【Ex-Amazon and Real Estate Startup】Takahiro Morinaga - On the topic of 'Global'
【Ex-Amazon and Real Estate Startup】Takahiro Morinaga - On the topic of 'Global'
This article will unraveled Takahiro Morinaga's dynamic career shift from Amazon to serial entrepreneurship, detailing his journey, challenges, and strategic pivots in pursuing global startup ventures, notably in real estate tech and cross-border markets.
Notable content:
Importance of International Expansion for Startups: Mr. Morinaga chose the U.S. market from the beginning because he wanted to do business on a global scale, and because the U.S. provides an environment in which he can realize his product goals.
Japanese entrepreneurial community in the U.S.: There are 30-40 Japanese entrepreneurs in the Bay Area, and the number is growing every year. Many of them come from a variety of backgrounds and age groups and are taking on the challenge of starting a business in the US.
Barriers to doing business overseas: Challenges in foreign countries face many challenges, such as language, visas, and financing. In particular, there are visa issues and challenges in an investment environment that differs from that in Japan.
Combining AI and Retail: Mr. Morinaga's next business challenge is to leverage AI in the retail industry, and he offers his thoughts on AI trends and his views on current market trends.
Fundraising and Incorporation Strategy: Mr. Morinaga plans to raise funds through an angel round and establish a corporation after developing a prototype. During the fundraising process, he also discusses the differences between the investment environment in Japan and the U.S.
—The second half has started, Morinaga-san. Thank you for your continued support.
Takahiro: “Thank you for inviting me today.”
—In the previous video, I asked Mr. Morinaga a variety of questions about his background, startups, why he started them, and also Hard Things. If you haven't seen it yet, please check out the video first. In the second half, I would like to ask him, keeping in mind the keyword "global”. I’m looking forward to talk with you. In the first half, you mentioned that you had written down all the failures you had made with startups in the past, and that you had realized once again that market selection was extremely important. When choosing a market, let me see... When you want to challenge in foreign country, I think there are various approaches like... Growing your company to some extent in Japan first, then, you will expand overseas. Or should we start expanding globally from Day 1? I guess it’s a tough choice. However, if we start expanding globally first, I’m wondering there are some issues that comes up like what market we will start. So, I would like to ask about methods for selecting a particular market or something that makes you decide if you have something like that.
Takahiro: “Okay. I decided from day that I wanted to choose American market. I am going to choose America all day, but basically, I think there is no answer about selecting market from Day. So, I think that the appropriate market generally changes depending on the individual's intentions or what you want to solve in terms of the kind of market they want to challenge. The reason I would choose the American market from Day is primarily because I have a strong desire to build a business on a global scale and create products. While it's possible to do this outside of America, platforms like YouTube and Netflix, which I use, are all based in the Bay Area of America.”
—That’s right.
Takahiro: “So, I thought that going to America from Day as a place to realize my aspirations would be a way to increase the chances of success. It seems that you're in a situation where you're choosing America as your market.”
—I see, thank you. When I met with you in America, I've heard that there is a community of Japanese entrepreneurs challenging themselves in America, Is the community growing even more?
Takahiro: “Yes. In the Bay Area, there are probably around 50 to 60 Japanese entrepreneurs.”
—That's amazing. I see.
Takahiro: “I believe it's increasing year by year.”
—Okay. What are most people like in that community? I suppose there are many young people in terms of age, right? What's the general age range like? Is it diverse
Takahiro: “It's quite diverse. There's quite a range, from early to mid-20s as the youngest, all the way up to people in their 50s and 60s. Some are employees working in Japan, some in America. So, I think there's a pretty broad age range.”
—I see. So, um... Are these individuals typically set on challenging America from the outset, or is it more common for them to have already achieved success in Japan, established some level of product-market fit, and then targeted America as the next market? Or is it quite case-by-case?
Takahiro: “I guess so. In my circle, there are many people who come to America with just themselves and a desire to start a startup here. However, recently, there have also been cases where people have scaled their startups in Japan and then come to San Francisco wanting to enter the American market, after achieving some level of product-market fit and having customers in Japan.”
—So, it varies from case to case, but it seems that for the most part.
Takahiro: “Many individuals really do come to America on their own and challenge themselves here. It might be just from my own observations, though.”
—I see. That's what it seems like. It’s natural to wonder about the best approach to challenge oneself overseas. I often think about that. In the case of Japan, perhaps it's just a hypothesis, but I think one reason why many people don't go abroad is because they can't speak English. So, they want to start a startup overseas, but I think English is a high barrier. Were you already speaking English well?
Takahiro: “But I think my English skill wasn't really good.”
—Did you improve in English after going to America?
Takahiro: “I guess so. So, it's not like I thought I was fine with English and then decided I could make it in America.”
—It seems you're reflecting on how people approach going abroad. If we don't increase the number of startups challenging overseas, fewer may feel inclined to do so. For instance, Mr. Morinaga's drive to challenge abroad stemmed from impactful childhood experiences or admiration for America. But what about those without such catalysts? One possibility is pushing oneself to go, even if the desire isn't strong. Yet, it's crucial to choose the right market; otherwise, the effort may lack conviction. Whether it's America or elsewhere, liking the country is crucial for a successful venture abroad. When I started my first business in the Philippines, its familiarity made the decision easier. I believe more resources like this media can ease fears and encourage more people to take on international challenges without hesitation. Regarding the Bay Area, where there are around entrepreneurs exploring various ventures, managing visas and housing can indeed be daunting. Visa procedures, especially in countries like America, are notoriously complex, so how do people handle these challenges?
Takahiro: “Many people initially come to America with the purpose of exploring and understanding the startup scene. Some come on student visas to study while immersing themselves in the startup environment. Others may arrive on ESTA visas to assess if they can pursue their startup ambitions. Essentially, most people come to America with these kinds of intentions.”
—What's the duration of a student visa?
Takahiro: “For that visa, I'm not entirely sure, but in my case, it was issued for about 3 years. So, you can get up to about 3 years on that visa. Of course, you can attend university, graduate school, or even a language school. I think it was issued for about 3 years.”
—So, with a year duration, is it permissible to work part time or earn income with that student visa?
Takahiro: “No, it's completely not allowed on a student visa.”
—Okay. That means it's not allowed to earn income like that, right? What's the maximum duration of stay under ESTA?
Takahiro: “It's said that the maximum stay is days per visit under ESTA, but I'm not sure if that's really the case. Nonetheless, it's been said that the maximum is days.”
—I see, I see. Got it. So, for now, in your mind, you want to continue to take on challenges in America. I think you have the desire to compete. Within what you can share, what kind of field do you plan to challenge yourself in? Have you decided on that?
Takahiro: “Actually, I've written down more than ideas, and I've bounced them off or people. With all that, I've been thinking about various things, but as for me, I want to engage in a business where America is main, like I mentioned earlier, and leveraging current trends effectively. Nowadays, I think it's AI, so I'll be focusing on that. Given my background, retail and ecommerce, selling goods were strongly sought in my first career, so now I want to challenge myself in the retail x AI domain. That's what I'm thinking of challenging next.”
—I see, retail x AI... It's still a bit unclear what exactly, but in America, how is AI... The AI field, is it a hot trend?
Takahiro: “As a trend. Yes, but it's so hot that I wonder if AI is really that good. On the contrary, here, it's like, well... It feels like it's come full circle.”
—I see, everyone...Everyone is talking about AI,
Takahiro: “So is AI really that good? That's the impression I get. Well, I think it's still hot though.”
—I see. In my image, it's mostly OpenAI and Anthropic, they are quite mainstream, and seem to be spreading in various ways.
Takahiro: “Also other AI startups' trends are varied approaches, but in the end, generative AI uses OpenAI's IT in the background.”
—I see, that's how it is. By the way, this market, I've heard it's cooling down, how is it now? Is it recovering?
Takahiro: “No, it still feels cold. Especially Series A and B are still tough. Seed and pre-seed seem to have some deals, but the later stages, the more mid-to-late stages, the colder it seems.”
—I see. It seems like it will still take some time. So from now, you'll solidify various ideas, and once they're solidified, so the plan is that you create a prototype, and once you've gained some traction, will you incorporate? Or will you incorporate first and then make a prototype? How are you thinking about it this time?
Takahiro: “I'm still thinking about that, but the next challenge I definitely want to do it in America again, so an angel round soon... if I can make the prototype, I'll proceed to the next round and start the next company. Even in America, I want to challenge myself again as soon as possible.”
—Once things are solidified, if possible, I'll make a prototype, and with the prototype, I'll do an angel round, and gather funds. In the angel round, how much are you planning to raise?
Takahiro: “As a goal, right now, it's about $20KUSD in Japanese yen I am aiming for around 30 million yen next as the next goal.”
—Okay. And once that's gathered, where will you register the company? Delaware?
Takahiro: “Yes, basically in America.”
—For example, creating it in Delaware Mostly, that's the case, right? With a CCorp.. In Delaware.Y
Takahiro: “Yes, creating it as a CCorp in Delaware.”
—By the way, when it comes to fundraising. In most cases, everyone is in Delaware I think they register companies, but what about Japanese? Is it easy for Japanese VCs to invest if it's in Delaware?
Takahiro: “Most Japanese VCs...We had the opportunity to talk to Japanese VCs last time. There were still funds involved or with American companies in their work. There were places where investing was not an option. I think there were several, so... I mean, really. Not all VCs can invest in American companies That's not the situation for investment, That's the feeling I got.”
—So depending on the VC, possibility seems quite scattered.
Takahiro: “Yes, there are also specific conditions depending on it. I think there were things like that.”
—Yes, I feel that you’re going to raise funds through the Angel Round now. Or rather, we're going to develop it and shape it. So you're thinking so. Fundraising seems to be... I'm thinking it might be a common challenge for everyone. Because, you know, when trying to challenge abroad, unlike in Japan, I think it would be smoother to raise funds from Japanese VCs by establishing a Japanese entity. And you could also get various loans from different people. So for Japanese founders, if they register in abroad, they can’t receive support which they have in Japan such as financing, if they're outside Japan. And also, in that scenario, I think everyone might struggle when they're challenging abroad. Getting money from foreign VCs or investors might be difficult, you know, so... How do you feel about that aspect? Mmm...Do you feel such a difficult challenge?
Takahiro: “Exactly. When setting up a company in America, there might be difficulties with Japan's financing system. As I mentioned earlier, for startups abroad, including those in America or other countries, it can be challenging to secure funds or attract VCs. Surely, this is a significant aspect to consider. However, as you progress with your startup in America, particularly in the mid to late stages or for the next rounds like Series A or Series B, attracting American venture capital firms may prove challenging. It could also be difficult for American VCs to engage if they don't have a presence or familiarity with your market. In such cases, starting with a CCorp in Delaware could potentially ease this in the mid to long term, making it more straightforward to attract American VCs in the future. That's how I see it.”
—In America, there are indeed various options available, and registering a company there offers advantages, especially when considering long-term prospects and fundraising. Creating a company in Delaware, for instance, is often seen as a favorable choice. However, when looking at other regions like Southeast Asia, there could be additional hurdles to navigate. Each country in Southeast Asia has its own regulatory environment and business culture, which can affect how startups operate and raise funds. Understanding these nuances and seeking local expertise would be crucial for anyone looking to expand into this region.
Takahiro: “Right, organizations like Y Combinator traditionally prefer companies to be set up in Delaware due to its favorable corporate laws and ease of doing business. During the application process, they often inquire about the company's incorporation details, including its structure and location. While I can't recall specific directives to 'make it in Delaware,' the practical advantages of setting up there are widely recognized in startup circles. So, for those looking to establish a presence in America and engage with prestigious accelerators like YC, incorporating in Delaware could indeed be a strategic move.”
—Yeah, that seems like a good idea. Well, when you're looking to challenge globally, there are various market considerations to think about. Where to register the company is also becoming quite important, I feel, to hear various things.
Takahiro: “Yes.”
—For example, if you are in the Philippines and want to challenge there, registering in the Philippines might not make it easier for both Japanese and American VCs to invest in Philippine entities. It's hard to say.
Takahiro: “There are so many unknowns, so it's like...”
—It's good to consult with experts, right? Including that in your considerations. Of course, when conducting market research, we also consider fundraising and explore available options. I think both should definitely be considered together after listening to today's discussion.
Takahiro: “Yes, I really think so too.”
—I see, thank you. By the way, regarding legal aspects, and the fact that laws are very different, right? Not just regulations but also other rules, who do you usually consult with about these things?
Takahiro: “Among the Japanese entrepreneurs in San Francisco, there are various networks, so sometimes I get introduced and we get connected that way. Also, JETRO (Japan External Trade Organization) has systems to support Japanese entrepreneurs abroad, so sometimes we get connected through JETRO. JETRO helps us connect as well.”
—Thank you. So, what's your plan for the future? What kind of approach are you considering? Solidify the idea, create a prototype, and once the prototype is ready, do an angel round, and after that, what are you planning to do? Are you also considering participating in an accelerator program?
Takahiro: “Yes, right now I'm in the process of reaching out to new members and inviting them onboard. For this angel round, I'm primarily targeting Japanese angel investors. In the next rounds and beyond, I aim to engage American venture capitalists and angel investors. So, I plan to actively participate in accelerators early on.”
—By the way, in America, which programs would you recommend?There seem to be a lot of them.
Takahiro: “Yes, that's true. YC is quite famous, though I've heard opinions about its declining quality recently. I'm still exploring that myself, but definitely, applying to YC is on my radar. There are also many new accelerator programs that focus specifically on AI, and I'm interested in applying to those as well. Jason Calacanis's accelerator, Launch, is another option I'm considering. So, I'm looking into applying to these kinds of programs now.”
—As for the requirements or selection criteria, is having a prototype stage acceptable
Takahiro: “Yes. However, for Launch, it seems difficult unless you have some revenue or traction.”
—Taking it step by step seems like a good approach. Start by applying to accelerators that accept startups in the idea stage. Refine the idea as you go through the accelerator program, and once it's polished and has gained some traction, you can then consider applying to Launch or similar programs. That could be a structured way forward.
Takahiro: “Yes, there are many programs available.”
—By the way, are you planning to find a cofounder from now on, or will you continue as a solo founder?
Takahiro: “I'm currently discussing and looking for a cofounder, rather than going solo, I want to gather a solid team and start from there.”
—Last time, you said you were working with two people, but how about this time?"
Takahiro: “I'm planning to have two cofounders this time, similar to before. Initially, we might start with part-time founding members. While they may be part-time initially, I think a three-person setup, including such members, would be ideal for the next step. That's what I'm considering now.”
—Do you already have roles in mind? Do you have ideal roles envisioned?
Takahiro: “Yes, I think having cofounders with different skill sets is ideal. Since I have a business background, I want a tech-oriented cofounder.In AI, a tech-oriented person seems crucial.”
—Yes. Different backgrounds expands our capabilities, like what we can do. So, how do you search for cofounders? What's your method for searching, and also, what criteria do you have in mind? What do you look for?
Takahiro: “There are various methods, but what I often use is a service provided by Y Combinator, such as their cofounder matching service. I've met people there, as well as through introductions from friends. Additionally, I've connected with individuals in settings unrelated to startups and invited them to join me.”
—I see. So, ultimately, when making an offer, how do you decide who to work with? What criteria make you think 'I want to work with this person'?
Takahiro: “I mentioned earlier that I look at skill sets, but more important than that is whether we can run the startup with the same vision. If our visions don't align, when challenges arise, we might end up going separate ways. But if we share the same vision and goals, we can persevere through difficulties and restart if needed, ensuring the team stays cohesive. So, having a shared vision, clear goals for the startup, and a mutual understanding of why we're doing this are crucial. When these align, I believe we can work effectively together as a team. Yes, that approach is definitely preferable.”
—It's not just about ambition, but working towards the same direction makes easier.
Takahiro: “Yes, I make sure to check that often.”
—Thank you. By the way, for young entrepreneurs who want to challenge themselves overseas, do you have any advice on what to avoid from the beginning? If there are things they should be careful about or avoid, I'd like to hear your suggestions.
Takahiro: “For those wanting to go to America or abroad, you mean?”
—Yes, exactly.
Takahiro: “This is my personal opinion, but I think you don't need to spend too much time preparing in Japan. This applies to learning English or even developing a business idea. First, just go to the country. If it's America, then go to America. The business plan you thought of in Japan could turn out to be different once you’re in America. There are many cases like that.That's right.No matter how much you study English in Japan, when you speak in America, it's not just about vocabulary; it's more about communication skills. Some people can communicate effectively despite limited English proficiency, while others struggle even with strong English knowledge. So, instead of spending too much time preparing in Japan and waiting until you're fully ready, I think it's better to just go and see for yourself. Experience firsthand whether it's really what you want to do and make your decision based on that.”
—That's a great insight. I agree. It's important to just go for it. People find reasons like their English isn't good enough, or their business idea isn't ready, and these become hurdles. I've seen this often. So, just go and experience it for yourself, it's much faster and more effective. Also, meeting people who are already doing it there is the fastest way to learn. So, get a cheap ticket and just go. Gather information and experience it yourself. That's the best approach, I think. Okay, thank you. By the way, regarding the Japanese startup ecosystem, even though you are in America today, but considering that, how can the Japanese startup ecosystem become more vibrant? And how can we increase the presence of Japanese startups overseas? The number of Japanese startups challenging themselves abroad? How can we increase that?
Takahiro: “That's a tough question. The Japanese startup ecosystem.”
—Yes, how can we improve it? There's a lot of effort now. It feels like it's gaining momentum. The government has also introduced a five-year startup plan, and there are more global events than before. It seems like it's changing positively. I think it's improving. There's also the angel tax system. Yes, this will encourage more people to become angel investors. I think the number will increase from now on. I think it's a good trend.
Takahiro: “As a nation, Japan is working to support startups. I think that’s the current situation. In Japanese startups, investment is increasing year by year, and the current market conditions are not severe. Also, for entrepreneurs, the key is how to increase the number of startups in Japan. If the number of entrepreneurs increases, the number of people willing to take on challenges will also increase, and as a matter of probability, some of these startups will grow significantly. First, those who want to start a business or try a startup need to first make the decision to give it a try and see how far they can go. I didn’t live during the Showa era, but lifetime employment is no longer the norm. So, even if a startup fails, in the past, you might have been labeled and found it hard to get reemployed, but now, the experience of having done a startup is seen positively by many companies. There are more companies like that now. The risks associated with challenging oneself as an entrepreneur, compared to the past, have greatly diminished, I think. Recognizing this, more people might think, 'Should I try starting a business in Japan?' If such people increase, the Japanese startup scene will keep growing, I believe.”
—I agree. The environment has become much more conducive to starting businesses than before, so I feel that after graduating from university—of course, there are various ways of thinking, and this might not apply to everyone—but if starting a business after graduation becomes a normal option in Japan, I think it would be better. But unfortunately, if I can speak frankly, there is too much peer pressure, and if you take a path different from others, you are often seen as an outsider in Japan. Whether it’s the culture or something else, I can’t fully articulate it, but that exists. So, regardless of that, pursuing what you want to do and starting a business as one of the options should be acceptable, I think.
Takahiro: “Yes, indeed. When Japanese people challenge themselves overseas, particularly in Silicon Valley over the past decade, they have accumulated a wealth of information about what to be cautious of, including potential pitfalls when starting a business there. Whether in Japan or America, the hurdles to starting a business aren't fundamentally different, I believe. Of course, there are visa and regulatory issues specific to each country, but ultimately, it depends on where you want to establish your business. If your goal is to innovate in Japan, then Japan might be the right place. If you're aiming for the global market, locations like America or Singapore offer many opportunities. The difficulty or ease of starting a business isn't defined solely by the location but rather by your readiness to navigate the market and execute your ideas. As more people choose to start businesses abroad based on their aspirations and market opportunities, I think we'll see more Japanese entrepreneurs succeeding internationally.”
—I see. Thank you. I really hope more and more young Japanese entrepreneurs will challenge themselves overseas. And not just entrepreneurs, but also business people who want to live and work abroad someday. I hope this discussion will be useful for them too. That's what I think. By the way, how can people reach out to you? Well, on X or LinkedIn.
Takahiro: “I think I check LinkedIn or Facebook the most...”
—Got it.
Takahiro: “So, if someone wants to go to America,”
—Yes, I think there are quite a few viewers who might want to hear more, so they might reach out to you. We can share your Facebook link or your LinkedIn link somewhere in the description. This will be the last question, but could you please share any final words for those who want to challenge themselves overseas?
Takahiro: “Sure. I was also anxious about coming to America, and about leaving my salaried job at Amazon to start a business, but I found that everywhere I went, many people were willing to help. With their help, I’ve been able to keep challenging myself, and now I’m here. In San Francisco and the Bay Area, where I frequently travel between Japan, there is a very strong and well-organized community that seriously supports Japanese entrepreneurs coming from Japan. This community is very supportive and closely knit. So, even if you feel anxious and uncertain about jumping into San Francisco or Silicon Valley, there are many supportive members who will help you out. I understand you might feel anxious, but once you come to San Francisco we can work hard together.”
—Yes. It would be great if we all come together with the samurai spirit. Thank you for watching Rising Podcast. If anyone is interested in going abroad or wants to challenge themselves overseas, please share this podcast since it's available on Spotify, Apple, and Google Podcasts. We'd be happy if you could share it. And if you could also follow us, it would be motivating, so please, we'd appreciate it. See you in the next episode! Thank you for watching. Morinaga-san, thank you for being on the show.
Takahiro: “Thank you. Yes, Nice meeting you.”