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This is a rather personal episode. There is no guest this time. It’s just you and me.
Uber and, to a lesser extent, Airbnb are failing horribly in Japan. There have been quite a few articles that have tried to explain what this is, and most of those articles have focused on why the market conditions in Japan make it hard for those companies.
These is certainly some truth to those articles, but they miss a larger and much more important factor about why these companies are struggling in Japan and in Asia in general.
You see, Uber and Airbnb represent a new very kind of startup, one that could not have existed twenty years ago, and the reason has nothing to do with smartphones or cloud computing or anything related to technology at all.
In fact, the very thing that make these companies powerful and transformative in the United States is what ensures they will never really succeeded in Japan.
You may not agree with everything I have to say, but I think you’ll enjoy it.
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Transcript from Japan
Disrupting Japan Episode 51.
Welcome to Disrupting Japan. Straight talk from Japan’s most successful entrepreneurs. I’m Tim Romero and thanks for listening.
Once again, I’ve got a special show for you today. There will be no guests, no wine, no playful banter with someone speaking English as a second language. Today it’s just you and me. For the next 20 minutes I’ll be whispering in your ear about something I consider very important, but that not enough people are talking about.
You know, a lot has been written about why Uber is failing so disastrously in Asia in general and Japan in particular. Most authors cite the very different state of the taxi industry here, and there is certainly some truth to that. Taxis in Japan are clean, safe, affordable and easy to hail.
But that analysis misses a larger and more important truth. You see Uber, and AirBnb as well, represent a very new kind of startup. One whose defining characteristic – the very thing that makes them what they are – has little to do with technology and ensures that they will always struggle in Asia.
Don’t get me wrong, Japan and greater-Asia market entry is challenging for even the best companies. I’ve been involved with a number of market entries, and the process is sometimes very much like the chaos and uncertainly of running a startup.
You see, if you are ready to expand overseas, you have clearly nailed the product-market fit and figured out how to scale you sales process. However, until you start selling in a new market, you are never really sure what positioning will resonate or which strategies will be effective.
You might be up against entranced competitors, you might lack the work-of-mouth reputation or partnership ecosystem that was critical to your success at home. The overwhelming pain you are solving for your existing clients might not even be viewed as a big deal in Japan, and on the other hand a minor feature barely mentioned in your marketing collateral might be seen as a game-changer.
For example, I ran the market entry for a San Francisco company that built its reputation and market on helping developers deploy their product quickly and innovate more rapidly. And we had the hard data to back up those claims, but the Japanese prospects were not particularly impressed. However, when we started focusing on how the product also decreased downtime and greatly improved how reliable their software was perceived by their users, and we began to sell like crazy.
These challenges are common to all companies, not just startups. But Uber and Airbnb are different. They are special. Examining why they are struggling in Japan illustrates a very important difference about how disrupting takes place in America and in Japan.
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OK, other than insane valuations and phenomenal growth, what’s so special about Uber and Airbnb?
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