Why this Japanese startup brought a unique ramen business to Silicon Valley

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.

More and more Japanese startup founders are looking at or even moving to Silicon Valley. It’s easy to see the appeal. San Francisco is home to the largest and most competitive startups in the world. In fact, there’s a small Japanese startup community there, with founders, mentors, and investors all supporting each other.

On my last trip to San Francisco, I had a chance to sit down and talk with Keisuke Kajitani, co-founder of Ramen Hero, which sells home delivery ramen meal kits. He and his co-founder moved there from Japan because they thought the US would be a better market for their product because ramen is already too popular in Japan.

Here’s the rest of the story.

nWhy did you choose to build a startup in the highly competitive food industry?n

I’ve seen a lot of Japanese entrepreneurs try to figure out how to make a big company in Silicon Valley, but I often find that they don’t have strengths in their expertise. Ramen is something the Japanese are an expert on. That’s why we chose it for our first entrance into the food business.

I’m the COO of Ramen Hero and I have a co-founder, Hiro, who is the CEO and chef. We had the same mentor, Kiyo Kobayashi, who’s very famous in the Japanese startup industry. I always wanted to start a business in Silicon Valley, which was like a holy place for entrepreneurs, but I didn’t have the chance to do it by myself. I was seeking for an opportunity and that’s how Kiyo introduced me to Hiro.

nHow big is your market?n

The market research estimated US$1.5 billion for the meal kit market, but it’s not as big as you think. It’s going to grow to around US$4 billion to US$5 billion in maybe the next 10 years—that’s what the research is saying.

But what’s more interesting is, I think, the meal kit business or the restaurant without the physical restaurant model is much more scalable than other restaurant business types because you can basically own a restaurant without paying a lot for rent. That’s why we thought of starting in San Francisco, where the rent is most expensive. We believe the business model with meal kits is more suitable than actually opening a ramen restaurant.

nDo you plan to expand beyond ramen?n

Of the US$1.5 billion meal kit market, I think the ramen ratio is going to be very small. But you can also look at the number of servings of instant noodles, which is I think over billions in the United States.

We definitely want to improve the business. You can look at the market in two—maybe three—different perspectives. One is the meal kit service I mentioned. Two is instant noodles. And the third one is a ramen shop. It is estimated that we have 12,000 ramen shops in the United States and it is growing by 17.5 percent every year. At this rate, the number of ramen shops will double in five years. In the food industry, doubling the number of restaurants is a huge change, and we think that’s the trend we are chasing.

nHow did you get the word out about Ramen Hero?n

We have two strong channels for marketing. One is called Kitchen Town, located in San Mateo. It’s a shared kitchen with maybe 20 to 30 food startups. We use the space to conduct popup events and serve ramen. In that community, there are tons of subscribed foodies who are looking for a new food culture. These people always come to our events and talk about our brand.

The second channel is called Feastly and EatWith, like an Airbnb for restaurants, where chefs can have a restaurant without actually having a physical shop and licenses. They can do it at home. You just have to post your menu and the platform will gather the customers for you. These channels are really good for us to gather customers without any marketing cost.

nDo you plan to enter the Japanese market?n

Probably not Japan, but the rest of the world. There are a lot of good ramen shops in Japan, so the competition there is much higher than elsewhere.

nTell us a bit about your storyn

My first career was actually at a venture capital called JAFCO. Just fresh after college, I joined that company for only half a year before jumping into the startup world with a Korean startup.

Maybe I should have stayed much longer at JAFCO to experience the beauty of VC because I didn’t make any investments there. I just sourced the deals and always envied entrepreneurs. I really loved how they put their passion and work into something they love. I was doing an internship in Silicon Valley before I joined JAFCO, and I saw entrepreneurs sleeping on the floor, missing the culture, and working hard until late at night.

Then, Kiyo told me, “Would you like to be an entrepreneurial VC? Because the muscle you’re using in entrepreneurship and the muscle you’re using in VC are totally different. So, if you want to become an entrepreneur, you have to train yourself by becoming an entrepreneur.” That pushed me to actually make a decision.

When I joined the Korean startup VCNC, they only had 10 people and they were all Koreans. I was the only Japanese. They made an app called Between, which was for couples who want to exclusively share photos and messages with each other. I was the 10th member and the product was already there. My role was to localize the product in the Japanese market, and that led me to where I am today.

If I wanted more challenge, I would go to the US. If I didn’t want to have more stress or suffer more, I would just stay in Japan and do something more profitable. I’m almost 30 now, and my mentality will definitely change when I have my own family. So, I think taking risks whenever I can is the fastest way to grow myself.

nWhat’s good about being in San Francisco?n

The community is much easier. It’s hard to get into the VC community because they always require us to be introduced by promising startups or investors. I have come to Silicon Valley several times and I wouldn’t get into the investor community so easily if I’m not running a ramen company.

It’s very interesting because if you start a ramen shop in Japan from scratch, without any brand, you won’t be having 100 customers in two hours and sell out. But here, because your ramen is very rare and special, everybody comes to eat your ramen and they sell out very fast.

nWhen should Japanese startups enter overseas markets?n

I don’t think there will be the best timing because in any timing, you will suffer anyways.

Hiro had told me that we would do a B2B ramen business, but when I came to the US, he said, “I’m going to pivot. I’m going to change the business model to B2C.” I thought we weren’t ready but we survived and are still trying to grow our business now.

My opinion is just come to the US whenever you want to, but I think what’s more important is the commitment. You have to be here and put in 100 percent of your time in order to make your company successful.

nAny advice for young Japanese entrepreneurs dreaming of building a startup in San Francisco?n

If you come to San Francisco, come with a business and don’t just look around or see the Facebook or Twitter office. Don’t do that. Your time is more precious than that, I believe. So, bring something to Silicon Valley—bring something you love or are passionate about and people will gather and make some good movement.

nWhat would you change to make things better for startups in Japan?n

I wish Japan has a better method of finding a good mentor. If I didn’t have my mentor or people around me, I wouldn’t be able to take the risk. I’m a very cowardly person and I don’t have so much confidence in myself. So, I wish people in Japan can find a mentor who can have their backs.

nFinal thoughtsn

What strikes me most about Ramen Hero is that its greatest current strength and greatest long-term weakness both stem from the same thing: its novelty. In the short run, Ramen Hero’s novelty has attracted the attention of investors and foodies who are relatively unfamiliar with ramen and want to try something new.

In a city awash in gaming, SaaS, and AI startups, leveraging their Japanese ties to offer something novel has helped them stand out in San Francisco. But moving forward, how much national or global interest will there be in a home delivery ramen? Will it ever be able to grow beyond its initial group of novelty-seeking customers?

Well, it’s impossible to know at this point, of course, but Keisuke had outlined two avenues of possible success. And his main point about being unique is undoubtedly true. Whether you are a startup trying to attract the attention of a VC or a multinational trying to attract a new customer, you better do something substantially different from what everyone around you is doing.

Read more from this series here.