I Secretly Founded a Company and Joined METI's Shido Program
I keep thinking of strange ideas and acting on them, and I have to admit it again this time. In August I started a new company with a friend, and with that company I applied to “Shido,” a project hosted by the Ministry of Economy, Trade and Industry and JETRO, and was selected.
New company: Kansayaku DX
The new company is called “Kansayaku DX.”
Exactly as the name reads. We intend to bring DX to the role of the corporate auditor (kansayaku).
I touched on this a bit in a YouTube interview I did recently.
Bringing a vibrant Japan to our children — Yuichiro Kuzuryu
To understand this properly, I first need to explain a few premises (skip this part if you don’t need it).
The “kansayaku” role is a mechanism unique to Japan, but every listed company has one, and so does almost every startup aiming to go public. That’s because it’s one of the conditions for listing.
There’s plenty of fine detail around kansayaku — full-time versus part-time auditors, audit and supervisory committees, and so on — but I’ll leave those explanations to Wikipedia.
What does a kansayaku actually do?
So, about that kansayaku.
As the name suggests, their job is to audit the inside of the company, but what exactly should that involve?
Most people probably think “kansayaku” is more or less equal to “accounting audit.” That’s understandable, because that’s nearly all most kansayaku in the world actually do.
The proper definition of the kansayaku’s role, meanwhile, is set out in the Companies Act, and the Japan Audit & Supervisory Board Members Association has summarized it clearly. https://www.kansa.or.jp/system/about/
- Requesting reports and conducting investigations
- Preventing illegal acts by directors
- Litigation between the company and directors
- Accounting audits
We believe most of these can be handled through DX, and we’ve already started working on it.
Kansayaku up to now have been charging too much money relative to the role they actually fulfill. I’ll just say it plainly: it wouldn’t be surprising if a system put them in their place.
Redefining the kansayaku’s role
We also believe the kansayaku’s role shouldn’t stop there. The keyword is “ESG management.”
You hear “ESG management” and “ESG investing” everywhere these days, used in the sense of “if your Environment, Social, and Governance aren’t in order, you’re in trouble,” or in the sense of “we’re already doing this.”
The idea of moving away from looking only at accounting and financial metrics (are you making a nice profit or not) and instead raising the evaluation of companies that reduce their environmental burden and build good relationships with stakeholders is a perfectly sound one. Many large companies already treat it as a matter of course, because if your ESG isn’t in order, banks won’t lend you money.
But among ‘E’, ‘S’, and ‘G’, the one where you overwhelmingly and constantly see the most immature and mistaken practices is “G = Governance.”
Put simply, governance is basically about how well a company has the “obvious controls” in place to reduce management risk.
And if you imagine it for a moment, it’s easy to see that this is full of “things that are hard for insiders to point out.” Isn’t that exactly where the kansayaku should step in? That’s what we think.
There’s a general trend of expecting this role from outside directors instead, but is it really sensible for an entity with no money and no time, like an early-stage startup, to pay high compensation to both a kansayaku (who shows up at management meetings, says nothing, and dozes off) and an outside director (who says all kinds of things based on their own experience, but is juggling so many roles that they can’t spare even 1% of their brainpower for this company)? I’d much rather they spend that money hiring good engineers instead.
We intend to redefine the kansayaku’s role and rebuild it as a reasonably priced service, raising the value of the kansayaku role even further.
This is undoubtedly something Japan needs, as a country where the number of startups is only going to keep growing.
What are YOU doing at Shido?
Now, continuing on to “Shido.”
“Shido ~ Next Innovator~” is a project hosted by the Ministry of Economy, Trade and Industry and JETRO. Its goal is to cultivate next-generation innovators, selecting around 100 people from Japan and abroad and developing startup talent through lectures by notable figures, workshops, discussions among project members, short-term dispatches to Silicon Valley, and more. This is already the 8th cohort.
Huh? You’re a participant? Not a mentor?
I imagine a lot of people are thinking that. Fair enough.
I participated in 2015 (I think) as a mentor on the Silicon Valley side, I already have experience founding a startup, I’m quite familiar with Silicon Valley (I lived there for five years), and these days I often serve as an advisor to startups.
So don’t jump straight to “is this guy just slacking off, or using public funds for a Silicon Valley vacation?”
I have my own reasons for this.
Connect the synapses!
First, through the pandemic, my inherently reclusive, communication-averse nature started winning out again.
Whenever I say that, people usually tell me “no way, you’re the exact opposite. Lol” But no, I’m originally a gloomy, lazy person, about as far from a social butterfly as it gets.
(Reference: Come to think of it, I’ve never danced para para)
To exercise creativity, other people’s brains and other people’s experiences are essential. What you know yourself and what you’ve done yourself only goes so far. Friends are the people you can share those things with unreservedly. Friends are the people who let you have phases of Give and Give as well as phases of Take and Take.
If you don’t keep increasing the number of people like that, your life hits a dead end. Or you just keep having the same conversations with the same members over and over. Breaking out of that means moving.
(Reference: Q. Is it better to take time alone to think carefully in order to leap to new ideas?)
I knew this, and that’s how I’ve lived my life — but inertia is scary. If there was a legitimate reason not to go out, I wouldn’t. That was me. Scary, right?
So one reason is forcing myself to increase my connections and keep wiring up those synapses.
Breaking away from “no comment”
The other reason is creating opportunities to be criticized.
I’ve reached a certain age. I have a certain track record. And when that happens, I, like everyone else toward other people, start falling into a typical behavior pattern.
That pattern is “no comment.”
The time we’re given in life is limited. I can’t spend time with people I can’t trust, and worrying over things I find no fulfillment in is basically an act of killing myself.
But even short of that serious a scene (absolutely to be avoided!), there are typical situations that are a bit troublesome and leave you unsure what to do — for example, “when someone you respect to some degree (though not enormously) says something completely different from your own opinion,” or “when someone you don’t know well is about to fall into a common mistake, but pointing it out and explaining it properly would take a lot of effort.”
In the former case, you go “no comment,” thinking (well, he’s got his own worldview I guess). In the latter case, you go “no comment,” thinking (hmm… this would take a while, and they probably won’t get it easily anyway).
The more experience someone has, the more they fall into this pattern. And the relationship settles into something like “there’s an exchange of opinions, but no real clash.” In a sense that’s an adult relationship, and there’s nothing wrong with it in itself. Life would be exhausting if it were nothing but clashes.
In fact, I feel this happening around me. Because I’m not being criticized anymore.
You only grow by being criticized
Adults don’t openly criticize others. They just quietly pull strings behind the scenes to exclude people.
So exclusion is still happening to me, to some degree. Lol.
It used to be different.
I’d present in front of VCs and be told “if even one page is boring, I’m walking out,” or the moment I presented market-size data, be told bluntly “this number is wrong.” Or be told to my face, “Kuzuryu-san is a top-down piece of sh*t (paraphrasing).” Lol.
At the moment it happens, sure, it stings, but there’s no doubt that those moments, one after another, have made me grow.
So I want to be criticized, and I’ll criticize too (if you’d rather I not, one-way is fine too).
To do that, there was no way but to go back to my beginner’s mind. All right, let’s apply — that’s how it went.
Everyone needs a “restart” at some point.
In an era where life spans 100 to 120 years, fewer and fewer people will be able to end their lives without a “restart” along the way.
Just like Finland’s education system, which makes no distinction between students and working adults and where all universities are free, supporting that “restart” with public funds should be recognized as an important theme, nothing less than a way to strengthen a country.
By the way, I find myself thinking “I want to restart again soon” roughly once every 2 or 3 years, as a matter of course.
Even after reading all this, plenty of people might still not quite grasp the answer to “what are YOU doing there.” But I have nothing but gratitude toward the Shido operating office for quietly letting me through the selection process instead of rejecting me. I think I can contribute in various ways. I’m surprisingly useful and easy to work with, you know. Lol.
Originally published in Japanese at https://clazytech.com/2022/09/1381/. Translated with LLM assistance and reviewed before publication.