How Bespoke faked AI until it actually worked (w/ Akemi Tsunagawa) | E2320

My time in Japan is sadly coming to an end for this trip. We had an amazing Founder University, uh, for 3 days here with our partner JETRO, and that is our second, uh, cohort. Good news, we're going to do a third cohort in January. If you would like to be part of Founder University in January, we're going to open up the applications on the 1st of September at founder.university. You can apply. And then we also had Angel University here in Tokyo at JETRO's special meeting space. And this time I think we have close to 20 angel investors. The angel investor community is growing here in Japan as the number of startups grow and the opportunity grows. And as part of this, we have Founder University here, we have Angel University here, and I like to tape a couple of episodes of This Week in Startups while I'm here for the English version of This Week in Startups. But I'm considering trying to find a host and a partner to do This Week in Startups Japan, the Japanese version, and maybe even to cover some of the other great startup centers around Japan. And as part of that, I asked my team to research some of the great founders. And today, I'm very happy we have Akimi Soagawa, and she is the founder of Bespoke. And she has 3 very interesting businesses here in Japan working on workers coming here in Japan where there is a labor shortage.

Yes.

Yeah. So welcome to This Week in Startups.

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You've been an entrepreneur here doing this startup for over 10 years. You started with a business, uh, Beebot, where you were doing a multilingual chatbot. That business did very well. Yeah. And, uh, had good revenue.

I would say so. Otherwise you wouldn't have founded two more businesses, right? Right.

So that business did well and visitors who are coming here can talk and on different websites for governments and get prepared to come here. 60 million tourists come here every year and that's increased a lot over the last 10 years, hasn't it?

Yes, it has. When we first started back in 2015, tourists were not like, you know, everywhere. Like today we walk around the street and it's very difficult not to see any tourists, right? Back then it was not like that. So when we first started offering the chatbot service to help non-Japanese people traveling to Japan, people thought we were crazy. And this is also the time before like all the ChatGPT and, you know, GenAI came out. So investors did not think it was a good idea.

And why didn't they think it was a good idea? What was your insight that was working that you believed in it and why didn't investors see it?

The thing investors did not believe in was like how people would communicate with AI when they need help. Because back in 2015, AI was not popular at all.

Yeah.

And then there were, there was no other chatbot service out there that people were using like actively. So they did not think it was possible technically and then also culturally. But then like we did a lot of test run, right? Yeah. We also had human, including myself, chat with people pretending to be a bot.

And you faked it.

Yes, we faked it. Yes. Multiple occasions.

Yes.

This is important. You have to do things that don't scale, as Paul Graham would say at Y Combinator. And it's a good insight to have the human in the loop because you learn. And I think you learned that there was a market for this and people were starting to come here. But the Japanese culture is inspiring, but also for people coming here can also be intimidating. It's a tough language to learn, and, you know, maybe going into a store or getting a visa or planning a trip, getting a taxi, it wasn't as smooth in 2015 as it is now.

Correct. And then things got even more interesting after 2017 when Narita Airport signed us.

Oh, wow.

It's one of the largest airports here.

Haneda and Narita.

Yeah, exactly. And then Narita came to us and they said, look, people are lining up at the information counter and our people keep quitting the job because it's stressful being yelled at in Russian, Korean, Chinese, all sorts of different languages. These workers like didn't speak multiple different languages, right?

Right.

So the airport came to us and they said like, hey, look, if you can automate the communication between hotel guests and hotels, you should be able to do that with the airport much easier.

Yes. So it's stressful to travel. People are cranky. They came here on a flight and maybe their luggage is lost or they don't know about their connecting flight. And so you send them to a web interface they get on their phone and they can chat in whichever language. And this is before Google had their product, or did you partner with Google? How did you do the technology?

We actually made it all in-house. Crazy, huh?

Yeah. Well, I mean, it didn't exist as a service, so you had to build it. So let's talk a little bit about tourism and then we'll go into your two other businesses because it's a good opportunity, I think, for entrepreneurs who are listening to This Week in Startups to, from first principles, your experience looking for problems that you can solve because of things changing in a society, right? So one thing that changed was so many people coming to Japan, and not just coming but making a yearly trip or coming back over and over again. So now 60 million people coming. Why do you think personally, and through your data, why do you think Japan has become so popular?

There are multiple reasons, um, Of course, like the big factor is the weakened currency, right?

It is a big driver.

I think it is a big driver. Japan used to be an expensive destination a long, long time ago, right? But now I think it's one of the cheapest, like the most affordable destination. You still get high quality.

People are delighted to come to something that's extremely high quality at a very fair price. What you would pay for an average good in America in a New York City, San Francisco, you can get a luxury experience here.

I think so. Money is not the only factor, but I think for larger audience, like the average tourist, it is a big factor. Yeah.

And then after that, food, shopping, culture, beauty tourism.

Exactly.

There's so many things people come for. Also skiing has become very popular, I understand.

Yes.

There are some cities where it's too popular, huh? And maybe some of the— and I've seen this firsthand in Niseko— there are some cultures, Japanese culture very specific, and some cultures may be a little bit loud or different, and there's a little bit of tension. Maybe people don't know how to behave when they're— be respectful in Kyoto or on a lift line in Niseko, or how to behave in a restaurant. Yes, yeah, maybe you could talk a little bit about this tension because I understand also maybe some restaurants, uh, don't put their name in English and try to hide the restaurant so only the locals come. Yeah, it's true.

It is completely true. So overtourism has been a problem not just recently, it's been a problem probably even about like since 2017, 2018, uh, when we saw like the surge of tourists. So one of the trigger before Japan became popular was the government's decision to loosen the visa requirements for non-Western tourists to come in because they're the major, like, tourists, right? The majority of the tourists. So that was the beginning. And then, um, the whole manner thing became a problem. So some restaurants were like— even ryokans, like the Japanese inns— like, they've decided not to take any non-Japanese tourists, which is bizarre, but they do have their own reasons of like not accepting. But then there are like, there's also like majority of like other shops and like hotels like welcoming foreign, like non-Japanese tourists, and that has also become major part of the businesses, like the profit.

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Take off your shoes when you enter ryokans. Um, that's the first thing. Second thing, maybe talk slightly softer, more quiet when you're surrounded by a lot of people.

Um, I'm still practicing. I can— I'm trying. I'm from Brooklyn. We talk very loud, so I've had to adjust, right?

Here you can talk as loud as you like.

Yes, here on this podcast. I went to a listening— one of my new favorite things to do is, um, they have a vinyl bar. I'm sure you've been to one or you know it. So we went to the vinyl bar and they were playing beautiful music on a very old stereo system and we're drinking very nice scotch, having a nice cocktail. And my friend who was with me, she's very loud, louder than me. And you're supposed to be there to listen to the music. And in America, people are very confrontational, very blunt. They will tell you, shut up, you're talking too loud. In Japan, she was talking too loud. And so the hostess came and she said, "Please enjoy music." And my friend was like, "What was that about?" And I said, "You're talking way too loud." So she calmed down. She talked a little bit lower. Then she started talking loud again. The woman came back, "Please enjoy music quietly." Now, oh, okay.

And she got it.

Yeah. So take your shoes off. You don't have to talk super loud.

And then the third thing.

Yes.

Except things are different.

Yes, things are different.

A lot of difference here. Some people appreciate it, other people get frustrated, but it's different for a reason, right?

I had to adjust. Being from Brooklyn, New York, if you want to get a table at a restaurant, you go to the maître d', the host, and you take a little bit of money. And you hand it to them and say, oh, thank you. If we have like 4 people, if there's anything you can do. And in Japan they say, oh, you should make a reservation next time. And they show you the reservation link. And I said, yeah, and they don't know what to do with the tip.

They give it back to you.

They hand it back to you immediately. And just it's very confusing or maybe even insulting.

Right.

And so you have to understand it's not personal. There's a rule at the restaurant. And one of the rules might be everybody has to order a drink and some food.

Yeah.

And that's because they're running a business. So it's a minimum spend kind of thing. So even I have to learn some rules. I can't buy a table. It's not for sale, etc. So now 60 million people here. Also, the taking of pictures, I think, is people in America think, oh, the Japanese people have selfie sticks, they take too many pictures. But then the Americans come here, and maybe they'll be in Kyoto, and there'll be some locals, and they try to take a selfie with them without asking and just be very obnoxious with the pictures. Yeah. And waiting in line properly is the other one. It's okay to wait in line, right?

Yeah. If you're traveling, you probably got plenty of time to wait in line.

Yes. So don't worry about it. Okay, so now, you identified this problem. Good business, great customers, and you solved some real problems. Then you found another challenge in Japanese society, which is the population has gone down a little bit, maybe 1% a year, 1.5% I think is the number.

So I don't have the exact percentage, but every year we lose population equivalent of Yamanashi Prefecture. That is around 700,000 to 800,000, and then this number would go up rapidly to 1 million soon. Like, each year we lose a population like almost like 1 million. So that is very significant.

It's very significant. And you have aging population, and it's a very affluent— they have money, they own some cases an apartment or another house, but there's so much housing stock outside the city that it can't even be maintained. All kinds of second-order impact to the population decline. And so we'll talk about maybe increasing population and why it's not happening. I have some guesses of why it's not happening. It might be because people aren't having babies. It's just a guess, but I think the population would go up if people had babies.

Yes, population can go up. You got me.

The joke didn't land. In order for the population to grow, you have to make babies.

Yeah.

Yes, but people don't want to, uh, maybe have babies or start a family. For some reason as much?

I think it's for obvious reasons, actually.

Tell me the obvious reason.

For us Japanese.

Yeah, tell me the obvious reason. Is it too expensive to have a family?

I think so. So having family has become a luxury.

Because it's too expensive in Tokyo?

Wages have not gone up as much as— it's not keeping up with inflation.

Ah, is there a government plan to make it easier to start a family? Whether it's tax benefits or maybe trying to raise wages?

Not just for the baby purpose. The government has been trying to pressure companies and organizations to increase wages, but not every company can transfer the price, right? So they can't just suddenly raise the service price to actually be able to increase pay for their workers. So it works in some companies, especially large companies, but not in smaller companies. The government has done some other things. There are, of course, tax benefits as well. But I don't think those are enough. In my personal experience, so I have a child. I never got married, but I have a child. And so I've been a single mom since almost 5 years ago.

Oh, wow. Congratulations. It's great to be a parent.

Thank you. But then because I don't have anyone to rely on, what I do is I take my child on every business trip that I go on. Wow. It's not— there are not enough child support type system here. I feel like.

So you have to bring your 5 or 6-year-old with you to every business trip?

Almost every business trip.

With no nanny or you have to try to find one?

So we try to find nannies like at our destination. So last month we got invited to, by Spanish government to be in Spain for 1 month for work. And I couldn't leave my son at home, so I took him with me and we found 3 nannies in 3 different cities in Spain. And yeah, he hung out with the nanny while I worked.

This is incredibly impressive to me that you're building this huge business and you're able to like take care of a child as well. It's incredibly hard. I have a partner and she's full-time raising 3 daughters and it's so hard on her. And we have some nanny support. Maybe this is why startups are important. If startups and stock options can provide greater wealth, then maybe having a family won't be as much of a luxury decision. It could be something that everybody can do more of. But The other problem is because there's not so many young people, you don't have the nannies, you don't have, uh, people working in service jobs. So you have to import people into the culture. Uh, Vietnam, Indonesia, Philippines, many workers coming here to work in construction and other service jobs.

Shipyards, um, hotels, restaurants, nursing, many different, uh, industries.

Yeah, at the izakaya, I took my family to an izakaya last night and it was, you know, like maybe half Japanese servers and the restaurants, but the runners, like the busboys, were all probably from Vietnam or Indonesia, I think. So you created Be Trained, a service to help train the folks who are coming from other countries. Yeah. And this is also another cultural issue because it's a very specific culture here for full-time. So not only are the Japanese people having to deal with 60 million tourists, you're having to deal with how many foreign workers are here now?

Oh, I don't have that number with me right now. I only know it is increasing very rapidly.

Millions.

Millions. Like, back in the day, so Japan always said no to immigration. So, you were— if you are a non-Japanese worker, blue-collar workers, then you're only allowed to— you're only allowed in Japan as a trainee. It was supposed to be a trainee thing, but some industries like went to the government organization, went to government, and they said, look, like, we simply don't have enough people. So the government decided to change the regulation in 2019. And now if you are— if you work in the list of like industry specified by the government, then you are allowed to come in as a worker, but you can only stay for 5 years unless you pass like certain exams. Then suddenly you can stay almost like permanently.

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Sure. So we do two different things. The first thing is to provide vocational training. So these workers don't speak Japanese. So experienced Japanese workers, let's say like wallpaper specialists, they only speak Japanese, right? They won't be able to train Vietnamese workers. So what we do is we send out smart glasses and then have the wallpaper specialist, like, put on the glasses and record how they do things. This person would be talking like, oh, here, there's a little hole here, so this is how you fix it, or like, you know, explain. Narrate. And then we take out the video, put it on our platform, just like YouTube, right? And then suddenly this This video turns into a training video in different languages. And then once you finish watching the video, each video, it generates kind of like a test, like a quiz. So you can, as an HR manager, you can verify the knowledge of the person, you know, if he or she really watched the video and understood the content.

So the training is part of it. Now, let me ask a cultural question. You have a kaizen approach in all trades, very high standards. And then people who are coming from an emerging country, maybe even a frontier market, I think Vietnam would be frontier, maybe, is I think the designation, or an emerging market. They may not have the same inherent training or schooling or discipline of the workers there that is demanded in Japan. I don't know if that's the case with Vietnam, Indonesia, or Philippines. I know Philippines have very good work ethic, work ethic, because I have two of them work for me as my Athena assistants, full-time two Athena assistants, like executive assistants. So very smart, very hardworking. But how is that you know, kaizen, obsession with perfection and doing a really good job. How is that translating with these workers? Are they able to hit those notes or not? Are they able to hit those, you know, real high performance?

Really depends on the company and industries, I would say. Like some companies really try. So for instance, they would upload videos of defects. Then every manager watches the video and learns here is how defects happen. That way they learn what not to do.

Right.

But then some other companies, they just get non-Japanese workers do very basic stuff. They treat those workers like—

Low level. Yeah. Do the basic stuff and then we have the high-level skill for the detail work.

Exactly.

More important work.

So it kind of depends on like how companies like separate, uh, division of labor, right?

Division of labor. Yeah. There's also, you know, when we look at cultural, um, assimilation and harmony in America, we have a term, the melting pot. Everybody comes and they put, you know, their ingredients into the pot, and hopefully everybody learns English and becomes an American. But there have been, been tension with maybe some folks coming to Europe or America, or perhaps here in Japan and not learning the language. And I understand there's been some, or there are some rule changes coming. I know in Finland and I think Sweden, they're now saying we could only accept a small number of non-English speakers because the school system for their kids and, you know, we just don't have enough people who speak the language who can even teach their children. So you have to learn Finnish or Swedish to go into that country. So here in Japan, not an easy language to learn, but a great country to come live in. So there should be some motivation. Tell me about the requirements that are about to change for people who are coming here to work full-time. I think permanently they come maybe for 5 or 10 years. I'm not sure how long the visa is, but there's a requirement now or coming soon. Tell us about it.

Yes. So there is a Japanese language test. That's been around for a long time. And then for some industries, like companies still would prefer to hire people with people who have those, like, you know, who have passed those tests. There's like N4, N3, N2, N1, right? N1 is like me. Like you speak perfect Japanese almost. But then now with the new changes, I suppose you need to have N4 to come in.

N4, which means you could order lunch or find the bathroom.

Actually, a little bit more than that.

A little bit more?

I think it was almost like you need to be speaking Japanese like a 10-year-old.

Like a 10-year-old?

Okay. Yeah, that is actually pretty good.

Yeah, that's pretty advanced.

Yeah, I hope I'm not mistaken though.

Yeah, okay, no, it's close enough. I think directionally correct. And so does that mean though that'll draw in higher-level workers because they'll have to maybe have more motivation or higher education level to learn another language to that level? Or is it going to just also help so those communities can integrate into society and not be two separate societies? You know, here's the Indonesians, here's the Filipino workers, and you know, here's the Vietnamese workers, but they don't, uh, you know, share the Japanese language and culture, right?

I feel like we probably need to separate two problems. So industry— so the government is probably thinking that way. Like, you can't just create, let's say, like the Vietnamese Village and they just hang out in that community. That won't work in Japan. Maybe in the U.S. it would still work to some extent, but not so much anymore.

Where I grew up in Brooklyn, you have enclaves, like little areas, and there's a Chinatown in Brooklyn and in Manhattan, and there's a little Saigon, and there's an Odessa for Russians. But so you can get away with not learning English immediately, but eventually you probably want to.

Yeah, right.

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And here the government doesn't want that situation to be created, so they try as much as they could. And then also it is city government's responsibility, right, for, um, kind of like making sure like non-Japanese workers won't create tension between the residents dense in that area. So it's been like headache for almost every city government that we meet. But on the other hand, companies and industry associations, they simply don't have enough people. You'll be shocked if you go to like shipyard or factories, there are just simply not enough people. Like these shipbuilding companies have orders booked for the next 3 years, and some of them used to produce, let's say, 9 ships annually, but now their production capacity has gone down so much, and then now they can only, only produce 6 ships per year simply because they don't have enough people. So I don't think these industry associations think about how these people, like, assimilating to, like, different culture and all that. Like, their bottleneck is the labor shortage, right?

So, and this is where government has to adjudicate or mitigate this issue for society because Yeah, in Japanese culture, to have 10 blocks go from Japanese culture to a Vietnamese culture or any other culture would be very strange. And the people who live in that area would be very upset. I know because on Twitter, X.com— are you on Twitter?

Yes.

It's very popular in Japan, right? I now— have you seen the feature where it translates English to Japanese? And then so now I have Japanese followers coming into my feed. And I start reading their posts, and immigration is a big— people are very honest on Twitter from their anonymous account how they feel, and they are very upset when, you know, 2 or 3 blocks go from being Japanese culture, now all of a sudden a different culture, whatever it is.

Yep. But then I feel like the reality is a bit like— have you seen a movie called A Day Without Mexicans?

Yeah, I've never seen it, but I know it.

Yes, I think Japan is kind of experiencing that today.

Yes, is, uh, they, they need to appreciate this group of people coming to help and then also still maintaining the culture. It's a delicate balance. How is Japan doing? If you were to look at it, you think is doing a pretty good job of managing the issue?

Um, we can certainly do better. Got it. In many different areas. For instance, the multi-language information is also one thing city governments could do, right? So the number one problem oftentimes occur in each area, like local area, is taking out the garbage. This creates problems like non-Japanese walkers won't follow the local rules because they can't read the instructions.

And the instructions are somewhat complex.

It is complex, yes.

Yes, I literally at my Airbnb, it was this big with tons of pictures explaining it. Combustible, not combustible, plastic with food on it, plastic without food on it. And trying to explain it is like, yeah, a little bit of work. There's a resistance to putting it into a foreign language, or it's just a burden for the local community to do that, I guess?

It's a bit both. So like locals would say things like they don't belong here and they can't even follow simple rules. Right. But then But city governments need these foreign workers so local factories can operate. So there's always tension.

Yeah, it's interesting tension. Now, there's a third business you discovered. There's a tension here, and the immigration is not going to solve the entire problem. It may take them from 6 ships to maybe not going to 5 and not going smaller, but it might not bring them to 9. But there's some revolution going on right now with human robotics and even non-humanoid robotics. So this is another area you've identified for a future product. So tell me about the problem you discovered and then how you're thinking about your third business line.

Sure. So now I spend half of my time inside chemical tanks at Shipyard.

Chemical tanks.

Chemical tanks. Yeah.

Very glamorous.

Yeah, thank you. Yeah, well, my work has never been more excited than this, really. And then when we first started offering the training solution to shipbuilding companies, construction companies, many different companies, they all appreciated the service. But then after a year or two, some of them said, there's only so much we can do with non-Japanese workers. Certain tasks need to be done by human, but not every task. And they asked, is there anything more that you can help automate? We're not a robotics company. We didn't think there was much we could do at that point. But then we actually spent more time, you know, speaking to these construction workers and shipyard shipbuilding experts. And then we, as we spend more time looking at how they actually do their jobs, we thought it might be a good idea to actually create a robot that can help automate part of the inspection that they do at shipyard.

This is a single task for a robot. It's a repetitive task. It's a boring task. Very boring, I think, perfectly suited for a robot. And then that robot can report into maybe one person. You could have 10 robots reporting into one person instead of having to fill those 10 positions.

Exactly. So one of the things that we looked into first was scaffolds. So scaffolds are everywhere at construction site, shipyard. And scary thing is, even though the law requires you to inspect manually every day before you use it. No company has resources to do so. Right.

So they may skip it.

They skip it almost 100% of the time. And then it does result in injuries and like severe accidents. In extreme cases, people could die. Yeah.

Very tragic. And there's no reason for it because you could, with a very simple robot and cameras, do a better job and you could inspect it 10 times a day for free. I mean, once you have the robot, an incremental inspection has got probably zero cost.

Yeah, exactly. At first we thought it was going to be very easy, but then we learned that like a shipyard or like plants, that's another segment we're trying to help. There are shiny metals, so the reflections make it very difficult. So we use B-DaM to solve that problem. What we are essentially trying to do is the robots climb up scaffolds by itself, grabs a joint, shakes it, and then record each joint is safe or not, and then send the inspection records to whoever is actually in charge of the inspection. So that person can come in and fix it before accident.

Right. And they could even take a video, I'm sure, if they wanted to, so they could pre-inspect it.

Yeah, exactly. But the next problem we encountered was because no one inspects scaffolds, it's not a sexy thing and it doesn't produce any profit, right, for companies. We spent more time interviewing them and learned there are other type of inspections we could also automate with the same robots. So paint thickness inspection at shipyard. Some companies that produce ship over like 200 meters, they would be spending more than 1,000 human hours to do the paint thickness inspection. They literally just scan the ship with a device like this. And then it's like, okay, this is enough. And then you scan, scan, scan. 1,000 hours. That can be easily automated with a robot.

At $20 per hour, it's $20,000. And every ship you have to do it over and over again. And probably the human could make mistakes.

Exactly. So there are like 3 other type of inspections we're looking to automate. It would be all done by one robot.

You know, it's very interesting when I hear your story and your approach. It's very similar to, you know, what we do in America, which is spend a lot of time doing customer interviews. Did you learn that technique from some startup book or is it just you understand, hey, hanging out with the customer and asking and being curious is the secret to developing great products? How did you learn this technique?

It was from the first business, the chatbot business. We didn't create a chatbot company first. When we first started a company, it was a simple— our product was just a simple website similar to TripAdvisor but local version of it. And then I have finance background but not like the product background. I didn't know what to do, so I just went to Shibuya Crossing or Roppongi Station, grabbed any tourist with a giant suitcase, asked a bunch of questions and user interview got us to the next business, which was the chatbot.

And some founders have a hard time doing this because they're nervous in front of other people. Right? So do you get nervous stopping somebody at a train station and saying, "Can I ask you questions?" They might think you're crazy.

I got kicked out of Roppongi Station many times. I also got banned from Meiji Shrine. Oh, wow. We also, when I got kicked out—

They put your picture up in the security office? Don't let her in.

The security guards all knew me, so I stayed away.

She keeps asking them how they could have a better experience in Tokyo.

It was a very strange thing, huh? And then we also ended up using like a dating app to source users. Because at the time there were like some known dodgy dating apps we could find all sorts of like non-Japanese tourists. So that type of experience helped me learn that actually speaking to the end users is the quickest way to build successful business.

Yeah. Any other startup hacks that you've learned along the way or stories of, you know, frustration that led to opportunity?

There are so many other things, but then my favorite one is when our chatbot broke down during Christmas holidays. That was a high season for us. We had high-end hotels as customers, and we had Narita Airport, Japanese government, all sorts of customers. And then after our engineers made update to our software, it just simply stopped working. So for the next 1 week, I was the chatbot. Wow. But then—

No sleep.

No sleep. I responded faster than anyone. And then during that time, we learned that human-like communication actually increases the user engagement. So we went back and then copied the whole user interaction between me and the users and then tried to implement the same type of conversation into our chatbot. And then suddenly the engagement has gone up so much. And then our chatbots became very popular even beyond the segments that we were trying to go after.

So you had to make the chatbot less efficient, more human, maybe a little more chit-chat?

Yes.

Interesting.

Because I used to think chatbot is just to answer question. You have a question and you want your question answer as quickly as possible. But that wasn't really the case with the tourism. And but then And we also have emergency response project, and then that works very differently. For that purpose, for emergency response, you want evacuation center address as soon as possible. So you don't want any chat chat, but different chatbot for different use case.

So just asking somebody, is it your first time in Japan? Or what are you looking forward to in Japan? Or something like that, increase their utilization and their NPS score, their happiness with the product?

It definitely did, yes.

Yeah, such a good insight. And what have you learned about raising money from venture capitalists who didn't understand the first business? And then you have gone into— I'll tell you what would seem to an investor as 3 completely different businesses, but I understand the thread each time, spending more time with customers, seeing the same problems around language and around work projects that are under-resourced. Each one is an under-resourced problem, right? They're trying to get a job done, but they don't have the resources. So you come up with a better resource. One better resource is an AI chatbot. Another good resource is video training, like YouTube-style video training and quizzes. Another technological source for not having enough employees is a robot. So you are trying to solve not having enough employees. Yeah, that's the theme.

Yes. And then actually, even technology-wise, there are some consistencies. So we still use chatbot for the second video learning business. When people have questions, then we answer. And then also we generate quiz of the videos. It's still like the text, right?

Yes.

And then for the third business, the second business does involve recording and video processing. And it's kind of similar for the third business as well because we still need to get people, workers put on the smart buses and record how they do inspections, right? Then we process the video and then create simulation. So it's kind of connected, but then it was difficult to convince investors.

Yes, one of my friends, uh, you know, built a rocket ship company, and then he learned a lot about materials, and he was working on a car company, and in the car company he learned a lot about batteries, and then the battery technology and stamping of metal from the, and building a factory for the rocket ships then informed how they built the factory for the cars. And then they needed energy and then the cars needed connectivity and all the material science he was able to apply to both companies. And eventually when I asked him or we were talking and he said, really, my job is just to make a machine called a factory. Factory. And that is what Elon does. Elon Musk, his job is to make a factory. And so that's his specialty. And the new factory is to make robots. And the other new factory is to make chips. But he's already made a factory to build rocket ships, a factory to build satellites, and a factory to build cars. So just, you're just building another factory, right? And so the tools, you know, they are going to be different, but the factory is a factory. Yeah. And so very, very interesting. What have you learned about raising money though in venture capital? And I'm assuming, I know you've raised a little bit of money, but are you able to build these businesses without a lot of capital or do you still need to raise a bunch of capital?

Right. So for the initial business, for the chatbot business, we raised about 450 million Japanese yen or so. The last round was back in 2020. So March 2020, like right in the middle of COVID And then we've been self-sufficient ever since.

Got it. So you've raised low millions of dollars, I think. I'm not sure what 450 million is in US.

Ah, so that's like 3 million US dollars. And then we also secured a lot more bank loans because we have a lot of government contracts. I learned along the way that like we can use the government contract as the collateral, which is much faster than speaking to investors.

Ah, so this is very unique. In America, very hard. The government or banks don't give loans to startups. They only get— in America, you know who they give loans to? Rich people. When I had no money and I was starting my businesses, the only the only loans I could get were American Express and Visa, and they made you give the money back 30 days, 60 days later. No banks would give you a loan. And then when I made some money, the banks would call over and over again and say, would you like lots of loans? We'll give you as many loans as you like, and we'll give you, you know, 2% interest, 3% interest. If you want to buy a home, we'll give you no interest, only interest payments for 5 years. 10 years, just interest, then you pay principal. And anytime I wanted to buy a house or anything, they just give you a loan because you had some assets, uh, and they just made it so easy, right? And it's kind of backwards. The, the rich people don't need the loans, they have assets, and it makes it easier for them to increase their assets because they don't ever have to sell an asset. They can keep their stock, they can keep their homes, and they can keep appreciating and they get loans against it. It's a very big problem in America where we really do need to give, you know, small businesses loans, but the problem is they can default on it.

Right. Here, as long as you're profitable, you can secure loans. So it's a bit difficult for startups, but as soon as we turned profitable, it was quite easy.

And what do they base it on? They look at like, oh, if you're making $1 million a year in profits, we'll give you $2 million, or is there some like ratio? How do they— did they actually look at the contracts and make sure they're like a strong contract?

In our case, they demanded the government contracts and then the loan they gave out was equivalent to the amount of the collateral we provided.

Ah, so if the contract was for $1 million, they'll give you $1 million.

Exactly.

Would they give it to you for the life of the contract or just in advance, or do they give it to you for a little longer?

For the short-term loan, it's only until you get paid, but for the long-term loan, The longest we have is 10 years.

Amazing.

Yeah. And then it's like 1% interest rate or something.

So beautiful. Oh, wow. So, you know, this is interesting. There should be more startups and— but I understand the goal of getting to profitability now. Getting to profitability means you don't have to sell your equity, so you get to keep more equity as the founder.

Correct.

Well, this is good. And then so what is the outcome for your business? Do you aspire to just keep growing here in Japan, or do you think, hey, maybe I should go to other countries and apply this there? Because in the Middle East, in UAE, in Qatar, in Saudi, they have the same exact issues. The society is growing. It's very— the society needs workers, and there, you know, you might have 500,000 Qataris and a million immigrants. So It's like 2 to 1 immigration, but they have the same issues around training, around integration into life, and just not causing friction in society. So have you thought about expansion plans globally, or you have so much work here to do?

We have thought about it. And then right now we think at least for the next 2 years or so, Japan is the hottest market. So we want to get to the point where the robots are working and we buy a couple of factories. And then try to kaizen those factories.

Yes.

And then we take that model overseas.

Just to give you a little bit of credit here, you want to go from building a chatbot to building robots and having your own robot factory.

So we'll buy, let's say, like a small shipyard and then deploy our own robots to show them how efficient it could be. There are successor problems in Japan. So there are many companies that go bankrupt here are actually profitable. They simply don't have successors.

That's amazing. So I just want to make sure I understand. There are profitable businesses that go out of business because they don't have somebody to give the business to.

Yeah, not bankrupt, exactly. Just they go out of business because they don't have anyone taking over the business. They have no kids to take over the business.

Oh my God, it's such a big opportunity.

Younger generations don't want to be factory owners. We want to be factory owners.

I want to own a factory. This is a great idea. Wow. I want to invest in this company. Go buy factories. And what would they charge you if you are the person retiring? What would they charge you to buy their factory? Like 1 times revenue, or they're just happy to get anything?

Could be lower.

Could be lower.

Yeah.

So you could even— maybe they give you owner financing too. Would they give you owner financing where the owner sells it to you and then you give them money every year for until it's paid off? Or do you have to go to a bank and get the money?

I think it depends. Depends on the term.

Yeah. This is an incredible opportunity. It reminds me when I go out to go skiing in Hokkaido, there's a bunch of Americans now on Instagram and they were telling me, you know, 6 or 7 years ago when I started skiing there, Oh, you know, you can get a house here for free or for $1, or they'll just give it to you if you pay your taxes and you keep the house from collapsing, because all the houses outside of Niseko and in the countryside, they just keep collapsing because too much snow and nobody's lived there for 10 years or 15 years. And so these young kids from America are coming here and they go renovate the houses in the countryside., and then they rent it during ski season, and that's their revenue stream. And then they talk about it on their Instagram accounts, and all these people in America now want to come and have a countryside house and, and rebuild it. It's a very interesting phenomenon. It's an incredible opportunity.

Yeah, it's everywhere in Japan. I think every city you would go to, like outside of Tokyo or metropolitan area, they have exact same problem.

And it's because young people can't find work there, or they just want to live in the city because the city is so much fun and convenient and so great?

So when kids turn, let's say, like high school age, like they— maybe oftentimes there is no high school in that area, so they already leave their town to go to school in a city, or like maybe university, right? Once they leave, they don't come back because there's no job Wow.

So all of those towns are getting hollowed out. They're turning into ghost towns.

There's so many of them. Yeah.

So this is what happened in— I made a friend out in Niseko in Hokkaido. He found an old ski resort. There's hundreds of ski resorts in Japan that are abandoned as well. And he convinced the local town to let him take over the ski town, the ski resort. But all the lifts were broken except for one. So the one lift is available to the locals, the remaining locals, or anybody Japanese who wants to drive out or take the train. And then the other ski routes, he has like a cat, you know, like with the tracks. And he drives people to the top to ski one run every hour. So you ski 7 or 8 runs, you know, you can do it maybe 45 minutes to an hour. Depending on the length of the run, drive up for 15, 20 minutes, ski down for 10, 15 minutes, do it again, do it again, do it again. But he had to convince the local town to give it to him. So incredible opportunity, I think. AI is allowing you to do more with less employees. Are you playing with these tools with agents, Claude Code or Claude Cowork? Has it infected your company yet to make you build products faster?

So yes to all of those questions because we've been doing AI since 2015. We, of course, you know, adopt many different AI tools in-house. Half of our team is actually non-Japanese. We have 65 people, but more than half is actually non-Japanese. And on the engineering side, every single person, of course, uses Claude, many different services. So in fact, last year when our German— Germany engineer had to move back to her country, we didn't replace her because we just decided, hey, like everyone can use AI agent. Like the code review is now faster and then there are things we can still improve in the process. So instead of like, you know, spending extra efforts to hire, train and manage the person, why don't we just like, you know, get everyone learn how to code with AI.

So it's very interesting. We're now asking our startups to teach us as investors in their companies when they are going to consider a new hire, how do they make the decision to hire a human or automate with AI, right? And so we're seeing many of them where, you know, at a certain point of scale, like 60 people, you might go, hmm, we need to have 3 accountants, we need to have we have 3 people in HR and, you know, this type of thing. And, you know, maybe 3 people to do meetings and scheduling and assistance. And now people look and go, huh, I think we could have one person who builds, you know, the HR department. And if you write a job description now, have you used AI to write a job description recently?

All of it. Yes.

And it's mind-blowing.

It's so much better than the ones we used to write.

I've had this conversation now with like 3 or 4 founders where we all had the same experience. I've been writing job descriptions for over 20 years. I've hired people and I used to pay them $1,000 or $2,000 to write a job description because the right job description could, you know, get 10 times more applications. And then I started asking Claude and it had access to our Slack, to our Notion. To our Gmail and it would incorporate things from the company for that position. And then I would ask it in free-flowing. I use a microphone, Whisperflow, to just talk about what I want the person to do. And it structured it so perfectly. And I wonder to myself, how can it make such a perfect job description better than I can? And it's so obvious. There's so many message boards online with jobs.

Yep.

And they've all been indexed by the AI companies.

Exactly.

So they actually, there's never been a human who had all the job descriptions in the world in their brain. And now AI has every job description in every country, in every language, in, and it's crazy, like what it can do. So amazing.

So we do rely heavily on AI to do pretty much everything, like every job in the company is now done by AI. And sometimes I even wonder if I— if the company still needs me.

I think it's a lot of people who are in the management positions who their job is to make everybody at the company better. Well, the AI understands everything they're doing. It has perfect insight. So I have been thinking about creating a second CEO, like, but that CEO has access to every email of every person in the company at all times and can know every Slack message and everything they've ever done so we can give better advice. So that's what I'm working on right now in my company is I had everybody connect and ask Claude Cowork, give me a summary of my week on Saturday. Based on my Gmail, my Notion edits, my Slack messages, uh, and my calendar. And I used to have the human do that. Tell me at the end of the week what you accomplished and then tell me what you're gonna do next week. The AI does it. And then the next phase is to ask the AI, what should I be doing? What should I do next? And that's the question we always ask ourselves as CEOs or leaders. What am I supposed to do next? And the only way you figure that out is either by meditating on it. If I go skiing, I can and maybe figure out what am I supposed to do next. And well, it's your choice, right? You're the main character, so you get to choose what do I do next. But, you know, do you have a coach, like a CEO coach? Do you have one?

So my number 2 person at work is almost like the CEO coach. He's got a little more experience than I do. He's American. We imported him from the US.

Oh, good. And so he can give you coaching and this kind of thing. Yeah. So this is what I'm thinking about is, hey, what did I spend I spend my time on? Was that the highest use of my time? And what else can I do, right? And what should I do? And I'm trying— do you guys use Slack? What do you use for Slack? Yes, this is, I think— and you've been using it for how many years?

11 years.

Yeah, same with us. We— so we have the entire knowledge in Slack. But do you have the Enterprise Plus version or the regular version?

Enterprise Plus.

So like, it's very expensive. So with Enterprise Plus, You can see every DM or every like group people chatting. You have full access. So now that you can connect the API to it. So I just upgraded this week. I've been working on it and I'm going to ask it just to look at the history of the company and make a timeline and say, what could we have done and how should that inform what we do for the next 10 years? What did we do for the last 10 years? What could I have done and the whole team done better? And then do forward. Have you connected like and created like an oracle, a god, a Slack god yet?

We haven't yet. We're still carefully evaluating because part of me feels like we shouldn't be going through some of the messages, even though I am not going to personally go through them.

Yeah, I think you have to let— I let everybody know at the company, even DMs, everything's recorded because we're a finance company. Of course, in a finance company that exists, this. So hopefully employees aren't complaining about the boss in DMs.

There's—

hopefully they're smart enough to do that.

So your people laughing, are you?

Please don't. I don't know, are you guys, uh, no? Kavya's like, nope, I'm smart. We do that on Signal. We complain about the boss on WhatsApp, disappearing messages. But I think this will be the big unlock is to have the oracle doing it. So, um, but I've been thinking maybe there should be a new Slack, like, um, a more open-source Slack. Or I'm thinking about maybe having Cloud Code or building our own version of open-source Slack kind of thing that is made for this purpose. Like, what should we do as an organization? The other thing that's pretty crazy is one person on my team said, um, you know, there was this person who was at the company for 7 years, this person who's 5 years, this person retired, this person went would you like me to recreate them?

Oh, genius idea! I haven't thought about that approach. So genius idea.

It's genius.

Then you don't need to rehire them.

Well, you can go— exactly, you don't have to rehire them. Or if you have a question, you can say, ghost of Jason, um, what happened in the first 5 years of the company with these 3 investments? And it goes 'Ah yes, I can tell you the conversation I had with that person.' So it's like, uh, Luke Skywalker being able to talk to Obi-Wan Kenobi's ghost. You have a ghost Jedi, you know the movie? Yeah, where they come back as like Force ghosts. So I thought, well, this is incredible for continuity. Then I was like, do I need the permission?

Uh, do you need permission?

I don't think you do.

The person's no longer with the company, you don't need permission, right?

But to use their name and likeness Yeah, you kind of need a permission.

Maybe you change the name.

I think you have to change the name. Like if it was Jason, we call it Ghost Jason.

Is that enough?

I don't know if it's enough or not, but it's going to be a brave new world. Okay, listen, Akemi, it has been incredible to talk to you. Let's give her a big round of applause.

Thank you.

I'm very interested in your business, specifically buying factories. This sounds like a really Hey, I think you should raise money to do a factory roll-up. Oh, so exciting. All right, we'll see you next time on This Week in Startups.

Bye-bye.