Code Chrysalis cofounder and COO Yan Fan made a bold choice with her coding bootcamp company: She founded it in Japan. She and her business partner, Kani Munidasa, had lived for years in Silicon Valley, where startups are a dime a dozen. They saw Tokyo as a source of untapped talent and investment.
Not that they expected it to be easy. As a foreigner, Fan knew the deck was stacked against her, but Japanese work culture, endless red tape, and lack of support still came as a big shock.
With Japan facing a huge tech talent shortage, many expected digital nomads to set up shop in the country. But even back in 2015, Inc. reported that Japan was the fourth least entrepreneurial country in the world, and the pandemic hasn’t done the situation any favors.
We recently sat down with Fan to discuss her experience as a startup founder amongst this adversity, what she believes Tokyo could learn from Silicon Valley, and why there’s hope for Japan yet.
Choosing Japan as a Startup Launchpad
Insights: You faced some hurdles starting a business in Japan. Can you share some of the toughest lessons?
Fan: We needed to have some cash going in because a lot of the products that we relied on in Silicon Valley weren’t available—services that do your HR, taxes, and even legal work. [Silicon Valley] is set up to encourage people to build companies, and that just isn’t here in Japan. If you want to have the paperwork done for your company, you have to spend lots of money or lots of time.
GLOBIS Insights: Why did Japan appeal to you, despite all that?
Yan Fan: Japan is sometimes overlooked or overshadowed by China, but it’s still one of the largest economies in the world.
I get the impression from Japanese people that they always feel like they’re the underdogs. And I tell them, “No, you’re not the underdog. This culture has captured the world’s imagination.” Oftentimes, when we say that Japan is a launchpad for us to the rest of the world, Japanese people are shocked that we have a global strategy starting in Tokyo.
Insights: What impact are you hoping to have in Japan as an entrepreneur?
Fan: We want to provide Asia access to tech opportunities through training software engineers, starting with Japan.
Japan has all the right ingredients for us. Large companies with lots of human resources, pride in the Japan tech boom, ambitions to reclaim that leadership seat, a unique culture, and strong soft power. Plus the company cash reserves to try things out.
This is a major business opportunity. We are helping both individuals make a career change, but also helping and companies reskill their workforce so they can compete more effectively now and in the future.
Tokyo’s Startup Community
Insights: It sounds like there are a lot of unique, unexpected challenges for startups in Japan. Who do you go to for advice?
Fan: A big problem that I’m facing right now, and in the beginning, is mentorship. It’s difficult to find people who are in our position. Our company is about twenty-five people right now, and we’re looking to expand. There are only a few people that I can go to in Tokyo who have gone through the process of growing into a larger company, dealing with Japanese bureaucracy, and whatnot. That kind of mentorship is hard to come by.
A lot of times, we’ve had to lean on friends of ours, connections that we have in Silicon Valley. But they don’t understand [the challenges in Japan].
Insights: What about the people you work with directly?
Fan: We are not seeing much movement in the talent pool. It’s locked up in companies.
In Japan, when you’re trying to hire someone with management experience, even if you find them, they are very loyal to the company. That loyalty is great, but it’s also bad in terms of creating innovation. What’s great about being able to change companies is that you’re taking ideas from one place to another. There’s a cross-pollination that happens.
Insights: So when people at senior levels in Silicon Valley decide to change companies, is that driven by innovation? Or is there another motivator?
Fan: I think pay is a huge one. Your pay right now in Japan is tied to the number of years you’ve been at the company. But in San Francisco, your pay increases when you go to another company, sometimes very significantly. And because you’re getting shares, you also want to diversify. So four years here, four years there, you start building a nice stock portfolio.
People [in Japan] don’t want to change companies because they know that their compensation is going to get docked.
Leveraging Uniqueness in Japan
Insights: What are some differences in mentality between San Francisco and Tokyo?
Fan: In Japan, people need time to sit with an idea or product, to explore it, before they make their next step. So there is a bit more hesitancy. They are also more low-key and less likely to want to draw attention to themselves.
In San Francisco, I felt like people were always sharing their knowledge or ideas with you. It was a very open culture of learning and teaching, and I loved that. No hesitation, no shyness. It also meant that it was easier for innovation to flourish because ideas are tested, combined, and shared.
These are generalizations of course, but I felt like they dominated my experience of the two cities.
Insights: Japan has a reputation for being traditional and high-context, but also a bit wacky. How does that impact the startup community?
Fan: I think living here, we see the creativity that happens. You go to Harajuku on a weekend, and it’s all these different ideas and ways of dressing. But then when Monday hits, everyone puts on this uniform, they shed their identities, and they go into work. I think that’s what’s great about companies like Google where they push being yourself. I know Google has all kinds of diversity issues, but they are a company that has been quite revolutionary. They promoted the idea of having fun at work, that it’s OK to be silly.
What’s incredible about Japan is that it’s still innovative and crazy, even if this is just a small fraction of what is allowed to survive. Can you imagine all the cool things that could be possible if we cracked the door open a bit more?