June 27th Startup People at Pangyo “Startup Culture in Japan”

During the June Startup People at Pangyo event, VP Seokyoung Hong gave a memorable lecture on the topic, “Are Your Customers Allowed to be Happy Just Once?”.

VP Seokyoung Hong is recognized by many corporations inside and outside of Korea. He has experience in working as a developer at companies such as Cyworld, Golfzon, and Picoma, and is currently working as a developer and is in charge of ‘Pairs’ at Eureka, a company that is a part of Match Group which is an American corporation. He is responsible for global business and marketing strategies as the leader of the global team and ‘Pairs’.

  • The characteristics of Japanese startups are information sharing , reproduction of success, and the growth of employees.

Although the difference is quite small, the reproduction of success is seemingly easier in Japanese startups than that of Korean startups. Japanese companies are not very different from other business fields such as satellites, robots, secondhand markets, finance, and AI. Each company is unique. The similarities that successful Japanese companies share are things such as investment attractions, M&A, and listed companies, but these factors are just means for business expansion. A company’s vision is considered most important in Japanese companies as it is related to the target customer’s values. The following summarizes how Japan’s venture companies have grown over the years.

1st Generation: Infrastructure business and investor model – SoftBank

2nd Generation: Platform based web-service model, mega-venture – Yahoo Japan, CyberAgent, DeNA  etc.

3rd Generation: Vertical field specialized mobile service – Startups (Eureka, ZOZOTOWN)

Recent Japanese startups combine craftsmanship and IT services, which means that they are IT services that updates slowly, but focuses on the values of the company. These startups emerged after reflecting upon the weaknesses the past Japanese manufacturers had. Past Japanese products were easy to use, but they lacked the reason behind the purchase. Japanese companies now aim to satisfy the customer’s needs in markets where customers make their own choices.

Therefore, Japanese startups aims to become a service that solves the customer’s problems or that satisfies their needs. The visions or mission statements of each startups are different, but the companies that have visions that connect with customer needs are often the most successful.

Hence it can be said that “needs x number of customers = marketability”.

Are Your Customers Allowed to be Happy Just Once?

It is more important to grab the loyal customer’s attention rather than increasing the scale of the business.

Needs x Number of Repurchasing Customers = Market Growth

The above equation could be the answer to the reproduction of success, one of the major characteristics of Japanese startups. Instead of selling products as much as possible at a low price, companies think about how to sell the product at a higher cost for a long time and focus on solving the problems that customers face.

In Japan, where long-living, high value services and products are successful in the market, it is more important to think about the continuous demand and sustainability of the service. A particular service or item is said to have potential in the market when it can be sold to a number of people at a higher value and higher price for multiple times. Eureka also puts a great amount of thought in developing services that customers are able to use for a long period of time. High value does not simply mean high quality services or high quality brands. The term ‘high value’ refers to services in which customers are willing to pay at a high price as they feel the service satisfies their needs and meets their values. Japanese companies tend to focus on creating long-term customer values rather than looking for short-lived business items.

Attracting high value loyal customers, aiming for high price. This is Eureka, one of the leading companies in Japan.

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