Only a few people know that Japan is among the top three Counties worldwide with the largest number of intellectual property patent applications. Despite that, the number of start-ups based in Japan is surprisingly low compared to other G20 countries. The Okinawa Institute of Science and Technology (OIST), a recently founded research institute, is trying to turn this situation around by establishing a start-up incubator program. Being international from the very start, OIST has already attracted some foreign entrepreneurs to develop start-ups in Japan. But to truly promote entrepreneurship among Japanese people, an entrepreneur-in-residence was appointed in late 2019. Mr. Masaaki Nakatsku is an experienced businessman and serial entrepreneur who founded start-ups in the cryptocurrency market in 2014, raising a total of $5.5 million USD for his projects, scaling up to 30 team members and attracting eight investors. Now, he acts as an advisor to those early-stage entrepreneurs who wish to succeed in Japan. He also came to OIST with a vision: to make Okinawa an economically independent, internationally renowned hub for technological innovation. He calls this initiative the “Deep Tech Island,” and the OIST community will play a crucial role in its realization.
How did you get your idea or business concept when you started Orb Inc.?
Since my time in college, I have always seen the potential of having a community currency that would solve the economic discrepancy of our world and be the key to fixing many problems linked with capitalism. So, I built a blockchain-based software platform, which enables anyone to build a stable and global coin-based community currency.
In general, the first 6-7 months are the most difficult for start-ups. How did you overcome that, and what advice would you give others?
I didn’t experience such tough moments because I chose the “right timing” to start. In 2012, no one around me believed in Bitcoin. In March 2013, when the Cyprus Shock happened, people started talking about Bitcoin. Then, in 2014, influential investors such as Mark Andreessen and Peter Theil started to invest in bitcoin and blockchain start-ups. So, I started my project. It is important to be able to read market trends, which help to avoid certain risks.
Branding and identity are crucial for a successful idea. How do you advertise your business?
Making inspiring stories for the potential market. One can learn many things from the Mackintosh Marketing Campaign in 1984 by Steve Jobs (i.e. the debut of the first Apple computer, that was cleverly linked to the great Orwell’s novel). Great designers can be great marketers while great marketers cannot be great designers.
A cultural aversion to risk and lack of funding for start-ups remain big challenges in Japan. For Japanese university students, entrepreneurship is still seen as a much lower position than working in a big company. How would you encourage students to become entrepreneurs?
Don’t scale business in Japan. You can use the Japanese market for the incubation phase of your business because it’s less competitive. But you should target bigger markets outside of Japan such as the US, India, and China for your go-to-market strategy.
What has been the most rewarding part of your role as an entrepreneur?
Knowing that I can change the world.
If you had one piece of advice to someone just starting, what would it be?
Manage your risks and prepare well.
According to the World Bank Group, “entrepreneurship is a critical part of economic development and growth, and important for the continued dynamism of the modern economy”. Given that you have experience developing projects both in Europe and the States, how do you compare the start-up entrepreneurial activity in these countries?
I don’t know European markets as well as I know the US market. If you have a very competitive technology, the US will be your primary choice for your business because of its big, open market, lots of venture capital and plenty of skillful talent to scale your business.
Since the 1990s, Japan has been trapped in a cycle of economic stagnation. As part of a project within the “Abenomics” program, Abe wants to double the start-up ratio in Japan. Still, Japan ranked twenty-fourth out of twenty-four developed Countries for levels of entrepreneurial activity. What would you suggest to him to build a productive and healthy start-up environment?
Rebuild Japan as a federal governance model; like the US would give local authorities legislative powers and eliminate meaningless regulations from the market in order to create bigger market possibilities.
OIST has launched the Startup Accelerator program aiming to recruit entrepreneurs from around the world to relocate to Okinawa. Given the low concentration ratio of innovative technology companies and distance to suppliers, customers, and cutting-edge research centers, what competitive advantages do you find here?
The Deep Tech Island – culturally connected, but, economically independent, is my answer. With the creation of such ecosystem, OIST can be very competitive and sustainable with other academic cities in the world, such as Boston. The goal is simple: by leveraging deep tech in OIST, we can build a 100% self-sustaining economy here in Okinawa. Our Startup Accelerator Program will be the foundation to realize this new industrial framework in Okinawa.
Creating a model at OIST for technology and innovation, building reliable networks with companies and attracting and retaining expertise can be difficult. Which actions are you planning to create a sustainable entrepreneurship net?
It is related to the Deep Tech Island. The “Regulatory Sandbox” by OPG (Okinawa Prefecture Government) is going to be a key part of the entire solution. We are going to run a Startup VISA program for Deep Tech entrepreneurs from all over the world with full set-up services, including opening bank accounts, corporate credit cards, relocation and driver’s licenses. In addition to that, we are also going to allow more capital gain in a tax-free model, as Singapore does. The goal is to attract venture capital from all over the world to foster the Deep Tech Startup Ecosystem around OIST. We must also build regulatory freedom policies to enable our Deep Tech Startups to run any kind of experiment. This is going to be essential if we truly want to realize a 100% self-sustaining economy in Okinawa. It means making Okinawa a special and strategic economic district in Japan.
I am pretty confident in obtaining this special agreement from the Japanese Government because I led Japan to become “Crypto Heaven” from 2014 to 2017 by building all crypto assets and a blockchain industrial framework from scratch, including passing the Virtual Currency Act in 2016, a world-class constructive regulatory framework for cryptocurrency in Japan.
Interested in learning more?
Nakatsu recommends checking out The Seasteading Institute projects (https://www.seasteading.org/), run by Patri Friedman, the grandson of Milton Friedman and Peter Thiel, co-founder of PayPal, to help imagine the Deep Tech Island Concept.
If you have questions, or are interested in joining OIST’s start-up community, reach out to the Okinawa Branch of Innovation Forum, or contact the OIST accelerator team ([email protected]).
More information about the start-up accelerator program can also be found here: https://groups.oist.jp/tdic/overview