Fuji Xerox won’t bring his product to market, so this employee left and did it himself

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This article is part of Tech in Asia’s partnership with Disrupting Japan where we publish the revised transcripts from the show’s podcast interviews with Japanese entrepreneurs. This is heavily revised from the original transcripts. For the full interview, go here.

Sandeep Casi is the founder and CEO of Videogram, a video content discovery platform. His startup journey is quite unique, leaving his corporate job and negotiating for an enterprise’s patents to start his own company.

In my interview with him, Casi shared his story and some pieces of advice on how to go global with a unique product. He also gave some real-world suggestions on how foreign founders can successfully raise funds in Japan.

nTell us about your history.n

I worked for big corporates before I started my own business. I’ve been in the video industry for almost 20 years and was part of the development of the first VR at General Motors back in 1993 or 1994. VR was used heavily in automotive and manufacturing for crash analysis.

Then, I moved to Palo Alto to work at a Fuji Xerox lab where I was part of the team that looked at interactive media. Videogram came from there, and this was pre-YouTube in 2003.

The reason that this product was invented in the first place was for training. Every three months, there was a new copier and printer released to market. So, after-sales repair became an issue because they had to keep training people with the new models and parts that were coming in. The whole concept of Videogram was this: let’s take those training videos and then “chapterize” them automatically so that people can randomly jump in to a particular topic.

Fuji Xerox decided that they wanted to productize it, and I realized, “Well, this might be interesting even for the consumer space.” Consumers were not creating videos and the studios were very much focused on DVDs and VHS.

But Fuji Xerox is not really a consumer company, so it was a dead-end for me. I thought the only way for me to do what I wanted to do was to wait until the market caught up.

I left the company, and in 2008, when YouTube was starting to get traction, I went back and negotiated the patents with Fuji Xerox. We got access to 30 patents, and then I started a company.

nWhy were you moving between the US and Japan?
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At first I thought this would be a company that’s better off being in Silicon Valley. But I’m the only US citizen among the co-founders. One co-founder is Indian, and the other guy is Japanese. We couldn’t get visas, so we fell back in Tokyo.

But whether the US is a more innovative market than the rest is not the reason I wanted to build a company in the US. I wanted to be there for the talent. My first choice would have been Japan if I could find talent here. But the mentality of the Japanese market back in 2012 was such that startups were the last thing they would consider because of the risk factor. There was also the language issue.

But now, we’ve built our headquarters here in Japan, while the development team sits in India.

nDo you see more people in Japan taking the same path to entrepreneurship like yours?n

I would love to see more people do what I’ve done. The issue here is that first of all, the Japanese companies are not very open on the patents they have. If I’m entrepreneur X on the street, I cannot knock on an enterprise’s door in Japan and say, “Give me the patents. I want to work with them.” It can only happen if you’re an insider.

So I think Japanese companies should look at “intrapreneurs” instead of entrepreneurs. They should educate and fund internal people to spin out to entrepreneurship.

nWhat would you change in Japan to make it a better place for startups?n

Have more intelligent use of risk capital, and not spray and pray.

There’s a lot of corporate investors in Japan, but very few take the lead. There’s also an aversion to investing with foreign founders, and I have encountered that a lot. When I was out raising funds, people always wondered, “What are you doing here in Japan? Why are you not in Silicon Valley? What is your intention of doing this in Japan?” I would always tell them:

“Look, ideas can be seeded here. Silicon Valley is not a magical place where just because you raised money 5 miles from Sand Hill Road, you become successful. The success and failures of startups is universally the same. Nine in 10 startups fail, and it has nothing to do with whether I’m close to Sand Hill Road or I’m in Tokyo. If I have a good product, it will survive. If I have persistence, it will go to the next level.”

That actually always convinced them. So, I want to see more investments with foreign founders, which can hopefully help the local education system and bring in the next level of founders.

There should also be more VCs taking the lead by seeding companies and not just investing millions of dollars. I’d like to see large companies do the same as well. If they do the “intrapreneur” thing, then the VC system will improve.

VCs here in Japan have a fear of missing out, and that’s how valuations go out of alignment. They crowd into the same deals. This is why I said investments should be smarter. Grow the entrepreneur and the ecosystem.

nWhat advice do you have for foreign startup founders who want to raise money?n

First of all, they need to have a very unique product, which doesn’t have to be a tech product. More importantly, it has to be global. You can’t take an idea that’s domestic, and then just work on that and expect to raise money. If the validation of that idea doesn’t happen domestically, Japanese investors would not think there’s a market for it.

Every time I raise money, I get asked to prove how my product will work in Japan. I tell them, “Look, this is a global company. It is not just focused on Japan. Anywhere there is a market, we will chase it down.”

So, go global from day one. Make sure that the design is scalable to all markets. Raise funding for that and not on a very niche product, which is less likely to succeed than a global product.