Japanese business loves paper.

From fax machines, to business cards, to massive project binders. Paper processes are slow to die in Japan, especially in industrial facilities.

Today we talk with Jumpei Yoshida of Kaminashi who explains why that's finally changing and how foreign workers are driving the transformation.

It's a great conversation, and I think you'll enjoy it.


Show Notes


What is Kaminashi, and who is using it?
Why it took Kaminashi four years to  to gain traction
The biggest challenge in digitizing blue-collar industries
Advice for selling software  to Japanese companies
How foreign workers are driving digital transformation in Japan
How to reach analog customers
The sales cycle for SMB and enterprise software
Why enterprise sales in Japan is fundamentally different from in the West
Kaminashi’s global expansion plans
Real innovation comes next


Links from our Guest

Everything you ever wanted to know about Kaminashi

... and about their products


Connect with Jumpei on LinkedIn





Transcript
Welcome to Disrupting Japan, Straight Talk from Japan's most innovative founders and VCs.
I'm Tim Romero and thanks for joining me.
Japan is unquestionably one of the most advanced nations in the world, and yet corporate Japan's love of paper processes and its resistance to going digital has become kind of a running joke even within Japan.
At the more traditional industries all over Japan, at corporate headquarters, regional offices and frontline facilities you'll still see people rushing about carrying thick three ring binders to prove to the rest of the office that they are busy and productive. It seems some things never change.
So, why?
Explaining this kind of thing is a cultural difference is a cop out. It doesn't actually explain anything. It ignores potentially valuable business opportunities. And more important, it overlooks the startups that are finally beginning to change things.
And so today we sit down with Jumpei Yoshida of Kaminashi - a name that literally means paperless - and he explains how Kaminashi is pulling factories, food processing, and other critical industrial processes into the digital age.
We talk frankly about why it's taken Japan so long to begin this transition and the recent trigger that has really kicked open the market. Jumpei also shares some great advice about how to sell innovation to conservative Japanese companies, the importance of foreign workforce to Japan's future prosperity and what to expect if you're a startup selling to SMBs in Japan.
But, you know, Jumpei tells that story much better than I can. So let's get right to the interview.

Interview
Tim: So, I'm sitting here with Jumpei Yoshida, the CFO of Kaminashi, who's digitizing frontline and field service work. So, thanks for sitting down.
Jumpei: Thank you for inviting me.
Tim: It's a pleasure to have you on. Now I gave a really high level explanation of what Kaminashi does, but I think you can explain it much better than I can.
Jumpei: Sure. Kaminashi is a company focused on providing SaaS solutions to empower frontline workers. Our main offering include tools that digitize and streamline paper-based workflows.
Tim: What is the primary focus? Is it mostly just checklists? Is it inspection comments, like approval, workflow? What kind of things does it cover?
Jumpei: The application itself is checklist, but there are so many variety of usage.
Tim: And what about the hardware runs on, is it iOS, Android, is it onsite terminals?
Jumpei: Initially it was only for iOS and iPad, but now our products can use any devices like Windows or Android. Now it's on the web-based software.
Tim: Now a bit later I want to get into more detail about the business model and the value you're providing beyond just the checklists. But tell me about your customers.
Jumpei: Regarding our flagship product Kaminashi report, it serves companies with large scale frontline operations across more than 30 industries. But we have a strong presence in food related industries like food manufacturers, restaurants, retail stores, and hotels where quality management is critical. So, they are using our checklist app for quality control of their food.
Tim: And actually Kaminashi is not a new company. Started back in 2016, but the current version of the products, the current incarnation was only launched in June of 2020. Early on it was very much focused on the food industry.
Jumpei: Yes, you were right.
Tim: What happened during those four years and why was the decision made to change things?
Jumpei: So, I've heard from our founders, like initially he was focusing on the food industry. The initial product was not only software, but they also have device. So just before we launched Kaminashi report, our product was mainly focusing on the quality management for food industry. But the quality management business is so small so he decided to expand their business into other area. That's the reason why we are still good presence in the core team management in the food industry.
Tim: Okay. Well, I mean, no that makes total sense of why that forms the core of the new business. So, kind of the lessons learned were you decided to move away from hardware and be pure software and to broaden the customer base beyond just food services and quality control.
Jumpei: Yes, that's right.
Tim: Just to get a sense of the potential user base. As I understand about 60% of Japan's workforce would be classified as frontline or blue collar work. So, that's a pretty big addressable market.
Jumpei: It is. It's about like 39 million people. But now most of our clients are in the food industry because in the food industry, quality control is crucial. But in other industries who has frontline operations, sometimes they don't have to have the application for core team management because paper is enough. Maybe Excel spreadsheet is enough for some industries. But now we have a lot more new products focusing on other operation in the front lines. For example, our facility maintenance product, the demand for the facility maintenance product is huge in the manufacturing industry.
Tim: Both Japan's food industries and its manufacturing industry has companies that range from the huge multinational brands that everyone knows down to lots and lots of four or five person companies who are supporting the supply chain. What's your ideal customer size?
Jumpei: Our clients are pretty much diverse. We have really large enterprises and also we have very small SMB clients, like 20 employees or something like that. So, we have both. We are welcome both clients but thinking about our revenue size, the larger clients pays a lot more than smaller ones. And also they have a lot of sites so that they can expand the usage of our products in many other locations.
Tim: Well, let's dig down a bit into the business model and the value proposition. So, obviously Kaminashi reports is more than just digital tech list, it's more than just Google Forms. So, what is the real value add for both Kaminashi reports and this kind of DX in general?
Jumpei: Kaminashi report, it's a basically simple checklist app. Before using combination report, our clients will use paper checklist or Excel spreadsheet. But if they write in a paper checklist, sometimes they write wrong things and sometimes they don't write. So, they have certification like ISO or they get audited by their suppliers. We have many clients in the supplier of 711, almost 90% of 711 food suppliers are our clients. So, 711 goes to their suppliers factory and check everything goes well. So, in a digital checklist app, if they write a wrong thing, then they can get allowed so they can write a right answer.
Tim: Are you considering doing kind of a supply chain integration where different parts of the supply chain, the quality assurance information that gets put into Kaminashi gets rolled up to the purchasers?
Jumpei: No, the quality management operation is pretty much independent from other operation in the factory. It's not related to supply chain of our clients, but the auditors sometime prefer to use Kaminashi if they go to their suppliers factory. So, sometime they decide to use our product and they ask their suppliers to use our products.
Tim: That makes a lot of sense. So, do you also support integrated workflows and approval processes as well as the data entry?
Jumpei: Yes. So the approval process is integrated in the checklist app. Before introducing our products, they need to check all the papers, but now they can do the approval from any other sites via internet. So that's a lot easier.
Tim: Right. Startups selling digital transformation tools, especially in Japan, it's a great business, but blue collar work, blue collar processes has always been hard. This is something that startups have been trying to do for the last 25 years in Japan. So why hasn't this problem been solved already? What makes it so hard?
Jumpei: That’s a good question. One of the biggest challenge we've seen is through adoption of IT frontline operations. A lot of companies are still using PayPal and Excel spreadsheet and yeah, there is often resistance of switching to digital tools.
Tim: Why do you think that resistance is there because the basic tools have been around for 20 years?
Jumpei: In many ways paper is an excellent UI, it's easy to use.
Tim: I mean, I've got my notes right here on paper, right? Yeah, that's true.
Jumpei: So, it's intuitive and physically visible, which makes it really simple to understand. Excel too has become so widespread and familiar for many people. So, these factors make traditional methods hard to replace. There is also a cultural element to this, like Japanese workers often seen as change adverse, maybe. And with an aging workforce, that perception can feel even stronger.