This ‘anti-Airbnb’ Japanese startup builds art communities with its hotel business

A room at BnA Art Hotel in Koenji named “Into the Foreign.” Photo credit: Bed &Art.

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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.

Keigo Fukugaki has started his own hotel brand, Bed & Art, where he tries to merge travel with supporting the local art community. It’s an ambitious project, and as the interview progressed, I went from thinking “This won’t work,” “Nah, this is way too much of a long shot to really work,” to “You know, this is just crazy and quirky enough that it just might work.”

In this age of SaaS, Airbnb, and middleware, it is sometimes refreshing to find a startup that deals with something concrete. Fukugaki tells that story.

nWhat is Bed & Art? n

It’s a hotel startup. We’re trying to find a new way to start a hotel brand and not to turn ourselves into a real estate mogul. We’re just four guys with a little bit of cash.

We’re creating rooms with artists, and every time someone stays in those rooms, part of the revenue goes back to the artists. It’s bringing together a lot of unique travelers and local artists together.

We’re actually registered as a hotel. We’re taking over and renovating old buildings, creating a lobby, bar, and hotel rooms. In Tokyo, there are a lot of these office buildings that we’re able to convert into a hotel. And I think that’s new.

We called on our friends to do the renovations. We had some pizzas and beer and asked our friends to come over and paint the walls with us. Of course, it’s under some supervision. It was a great time and we built a community out of that. Everyone had a little part in it.

I think it was a great way to start something.

nAre you kind of anti-Airbnb, as the accommodations on the platform get standardized?n

That is exactly why we started Bed & Art. We started a pilot project in Ikebukuro, as two of our co-founders used to run a lot of Airbnbs in Tokyo. They were actually Airbnb moguls. They had like 40 Airbnbs in the city, and they were some of the first ones to really start making that into a pseudo business.

They were killing it but I came in and made fun of them. I said, “You guys are actually making this cookie-cutter room with IKEA furniture, and all you’re doing is making money.”

At the time, they were 27-year-old brilliant guys, and that’s why I’m working with them. But I realized that at 27, I think if you can have a higher goal, you can achieve much, much more interesting things. And that’s when I came in and poked around. They agreed. They wanted to do something more interesting.

However, they have pulled back from the Airbnb business. They realized the competition is really high in terms of the volume of listings. So, even if you are doing a great job, the price will come down.

nIf your hotel only has two rooms, how else do you generate profit?n

Our hotel has a bar on the first floor and an art gallery in the basement. We also have a community space on the rooftop. We generate some income through those and events and art gallery exhibits. But we’re definitely looking to scale and that’s one of our biggest hurdles right now. I think we’ve built everything so far as a pilot, tested the concept, and learned about the market.

nYou ran a crowdfunding campaign. How did it go?n

We ran a crowdfunding campaign right before we launched our hotel in Koenji. We raised US$20,000, so it’s not a big campaign. But we raised money to create a community space on the rooftop. The reason why we did that is because we’re trying to keep our hotel to do as little as possible with outside money so that the artists have the freedom, separated from any kind of attachment to outside influence.

Our target was the local community and our Koenji project is truly about the community. We chose that location because it’s where a lot of artists live. There is a deep culture of alternative lifestyle and alternative music, that kind of stuff.

nHow will you replicate your model overseas?n

Our Koenji prototype is actually to test out how we could create a community around a hotel. None of our teammates are from that area, but we found a key person in the community and we brought him into the team. He was the one who was able to get everyone involved and create that community in just six months of us being there.

I think this model is replicable in other creative communities around the world. The reason we’re focused on a creative community is because there is a certain need that each one has, and I think a hotel has actually a very unique but viable way to create a sustainable economic community that a lot of these creative communities desperately need.

nWhat’s the future growth of Bed & Art? n

We’re definitely looking to expand and raise money. But we haven’t considered going to VCs at this point. We’re looking at someone closer to an angel.

Right now, we’re really interested in running it for a long time and creating a great network through it. We want to expand internationally and in 10 years’ time, we imagine the Bed & Art brand in several other cities around the world.

nYou lived in San Francisco for a while. But why leave to come to Japan to build a startup?n

It was definitely a personal reason. I met my wife in a bar in San Francisco. She just happened to live in Tokyo and I decided to move over here. But I was just a normal architect designer, I had nothing to do with the startup world.

But as soon as I got in Japan, being someone who speaks Japanese and understands the culture fully but comes from a different background, I saw a lot of room for innovation. After two years of being here, I really felt this urge, this calling, to do something new and bring change.

nWhat do you find attractive about the Japanese startup ecosystem? n

I believe the reason why I think Japan is a great place is because the country itself, living here, is a fantastic place. I think it really is kind of a future model of what lifestyle means and what it means to live in a safe environment, a place where, if you have the courage, you can make innovation happen.

nIf I gave you a magic wand to change one thing about Japan, what would you change?n

I would change the way funding happens. Maybe not how it happens, but the people involved.

I would ask more people to be angels. I think Japan has a very big number of wealthy individuals, but they are not startup founders themselves. Or if they are, it would be very common to hold on to what they’ve got.

I also think there’s still a lot of focus that needs to be made on reinvestment and giving back to the community.

Read more from this series here.