I Secretly Started a Company and Joined Shido
I’m often struck by how odd my ideas are, and how readily I act on them.
First, in August, I started a new company with a friend.
With that company, I applied to “Shido,” a project run by the Ministry of Economy, Trade and Industry and JETRO, and was selected.
The New Company: Kansayaku DX
The new company is named “Kansayaku DX” (Auditor DX).
Exactly as it reads. We intend to bring DX to the role of the corporate auditor.
I touched on this a bit in a Youtube interview I gave recently.
A Vibrant Japan for Our Children – Yuichiro Kuzuryu
To understand this properly, I first need to lay out some background (skip this part if you don’t need it).
The role of “kansayaku” (statutory auditor) is a distinctly Japanese arrangement, but every listed company has one, and most startups aiming for an IPO have one too, since it’s one of the conditions for listing.
There are various fine distinctions among auditors — full-time auditors, part-time auditors, audit and supervisory committees, and so on — but I’ll leave those explanations to Wikipedia.
What Does an Auditor Actually Do?
So, about that auditor role.
As the name suggests, the job is to audit the inside of the company, but what exactly should that involve?
Most people probably think “auditor” ≈ “accounting audit.” That’s understandable, because in practice, that’s nearly all most auditors actually do.
Meanwhile, the proper definition of the auditor’s role 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 work on this.
Auditors up to now have been charging far too much for the value they actually deliver. I’ll casually say it wouldn’t be so bad if a system put them in their place.
Redefining the Auditor’s Role
We believe the auditor’s role shouldn’t stop there. The keyword here is “ESG management.”
“ESG management” and “ESG investment” come up everywhere these days. People use them to mean “if your Environment, Social, and Governance practices aren’t in order, you’re in trouble,” or in the context of “we’re already doing this properly.”
The idea itself is sound: stop looking only at accounting and financial metrics, at whether a company is making good money, and instead raise the evaluation of companies that reduce environmental impact and build good relationships with stakeholders. Many large corporations have already adopted this as a matter of course, because banks won’t lend money to companies without solid ESG practices.
But among ‘E’, ‘S’, and ‘G’, the one that’s overwhelmingly the least mature, and where mistakes are most often seen, is by far “G = Governance.”
Put simply, governance comes down to how well a company has “ordinary controls” in place to reduce management risk.
Think about it for a moment and it becomes obvious: these are exactly the kinds of things that are hard for insiders to point out. Isn’t that exactly where the auditor should step in? That’s what we believe.
There’s a broader trend toward expecting outside directors to fill this role, but consider an early-stage startup with little money and less time. Is it really sensible for such a company to pay high fees to both an auditor, who shows up to management meetings, says nothing, and dozes off, and an outside director, who talks a lot from their own experience but is juggling so many roles that they can’t spare even 1% of their brainpower for this particular company? We’d much rather see that money spent hiring a great engineer.
We intend to redefine the auditor’s role and rebuild it as a reasonably priced service, raising the value auditors actually provide in the process.
This is, without question, something Japan needs as the number of startups continues to grow.
Why Did YOU Apply to Shido?
Now, on to “Shido.”
“Shido Next Innovator” is a project run by the Ministry of Economy, Trade and Industry and JETRO, now in its eighth cohort, aimed at cultivating next-generation innovators. It selects around 100 people from Japan and abroad and develops startup talent through talks by notable figures, workshops, discussions among project members, and short-term dispatches to Silicon Valley.
Wait, you’re a participant? Not a mentor?
I imagine a lot of people are thinking that. And fair enough.
In fact, I took part as a mentor on the Silicon Valley side back in fiscal year 2015 (I think). I’ve already started a startup myself, I’m quite familiar with Silicon Valley (I lived there for 5 years), and these days I often serve as an advisor to startups.
So is this just me slacking off, or trying to get a free trip to Silicon Valley on public funds? Don’t jump to that conclusion.
I have my own reasons for this.
Connect the Synapses!
First, through the pandemic, my natural tendency toward being a homebody who dislikes communication has started winning out.
Whenever I say this, people usually respond with, “No way, you’re the exact opposite. Lol.” But no — I’m fundamentally a gloomy, lazy person, about as far from a party animal as you can get.
(See also: I never actually danced parapara, come to think of it)
To exercise creativity, other people’s brains and other people’s experiences are essential. What I know myself, what I’ve done myself, is limited. Friends are the people you can share those things with freely. Friends are the ones who let you get away with a season of Give and Give, and also a season of Take and Take.
Without increasing the number of such people, life hits a dead end. Or you just end up repeating the same conversations with the same members. Escaping that means moving.
(See also: Q. Is it better to take time alone to think carefully in order to make creative leaps?)
I knew all this, and that’s how I’ve tried to live, 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: force myself to increase my connections and wire up the synapses like crazy.
Escaping “No Comment”
The other reason is creating opportunities to be criticized.
I’ve reached a certain age. I have a certain track record. And with that comes a tendency, one I also notice in others, to fall into a typical behavioral pattern.
That pattern is “no comment.”
The time given to us in life is limited. I can’t spend it with people I don’t trust, and agonizing over things that don’t give me a sense of purpose is basically a form of self-destruction.
But short of that serious a scenario, which should absolutely be avoided, there’s a more common and mildly troublesome situation: when “someone I respect to some degree (not enormously) says something completely different from my own opinion,” or when “someone I 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, I go “no comment,” thinking, “well, he’s got his own worldview, I guess.” In the latter case, I go “no comment,” thinking, “hmm… this’ll take a while, and they probably won’t get it easily anyway.”
The more experienced someone is, the more they fall into this pattern. And the relationship settles into something like “we exchange opinions, but there’s never a real clash.” In a sense that’s a mature relationship, and there’s nothing wrong with it in itself. Life would be exhausting if it were nothing but conflict.
I do feel this happening around me these days. Because, well, nobody criticizes me anymore.
Growth Comes From Being Criticized
Adults don’t openly criticize others. They just quietly maneuver behind the scenes to exclude them.
So exclusion still happens, plenty of it. Lol.
It used to be different.
I’d give a pitch in front of VCs and get told, “If even one page is boring, I’m walking out.” I’d present market size data and immediately get told, bluntly, “This number is wrong.” I’ve been told to my face, “Kuzuryu, you’re a top-down piece of s**t” (paraphrased). Lol.
It stings in the moment, of course, but there’s no doubt that those moments, one after another, are what grew me as a person.
So I want to be criticized, and I’ll criticize too (if you’d rather I didn’t, one-way is fine).
To do that kind of thing, there was no choice but to go back to the beginning. So, I decided to apply.
Everyone needs a “restart” at some point.
In an era where people live to 100 or 120, fewer and fewer people will get through life without a “restart.”
Just like Finland’s education system, which makes no distinction between students and working adults, and where university is entirely free, supporting that “restart” with public funds is nothing less than an important theme for strengthening a nation.
By the way, roughly every 2 or 3 years, I find myself thinking, “it’s about time to restart.”
Even after reading this far, many of you might still not have a clear answer to “why did YOU apply.” But I’m nothing but grateful to the Shido program office for quietly letting me through the selection process instead of rejecting me.
I think I can contribute in all sorts of 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.