Interview with Ted Katagi, Founder & CEO of Kenja

Welcome to ChainTech, the show and podcast focusing on the latest trends in supply chain, procurement, and logistics technology. My name is Max Henry from the Global Supply Chain Council, and together with my co-host and special guest, we explore the personalities, startups, innovators, and industry players driving disruption in supply chain. From early stage to unicorns, And from cutting-edge technology to the people using it to help drive more innovative, agile, and resilient supply chains around the world. This is ChainTech. Hi everyone, welcome to a new episode of ChainTech. I'm your host, Max Henry, from the Global Supply Chain Council. Again, very pleased to have you joining us for this new show as we continue some of the most interesting chain tech founders and discuss the rapid rise of supply chain logistics and procurement technology in Asia. As we jump into today's conversation, I also want to remind you that we have our chaintech.net platform that you can visit where we curate a number of supply chain tech solutions. And if you're interested to watch also the previous episode of the show, you can go to gentech.show. Today I'm joined by one of our founders who's been following us for some time already. I would like to introduce you to Ted Katagi, who is the CEO of Kinja. Hi, Ted, how are you?

Hi, Max. Nice to meet you and all your listeners as well.

All right, so let me— we get started. I just would like to maybe start with your background. If you could share with us, you know, a little bit about your childhood, did you study? Where were you born? And give us a bit of background of you, you know, the early, of your early age before you actually get started and, you know, and work here.

That could be a very long podcast, but I'll, I'll try to keep it short. But I was actually born in the States and raised by Japanese parents. And so, um, completely speaking only English because my, my Japanese parents said, hey, um, we want to learn the language too. And so we're going to learn all, we're going to only speak English. Which was great for the first 30 years of my life until I moved to Japan. And I've been in Japan for a few decades now. And it's a little bit difficult at first because I didn't speak the language. But I stayed— I grew up in California. I went to school at Berkeley. I studied computer science. Went to work at IBM in the '80s when it was really a top place to work. And then I— I went to business school, Harvard Business School, and I went to Bain& Company as a general management consultant. Then I worked in telecom for probably almost 17, 18 years before I went to private equity briefly and then software. And then I started up my own company. So, it's kind of— I had a brief— many different things. In telecom, I was an executive, had a few thousand people work for me. I ran billion-dollar units for a number of years. Vodafone, and, uh, Fidelity, I ran their private equity group. So basically, that's, uh, I had a smattering of different industries, but, um, but supply chain is where my software, our platform that we developed, is, uh, is one of its focus areas. So anyway, that's, uh—

So what was the, uh, trigger point or, you know, the aha moment that you had, uh, in your previous job before you to actually motivate you to start Canjaya?

So the aha moment for me literally was when we saw this current user interface that we have. And I said, wow, if we could do an interface like that, bring that to life, it could solve so many different problems. And I couldn't literally sleep for a couple of nights, almost. Yeah, like I didn't sleep the first night and I barely slept the second because I was that excited about it. And so, I think when you have something like that in a lecture, sometimes you just got to grab it and go with it. So, that user interface is basically just taking content, putting tasks right against the content, and being able to see all the information flow that goes on behind it. So, I realize that could go into any program. It could go into an ERP system. It could go on a warehouse management system. Everybody needs a secure container that can be integrated with many things. So, that was the aha moment for me.

So, if you could just tell us in one sentence what Kenja is doing, if you could, you know, just summarize it.

Yeah. Sure. We're an IT solution company focused around visualizing trust for our customers and their consumers. And we visualize the trust by putting up a blockchain with a published website.

What problem are you solving with Kenja?

It depends on the industry, but for supply chain, the problem that we're solving is the problem of provenance. How do I prove that this is really from where we said it came from? And basically, the issue of provenance, it goes back to at the source, you have to have some sort of mark at the source. And we provide a blockchain-enabled technology that lets you track it and lets you add this information to a a publicly available website so that you have the best of both worlds. You're able to have the security of a blockchain. You're able to actually see this through a QR code. You can see the website around it.

All right. So let's go back a little bit on what's been happening with blockchain because I think our audience would be interested. When you talk about blockchain today, a lot of people will say, oh, you know, that was cool, but You know, the hype is over. You know, what happened to that technology? There's overall a lot of disappointment around the technology. So, what has changed today, 2023, 2024, and why you guys are doing something different? Because again, people have some kind of a negative feeling about the technology.

Sure. There's always a problem of a hype. They call it the Gartner hype curve, actually, you know, that people get really excited and then people's expectations are not met because it's overhyped. And then they get all disappointed and then the reality comes true years later. And this is what I think is the truth of blockchain as well, is that the problem is that we all understood that it solves a lot of issues on provenance and it does it in a very secure way. The problem on blockchain has always been on scalability and costs traditionally. So how do I scale this up so that it has many transactions per second and how does it get to a low enough cost? Now the problem is, I want to say that there's different ways to implement a blockchain. You could do a zero trust. In other words, I don't trust anything. You got to put everything on the blockchain, right? And that's what a lot of people are. But our philosophy is a little bit different, is we're saying, do you really have to do everything? So, for example, if I know this came from a top investment bank and this is one of our customers, do I really need a further to, within the bank to blockchain every single element, or can I just blockchain the last element? And as it goes out to the customer to show people on the outside, if you just do the last element, what we call last mile blockchain, it reduces the price by 1,000-fold. That's an example. If you look at the blockchain itself, several developments occurred that made it dramatically cheaper. It used to be proof of proof of work was the only way that they would say this blockchain is valid. Now, you can have proof of stake. There's other proofs that people have. But the bottom line, without getting too technical, is that it's cheaper for— much cheaper, on the order of 1,000 times cheaper than a year ago, a couple of years ago. So, when you're talking about 1,000 times cheaper, it also implies 1,000 times faster. So, you know, that The stuff didn't scale well because part of the reason why it was expensive, there's so much encryption going on that it would take time. But with so much less encryption now, it's basically moving much faster and much cheaper. So, I would encourage everybody, yes, there were a lot of disappointing projects. People are spending millions of dollars on POCs and all that, but for a 10th of the cost of that, sort of thing or less. POCs we can even do for, you know, $10,000. This type of thing is, it's the technology is now at a different scale. So, I would encourage everybody to look at it again.

What do you think are some of the biggest benefits that your solution is bringing, especially in the field of supply chain management?

Yeah, so, there's a couple of use cases that I'm really proud of. One is we're working with one of Japan's largest retailers. I would say that they— most of your listeners would know the chain. I don't have an agreement that we disclose the name, but it's— most people would know, and it's a convenience store chain. So, and they are one of Japan's largest retailers. But what they had was they have, let's say, more than 1,000 factories, of factories because they have a lot of private label goods. And what their problem statement was that they had an outside— and I can mention these— they had an outside ISO certification audit, TÜV Rheinland. That's one of our partners. And TÜV Rheinland audited all their factories. Okay, that's fine. And the problem statement that they had was that the auditing was all done on paper. And there was no way to actually prove provenance. There's a lot of issues in it. And what we did is for, I think, a very competitive cost, we got a system up for all their factories. And basically what it allows you to do is now see the quality within that factory. All the certification by TÜV is online. And the benefits for people is the buyers now can buy product not just based on price, but it's also based on quality. The consumer now can have a— not on all instances, but they can have a QR code, they can look at where did this come from. And there's a blockchain-enabled certificate. And this is what I was meaning by blockchain is that we don't try to blockchain every single element in the factory. That's expensive. What we— all we have to do is TÜV issues out a certificate and there's a QR code. That is what's on the blockchain. That's what I'm saying is a way that you can get it a lot cheaper. So, we show provenance, we prove provenance, we show quality, and it's visual so that people can actually see pictures of what was going on and controlled, of course, by the supplier of certificates of the factory, of anything that they want to show. So, that's the benefit to people. Full visibility of the provenance of the product and ability to now also take advantage of that for the buyers of the company.

Okay. So, beyond the retailers, what kind of other customers do you have and who are you targeting with Kenja?

So, beyond supply chain, we also have finance industry is one of the areas that are quite interested in our technology. Within finance, I'd say that one of our best use cases is compliance. And so, they have a bunch of documents that they ingest, and what they need to do is compare those across— we work with some of the largest banks, so they're looking at compliance documents and they have to then see what compliance controls have changed across their footprint, and they need to put that in. Now, the other thing that we've added in a very deep level is AI to our platform. And I feel like AI is a little bit like blockchain, is that sometimes people got a little burned if you went in and you see it. But we address the basic issues of of AI as well in this compliance use case. But before I go into that, compliance for finance, we do, you know, I told you about the convenience store chain. Another example in supply chain would be halal food for Indonesia. Another one would be coffee certification in India. So, working with the Rainforest Alliance. So there's a lot of good supply chain. Finance is probably the other one. And we even have some government and military type of applications because blockchain, as you understand, is extremely secure.

So a lot of work that you do relate around certifications, right? And making sure that those certifications are valid And authentic. This is your main focus, right?

That's right. And that's why compliance is like a close cousin to that. You can see that, right? I need to make sure that these steps were actually taken. And yeah.

And so when I think about compliance, when I think about, you know, those certificates, I'm also thinking about in terms of sustainability and CSR. Is that something that you also can do with Kendra? Can you, because a lot of companies obviously spending a lot of money on ESR and CSR projects and initiative, and they rely on this kind of certification as well from suppliers.

Absolutely. And Max, it's like you're doing a plug for our company. That's one of our things as well, the SDG. Actually, that same— the original catalyst for bringing us in the factories of that retailer was that they wanted to prove that there's no child labor in their factories because the factories, a lot of them are in China. So, SDG and greenwashing in particular is one of the things that is an issue with people is that I think most of your listeners will know, but the problem is not just to show that we're doing these things good, but how do you prove it? Everybody says, yeah, we're working with COP28 guidelines and all these things, but really, are you really doing it? And the problem is it's kind of a wild west. People are saying, are you using If you get into it, they have these carbon certificates that they're trading. And if you actually talk to real traders, they'll say, do you want real certificates or do you want fake ones? It's actually a question that people do. So, it's— there's a lot of shadiness going on. And so, what we— this is why we think that visual trust is such a big factor is that if I can see pictures of the actual supply chain, matched up with blockchain against it, then I'm saying, no, it's really, we have the proof on this and it really happened on these things. The other thing that provenance that we have that's a very interesting solution is that you can scan your inventory at different parts of the supply chain and every time you scan it, there will be a GPS tag that's added to the blockchain. And basically, this is how you make sure that you prove the provenance that it went— actually went through your logistics and not through a counterfeit logistics ring. So, a lot of this certification at scale with low-cost blockchain is something that I think is going to take over. And I have another interesting solution on this is that we're working with a company that does, let's say, yeah, I can just say it because it's engineered wood, you know, like a very high-tech wood. And what they realize is that their product needs to have a manual because it's so engineered, it has to be handled in a certain way. And one of the things that we can do is put a QR code on the wood. And, and that's blockchain. But the— I remember I was telling you the AI, the benefit is they would like to have that manual on the QR code. What does that mean? That manual code—

Yeah.

Put up, but the manual code, not just put up with a PDF, but you can talk to it. You can actually say, Tell me, how do I handle you? And it would talk back just based on the QR code. So those are the types of really advanced functions that we're working with. And it's possible on our AI technology is that what we've done is instead of GPT, which does all the— it is trained on the entire internet, it speaks fairly highly intelligently, but it doesn't actually get the facts right. And our that data room, we only base the answer based on what is loaded up in your local, on your local data room. So it will say, I don't know the answer when it doesn't know the answer. And that's the, that's, that's the interesting thing, a talking blockchain-enabled supply chain on any item in—

I wanted to ask you about your revenue model. You know, how do you charge? You know, how do you make money from your customers?

Yeah. So our revenue model is basically, it's usually, it's based on licenses per, you know, number of licenses you have, number of people that are using our license. So that's the number one license model. However, having said that, and there's also a one-time setup fee depending on how much customization. Customization, of course, is not free. We do that. If they do do a commitment for enough licenses, sometimes we throw in some of the the customization as part of the cost to get them over that first initial hump. But some people say, we're not about licenses, we only have 3 people, but we want to do a bunch of at-scale factories or a lot of transactions. So, we move to a transaction model in some customers.

Okay. I want to go back to, you know, the company itself. You know, in terms of funding, where are you? Have you raised already some funding and are you looking to raise more? What's your current stage here?

Yeah, so we raised some initial capital and we're 11 years into operations now. So, we're not a startup by any— that measure at all. But we've— we're proud that we've, based on just some limited seed capital, we now have a thriving organization that is bootstrapped largely. And now that we have, I want to say, you know, we have hundreds of customers and dozens. And when I say dozens of big logo companies, right? We're not in the model of doing the millions or tens of thousands or hundreds of thousands because we don't need to because we're focused on our limited you know, on our solutions for the bigger customers. And so, the funding right now is we are— we've raised some limited capital and then we're going into— some would say it's a Series B because it's more of that higher valuation and we've been in operation, we have revenues, we're profitable, all these different things. And then Since it's our first round from a venture capital thing, they want to say Series A, but we think it's kind of a fresh Series B, if you will.

Okay. Tell us about your team. How many employees do you have? You know, your engineering team, where they are, how do you develop the solution here?

So our proper team, we have about 25 employees, but if we, you know, add contractors and other definitions, you know, it's about 40 people. Of that group, we have about, let's say, about 12 people mostly in Poland, but we also have a number in the Philippines and a few other countries. But that's our base. And what I'm really proud of is that actually our retention rate is You know, in the high 90s percent because we have a very good group of loyal, loyal people. So, it's, it's great that we just had our all-hands employee meeting and I just, just seen a lot of really good talented people and we're very lucky to have them.

What has been the impact of the pandemic on your business and on how you run your business?

Well, the interesting thing is that the way we run our business has largely been remote from day one. For 11 years, we've been running mostly a remote company. Right now, we have people in Poland and another center, of course, in Japan. And we get together in Japan once a week, but most of the time it's remote. And so, that was even before the pandemic. We were like that. So, kind of work style, I felt like everyone learned how to work like we do already. So that was kind of interesting. So the pandemic didn't impact our work style. I want to say it kind of helped business. It wasn't like this, but I think in general it was better than not having, because people finally had to go remote in Japan especially. And they said, oh, this cloud software and all that, they're more open to the idea. But then again, the business itself suffered. So it's like plus and minus, kind of a little bit positive.

So do you think that Japanese companies have changed a little bit the way they run or they do business and the way they interact? When you talk to customers in Japan, are they more willing to talk to you on Zoom than before? Because obviously there's a lot of relationship building, a lot of face-to-face talk that you have to do with some of those large companies in Japan. So has anything changed?

Yes, I think they're a lot more accepting to online than they— than Japanese used to be. And so, I think it's still very much a land where people really enjoy the personal relationship. So, I'm noticing now that, let's call it somewhat post-pandemic, people are going out again and I'd say about 70% of the old behavior is there. But now the nice thing, the 30% difference is, yes, you can have a, let's do remote instead and people will be accepting of that. At some point in Japan though, they'll always want to meet in person. So that's just part of the business culture, I think. And I think it's still the same case that people are generally preferring to do at some point, they want to see who you are in person.

Let's talk about the startup scene in Tokyo, in Japan in general. Do you actually get to meet other founders which are part of startup and probably in the field of suppression, but it doesn't have to be in suppression. Do you meet? Do you talk to each other? Is there a lot of cooperation or exchange between different founders?

I don't think it's as well developed as a community as tight-knit as in other countries that I've seen. Japan, there's a number of hubs and I'm not really a member of the hubs, but there's a number of different startup hubs and I think there's cooperation there in pockets. I think there's a nice respect that people feel like as an entrepreneur in Japan, it's not the same as in the States or, you know, in other countries like Singapore where they understand a startup and there's a lot of prestige and everything else associated with it. In Japan, there's more of a question like, you were a successful business executive, why did you choose to start up your own company? It doesn't make sense.

Yes.

There's a little bit of that mentality, like, why would you do that? And I think that part of it, you have to understand Japanese psychology a bit, is that the Japanese will look at the downside more than they'll look at the upside. In other words, they'll say, oh, well, you could fail or you could do this or, you know, that's a lot of personal risk and there's no upside of like But if you succeed, there's this huge big thing, right? They don't need the upside. They just don't want the downside.

Yeah. So, being a startup founder is not as prestigious in Japan as it would be in other countries, right?

Right. There's a sense of like, oh, you're really trying to create change in the world, be a force for good, all those kind of things. You're ambitious because you're doing this stuff. You're more like, wow, you're quite a risk taker or something like that. Yeah.

Okay. I see it. What's your biggest challenge as a founder and CEO of this company right now? You mentioned that when you started the company, you couldn't sleep at night. So, I believe maybe today you also have some of those nights where you cannot sleep.

Well, no. So, the respect of the signature, there's good kind of not sleep at night, whereas like so excited. That's what I mean.

Yes. Okay. All right. It was an excitement back then.

I can't sleep at night because of the downside. But yeah, so the challenges for a company— and again, we're not a startup because I think there's an interesting thing about smaller startups or smaller companies or whatever you want to call that. It's kind of like looking at human development, right? Is that if you look at a 35-year-old versus a 38-year-old, Not a lot of difference, right? 3 years, right? But if you look at a newborn versus a 3-year-old, huge. 3-year-old versus a 6-year-old, huge, right? And that's the evolution. Now, being 11, you could say, wow, didn't you get past the diaper stage? And we have, right? No more of that type of stuff. But each thing, growth period has its own challenges. That's what—

Yeah.

That's what I noticed. So, you know, if you're, if you're just you and another co-founder, that's one set of challenges. That's really about do you have all the skill sets needed to run a whole company? That's very difficult, but that's true. Like literally you have to wear many, many hats. As you get a little bit bigger, you now have people in different functional roles and now it's a little bit more of an issue. How do you scale when you got great news, a new big customer came in? how do we bring that in? Because how do we bring that skill set in? Because I can't afford the guy full-time, but I still need a skill set like this. So, how do I do that? So, you learn how to— as you scale in the mid-levels, it's much more about how to get partners, the right type of partners to work with us. I told you about compliance. We don't really— we're not specialists in compliance, but we have partners who have you know, 25, 30 years of experience in compliance. And so it's more about bringing an ecosystem of players to any solution.

You've been working in the corporate world for a number of years. You started your company a little bit later than the typical founder. Do you think it's a good thing? Do you think it's better to start when you are older rather than younger? And is age today an issue for you? Because obviously, when you are, I don't know how old you are, maybe 40, 50 years old, you don't have the same amount of energy as a 20-year-old, right? So, is this an issue for you?

No, well, so it's a complex, there's so many things in life that you say, this is good or bad, you're kind of saying, right? But it, and I know it sounds like a cop-out a bit, but it depends, right? So, for example, if you're going to run an enterprise B2B business, do not be a 20-year-old, you know, 20 or 30 because you don't have enough experience in enterprise to understand how enterprise thinks and what's required. And so, from that standpoint, I'm really glad that I started our business later in life, right?

Yeah.

So, that's good. Some things I didn't really think through, but it was true, is that your peak earning period is like when you're late 40s, early 50s. And I started the company when, you know, in that age range. So, I'm like, okay, it's the opportunity cost of that. But, you know, you don't— if that's the reason you're starting a company, then I'd say don't start it because it's It's not the financial short-term rewards for sure. And even the long-term rewards, it's not that. It's more you start a company because you want to. It's in your— it's something I've always known I wanted to do and you have to do it. And if you got to scratch that itch, that's the only way to do it, right? So, the age depends on what type of business. I'd say B2B is later is better. Yeah, because the biggest thing I think, you got to know your customer. And knowing your customer means being the customer is the easiest way to succeed at that game, right? If you actually were— and that's why we focus on enterprise because I understand the enterprise customer and what— and the reason why I founded Kenja was I was really frustrated because like, why does it have to be like this $10 million, you know, tag from this big SI? Or why does it have to be this $5 million thing? Why can't I, I, you know, I, I learned some coding when I was in college. I was like, it shouldn't be that big of an issue. Can't we do something for $50,000 or $100,000 that can do that? And that's the sweet spot that we're, we're addressing is you have this big system, all big, big companies have it. Can I get this one spot that I wanna bring a visual trust to that one spot? Right. And, and that's, that's, uh, Anyway, that's the thing I think we're solving for people and what I wanted to do as an entrepreneur that wasn't done before.

How do you see your company and your solution in 3 to 5 years from now?

In 3 to 5 years, we have a number of different solutions that are ready to scale now to a large number of people. So, halal food is one of them where we're now talking in many different countries about how to introduce it. And halal food, I mean, that's how we got into coffee certification too. It's basically the steps are very, very similar and the problem statement is very similar because you have intermediaries that need to be certified, right? And so, basically because these are similar, I see us scaling that. Solution. And I see us scaling compliance, which seems totally different. But again, all I'm doing is certifying steps along a certain activity chain. So, so what I see us 3 to 5 years is getting to, getting to a few use cases that are now at scale, and then also still providing that, that more customized solution experience for individual enterprises.

What would be your best advice that you can give to a founder, a new founder who's starting a company, especially in the field of technology and, you know, and supply chain today?

The best advice I'd give somebody is that you have to really understand why you're starting a company and you have to understand it's going to be much more difficult than you even imagined. And I say that because I think there's a fair number of light entrepreneurs that kind of dip their toe in the water and then feel the cold and they come in. If you really want to be an entrepreneur, you do got to jump in. But when you jump in, make sure you know what you're in for.

Right.

And so, I think that But entrepreneurs are a pretty tough breed, so I think that gets rid of only 20 or 30% of the people, so that most of the people still can't stay in it. The next thing I'd say is make sure you understand your product-market fit. They all say that. And understand what you're bringing to the marketplace. What's the value add of your solution? Because they could go Many people go anywhere for your solution. So, you have to have something that no one else really does well. And we have our own space that we developed over the years. And if you can get that compressed, then that's always a better thing, right? The time it takes to understand the product-market fit.

Okay. I've got some quick Just wrap-up fire questions for you, if you can answer very quickly. Cats or dogs?

Dogs.

Okay. Window or aisle?

Window.

Okay. Any movie that you've seen recently that you're really excited about? A movie that you really love?

A movie that recently I I really love. Well, my all-time favorite is Raiders of the Lost Ark. That dates me quite a bit. But recently, movies that I've seen, I haven't seen a movie in the past year, it seems like. I've been pretty busy. So—

Okay. All right. No problem. What's your favorite lunch when you're in Tokyo?

Favorite lunch in Tokyo. I think a good sushi place is great. But tonkatsu at Pride Park is also one of my favorites too.

And okay, what's your most used— yeah, yeah, go ahead.

Podcast. If you're interested in finding out more about Tokyo and you happen to be in town, send— Max, you'll be able to send my contact information. Send me an email.

Absolutely. Okay. What's your most used app on your phone right now?

Probably Slack.

Okay. What's your—

Chat, basically, yeah.

Okay. What's your favorite tool to build your company right now, except for Slack?

EnterVince, our own tool.

Okay. All right.

Slack is great at doing the communication, but you need the content, you need the context of the information. And you need a complement to that instant chat. You need some place to discuss a topic or to have the content around that topic.

Describe the rest of your life in 5 words. Where do you see yourself 10, 15, 20 years from now when you are, you know, you got enough of Kenja and you just want to retire?

Well, so interestingly enough, I think AI is very much part of our solution. And this private AI is a great thing. But conversely, AI is a bit of a threat to society if we don't introduce it in the right way. So, I want to work with AI. At the same time, I want to protect it. prevent its abuses. And I do believe you need a control layer. And that's where actually the company— I didn't even talk about it, but that's where I'm going with it. And even in a pro bono post-Kenja life, that's still what I want to do because I believe that it's a great— it promises economic rewards beyond our imaginations. And it also could be, and I will say this, it actually could be an existential threat to humanity if we don't do it right. And that's why I think it's just an exciting thing. And you can't ignore AI. It's exponential growth. So we just have to look at the world we're in and be part of it.

All right. Thank you very much, Ted. It was great to have you. For this new episode of GENTECH. Again, it was Ted Katagi, the CEO of Genja, joining us today. Thanks again.

Thanks, Max. Really appreciate it.

Thank you all for listening. I hope that you enjoyed this episode, and we look forward again to see you next time. Thanks again. Bye.