Meet the Entrepreneur Behind One of Japan's Most-funded Start-ups
Business cards are a vital tool for making introductions and networking. In Japan especially, where people often introduce their company name first and then their own, the humble business card holds a special place when it comes to doing business.
As Chika Terada says, business cards act as “paper proof of a business transaction.” The Tokyo-based entrepreneur is the founder and chief of Sansan, a freemium contact sharing service that transcribes business cards and stores them in the cloud. His startup, founded in 2007, doesn’t plan to replace the business card – it is simply bringing the paper rectangles up to speed with our digital world.
Terada, who is in his 40s, is making quite a splash globally with his business, which has raised over $100 million and become one of Japan’s most-funded startups. It recently filed for an initial public offering (IPO) at the Tokyo Stock Exchange, with listing scheduled for June 19.
In an interview, Terada shares his journey and explains his motto for turning encounters into innovation. Edited excerpts:
Sansan is one of Japan’s most-funded start-ups. When did you decide to establish it?
My dad was an entrepreneur, and ever since I was in elementary school, I looked at him and thought, “I’m going to start a business one day, too”. After graduating from university, I got a job at Mitsui, a major trading firm. While there, I spent a year in Silicon Valley, working with cutting edge US ventures, helping them to develop business with Japan. After eight years at Mitsui, I was turning 30, and I had my idea for Sansan.
Like many entrepreneurs, I wasn’t sure whether to go for it or not. Of course, I thought it was a good idea, but then again, I had a very good job and a great career ahead of me at Mitsui. It’s easy to see why that’s the option most people go for. It is attractive.
But I did quit. I’m very much a twister rather than a sticker, and it was my ambition to start a company, so that’s what I did. I followed my dream and started Sansan.
How has your concept of “rivalling yourself” helped you on that journey, and how does it tie into your advice to other entrepreneurs?
Basically, I’m never satisfied. I’m constantly driven forward, determined, and in search of something more. It’s all thanks to risk. But in a different way to how most people might think. Most people see risks in changing. They stick with what they know and what they’re doing, even if they know it’s not optimal, out of a fear of change and the risks they associate with it.
I see it in completely the opposite way. The bigger risk, by far, is in staying the same. Where most people fear change, I have a real fear of not changing. Start-ups like Sansan need dynamism, they need to be daring and resourceful, they need confidence, and their leader must embody all these qualities. The reality is that there is an element of risk in anything… that’s just the nature of life… but by far the bigger risk is in avoiding changes. Of course, this assumes good judgement, but fundamentally understanding this point gives you a strong foundation on which to grow a company.
The rivalling yourself concept is a simple one really. Rather than compare myself with those around me, I try to look inward, to compare myself with how I used to be, how I could be in the future.
The younger me, from the first few years of Sansan is really my strongest rival.
Of course, he was far from perfect; he was headstrong and naive, and I certainly know a lot more now and have many more resources than he did. But he was so committed and dedicated to the challenge. I often doubt now whether I’m as committed as he was. I don’t want to lose to him. I think that it’s this rivalry with my former self which keeps me focused and motivated, and which keeps our growth so strong and constant.
At Sansan, we have grown by challenging ourselves and the ideas of others. That’s what innovation is. I still believe now that if we stop innovating, our growth will slow.
Can you talk about the need to digitise and adopt cloud solutions for businesses in Southeast Asia, especially emerging markets that have an opportunity to leapfrog legacy systems?
In Japan, business cards are often not digitized to the cloud. Opportunities are lost and time is wasted because people do not know who is connected to who, or even have a solid organizational grasp of their own contacts. But, of course, Japan is a very developed market. In Southeast Asia, where there are many emerging markets, this challenge is even more pronounced. However, the advantage Southeast Asia has is that it can skip many of the legacy systems that businesses have used over the past decade in more developed markets, which in some cases have required tremendous investments for relatively small returns. The cloud as it exists today is a very affordable and effective solution for Southeast Asia.
What are the inefficiencies you see within Japan’s corporate world, in particular regarding the simple task of sharing contacts, and what are the cost that this has for companies in the form of lost time and lost opportunities?
The idea for Sansan came from my own personal experience of contact management inefficiencies, while I was a salaryman in my previous company. Despite having hundreds of meetings with different business contacts every month, no one within the company knew who had met who and so who to talk to.
On one occasion, I took months to secure a meeting with an executive of a company, only to find out later that my colleague had known him all along and could have introduced me months before. This is a common problem, which was not being addressed by the market prior to Sansan.
If people cannot see the connections like this that their colleagues have, then countless opportunities are being missed, and time is being wasted. Business cards as representative of these opportunities, but so long as business cards remain just pieces of paper, stuck in people’s files, and kept to themselves, these inefficiencies continue.
How does Sansan address these inefficiencies and make networking more efficient and effective, for both companies and individuals?
Our namesake B2B service provides combined business card scanning and CRM functionality. It now has over 80 per cent market share in Japan and serves over 6,000 corporate clients. We use a proprietary method of digitization, combining our in-house OCR, with secure, manual input, to provide 99.9 per cent accuracy to our customers.
As employees start scanning their business cards into Sansan, they are able to track their connections and the evolution of these connections, as well as see the connections that their colleagues have. It’s all accessible via our web or mobile app, and has numerous powerful functions to keep on top of one’s network.
Your expansion plans?
In December we raised JPY 3 billion (US$26.43 million) in Series E funding, taking our funding to date to over JPY 11.4 billion (US$100 million). Our Series E investment was led by Japan Post Capital, T. Rowe Price, SBI Investment, and DCM Ventures. We are investing heavily into our new Singapore office, including ramping up hiring efforts and appointing a local CEO, in order to ensure robust growth in Southeast Asia. We believe the region, with its population of 600 million people and myriad of emerging markets, offers great opportunities for us and our customers, and we’re targeting growing our Southeast Asian client base from 100 to 500 by 2020.