Building an internet startup in one of the least hospitable places on earth: Japan

For those considering a start-up, the story of Jason Winder’s new venture, MakeLeaps, provides an uplifting educational and inspiring read. Winder came to Japan in 2001 speaking little Japanese and without a college education. Yet with drive, focus and passion, he is now working on his second venture. Winder is an Ichiban Entrepreneur.

Winder began working for an IT consultancy shortly after arriving in Japan. He jumped at the chance to set up on his own, when a client asked him to manage an IT project as an independent subcontractor. Winder’s new IT services company expanded through recommendations as his client got bigger. To service new clients, Winder took on employees. “I had to work hard and learn fast,” he said. Just when he was starting to feel he was getting a handle on things, he’d get sucker punched by some new category he had never considered before. Negotiation, sales, contracts, accounting and human resources — he had to learn all the basics of business. Along the way, he had to improve his Japanese. This early experience provided him with a well-rounded business education earned out of necessity.

The business grew. By 2005 Winder was mailing 20 – 30 invoices each month. That might not sound like many, but each invoice was supported by a countless number of time sheets. Winder’s life became an administrative headache. “It took 3 staff members about one week to prepare the monthly invoices,” he said. That’s when he got the idea to automate the invoicing.

The solution Winder built over a period of years was not sexy, but it reduced the monthly workload to a single person consuming fifteen minutes. He had personally experienced and successfully solved the “pain” of invoicing within his own company and felt sure other small business owners could benefit from the same.

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He showed his software to a friend: “Click this you get invoices; click that you get reports.” His friend said, “That’s really cool. How much is it?” Winder replied, “It’s not for sale.” He took it to another friend, who also wanted it. Winder reiterated, “It’s not for sale.” Finally, he took it to a third friend. That friend said, “I need this for my business.” Again Winder said, “It’s not for sale.” His friend retorted, “You don’t understand, I NEED THIS FOR MY BUSINESS.” His friend’s message was clear.

Winder had a first client, but he could not supply product. The software worked for his own purposes. But the code was never built to clean, clear specifications, and was designed from the ground up to be used by only one company. If it was going to be used by others, the entire system needed to be rebuilt with a stable foundation from scratch.

That’s when Winder got lucky and met Paul Oswald. Oswald was a software architect who had just come to Japan having left his job at Sony Music in New York. The two hit it off and together founded the cloud based invoice solution’s company, MakeLeaps.

Winder had other things going for him too. His first venture of which he was sole shareholder provided an economic base from which he could explore new ideas. It was cash flow positive, debt free, with a staff of eight.

Still, Winder was nervous. Overseas, companies were already using online invoicing services. But in Japan, few were using them. Everyone was still using Word and Excel to produce their invoices. Perhaps Japanese tradition or custom precluded use of the alternatives? Winder thought, if you pitch your company to a venture capitalist, the VC will say, “The idea sounds good but, who are your competitors?” Winder had no substantial competition. That answer is usually a huge red flag. It can mean there isn’t a market.

Winder knew he had to talk first to many potential clients before developing the product. He needed to determine what problems they had, what features might be useful, and to make certain there was a genuine need for it all. Peter Drucker once said, “There is nothing quite so useless, as doing with great efficiency, something that should not be done at all.” Winder wanted to avoid that trap. Further, he did not have deep pockets to come back from a serious setback, so he had to make intelligent use of his limited resources. He had to avoid building anything for which there was not a genuine need. Otherwise, Winder said, “you end up with the builder’s dilemma — you’ve spent hundreds of thousands of dollars and months or years building a perfect solution for yourself, that doesn’t work for anyone else. Then you go out of business.”

Winder set about to build a minimal product, to get it in front of as many potential clients as he could, and to only add features that were actually needed. He took his software to the first willing prospect he could find and said, “We’ve got this first version, would you be interested in trying it?”  “Sure,” the client replied. The client pressed the “create invoice” button, and waited. After what seemed like ages, he said, “It’s good, but too slow. We would never use it.”

Winder went away and made the program faster. He took it back and showed it to the client. The client responded, “Yes, it’s fast, but there’s no official company seal (判子) on the invoice.” Winder asked, “Is that really necessary.” The client nodded.

Winder went away and added the seal. Again, he took it back to the client who said, “Yup, it’s fast, it has the seal. But it doesn’t have a logo.”

Winder was agitated, but unwavering. He went away, added the logo, and took it back to the client a third time. “How is it now,” Winder asked? “It’s fast, there is a seal, it has a logo, but….. I want a different layout on my invoices.”

Winder paused. The development work to change the quote and invoice layouts would take months. He also knew that what one person thinks is critical for him, might be unnecessary for 99% of the market. Winder gritted his teeth and replied, “Sorry, we can’t fix that right now. Will you still use it?” The client paused before responding, “Alright, we’ll give it a go.”

Lo and behold, Winder had his first paying client.

No sooner had Winder begun showing his software to other prospects, when he hit another road block. People were saying, “It’s a really good product. It is reasonably priced. But, who else is using it?” In consensus driven Japan, where nobody budges unless the next guy is doing the same, Winder faced a chicken and egg problem. Prospects had legitimate concerns too — MakeLeaps provided an unknown service. Perhaps it would disappear overnight?

Winder was stumped. He proved he could solve technical problems. But this time WAS DIFFERENT. Neither he nor his partner could solve the marketing problem. They thought long and hard.

Then one day Winder was researching accounting software. The leading package in use in Japan was Yayoi Kaikei, an expensive and difficult to use product. Most business owners when asked said, “It’s terrible software. It takes weeks to learn and is difficult to use.” Winder watched someone being trained on Yayoi Kaikei. It was one of the most painful things he’d ever witnessed. So he asked, “Why on earth would you buy this terrible, terrible software?” The answer was, “Our accountant told us to.” Winder experienced a light-bulb moment.

Accountants spend much time inputting invoice data into Yayoi Kaikei. Up to tens or hundreds of hours a month in fact, for a big firm. Which, according to Winder was, “kind of crazy.” Customers need to create and send invoices anyway, so Winder came up with the idea to automatically export their invoice data to Yayoi Kaikei. He approached accountants and posed the question, “What if the work you hate doing, data entry, was done by your customers? And, what if we paid you commissions when they used our product? You would be saving hundreds of hours of work you don’t like, and you get paid for it. Would you be interested in that?”

The answer was, “Yes.”

Once Winder had figured out how to make their software of interest to accountants, MakeLeap’s invoicing solution was a very easy sell. Nobody challenges the advice of their accountant. As a result, a few thousand companies in Japan are now using MakeLeaps.

Winder’s drive, focus and passion is what makes him an Ichiban Entrepreneur. About his work, Winder said, “The most exciting thing for a software engineer is to see someone using the product that they have created. What’s super exciting for me too, is to get a team together to work on a product, and then see someone actually getting value from it. This is like nothing I’ve ever experienced. It is tremendously satisfying and gratifying, and loads of fun.”

Jason Winder is one of many Ichiban Entrepreneurs that today are successfully starting new ventures in Japan. If you are an Ichiban Entrepreneur with a unique story you think would be of interest to our readers, please tell us about it here.

Jason Winder is cofounder of MakeLeaps
and President of Webnet IT.

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