Ask "Why Now?" of Startup Support, Too
This article was machine-translated from Japanese by AI (Claude). It may contain errors. Read the original Japanese article.
The government-led Five-Year Startup Development Plan is reaching its halfway point, and regions across Japan have begun actively supporting startups. However, I feel somewhat uneasy about the fact that the support methods being used seem to be either those from five or ten years ago taught as they are, or overseas support programs imported wholesale.
Many entrepreneurship support programs teach customer development, lean startup, and design thinking techniques. I do think these are still quite effective for starting small businesses. However, I suspect that if the goal is high-growth startups, lean startup and similar approaches are not very effective in Japan (see, for example, the article below).
More than ten years have passed since those methods were introduced, yet Japan has not produced all that many unicorns. Financial issues, such as VC fund sizes being relatively small, may be part of the reason, but even more than that, I think we cannot deny that there were limits to conventional startup methodologies and support methods.
And my argument in this article is that, to break out of this state, the question "Why Now?" may be most useful for the support side itself.
Note that this article is not about ordinary entrepreneurship; it deals strictly with high-growth startups. Some regions may also need ordinary entrepreneurship, so
① The types of startups to support differ by era
Rather than ordinary entrepreneurship, startups that aim for rapid or high growth (high-growth startups) differ in type from era to era. If the 2000s were about web apps, the 2010s were about smartphones and SaaS. Going back further, in the 1970s it would probably have been semiconductors and the like.
Timing is said to be important for a startup to grow rapidly or at a high rate. That is probably because new opportunities suddenly appear, and as time goes on, the opportunities in a particular field get used up. Including this background, it means that different startups emerge in each era.
That is exactly why startups are asked "Why Now?" This is the well-known question: "Why this business now, not two years from now and not two years ago?"
I think this question should be asked of the support side as well. The question is: "Why do you think this support is effective now, not two years from now and not two years ago?"
This is because, as mentioned above, the types of startups change with the era. Different types then require different support. Those who support startups must catch up with the latest conditions and keep refining their support methods. Those methods may well differ from conventional ones.
② The best methodology differs by country
Especially over the past fifteen years or so, it has been lean startup and design thinking. These methodologies convey the importance of first confirming customer demand.
This way of thinking is itself very important. It will raise the probability of capturing early demand. But whether a startup then grows rapidly or at a high rate beyond that demand is a separate matter.
In fact, in my experience, applying lean startup or design thinking without careful thought tends to lead to small-business-style ventures. That is because they basically optimize for the problem right in front of you.
The reason these methods worked exceptionally well in Silicon Valley in the United States is that the environment there was such that if you captured cutting-edge demand in Silicon Valley, it connected directly to the large American market, and from there naturally to the global market. The startup environment of Silicon Valley is one in which, even if you set aside various strategies and optimize for what is in front of you, things tend to work out later, and at the time it was also a good fit with the software field.
In Japan, on the other hand, doing so makes it easy to build businesses optimized for a truly small market. Even if they succeed, the ceiling of the market becomes Japan, and there is a discontinuity in subsequent global expansion; it cannot be called as continuous as in the United States.
If we wanted to produce unicorns and the like from Japan, a different approach from these was probably needed.
Seeing the "result" that startups are emerging in Europe and the United States, we assume the secret lies in the "method" that produces that result and import the methodology as it is. Instead, we should perhaps stop for a moment and think again about "Why This?"
* I wrote that things are going well in the United States, but looking at overseas accelerator programs, independent accelerator programs other than Y Combinator do not seem to be doing very well. In that sense, it is not simply that they do not suit the Japanese environment; I also think the methodologies taught in these accelerators themselves should be reconsidered in the context of high-growth startups.
When methodologies are renewed
If the types of startups change with the era, and if some American methodologies cannot be used in Japan, then unless we devise and carry out methodologies of our own, we will remain unable to produce excellent startups from now on as well.
In that sense, I myself, who think I may have had some influence by summarizing overseas methodologies in slides and spreading those techniques, even think that it might be better to delete all my past slides, and I regret that I should have reflected and changed direction much earlier, before writing the article "The Limits of Lean Startup."
That said, I have not deleted them, because I think these methodologies are worth teaching as a foundation, they are easy to teach from an educational standpoint, and they also have historical significance. But if we are optimizing for the present, I think it would be better to delete the past slides and encourage people to explore new methodologies.
Especially now, when the fields suited to startups seem to be gradually changing, I believe that to provide support that is truly effective going forward, we need the latest support for the startups that are needed now, while still referring to past methodologies.
At the same time, though, I sense that there are structural reasons why this does not happen.
Structural reasons why old methodologies keep circulating
There seem to be several reasons why old methodologies keep circulating.
- They have a track record - Old methodologies have a track record. They also make it easy to start a business. But whether that track record fits today's high-growth startup trends is a separate matter.
- They are easy to teach - Lean startup and design thinking have a process worked out to some extent. There are also tools such as the Business Model Canvas, which makes them easy to teach.
- They have a brand - It seems that some pay a lot of money for the brand of "overseas" or "Silicon Valley." Some of their methods are excellent, and I think there is still much to learn, but there are also parts that are not, and I think we should be quite conscious that the underlying market environment and other premises are different.
For these reasons, we tend to cling to past methods that look safe.
Support from governments and local authorities
I think public bodies such as local governments are all the more likely to rely on such past track records.
However, considering that startup support run by local governments tends to target the early stage (just before or just after founding), it is precisely because of that stage that new support responding to new methods of starting a business should be needed. A mismatch seems to be occurring there.
(That said, if the aim is ordinary entrepreneurship promotion rather than high-growth startups, it may be fine. Even then, I think the prior question of why ordinary entrepreneurship promotion is needed in that region should be answered properly.)
Overseas programs in particular may look like they have a brand, but I think they should be evaluated quite carefully. As mentioned above, many of them seem not to match the era or the region, both in program design and in content, depending on the program.
In addition, it seems easy for what is happening to be that, because money has stopped circulating overseas, they make Japan a cash cow (overseas VCs coming to Japan to look for LPs is probably part of this). That is a market mechanism, so I do not think there is any need to speak ill of the movement itself, but it can also be said to be the time when the Japanese side, as the party placing the order, is required to have the literacy to judge the quality of programs. There is much to learn from those overseas accelerator programs, but I think we should think again about whether they are truly effective "now," as "this support," and "for this purpose."
The questions "Why Now?" and "Why This?" for the support side
In a sense, these are also a kind of curse. To break free from this curse, I think we need to ask the support side the questions "Why Now?" and "Why This?" These are familiar questions, and asking them would give us an opportunity to reconsider what support should be.
Of course, some parts, such as the underlying way of thinking about business, remain common even as times change, so there will be support methods that do not change. Those need to be continued, and if the number of startup founders is increasing, it would be enough to increase the volume of support. On the other hand, what is demanded now is raising the height, so I think a shift in the quality of support is necessary.
VCs have the basic function of providing funds, and that is unlikely to change. However, support organizations other than VCs, which have no financial function, probably need to ask "Why Now?" constantly. In addition, the earlier the stage of a startup, the more the business is built with the next ten years in mind, so new support methods are needed for the newest businesses. In some cases, I think we should aim for a situation in which support has already begun, ahead of time, before startups emerge.
Also, one could argue that even outdated knowledge is better than having no knowledge of startups or entrepreneurship, but wrong knowledge can have a harmful effect. If someone has prior knowledge before learning and that prior knowledge is wrong, unlearning takes extra effort (considerable time and effort).
In that sense, I believe it is precisely the support side that must keep updating itself at all times.
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