Cybozu CEO Yoshihisa Aono and president Osamu Yamada talk about why their company opened up a U.S. office. Twice.
More than a decade ago, Cybozu tried to open an office in the U.S. The attempt failed miserably—so why try again?
This was the question that Alex—the new member of the Cybozu editing team in charge of overseas promotion—had been asking himself since he was hired.
To find an answer, Alex invited Cybozu founder and CEO Yoshihisa Aono and company president Osamu Yamada to the Cybozu Bar for a chat. To smooth things over, Alex did the bartending.
Things kicked off with a toast. Then, they dove straight into it: the reason Cybozu made a second attempt at the U.S. market.
It's online, we can sell it anywhere!
Alex
Let's get straight to the big question: Why did you first attempt back in 2001 to open an office in the U.S.?
Yoshihisa
From the beginning, the two other co-founders* and I were really set on doing a global launch. That's why back in 1998 we went through the trouble of translating the first version of our product, Cybozu Office 1, into English.
*Toru Takasuka and Shinya Hata
Osamu
That was the year after you founded the company, right? It was still just the three of you?
Yoshihisa
Yeah. We were still working out of a two-bedroom apartment.
Looking back it seems crazy. We hadn't even started selling the product in Japan. Nevertheless, we decided to ask our friend's Australian husband to translate the product content into English and make us a homepage.
Even back then, we wanted to expand overseas.
Osamu
I definitely felt that desire when I joined the company a couple of years later. There was no master plan, the thinking was just, "It's online, we can sell it anywhere!" (laugh)
Yoshihisa
When I look back at it now, I realize there's no way the product would've actually sold.
(laugh)The first time we went to America, it ended in disaster.
Cybozu CEO Yoshihisa Aono and president Osamu Yamada chatting at the Cybozu Bar. Cheers!
Osamu
The first try lasted three years, right?
Yoshihisa
Yeah. The previous CEO had tried for three years. By the time I took over, we were basically just trying to salvage what we could.
Osamu
Most of the people were local hires. Almost nobody from the Japanese side of the business went over.
Yoshihisa
There was no support from the Japanese side. Our thinking was to let the U.S. side handle things in the U.S.
Osamu
I feel like at the time, a lot of Japanese companies were floundering abroad. Middle management would allocate some budget, but then the local teams would have to do the best they could with what they had.
Despite having no experience with localization, local teams would be left to fend for themselves. Even when they asked headquarters for help, nobody would really understand what they were going through. Headquarters would respond with: "Why do you need so much money?"
Yoshihisa
In that situation, there was no way forward.
Osamu
Yeah, we were stuck. In the end, I think it's good that we didn't have enough resources to go on back then. Otherwise things would have dragged on endlessly before we reached the decision to pull out.
We dove in headfirst with no prior research
Alex
What was the biggest reason the first attempt failed?
Yoshihisa
Everything went wrong.
It's not like we had a lot of resources in Japan that we could use to continuously invest in the U.S. market. We were playing the game on impossible mode.
Osamu
Was the product well-received?
Yoshihisa
Our best-selling product in Japan, our schedule-sharing software, didn't work at all in the U.S.
When we'd ask clients why they weren't interested, they'd ask us: "Why would I want to show my schedule to my boss? If my boss trusts me, there's no reason for me to share!"
There was also no need for a room booking function. Back then, everyone working in large U.S. companies had their own office.
Osamu
Sounds like both the culture and company structures were pretty different from Japan.
Yoshihisa
Indeed. That's why I began thinking that rather than depend on our application, we had to dig one layer deeper.
For example, pretty much every PC has an Intel CPU. I became convinced that we needed a similar strategy. We could leave the overall products to other vendors and instead focus on building a support layer for those products.
Yoshihisa Aono was born in 1971. After graduating from the Information Systems Engineering Division of the School of Engineering of Osaka University, he joined Matsushita Denkou (currently Panasonic). In August 1997 he co-founded Cybozu, and in April 2005 he was appointed CEO. Yoshihisa spearheaded the company's workstyle reform, as well as its transition toward cloud-based products in 2011. He is the author of several books on teamwork and happiness at work.
Osamu
There's a lot of competition when it comes to applications.
Yoshihisa
Especially in the U.S., where even in the most niche market, there are still a ton of package vendors.
I remember being surprised by one family-run package software vendor that focused exclusively on helping companies rent limousines.
Osamu
That's a whole new level of niche.
Yoshihisa
In Japan, there's no way that would be its own package.
The U.S. market is so big, it's constantly attracting new players. In order to be able to compete, we had to find somewhere to put ourselves.
Osamu
I feel like it's gotten even worse today. New players are entering from all over the world, while the gigantic GAFA* have so many resources to pour into new investments.
*GAFA refers to the world's four largest tech companies: Google, Apple, Facebook and Amazon.
Yoshihisa
The first time we tried to expand, we hadn't done that analysis at all. We dove in headfirst with no prior research.
Osamu
We used to think: "Doing research before going in is not something ventures do!" (laugh)
Yoshihisa
We used to hate doing research.
(laugh)On our second try, we had already expanded the Japanese side of the business, Osamu managed to raise approx. $10 million for our public listing, and we were making enough profit in Japan to have funds we could dedicate to investment.
In order to provide a service that wasn't exclusive to a single culture, we emulated Microsoft and started doing research on how we could compartmentalize in order to be the most competitive.
The CEO had young children, so the company president went instead
Alex
Why did you choose the U.S. as the first place to expand overseas?
Yoshihisa
First because it's the biggest market in the world. In Japan, you need about ten percent market share to be profitable. In the U.S. you can be profitable with just three percent. I thought, in those circumstances, why not give the niche approach a try?
Another thing is that the most advanced software companies in the world compete in the U.S. If we could achieve results there, we could develop into a truly global company.
Osamu
In the information technology sector, if you can take hold in the U.S., you can take hold anywhere in the world.
That's why I suggested that if we really want to succeed in the U.S. market, we need to be committed to the point of moving our headquarters to the U.S.
Yoshihisa
You suggested that?
Osamu
Yeah, but you said it was impossible because you have children. (laugh)
Yoshihisa
That rings a bell. (laugh)
Osamu
That's when I suggested I should go.
Osamu Yamada is the president of Cybozu and CEO of its U.S. affiliate, Kintone Corporation. Osamu began his career in 1992 working for the Industrial Bank of Japan. In 2000 he joined Cybozu, where he became in charge of the department of financial affairs, human resources and general affairs. He has been involved in building the human resource system and training courses that both companies use today. In 2014, as part of the company's plan for global expansion, he moved to San Francisco, where he helped establish the affiliate's legal personality. He still resides in San Francisco.
Yoshihisa
There's nobody else to whom I could have entrusted this. If we were going to compete in the U.S. again, it didn't matter how much money we put in, we needed to have a team that could provide the best possible service.
We had to send Osamu himself, so that he could take the time to build a team that matched the Cybozu spirit.
Osamu
Involving Japanese stakeholders in the process of creating a team was essential, which is why it was mandatory for Yoshihisa and me to get involved.
It couldn't be me going to the U.S. as a manager. It had to be as if Yoshihisa himself had committed himself to going to the U.S., otherwise we'd never move forward. It was important for me to be able to make decisions the same way Yoshihisa would.
Yoshihisa
Agreed.
Osamu
Same thing when it came to local recruitment. Not that many people are keen to join the affiliate of some Japanese venture. However, the company's president showing up proved we were serious.
When asked if headquarters had given the affiliate any authority, I could reply: "Why do you think I came all the way here?"
Why aren't American workers happier?
Yoshihisa
Cybozu's vision is to "build a society brimming with teamwork." I joined the company because I support and resonate with its vision. Can Cybozu's vision be rolled out as is in the U.S.?
Osamu
Progress has been slow, but the number of people who can relate to our vision has been increasing.
The U.S. is very culturally diverse, to the point where it's become normal for different cultures and ethnicities to mix. However, in the business world the merits of diversity tend to be overlooked. Instead, the culture is geared toward getting talented people together and making them grow the company and raise stock value.
That talent will eventually begin to wonder: "How much am I willing to do for money? Shouldn't I be trying to improve my life instead?" This soul searching is currently very present in the U.S.
Yoshihisa
The culture of companies taking over every aspect of life is slowly changing.
Osamu
Absolutely. When the U.S. was in a period of high economic growth, it was possible to work for many years for large companies like General Motors, making them into a status symbol.
Yoshihisa
Now, it's the I.T. ventures that have become the world's biggest economic powers.
Osamu
Policies that would be seen as workplace reforms in Japan, things like the ability to work remotely, took place a long time ago and already seen as commonplace in the U.S.
However, people who benefit from these reforms are now beginning to realize that they still aren't feeling happy at work.
Alexander Steullet joined the Cybozu branding team in November 2018. He graduated in 2012 from the University of Nottingham with an LLM in Human Rights Law. Alex is a Swiss national.
Yoshihisa
In Japan we often hear that people are exhausted because they work too long. That society should make an effort to reduce work hours. In the U.S., it's results-oriented thinking that's wearing people out. If we look to organizational theory, the U.S. is still dominated by old-fashioned "orange" style organizations*.
*According to Frederic Laloux's Reinventing Organizations, an "orange" style organization is a heavily hierarchical rewards-based corporate organizational structure.
Osamu
That's why I believe that even in the U.S., talking about the context behind workplace reforms puts our company in an interesting position.
In existing companies structures, a few individuals will have the authority to control the flow of information in a way that's dictated by the results-driven model. Kintone was designed to achieve the complete opposite: for information to be made readily available for everyone. That's why I think our culture and product are linked. If we can spread Cybozu's cultural model, interest in Kintone will naturally grow.
Companies have stopped trying to make workers happy
Yoshihisa
Companies began as a thing that made people happy. This concept had such a strong impact in Japan that companies became referred to as
Kaisha-san (Mr. Company).
However, over the years, the situation has reversed itself. Instead of companies serving people, it's people who serve Kaisha-san.
In the U.S. the situation is a bit different. Companies have become a tool for CEOs to exert control over people and money. That's why so many workers are failing to find happiness in their jobs.
Osamu
Absolutely. I think most people are ultimately motivated by the desire to make themselves and others happy. Companies are just a practical means toward achieving that end.
Yet nowadays, whether in the U.S. or Japan, companies have stopped trying to make people happy. Which made me think we should start reforming our workplaces by simply restating that companies exist to make people happy. By doing so, workers become aware that their company is there for them.
Yoshihisa
That does seem like a "Cybozu" way of thinking. It would be amazing to uphold our company vision of "100 people, 100 ways to work and live" while at the same time achieving better teamwork.
Osamu
I actually think that our company message of "100 people, 100 ways" would resonate even more in the U.S.
In Japan, diversity is still mostly thought of as differences between men and women. In the U.S. it's more common to think of diversity in terms of ethnicity, religion, sexual orientation and gender identity. That's why it's so important to put forward this message of "100 people, 100 ways." All people should be allowed to achieve happiness, whatever their individual traits.
Translated from Japanese by Alex Steullet. Edited by Alex Steullet, Michelle Adams and Richard Ho. The original Japanese article is available at the link below.