as you know we have a program called founder university founder university

SPEAKER_26: is a 12-week course for people in year zero of startups people who apply for funding from our venture firm but are too soon for funding so we said wow all this incredible energy everybody emailing us applying for funding literally over 10 000 people a year how do we capture that energy and help founders solve the world's biggest problems or solve the problems that are important to them maybe you as consumers so we created this 12-week course where we go over all the basics how to set up a cap table how to get product market fit how to do go-to-market strategies how to find a co-founder how to present your product how to understand your total addressable market maybe find your

SPEAKER_27: ideal customer profile just design ux all of it the founders typically understand about half of what we teach them for different founders that 50 is different some of them are awesome at operations but their design is terrible but they're really good at go to market or they're absolutely extraordinary at recruiting talent but they don't even know what the term icp or customer acquisition costs they don't they're not familiar with those and that's okay because everybody becomes familiar with these techniques and these strategies over time so we meet the founders where they are and my team spends time with them it's incredibly rewarding it's incredibly hard most of the startups fail but they come back a second or third time and then sometimes even on the first shot they make it and it's one of the great joys in my life to take founder university from the united states to my favorite country in the world after the united states and maybe don't tell anybody but maybe i like it a little more in the united states and that's japan and it's been the thrill of my life to have the japanese government jetro asked me to bring founder university here and we're doing our first cohort we've had so many of my friends over the years of coming here for 30 years say yes to coming and mentoring the founders here 30 founders joined the first cohort very competitive process to get in if you want to learn more about it just go to founder.university you can apply to do it in the united states you can apply to do

David Friedberg: it in riyadh in saudi arabia in the kingdom we do it there with sunabul you can apply to do it here in japan but please no more countries i'm saying this with peace and love and doing a lot of traveling

SPEAKER_26: okay maybe one more country but that's it after that i'm going to say no maybe we'll do one more i don't know so here we are uh at founder university it's the end of the program uh of the first week

SPEAKER_27: of the program it's the third day and we had an intensive couple days but i'm really excited because shin takamiya i met you 20 years ago 2015 years ago yeah 25 years ago i don't know maybe not

SPEAKER_26: that 20 20. yes i'm very old now you know shin you and i are old yeah and we learned some things so today we'll talk about what we've learned and how things have changed i was talking earlier in the

David Friedberg: program i got invited to come speak and back then i would maybe get invited once in a while maybe they pay for my flight big deal for me back then because i was broke i had no money so to get a free coach flight and fly here to me was like the dream and you and i met at a conference i had sold weblogs

SPEAKER_26: saying i was doing a gadget and i would always go to akihabara the electronics here and i had seen vr and really augmented reality for this first time it was remember that back 20 years ago and already

SPEAKER_41: japan was coming up with a vr figure and jason was so excited about it and he was just hanging

SPEAKER_45: around this otaku anime kind of figure what happened was i was walking through akihabara

David Friedberg: and i would go there with my writers from engadget and they would take me to all the different buildings and the buildings there would be 10 stories so we go to the 10th floor maybe robots like little miniature robots then the next floor would be robot cars the next floor would be robots that went in water each of the different floors and then i saw this big line with a bunch of salary men in line after work in their suits that looked pretty tired and they were online to buy

SPEAKER_26: something so i went to the front of the line and they were buying an action figure in a box of software

David Friedberg: and you would take the web camera off the computer web cameras were pretty new they didn't work very well and then they had a paddle like a stick with a qr code and a little box you put the box down you have your pc and you take the image and you put it on the box and pop out of the box would be a little character and then you would interact with the character and i said whoa that could be the future it was a little too early a little bit yeah but they were buying it and this is one of the great things about japanese culture you're always five ten twenty years ahead of everybody else what do you

SPEAKER_00: attribute it to the creativity and everything yeah yep i mean the vr figure back then was already quite advanced in japan but you know if you look back you know you you could say we were pretty advanced and even from a japanese standpoint it was it wasn't a mainstream it was like a you know kind of otaku culture but now otaku culture is everywhere in the world like you see anime what is otaku culture otaku

SPEAKER_04: culture is like a japanese pop culture kind of rooted around anime and manga and things like that

SPEAKER_00: initially maybe 30 40 years back it was regarded as a kind of geeky hobby it was a geek yeah and otaku

SPEAKER_59: was kind of sometimes it was like a some kind of you know bad word to say if you like a nerd yeah yeah or a geek yeah but dweeb yeah yeah but nowadays you know i'm not calling you that i'm not otaku so it's okay yeah but now you're cool otaku became cool yeah yeah very cool yeah exactly

SPEAKER_65: exactly exactly and you know otaku is highly related to ip business so you know it's definitely

SPEAKER_12: something we can explore out of japan yeah ip intellectual property became i think a very very

David Friedberg: powerful concept here and i remember in 1992 i was working for sony and they became the sony corporation said hey if we can do convergence we can bring together consumer electronics music so they bought columbia records and movies we buy paramount and then uh we would do convergence and even doing radio and i that was when i first got exposed to the concept of hey all of these things are going to

SPEAKER_59: come together and here we are it's come together back then idei-san came up with the ceo idei-san came up with the concept digital media kids which is yes dmk yeah digital media kits that was so cool

SPEAKER_74: on a floppy disk and they would say here is everything you need to understand the topic a

SPEAKER_27: text file some pictures short video clips all of that then became deliverable on the internet online services right it's fascinating so shin you work for globus capital partners this is one of the largest venture firms here yeah and so today we're going to talk about your investing here and then just some observations about the global market maybe tell us a little bit about what you do how long you've been

SPEAKER_41: a venture capitalist so we globus capital partners are one of the biggest vc firms here and we are

SPEAKER_00: actually one of the oldest vc firms here so we started out in 96 back then 1996 yeah back then there was no ipo market for tech companies so nasdaq japan and the mother's market of tokyo stock exchange only came in in the early 2000s you know we kind of grew together with the japanese started startup ecosystem so we're kind of like brothers to the japanese startups we were a startup incidentally doing vc business back then and as for myself i spent like six years of my childhood in europe and went to

SPEAKER_59: us to get my mba where'd you go uh mba yeah harvard oh okay yeah it's okay right i've never heard of it

David Friedberg: where's it from uh it's somewhere cold it's somewhere cold yeah boston i think yeah you can always know if somebody went to harvard because they never mention it they say i got an mba and then i say where and they say oh massachusetts and then i say oh where are masters say boston i say oh where in boston they say cambridge it's because if you say you went to harvard everybody says oh too smart

SPEAKER_97: or whatever but you went to hbs yeah and uh you did that in the 90s late 90s no no i was class of 08

David Friedberg: of 2008 2008 yeah oh 2008 okay you went later and when did you start in venture capital and why did

SPEAKER_00: you decide venture capital so i joined the globe is right after my mba so that was 2008 that was like

SPEAKER_101: right after the subprime bubble burst yes we had the um great recession in america everybody lost their

David Friedberg: jobs the nasdaq went from 5 000 to 1500 and everybody thought it was the end of the technology

SPEAKER_97: business but it was actually good timing for you exactly enter low and exit high you know it is paradoxically the best time to get in venture capital is at the down market yep exactly if you're

SPEAKER_107: an independent content creator or you're building any kind of community oriented business like i am

SPEAKER_108: just making great videos or awesome websites it's not enough you need to spend real time with your community and you need to do that with tools that allow you to see what's going on and communicate smoothly and crisply with your community members that's why i'm so happy to partner with circle the complete community platform for creators and brands with circle you're going to get an easy way to build branded websites that help you with email marketing strategies that's super clutch and ai agents that can help you design manage data and even do the branding we use circle here at launch to keep up with our founder university community we've done 14 founder universities around the world and they've helped us grow that from this tiny little program out of our office in austin to this bona fide international movement and they can do the same for your startup twist listeners can get a thousand

SPEAKER_111: dollars off circles professional plan by going to circle.so twist that's c-i-r-c-l-e dot s-o slash twist

SPEAKER_114: what stage do you invest in typically so currently we typically start from pre-a or a kind of stage

SPEAKER_04: okay so seed and series a uh pre-a kind of oh okay so we would like to see a team and the product you don't have to have a massive attraction but enough traction so that we can get a glimpse of pmf

SPEAKER_00: that's like the initial stages we would invest but we would follow on anything into the late stage so we we we say we are the first and first to last so we are the first institutional vc to back a founder and the last we would back it to the last round before ipo okay yeah so a full life cycle

SPEAKER_123: basically yeah and that means the company's here a little bit too early so when he finishes don't rush

SPEAKER_12: the stage you can meet him but uh the likelihood of investing in year zero startup or pre-product market

SPEAKER_126: fit is too early for you a little bit but probably i should know you guys now because you know you

SPEAKER_00: know it's a very kind of relation business you don't want to invest into somebody you don't know you don't trust you know typically when i invest i like to invest into my friends who i know for like over two years or something like that right so i can trust the person and i i know that person from like

SPEAKER_59: everyday life rather than knowing him and the cosmetic when he's fundraising and this is an

SPEAKER_130: important lesson for founders is to play the long game yes you're going to meet people you want them

SPEAKER_132: to understand what you're building and why you're building it and then they can put a little check mark yes in their journal in their database okay i met this founder they're doing something interesting

SPEAKER_126: yeah so even in series a you know i and maybe we believe that the founder is the single most important

SPEAKER_00: factor in investing and especially their motivation you know we don't want to invest into people whose interest into money or power you know we look for some you know truly rooted down motivation why they want to do this business they would have like a passion for it or they would have like a almost like a karma to do that business or something like that so we want to know why the founder is doing that business and if that why is solid you know you can you know you would have the grit to continue the business when you're even in the hard hard things and in the end if the founder doesn't give up the business is still alive so you know you always need that you know strong motivation or driver why

SPEAKER_139: the founder is doing the business this is really important for founders to understand that our number

David Friedberg: one fear our nightmare as uh investors is not that the company runs out of money or they have to pivot

SPEAKER_00: it's that the founder gives up exactly so we don't want founders you know just fleeing irresponsibility irresponsibly so you know and of course you know sometimes it's important for the founders to rightly give up because after all if you look at it from the macro perspective it's a kind of utility business as i look at it so the founder is the most precious resource in the startup community and you

David Friedberg: want to maximize the utility of the founders so if the founder picks an idea they have the karma they're passionate for it and they get two three years into this adventure and they realize the market isn't ready the market doesn't want it they can't force consumers they can't force a business exactly to want their vision of the world so yeah sometimes it's the right thing to shut it down yeah so you

SPEAKER_00: know it's okay that your hypothesis is wrong you know you know what is not okay is you you just kind of you know be irresponsible or you know you do some kind of immoral things or things like that but you know if your hypothesis does make sense but it doesn't turn out to be right i think it's a nice try and even from our our investor kind of perspective we'd like to invest into those kind of uh founders you know it's not the result that which matters so if founders had a very logical and or hypothesis or

SPEAKER_59: investment seems that made sense but if he fails it's okay we want to invest again into that serial

SPEAKER_147: entrepreneur this is also very important if failure in the united states we champion it yeah we

David Friedberg: are excited to see it's not what we want to happen but when we see a founder fail it's almost universally if they don't give up the precursor to later success in japan the culture though of failure comes with shame it used to it used to yeah when did it change and why um i think it changed in the

SPEAKER_59: last 10 years just to throw out a showcase number when i joined globus as a venture capitalist there

SPEAKER_00: was only like 300 million investment per year in all of japan but nowadays we have like 10 billion usd so you know it's growing so fast and one of my portfolio companies mercury was the very first unicorn japanese unicorn to go public which went public in 2018 and only after seven years we had

SPEAKER_74: mercury mercury yes m-e-r-c-a-r-i uh it's a marketplace yes exactly like uh craigslist or ebay uh how would

SPEAKER_05: americans think of uh it's the equivalent is poshmark oh posh yeah yeah so designer clothes or designed

SPEAKER_04: products initially started out from kind of design clothes for ladies and for kids because they it's

SPEAKER_00: the same kind of seller and there was a synergy between different categories but as they grew uh they are dominant kind of secondhand app in japan so they kind of went into multi categories and they're basically all category right now but the point i wanted to make was only after seven years of the first first unicorn going public we had 77 startups that was valued over 1 billion wow the caveat is that includes not only unicorns but also includes those companies that touched down to the 1 billion dollar market cap line after one year of going public so one point i wanted to make is this is how how vibrant japanese startup community is and how much younger generation is becoming entrepreneurs and startups are becoming cool so the traditional kind of stereotype image of japanese wearing suits being what we call salary man yes you know lifetime employment that's totally gone right now totally

SPEAKER_01: gone for young people for young people yeah they still have it as an option yes but they're now it's

SPEAKER_04: number two on the list number three on the list of possibility yeah maybe so another kind of a showcase it's like a joke but i always tell number one job for four after mckinsey is now startups mckinsey used to

SPEAKER_00: be number one uh you know it's one of the prestige you know yes jobs you can get and you know typically people might join a big japanese blue chip company to become one of the you know top management or

SPEAKER_12: something like that that was high status yes and now high status has shifted for young people to being a

SPEAKER_14: founder or even joining associated with startups yes exactly this is very interesting for people to

David Friedberg: understand coming here in it's less transactional it's more character based yes yes honor karma it's

SPEAKER_130: cool to be with startup yeah we've got a brand new sponsor this week and it's another amazing startup

SPEAKER_107: whose product we actually use every day here at launch if you need to hire manage pay or equip team members anywhere around the world you need deal d-e-e-l they're going to take care of all the annoying hr tasks you don't have time for like payroll compliance visas and onboarding so you can stay focused on your business and deal scales up with you from the first hire on so there's never any need to switch platforms or transition into a new system with deal you can set up payroll for any country in just minutes and get all the complicated visas and paperwork settled right away allowing your business to grow without borders that's why more than 37 000 startups and fast-moving companies are already using deal to accelerate their hiring and growth find out more by visiting gil.com twist that's d-e-e-l dot com twist

SPEAKER_139: so shin you're at globus capital partners 500 million dollar fund new fund coming you invest series a

David Friedberg: sometimes a little before and in the last round before they go public we'll talk about going public but for the founders here what should this ideal meeting and what is the protocol here in japan for getting that meeting and what is expected to occur in that meeting i don't think there's much

SPEAKER_41: difference between you know having an investor meeting in the us so to answer your first question

SPEAKER_00: about what the founder should do with the first meeting so to be very tactical or like a hacker mind i think the whole objective of the first meeting is to get the investors interested you don't have to tell all of the story you just want to focus on one single value proposition you have and get that investor interested in then you know once you get that investor interested you would naturally have a follow-up meeting or follow-up questions so single important thing is to you know get his interest that's

David Friedberg: the only thing you need right you want them to understand what you're doing understand why you're doing it understand why you're the right person to do it and then you want to get them to ask questions yeah yes and so what is the best way sometimes founders get a little nervous venture capitalists oh they have the money they anoint me but you and i know especially my time as an entrepreneur i'm not sure did you spend time as an entrepreneur as well or um not really as an entrepreneur when you're first starting out it's very intimidating and then later on you look at venture capitalists okay they support my company but i still have to run it so i could use their capital i could use their advice on the margins so maybe you're not as enamored with it what's the way to answer the questions when you ask you know a very basic question how should the founder respond to

SPEAKER_00: it especially if they're a little nervous probably the very basic is i think you should try to you're not the person being judged you should also judge the investor after all especially for the lead investor you you're going to be stuck with that person for like seven years or 10 years even longer right so you want to select the investor who you can get along with who you have the right chemistry with so you should take off your mind that you're being judged you're also judging your opponent yes and the game of getting the lead investor is not like the popularity kind of you know voting you have to the game is to find only one lead investor the right investor so you know even 99 lead investor

SPEAKER_12: potential lead investor says no that's okay if you get one yes right it is a numbers game yes and that i think is very hard for a founder to handle early on rejection and a no is the default right and you

SPEAKER_04: know when you get the rejection you shouldn't feel that you or your baby is you know ugly ugly or you

SPEAKER_202: know i said it not you yeah i know but like you know it's very objective so some person might think

SPEAKER_00: it's ugly but it's a hypothesis that you think it's beautiful and you have to find a person who agree with

David Friedberg: you reckoning that is beautiful yes yes this is in a way investor product or investor problem or investor market fit the investor has to also be excited about it and when i was early in my career i had an investor say to me when i was pitching early on i'm just not so excited about what you're building i'm

SPEAKER_12: not the right investor and i was incredibly hurt and i talked to my wife who was then i think just my girlfriend and i said oh man it's terrible she says oh that was like very kind of them you don't want

SPEAKER_132: that person to be your investor right if they're not excited about it go find one who is excited about

SPEAKER_04: it yes yes this is critical yeah and you only need one so it's okay you know if your first time maybe

SPEAKER_00: you're nervous you may think that investors have the right answers but we don't nobody has this is very

SPEAKER_12: important it's the humility and sometimes people project into a successful investor oh you did you know this incredible company that went public and the biggest ipo billion dollar company oh you invested in uber robin hood you know what's going to work the answer is we don't yes exactly so you have to find somebody who believes in your same hypothesis funny story i was training a new vc oh yeah and i like to i like to have the orchard not go to the market and get apples so i go to the orchard and i find talent out of school to train to be venture capitalists united states right out of school and i have this very smart uh young man working for me very analytical but also very candid which i like about

SPEAKER_132: him so he wrote an email and he wrote back this founder has ugly baby syndrome they don't know that their product is terrible their execution is horrible and they don't even understand the market they're going after and they sent this email to the team but they forgot and they didn't take the founder off

SPEAKER_226: the email so the founder said i'm sorry that you think my baby's ugly and i wasn't involved but then

SPEAKER_132: my partner who was my first boss who works for me now mike savina called me and he said uh i've got an interesting situation uh and he calls me boss now even though he was my boss he's my big brother and i taught me a lot of what i know in business i said tell me i love a good situation and he said well you may not like it um can you explain to me what happened and i laughed and he said sounds like a

SPEAKER_27: mistake you would make when you were young i said yeah it does so should we fire him promote him what

SPEAKER_132: do we do and he said uh let's talk to him so we got the researcher they started as a researcher then they become an analyst then they become associate very hard training program we make them work 60 hours a week like a goldman sachs program very hard try to break them we want them to quit because we want them to work as hard as i do and the rest of my team members so i um call the founder and i said well you know obviously i'm very embarrassed to say to the founder would you like me to fire them

SPEAKER_26: for this terrible mistake or would you be willing for me to have them apologize to you and make it a learning lesson for them and the person said well i don't want them fired they made a mistake yeah i'm i i'm sorry that this happened and i said no it's not your fault so then i went to the person and i said would you like me to fire you would you like to apologize to the founder and he said if you have to fire me i understand but i i already apologized to the founder and he had already apologized he took it to himself in the you know in the in between time so i said uh now he's been working for me for

David Friedberg: two years i think if i were to rank all of these trainees and i think there's 10 of them now i rank him as in the top two top two bianca who's here and lucas who wrote the ugly baby i can only say his name now because he's so good and i always make the joke with him and now when he trains the new people coming in he's gonna i think he's an associate now or analyst i don't know he's doing so well and his performance is so good we always have that as a nice joke nice thing but mistakes can happen and then

SPEAKER_00: do you act honorably and he did and probably one lesson to the investor side i always tell myself and also maybe like the younger vcs is that one i think it's good to be candid but being candid and being like judgmental or mood uh emotional is a different thing being objective is very so you know you don't want to say it's ugly you want to say why you don't think it looks functional or it doesn't look good yeah so you have to have like a communication program uh protocol where you can actually debate about it with your opponent the founder yeah so if you think it's ugly um dysfunctional you should say why you think this is dysfunctional because it's not delivering the right function to fulfill the value

Chamath Palihapitiya: proposition or something like that it's okay your ai is only as good as the data it's learning from every huge leap we're seeing in ai development is based on refining better data sets and guess who came up with the ideal solution for your company that's right my pals at uber did you all know i

SPEAKER_244: was an early investor in uber maybe you heard third or fourth and i never talk about it but it's true

SPEAKER_108: and now uber ai solutions works with enterprises all over the world helping them source label evaluate and scale real world high quality data for every industry when you think about it this makes total sense no company understands how to maintain quality while scaling exponentially like uber their own ability to refine and process data sets is why they currently power millions of trips per hour now they're bringing that insane level of insight and expertise to your startup or enterprise it's pretty exciting

SPEAKER_245: book a demo today by going to uber.com twist that's uber.com twist what i tell my team is never

David Friedberg: underestimate anyone you and i have experienced this somebody is very awkward maybe they show up at a meeting there's a stain on their shirt or they're nervous or sweating or there's some product or they have a misspelling and then that person eventually becomes mark zuckerberg you know because by the way we

SPEAKER_59: all start out awkward yes unsure and quite typically well-rounded person is well-rounded sus you know

SPEAKER_00: you don't have that spike in one certain you know attribute right sometimes the great founders have

SPEAKER_65: the huge spike and the rest of it he doesn't have anything you know yeah they have a zone of excellence

David Friedberg: yeah yeah they have something that makes them uh very unique in the world and there's a way to say it some venture capitalists maybe don't have a good bedside manner like a doctor and so the way to say it would be the way i say it in the program since you're here and i'm an investor you may hear me say to you i predict when you go to see venture capitalists these are the things that they're going to be thinking would you like to hear those and can i have your permission to speak candidly in fact yes tell me candidly jason and i say i think they're going to look at the design and they're going to judge a book by its cover your design right now in their mind will be a four

SPEAKER_132: of ten and we have some resources to help you get it from a four very quickly to a seven and then getting from seven to eight eight to nine it's gonna be very hard but i think with you know just maybe we introduce you to a couple designers maybe you read this book and you read these websites and you could really improve it kim would you like us to introduce you to something yeah yeah please the right founder wants to you know have that candidness so how you say it's super important and i'll also say these three things i think are great you love this problem you've done great research on the customer and then um maybe some vcs when you say you're going to pursue four different business models that will counter their experience their lived experience their signaling will say i don't

SPEAKER_12: know of another startup that had four revenue streams in years one and they'll look at amazon and say amazon added a second revenue stream in year seven and microsoft added a third one in year 20

SPEAKER_04: and there's a way to communicate in a healthy way yeah but i think it's how the founders view the world

SPEAKER_00: and how you tie the context into the results of the business model so if you think the external environment is very very volatile or if you think you're still in a poc phase you want to try out different business models and if you can kind of explain why it's volatile why you think there is like different scenarios of you know having potentially having different business model and if you can just logically explain that you are in a testing phase to find the right one but eventually you might you know converge into one business model then it makes sense but just kind of like adding different revenue stream just for the sake of making good looking pnl it doesn't make sense right so it really depends on how you see your business context this is why vcs want to talk a lot they want to understand how you're thinking yeah yeah so like every other pc we had a have a management presentation which is the most important kind of like a investment decision gate what we look at as a partner if i'm not in charge of the deal is the thread of thinking of the entrepreneur he doesn't have to be right it's okay if if he has kind of like the right process of logical way of thinking and you know the precondition is in this kind of external environment the logical business model is this but you know once you start that business model you may find out that the um recognition of the external environment was different then you would change your business model but again the founder is able to come up with the same kind of logical business model so if the founder has that kind of you know logical thinking and if he is have that capacity to replicate the same kind of you know way of thinking that's a very good sign and

SPEAKER_49: that's probably what like the ic looks for if they the investment committee yes yeah so this investment

David Friedberg: committee is going to say hey what's the business model pursuing and if you are the partner champion you say well they're considering three different business models they're leaning towards a they're testing b and they've pretty much ruled out c but they're unsure right so they need to do some more thinking on it i want to talk to you about which business models you think get the best venture capital results

SPEAKER_132: you don't want to be the sole source of funding no you want other investors to help too yes so it's the

SPEAKER_00: nature of vc business but you you want to get a kind of like a additional return compared to your competitor vcs but at the same time you're supporting a very kind of high risk business so sometimes well most of the time the fellow vcs are your kind of collaborators who would support that business together with you so in the time of hardship you don't want to it's quite risky to support let's say a startup in a down round but if you have co-investors and it's it's the role of the lead investors to syndicate that kind of hard round too so yeah this is the value that a great

David Friedberg: investor can provide they're going to introduce you and explain to other investors when we have lunch or we're talking going skiing or whatever we're doing vcs do uh spend time with each other and they say hey what are you investing in what's interesting and you say well this is very interesting and here's where it's at we talk very candidly about it and you wouldn't want me to invest in something without knowing the complete story yes because we have a relationship based on trust you know relationship

SPEAKER_04: based on trust uh kind of social equity is on the stake yeah so we don't i don't want to sell you you know crappy yeah companies i want a broken car yeah a lemon exactly exactly exactly because then i

SPEAKER_280: have a problem and then the next time when you have something great i just say oh maybe there's some hidden problem with this car is the transmission is no good and then you would never co-invest with

SPEAKER_00: me so it's a very long time business so one cycle is long it takes like you know five ten years for a result to come out from one company and one fund takes 10 to 15 years and that's like how long the cycle is and we're continuing in that cycle so it's it's all about long-term relationship with your founders your startup community your co-investors your lp investors so we live in a very kind of

David Friedberg: long-term kind of time horizon and we have many bets we place many investments so we have a built-in

SPEAKER_132: diversification the founder is all in on one thing so that's also an interesting part of the dynamic yeah yeah the founder could be very high anxiety an investor might be oh in this fund we have uber in

David Friedberg: this fund you know so many great companies you've done you have kayak in this one you that fund you've already returned 3x 4x you feel calm but sometimes an investor has a fund it's underwater their second fund is underwater first fund is great third fund they're raising there are things that we have to deal with on a psychological basis we'll get into that i promise the audience we talk about business models take me through what business models really work in 2026 and going forward which ones are the most investable from a venture capitalist and why on the precognition that i think great business and great

SPEAKER_00: investment is two different things okay and i want to invest in the overlap so you know the definition of great business is you know you have different perspectives you know highly scalable you know that's kind of like a typical startup kind of great business but let's say in actually the longest standing company is actually founded in japan it goes on for about 1500 years it does like traditional kind of carpentry for japanese shrine and you know it's not scalable it's not making huge amount of wait this

SPEAKER_293: is a real companies yeah how many years old 1500 that's the world's oldest company the oldest company

SPEAKER_294: in america is america 250 years old it's something to think about yeah exactly so you know if i ask if

SPEAKER_126: that you know carpentry company for you know traditional shrine is that a great company yes incredible yeah

SPEAKER_00: yeah yeah it's not a venture company yeah exactly it doesn't have to have a highly scalable or high

SPEAKER_49: speed but it's a great company yeah so you mentioned two things there high speed i think maybe high

David Friedberg: margin and scalable are these the main circles that we need yes and the overlapping ones is the is the company that people would take public right it needs to have those components it can't be low margin

SPEAKER_00: it can't it can't grow slow yep to put it in as a way vc investable great company is a very niche component of the great companies and you know so to break down your perspective on high high margin scalability and speed i think it really comes down to exponential top line growth and how do you say i forgot the english word but the other way around of exponential so the cost it's coming down yes as the scale ups yeah not like linear but in a curve yes i am yeah that's the

David Friedberg: best way to say the other way round of explanation yeah if the in a fixed cost business yep the margin can keep increasing so if you were to make a piece of software the incremental customer if it costs one million dollars to make the software a year spend one million to make it the first million dollars you break even but then at a certain point the fixed cost business everything is very profitable after that

SPEAKER_00: yeah the point is you have like the unit economics as a snapshot yeah as you scale the unit economics on the top line side and on the cost side both kind of improves yes significantly so in the end your final business

SPEAKER_301: model is super super beautiful yeah if you were take the example of robin hood or uber on robin hood they

SPEAKER_12: which we were early investors in before they even launched the product they have 11 business units that make a hundred million dollars now and when they started they had one business unit making no dollars you know we could never have predicted that but when they get a customer for one or two of those services now they've added prediction markets now they had margin loans now they add options trading now they add a retirement savings account they added a credit card as they add each one of those they don't have

SPEAKER_132: to acquire the customer because they have the customer ready when uber launched uber eats on both sides they have the drivers so the drivers get more work in a marketplace dynamic and they already have the customers so what they've tried to do is create this uber one where they get people to use both products

SPEAKER_226: and if you do that oh wow yum yum yum is technical term it means lots of money so implication of that to the

SPEAKER_00: founders especially when you're in a very early or seed phase is that you know you don't have to have that kind of yum yum unique economics right now you don't have to realize it but you you have to have a hypothesis to have that five years down the road right yeah and you can model that very simply on

David Friedberg: the back of an envelope exactly okay we're in one city we have this many drivers and this many customers but when we get to six cities and we can launch a city for you know a tenth of the price and they already know uber because they used it on their vacation when uber finally came to tokyo many people had heard of it before right so it's easier each city became easier on the traditional business models you have e-commerce you have consumer advertising consumer subscription you have marketplaces you have api charging for consumption type businesses you have enterprise cost per seat and obviously enterprise costs for utilization some people sell data or subscriptions you know it's more niche

SPEAKER_04: what which of these do you like most right now i may not be answering your question directly but

SPEAKER_00: other than the founders single next important thing is having the right market the the big market size growing market size if the time is growing you know only if you grew together with the time even if you don't beat the growth of your market you're growing so it's easy and the next thing you want to do is how you can you know establish kind of like a exponential top line in that market and improving your margins in the other way curve is you know you can think about it after you have that exponential yes top line so you know within that growing market how you can out beat the growth of the huge market and huge market growth that's next after the market and then after that as you run you know you can think about how you can exponentially decrease the cost side so i think that's that's like the the priority order

SPEAKER_12: yeah it's um very interesting when a founder figures this out and first-time founders they this is one of the great things of venture capitalists a right partner can do is they can say hey we can tell you some

SPEAKER_132: stories this movie has already happened take a look at this company here's a marketplace similar to yours take a look at this e-commerce company but your point is very important if you pick a market i remember people were building tools for newspapers they were building tools for local television stations in america we have like very regional television stations and they would make these incredible tools because those businesses had lots of problems so those businesses would embrace it but because the

SPEAKER_00: newspaper business was going like this you could not solve their problem when in the late 90s there was like a joke like startup saying hey there's a new tech internet it's going to revolutionize the facts

SPEAKER_05: right yeah revolutionize it as in kill it no no no it was like a fax over the internet yeah fax over

SPEAKER_131: internet yeah so they they you know i've raised like almost like 100 million but they went bankrupt yes

SPEAKER_12: they were literally allowing people to have a phone number that you could fax and it would send you a

SPEAKER_334: pdf yes of the facts exactly so you know you're gonna be the transitional technology exactly not a lasting

SPEAKER_00: technology yes exactly exactly so i think you know what what's important is not only looking at the super superficial market but the fundamental needs behind it and some means like fax or internet is only the means or the how of delivering that value so you know maybe emails and fax it provides the same kind of value proposition horse and motor cars yeah it's trend they're both transportation

David Friedberg: both are for sharing documents but one is just so much faster you would never use it right and sometimes you have to think at a very fundamental basis well what are people faxing and you have to

SPEAKER_123: ask a more basic first principle question what do people fax a lot of times they fax a contract

SPEAKER_26: and that's docu-sign exactly exactly you know and a calendar is calendly you know like so there were some little ideas that became very large businesses very simple ideas like docu-sign or hello-sign so i

SPEAKER_04: think you have to recognize the market in terms of like not in terms of like superficial product market

SPEAKER_00: so the the failure of the fax internet company was you recognize the market as the fax market not like the document kind of sending market right so i think you have to understand the market as in the value proposition opportunity and then you come up with a solution that provides the best

David Friedberg: fit solution to realize that value proposition i want to talk to you about the greatest technological

SPEAKER_12: change of our lifetime and i mentioned earlier you and i are old but we knew this one was coming we knew ai was coming for 40 years and now it's here really great to catch up and ai we had machine learning

SPEAKER_132: we were watching big blue and ibm with the super computer beat chess 20 years ago it's slowly slowly slowly been coming and now all at once it's affecting everything and maybe you could talk a

SPEAKER_00: little bit about the pace and the opportunities yes so in terms of pace it's highly unpredictable definitely it's very fast and you know it's much much faster than we anticipated or you know when we when us older people go and look back the internet it was much slower in diffusing but ai is much much faster but what we know is the direction of the change but we don't put we can't predict the timing so the way i look at it is i think i would like to look down in the future trying to find the path that would definitely come but if you can't predict the time that's okay it would come eventually so all you need is enough money so that you can you know wait for that time to come but you know if you're super certain about that coming you know you can bet on it and wait for it to come sometimes people say like you know when there is like a big wave coming it's too late to go out and paddle you have to you have to have already paddled and be in the waters to ride that wave so but if you know the big wave is coming you don't know whether it would come in one minute five minutes one hour but if you see it coming you should

SPEAKER_101: wait in the sea or yes they i think the servers call them sets yeah like wait for the right set yeah

David Friedberg: and if you're in the game if you're in the ocean right you can take advantage of it but if you're on the shore this is why it's important to start right but you're also speaking to being frugal and controlling your burn rate right right and anticipating hey this could take time if you look at ar and vr you and i were talking 20 years ago starting to happen here on desktop computers now we finally have actual headsets apple is getting closer and closer with apple vision spectacles are getting better and better it's close but ai my lord it's changing not just what products we're building and the value proposition but it's also changing how we build companies what are you seeing how are founders using ai to build companies faster better do you have insights into it yeah definitely you

SPEAKER_126: know ai has to be integrated into your business model but again it's about predicting the time so

SPEAKER_00: what i always like to think when i'm thinking of my investment thesis or even to advise the founders or or my portfolio company is that uh look at the advanced use cases so ai is a big word but there are some advanced use cases cases like let's say for example autonomous cars the tech is already ready you know you know uh initially people was in the main driver's seat ai was just an assisting kind of tool then the role of ai became stronger and you know people just sat on the driver's seat to take responsibility because of the readiness of the society and the legal framework wasn't there and finally tech and the society is both ready so there is full autonomous driving and you know autonomous driving it was a use kind of one of the advanced or use cases you know you already have way more and all that already you know put into use but if you look at other application even like enterprise solution or something like that you hardly see any autonomous kind of you know fully agentic product yet so the way i see it is in analogy to the autonomous driving is that yes the tech is there it's you know it's possible to build a product but let's say if it's an enterprise product your client might be very old especially in japan the big japanese traditional companies may be very conservative and they don't want to kind of implement fully blown like a autonomous ai agent right they would say like who's going to take the

SPEAKER_59: responsibility when it fails and things like that risk is very important here so that means your client

SPEAKER_00: you know in the analogy of autonomous driving the society is not ready yet yeah so what's happening right now is there is like a human account manager and the quality assurance person who is just being there just just for the sake human in the loop monitoring yeah monitoring yeah so that the client can feel safe and you know and the ai agentic kind of product is implemented within the workflow of the provider not the client internally so from the client perspective it's just to be you know cheaper and more efficient bpo but internal process on the supplier side it's fully ai and that's like the you know stage where there is like a human you know safety co-pilot is there right maybe down the road there's going to become like fully uh autonomous product where it would be implemented within the client's workflow but you can't predict the time of readiness of the client side and you know like uh regulatory issues like security or you know information things like that so in the short term you have to take what is available on the table with a short-term business model but at the same time it's pretty difficult to have a conflicting business model within your company but it would dominate five years down the road and you don't know when the switching time timing would come so you have to have both business model embedded

SPEAKER_12: and this is where the strategy comes in yes yes as a founder you have to figure out how to survive so if fully autonomous cars aren't here yet but you can give it to a driver so they're less fatigued

David Friedberg: which was the original idea this will lower fatigue maybe lower mistakes okay great like adaptive cruise control i'll keep you in the lane and that's that's some value yeah yeah not the full value and you know

SPEAKER_04: it kind of helps you develop elemental product uh elemental technology to feed into the you know fully

SPEAKER_00: autonomous driving in the end so it kind of leads the way into the end goal shin it's been an amazing

SPEAKER_187: to spend an hour with you and catch up thank you so much for coming on this week in startups

SPEAKER_237: and i'm going to be here twice a year so okay i don't know what your favorite restaurant is or food

SPEAKER_00: tell me now actually you know there's tons of japanese great restaurants you know there's no rest into lots of them yeah some restaurants you can't reserve ahead like two years right so let me

SPEAKER_59: know which are very important yes and you know everybody and you know as we said we we live in a longer time horizon so two years is like you know two weeks down what's your favorite food right now

SPEAKER_391: right now um what do you love maybe there's a restaurant well actually there's a good sushi

SPEAKER_00: restaurant in uh tokyo kyoicho kyocho mitani ah it's uh omokase omokase yeah michelin star or like more underground it's not underground but it's it doesn't have a star but it's super famous some of the best restaurants in japan they don't have stars they don't want them exactly yeah because they

SPEAKER_26: want to be for their customers in their community yeah loyal customers with long higher ltvs yeah

SPEAKER_12: actually thinking uh correctly i found an interesting concept i had heard that sushi used to be bar food

David Friedberg: it was a fast food in edo period yeah yeah and so having done this research many years ago on the history of it there used to be stand-up sushi bars and when i came here i was talking to one of my

SPEAKER_12: founders and they said oh yeah we were going shopping and he said there's a stand-up sushi bar i like a lot

SPEAKER_132: in the basement of this department store you should go to it and i went and you stand up and it's all these incredible cuts incredible o toro incredible hokkaido uni just all the best pieces but the price is like half of the normal restaurant in japan you get it faster and you stand there and then there's a little hot spigot and you take a little matcha powder and you make your own green tea no waitresses just orders from the chef boom boom boom and that is one fourth of the price in the united states right it was so good so i've been to two stand-up sushi places have you you know about these yes are they common or not common uh pretty common you actually have one in haneda airport too another

SPEAKER_04: airport has one yeah oh really yes now you know where to find jason we'll be there all right let's

SPEAKER_409: give it up one more time for shin takamiya thank you all right everybody uh we'll have one more episode

SPEAKER_26: or two uh on this week in startups from tokyo and it has been what a thrill to and an honor and a privilege to get to spend time with these founders we'll see you all next time bye bye