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Why this startup is better off in Tokyo than in Silicon Valley

gengo-founders-matt-robert

The story of Gengo’s Robert Laing (CEO, left) and Matthew Romaine (CTO, right) is a source of inspiration for many gaijin (foreigners) building a tech startup in Japan. As I sipped my green tea, Laing and Romaine told me how Gengo started. Their story is nothing short of amazing for a Tokyo-based startup. While Silicon Valley is great, Tokyo ain’t that bad after all.

“If we were in Silicon Valley, we would not have come up with the idea,” said Robert.

(See: The magical Silicon Valley effect)

Robert and Matthew first met in Tokyo where both of them were running their own web agency business. Robert, who was learning Japanese back then, thought it would be great to build an online crowdsource translation startup. Matthew, who is fluent in Japanese, was sold. In 2009, the duo agreed to work on it.

“In Tokyo, we found more people who understand the idea,” said Robert.

Tokyo, a great place for startups

In September 2009, Robert and Matthew raised $30,000 from friends and family to kick start business. It was then followed by a $760,000 financing round which was raised in January 2010 thanks to 500 Startups’ CEO, Dave McClure, who gave the entrepreneurs $10,000 to travel to the Valley to raise more money. Later in the same year, Gengo raised $900,000. In September 2011, it raised $5.25 million from Atomico, followed by a whopping $12 million in April 2013.

While that reads easy, it wasn’t simple at all. “2010, 2011 fundraising was tough. The ecosystem [in Japan] doesn’t really exist. The inspiring thing, I think, is that Gengo is able to do this, so we can be at the forefront and other companies can find it easier to raise money. The bad thing is that we have to be the first,” said Robert.

With a war chest of $19 million in total funding, Gengo stayed put in Tokyo. Many other Asian startups would have dived towards the Valley as the land promises more capital, talent, and opportunities.

“I think people who are outside of Silicon Valley are: (A) they idolize Silicon Valley too much and (B) they think that it is so easy to hire a great team at Silicon Valley. There are a lot of great people there but it is also very expensive,” said Robert.

Matthew added:

There’s a deeper tech talent pool out there. But there’s also a lot of exciting startup opportunities as well so trying to win them over is going to be a lot more difficult. The turnover rate is also very high.

Whereas in Japan, you will find a lot more loyalty. It works both ways. If you find someone you really like [because] they are very loyal to their current company, it takes more time to win them over. But they will apply the same loyalty to your company as well.

Being based in Japan also gives Gengo an interesting advantage in attracting international talent. There are always talented people who want to work in an international company and who want to experience the Japanese culture.

(See: 7 characteristics of Silicon Valley you won’t find in Asia)

Of course, not everything is shiny in Japan. The ecosystem here (though relatively better than Southeast Asia) isn’t great compared to the Valley. Being a Tokyo-based startup also means that both Robert and Matthew have to travel a lot, but that also forced Gengo to be an international company right from day one.

Click, boom, amazing

gengo-screeny

The struggles paid off. To date, Gengo has translated over 150 million words. Some of its clients include Alibaba, YouTube, Rakuten, and TripAdvisor.

Gengo prides itself on being speedy too. 95 percent of all translations are picked up in under 200 minutes and over 90 percent of all Gengo’s crowdsourced translations are done within 24 hours. If you think that is fast, Robert says that Gengo is planning to “halve the time in six months.”

As the internet better connects the world, the demand for language translation grows exponentially. 75 percent of website customers come from Japan whereas for enterprise sales more clients come from the U.S. The language that users translate most is from Japanese to English. Robert declined to reveal Gengo’s revenue figures but did say he is seeing a lot of demand from ecommerce companies. Some of its clients could spend up to a million a year on translation. He said:

The thing about translation is that people are getting smart about ROI. If someone translates a page, they can measure exactly how much revenue they can get.

Besides expanding its sales force, the founders who are geeks at heart are always looking for ways to upgrade its crowd management system and technology. For example, the Gengo engineers are now making it easier and faster for translators to translate, adding features such as spell check and machine translation assistance.

“There are millions of jobs coming through the system. We need to make it more robust, more enterprise scale,” said Robert.

“A lot of technology that we build, you don’t see it. We have a saying in Gengo — Click, boom, amazing — What’s amazing to us means the speed and quality of Gengo’s translation.”


Join us at Startup Asia Tokyo 2014 this September 3 and 4. Get 25 percent off with the SuperEarlyBird code when you get tickets here. Hurry because the discount ends on June 6.

Editing by Charlie Custer

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