Scrum Connect, our annual event in Tokyo, fosters open innovation between Japan and startups

Scrum Ventures held its annual Scrum Connect (previously Scrum CEO Summit) this past November 19th. Over 360 LPs, entrepreneurs, corporates, startups, and journalists attended at the Tokyo American Club.

This year’s theme was open innovation. Leaders from both the corporate side and startup side discussed how to promote innovation and trends they see in Japan and Silicon Valley. We were honored to welcome a special guest, Mr. Yasutoshi Nishimura, Deputy Chief Cabinet Secretary of the House of Representatives, where in his opening speech, he highlighted innovation efforts in Japan and the government’s support to help entrepreneurs thrive.

Panelists included 8 of our portfolio founders, corporates, and professional athletes. Two of the panel sessions were in collaboration with Nikkei CNBC, “Nikkei Startup X Special Session,” that will be broadcast on Nikkei CNBC, Paravi and Nikkei Electronic Edition. The Sports Tech Tokyo program, a joint acceleration program run by Scrum Ventures and Dentsu to provide opportunities for innovations in sports technology, was also introduced. Overall, Scrum Connect is a key opportunity for our community to come together, share ideas, and meet key business partners.

Session 1: Current state and outlook of large enterprise’s open innovation

Speakers:
Teiko Kudo, Managing Executive Officer of Sumitomo Mitsui Banking Corporation
Tetsuro Honma, Senior Managing Executive Officer of Panasonic Corporation & President of Appliance Inc
Hiroyuki Watanabe, Managing Director of Nihon Keizai Shimbun Inc

Moderator:
Makoto Haruka, Partner at Scrum Ventures

While the 3 panelists came from different industries, they all agreed that corporate innovation is a necessity. Honma from Panasonic explained how all businesses eventually reach a stage after maturation where they need to break out to be nimble and open new business arms. Kudo from Mitsui discussed the need for innovation in financial institutions to provide quicker support to companies and the government. Watanabe from Nikkei said that for a newspaper company, speed in adjusting and making changes is essential over focusing on creating a perfect business model.

Sharing their experiences on success factors for open innovation, Watanabe stressed that company objectives must be clarified, such as whether to focus on capital gains or strategic alignment. Through many interviews with corporations, he has learned that a key to innovation is to separate new ideas from the main business so they can each grow in their sectors. Honma highlighted that new ideas should always be tested early and often by potential users to avoid making slow and costly mistakes. Watanabe shared similar views about enterprises lacking agility in decision-making and shared that nurturing internal entrepreneurs is key.

Opening remarks by Deputy Chief Cabinet Secretary of the House of Representatives, Mr. Yasutoshi Nishimura

Nishimura highlighted the current Japanese administration’s support of entrepreneurs, and how he regularly studies areas of innovation and change, such as Silicon Valley. He mentioned three key factors necessary for innovation success in Japan: 1) Challenge – a culture that accepts failure as a part of experience needs to be nurtured so people continue to experiment even after failure. 2) Diversified members and opinions – in Silicon Valley, various people from all over the world engage in heated discussions with differing opinions. In Japan, there is a tendency to interact only with people of similar viewpoints. But this inhibits new innovation so Nishimura encourages actively engaging with people of different backgrounds, including non-Japanese. 3) Style of working – Nishimura supports the idea of having a second job or concurrently working on different projects to foster the exchange of opinions and new ideas. He stressed that challenging the status quo is necessary for companies to make changes.

Session 2: Healthcare session

Speakers:
Jonathan Palley, Co-founder & CEO of Spire
Yuri Hamasaki, Country Manager of Japan of Noom

Moderator:
Ryan Mendoza, Associate at Scrum Ventures

This panel discussion focused on healthcare data. The application of healthcare data has the capability to save more than $400B in healthcare costs in the U.S. alone, which is about 20% of total U.S. healthcare costs. In this discussion, Spire and Noom shared how they are applying healthcare data.

Spire creates a wearable device that collects and processes data from patients when they are outside of the hospital. They are solving the problem of adherence with wearables that enables collecting data while minimizing patient effort. Noom provides a unique combination of AI and personalized coaching for losing weight and promoting a healthier lifestyle through data analysis and feedback.

Spire is a hardware company and Noom is a software company so their collection and use of data are very different. Spire’s device has multiple sensors for heart rate, measuring steps,  and proprietary sensors to capture respiratory patterns. This data can be applied for insights into mental health, sleep, and chronic diseases. Noom, however,  collects data from 1) users when they login and integrate data from devices, 2) feedback from users collected by devices, and 3) conversations with human coaches. The data is used to provide diet analysis and feedback.

Palley from Spire pointed out that collecting healthcare data is irrelevant unless real outcomes are created. Furthermore, while startups like Spire are focused on making devices small and capable of collecting actionable data, partnering with large players in the healthcare space is essential for distribution.

Session 3: Sales Technology Session

Speakers:
Prayag Narula, President & Chairman of the Board of Leadgenius
Naoki Kobayashi, Senior Director of Sales – Japan of Aarki

Moderator:
Austin Arensberg, Principal at Scrum Ventures

This panel showcased how big data is used to support sales activities and machine learning is used to stay competitive. LeadGenius utilizes the cloud to help sales and marketing teams make sense of their data. Aarki optimizes media campaign creativity and distribution based on data

Narula from LeadGenius believes that sales and marketing will never get completely automated and there is a human touch that is necessary. However, segments of sales and marketing such as bookkeeping, low-level data management, campaigns, emails, and messages should be partly automated. He further highlighted the importance of good data architecture and training for the adoption of machine learning in sales and marketing. Driving efficiency from data cleanliness and collection is critical to maintaining competitiveness.

Kobayashi from Aarki described how the use of data can unify marketing optimization and the creativity of media to improve sales. Aarki’s multivariate platform is able to optimize creativity and distribution through detailed processing of data such as user behavior, app usage and diversity of users. He also introduced the different aspects of data that Aarki provides solutions for, such as finding data, managing data and using data.

Session 4: Corporate vs Startup Session

Speakers:
Derek Weng, Founder & CEO of LemonBox
Jigar Shah, Co-founder & CEO of Miles

Moderator:
Yohei Nakajima, Venture Partner of Scrum Ventures

Both panelists, Derek Weng and Jigar Shah, previously worked at large corporations but are now founders of a startup. They shared what the transition was like, how they decided to start a company, and what experiences from the corporate world applied or not to their new paths.

Weng from Lemonbox,  that uses personal health data to customize vitamin products for the China market, previously worked at Walmart in cross-border e-commerce. He said that his experience at Walmart was the best foundation for equipping him with the skills he needs for Lemonbox. Through his exposure to cross-border sourcing at Walmart, and the connections he built along the way, he was solidly positioned to turn his vision to distribute US made vitamins to China into a company and product.

Shah from Miles, that offers rewards based on users’ daily commute and travel, previously worked at Cisco Systems for more than nine years as an engineer and eventually a senior role in product management. By leading product at Cisco, he was equipped with the mindset of fast innovation and experience of creating products that beat competition.

Both Shah and Weng strongly agreed that starting a company is more a form of personal and career development rather than a risk. Shah described starting a company as a “huge fast track of experience.” Weng explained that a startup allows you to tackle challenges and “make your ideas into reality … and even if things do not go as planned, when you go back, a lot of doors are going to open up for you. Your career will be at a higher level. They both stressed that confidence and excitement for what you are working for are key for founders.

According to Shah, one of the key differences between corporates and startups is the use of resources. He pointed out that in a large company more money and people are accessible, whereas at a startup people are pushed to think outside the box to use resources more efficiently. For Weng, the key difference is the focus on people in large corporates, including management and culture whereas for startups, the key is execution where everything is based on deliverables.

Session 5: Present state and outlook of open innovation in Japan ~ Nikkei Startup X Special Session ~

Speakers:
Takanobu Kawano, CEO of Vacan
Makoto Aou, Director of ExaWizards

This session focused on the status of open innovation in Japan.

As a collaboration with Nikkei CNBC, it will be broadcast on Nikkei CNBC, Paravi and Nikkei Electronic Edition. Panelists were from Japanese startups Vacan, that provides real-time vacancy information for restaurants, restrooms, and inventory, and Exawizards that uses AI to innovate nursing home care and solve social issues.

Aou from ExaWizards pointed out that for open innovation in Japan to flourish, collaboration among the government, industry, and academia is needed. Both Vacan and Exawizards’ partnerships with the academic sector resulted in their current success. Kawano from Vacan added that for such collaboration to be successful, enthusiasm and a serious approach to new technologies are required. Aou sees positivity in the current state of open innovation in Japan, highlighting that in the past, collaboration with big enterprises often required ExaWizards approaching them, but now they receive inquiries from corporations and have meetings with university labs.

Regarding the success factors for open innovation within large corporations, Kawano said a shared vision is the first critical step to be able to solve issues and develop trust. Aou from Exawizards emphasized the importance of having a person in charge of open innovation and the relationships formed. Communication and the ability to influence employees in the organization are critical. More importantly, the person in charge should be the ambassador of ideas and technology within their own corporation.

Session 6: Hardware Session ~ Nikkei Startup X Special Session ~

Speakers:
Long Phan, CEO & CTO of Top Flight Technologies
Peter Howard, President & CEO of Realtime Robotics

The second panel in collaboration with Nikkei CNBC focused on hardware trends, challenges faced by hardware startups, and the importance of partnerships with Japan. Top Flight Technologies provides hybrid engines that when combined with drones, enables them to fly for hours carrying a significant load while remaining stable. Realtime Robotics provides motion planning technology that enables a robotic arm the ability to adapt to an environment in real time.

Both Phan and Howard stressed that for hardware companies, the underlying software often plays a critical role. Phan mentioned that “50% are things you don’t see, meaning software.” Top Flight Technologies is collaborating with Hyundai because of its software, not hardware, and will be providing Hyundai with tools to make flying cars. He further pointed that while autonomous cars are big now, the future lies in autonomous flying cars and many car companies are starting to think of how to transfer their car business to transport people through the air.

Howard from Realtime Robotics mentioned that its technology is essentially a software that will not function without an underlying special hardware. He shared that 99% of industrial work done is without robots, primarily because robots today cannot work in a dynamic environment. Technology like Realtime Robotics enables the use of robots in an environment that is changing.

Regarding partnerships with Japan, Howard mentioned the “importance of Japan has been clear from day one.” To him, Japan is “ground zero for the robotics industry.” He views partnerships with Japanese companies as a way to build trust and traction quickly. He also highlighted that often Japanese companies are used to competing on small margins and protecting every bit of intellectual property, but this is the opposite of open innovation. He illustrated that Toyota’s strategy of forming separate, new companies where open innovation has a chance to thrive is a good pattern to learn from. Phan described his experience working with Japanese partners as having quality, reliability, and commitment to success. He observed a change where Japanese leaders are taking initiative to introduce advanced robots to society.

Session 7:  SPORTS TECH TOKYO

Speakers:
Masahide Kobayashi, former professional baseball/MLB player
Ryuzo Morioka, former Japan representative captain for soccer

Moderator:
Takuya Miyata, General Partner of Scrum Ventures

The session kicked off the introduction of SPORTS TECH TOKYO (STT) by Hiroshi Igarashi, Director and Executive Officer of Dentsu Inc. STT is a joint accelerator program run by Scrum Ventures and Dentsu, aimed at providing mentoring and networking opportunities for sports technology companies. Since Tokyo will be the central hub for global sports in the coming few years, they want to make full use of this momentum to maximize the potential of new sports business opportunities. He believes that sports and technology should be unified to evolve and expand to new areas, and the program provides a large network of advisors, enterprises and sports personnel to support such efforts.

Part of the session was a panel discussion on sports tech in Japan. Moderated by Tak Miyata, our General Partner, Masahida Kobayashi, former professional baseball player in the MLB, and Ryuzo Morioka, former professional soccer player and captain of the Japan national team,  discussed the value of data for tracking performance.

Kobayashi described the many useful data points that can be collected for a baseball player, such as the rotation of the ball, height when a ball is thrown, and initial velocities. Such data is key for deciding when to switch pitchers during the game. Morioka shared how soccer is becoming fairer with technology. For example, it can be difficult to catch all violations such as a handball or a pull of a jersey during play. With video feedback, these violations can be caught. This technology was introduced during the Russian World Cup that assisted the referee on a real-time basis. Morioka further illustrated that data can be used to make more rational decisions in soccer such as determining whether a player is fatigued. Before, coaches made decisions based on facial expressions, but it can now be accurately verified from data and visual technology.

Morioka highlighted many improvements in sports equipment both functionally and for fashion. Footwear now has replaceable spikes and no shoe strings, where in the past,  heavy spikes impeded performance, and players had to stop to change shoe strings that wore out. The surface of shoes has also become an area of innovation with new textures and materials allowing players to create more curvature and rotation. Kobayashi dived deeper into the use of smartphone technologies to improve performance. Not only are videos taken to provide clarity of movements during practice, overlapping of video enhances details of player movement in training.

[Scrum Connect 2018 Japanese Report]
Vol.1 日本の大企業に、シリコンバレー流ベンチャーのスピードと活力を!
Vol.2 挑戦こそがベンチャースピリット。大企業はついて来られるか?  
Vol.3 日本の大企業は、ベンチャーの活力を取り入れられるか?

[Article]
Flick 『日本にベンチャーの活力を!』Scrum Connetレポート
GetNavi チャレンジは優しく自然に。ベンチャーの未来語るイベント「Scrum Connect」でヘルスケアの先を感じた
BCN+R 米国のスタートアップ事情に精通する「ScrumVentures」ってどんな会社?
TechCrunch 共有と熱量がオープンイノベーション成功の鍵、Scrum Connect 2018レポート
TechCrunch ハードウェアはチャレンジングだがリスクは低減できる、Scrum Connect 2018レポート
Nikkei X TREND 下着と一体化し洗えるヘルスタグ ストレスや睡眠計測の市場拓く
日経X TREND どんな移動でも“マイル”がたまる 米国発MaaSアプリが日本へ
日経電子版 オープンイノベーション成功の秘訣は
日経電子版 ハードウエア起業 成長への道筋