Being positive while expecting the worst. Dr. Kamada of TomyK talks about how start-ups can overcome the new corona crisis

A new type of coronavirus infectious disease (COVID-19) is having a major impact on the global economy. Many events are being cancelled, the movement of people and goods is being restricted, and many companies are suffering from managerial problems. Of course, start-ups are no exception. Start-ups, which lack the resources of large corporations, will be tested to see if they can survive the stagnation in economic activity.

What kind of mindset do start-ups need in a global crisis? What will happen in the future, “post-corona?” We interviewed Dr. Kamada of TomyK—co-founder of ACCESS and a leading supporter of start-ups originating from universities—about the actions companies should take and the changes that will occur in Japan.

We will find out the true intentions of Dr. Kamada, who insists that “there is an opportunity after the corona shock,” and says that survival should be given priority over anything else.

INDEX

・ Assuming the worst, and focusing only on survival
・What we have learned from many tough situations is that “there are great opportunities after an economic crisis”
・ “Job” (仕事 – to serve somebody) becomes “job” (為事 – to carry out something). This changes the meaning of working
・Key Points

Tomihisa Kamada

CEO of TomyK Ltd.

He completed a doctorate in information science (Doctor of Science) at the Graduate School of Science at the University of Tokyo.
Co-founder of ACCESS Co., Ltd.
He established the software venture company ACCESS—together with Toru Arakawa—while at university. This company developed embedded TCP/IP communication software and the world’s first web browser for mobile phones. It became a leader in the technological innovation of mobile Internet by proposing W3C, a compact HTML specification “Compact HTML” for mobile phones. It was listed on the Tokyo Stock Exchange Mothers in 2001, and has been expanding its business globally. He retired from the company in 2011. He established TomyK to support start-ups. He has helped launching many technology start-ups in fields such as robotics, AI, IoT, human expansion, space, genome, medical, etc., including supporting the robotics venture SCHAFT (acquired by Google in the US). His book is “Technology Start-ups Create The Future: Aiming to be a Tech Entrepreneur” (The University of Tokyo Press).

Assuming the worst, and focusing only on survival

Dr. Kamada started by saying that “to the start-ups we have invested in, we just say that survival is our top priority.” He says that for start-ups, which don’t have the resources of big companies, having forecasts that are too optimistic can quickly become fatal. He points out that although many start-ups may have already cut costs, the forecasts are often too optimistic.

Kamada: “Many start-ups think that sales and collaboration with large companies will be delayed for a few months, but that is in the best-case scenario. While imagining the very worst situation, it is necessary to cut all the costs that can be cut, assuming that there will be no sales for a year. Spending no money on wasteful things and narrowing down hiring. We have to give top priority to how we can extend the runway (the deadline for running out of cash on hand).”

He says that, for start-ups, a survival strategy is important, but on the other hand, big companies and VCs will also undergo major changes.

Kamada: “In this situation where people and goods cannot be moved, even large companies will see an impact on their main businesses, so naturally investment in start-ups will be postponed. Even if I am interested in a new initiative, I may not be able to do anything because of the current emergency situation. VCs will also be conservative. If the stock market stagnates, listings across the board will be postponed and the number of listings will decrease. If exits decrease and valuations decrease, VC returns also fall, so rather than risky early start-ups, there will be no choice but to focus on investments in the middle and later stages. Since the priority is to protect existing investment destinations above all, new investments will also slow down. In any case, start-ups cannot avoid the fact that the bar for fund-raising will become higher.”

Dr. Kamada, who mentioned that it will be difficult to raise new funds, says that it is necessary to consider the company’s internal unity as much as cash flow.

Kamada: “In addition to a decrease in sales, reducing costs will make the internal atmosphere worse. Disagreements will also increase at the management level. However, at such times, we must not forget about internal care. It is not a bad thing that managers disagree, but they should avoid having a soured relation with employees. When in front of employees, please be sure that the managers are pacified before speaking.
If business performance worsens, there will be more troubles, but this is also an event that will test the skills of managers, and conversely, the team that survives such a situation will be stronger. It is common for business performance and corporate value to fall, so it is important to do what you believe in without being too trapped in the numbers.”

What we have learned from many tough situations is that “there are great opportunities after an economic crisis”

Dr. Kamada himself got a company listed on the stock exchange and has overcome several economic crises. How has he overcome crises so far?

Kamada: “I have experienced global crises, such as the collapse of the IT bubble, terrorist attacks and the Lehman shock. This is the same as the time when the movement of people was stopped all over the world due to the terrorist attacks. At that time, as I was making efforts for global expansion, I got stuck in Spain, and some employees were stuck in other countries for a while. Eventually, we stopped global expansion for a while, and gave top priority to the domestic business.
During the Lehman shock, the financial industry was heavily damaged, consumption cooled down, and the economy slumped. I think it was tough for a while for start-ups that were trying to raise money at the time. However, unlike at that time, the economy was originally healthy this time. What many start-ups are doing is not wrong. Currently, we are suppressing existing demand with measures to prevent corona infection. So, if you are able to overcome this situation, you should be able to bounce back again.”

Dr. Kamada, who has actually overcome global crises, continues to test whether he can stay calm when he is in a tough situation.

Kamada: “We are not the only ones suffering—our competitors around the world are in the same situation. Rather, as far as we can see in the news, Japan is still in good condition at this stage. Since everyone is in the same conditions, there is no need to rush, and it is important to be able to fully accumulate strength in such times. As more and more companies struggle as they see their funds decrease, let us focus on being calm. If the forecast is too optimistic, we will get impatient when the situation worsens more than expected, but if we assume the worst, we will not get impatient.”

It seems that Kamada himself had an experience in which the situation worsened more than expected, and many times he shared the importance of assuming the worst, including the meaning of self-discipline. And precisely because we are in such times, he also touches on these actions.

Kamada: “In such cases, it is important to focus on the work that we can complete by ourselves. The work we are doing with our customers and partners will not proceed unless the other person works. In such a situation, it is very likely that things will change. Rather than that, we should firmly plan and advance the work that we can control by our own efforts, such as the development that we should have carried out originally, and developing ahead of schedule the products and services that we were thinking to develop later.
If you maintain your own strength, you should be able to bounce back in a big way after this situation is over. Based on my experience so far, there are many opportunities after a crisis, such as the fact that it becomes easier to recruit excellent people. Please calmly maintain your strength while thinking about such positive things.”

“Job” (仕事 – to serve somebody) becomes “job” (為事 – to carry out something). This changes the meaning of working

We changed topic and talked about the social changes after the corona crisis. Dr. Kamada told us that this turmoil will change the awareness of the global environment in each country.

Kamada: “It is possible that the risk of virus mutation will increase due to global warming and the destruction of nature. We cannot fight nature. This time, there may be a change in consciousness about the global trend that has prioritized economic growth until now. Even when looking at corporate activities, rather than advocating blind economic growth, those that contribute to SDGs and have social responsibility attract more attention. The significance of a company’s existence should shift from simply pursuing profits to solving environmental and social issues.

Kamada continued saying that not only the global trend, but also the way of working in Japan will change.

Kamada: “There will be a change from the factory-type work-style that has been used up to now to work-styles that connect abilities. Until now, people have been gathered in the same place and assigned work to increase productivity. This is because it was easier to manage if people gather in one place. However, with the rise of online work due to the current turmoil, many companies may have noticed that there are unexpectedly many jobs that can be done without going to the office. Of course, there may be some types of work that are difficult to do remotely, but I think there will be more remote work than before.

From now on, how to make the best use of individual abilities will be a major point of working-styles. For example, it is important to choose the work environment depending on the nature of the work. A quiet space where you can concentrate silently by yourself, a space where you can get inspiration from talking to people, and an environment where undesired noise is kept to a moderate degree.
I think we should be able to choose a working environment from these three types. Recently, there are an increasing number of offices with spaces where one person can concentrate alone, as well as open spaces, and I think that the design of workplaces will change to designs that generate creative ideas. With the current turmoil, working styles that I thought would be implemented many years later should come ahead of schedule.”

Now that the working environment is changing dramatically, start-ups also have great opportunities. In the words of Ogai Mori, a writer of the Meiji era, a paradigm shift will occur not only in the way of working but also in the significance of working.

Kamada: “The word “job” in Japanese is “shigoto” (仕事), which means to serve somebody (仕える事), but Ogai Mori wrote it as “shigoto” (為事) in his novel, which means to carry out something (為す事). “Shigoto” (為事) is when—rather than having employees work for the company—employees can work on the things they want to do and accomplish, and the company or organization takes advantage of this. Instead of being told to work, it means utilizing the organization for what you want to do. I think it is really amazing that he thought in this way at that time. And, I feel that now is the time when the world he envisioned will become a reality.

Kamada says that anyone can show their strength when doing what they want to do, and then the company can utilize that strength to produce results. Finally, he gives the following advice to start-ups and large companies.

Kamada: “The opportunity for start-ups is in the ‘future’ minus the ‘present’. Start-ups create what is missing from a future perspective. This turmoil may have brought the future a little closer, so it is at such times that you should anticipate the future and turn it into an opportunity. I want you to survive with such a positive attitude, even when assuming the worst.
I would like large companies to dream about it at this time. If the core business is in a tough situation in such circumstances, the sentiment for investment will disappear and the short-term rebuilding of the business will become a priority. However, investing in a dream at such a time is something that will be praised 10 years from now. The core business is important, but don’t forget to invest in start-ups and create a future together.”