Photo: Infostellar team, global from the beginning.
Last month I spoke on a panel at the Infinity Ventures Summit, a conference that brings together leaders in Japan’s venture world. Naturally, as the “gaijin” and foreign VC at the conference, one of the topics that came up was how startups in Japan can successfully reach a global market.
This is a complicated and difficult question. First of all, there is no silver bullet, or one-size-fits-all approach. Each company has unique circumstances and challenges that they need to consider. However, they do have one thing in common. Whether consciously or unconsciously, they all make one seemingly trivial decision early on:
Will we be a Japanese-speaking company, or an English-speaking company?
This decision is deceptively simple, but of paramount importance, because it fundamentally changes the future of the company. And contrary to what you might assume, choosing to be an English-speaking company is not necessarily the best approach. There are pros and cons to each choice.
Let’s say you choose to be a Japanese-speaking company. The primary benefit of this approach is that you’ll have access to a significantly larger domestic talent pool. The secondary benefit is that they will also likely be cheaper than their bilingual counterparts, who tend to work at higher paying foreign firms. The combination of these two means that you’ll be able to hire much more quickly, and therefore conquer the domestic market much faster. In other words, the early days will be much easier.
However, expanding globally will be a struggle. Building and managing a team for a foreign market will be an uphill battle due to the language barriers within the company. Acquiring and retaining the best talent is hard enough in your own language, think about how hard it must be in broken English. Even if you manage to hire them, they won’t be able to fully communicate or forge close relationships with their colleagues. They will feel alienated within a predominantly Japanese speaking firm.
Let’s say, on the other hand, you choose to be an English-speaking company. You’ll likely need to hire bilingual talent to cater to both English and Japanese. Therefore, your domestic talent pool will be much smaller, and much more expensive. This will hinder your ability to move quickly against your Japanese monolingual competitors. In other words, the early days will be much harder.
But if you get over this hurdle, that sacrifice will likely pay off in the long run. You’ll already be ready to expand globally, because you’ve built a strong foundation. English is the world’s lingua franca, so communicating with other markets will come naturally.
The middleground is to create a hybrid. For domestic sales roles that may not require very much English, you can hire Japanese monolinguals. For roles that may require more coordination with teams abroad, hire English monolinguals. In any case, you’ll always need bilingual talent to fuse the two together, and everyone will at least need to have some level of comfort in a base language. Most Japanese can at least read and understand the basics in English.
You should deeply consider your circumstances when making this decision. How much local competition is there for this market? If there are formidable domestic players that you need to compete against, you may not have the luxury of trying to build a foundation for global expansion. How confident are you about your ability to fundraise? If fundraising comes easy, then perhaps you can afford typically expensive bilingual talent. What are the dynamics of the market you are approaching? If the domestic market is too small, or if it is fundamentally a global market, then perhaps the choice is obvious. In any case, this is a critical decision for your company, so think about it carefully.
Founding Partner & CEO @ Coral Capital
