The document discusses different approaches to acquiring empathy, which is essential for starting a successful business. It contrasts the "Gusto Zone" approach of building a team of ardent fans without experience (taken by early social media startups) versus the "Professional Zone" approach of building a team with seasoned industry experts. While the media portrays most investments going to the Gusto Zone, in reality over 60% of venture funding goes to more established sectors that fall in the lower risk Professional Zone. Building a team with experienced professionals is generally the better way to quickly acquire empathy outside of Silicon Valley.

1. Does
Silicon
Valley
Style
Work
in
Your
Place?
~
Seek
a
right
style
~
Chikafuji,
Ryu
fromBayArea.com
Beta
version

2. This slide shows my thoughts on how to
launch and foster high-value start-ups
outside the United States.
Chikafuji, Ryu(Taka Kondo)
April, 2012

4. SILICON
VALLEY
Part
I

5. The
most
significant
ability
for
business
is
empathy,
the
ability
to
understand
and
share
the
feelings
of
the
target
customers.

6. Empathy
is
the
source
of
both
encouragements
and
inspiraJons
which
make
your
team
innovaJve.

7. Empathy
Inspira2on
Encouragement
Imagina:on
Mo:va:on
Crea:vity
Passion
InnovaJon

8. Empathy
works
as
a
compass,
map
and
sails.
A
start-­‐up
team
without
it
can’t
voyage
to
the
new
world.

9. There
are
two
types
of
acquisiJon
for
a
start-­‐up
team
to
acquire
empathy,

10. A. Be ardent fans of your products /
service, and have “the right discipline
to think through whether a lot of other
people are going to want it(*)”.
(*)
Steve
Jobs,
CNN
Money,
Aug/03/2008
Apple
iPod’s
adver2sement

11. B. Build a start-up team with seasoned
professionals in your business area.

12. Social
media
start-­‐ups,
like
Facebook,
TwiPer,
etc.,
took
type
A
approach.

13. If
we
plot
the
entry
points
of
these
start-­‐ups
on
the
graph
below,
then
Needs/Market
<unknown>
Technical
Challenge
<exis:ng>
<low>
<high>

14. they
were
here
Needs/Market
<unknown>
Technical
Challenge
<exis:ng>
<low>
<high>
Facebook
/
TwiGer

15. There
was
liPle
technology
risk.
Market
risk
was
their
real
challenge.
But
nobody
had
markeJng
experience
in
this
area
because
there
had
been
no
such
market.

16. The
start-­‐up
teams
had
empathy
because
they
were
big
fans
of
their
service.
Probably,
they
also
had
the
right
discipline
to
think
through
whether
a
lot
of
other
people
were
going
to
want
it.

17. Needs/Market
<unknown>
Technical
Challenge
<exis:ng>
<low>
<high>
Let
us
think
about
this
area.
Facebook
/
TwiGer
Type
B
approach
can
be
available
in
the
other
area

18. The
most
significant
feature
of
Silicon
Valley
is
generous
supplies
of
talents.

19. Crazy
tech
guys
and
flighty
investors
are
not
the
only
residents
in
Silicon
Valley’s
business
community.

20. There
are
a
plenty
of
seasoned
professionals
in
markeJng,
sales,
finance,
IP,
logisJcs,
etc.,
…

21. …
from
a
variety
of
business
areas,
and
from
all
over
the
world.

22. If
an
entrepreneur
has
a
really
great
idea,

23. then
he/she
can
build
a
team
with
seasoned
professionals.
VP,
Marke:ng.
I
have
20+
years
experience
in
this
business
area.
13
years
10
years
VP,
Sales
16
years
VP,
Engineering
12
years
12
years

24. Such
a
team
can
quickly
acquire
empathy.

25. Successful
Silicon
Valley
entrepreneurs
have
an
average
of
13
years
professional
experiences
before
they
started.
*
Research
of
UC
Davis
&
New
Hampshire
Univ.,
2006

26. The
average
age
of
founders
in
Silicon
Valley
exceeds
40
when
they
started,
even
this
web
business
heyday.
*
For
instance,
Vivek
Wadhwa,
goo.gl/pfBdV

27. M.
Zuckerberg
(Facebook)
J.
Bezos
(Amazon)
R.
Hoffman
(LinkedIn)
B.
V.
VonderschmiG
(Xilinx)
N.
C.
Warren
(eHarmony)
R.
Shapiro
(LegalZoom)
J.
E.
Warnock
(Adobe
Systems)
J.
Dorsey
(TwiGer)
F.
H.
Moll
(Intui:ve
Surgical)
M.
Benioff
(Salesforce)
I.
M.
Jacobs
(Qualcomm)
W.
A.
Porter
(E*Trade)
20
30
40
50
60
70
Age
when
they
started

28. In
general,
experience
maPers.

29. Entry
points
when
they
started
Facebook
/
TwiGer
Salesforce
Adobe
Systems
Intui:ve
Surgical
Qualcomm
Xilinx
eHarmony
LegalZoom/
E*Trade
Amazon
LinkedIn
Needs/Market
<unknown>
Technical
Challenge
<exis:ng>
<low>
<high>

30. Let
us
classify
them
into
zones
of:

31. Needs/Market
<unknown>
Technical
Challenge
<exis:ng>
<low>
<high>
Too
risky
to
invest
zone
Too
compe11ve
to
invest
zone
Professional
Zone
Facebook
/
TwiGer
Salesforce
Adobe
Systems
Intui:ve
Surgical
Qualcomm
Xilinx
eHarmony
LegalZoom/
E*Trade
Amazon
LinkedIn
Gusto
Zone

32. • “Empathy”
is
the
most
important
ability
to
start
a
new
business.
The
way
to
acquire
it
is:
– Gusto
Zone’s
start-­‐up:
• Build
a
start-­‐up
team
with
ardent
fans
of
the
service
because
no
seasoned
professionals
exist.
– Professional
Zone’s
start-­‐up:
• Build
a
start-­‐up
team
with
seasoned
professionals.
Summary
of
Part
I

33. Due to recent mass-media reports, people
may embrace the illusion that most venture
investment go to “Gusto Zone”.
But the reality is:
Appendix

34. 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Other
Business
Products
and
Services
Healthcare
Services
Retailing/Distribu:on
Computers
and
Peripherals
Networking
and
Equipment
Financial
Services
Telecommunica:ons
Electronics/Instrumenta:on
Semiconductors
Consumer
Products
and
Services
Media
and
Entertainment
IT
Services
Medical
Devices
and
Equipment
Industrial/Energy
Biotechnology
Sokware
US Investments by Industry 2011(Money)
(*
based
on
PwC's
"Shaking
the
MoneyTreeTM
Q4/Full-­‐Year
2011
Update")

35. 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Other
Business
Products
and
Services
Healthcare
Services
Retailing/Distribu:on
Computers
and
Peripherals
Networking
and
Equipment
Financial
Services
Telecommunica:ons
Electronics/Instrumenta:on
Semiconductors
Consumer
Products
and
Services
Media
and
Entertainment
IT
Services
Medical
Devices
and
Equipment
Industrial/Energy
Biotechnology
Sokware
US Investments by Industry 2011(Money)
(*
based
on
PwC's
"Shaking
the
MoneyTreeTM
Q4/Full-­‐Year
2011
Update")
Gusto
Zone
is
just
part
of
this
area
Professional
Zone

36. 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Other
Healthcare
Services
Computers
and
Peripherals
Retailing/Distribu:on
Networking
and
Equipment
Financial
Services
Electronics/Instrumenta:on
Business
Products
and
Services
Semiconductors
Consumer
Products
and
Services
Telecommunica:ons
Industrial/Energy
Medical
Devices
and
Equipment
IT
Services
Media
and
Entertainment
Biotechnology
Sokware
US Investments by Industry 2011(# of deals)
(*
based
on
PwC's
"Shaking
the
MoneyTreeTM
Q4/Full-­‐Year
2011
Update")

37. 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Other
Healthcare
Services
Computers
and
Peripherals
Retailing/Distribu:on
Networking
and
Equipment
Financial
Services
Electronics/Instrumenta:on
Business
Products
and
Services
Semiconductors
Consumer
Products
and
Services
Telecommunica:ons
Industrial/Energy
Medical
Devices
and
Equipment
IT
Services
Media
and
Entertainment
Biotechnology
Sokware
(*
based
on
PwC's
"Shaking
the
MoneyTreeTM
Q4/Full-­‐Year
2011
Update")
Gusto
Zone
is
just
part
of
this
area
Professional
Zone
US Investments by Industry 2011(# of deals)

38. Top 10 deals in Silicon Valley: Q4/2011
Company
name
$million
Area
of
business
Dropbox
250
Sokware,
file
storage
and
sharing
service
BeGer
Place
200
Cleantech,
electric
vehicle
transporta:on
S:on
100
Cleantech,
thin-­‐film
solar
module
Portola
Pharmaceu:cals
89
Biotech,
biopharmaceu:cal
Soraa
89
Cleantech,
LED
bulb
Workday
85
Sokware,
enterprise
business
sokware
Fulcrum
BioEnergy
69
Cleantech,
bio
energy
Hearslow
65
Medical
device
&
equipment,
Guiding
system
Box
62
Sokware,
file
storage
and
sharing
service
Lithium
Technologies
53
Sokware,
social
CRM
solu:on
(*
based
on
PwC's
"Shaking
the
MoneyTreeTM
Q4/Full-­‐Year
2011
Update")

39. You may forget it, but the Professional
Zone is still a really Cool Zone.

40. THE
REST
OF
THE
WORLD
Part
II

41. Needs/Market
<unknown>
Technical
Challenge
<exis:ng>
<low>
<high>
StarJng
in
this
zone
is
OK
because
no
seasoned
professional
is
required.
Professional
Zone
Gusto
Zone

42. Actually,
China’s
Gusto
Zone
is
crazy
hot
as
well
as
Silicon
Valley
because
of
its
domesJc
market
growth.
0
100
200
300
400
500
600
700
800
China’s
internet
popula:on
will
be
almost
double
US
and
Japan
combined
by
2015(*).
(*)
Data
from
The
Boston
Consul:ng
Group
(Million)

43. *
Examples
of
Vietnamese
start-­‐ups
Not
only
in
China
and
Japan
but
also
other
naJons’
Gusto
Zone
are
also
hot
even
if
their
domesJc
markets
are
sJll
small.

44. The
Gusto
Zone
is
hot
but
it’s
too
hot
for
me,
so
my
interest
here
is

45. Needs/Market
<unknown>
Technical
Challenge
<exis:ng>
<low>
<high>
this
“Cool”
zone
Professional
Zone
Gusto
Zone

46. A
successful
story
in
the
Professional
Zone
in
Silicon
Valley.

47. InnovaJon
Empathy
Start-­‐up
Team
idea!
Professional
Experiences
A
founder
had
experience
in
the
field
related
to
the
target
market
–
as
a
tech
guy,
marketer,
researcher,
or
as
a
user.

48. InnovaJon
Empathy
Start-­‐up
Team
idea!
Seasoned
professionals
were
hired
not
only
from
Silicon
Valley
but
also
globally.
Experienced
Professionals

49. InnovaJon
Empathy
Start-­‐up
Team
idea!
They
made
full
use
of
their
empathy
from
day
one,
and
got
lots
of
inspiraJon
and
encouragement
through
their
acJviJes.
Inspira:on
Encouragement

50. InnovaJon
Empathy
Start-­‐up
Team
idea!
InspiraJon
fostered
creaJvity
and
encouragement
led
passion.
Finally,
the
original
idea
became
an
innovaJon.
Crea:vity
Passion

51. Another
story
in
the
Professional
Zone,
happened
somewhere.

52. A
founder
got
a
great
idea
and
decided
to
start
a
new
business.

53. Because
it
was
difficult
for
a
start-­‐up
to
hire
seasoned
professionals,
the
founder
had
to
hire
junior
and
amateur
guys
locally.
Start-­‐up
Team

54. The
start-­‐up
team
couldn’t
understand
and
share
the
feeling
of
the
target
customers,
and
wasted
too
much
Jme.
Start-­‐up
Team
Chaos
Far
from
Empathy…

55. The
window
of
opportunity
was
closing.
The
idea
failed
to
become
an
innovaJon.
Start-­‐up
Team
Chaos
The
idea
failed
to
become
innova:on
Give
up

56. In
many
areas
in
the
world,
it
is
fairly
difficult
to
organize
a
start-­‐up
team
with
experienced
professionals(*).
(*)
Israel
may
be
an
excep:on,
the
na:on
has
great
talent
pool
for
high-­‐tech
start-­‐ups;
furthermore,
many
Israeli
start-­‐ups
easily
move
to
Silicon
Valley.

57. PracJcally,
a
start-­‐up
team
needs
a
kind
of
preparaJon
period
to
culJvate
the
team’s
Empathy.

58. Case
Study

59. Tokyo
Electron
Limited,
a
world
leading
manufacturer
of
LSI
and
FPD
produc:on
equipment,
the
company
name
became
synonymous
with
“High-­‐Tech
company”
in
Japan.
Case-­‐1
Revenue
$8.04
Billion(2011)
Net
income
$865
Million(2011)
Market
Cap
$9.83
Billion
(April,
25,
2012)

60. Tokyo
Electron
Laboratories,
Inc.(*)
was
founded
in
1963,
as
a
trading
company.
The
company
imported
cuzng-­‐edge
technology
products
such
as
IC
testers,
electronic
components
and
semiconductor
produc:on
equipment
into
Japan.
(*)
Today’s
Tokyo
Electron
Limited.

61. In
1969,
the
company
entered
the
market
to
design
and
develop
a
semiconductor
produc:on
equipment.
About
five
years
experience
in
sales
and
customer
support
enabled
the
company
to
acquire
the
ability
to
understand
and
share
the
feeling
of
the
target
customers.

62. Case-­‐2
Acer(Mil:tech)
was
established
in
Taiwan
in
1976
as
a
trader
of
electronic
parts
and
a
consultant
in
the
use
of
microprocessor
technologies.
(*)
Ref:
Acer’s
web
site
and
Wikipedia

63. Acer
released
“Micro-­‐Professor
MPF-­‐I”
in
1981,
the
company’s
first
computer
product.
The
company
obtained
interna:onal
reputa:on
through
the
success
of
“Micro-­‐Professor”
series,
especially,
in
European
market
during
1980s.
Micro-­‐Professor
MPF-­‐I
Photo
by
“Toytoy
on
en.wikipedia”

64. I
would
say
that
several
years
of
experiences
in
sales
and
consul:ng
fostered
the
ability
to
understand
and
share
the
feeling
of
their
target
customers.
Acer
group
became
one
of
the
biggest
PC
maker
in
the
world;
the
company
owns
Gateway,
Packard
Bell,
BenQ,
AUO,
AOpen,
etc.

65. Crea:ve
Technology,
a
Singapore-­‐based
company
established
in
1981
as
a
computer
repair
shop.
The
company
ini:ally
treated
the
Apple
II
computer,
then
IBM
PCs.
Case-­‐3
Apple
II,
Photo
by
Marcin
Wichary

66. In
1987,
the
company
released
their
own
product,
a
sound
generator
card
for
IBM
PC
architecture,
widely
known
as
“Sound
Blaster”.
*
Ref:
“Wikipedia
–
Crea:ve
Technology”

67. About
six
years
experience
might
enable
the
company
to
understand
and
share
the
feeling
of
target
users.
As
you
may
know,
“Sound
Blaster”
dominated
the
PC
audio
market
during
1990s.

68. Case-­‐4
Huawei
Technologies
is
a
networking
and
telecommunica:ons
equipment
and
services
company
headquartered
in
Shenzhen,
China.
Revenue
$29.3Bilion
Net
Profit
$3.8Bilion
Employee-­‐owned
corpora:on
(2010)
*1CNY=0.16
USD

69. The
company
was
established
in
1987
as
sales
agent
for
Hong
Kong’s
PBX-­‐switch
company.
In
1990,
the
company
embarked
on
research
and
commercializa:on
of
their
own
PBX
technologies
targe:ng
hotels
and
small
enterprises.
Experience
in
sales
and
support
must
advance
their
empathy
to
develop
their
own
products.

70. In
1992,
Huawei
launched
digital
switching
solu:on
and
generated
sales
RMB
1.5Billion
in
1995.
Huawei
has
con:nued
to
invest
in
technologies,
and
46%
of
the
110,000
employees
are
engaged
in
R&D.

71. Huawei
began
interna:onal
expansion
in
1997,
and
75%
of
the
sales
is
generated
from
overseas
markets
in
2010.
Huawei
was
ranked
5th
most
innova:ve
company
in
the
world
by
Fast
Company
in
2010.

72. Case-­‐5
DeNA
is
the
world’s
largest
mobile
social
gaming
plasorm
provider,
headquarters
in
Tokyo.
Revenue
$1.4Bilion
Opera:ng
margin
50%
Market
cap
$4.7Bilion

73. DeNA
was
founded
in
1999
as
an
eBay
clone
service
provider.
At
that
:me
eBay
hadn’t
entered
the
Japanese
market,
but
Yahoo!
Auc:on
was
launched
at
the
same
:me.
(*)
NTT
Docomo
started
i-­‐mode,
the
world
first
mobile
internet
service,
in
1999.

74. DeNA
struggled
and
decided
to
shik
their
emphasis
from
PC
to
mobile
in
2002.
In
2005,
when
the
mobile
auc:on
service
was
just
star:ng
to
take
off,
the
company
got
an
idea
called
“mobile
social
gaming
plasorm”.

75. Six
years
had
passed
since
establishment,
the
company
became
an
experienced
professional
team.
The
mobile
social
gaming
plasorm,
“mobage”
was
launched
very
smoothly,
and
the
business
has
been
growing
extremely
quick.

76. All
of
these
companies
took
a
similar
route
regardless
of
the
founder’s
intenJon.

77. InnovaJon
Empathy
idea!
in
Emerging
market
Prepara1on
Period
Start
Acquire
Empathy
Vision!

78. Every
company
entered
emerging
business
area
Business
Area
Business
when
they
entered
Tokyo
Electron
Semiconductor
(1963)
Trader
Acer
Microprocessor
(1976)
Trader
and
Consultant
Crea:ve
Technologies
Personal
Computer
(1981)
Repair
Shop
Huawei
Telecommunica:on
(1987)
Sales
Agent
DeNA
E-­‐Commerce
(1999)
eBay
Clone

79. Every
company
entered
emerging
business
area
as
a
non-­‐technology
company.
Business
Area
Business
when
they
entered
Tokyo
Electron
Semiconductor
(1963)
Trader
Acer
Microprocessor
(1976)
Trader
and
Consultant
Crea:ve
Technologies
Personal
Computer
(1981)
Repair
Shop
Huawei
Telecommunica:on
(1987)
Sales
Agent
DeNA
E-­‐Commerce
(1999)
eBay
Clone

80. Every
company
entered
emerging
business
area
as
a
non-­‐technology
company.
Business
Area
Business
when
they
entered
Tokyo
Electron
Semiconductor
(1963)
Trader
Acer
Microprocessor
Trader
and
Consultant
Crea:ve
Technologies
Personal
Computer
(1981)
Repair
Shop
Huawei
Telecommunica:on
(1987)
Sales
Agent
DeNA
E-­‐Commerce
(1999)
eBay
Clone
Prepara1on
Period
Acquire
Empathy

81. Prepara1on
Period
Acquire
Empathy
These
companies
took
preparaJon
period
regardless
of
the
founder’s
intenJon.
Trader
Consultant
Sales
agent
Repair
shop
Clone
Service
…

82. Empathy
is
the
most
important
ability
for
business.
And
this
kind
of
preparaJon
period
develops
start-­‐up
team’s
empathy:

83. communicate
with
target
customers,
True marketing says, “These are the satisfactions
the customer looks for, values, and needs.”
– Peter F. Drucker

84. enhance
a
human
network,
Today knowledge has power. It controls access to
opportunity and advancement.
– Peter F. Drucker

85. and
build
a
team.
Alone we can do so little; together we can do so much.
– Helen Keller

86. PreparaJon
period
is
a
key
process.

87. More
haste,
less
speed

88. Four
Steps
for
preparaJon
period

89. I. Define
target
market
II. Seek
a
business
opportunity
in
the
preparaJon
period
III. Start
small,
grow
smart
IV. “Keep
looking,
don’t
sePle”

90. I.
Define
target
market
• First
of
all,
make
sure
that
you
have
a
passion
to
do
business
in
the
target
market.
• Emerging
business
area
is
good,
but
not
limited
to
so
long
as
you
and
your
folks
have
a
passion
for
the
business
area(*).
(*)
For
example,
a
UK
manufacturer,
“Dyson”
successfully
entered
the
vacuum
cleaner
market,
a
saturated
market,
with
cuVng-­‐edge
technologies.
He
had
worked
as
a
licenser
for
14
years
a[er
designing
prototype,
then
established
Dyson
Ltd.

91. II.
Seek
a
business
opportunity
in
the
preparaJon
period
• The
purpose
is
to
develop
your
team’s
ability
to
understand
and
share
the
feeling
of
the
target
customers.
The
following
are
examples
of
businesses
which
enable
you
to
develop:
Ø Importer/sales
agent
Ø Technology
consultant
Ø Repair
service
firm
Ø Clone
service
provider
/
Clone
product
maker
etc.

92. III.
Start
small,
grow
smart
• Start
small(of
course)
• Enhance
a
human
network
and
uJlize
(open)
innovaJon
system
Ø Universi:es
/
Na:onal
Ins:tutes
Ø Professionals
in
other
industrial
fields
Ø Foreign
high-­‐tech
companies
etc.
• Organize
internal
R&D
team
as
early
as
possible.

93. IV.
“Keep
looking,
don’t
sePle”
idea!
• Look
for
new
business
idea
which
makes
your
hearts
sing.
• “Keep
looking,
don’t
sePle”

94. Summary
of
Part
II
• In
many
places
in
the
world,
a
start-­‐up
team
needs
a
kind
of
preparaJon
period
to
start
business
in
the
professional
zone.
• This
slide
showed
some
case
studies
and
provided
a
direcJon
for
the
preparaJon
period.

95. THANK
YOU
fromBayArea.com