In many places, people have been trying to build their own “Silicon Valley”. But none of them were successful as long as I know. Look at the world from a different perspective, there should be better examples. It might be old but new style. This slide shows my thoughts on starting a business outside USA.

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
US Investments by Industry 2011(# of deals)
(* based on PwC's "Shaking the MoneyTreeTM Q4/Full-Year 2011 Update")
Gusto Zone is just
part of this area
Professional Zone

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