Japan’s startup ecosystem gets lift from Silicon Valley’s Hiroshi Menjo

Hiroshi Menjo, Managing Partner at Hack Ventures

Hiroshi Menjo, Managing Partner at Hack Ventures

Japan’s startup ecosystem is between 15 and 30 years behind that of Silicon Valley. The lack of infrastructure weighs heavily on Japan’s economy. Without a robust network of experienced entrepreneurs, mentors, capital providers and institutions that support startups, new business formations slip behind those of more adaptive nations. Silicon Valley venture capitalist and adviser Hiroshi Menjo hopes to change that.

He recently launched Hack Ventures, a firm which operates a $40 million (¥4.8 billion) venture capital fund in cooperation with the City of Osaka. The fund invests $500,000 – $1 million into promising IOT (Internet of Things) startups located in major Japanese cities and in Silicon Valley.

Through Hack Ventures he aims to bridge Silicon Valley’s software expertise together with Japan’s monozukuri culture which excels at making tangible products. He also hopes to broaden Japan’s startup ecosystem beyond Tokyo (where most entrepreneurs typically migrate) and to help plug the “Series A” funding gap — the round of finance just beyond seed capital. Most importantly, he wants Japan to become more accepting of people who think differently.

As a young man, teachers and bosses told Menjo that they disliked his blunt and direct talk. They told him he didn’t fit into Japanese society. Only after a stint studying for a master’s degree with other outspoken individuals at Boston’s Massachusetts of Technology did he see Japanese culture from a wider perspective. At MIT he felt fully accepted. Eventually he made Silicon Valley his home. Thirty-two years after moving to the US, Menjo says he now feels duty-bound to use what he has learned over the course of his career to pave the way for Japan’s younger generation of entrepreneurs.

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Menjo joined Konica Corporation in 1978 where he worked as an R&D chemical engineer on conventional film technology. Alarm bells rang in 1981 after Sony introduced the world’s first non-film camera, the Mavica. Then, Menjo realized that digital technology would one day make obsolete ordinary film. It seemed a mathematical certainty. Photochemical technology hadn’t changed in 100 years, while integrated circuits doubled their power every two years in accordance with Moore’s Law. What’s more, the crossover would likely happen within 30 years.

Menjo alerted management to this threat and asked to be reassigned to technologies that might come to replace conventional film. Instead of granting his wish, he was told to continue working on film. They said, “Your job is 100 times better than other jobs in the company. Just enjoy your work.” Menjo escalated his concerns. “We really need to study this,” he said, fearing that vested interests within the firm would delay the development of new technologies to the detriment of the overall company (a syndrome called the ‘innovators dilemma’).

Instead of being appreciated for his farsightedness, Menjo was labeled a rebel. He fell out with his bosses and was reassigned to work within a small 3 person R&D team, researching liquid crystal displays. To learn the latest advances in the technology, he convinced Konica to send him to MIT in Boston. It was a fortuitous move. Within a week of arrival on campus in 1983, Menjo discovered that behavior which was considered odd in Japan was considered normal at MIT. “I was always told that voicing my controversial opinions was abnormal. But at MIT, people thought I was perfectly normal,” he said. MIT professors, including those from Bell Labs, opened his eyes to innovation.

Within a week of arrival on campus in 1983, Menjo discovered that behavior which was considered odd in Japan was considered normal at MIT.

After obtaining his master’s degree in material sciences, Menjo returned to continue working at Konica in Japan. But he was soon put off by his manager. He wanted the firm to invest in a $10 million ‘clean room’ to advance LCD research. When asked for the money his manager replied, “Okay, come back later.” One year later Menjo asked again, but  the response was the same. Rather than waste another year, Menjo left Konica “to live a life at the edge of innovation,” he said.

After working for BCG as a consultant to global companies, Menjo moved to Silicon Valley where he has lived and worked in the information technology sector for the past 24 years. Among the people he has worked with is Regis McKenna, the man who helped Steve Jobs introduce Apple’s first personal computer.

In late 2012 Menjo became an adviser to the City of Osaka after Mayor Hashimoto asked his help to expand entrepreneurship in the city. Eventually Menjo got co-opted to launch the $40 million venture capital fund, 10% of which is funded by Osaka.

When asked why he took up the challenge that involves working with bureaucrats and producing burdensome government reports, Menjo explained that Japan needs a resilient startup ecosystem that spans many cities, not just Tokyo. “I felt obliged as few Japanese have lived in Silicon Valley or have the global experience that I do. It is important to the whole Japanese economy,” he believes.Hiroshi Menjo

 

 

 

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