6 ms·

Failure: How it powers Silicon Valley and handcuffs Japan

85 points by iuguy 16y ago

sili 16y ago
If the Japanese market for start up companies is open, but the culture is a problem, there could be an opportunity to run a start up from Silicon Valley but targeted at Japanese market. Especially if it is an internet service start up with minimal physical presence. I understand not being immediately present in the target market means that you can become out of touch with it; also some legal issues might arise, but an opportunity is there.
- patio11 16y ago
  I won't say that is impossible, but anyone wanting to execute on it needs to have a team where everyone speaks a lot better Japanese than I do, and your odds of recruiting that team stateside are pretty slim.
  - sili 16y ago
    I was thinking more of a team of entrepreneurial native Japanese who simply decided to do it in US in search of better start-up culture.
    - patio11 16y ago
      Feel free to talk to Japanese entrepreneurs about their sorrows sometime, because I don't want to speak for them, but I don't think moving to the US addresses the concerns of the three stakeholders who I generally hear mentioned: girlfriends, parents, and prospective future employers.
      - danielharan 16y ago
        Maybe some US funds could offer a good "cover story" for Japanese immigrants if they fail?
- rgrieselhuber 16y ago
  Ginzametrics has a relatively high percentage of customers in Japan and I run the company from Silicon Valley. But I also spent 2.5 years in Tokyo making connections and building relationships. Without that time spent, selling into the Japanese market with no local presence or understanding of how things work there would be exceedingly difficult.
tomjen3 16y ago
Can anybody expand on what he talks about with regards to the German bankruptcy laws?
- moeffju 16y ago
  "In Germany, for example, company founders are held personally liable for unpaid debt for up to 30 years—even after they declare bankruptcy." As far as I know, this is not true and hasn't been true in many years (since 1999). You can declare "private bankruptcy" and basically get clear of debt after six years. The German Wikipedia article might be of help, using Translate: http://de.wikipedia.org/wiki/Privatinsolvenz http://de.wikipedia.org/wiki/Privatinsolvenz
- Kurtz79 16y ago
  Yes, I´m interested too... Germany has nothing like as a Limited Liability company ???
  - moeffju 16y ago
    They do, of course. There's the GmbH ("Corporation with limited liability"), which is pretty much exactly like a LLC. Recently, they also added the UG ("Unternehmergesellschaft") which is the same thing save for less statutory base capital. But, as seems to be usual in Germany, everything is more complicated here. To found a GmbH, you basically need a lawyer and a notary. Oh, and 25k€. AFAIR founding a LLC is easier. However, thanks to the EU, you can of course found a UK Limited (Ltd.) with relatively little trouble.
    - aristidb 16y ago
      Supposedly you can found a GmbH without a notary now. I don't know how well that works in practice, though.
      - moeffju 16y ago
        In theory you can use a sample contract and found without a notary, in practice I have never seen it done and people I know used to recommend against it, but I haven't checked in a while.
napierzaza 16y ago
So the industry is "wide open" but if you fail you can be arrested? I'm not sure there are many convincing ideas to take a shot at Japan until the laws change.
grellas 16y ago
Failure does not power Silicon Valley. Failure is only a byproduct of a rich entrepreneurial culture whose overriding goal is success. That culture understands that startups inevitably will have a non-trivial failure rate and factors this into such things as equity structures, company valuations, decisions to fund or not to fund particular ventures, decisions to leave secure employment situations in favor of joining startups and the like. But failure is never the goal. It is only a byproduct. To me, therefore, it is not accurate to say that failure "powers" Silicon Valley. Apart from some overstatement about the concept of failure (e.g., its being regarded as a "badge of honor" in the Valley), this piece makes some good observations about how the Valley has grown and prospered through continued flexibility and experimentation in contrast to the relative rigidity that has hampered Japan's startups. Silicon Valley is beautifully set up to encourage risk taking but the goal of all risk takers is success, not failure. The United States, like Japan, once had a mindset by which the goal of every responsible working adult was to have a "steady job" and there have been cultural factors aplenty that have discouraged people from leaving such jobs to take a whirl with a startup. The move from that mindset to that of the risk-taking entrepreneur is driven by the hope of an extraordinary return for one's efforts. In Silicon Valley, it has been proven over and over again that such extraordinary returns are possible for those who are smart and enterprising and that historically has been the main draw for joining a startup. Today, with the low barriers to entry, the reasons for taking the leap into startups can be more complex (personal growth, etc. can now factor in). But the overriding goal is still money. Silicon Valley provides a fertile ground for those who are driven by that desire and provides all that is needed for success with a startup (as do other centers of startup activity). What drives the Valley, then, is not failure as such but rather the large number of smart, disciplined, talented people who want to do something special in hopes of getting large rewards. Those people are not afraid to fail but their very essence is to try to avoid it at all costs while chasing after the prize of success.
- gvb 16y ago
  A better premise for the article would be that tolerance of failure is an enabler in Silicon Vally and that intolerance of failure is debilitating elsewhere.
awlo 16y ago
This doesn't make sense to me. Doesn't that mean, that Japanese (and German, and Indian and anywhere else in the world) markets are completely open to (and from a certain point of view desperate for) startups? I understand problems with getting funding or the right people, but can't you import those?
dnsworks 16y ago
Quick summation: Cargo cults don't work.
donaldc 16y ago
From the article: In Germany, for example, company founders are held personally liable for unpaid debt for up to 30 years—even after they declare bankruptcy. Surely Germany has limited-liability corporations. How is it that a startup there can't use such a structure?
ebun 16y ago
Just fyi, this was originally on techcrunch: http://techcrunch.com/2010/10/17/japan-to-fix-your-economy-honor-your-failed-entrepreneurs/ http://techcrunch.com/2010/10/17/japan-to-fix-your-economy-h...

85 points by iuguy 16y ago

sili 16y ago

If the Japanese market for start up companies is open, but the culture is a problem, there could be an opportunity to run a start up from Silicon Valley but targeted at Japanese market. Especially if it is an internet service start up with minimal physical presence. I understand not being immediately present in the target market means that you can become out of touch with it; also some legal issues might arise, but an opportunity is there.

patio11 16y ago
I won't say that is impossible, but anyone wanting to execute on it needs to have a team where everyone speaks a lot better Japanese than I do, and your odds of recruiting that team stateside are pretty slim.
- sili 16y ago
  I was thinking more of a team of entrepreneurial native Japanese who simply decided to do it in US in search of better start-up culture.
  - patio11 16y ago
    Feel free to talk to Japanese entrepreneurs about their sorrows sometime, because I don't want to speak for them, but I don't think moving to the US addresses the concerns of the three stakeholders who I generally hear mentioned: girlfriends, parents, and prospective future employers.
    - danielharan 16y ago
      Maybe some US funds could offer a good "cover story" for Japanese immigrants if they fail?
rgrieselhuber 16y ago
Ginzametrics has a relatively high percentage of customers in Japan and I run the company from Silicon Valley. But I also spent 2.5 years in Tokyo making connections and building relationships. Without that time spent, selling into the Japanese market with no local presence or understanding of how things work there would be exceedingly difficult.

tomjen3 16y ago

Can anybody expand on what he talks about with regards to the German bankruptcy laws?

moeffju 16y ago
"In Germany, for example, company founders are held personally liable for unpaid debt for up to 30 years—even after they declare bankruptcy." As far as I know, this is not true and hasn't been true in many years (since 1999). You can declare "private bankruptcy" and basically get clear of debt after six years. The German Wikipedia article might be of help, using Translate: http://de.wikipedia.org/wiki/Privatinsolvenz http://de.wikipedia.org/wiki/Privatinsolvenz
Kurtz79 16y ago
Yes, I´m interested too... Germany has nothing like as a Limited Liability company ???
- moeffju 16y ago
  They do, of course. There's the GmbH ("Corporation with limited liability"), which is pretty much exactly like a LLC. Recently, they also added the UG ("Unternehmergesellschaft") which is the same thing save for less statutory base capital. But, as seems to be usual in Germany, everything is more complicated here. To found a GmbH, you basically need a lawyer and a notary. Oh, and 25k€. AFAIR founding a LLC is easier. However, thanks to the EU, you can of course found a UK Limited (Ltd.) with relatively little trouble.
  - aristidb 16y ago
    Supposedly you can found a GmbH without a notary now. I don't know how well that works in practice, though.
    - moeffju 16y ago
      In theory you can use a sample contract and found without a notary, in practice I have never seen it done and people I know used to recommend against it, but I haven't checked in a while.

napierzaza 16y ago

So the industry is "wide open" but if you fail you can be arrested? I'm not sure there are many convincing ideas to take a shot at Japan until the laws change.

grellas 16y ago

Failure does not power Silicon Valley. Failure is only a byproduct of a rich entrepreneurial culture whose overriding goal is success. That culture understands that startups inevitably will have a non-trivial failure rate and factors this into such things as equity structures, company valuations, decisions to fund or not to fund particular ventures, decisions to leave secure employment situations in favor of joining startups and the like. But failure is never the goal. It is only a byproduct. To me, therefore, it is not accurate to say that failure "powers" Silicon Valley. Apart from some overstatement about the concept of failure (e.g., its being regarded as a "badge of honor" in the Valley), this piece makes some good observations about how the Valley has grown and prospered through continued flexibility and experimentation in contrast to the relative rigidity that has hampered Japan's startups. Silicon Valley is beautifully set up to encourage risk taking but the goal of all risk takers is success, not failure. The United States, like Japan, once had a mindset by which the goal of every responsible working adult was to have a "steady job" and there have been cultural factors aplenty that have discouraged people from leaving such jobs to take a whirl with a startup. The move from that mindset to that of the risk-taking entrepreneur is driven by the hope of an extraordinary return for one's efforts. In Silicon Valley, it has been proven over and over again that such extraordinary returns are possible for those who are smart and enterprising and that historically has been the main draw for joining a startup. Today, with the low barriers to entry, the reasons for taking the leap into startups can be more complex (personal growth, etc. can now factor in). But the overriding goal is still money. Silicon Valley provides a fertile ground for those who are driven by that desire and provides all that is needed for success with a startup (as do other centers of startup activity). What drives the Valley, then, is not failure as such but rather the large number of smart, disciplined, talented people who want to do something special in hopes of getting large rewards. Those people are not afraid to fail but their very essence is to try to avoid it at all costs while chasing after the prize of success.

gvb 16y ago
A better premise for the article would be that tolerance of failure is an enabler in Silicon Vally and that intolerance of failure is debilitating elsewhere.

awlo 16y ago

This doesn't make sense to me. Doesn't that mean, that Japanese (and German, and Indian and anywhere else in the world) markets are completely open to (and from a certain point of view desperate for) startups? I understand problems with getting funding or the right people, but can't you import those?

dnsworks 16y ago

Quick summation: Cargo cults don't work.

donaldc 16y ago

From the article: In Germany, for example, company founders are held personally liable for unpaid debt for up to 30 years—even after they declare bankruptcy. Surely Germany has limited-liability corporations. How is it that a startup there can't use such a structure?

ebun 16y ago

Just fyi, this was originally on techcrunch: http://techcrunch.com/2010/10/17/japan-to-fix-your-economy-honor-your-failed-entrepreneurs/ http://techcrunch.com/2010/10/17/japan-to-fix-your-economy-h...