Five years ago Kazuki Ohta didn’t speak English, yet it was obvious to him that his startup had to happen in the US. He and his co-founders at Treasure Data are all Japanese, met in Tokyo, but decided to build their company in Silicon Valley from the start. After 100 hires and $47M raised, their company highlights the increasingly common trend of fast-growth startups, started by all-foreign teams, right from the heart of California. Why do these founders do it? How? And it is worth it?
Kazuki Ohta, Founder & CTO at Treasure Data: Yeah, so, my original background is HPC, high-performance computing area, so I was a researcher at Argonne National Laboratory, and they have a super computer called Blue Gene, which has a million CPU cores. So I was a part of team to handle the data there, they generates, like, a lot of data, obviously. But it’s also a limited environment, only DOE can buy, Department of Energy. So seven or eight years ago, I got naturally into another system called Hadoop. Which is a data processing framework, as you know, and it didn’t work on my laptop. So, I started working on some patches, and started organizing community in Japan. So, it was like five, ten, our people, but now we have around 2,000-3,000 members on it. And during that explosion, I was fortunate enough to be a founder of that community, and talking with hundreds of developers managing the data. Not only from social mobile internet, but they collect the data from, like, automotives, buildings, and lights, and everything is now generating data.
Tim Anglade, Executive in Residence at Scale Venture Partners: Right, Hadoop’s just kinda took over, very quickly, everywhere, all around the world.
Kazuki: Yeah, it just fueled, right? But they have a lot of problem, especially like data volume, and also like data source diversity is just exploding. But the people who can build and maintain the system is just not increasing. So that’s where I see the talent gap, so we started this company just to fill in that gap. So that’s why we started. So how we do this is just running the cloud service for data audits, so that people can just instantly start analyzing the data.
Tim: So, did you guys meet through the community that you were, like, a founder of in Japan?
Kazuki: I met Hiro at the Hadoop Conference Japan. Hiro was a VC here, and he was originally from Rettan, and working on some of the open source deals. And he met like four people, one internet startup called Cloudera.
Tim: Oh right.
Kazuki: He also want to introduce Hadoop to the Asia region. So obviously he come from Japan, so he found me because I’m a founder of Hadoop community in Japan. So we started working together with one of the Cloudera founder, Christophe Bisciglia. And we met and together and so… I feel like the reason why I come here is I was the CTO in the previous company from the age of 20 to 26. So I was helping the company founded by like a university colleague, and it was okay. It was like five people to like 35 people, about six to seven million in revenue. But during that period, Cloudera took off from five people to 500 people, so I saw this curve. And I feel like, okay, well it’s okay to be in Japan, but something different here in Silicon Valley. So that’s why I decided to come here.
Tim: So you guys, did you know from the start that you wanted to do this here? And you were gonna like, you know, did you create the company directly in Silicon Valley or did you go through a phase of working in Japan?
Kazuki: Yeah, we directly founded the company in Silicon Valley.
Tim: And it’s funny, ‘cause I see a lot, you know, a lot of entrepreneurs kind of, they choose to use a model would be like, “oh, I’m gonna start it in my country first “and then I’ll move to Silicon Valley.” And, you know, that didn’t really work very, very well. But now I see a lot of companies just go directly, like, “let’s incorporate in the US. “Do the paperwork correctly, and let’s kind of “make it or break it directly from Silicon Valley.” So you start from like very small, you were saying, just like one small room–
Kazuki: Three people.
Tim: And now, you know, it’s been like a few years later. I mean, how long has it been? It’s been like six years, something like that? Or five years?
Kazuki: It’s almost like four years and a half, we’re around like 100 people.
Tim: Yeah, and now it’s the big office and you know, it’s like, you still need to fill it in but it’s kind of a big transition, so what was kind of… It seemed like a big decision, it seemed like you were convinced of it. What were you afraid of I guess, you know, in terms of in your mind, right? About like starting a company in Silicon Valley compared to what you were doing before.
Kazuki: You know what? Because I started working at startup from age of 20, I actually don’t afraid and I was always excited.
Tim: Was there something you should have been afraid of? In retrospect?
Kazuki: Maybe, yeah. Time is the only risk, right? And investors are so friendly for entrepreneurs here, in terms of conditions and terms. Yeah, really but I know the SAS business model where we are playing is more like a long term play. So I know when I need to commit next seven to 10 years, just to build a business. But, I was ready, so I was convinced to spend next 10 years with this one thing.
Tim: What were some of the things that happened that surprised you? Or maybe some of the ways that this ended up being different than previous companies you were trying to do in Japan?
Kazuki: Yeah, I feel like the first one, the investor ecosystem here is pretty much new. I was surprised how much influence investors has in this area. Well, I didn’t take any money in the previous company so that’s so much different. And also the working culture is also pretty much different. So Japanese like working all the time, like count to 10 and then go back to like five p.m., but it’s like, there’s a lot of freedom here. But also, you gonna need to show the result. That’s it, right? So that’s pretty much different.
Tim: Different set of controls, right. And then it’s interesting what you’re saying about the investor influence. I’d like to understand a bit better. Do you mean by that that they, they control, I guess, the moment when you build your own companies or on trends, or they’re more a fabric of startups? Like what do you mean by that?
Kazuki: I think it’s almost like a ecosystem. I met like a Bill Tai, Jerry Yang, and Scale Ventures and some of the VCs they all were ex-entrepreneurs often, so let’s say like Jerry Yang founded Yahoo. There’s so much VPs and Director there, started the new company, and Jerry Yang is just fund, because he just do it. And wants to cultivate the next innovation, right? Well, in Japan, there’s no tech person who actually became like, let’s say, like a Bill Maris and others. There’s almost like bankers and others. And I think Silicon Valley you have like a continuous cycle of success. And people have that kind of culture.
Tim: Yeah, it makes sense. And I’ve heard kind of similar stories from many different countries where like, a lot of the VCs you can find or investors in general you can find, in Europe or in other places in Asia, are people who made their money elsewhere or behave much more like a bank even if they’re kind of familiar with tech. Of course, you have a lot less options too and I would guess that’s the same in Japan, right? In terms of how many people you can go and get money from and the terms that you get, and you mentioned that, right? It’s like it’s much more startup friendly and entrepreneur friendly here. So what are some of the advice you would give? You seem like you’re doing well. It seems like you’re not really afraid of doing the move. What advice would you give to people right now that are like entrepreneurs in Japan or somewhere else or just have an idea in their head?
Kazuki: Our first angel investor called Bill Tai just said to me, it’s pretty hard to establish the company here as foreign entrepreneurs. Because, you obviously don’t have much network, first. And I couldn’t speak any English like five years ago. So when I pitched to Bill Tai I couldn’t listen, he said, “oh, I will invest.” It looks like meeting went well. I asked Hiro, okay, is the meeting went well? And, “oh, you missed that?” So yeah, you have a witness, right? But yeah, that’s when he said, Bill Tai told me think of you as someone come from Estonia, and I founded a company in Japan. Do you want to join as a Japanese to that company? And I probably hesitate. And in the similar situation, someone come from Japan, you don’t have any background here and network, come here. Does everyone wanna join this company? Maybe not. So think of that you have a huge gap in wall compared to what you want to be, but you’re gonna need to overcome.
Tim: Right, but conversely wouldn’t you say that, it’s even less likely that an investor would invest in, a Japanese founder who’s doing the entire company in Japan? As opposed to the same Japanese founder trying to organize in Silicon Valley and move there, right? It does seem like there’s a bias for whatever reason towards investing in company and people that are here, even if they don’t have a great network.
Kazuki: Yeah, that’s true. I think once you, especially with the language difference, so it’s like my previous company, but they established the entity in Japan first and tried to go abroad, but because of some language issues, all the wiki for example is written in Japanese. So if someone from like US wants to join, but all the information is written in Japanese, for example, well we built the company from scratch to be really the international company. So that’s very different.
Tim: Right, doesn’t that help you though sometimes? You know, I’m thinking particularly, like at France they were doing Docker, like Dotcloud, in the early days. And there was a big kind of French connection ‘cause a lot of the founders were French and they got access to a lot of talent that wasn’t necessarily very comfortable with language or wanted to work with fellow French people and knew them, and so they really were able, it seems to me, to leverage their local network and their advantage, right, in other words. Did that help you?
Kazuki: I don’t know much about the French network, but obviously there’s less Japanese people here, compared to other regions. And you don’t see many Japanese here. But, we have also, so this is a like, behind from others, but it’s also benefit because we have benefit of hiring the engineer in Japan. And they’re all talented, and they’re looking for, they’re all working with the company who is building the business for domestic business. But we can give them an opportunity to just go international, right?
Tim: Yeah, yeah, I know exactly what you mean. That was exactly the same for us at RAM. Where the big kind of Danish component, and being able to have an office in Denmark, hire a lot of local talent, and have them be super excited to work for a Silicon Valley company or a company that was partly in Silicon Valley–
Kazuki: And RAM is like everywhere.
Tim: So you get to play that advantage. It’s like everything else, right? Where you come from, I think, that can work against you in some ways and with some people and you can also turn it to your advantage, I think, in some very concrete ways. By leveraging investors that come from a similar background, by focusing on the hiring, by having a satellite office in those markets. And I would imagine also for yourself, I know you’re very active a lot in APAC, and so I assume that you would have an advantage as well, in terms of being a big data vendor and understanding the local market, the local players and everything else.
Kazuki: That’s true.
Tim: Yeah, so that’s been kind of nice. So, any other words of advice or caution you would give to people, or you just get started I guess?
Kazuki: Just get started. I also feel like, Silicon Valley, I think it’s perceived as more like a heaven in engineering thing. But, for my mind, the access to the top talent for sales and marketing is more valuable because people who made a success at, let’s say New Relic or like any other like Box or Salesforce, all these successful company actually grow the sales and marketing talent. No one can access except in this area, so that’s why I think the decision of coming here and hiring sales and marketing talent here was the best decision.
The Startup Tapes chronicle the highs & lows of building a startup, through candid, immersive interviews with founders, operators & advisors. Tim Anglade, an Executive-in-Residence at Scale Venture Partners and formerly with Realm, Apigee, and Cloudant leads the project with the goal to de-mystify the process through which startups emerge, grow & succeed. His unfiltered interviews transcribe the conversations we often hear in the boardroom, amongst our portfolio community and with entrepreneurs and partners we engage with every day.
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