Cargo.one finds a simpler way to get started in Japan

Getting a startup off the ground is rarely a simple affair. In Japan, the difficulties are multiplied for foreign founders who must jump through a series of hoops to attain the appropriate right to work.

The innovation scene has become much more dynamic in the past decade, especially after the flea-market app Mercari attained unicorn status in 2018. Japan has been looking to accelerate growth in this sector further, recently introducing a Cabinet post to oversee the promotion of startup policies earlier this month. Some of the old stumbling blocks remain, however.

For example, obtaining the prerequisite business management visa requires ¥5 million in capital. You’ll also need to hire some locals and be subject to investigations into your company’s shares and investment profiles, as well as undergo an Immigration Agency assessment on how you acquired a managerial position at the company.

The startup visa, which has found traction among inbound entrepreneurs in innovation-focused cities like Fukuoka and Kobe, has helped budding companies fast-track the process by availing themselves of a few financial perks — as per the host municipality’s specifications — and launching operations before the business management visa requirements are met. For now, though, the startup visa only lasts the duration of a company’s first year in situ.

Cargo.one opted for a different and decidedly more modern route into Japan. The tech company has developed a marketplace connecting airlines and forwarders who coordinate the shipment of goods from one place to another. By using cargo.one’s platform, forwarders can cut the amount of time needed for planning and booking air cargo shipments by up to 50%.

Head of Expansion at cargo.one, José Paz Rendal, is in many ways the archetypal startup manager. Paz Rendal joined the company straight out of business school with lofty career ambitions. Clad in a hoodie and T-shirt befitting his relaxed demeanor, he tunes in for our virtual interview and wastes no time getting to the point, declaring: “We are on a mission to make air cargo effortless.”

This approach was front and center in cargo.one’s recent introduction to the Japanese market. An entirely remote company, it kickstarted business operations in Tokyo last month while circumventing the logistical roadblocks often faced by nascent foreign companies. It achieved this by applying what you might call a “Schrodinger's cat business model,” allowing cargo.one to be both in Japan and not in Japan simultaneously.

Cargo.one has one legal entity based in Berlin, where the company was founded by Germans Oliver T. Neumann, Moritz Claussen and Mike Rötgers in 2017. But half of cargo.one’s 130 employees of 30 different nationalities — based around the world and known colloquially as “cargonauts” — are technically hired by employer of record partners incorporated in their respective host countries. This has proved a cost-effective and expedient method of launching the business in new markets, and with Japan it was no different.

“This made starting much simpler because we could delay the process of opening an entity,” says Paz Rendal, who is currently in Japan on a temporary basis through the business track visa. From a practical perspective, this also allowed cargo.one to get to market as quickly as possible.

“It’s definitely the right approach to get started,” Paz Rendal adds, “but longer term we would like to have entities in our main countries because we have more flexibility than working with partners ... it would also show our commitment to Japan, which is very important here.”

Expanding abroad

Paz Rendal was one of cargo.one’s first hires when he joined the company in 2018. Since leaving his home country of Spain, he has been no stranger to working abroad, having spent prolonged periods in seven countries over the past 10 years — including France, Germany, Finland and Singapore. Expanding into new international markets was firmly within Paz Rendal’s remit.

“For us to build a successful company, we also needed to become global,” he says. “Japan is one of the largest air cargo markets in the world, and we only want to open in markets where we believe we can offer a great experience to customers, which we felt we could offer to Japan.”

Already having high-profile customers on the cargo.one portfolio, including ANA Cargo, Lufthansa and Finnair, played a key role in bringing the product to Japan, given that referrals and word of mouth account for 50% of the company’s new users.

Paz Rendal worked on the assumption that such partnerships, alongside cargo.one’s proven international track record, would give it much-needed cachet when entering a Japanese market that only acquiesced to working with startups during the late-Shinzo Abe’s second prime ministerial tenure (2012-20).

How the product would be received in Japan and its business culture hardwired to resist change was among cargo.one’s biggest concerns. Paz Rendal maintains that he had no desire to “disrupt” the market but rather to streamline it and help companies adapt to the digital era through cargo.one’s services.

“The response has been very positive; we have found Japanese forwarders very willing to try our product and to digitalize their processes,” he notes, adding that cargo.one has already secured a number of “power users” in Japan — customers who use the product “proficiently.”

Rather than going through a laundry list of setbacks and difficulties, Paz Rendal is keen to focus on the positives. “One thing about the Japanese market is that companies are very loyal,” he says. “Being early in the market and having the opportunity to build relationships with our partners has been important. And if we do this right, we might have customers here forever.”

Paz Rendal admits he knew very little about Japan prior to his arrival, so he sought the help of entrepreneurs and operators who had already expanded into the local market.

“That’s a great way to understand dos and don’ts, and the practicalities,” he says. “We essentially built off of their experiences and their knowledge.”

Finding a home

Though cargo.one only has one local hire to date — Country Manager Yoichi Mizuno — it hopes to recruit five more before the year is out. Startups tend to have a contracted timeline compared with larger enterprises, so Paz Rendal is aiming for a fully established, self-sufficient and autonomous team of up to 10 members in Japan within the next couple of years.

“We combine local expertise with cargonauts who know our culture in and out,” Paz Rendal says. Local hires will be tasked with influencing the company’s direction in Japan, including localizing the product; something that cargo.one rarely does. But Paz Rendal felt it was the right investment as a way of showing reciprocal loyalty to Japan and to mitigate the relatively low levels of spoken English in the country.

Paz Rendal has also found that once you get started in Japan, things move fast, and part of this acceleration required securing a base for the company. In most of cargo.one’s satellite countries, employees work from home and utilize co-working spaces when necessary. In Japan, it slightly adapted this model by renting a permanent office space in the Toranomon WeWork office in Tokyo, close to where many of the company’s partners are situated. Not only was this a statement of immediate intent but it also facilitated face-to-face meetings, which cargo.one quickly discovered are integral to establishing relationships with major Japanese companies.

Paz Rendal concedes that conducting business in Japan will always involve a steep learning curve. But he is clearly taking it in stride and remains excited about the possibilities it offers.

“Japan has a very genuine culture, a very specific way of doing things, and you have to follow it. You need to show that you’ve done your homework and to show that respect,” he says. “The airlines and forwarders know how to do air cargo; we know how to do technology. And those are the partnerships we want to establish.”