This Week in Startups - While other cultivated meat companies are collapsing, this one turned a profit | E2317

Starting point is 00:00:00 Let me drink a hot cup of tea. Show. That didn't get picked up on the mic, did it? How's it going, show? You okay? Okay, everybody, welcome back to this week in startups in Japan. It's great, great to be back in my favorite city in all the world after my hometown of New York. My new hometown of Austin, that's Tokyo.

Starting point is 00:00:28 Man, I love coming here. It's always so inspiring. If you're a founder, if you're an investor, and you haven't come. to Japan, I highly recommend coming because you get to see people building and working with extreme pride and trying to get better at building their product or service every day of their life. It's called Kaizen, is the art of constant improvement. The founders here in our second cohort of Founder University have been incredible. I was telling my team, the first cohort, we had so many great companies, but very raw. We were just getting started. And the second cohort, we saw a lot more

Starting point is 00:01:03 that were ready to go global and that had their company formation in the United States. So I think we're actually going to find some really great investments or candidates to come to our accelerator. If you want to find out about this Founder University program, we run it twice a year in Tokyo, twice a year in Riyadh, Saudi Arabia, and then twice a year in the United States. Founder.com University is the web page where you can see all three programs. The sun never sets on Founder University, and you don't even need to be incorporated. It could be you and two of your friends. You've built a project.

Starting point is 00:01:38 You've got a prototype. You've vibe-coded something in lovable or Claudecote or GROC or Proplexity Computer. We want to see it all. We love to work with founders in year zero. And I'm super excited today because we have Dr. Yuki and Yu. And he is making cultivated meat. This weekend startups is brought to you by Agree.com. Stop chasing invoices and automate your entire contract to cash stack.

Starting point is 00:02:03 Go to agree.com and tell them Jason sent you to get 50% off for life. MongoDB. AI assisted and agenda coding is helping you build faster than ever. Start building at MongoDB.com slash AI and Every. For all your incorporation, banking, payroll, benefits, accounting, taxes, or other back office administration needs, visit every. And you're doing this in a different way than some of the cultured meats that we got to experience in America. I think impossible meat was one? That is actually plant-based meat.

Starting point is 00:02:38 That's plant-based meat. And then what was the next one that did chicken in America? You mean, upside foods? Ah, yes. Yeah, so there are major companies in this field is like upside foods. Believer meats now defunct, but there's like wild type without, sell-culted salmon. What was the salmon one called? Wild tight.

Starting point is 00:02:59 So this has been around for a couple of years. And between the veggie, the fake chicken, fake fish, or mock, I think is the term. It's gotten some fans in America, but it hasn't broken out yet. Why? Why hasn't it become very mainstream? Or hasn't it? I would say it's just a technology, just not. been there because the issue has always been the scaling and unit price.

Starting point is 00:03:32 And also on the other side, on the other side, that will be the unit economics that's not quite working yet. Got it. So consumers have shown they want it, correct? That's another because unless you have sufficient quantity, you can't even like test for real to the consumers. Until then, it will be all fantasy, to be honest. hasn't been enough scale for a large amount of customers to try it.

Starting point is 00:04:00 So it's hard to understand demand. But I know from my friend group in San Francisco. You can always ask that what consumers say and what they actually buy are always very different. As Steve Jobs taught us, right? If he asked people like what they wanted in an iPhone, it would not be beautiful, elegant. And I guess when it comes to food, if you were to ask a chef, if the chef were to ask you what you wanted, you would not be as delicious as omelkase and or yeah correct yeah i go for like half price yes 30% off things like that yeah you want to really have uh so your company

Starting point is 00:04:39 integree culture integral culture um is working on a new way to create this food yes yes i would say protein without the call our product as meat that's a different story got it so for protein And it's going to get a little graphic. So people be prepared if you, you know, we're talking about meat. But the ingredients and the process for creating mock meat previously, this was using FBS. In some cases? Not really because I would say FBS has been only for like a global tree scale tests. For regenerative medicine, cell culture, those things.

Starting point is 00:05:21 Yes. And no one has actually made any commercial product with FBS is too expensive anyway. Too expensive. And this is, of course, fetal bovine serum. That's the blood of unborn calves. And that's going to be used for organs in our body. Maybe? Maybe.

Starting point is 00:05:38 But even within that field, because such of a quality control of FBS is really difficult. Yes. As you can imagine, how would you control the exact chemical composition of if it's made that kind of way? Yes. So the industry is going, I mean, medicine, a biofarmar, they're going to chemically defined ones, but very expensive. But it's medicine anyway. How were some of the other companies built the mock fish? I'm going to say mock fish and mock chicken.

Starting point is 00:06:09 How did they make it taste for me? I tasted the chicken. And when they put it in sauce, I didn't. didn't taste very different. It tasted a little different, but I would say maybe it was 70% as good as real chicken to me. So what was the strategy they used for those specific verticals? So obviously there's like different levels of I would say imitation level of completeness for cell culture, cell cultured meat.

Starting point is 00:06:42 Cell cultured, yes. Yeah. So if you are talking about it's 100% cell culture is a little bit hypothetical, but if that is, days one, that's kind of like synthetic diamond versus natural diamond. So it's basically talking about chemically the same thing. So that's why, so no wonder it tastes just like chicken. Yes. And but as of now, because of the state of the technology, it's not 100%, 100% imitation.

Starting point is 00:07:08 Somewhere like, say, 70% let's say. What do you think it's at now if you were to pick? I would say, I think as of now, the 70 is like the maximum. And the reason is like, right. now the cell-cultured meat, what they say, is made in large stir-tank bioreactors, and it is not making steak. It's making like slurry of cells. Yes. So you have to modify the slurry of cells to taste and look and taste like meat.

Starting point is 00:07:36 But it's not quite the actual muscle tissue. Got it. So right now, anybody who is a vegetarian turned off the podcast, that's okay. But for us who do like meat, it makes a slurry, which has the chemical composition, but now it doesn't have texture. So it doesn't have the fabric of meat that we like in a different cut of steak, different cut of chicken. You might like the chicken breast. I might like the chicken wing. The fibers and the structure is another piece of this. Some people were making a 3D printed one or other techniques.

Starting point is 00:08:10 But essentially, current state of the art is making this in a big giant vat. with chemicals in order get activated and then you make the slurry and then you put it into chunks, I guess, or different formats. Well, chemicals, but exactly speaking, things like glucose, amino acids, which is like something we eat every day anyway.

Starting point is 00:08:32 Okay, so you have a different technique for this that you're pursuing? Tell us about it. Yeah. So, first of all, we are not aiming for meat. So we're making something, it's trademarked as Kraft Essend. It sounds a little bit German.

Starting point is 00:08:47 But it's just, well, Japanese people sometimes do the kind of thing. Just take any long words without even knowing the origin of the word. But anyway. Yeah, I have seen this. Sometimes you go to a cafe and it has a name that doesn't, for the American mind, make a lot of sense. So tell us the German word you're using. Yeah, craft essence. So basically, craft food.

Starting point is 00:09:09 Craft food. Yeah. So basically, yeah. So that is basically cell culture, duck liver cells. on cellular scaffold that actually looks like this. Got it. So you're going to make duck liver like paté?

Starting point is 00:09:23 Yeah. So it's actually the same sales as foie gras. I love foie gras, but I feel guilty eating it. Well, if you don't need to, if it's so cultured. Yes. Then I can eat foie gras every day.

Starting point is 00:09:35 Make sure you get enough vegetables as well. Okay, yes. So the first product you're making is going to be foie gras-ish. for what if we are to if we decide to go with that marketing strategy but probably not yeah this is a very niche market

Starting point is 00:09:52 what is the technique you're using and what's unique about your technique yeah so we have like a number of ways but it traces back to our origin as a company so originally we were not even a company or even a for-profit entity we were more like an open source cultured meat project and do that DIY cell cultured meat

Starting point is 00:10:10 making sale cultured meat at home but the money we here, by the way. Oh, wow. So there are nerds, there's a technical word in America, there are nerds who want to do this at home as a hobby.

Starting point is 00:10:24 Yeah. You're one of them? Yeah. You're the leader of the nerd? Because I thought it was funny. I thought it was funny to make meat at home. Yeah, and I was basically

Starting point is 00:10:34 distributing this manual in comic market. So I would go to a comic store and you have the manual here, I'm holding it up, that has all the different tools you need to make your own meat at home. Yes, I think some of the copies is still in Comic Zing in Akihabara, still.

Starting point is 00:10:49 In Akihabara. But also in London Science Museum. In the London Science Museum, hilarious. How many years ago did you start this hobby? One of the most important things you can do as a busy founder is stay focused. You need to prioritize the decisions and workflows that are going to move your company forward,

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Starting point is 00:11:44 So head over to every.io and stop wasting time on stuff that isn't growing your company. That's e-v-e-e-r-Y-D-Y-O. So, yeah, we started back in 2014. It's called Solzijing Meat Project still ongoing. Okay, so 10 years ago, over 10 years ago, you start this open-source project, and how did that grow? And who joined it? Yeah, all sorts of random people. Very random.

Starting point is 00:12:10 like high school students. It was actually one of the high school students who did the DIY cell culture at home, and NHK came to film her, growing cells in her room. And that would televise nationwide. And that's sort of like funded, led to the seed funding of Integrity Culture,

Starting point is 00:12:33 which is the direct spin-off from this Shōjimi project, this DIY movement. Got it. So there's the DIY movement. open source movement created your company. And how many people participated and actually made lab grown meat at home over the last 10 years? We haven't been even counting, actually, because we at least we have... Hundreds, thousands?

Starting point is 00:12:54 I would say, including those who did sell culture in schools after following the teacher's instructions and the teacher being trained by the Sojin Meat Project Workshop. Yeah. I just don't know the number. But maybe thousands even. Potentially, I don't know. Potentially, yeah. And so this technique, maybe you can show us some of the items you have here,

Starting point is 00:13:17 but you've got a technique for doing this. That's open source, and then you're going to go to market with it, and you've raised a seed round, yep. Yeah, so in the early phase, our worry was that. So the cell culture could mean could change the world, but it could also easily get into the GMO situation, like being politicized, some like, basically. Basically, if we just let capitalism take this, things go bad.

Starting point is 00:13:43 So we need a clever way. So what we came up was to build an ecosystem. So Shōjin Meat Project is open source. They do the more visionary stuff in this latest zine. And then there's Cellar Agriculture Institute of Commons, non-profit. They speak with the government, regulators, and maybe established industry association. then there's an integral

Starting point is 00:14:09 company that builds the physical infrastructure and anyone who want to make develop cell culture meat could use integrated culture companies capabilities these materials equipment and in the future

Starting point is 00:14:22 production capability got it so you're starting with the products you need to do it at home or business if you wanted to start a startup and then eventually they'll be able to come and you might have a factory to do this on behalf of

Starting point is 00:14:36 some other entrepreneurs Yeah, if things go well, what we are going to get is there's some hobbyists developing novel sort of cell culture meat. It could be like pork muscle, tuna fat, healthy meat, something like that. And if it's good and they want to, he or she wants to expand, they could come to Integrity Culture Company to expand. So that way, how to make is open source, how to scale from the business. Got it. It's almost, I think they call it contract manufacturing in the United States. Yeah, so you come up with your formula and then somebody else packages it for you and then there's distributors after that.

Starting point is 00:15:16 You mentioned two different meats together. This is, I think, something people don't understand. We're comparing it to things that we've put in our mouth before and flavors that we understand. So I understand tuna, choto, O-toro had all these great flavors, seared toro. Then I also understand Wagu, Miyazaki beef 5A5, New York strip, Australian beef, different profiles. But somebody could take these two concepts and build a flavor profile that somehow incorporates Toro, Yuzu flavor, and maybe steak, yeah? Yeah. So if it's still culture, you can't design that, like, meat, or better say, food, in any way you want.

Starting point is 00:16:04 So has anybody done anything interesting that you've tasted? VAL Foods, it's an Australian company. They did quail meat. Quail? Yes. This little bird. Which has never been on the supermarket in a packaged that it has the quail meat. Yes.

Starting point is 00:16:22 By setting the initial products of quail meat, they cannot benchmark against any existing category. So they can put whatever price they want. And also it shows the possibility of this technology. Right. So there had been some stunts like mammoth meat, that a bit more on the realistic side when they actually distribute stuff, they went with the quail.

Starting point is 00:16:43 Well, and it's somewhat controversial, and so I'll be delicate, but in certain cultures, the idea of killing a cow, you know, in some countries is considered a sin and just terrible. Other cultures, you know, in Alaska,

Starting point is 00:17:02 seal me. dolphin meat, whale meat, like, is part of the culture, history. And then in other cultures, it's looked at, it's a very big controversy between the West and, in fact, Japan, and in Nordic countries, we don't, we consider, oh my God, how could you kill a whale, or how could you kill a dolphin? It's very strange.

Starting point is 00:17:20 First time I, one of the first times I came to Japan, I went to the Skiji fish market before it was popular. And I saw this beautiful meat in bricks, and I said, oh, it must be this beautiful tuna. And then I got closer and closer and it was whale, beautiful cuts of whale. And I was like, whoa, I've never seen that before. So sometimes things that maybe are either extinct or maybe controversial, you can't sell well meat in America, so not allowed. Contraband, just like in some countries now, in some places foie gras is considered too cruel to create and they don't

Starting point is 00:17:57 let people do it. So have people started to think about that, you know, dolphin meat, well meat, etc. These are things that people are just not able to access, let's say. Yeah. So those things are on the possibility as a niche market. So the market has to develop. It starts with some like stunt products. Yes. Then niche products. Then something a bit more mainstream before going to the actual mainstream. So the industry has to like take each steps to reach the mainstream. What stage are we in now? Are we in the stunt phase? Stunt phase.

Starting point is 00:18:29 Got it. So are you able to? buy many of these stunt meats in supermarkets now? Well, right now in Japan, because the food regulation is not ready yet, so it's not there. In Singapore, some, yes, Vau Foods, and Parima, which is a French company that makes sell cultured foie gras, they've got the clearance, regulatory clearance, but I don't think they have put it on the market yet. Oh, you haven't tried it yet, or have you tried it?

Starting point is 00:18:58 VAL foods, quail meat, yes. How was it? Well, I enjoyed it, although, like, because it's a stunt meat, would I eat it every day or? Regularly? Regularly, probably not, but because it's expensive. Ah, partially. What is it per pound versus real quail? I don't know the price of the real quail, but anyway, so that's the whole point, but anyway.

Starting point is 00:19:19 But it's multiple times the cost of poultry or chicken. And partially because it was in a fancy restaurant. Ah. Yeah. So it was a good experience. Yes. It's also interesting maybe you wouldn't normally use a larger quantity or a different format. For example, to use 5A5 incredible Kobe beef or Wagu, Miyazaki beef in a hot dog or for like a bacon or some common meat or, you know, to make, you know, hash or like a corned beef hash, you would never use it.

Starting point is 00:19:53 It's too high quality. You'd be offensive to use it. So you could have maybe more accessibility. It can have a hot dog that's a Wagu hot dog. This might be the best idea ever. Maybe I should contract manufacture this. Actually, when it comes to those stunt products, it doesn't have to be just food that you're selling.

Starting point is 00:20:15 It could be part of a bigger experience. So, for example, have you heard of a video game called Cyberpunk 2017? Yeah, of course. So basically, if there's some sort of special event, of cyberpunk 2002, 7, and part of the event is the cell-cultured meat. So basically, you're selling not just the cell-cultured stuff itself, but you're selling the whole experience. So that's the sort of the approach we have to take for these stunt market.

Starting point is 00:20:46 When will the regulatory framework make it possible to put these in more supermarkets and more restaurants? Yeah, so, well, you mean in Japan, right? Yeah. So that depends on what the consumer phase agency say, but they've at least did the hearing session to consumer groups already. Okay. And so those industry association people say, well, end of this summer or maybe beginning of autumn.

Starting point is 00:21:16 So it's very close, I hope. In America, and maybe you know about this more than I do, there were some places Florida or Texas that wanted to ban these things, yes? Yeah, yeah. I don't know, those haven't passed or those are controversial, I think. Yeah, because it has become a part of a culture war in the U.S. Ah, yeah.

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Starting point is 00:22:39 It could be framed as those, but people are trying to protect the cattle industry maybe. To be honest, I talked about the scale earlier and the scale is so tiny that I think it's the point zero. zero one percent or even less compared to the existing meat industry. So it's not even a dent to the industry, but it's just too woke.

Starting point is 00:23:03 How many cycles do we need to do sprints to get it to be the same price as the equivalent product today? Do you think? So sprints. Or years, you know, how many revisions do you still need? Do you have to do maybe 10 revisions, five revisions every six months? And, you know, two or three years from now, it will be same price for a steak. Yeah. Your chicken breast, yeah.

Starting point is 00:23:33 Yeah. So actually what could happen is that because the existing meat price is also the moving targets, because of all the climate change and geopolitical, this and that. Yeah. So. Well, let's assume meat prices continue to go up maybe 5% a year. So it's going to double every 10 years, I think, is what it's done previously. So to meat catarice, like eel, foie gras, as we have price priority is close.

Starting point is 00:23:57 And when it comes to like regular beef, if you're talking about wagyu beef, things like that, it also depends on texture, but I would say like 10 years or so, but it also depends on the branding actually. Yeah, because it's actually paying for the brand rather than the meat itself when it comes to wagyu and those like expensive beef. Right. Let's go with chicken. So chicken is a commodity. You know, people make chicken salad, they make chicken breast, they make chicken nuggets. That's the hardest one.

Starting point is 00:24:28 Why is it the hardest one? Because it's cheap. So you have to make it cheap, you probably have to go with a large scale factory or something. Yeah, which even if the technology is ready, you know how many years it takes to build a nuclear power station. Yeah, too long. You will be talking about that kind of things. Like a decade or two maybe. And we don't have that technology yet.

Starting point is 00:24:49 So when do you as a startup, you've raised a seed around? Yeah, yeah. How do you stay in business long enough to, you know, get there? Because obviously you're enabling other people, so you're selling the tools, yeah, in the system? So. By making ourselves a cell agricultural company rather than sell cultured food or self-cultural meat company. Got it. Yeah.

Starting point is 00:25:13 So this kind of like nested, like, a field. of ideas, cell-cultured meat is a future form of cell-cultured food. And outside the cell-cultured food, we have cell-cultured cosmetics, cell-cultured leather, maybe. Well, this is plastic, but anyway. And even outside that, we have regenerative medicine and other biofarmist stuff. So we are cell-agriculture company rather than cell-culture food or even cell-culture meat. Got it. And leather could be really interesting, yeah. And beauty. Cell cultural cosmetics.

Starting point is 00:25:55 Yeah, that's one of the ways of keeping us alive. Tell me about the cosmetics. Is it a better product, a cheaper product? Are you making things that can't be made? Today, and you're going to have breakthrough products? Yeah, so it also resonates with what we discussed a little bit earlier about this previously impossible sort of food. So when it comes to cell culture, we can make some of the, yeah, one of the most common beauty ingredients, like placenta in Japan and East Asia. But that alone, like safety is one, ethical side is another. But if it's cell culture, it basically solves all these problems. And another is that becoming more important.

Starting point is 00:26:46 but supply chain stability is another. It is in competition to so-called stem cell serum, a lot imported from Korea. Got it. So this is something for your face or something, or this ingredient would go into another product. Well, to our client's product. Your client's product.

Starting point is 00:27:03 Yeah. And that one's more supply chain stable because we don't need to import from Korea. Got it. And the existing stem cell serum is human cells. But that one's like vaccine-grade eggs placenta cells, so safer. and also it's actually a little bit cheaper

Starting point is 00:27:18 so better supply chain more ethical, less controversy safer safer so many things to navigate just with this particular brand alone and we could develop all sorts of other products using different sales you can make something better yeah fascinating

Starting point is 00:27:39 and so how much money have you raised so far who's the investors is it venture capital yet or just crazy seed investment Crazy Angel investors. Yeah. So, so far, our fund rates so far have been something like, something between 15 to 20 million USD, which is far less smaller compared to our, like, industry peers in the US or like in Europe. Yeah.

Starting point is 00:28:03 But it's still a big amount of money for Japan. Yeah. And you have how many years to figure all this out? Two years to make it work? Well, initially, we, like, we have been doing cosmetry, but we have been doing cosmet. We're doing cosmetics from day one. Oh, so you have revenue now. Yeah, yeah, yeah.

Starting point is 00:28:19 Oh, amazing. Yeah, so that's actually one of the reasons why a lot of our better, better funded peers are collapsing while, like, we're told me healthy. We actually turned profitable last year. Oh, congratulations. It's fantastic, because you picked a good beachhead market. You have a good first market ideal customer. Yeah.

Starting point is 00:28:37 Yeah. And then you wait for the other things to show up. And also the contract manufacturing and building the tools. A little bit in the future, but yes, we already provide the tools. Yes. And that business could be big too, yeah? Yeah. Excellent. So this is an important lesson for a lot of founders. We talked earlier, like sometimes you have a big vision.

Starting point is 00:28:54 We have one founder here who wants to put robots for elder care, you know, and the robots aren't going to be ready for one or he thinks one year, I think two, maybe realities, three. What can you do before the future is ready, right? Before the technology is ready, you have to find really good ideas. then that's a trick because I would say a trap because a lot of venture capitalists

Starting point is 00:29:20 when they invest they basically tell you to focus on something which goes against that sort of strategy right but only focus on one thing as opposed to

Starting point is 00:29:29 have a series of what I call waypoints a series of islands you can stop at before you get to the new world yeah

Starting point is 00:29:38 yeah so like in early days like if they say 2020 or something like, there has been, like, even from within the company to focus on meat rather than doing cosmetics. Ah. So you had to, as the founder, get everybody around the right idea that could generate

Starting point is 00:29:55 revenue today. Uh, yeah, because there will be this hype cycle stuff. Yes. There will be hype crushed. Ah. Yeah. So we need to be ready by then. Got it.

Starting point is 00:30:03 Yeah. And is this your first company, your first startup? Okay. What have you learned? And then we'll open up to questions. You have questions you can line up at the microphone. What have you? learned what mistakes have you made that you've corrected in terms of company building, raising

Starting point is 00:30:18 capital, you know, and getting product market fit? Yeah. Or mistakes. Mistakes. Yeah. Painful. Our show is filled with helpful and practical advice for founders, but there's another reason to become a regular twist listener, amazing deals on essential products to help you run your company

Starting point is 00:30:36 more effectively. So I'm super excited to announce our new deal with Agree.com, the all in one, contract. to cash flow workflow. Go right now to agree.com, sign up and tell them you're a JCal listener, and they'll give you 50% off for life. Agree is the number one fastest way to go from contract to cash. That means gathering these signatures, invoicing, billing, payments, and revenue recovery. No more jumping between four or five different platforms just to write out a contract. Get it signed, that set up billing, and start sending out invoices. 99.64% of all invoices on the entire platform are paid within just 10 days. So if you want to stop chasing invoices, go right now

Starting point is 00:31:18 to agree.com. And if you tell them Jason sent you, you're going to get 50% off for life. Team building really matters. That's one. And team building starts from day zero of like, okay, let's do something. Within yourself, decide to do something, which could be a startup, could be a non-profit or whatever. But doing it alone, so-called solo planar possible, but eventually you need to find like someone else to work with. Yes. And you have to get it right. If you get it wrong, you have to correct

Starting point is 00:31:49 very quickly. Quick iterations is everything. Quick iterations. Yeah, yeah. But even with quick iteration, I would say something like some, I would say the plurril star or whatever, like the general direction. Yes. Of, I think that's something you call a vision.

Starting point is 00:32:06 Yeah. Yeah. For us, it was easy because I could do it like, I also do like computer graphics. So I basically showed all these images that I made for fun. And that's where we're going to. Right. Like Elon says we're going to Mars. Before Mars, we have to get a rocket and put some stuff in space. And then we can have Starlink to help solve a problem with the rockets.

Starting point is 00:32:32 That generates revenue. By drawing this kind of things, it actually gives you an idea of, okay, with that sort of future. What component technologies do we actually need? So working backwards from science fiction in a crazy vision. Yeah, because the reason why I started working on cell culture media is because of science fiction, anime, manga, and video games. Oh, really? Yeah. Because you were scared about the future. Or the nightmare future was in it, or a positive future? Positive future. Got it. Eutopian future.

Starting point is 00:33:00 Yeah, like Doraemon. Yeah, very nice. Okay, so some questions. So tell me about how you get to product market fit while we wait further questions. Yeah. To be honest, when it comes to food, it's not in product market fit yet because we cannot even put product on the market yet. So that's a work in progress.

Starting point is 00:33:19 But when it comes to cosmetics, then, like, lots of, like, asking conversations, trust building. It's not at all something like someone with an MBA, do something smart, and then there's a deal. It doesn't work that way. It just takes lots of trust-building.

Starting point is 00:33:38 and asking people, like, maybe something's drinking together and that kind of thing. From the beauty company, and you have to go to the beauty company, explain what you're doing, and then listen to them and build a trusted relationship. Yeah, yeah, yeah. And after... They're all going parallel. Yes. Yeah.

Starting point is 00:33:54 I think it's very important. Yeah. And then what we figured out is that when it comes to this kind of beauty products, then it's actually the sales, this hard-earned sales channel is what matters, and it's not actually the patent on the ingredient. silver things like that. They have worked hard to build a brand, have distribution, and they've built trust on their side of the business.

Starting point is 00:34:16 You build trust with them, then they can take what you've done and give it to their customers. But they have to trust you first. I've learned this lesson also in the Middle East. When I first started going to the Middle East, they said it's a very family dynamic. And people want to build a relationship, then do business. in America you do business, you do a deal,

Starting point is 00:34:40 and then you decide if you want to be friends. And I think in Japan, you become friends as you're doing business. Three different cultures. It's all slightly different. In America, everybody fights to be an investor in your company, we become investors, and then maybe we become friends. Or not. Maybe I'll just be very distant,

Starting point is 00:35:00 and you have some venture capitalists who are just, you know, put money in and they send you emails and talk about the business, but no friendship, no birth. birthday card, you know, and then other ones, they send you when you have a baby, baby clothes with the name of the venture capital firm that backed you. Sequoia would send a onesie. So when we had our baby, they send a cute onesie with the Sequoia Capital logo on it. I thought it was very cute, very fun.

Starting point is 00:35:25 But I think we now have a framework. Do a deal, build a relationship, that's America, and then in Japan maybe build a relationship as you're building a business together. And then maybe in the Middle East, in Saudi, UAE, it's get to know each other, then build the business. Very interestingly, you know, different in each case. I don't know about Europe. I don't think they're building businesses there anymore.

Starting point is 00:35:52 Okay, so tell us your question, your name, your company, and your question, please. Hi, I'm Natalie. Building PlayPin, so we make anyone easy to build robots. So I actually have two questions that I'm quite curious about, because we also do open source community. So one is how did the open source community react to your company's commercialization? Oh, good question.

Starting point is 00:36:13 Yes, so you had the open source community for 10 years plus and then you made a for-profit, how did they respond? From the early phase, we had this like overall framework of how things should be, like this open-source community doing like the bio-art, so like a visionary, and then we have this non-profit organization talking speaking with academia and maybe the government, then there's this for-profit entity

Starting point is 00:36:40 that does the physical infrastructure, therefore, like, IP, how to make open, how to scale proprietary, and we had all this kind of overall framework already shown from early phase. So a lot of the members, it wasn't a surprise for most of the members. Got it. So good communication.

Starting point is 00:37:00 Yeah. Okay, next question. And also clear vision in a way. Very clear, yeah. What was the impact of the open source angle when you were raising from VCs? They didn't really care, to be honest. So, because it's not the, they knew that it's not this initial IP that really matters. It will be more about the IP to be generated as the company operates.

Starting point is 00:37:23 Yes. Yeah, I think we've seen that many times. Open source project, WordPress powers a lot of the web, my friend Matt Malema, created it. and everybody was using it, but he made the commercial version and hosted version. And so VCs were like, yeah, if a bunch of open source people want to go through the trouble of forking it or standing it up themselves, and okay, fine, but the businesses don't want to do that. They want to have a partner who they can trust, right, back to trust. So great questions. Awesome.

Starting point is 00:37:53 Yeah. Okay, we'll take another question. Hello, Richard from Nakatomi, a cybersecurity company. My question is around, like, are you working with organizations like NASA or Jaxa to do this type of culture in space? Because that would be actually a really great use case because getting protein to the astronauts, especially if they're on the moon. Such a good question. Yeah, because you can't bring cows to space yet. Yeah.

Starting point is 00:38:20 So the very short succinct answer will be yes. It's like more specifically, like the cabinet office, moonshot, not moon-shot, the other one. startup project. And this potential application in space is also what led us to get into seed-run funding. Mainly as an open-source project, I was pitching for the potential space application of this technology, and that made it to television broadcast. And a professor in Tokyo Women's Medical University, Professor Shimizu, himself being an expert in Regent and Medicine, he's also a space enthusiast.

Starting point is 00:38:59 And he decided to call us in to Tokyo Women's Medical University. We got there and basically we agreed to work together. So we now have a very prestigious advisor. Yeah, working with us. Fantastic. And that basically led to the seed round. Great. So you built up your credibility.

Starting point is 00:39:24 Yeah, yeah. And then we're able to raise. Did you raise from American VCs, Japanese-based VCs? or both? In 2018, in the seed round, we raised on the Japanese VCs and even the government-backed VC as well, sovereign VC, I would say. Sure. Yeah. And because of our own administrative capability shortcomings, we couldn't take international ones. Although one of the international VC said yes, that it was kind of oversubscribed. Ah. Yeah. So, but in the series A, and the next In 2020, we got AgFunder on board and also venture university partners.

Starting point is 00:40:04 Great. Awesome. All right. One more question. Hello, I'm Howard from LFAOS. We build the student record for tutoring agencies. My question is that in traditional meets or even for processed meat, there's a certain hierarchy that is based on both costs and also public perception. Do you think this hierarchy would exist for like cultivated a lab processed meat and what do you make of this trend? Yeah, so it will be more of a future stuff because we will be talking about all the mainstream phase. So I have to admit that it will be a bit of a fantasy that I'm on a say, but I think it will be a separate category.

Starting point is 00:40:45 At least those existing brand owners don't want cell culture versions to get into their field. So it would inevitably, sale cultured meat will be outside the existing hierarchy. And then comes the questions, like, should we call our product even meat is actually another? And as of now, Ministry of Agriculture, Forest and Fishery, or Muff in Japan, they are refraining from calling it meat.

Starting point is 00:41:13 Got it. Got it. Got it. So that's a great question. Yeah, I think we had in America, I think it was Burger King. Somebody can look it up, Bianca. I think it would have been Burger King that had either Beyond Meat or the Impossible Burger. Maybe you know.

Starting point is 00:41:28 It was impossible burger? And do they still do it? I wonder. They do. Yeah. I think it's been successful? Hamburger, I think, is the Holy Grail. If you can make a great hamburger,

Starting point is 00:41:40 that's going to be amazing. Maybe 10 years. Yeah, so because it will be a commodity product, so it takes time to get the price point, but that is a holy grail, yes. And it could be healthier. Yeah. And it could be designed to be very healthy.

Starting point is 00:41:56 There's a product in Japan only. It's Coca-Cola that helps you lose weight. What's it called? Coca-Cola Special? I just got it at 7-Eleven. I'm sure that someone in America has decided dope Coke with GLP 1 or something. Yeah. No, this is Coca-Cola, though, with fiber in it.

Starting point is 00:42:18 Somebody look it up and tell me the name. Wow, incredible. So we just heard The Impossible Whopper is one of their most successful. It's in a white label, this Coca-Cola Plus. Coca-Cola Plus. Has anybody tried it? Raise your hand if you have. You have.

Starting point is 00:42:36 What do you think? It's incredible. I had it, and Coke Zero tastes like better than Coke Diet Coke. It's like more syrupy and delicious. And then Coke, what's this one called? Plus. Coca-Cola Plus has, I think, fiber in it and no calories. and you lose weight from it.

Starting point is 00:43:02 I drank it. I was working last night. I was a little bit late, and I had a Coca-Cola plus on ice. And I said, oh, if they had this in America, I would be even slimmer, like a model, like a fashion model slim.

Starting point is 00:43:15 I would be like runway slim. You could try for a K-pop star band. Like K-P? We could start a K-pop band together. We would be incredible. Yeah. You could be the nerdy. I could be sporty.

Starting point is 00:43:28 K-pop member. We have a, how many members do we need? Three more? You need five, right? Possibly. Possibly five. We could be like the old entrepreneurial K-pop band. All right, listen, this has been a pleasure. I wish you great success. Let's give a round of applause to Dr. Yuki. Thank you. Thank you. Okay, and we'll see you next time on This Week in Startups from Japan.

This Week in Startups - While other cultivated meat companies are collapsing, this one turned a profit | E2317

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