Japanese startups are missing a killer app – foreigners

Startups are supposed to be free from societal norms. They are meant to be places where like-minded people are gathered to spend an enormous amount of time and energy to deliver the Next Big Thing to consumers. They are, to paraphrase Steve Jobs, where the round pegs who reject the square holes gather.

Assuming the same holds true for Japanese startups – and after meeting a number of them, I’m inclined to say it does – why are they lacking the most obvious round peg of all – foreigners living in Japan?

Tokyo has plenty of startup events, from informal gatherings, to pitch contests, to full-blown conferences. Short of a large conference, however, it is rare to find foreigners in the audience and even rarer to discover that they work for a Japanese startup.

This observation is not meant as an indictment against these startups. The first handful of employees in any startup are likely made up of deeply trusted friends or colleagues. Considering the foreign population in Japan only makes up 1.5 percent of the general population, those first employees are most likely only going to be Japanese.

Even so, there is an odd contradiction that almost every Japanese startup is adamant about its interest in expanding outside of Japan but does not make hiring non-Japanese a priority. Companies like Coiney, Metaps, and Goodpatch are the exceptions that prove the rule but I hope they become models for their peers.

All three firms have found highly skilled employees in varying fields like development, design, and public relations. Those employees are also perfectly fluent in Japanese, often coming from some of Japan’s most famous firms and universities. More importantly, they are not alone. There are other talented folks out there and overlooking them means missing out on creating a strong, diverse team.

Goodpatch recently benefited from its diversity when an employee got connected with the well-known Slush Conference and helped organize a pitch contest to send a Japanese startup to the main event in Finland. The connection, if properly nurtured, will likely lead to new business opportunities for Goodpatch that its competitors won’t have the same access to.

The most ironic aspect about this situation is that large Japanese tech companies actually understand the need for non-Japanese talent and take significant steps to diversify their ranks. Rakuten controversially changed its official language to English in an effort to compete with global tech companies. Other powerhouses like DeNA and Gree are also known for having diverse staff.

Large firms in Japan, tech or otherwise, rightfully tend to get a bad rap for myopic, domestic-first business strategies, terrible workplace environments, and low starting salaries. Yet, they manage to attract global talent that helps push them higher into the upper echelons. Startups should be winning this talent war, not ignoring it.

It’s not even so hard to find such prospective employees. Go to the top Japanese schools – Tokyo, Kyoto, and Waseda all have strong study-abroad programs and feature plenty of bilingual students from Korea, China and Southeast Asia who attend all four years. Go the top language centres – there is a Stanford-run school in Yokohama which is pumped full of smart men and women from American, Canadian, and British schools. Go there and find a bunch of smart people who are fluent in Japanese, and want to develop their careers in Japan without working at Just Another Big Firm.

If Japanese startups do not inject non-Japanese into their staff and culture from an early start, they are likely resigning themselves to an sad fate. If they make it out of the startup scrum and find success, not only will they be underprepared for becoming a global company, they will be well on the road to becoming the monolithic, monocultural giants they used to oppose.

See: Why startups should hire slow and fire fast