Japan’s SmartNews booming in US with 1M monthly active users

Just three months after debuting in the US, Tokyo-headquartered news app SmartNews has achieved a major milestone: one million Americans are already monthly active users. It has also reached the number-one spot in the news category for apps on the US versions of the App Store and Google Play.

“Our growth in the US is fueled by word of mouth, good press, publisher co-promotions, and advertising,” Kaisei Hamamoto, SmartNews co-founder and co-CEO, tells Tech in Asia. “What’s great is that, despite our fast growth and advertising, we’re maintaining the same strong engagement rate – 50 percent of monthly active users are also daily active users.”

SmartNews, which uses machine-learning algorithms to aggregate trending stories from both news outlets and social media, was founded in June 2012. It entered the US, with localized versions for both iOS and Android, last October. The app boasts 4 million monthly active users in its home market of Japan, though Hamamoto says that “much higher” domestic metrics will be revealed next month.

In Japan, SmartNews competes with a number of rivals, including KDDI-backed Gunosy and celebrity-endorsed Antenna. SmartNews and Gunosy struck a major nerve with venture capitalists, securing US$36 million and US$24 million in funding last year, respectively. Japanese gaming giant Gree has been a leading investor in SmartNews, along with Skype founder Niklas Zennstrom’s VC firm, Atomico.

In addition to the app’s remarkable success in the US, SmartNews announced a slew of new US-based media publishers to the platform: TIME, USA Today, Fast Company, MSNBC, Upworthy, Perez Hilton, Today.com, Entrepreneur, Opposing Views, The Daily Dot, and Reuters. It will also begin delivering curated local news for a dozen major US cities, including San Francisco, New York, Los Angeles, Chicago, Dallas, Houston, Philadelphia, Washington DC, Miami, Atlanta, Seattle, and Boston. In the near future, Hamamoto says that SmartNews will also launch an “International Edition” for other English-speaking countries.

Outside of Tokyo, SmartNews maintains operations in San Francisco and New York. The app has attracted top journalistic talent in both markets, including the former Japan editor in chief of the Huffington Post and Rich Jaroslovsky, an ex-Wall Street Journal managing editor and Bloomberg tech columnist.

Many Japanese startups – even established companies like Gree and DeNA – struggle to penetrate the intensely competitive US market. SmartNews’ success is rare, to say the least, but could it ever unseat an American incumbent like Flipboard?

“Flipboard takes a magazine-like approach, which is nice for weekend reading or creating your own magazines,” Hamamoto explains. “SmartNews takes a minimalist, newspaper-like approach, which is good when you’re in a hurry on a train to work and there’s no internet connection and you want to see what’s trending now. We believe our real competitors are mobile games, social media, and the top apps people use on their smartphones everyday. We are competing for the overall attention of the user.”

Flipboard, one of Silicon Valley’s darlings, claims more than 100 million registered users around the world and is valued at approximately US$800 million. SmartNews is valued at more than US$100 million.

For Japanese and Asian startups hoping to break into the US, Hamamoto offers the following advice:

Make great products! If it’s a great app, people will find it, use it, get addicted to it – and, finally, talk about it. We spent months on user testing in [the US] before launching [there]. We learned that user habits and expectations in Japan and the US are very different. It’s also important to meet and partner with other US startups and build relationships with their developers, hence opening an office in San Francisco.

See: Yahoo Japan challenges report on news apps, refuses to admit it is losing to two startups