How startups suddenly became "cool" in Japan (feat. Shin Takamiya of Globis Capital) | E2237

This Week In Startups is made possible by: Circle.so - http://Circle.so/twist Deel - http://deel.com/twist Uber AI Solutions - http://uber.com/twist Today's show: Not long ago, promising young Japanese graduates wanted to go work for the largest, most established, and even oldest corporations: Sony, Mitsubishi, and the like. But now, just over the last few years, more and more Japanese people are becoming entrepreneurs and founders. TWiST Japan continues with a fascinating look inside the country's growing startup ecosystem with special guest, venture capitalist Shinichi "Shin" Takamiya. He'll walk Jason through how Japan stayed ahead of the rest of the world in technology, but started falling behind when it came to founding companies, and how the Japanese are now starting to level the playing field. PLUS why his fund, Globis, sees other VC firms as collaborators rather than the competition… How AI is helping Japanese and American founders build their companies more quickly… Why Jason prefers training younger people to become VCs rather than hiring more experienced players… Shin's guide to eating out in Tokyo… and much more! Timestamps: (00:00) We're so excited to bring Founder University in Japan! (04:15) Jason and our guest first met 15-25 years ago… (06:06) How is Japan always so far ahead of the rest of the world? (08:29) Globis is one of Japan's largest and oldest venture capital firms! (10:48) Circle.so - the easiest way to build a home for your community, events, and courses — all under your own brand. TWiST listeners get $1,000 off Circle's Professional Plan by going to http://Circle.so/twist (12:38) Why founders need to play the long game when it comes to networking (15:03) "The founder is the most precious resource in the startup community" (16:50) Shin takes us inside his Mercari (a massive Japanese marketplace site) investment (18:20) How startups became "cool" in Japan, just recently (19:43) Deel - Founders ship faster on Deel. Set up payroll for any country in minutes and get back to building. Visit http://deel.com/twist to learn more. (21:09) You don't have to tell an investor your whole story… just get them interested (25:28) Why Jason likes to train young folks to be VCs, rather than hiring for experience (28:44) The differences between being candid and rude (29:44) Uber AI Solutions - Your trusted partner to get AI to work in the real world. Book a demo with them TODAY at http://uber.com/twist (35:40) Why Globis sees other VC firms as collaborators (39:08) The world's OLDEST company is 1500 years old… and it's from Japan… (39:54) Why a lot of great businesses aren't right for VC investment (43:34) Why picking the right market is so crucial (48:37) When you know the direction of change but can't predict the timing (50:34) How founders are using AI to build better companies faster (54:39) Shin's guide to eating out in Tokyo * Subscribe to the TWiST500 newsletter: https://ticker.thisweekinstartups.com/ Check out the TWIST500: https://twist500.com Subscribe to This Week in Startups on Apple: https://rb.gy/v19fcp * Follow Lon: X: https://x.com/lons * Follow Alex: X: https://x.com/alex LinkedIn: https://www.linkedin.com/in/alexwilhelm/ * Follow Jason: X: https://twitter.com/Jason LinkedIn: https://www.linkedin.com/in/jasoncalacanis/ * Thank you to our partners: (10:48) Circle.so - the easiest way to build a home for your community, events, and courses — all under your own brand. TWiST listeners get $1,000 off Circle's Professional Plan by going to http://Circle.so/twist (19:43) Deel - Founders ship faster on Deel. Set up payroll for any country in minutes and get back to building. Visit http://deel.com/twist to learn more. (29:44) Uber AI Solutions - Your trusted partner to get AI to work in the real world. Book a demo with them TODAY at http://uber.com/twist Check out all our partner offers: https://partners.launch.co/

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  Younger generation is becoming entrepreneurs and startups are becoming cool. So the traditional kind of stereotype of Japanese wearing suits being what we call salary man.

• 0:12Jason Calacanis?

  Yes.

• 0:13Speaker 00

  You know, lifetime employment, that's totally gone right now.

• 0:16Jason Calacanis?

  Totally gone for young people.

• 0:18Speaker 00

  For young people, yeah.

• 0:19Jason Calacanis?

  They still have it as an option.

• 0:20Speaker 00

  Yes.

• 0:21Jason Calacanis?

  But they're now, it's number two on the list, number three on the list of possibility.

• 0:26Speaker 00

  Yeah, maybe. So another kind of a showcase, it's like a joke, but I always tell number one job sought after McKinsey is now startups.

• 0:36Jason Calacanis?

  McKinsey used to be number one?

• 0:38Speaker 00

  Uh, you know, it's one of the prestige, you know,

• 0:40Jason Calacanis?

  Yes.

• 0:40Speaker 00

  jobs you can get and you know typically people might go join a big Japanese blue chip company to become one of the, you know, top management or something like that.

• 0:49Jason Calacanis?

  That was high status.

• 0:50Speaker 00

  Yes.

• 0:51Jason Calacanis?

  And now high status has shifted for young people to being a founder or even joining.

• 0:56Speaker 00

  Associated with startups. Yes, exactly.

• 1:03Speaker 02

  This Week in Startups is brought to you by Uber AI Solutions, your trusted partner to get AI to work in the real world. Book a demo with them today at uber.com/twist. Deal. Foundership faster on Deal. Set up payroll for any country in minutes and get back to building. Visit deal.com/twist to learn more. Circle dot S O. Circle gives you everything you need to build and scale your community-led business. Twist listeners get $1,000 off Circle's professional plan at circle dot S O slash twist.

• 1:37Jason Calacanis?

  All right, everybody. Welcome back to This Week in Startups. I'm your host, Jason Calacanis. As you know, we have a program called Founder University. Founder University is a 12-week course for people in year zero of startups. People who apply for funding from our venture firm but are too soon for funding. So we said, wow, all this incredible energy, everybody emailing us, applying for funding, literally over 10,000 people a year. How do we capture that energy and help founders? Solve the world's biggest problems, or solve the problems that are important to them, maybe you as consumers. So we created this 12-week course where we go over all the basics. How to set up a cap table, how to get product-market fit, how to do go-to-market strategies, how to find a co-founder, how to present your product, how to understand your total

• 2:19Jason Calacanis?

  addressable market, maybe find your ideal customer profile, just design, UX, all of it. The founders typically understand about half of what we teach them. For different founders, that 50% is different. Some of them are awesome at operations, but their design is terrible. But they're really good at go-to-market, or they're absolutely extraordinary at recruiting talent, but they don't even know what the term ICP, or Customer Acquisition Cost, they're not familiar with those. And that's okay, because everybody becomes familiar with these techniques and these strategies over time. So we meet the founders where they are, and my team spends time with them. It's incredibly rewarding, it's incredibly hard. Most of the startups fail.

• 3:02Jason Calacanis?

  But they come back a second or third time, and then, sometimes even on the first shot, they make it. And it's one of the great joys in my life to take Founder University from the United States to my favorite country in the world after the United States. And maybe, don't tell anybody, but maybe I like it a little more than the United States, and that's Japan. And it's been the thrill of my life to have the Japanese government, JETRO, ask me to bring Founder University here. And we're doing our first cohort. We've had so many of my friends, over the years of coming here for 30 years, say yes to coming and mentoring the founders here. 30 founders joined the first cohort. Very competitive process to get in. If you want to learn more about it, just go to founder.university.

• 3:47Jason Calacanis?

  You can apply to do it in the United States, you can apply to do it in Riyadh, in Saudi Arabia, in the Kingdom, we do it there with Sunabu. You can apply to do it here in Japan. But please, no more countries. I'm saying this with peace and love. I'm doing a lot of traveling. Okay, maybe one more country, but that's it. After that, I'm gonna say no. Maybe we'll do one more. I don't know. So here we are at Founder University. It's the end of the program, of the first week of the program. It's the third day, and we had an intensive couple of days. But I'm really excited because Shin Takamiya, I met you 20 years ago.

• 4:20Speaker 00

  Twenty, fifteen years ago, yeah.

• 4:22Jason Calacanis?

  Twenty-five years ago?

• 4:24Speaker 00

  Maybe not that bad.

• 4:25Jason Calacanis?

  Twenty.

• 4:26Speaker 00

  Twenty, yeah.

• 4:26Jason Calacanis?

  We're very old now, you know, Shin. You and I are old.

• 4:29Speaker 00

  Yeah.

• 4:30Jason Calacanis?

  And we learned some things. So today, we'll talk about what we've learned and how things have changed. I was talking earlier in the program. I got invited to come speak. And back then, I would maybe get invited once in a while. Maybe they pay for my flight. Big deal for me back then, because I was broke. I had no money. So to get a free coach flight and fly here, to me, was like the dream. And you and I met at a conference.

• 4:50Speaker 00

  Yep.

• 4:51Jason Calacanis?

  I'd sold Weblogs Inc., was doing Engadget, and I would always go to Akihabara, the electronics here, and I had seen VR and really augmented reality for the first time.

• 4:59Speaker 00

  It was twenty years back.

• 5:01Jason Calacanis?

  Twenty years ago.

• 5:02Speaker 00

  And already, Japan was coming up with a VR figure. And Jason was so excited about it, and he was just hanging around this otaku anime kind of figure.

• 5:13Jason Calacanis?

  What happened was, I was walking through Akihabara, and I would go there with my writers from Engadget. And they would take me to all the different buildings. And the buildings, there would be ten stories. So we'd go to the 10th floor, maybe robots, like little miniature robots. Then the next floor would be robot cars. The next floor would be robots that went in water, each of the different floors. And then I saw this big line with a bunch of salarymen in line after work, in their suits. They looked pretty tired, and they were online to buy something. So I went to the front of the line, and they were buying an action figure in a box of software. And you would take the webcam off the computer. Webcameras were pretty new. They didn't work very well. And then they had a paddle, like a stick with a QR code, and a little box.

• 5:58Jason Calacanis?

  You put the box down, you have your PC, and you take the image, and you put it on the box. And pop out of the box would be a little character. And then you would interact with the character. And I said, "Whoa." That could be the future. It was a little too early.

• 6:12Speaker 00

  Little bit.

• 6:13Jason Calacanis?

  Yeah, but they were buying it and this is one of the great things about Japanese culture. You're always five, ten, twenty years ahead of everybody else.

• 6:22Speaker 00

  Right.

• 6:23Jason Calacanis?

  What do you attribute it to? The creativity and everything, yeah?

• 6:26Speaker 00

  Yep. I mean, the VR figure back then was already quite advanced in Japan. But, you know, if you look back, you know, you could say we were pretty advanced. And even from a Japanese standpoint, it was, it wasn't a mainstream. It was like a, you know, kind of otaku culture. But now otaku culture is everywhere in the world, like you see anime.

• 6:47Jason Calacanis?

  What is otaku culture?

• 6:49Speaker 00

  Otaku culture is like a Japanese pop culture, kind of rooted around anime and manga and things like that. Initially, maybe thirty, forty years back, it was regarded as a kind of geeky hobby.

• 7:02Jason Calacanis?

  It was a geeky hobby.

• 7:02Speaker 00

  Yeah, and otaku was kind of, sometimes it was like a, some kind of, you know, bad word to say if you were.

• 7:09Jason Calacanis?

  Like a nerd?

• 7:10Speaker 00

  Yeah, yeah.

• 7:10Jason Calacanis?

  Or a geek?

• 7:11Speaker 00

  Yeah, but nowadays.

• 7:11Jason Calacanis?

  Dweeb.

• 7:12Speaker 00

  Yeah, yeah, yeah. But nowadays, you know.

• 7:14Jason Calacanis?

  I'm not calling you that.

• 7:15Speaker 00

  I'm out otaku, so it's okay.

• 7:18Jason Calacanis?

  But now you're cool. Otaku became cool.

• 7:20Speaker 00

  Yeah, yeah.

• 7:21Jason Calacanis?

  Very cool.

• 7:22Speaker 00

  Yeah, exactly, exactly. And, you know, otaku is highly related to IP business. So, you know, it's definitely something we can explore out of Japan.

• 7:30Jason Calacanis?

  Yeah, IP, intellectual property, became, I think, a very, very powerful concept here. And I remember in nineteen ninety-two, I was working for Sony. And they became, Sony Corporation said, hey, if we can do convergence, we can bring together consumer electronics, music, so they bought Columbia Records.

• 7:49Speaker 00

  Yep, yep.

• 7:49Jason Calacanis?

  And movies, we bought Paramount. And then we would do convergence, even doing radio. And that was when I first got exposed to the concept of, hey. All of these things are going to come together and here we are, it's come together.

• 8:04Speaker 00

  Back then, Idee-san came up with, the CEO Idee-san came up with a concept, Digital Media Kit, which is.

• 8:11Jason Calacanis?

  A yes, DMK.

• 8:13Speaker 00

  Yeah, Digital Media Kit, that was so cool.

• 8:15Jason Calacanis?

  On a floppy disk and they would say, here is everything you need to understand the topic, a text file, some pictures, short video clips, all of that then became deliverable on the internet, online services.

• 8:29Speaker 00

  Right.

• 8:29Jason Calacanis?

  It's fascinating. So Shin, you work for Globis Capital Partners, this is one of the largest venture firms here.

• 8:34Speaker 00

  Yep.

• 8:35Jason Calacanis?

  And so today, we're going to talk about your investing here and then just some observations about the global market. Maybe tell us a little bit about what you do, how long you've been a venture capitalist.

• 8:45Speaker 00

  So we, Globis Capital Partners, are one of the biggest VC firms here and we are actually one of the oldest VC firms here. So we started out in ninety-six, back then.

• 8:56Jason Calacanis?

  Nineteen ninety-six.

• 8:57Speaker 00

  Six, yeah. Back then, there was no IPO market for tech companies. So NASDAQ, Japan and the mother's market of Tokyo Stock Exchange only came in in the early two thousands. You know, we kind of grew together with the Japanese startup ecosystem. So we're kind of like brothers to the Japanese startups.

• 9:16Jason Calacanis?

  Hmm.

• 9:16Speaker 00

  We were a startup, incidentally, doing VC business back then. And as for myself, I spent like six years of my childhood in Europe and went to US to get my MBA.

• 9:29Jason Calacanis?

  Where'd you go?

• 9:30Speaker 00

  Uh, MBA?

• 9:30Jason Calacanis?

  Yeah.

• 9:31Speaker 00

  Uh, Harvard.

• 9:32Jason Calacanis?

  Oh, okay.

• 9:32Speaker 00

  Yeah. It's okay, right?

• 9:34Jason Calacanis?

  I've never heard of it, where is it from?

• 9:37Speaker 00

  Uh, it's somewhere cold.

• 9:38Jason Calacanis?

  It's somewhere cold, Boston, I think, somewhere in Cambridge.

• 9:40Speaker 00

  Yeah.

• 9:41Jason Calacanis?

  You can always know if somebody went to Harvard because they never mention it. They say, I got an MBA and then I say, where? And they say, oh, Massachusetts. And then I say, oh, where in Massachusetts? They say, Boston. I say, oh, where in Boston? They say, Cambridge.

• 9:56Jason Calacanis?

  It's because if you say you went to Harvard, everybody says, oh, too smart, whatever. But you went to HBS.

• 10:01Speaker 00

  Yeah.

• 10:02Jason Calacanis?

  And you did that in the 90s, late 90s?

• 10:04Speaker 00

  No, no, I was class of 08.

• 10:06Jason Calacanis?

  Of 2008?

• 10:08Speaker 00

  2008, yeah.

• 10:09Jason Calacanis?

  Oh, 2008, okay, you went later. And when did you start in venture capital? And why did you decide venture capital?

• 10:14Speaker 00

  So I joined Globis right after my MBA. So that was 2008. That was like right after the subprime bubble burst.

• 10:21Jason Calacanis?

  Yes, we had the Great Recession in America. Everybody lost their jobs. The NASDAQ went from 5,000 to 1,500. And everybody thought it was the end of the technology business.

• 10:33Speaker 00

  But it was actually-

• 10:34Jason Calacanis?

  Good timing for you.

• 10:34Speaker 00

  Exactly, enter low and exit high, you know?

• 10:37Jason Calacanis?

  It is, paradoxically, the best time to get in venture capital is at the down market.

• 10:42Speaker 00

  Yep, yep, exactly.

• 10:48Jason Calacanis?

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• 11:32Jason Calacanis?

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• 11:56Jason Calacanis?

  What stage do you invest in typically?

• 11:59Speaker 00

  So currently, we typically start from pre-A or A kind of stage.

• 12:03Jason Calacanis?

  Okay, so seed and series A?

• 12:06Speaker 00

  Pre-A kind of.

• 12:07Jason Calacanis?

  Oh, okay.

• 12:08Speaker 00

  So we would like to see a team and a product. You don't have to have a massive traction, but enough traction so that we can get a glimpse of PMF. That's like the initial stages we would invest, but we would follow on anything into the late stage. So we say we are the first and first to last. So we are the first institutional VC to back a founder and the last, we would back it to the last round before IPO.

• 12:35Jason Calacanis?

  Okay.

• 12:36Speaker 00

  Yeah.

• 12:36Jason Calacanis?

  So a full life cycle, basically.

• 12:38Speaker 00

  Yeah.

• 12:39Jason Calacanis?

  And that means the company's here a little bit too early. So when he finishes, don't rush the stage. You can meet him, but the likelihood of investing in year zero startup or pre-product market fit is too early for you.

• 12:54Speaker 00

  A little bit, but probably I should know you guys now because, you know, it's a very kind of relation business. You don't want to invest into somebody you don't know, you don't trust. Typically, when I invest, I like to invest into my friends who I know for like over two years or something like that.

• 13:11Jason Calacanis?

  Right.

• 13:11Speaker 00

  So I can trust the person and I know that person from like everyday life rather than knowing him under cosmetics when he's fundraising.

• 13:21Jason Calacanis?

  And this is an important lesson for founders is to play the long game.

• 13:25Speaker 00

  Yes.

• 13:25Jason Calacanis?

  You're going to meet people, you want them to understand what you're building and why you're building it. And then they can put a little check mark.

• 13:32Speaker 00

  Yes.

• 13:32Jason Calacanis?

  In their journal, in their database. Okay, I met this founder, they're doing something interesting, yeah?

• 13:38Speaker 00

  So even in series A, you know, I am, maybe we believe that the founder is the single most important factor in investing and especially their motivation. We don't want to invest into people whose interest into money or power. We look for some truly rooted down motivation, why they want to do this business. They would have like a passion for it or they would have like a, almost like a karma to do that business or something like that. So we want to know why. The founder is doing that business and if that why is solid, you know, you can, you know, you would have the glit to continue the business when you're even in the hard, hard things.

• 14:19Speaker 00

  And in the end, if the founder doesn't give up, the business is still alive. So, you know, you always need that, you know, strong motivation or driver why the founder is doing the business.

• 14:31Jason Calacanis?

  This is really important for founders to understand that our number one fear, our nightmare as investors is not that the company runs out of money or they have to pivot, it's that the founder gives up.

• 14:46Speaker 00

  Exactly. So we don't want founders, you know, just fleeing irresponsibly. So, you know, and of course, you know, sometimes it's important for the founders to rightly give up. Because after all, if you look at it from the macro perspective, it's a kind of utility business as I look at it. So the founder is the most precious resource in the startup community. And you want to maximize the utility of the founders.

• 15:12Jason Calacanis?

  So if the founder picks an idea, they have the karma, they're passionate for it. And they get two, three years into this adventure and they realize the market isn't ready. The market doesn't want it. They can't force consumers, they can't force a business to want their vision of the world. So, yeah, sometimes it's the right thing to shut it down.

• 15:32Speaker 00

  Yeah, yeah. So, you know, it's okay that your hypothesis is wrong. You know, what is not okay is you, you just kind of, you know, be irresponsible. Or, you know, you do some kind of immoral things or things like that. But, you know, if your hypothesis does make sense, but it doesn't turn out to be right, I think it's a nice try. And even from our investor kind of perspective, we'd like to invest into those kind of founders. You know, it's not the result that which matters. So if founders had a very logical hypothesis or investment theme that made sense.

• 16:14Speaker 00

  But i- if he fails, it's okay. We want to invent a game into that serial entrepreneur.

• 16:19Jason Calacanis?

  This is also very important. If failure in the United States, we champion it.

• 16:25Speaker 00

  Yeah, yeah.

• 16:25Jason Calacanis?

  We are excited to see. It's not what we want to happen. But when we see a founder fail, it's almost universally if they don't give up the precursor to later success. In Japan, the culture though of failure comes with shame.

• 16:44Speaker 00

  It used to.

• 16:45Jason Calacanis?

  It used to.

• 16:45Speaker 00

  Yeah.

• 16:46Jason Calacanis?

  When did it change and why?

• 16:47Speaker 00

  Um, I think it changed in the last ten years. Just to throw out a showcase number. When I joined Globis as a venture capitalist, there was only like three hundred million investment per year in all of Japan. But nowadays, we have like ten billion USD. So, you know, it's growing so fast. And one of my portfolio companies, Mercuri, was the very first unicorn, Japanese unicorn to go public, which went public in two thousand and eighteen. And only after seven years, we had.

• 17:17Jason Calacanis?

  Mercuri.

• 17:18Speaker 00

  Mercuri, yeah.

• 17:18Jason Calacanis?

  Yes, M E R C A R I. It's a marketplace.

• 17:22Speaker 00

  Yes, exactly.

• 17:23Jason Calacanis?

  Like Craigslist or eBay?

• 17:25Speaker 00

  Uh.

• 17:25Jason Calacanis?

  How would Americans think of it?

• 17:27Speaker 00

  Uh, it's, the equivalent is Poshmark.

• 17:30Jason Calacanis?

  Oh, Poshmark.

• 17:31Speaker 00

  Yeah, yeah.

• 17:31Jason Calacanis?

  So designer clothes or designed products?

• 17:35Speaker 00

  Initially started out from kind of design clothes for ladies and for kids because they, it's the same kind of seller. And there was a synergy between different categories. But as they grew, uh, they are dominant kind of secondhand app in Japan. So they kind of went into multicategories and they're basically all category right now. But the point I wanted to make was only after seven years of the first unicorn going public, we had seventy seven startups that was valued over one billion.

• 18:06Jason Calacanis?

  Wow.

• 18:08Speaker 00

  The caveat is that includes not only unicorns, but also includes those companies that touch down to the one billion dollar market cap line after one year of going public.

• 18:21Speaker 00

  So, one point I wanted to make is this is how vibrant Japanese startup community is and how much younger generation is becoming entrepreneurs and startups are becoming cool. So, the traditional kind of stereotype of Japanese wearing suits being what we call salaryman, you know, lifetime employment, that's totally gone right now.

• 18:45Jason Calacanis?

  Totally gone for young people.

• 18:46Speaker 00

  For young people, yeah.

• 18:47Jason Calacanis?

  They still have it as an option.

• 18:49Speaker 00

  Yes.

• 18:50Jason Calacanis?

  But they're now, it's number two on the list, number three on the list of possibility.

• 18:55Speaker 00

  Yeah, maybe. So, another kind of a showcase, it's like a joke, but I always tell, number one job thought after McKinsey is now startups.

• 19:04Jason Calacanis?

  McKinsey used to be number one?

• 19:06Speaker 00

  Uh, you know, it's one of the prestige, you know, jobs you can get and, you know, typically people might go join a big Japanese blue chip company to become one of the, you know, top management or something like that.

• 19:18Jason Calacanis?

  That was high status.

• 19:19Speaker 00

  Yes.

• 19:20Jason Calacanis?

  And now, high status has shifted for young people to being a founder or even joining.

• 19:25Speaker 00

  Associated with startups, yes, exactly.

• 19:27Jason Calacanis?

  This is very interesting for people to understand coming here. It's less transactional, it's more character based.

• 19:35Speaker 00

  Yes, yes.

• 19:35Jason Calacanis?

  Honor, karma.

• 19:37Speaker 00

  It's cool to be with startup, yeah.

• 19:44Jason Calacanis?

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• 20:28Jason Calacanis?

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• 20:44Jason Calacanis?

  So Shin, you're at Globus Capital Partners, 500 million dollar fund, new fund coming. You invest Series A, sometimes a little before and in the last round before they go public. We'll talk about going public. But for the founders here, what should this ideal meeting and what is the protocol here in Japan for getting that meeting and what is expected to occur in that meeting?

• 21:07Speaker 00

  I don't think there's much difference between, you know, having an investor meeting in the US. So to answer your first question about what the founder should do with the first meeting, so to be very tactical or like a hacker mind, I think the whole objective of the first meeting is to get the investors interested. You don't have to tell all of the story. You just want to focus on one single value proposition you have and get that investor interested in. Then, you know, once you get that investor interested, you would naturally have a follow up meeting or follow up questions. So single important thing is to get his interest. That's the only thing you need.

• 21:49Jason Calacanis?

  Right. You want them to understand what you're doing, understand why you're doing it, understand why you're the right person to do it. And then you want to get them to ask questions, yeah? And so what is the best way? Sometimes founders get a little nervous venture capitalists. Oh, they have the money. They anoint me. But you and I know, especially my time as an entrepreneur, I'm not sure, did you spend time as an entrepreneur as well?

• 22:16Speaker 00

  Not really, not really.

• 22:17Jason Calacanis?

  As an entrepreneur, when you're first starting out, it's very intimidating. And then later on, you look at venture capitalists, okay, they support my company, but I still have to run it. So I could use their capital. I could use their advice on the margins. So maybe you're not as enamored with it. What's the way to answer the questions when you ask, you know, a very basic question? How should the founder respond to it, especially if they're a little nervous?

• 22:46Speaker 00

  The very basic is, I think you should try, you're not the person being judged, you should also judge the investor. After all, especially for the lead investor, you you you're gonna be stuck with that person for like seven years or ten years, even longer.

• 23:02Jason Calacanis?

  Right.

• 23:03Speaker 00

  So you wanna select the investor who you can get along with, who you have the right chemistry with. So you should take off your mind that you're being judged, you're also judging your opponent, yes.

• 23:15Jason Calacanis?

  Hmm.

• 23:15Speaker 00

  And the game of getting the lead investor is not like the popularity kind of, you know, voting. You have to, the game is to find only one lead investor, the right investor. So, you know, even ninety nine lead investor, potential lead investor says, no, that's okay, if you get one, yes.

• 23:35Jason Calacanis?

  Right, it is a numbers game.

• 23:37Speaker 00

  Yes.

• 23:37Jason Calacanis?

  And that, I think, is very hard.

• 23:40Speaker 00

  Mm hmm.

• 23:40Jason Calacanis?

  For a founder to handle early on, rejection.

• 23:44Speaker 00

  Mm hmm.

• 23:45Jason Calacanis?

  And a no is the default.

• 23:48Speaker 00

  Right, and you know, when you get the rejection, you shouldn't feel that you or your baby is, you know.

• 23:56Jason Calacanis?

  Ugly.

• 23:57Speaker 00

  Ugly or, you know.

• 23:58Jason Calacanis?

  I said it, not you.

• 23:59Speaker 00

  Yeah, I know, but like, you know, it's very objective, so some person might think it's ugly, but it's a hypothesis that you think it's beautiful.

• 24:08Jason Calacanis?

  Hmm.

• 24:08Speaker 00

  And you have to find a person who agree with you, reckoning that is beautiful.

• 24:15Jason Calacanis?

  Yes.

• 24:15Speaker 00

  Yes.

• 24:16Jason Calacanis?

  This is, in a way, investor product or investor problem or investor market fit.

• 24:24Speaker 00

  Mm hmm, mm hmm.

• 24:24Jason Calacanis?

  The investor has to also be excited about it.

• 24:27Speaker 00

  Yep, yep.

• 24:27Jason Calacanis?

  And when I was early in my career, I had an investor say to me, when I was pitching early on, I'm just not so excited about what you're building, I'm not the right investor. And I was incredibly hurt, and I talked to my wife, who was then, I think, just my girlfriend, and I said, oh, man, it's terrible, she says, oh, that was like very kind of them. You you don't want that person to be your investor.

• 24:50Speaker 00

  Right.

• 24:50Jason Calacanis?

  If they're not excited about it, go find one who is excited about it.

• 24:53Speaker 00

  Yes, yes.

• 24:54Jason Calacanis?

  This is critical.

• 24:55Speaker 00

  Yeah, and you only need one, so it's okay, you know, if you're first time, maybe you're nervous, you may think that investors have the right answers, but we don't, nobody has.

• 25:07Jason Calacanis?

  This is very important. It's the humility. And sometimes people project into a successful investor. Oh, you did, you know, this incredible company that went public and the biggest IPO billion-dollar company. Oh, you invested in Uber, Robin Hood. You know what's gonna work. The answer is, we don't.

• 25:24Speaker 00

  Yes, exactly. So you have to find somebody who believes in your same hypothesis.

• 25:30Jason Calacanis?

  Funny story. I was training a new VC.

• 25:33Speaker 00

  Oh, yeah?

• 25:34Jason Calacanis?

  And I like to, I like to have the orchard. Not go to the market and get Apple. So I go to the orchard and I find talent out of school to train to be venture capitalists in the United States, right out of school. And I have this very smart young man working for me, very analytical, but also very candid, which I like about him. So he wrote an email and he wrote back, this founder has ugly baby syndrome. They don't know that their product is terrible, their execution is horrible, and they don't even understand the market they're going after. And they sent this email to the team, but they forgot and they didn't take the founder off the email.

• 26:19Jason Calacanis?

  The founder said, I'm sorry that you think my baby's ugly.

• 26:23Jason Calacanis?

  I wasn't involved, but then my partner, who was my first boss, who works for me now, Mike Savina, called me and he said, I've got an interesting situation.

• 26:35Jason Calacanis?

  And he calls me boss now, even though he was my boss. He's my big brother and he taught me a lot of what I know in business. I said, tell me, I love a good situation. And he said, well, you may not like it.

• 26:49Jason Calacanis?

  And he explained to me what happened and I laughed. And he said, sounds like a mistake you would make when you were young. I said, yeah, it does. So should we fire him, promote him? What do we do? And he said, let's talk to him. So we got the researcher, they started as a researcher, then they become an analyst, then they become associate. Very hard training program. We make them work 60 hours a week, like a Goldman Sachs program. Very hard. Try to break them. We want them to quit, because we want them to work as hard as I do and the rest of my team members. So I call the founder and I said, well, you know, obviously I'm very embarrassed. I said to the founder, would you like me to fire them?

• 27:32Jason Calacanis?

  For this terrible mistake? Or would you be willing for me to have them apologize to you and make it a learning lesson for them? And the person said, "Well, I don't want them fired. They made a mistake." "Yeah, I'm sorry that this happened." And I said, "No, it's not your fault." So then I went to the person and I said, "Would you like me to fire you? Would you like to apologize to the founder?" And he said, "If you have to fire me, I understand, but I already apologized to the founder." And he had already apologized. Took it to himself, you know, in the in-between time. So I said, uh, now, he's been working for me for two years. I think if I were to rank all of these trainees, and I think there's ten of them now,

• 28:14Jason Calacanis?

  I rank him as in the top two. Top two, Bianca, who's here, and Lucas, who wrote The Ugly Baby. I can only say his name now because he's so good. And I always make the joke with them. And now when he trains the new people coming in, he's in a, I think he's an associate now or analyst, I don't know. He's doing so well and his performance is so good. We always have that as a nice joke, a nice thing. But mistakes can happen and then do you act honorably? And he did.

• 28:45Speaker 00

  And probably one lesson to the investor side, I always tell myself and also maybe like the younger VCs, is that one, I think it's good to be candid. But being candid and being like judgmental or almost like emotional is a different thing. Being objective is very, so you know, you don't want to say it's ugly. You want to say why you don't think it looks functional or it doesn't look good. So you have to have like a communication program, a protocol, where you can actually debate about it with your opponent, the founder.

• 29:26Jason Calacanis?

  Yeah.

• 29:27Speaker 00

  So if you think it's ugly or dysfunctional, you should say why you think this is dysfunctional because it's not delivering the right function to fulfill the value proposition or something like that. It's okay.

• 29:45Jason Calacanis?

  Your AI is only as good as the data it's learning from. Every huge leap we're seeing in AI development is based on refining better data sets. And guess who came up with the ideal solution for your company? That's right, my pals at Uber. Did you all know as an early investor in Uber? Maybe you heard third or fourth. And I never talk about it, but it's true. And now Uber AI Solutions works with enterprises all over the world, helping them source, label, evaluate, and scale real-world, high-quality data for every industry. When you think about it, this makes total sense. No company understands how to maintain quality while scaling exponentially like Uber. Their own ability to refine and process data sets

• 30:27Jason Calacanis?

  is why they currently power millions of trips per hour. Now they're bringing that insane level of insight and expertise to your startup or enterprise. It's pretty exciting. Book a demo today by going to uber.com/twist. That's uber.com/twist.

• 30:45Jason Calacanis?

  What I tell my team is never underestimate anyone. You and I have experienced this. Somebody is very awkward. Maybe they show up at a meeting, there's a stain on their shirt, or they're nervous or sweating, or there's some product, or they have a misspelling. And then that person eventually becomes Mark Zuckerberg. You know? Because, by the way, we all start out awkward, unsure.

• 31:09Speaker 00

  And quite typically, well-rounded person is well-rounded. Thus, you know, you don't have that spike in one certain, you know, attribute.

• 31:20Jason Calacanis?

  Right.

• 31:20Speaker 00

  Sometimes the great founder has the huge spike, and the rest of it, he doesn't have anything, you know?

• 31:27Jason Calacanis?

  They have a zone of excellence.

• 31:29Speaker 00

  Yeah, yeah.

• 31:29Jason Calacanis?

  They have something that makes them very unique in the world. And there's a way to say it. Some venture capitalists maybe don't have a good bedside manner, like a doctor. And so the way to say it would be... Or the way I say it in the program, since you're here and I'm an investor, you may hear me say to you, I predict when you go to see venture capitalists, these are the things that they're going to be thinking. Would you like to hear those? And can I have your permission to speak candidly? Yes, tell me candidly, Jason. And I say, I think they're going to look at the design and they're going to judge a book by its cover. Your design right now in their mind will be a four of 10.

• 32:12Jason Calacanis?

  And we have some resources to help you get it from a four very quickly to a seven. And then getting from seven to eight, eight to nine, it's going to be very hard. But I think with, you know, just maybe we introduce you to a couple of designers. You read this book and you read these websites and you could really improve it. Kim, would you like us to introduce you to something? Yeah, yeah, yeah, please. The right founder wants to, you know, have that candidness. So how you say it is super important. And I'll also say, these three things I think are great. You love this problem. You've done great research on the customer. And then maybe some VCs, when you say you're going to pursue four different business models,

• 32:55Jason Calacanis?

  that will counter their experience, their lived experience. Their signaling will say, I don't know of another startup that had four revenue streams in years one. And they'll look at Amazon and say, Amazon added a second revenue stream in year seven. And Microsoft added a third one in year 20. And there's a way to communicate in a healthy way, yeah.

• 33:18Speaker 00

  But I think it's how the founders view the world and how you tie the context into the results of the business model. So if you think the external environment is very, very volatile, or if you think you're still in a P O C phase, you want to try out different business models. And if you can kind of explain why it's volatile, why you think there is like different scenarios of, you know, Having, potentially having different business model. And if you can just logically explain that you are in a testing phase to find the right one.

• 33:53Jason Calacanis?

  Hmm.

• 33:53Speaker 00

  But eventually, you might, you know, converge into one business model. Then it makes sense. But just kind of like adding different revenue stream just for the sake of making good looking P and L. It doesn't make sense.

• 34:08Jason Calacanis?

  Right.

• 34:08Speaker 00

  So it really depends on how you see your business context.

• 34:13Jason Calacanis?

  This is why VCs wanna talk a lot. They wanna understand how you're thinking, yeah?

• 34:17Speaker 00

  Yeah, yeah, yeah. So like every other VC, we had a, have a management presentation, which is the most important, kind of like a investment decision gate. What we look at as a partner, i- i- if I'm not in charge of the deal, is the thread of thinking of the entrepreneur. He doesn't have to be right. It's okay if, if he has kind of the right process of logical way of thinking. And you know, the precondition is in this kind of external environment, the logical business model is this. But, you know, once you start that business model, you may find out that the um recognition of the external environment was different. Then you would change your business model.

• 35:00Speaker 00

  But again, the founder is able to come up with the same kind of logical business model. So if the founder has that kind of, you know, logical thinking and if he is, has that capacity to replicate the same kind of, you know.

• 35:14Jason Calacanis?

  Hmm.

• 35:15Speaker 00

  Way of thinking, that's a very good sign and that's probably what like the IC looks for.

• 35:20Jason Calacanis?

  If they, the investment committee is.

• 35:22Speaker 00

  Yes, yes, IC, yeah.

• 35:23Jason Calacanis?

  Yeah, so this investment committee is gonna say, hey, what's the business model they're pursuing? And if you are the partner champion, you say, well, they're considering three different business models. They're leaning towards A, they're testing B, and they're pretty much ruled out C, but they're unsure.

• 35:39Speaker 00

  Right.

• 35:40Jason Calacanis?

  So they need to do some more thinking on it. I wanna talk to you about which business models you think. Get the best venture capital results. You don't want to be the sole source of funding, no. You want other investors to help too.

• 35:54Speaker 00

  Yes, so it's the nature of VC business, but you you want to get a kind of like a additional return compared to your competitor VCs, but at the same time, you're supporting a very kind of high risk business. So sometimes, but most of the time, the fellow VCs are your kind of collaborators who would support that business together with you. So in a time of hardship, you don't want to, it's quite risky to support, let's say, a startup in a down round, but if you have co-investors and it's it's the role of the lead investors to syndicate that kind of hard round too.

• 36:34Jason Calacanis?

  Yeah, this is the value that a great investor can provide. They're going to introduce you and explain to other investors when we have lunch or we're talking, going skiing, or whatever we're doing, VCs do spend time with each other and they say, hey, what are you investing in? What's interesting? And you say, well, this is very interesting and here's where it's at. We talk very candidly about it.

• 36:55Speaker 00

  Yes.

• 36:55Jason Calacanis?

  And you wouldn't want me to invest in something without knowing the complete story.

• 36:59Speaker 00

  Yes.

• 37:00Jason Calacanis?

  Because we have a relationship based on trust.

• 37:02Speaker 00

  You know, relationship based on trust, our kind of social equity is on the stake.

• 37:07Jason Calacanis?

  Yeah.

• 37:07Speaker 00

  So we don't want, I don't want to sell you, you know, crappy.

• 37:12Jason Calacanis?

  Yeah.

• 37:12Speaker 00

  Companies.

• 37:13Jason Calacanis?

  A broken car.

• 37:14Speaker 00

  Yeah.

• 37:14Jason Calacanis?

  A lemon.

• 37:15Speaker 00

  Exactly, exactly, exactly.

• 37:16Jason Calacanis?

  Because then I have a problem and then the next time when you have something great, I just, oh, maybe there's some hidden problem with this car as the transmission's no good.

• 37:23Speaker 00

  And then you would never co-invest with me. So it's a very long time business. So one cycle is long. It takes like, you know, five, 10 years for a result to come out for one company and one fund takes 10 to 15 years. And that's like how long the cycle is and we're continuing in that cycle. So it's it's all about long term relationship with your founders, your startup community, your co-investors, your LP investors. So we live in a very kind of long term kind of time horizon.

• 37:55Jason Calacanis?

  And we have many bets we place, many investments, so we have a built in diversification. The founder is all in on one thing. So that's also an interesting part of the dynamic, yeah?

• 38:07Speaker 00

  Yeah.

• 38:08Jason Calacanis?

  The founder could be very high anxiety. An investor might be, oh, in this fund, we have Uber. In this fund, you know, oh, so many great companies you've done. You have Kayak in this one. You, that fund you've already returned three X, four X. You feel calm. But sometimes an investor has a fund, it's underwater. Their second fund is underwater. First fund is great. Third fund they're raising. There are things that we have to deal with on a psychological basis. We'll get into that. I promise the audience, we talk about business models. Take me through what business models really work in 2026 and going forward. Which ones are the most investable from a venture capitalist and why?

• 38:51Speaker 00

  On the precondition that I think great business and great investment is two different things. And I want to invest in the overlap. So, you know, the definition of great business is, you know, you have different perspectives, you know, highly scalable, you know, that's kind of like a typical startup kind of great business. But let's say in, actually the longest standing company is actually founded in Japan. It goes on for about 1,500 years. It does like traditional kind of carpentry for Japanese shrine. And, you know, it's not scalable. It's not making huge amount of.

• 39:33Jason Calacanis?

  Wait, this is a real company.

• 39:34Speaker 00

  Yeah.

• 39:35Jason Calacanis?

  How many years old?

• 39:36Speaker 00

  1,500. That's the world's oldest company.

• 39:40Jason Calacanis?

  The oldest company in America is America. 250 years old.

• 39:48Jason Calacanis?

  It's something to think about.

• 39:49Speaker 00

  Yeah, exactly. So, you know, if I ask if that, you know, carpentry company for, you know, traditional shrine, is that a great company? Yes.

• 39:57Jason Calacanis?

  Incredible.

• 39:58Speaker 00

  Yeah, yeah.

• 39:58Jason Calacanis?

  It's not a venture company.

• 40:00Speaker 00

  Yeah, exactly. It doesn't have to have a highly scalable or high speed, but it's a great company.

• 40:08Jason Calacanis?

  Yeah, so you mentioned two things there, high speed, I think maybe high margin.

• 40:12Speaker 00

  Yep, yep, yep.

• 40:12Jason Calacanis?

  And scalable.

• 40:13Speaker 00

  Yep, yep.

• 40:14Jason Calacanis?

  Are these the main circles that we need?

• 40:16Speaker 00

  Yes.

• 40:16Jason Calacanis?

  And the overlapping ones is the, is the company that people would take public.

• 40:22Speaker 00

  Right.

• 40:22Jason Calacanis?

  It needs to have those components. It can't be low margin, it can't be low scale, it can't, it can't grow slow.

• 40:28Speaker 00

  Yep. To put it in a, as a way, VC investable great companies are very niche component of the great companies. And, you know, so to break down your perspective on high, high margin scalability and speed, I think it really comes down to exponential top line growth. And how do you say it? I, I forgot the English word, but the other way around of exponential. So the cost is coming down.

• 40:54Jason Calacanis?

  Yes.

• 40:54Speaker 00

  As the scale ups.

• 40:56Jason Calacanis?

  Yeah.

• 40:56Speaker 00

  Not like linear, but in a curve.

• 40:59Jason Calacanis?

  Yes. I, I am, yeah, that's the best way to say that.

• 41:02Speaker 00

  The other way around of exponential ways.

• 41:04Jason Calacanis?

  Yeah, I, i- if the, in a fixed cost business.

• 41:08Speaker 00

  Yep, yep.

• 41:09Jason Calacanis?

  The margin can keep increasing. So if you were to make a piece of software, the incremental customer, if it costs one million dollars to make the software a year, spend one million to make it, the first million dollars you break even. But then at a certain point, you, the fixed cost business, everything is very profitable after that, yeah.

• 41:31Speaker 00

  The point is, you have like the unit economics as a snapshot.

• 41:36Jason Calacanis?

  Yeah.

• 41:36Speaker 00

  As you scale, the unit ex- unit economics on the top line side and on the cost side both kind of improves.

• 41:43Jason Calacanis?

  Yes.

• 41:43Speaker 00

  Significantly. So in the end, your final business model is super, super beautiful.

• 41:48Jason Calacanis?

  Yeah. If you were to take the example of Robinhood or Uber, on Robinhood, they, which we were early investors in before they even launched the product, they have eleven business units that make a hundred million dollars now. And when they started, they had. One business unit making no dollars, you know, we could never have predicted that. But when they get a customer for one or two of those services. Now they've added prediction markets, now they add margin loans, now they add options trading. Now they add a retirement savings account, they added a credit card. As they add each one of those, they don't have to acquire the customer because they have the customer already. When Uber launched Uber Eats, on both sides, they have the drivers. So the drivers get more work in a marketplace dynamic.

• 42:33Jason Calacanis?

  And they already have the customer. So what they've tried to do is create this Uber One where they get people to use both products. And if you do that, oh, wow, yum yum. Yum yum is a technical term. It means lots of money, yum yum.

• 42:49Speaker 00

  So implication of that to the founders, especially when you're in a very early or seed phase. Is that, you know, you don't have to have that kind of yum yum unit economics right now. You don't have to realize it, but you have to have a hypothesis to have that five years down the road.

• 43:07Jason Calacanis?

  Right.

• 43:07Speaker 00

  Yeah.

• 43:08Jason Calacanis?

  And you can model that very simply on the back of an envelope.

• 43:13Speaker 00

  Exactly.

• 43:14Jason Calacanis?

  Okay, we're in one city, we have this many drivers and this many customers. But when we get to six cities and we can launch a city for, you know, a tenth of the price. And they already know Uber because they used it on their vacation. When Uber finally came to Tokyo, many people had heard of it before. So it's easier, each city became easier. On the traditional business models, you have e-commerce, you have consumer advertising, consumer subscription. You have marketplaces, you have API charging for consumption type businesses. You have enterprise cost per seat and obviously enterprise costs for utilization. Some people sell data or subscriptions, you know, it's more niche. What?

• 43:59Jason Calacanis?

  Which of these do you like most right now?

• 44:02Speaker 00

  I may not be answering your question directly, but other than the founders, single, next important thing is having the right market, the, the big market size, growing market size. If the TAM is growing, you know, only if you grew together with the TAM, even if you don't beat the growth of your market, you're growing, so it's easy. And the next thing you wanna do is how you can, you know, establish kind of like a exponential top line in that market. And improving your margins in the other way curve is, you know, you can think about it after you have that exponential

• 44:42Jason Calacanis?

  Yes.

• 44:42Speaker 00

  top line. So, you know, within that growing market, how you can outbeat the growth of the huge market and huge market growth, that's next after the market. And then, after that, as you run, you know, you can think about how you can exponentially decrease the cost side. So I think that's, that's like the, the priority order.

• 45:05Jason Calacanis?

  Yeah, it's um, very interesting when a founder figures this out. And first time founders, they, this is one of the great things a venture capitalist, a right partner can do, is they can say, hey, we can tell you some stories. This movie has already happened. Take a look at this company. Here's a marketplace similar to yours. Take a look at this e-commerce company. But your point is very important. If you pick a market, I remember people were building tools for newspapers. They were building tools for local television stations. In America, we have like very regional television stations. And they would make these incredible tools because those businesses had lots of problems. So those businesses would embrace it.

• 45:50Jason Calacanis?

  But because the newspaper business was going like this, you could not solve their problem.

• 45:55Speaker 00

  When in the late nineties, there was like a joke like startup saying, hey, there's a new tech, internet.

• 46:05Speaker 00

  It's gonna revolutionize the fax.

• 46:07Jason Calacanis?

  Right.

• 46:07Speaker 00

  Yeah.

• 46:08Jason Calacanis?

  Revolutionize it as in kill it?

• 46:10Speaker 00

  No, no, no. It was like a fax over the internet.

• 46:14Jason Calacanis?

  Yeah, fax over internet.

• 46:15Speaker 00

  Yeah, so they, they, you know, I raised like, almost like hundred million, but they went bankrupt.

• 46:21Jason Calacanis?

  Yes. They were literally allowing people to have a phone number that you could fax and it would send you a PDF

• 46:27Speaker 00

  Yes.

• 46:28Jason Calacanis?

  of the fax.

• 46:28Speaker 00

  Exactly, so, you know, you're gonna be

• 46:30Jason Calacanis?

  It's a transitional technology.

• 46:31Speaker 00

  Exactly.

• 46:32Jason Calacanis?

  Not a lasting technology.

• 46:33Speaker 00

  Exactly, exactly. So, I think, you know, what, what's important is not only looking at the superficial, superficial market, but the fundamental needs behind it and some means like fax or internet is only the means or the how of delivering that value. So, you know, maybe emails and fax, it, it provides the same kind of value proposition. Horse and motor cars.

• 47:00Jason Calacanis?

  Yeah. It's They're both transportation.

• 47:02Speaker 00

  Yeah.

• 47:03Jason Calacanis?

  Both are for sharing documents.

• 47:04Speaker 00

  Yeah, yeah.

• 47:04Jason Calacanis?

  But one is just so much faster, you would never use it.

• 47:07Speaker 00

  Right.

• 47:08Jason Calacanis?

  And sometimes you have to think at a very fundamental basis, well, what are people faxing? And you have to ask a more basic, first principle question.

• 47:15Speaker 00

  Yeah, yeah, yeah.

• 47:15Jason Calacanis?

  What do people fax? A lot of times they fax a contract. And that's DocuSign.

• 47:20Speaker 00

  Exactly, exactly.

• 47:22Jason Calacanis?

  You know, and a calendar, Calendly, you know, like, so there were some little ideas that became very large businesses, very simple ideas, like DocuSign or HelloSign.

• 47:33Speaker 00

  So I think you have to recognize the market in terms of like, not in terms of like superficial product market. So the, the failure of the fax internet company was you recognize the market as a fax market. Not like the document kind of sending market.

• 47:48Jason Calacanis?

  Right.

• 47:49Speaker 00

  So I think you have to understand the market as in the value proposition opportunity. And then you come up with a solution that provides the best fit solution to realize that value proposition.

• 48:01Jason Calacanis?

  I wanna talk to you about the greatest technological change of our lifetime. And I mentioned earlier, you and I are old. But we knew this one was coming. We, we knew AI was coming for forty years. And now it's here. Really great to catch up. And AI, we had machine learning. We were watching Big Blue and IBM with a supercomputer beat chess twenty years ago. It's slowly, slowly been coming and now all at once. It's affecting everything. And maybe you could talk a little bit about the pace and the opportunities.

• 48:39Speaker 00

  Yes, so in terms of pace, it's highly unpredictable. Definitely, it's very fast. And you know, it's much, much faster than we anticipated. Or you know, when we, when us older people go and look back to the internet, it was much slower in diffusing. But AI is much, much faster. But what we know is the direction of the change, but we don't, we can't predict the timing. So the way I look at it is, I think I would like to look down in the future, trying to find the path that would definitely come. But if you can't predict the time, that's okay. It would come eventually. So all you need is enough money so that you can, you know, wait for that time to come.

• 49:24Speaker 00

  But you know, if you're super certain about that coming, you know, you can bet on it and wait for it to come. Sometimes people say like, you know, when there is like a big wave coming, it's too late to go out and paddle. You have to, you have to have already paddled and be in the waters to ride that wave. So, but if you know the big wave is coming, you don't know whether it would come in one minute, five minutes, one hour. But if you see it coming, you should wait in the sea already.

• 49:52Jason Calacanis?

  Yes, they, I think the servers call them sets.

• 49:55Speaker 00

  Yeah.

• 49:55Jason Calacanis?

  Like a wait for the right set.

• 49:57Speaker 00

  Yeah, yeah, yeah.

• 49:57Jason Calacanis?

  And if you're in the game, if you're in the ocean.

• 50:00Speaker 00

  Right.

• 50:00Jason Calacanis?

  You can take advantage of it. But if you're on the shore, this is why it's important to start.

• 50:04Speaker 00

  Right.

• 50:05Jason Calacanis?

  But you're also speaking to being frugal and controlling your burn rate.

• 50:10Speaker 00

  Right, right.

• 50:10Jason Calacanis?

  And anticipating, hey, this could take time. If you look at AR and VR, you and I were talking twenty years ago, starting to happen here on desktop computers. Now we're finally. Have actual headsets, Apple is getting closer and closer with Apple Vision. Spectacles are getting better and better. It's close, but AI, my lord, it's changing not just what products we're building and the value proposition, but it's also changing how we build companies. What are you seeing? How are founders using AI to build companies faster, better? Do you have insights into it?

• 50:43Speaker 00

  Yeah, definitely, you know, AI has to be integrated into your business model. But again, it's about predicting the time. So what I always like to think when I'm thinking of my investment thesis, or even to advise the founders of my portfolio company is that, uh, look at the advanced use cases. So AI is a big word, but there are some advanced use cases, cases like this. Say, for example, autonomous cars, the tech is already ready, you know? You know, initially, people was in the main driver's seat. AI was just an assisting kind of tool. Then the role of AI became stronger and, you know, people just sat on the driver's seat

• 51:27Speaker 00

  to take responsibility because of the readiness of the society and the legal framework wasn't there. And finally, tech and the society is both ready, so there is full autonomous driving. And, you know, autonomous driving is a use, kind of one of the advanced use cases. You know, you already have Waymo and all that already, you know, put into use. But if you look at other application, even like enterprise solution or something like that, you hardly see any autonomous kind of, you know, fully agentic product yet. So the way I see it is in analogy to the autonomous driving is that, yes, the tech is there, it's, it's, you know, it's possible to build a product. But let's say if it's an enterprise product, your client might be very old.

• 52:12Speaker 00

  Especially in Japan, the big Japanese traditional companies may be very conservative and they don't wanna kind of implement fully blown like a autonomous AI agent.

• 52:25Jason Calacanis?

  Right.

• 52:25Speaker 00

  They would say like, who's gonna take the responsibility when it fails and things like that?

• 52:29Jason Calacanis?

  Risk is very important here.

• 52:31Speaker 00

  So that means your client, you know, in the analogy of autonomous driving, the society is not ready yet.

• 52:37Jason Calacanis?

  Yeah.

• 52:38Speaker 00

  So what's happening right now is there is like a human account manager and a quality assurance person.

• 52:46Speaker 00

  Who is just being there just to just for the sake of.

• 52:49Jason Calacanis?

  Human in the loop, monitoring.

• 52:50Speaker 00

  Yeah, yeah, monitoring. So that the client can feel safe and, you know, and the AI agentic kind of product is implemented within the workflow of the provider, not the client internally. So from the client perspective, it's just to be, you know, cheaper and more efficient BPO. But internal process on the supplier side, it's fully AI. And that's like the, you know, stage where there is like a human, you know, safety co-pilot is there. Maybe down the road, there's gonna become like fully aut- autonomous product where it would be implemented within the client's workflow.

• 53:32Speaker 00

  But you can't predict the time of readiness of the client side. And, you know, like regulatory issues like security or, you know, information, things like that. So in the short term, you have to take what is available on the table with a short term business model. But at the same time, it's pretty difficult to have a conflicting business model within your company. But it would dominate five years down the road. And you don't know when the switching time, timing would come. So you have to have both business model embedded.

• 54:04Jason Calacanis?

  And this is where the strategy comes in.

• 54:07Speaker 00

  Yes, yes.

• 54:08Jason Calacanis?

  As a founder, you have to figure out how to survive. So if fully autonomous cars aren't here yet, but you can give it to a driver so they're less fatigued. Which was the original idea, this will lower fatigue, maybe lower mistakes. Okay, great. Like adaptive cruise control. I'll keep you in the lane and that's, that's some value. Not the full value.

• 54:29Speaker 00

  And, you know, it kind of helps you develop elemental product, elemental technology to feed into the, you know, fully autonomous. Driving in the end, so it kind of leads the way into the end goal.

• 54:42Jason Calacanis?

  Shin, it's been amazing to spend an hour with you and catch up. Thank you so much for coming on This Week in Startups. And I'm gonna be here twice a year, so.

• 54:48Speaker 00

  Okay, great.

• 54:49Jason Calacanis?

  I don't know what your favorite restaurant is or food. Tell me now.

• 54:52Speaker 00

  Actually, you know, there's tons of Japanese great restaurants, you know, there's some restaurants.

• 54:57Jason Calacanis?

  I know, I've been to lots of them, yeah.

• 54:58Speaker 00

  Some restaurants you can't reserve ahead like two years.

• 55:02Jason Calacanis?

  Right.

• 55:02Speaker 00

  So, let me know.

• 55:03Jason Calacanis?

  But you're very important.

• 55:04Speaker 00

  Yes.

• 55:05Jason Calacanis?

  And you know everybody.

• 55:06Speaker 00

  And you know, as we said, we live in a longer time horizon, so two years is like, you know, two weeks down the road.

• 55:12Jason Calacanis?

  What's your favorite food right now?

• 55:14Speaker 00

  Right now, um.

• 55:15Jason Calacanis?

  What do you love?

• 55:16Speaker 00

  Maybe there's a restaurant, well, actually, there's a good sushi restaurant in Tokyo, Kyoicho.

• 55:24Jason Calacanis?

  Kyoicho?

• 55:24Speaker 00

  Mitani.

• 55:25Jason Calacanis?

  Ah, it's Omokase.

• 55:28Speaker 00

  Omokase.

• 55:29Jason Calacanis?

  Yeah, Michelin star or like more underground?

• 55:32Speaker 00

  It's not underground, but it's, it doesn't have a star, but it's super famous. Some of the best restaurants in Japan, they don't have stars.

• 55:40Jason Calacanis?

  They don't want them?

• 55:41Speaker 00

  Exactly.

• 55:42Jason Calacanis?

  Yeah, because they want to be for their customers and their community, yeah?

• 55:47Speaker 00

  Loyal customers with long, higher LTVs.

• 55:50Jason Calacanis?

  Yeah, they're actually thinking correctly. I found an interesting concept. I had heard that sushi used to be bar food.

• 55:59Speaker 00

  It was a fast food in Edo period, yeah.

• 56:01Jason Calacanis?

  Yeah, and so having done this research many years ago on the history of it, there used to be stand-up sushi bars. And when I came here, I was talking to one of my founders and they said, oh yeah, we were going shopping and he said, there's a stand-up sushi bar I like a lot in the basement of this department store.

• 56:18Speaker 00

  Right.

• 56:18Jason Calacanis?

  You should go to it. And I went, and you stand up and it's all these incredible cuts, incredible otoro, incredible Hokkaido uni, just all the best pieces, but the price is like half of the normal restaurant in Japan. You get it faster and you stand there and then there's a little hot spigot. And you take a little matcha powder and you make your own green tea. No waitresses, just orders from the chef, boom, boom, boom. And that is one-fourth of the price in the United States.

• 56:54Speaker 00

  Right.

• 56:55Jason Calacanis?

  It was so good. So I've been to two stand-up sushi places. Have you, you know about these?

• 56:59Speaker 00

  Yes.

• 57:00Jason Calacanis?

  Are they common or not common?

• 57:01Speaker 00

  Uh, pretty common. You actually have one in Haneda Airport too.

• 57:05Jason Calacanis?

  Haneda Airport has one?

• 57:06Speaker 00

  Yeah.

• 57:08Jason Calacanis?

  Really?

• 57:08Speaker 00

  Yes. Now you know where to find Jason.

• 57:11Jason Calacanis?

  We'll be there. All right. Let's give it up one more time for Shin Takamiya.

• 57:16Speaker 00

  Thank you.

• 57:18Jason Calacanis?

  All right, everybody.

• 57:20Jason Calacanis?

  We'll have one more episode or two on This Week in Startups from Tokyo. And it has been what a thrill and an honor and a privilege to get to spend time with these founders. We'll see you all next time. Bye-bye.