Trying To Implement a New Economic System (Part 2)
Masa Nakatsu, Co-Founder and CEO of Orb, Inc., has been researching currency systems for over 15 years, including during his college days. While he was working as an investment management advisor in New York, he recognized the problems of currency systems and decided to solve them by becoming an entrepreneur. He went on to work as a product manager at Seven-Net Shopping and founded Musavy, a content curation venture in Silicon Valley. He founded Orb after gaining experience in Business Development at Groupon, and working as the Global RTB Team APAC Director at Citero.
Read Part 1 here
Having founded companies both in Silicon Valley and in Japan, have you found any significant difference?
Masa: First of all, Silicon Valley is about 2 years ahead in terms of Bitcoin and the sharing economy, whereas Japanese VCs won’t give a business the go-ahead for fundraising unless the business had a previous example in Silicon Valley.
The benefit of starting a business in Japan is that the environment is less competitive and it is relatively easier to access funding. In Silicon Valley, the competition is so intense that when you’re at the stage where the future of your business depends on whether you can get funding, it’s not rare to lose your appetite due to the pressure.
But, if you’re starting your business in Japan, especially in Tokyo where the big corporations are concentrated, the downside is that you can easily get absorbed into their ecosystems. High potential startups like Facebook or Tesla Motors can grow further in Silicon Valley because there is no such interest, or concern, that big companies will gobble them up.
Also, I have the impression that it’s not as easy for ventures in Japan to understand and accommodate the values of other countries and to be accepted globally – compared to those in Silicon Valley. In big corporations where the majority of people are Japanese, it’s not easy to get rid of that Japanese specific culture. Whereas in Silicon Valley, team members are from all over the world from the beginning, so it’s a great advantage when they go global, as they can easily fit into a multicultural environment.
So you think it’s important to hire people with multicultural backgrounds. What were the points you were careful about in order to put Orb on track in Japan?
Masa: What I’m aiming at is to reform the financial system. Create a world where small government can flourish. But I’m aware that resistance will be fierce when you are first proposing a new value system. Therefore, I thought it would be important to start the business at a time when the world is ready to accept my idea. It was ideal that people started to pay attention to Bitcoin, or block chains, because I could ride that trend to push the implementation and penetration of a decentralized financial system further. I started the business in 2014, right after influential VCs, including Peter Thiel, invested in the Bitcoin businesses. Their investment proved that Bitcoin is able to create a positive market, and could be a viable business. After I heard this news I immediately created my team and started visiting investors. I explained to them that “the wave hitting Silicon Valley will definitely come to Japan. You’ll be behind the players overseas if you miss this chance.” Gradually people started to understand the purpose of this business. In fact, Cyber Agent decided to invest in us in just two weeks.
What do you think are the obstacles Japan has to overcome in order to build ecosystems where ventures can grow easily like in Silicon Valley?
Masa: In Japan, I think it’s important to boost VCs’ ability to support ventures adequately. VCs in Silicon Valley have excellent business development and recruiting ability. If startups get funding from prominent names, those VCs support the business all-round including head-hunting excellent talent from other firms, or concluding alliances. Anything, so that the business they invested in will succeed.
VCs show their guts and effort through this. They are taking risks by paying a portion of the funds out of their own pockets. I guess once this “letting the VC step in this far” culture becomes the norm in Japan, more ventures will find it easy to grow here.
Tell us about your future vision.
Masa: In Japan, I’d like to nurture the local currency business as our main business first. Regional revitalisation in rural Japan has been booming lately, but I think it’s difficult to see a true revitalisation with regional independence in today’s situation where there is a single currency controlled by the central bank. When thinking about financial systems in the future, it’s important to think about how to create diverse economic spheres where various currencies are circulated.
Actually, in the Edo era, that kind of idea of diverse economic systems was practiced. Unlike today, each Han (municipality) was independent from the Edo Shogunate (central government) and they maintained their own small economic spheres by using unique local currencies called Han-Satsu. I believe one of my missions is to communicate with municipalities and key persons in the local banks and let them know the importance of having their own currency – avoiding economic enclosure from the central government to prevent weakening their local economy.
