The Great Japanese Paradox

How one of the most innovative countries on earth almost forgot to build a startup ecosystem.

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A post-war miracle

On par with South Korea, Japan’s economic recovery post-WW2 qualifies as nothing short of extraordinary. The millennial old archipelago rose from its nuclear ashes to become, in a couple of decades, the world’s second-largest economy. The globe’s fascination with Japan’s unique insular culture, orderliness, and technological innovation undoubtedly places the country in the “successful nations” category.

Everything seems smoother when seen from the outside. For all of its qualities, Japan is constantly battling internal turmoils and demons, just like any other nation. In July 2022, the country was stunned by the unexpected assassination of Abe Shinzo, Japan’s longest-serving prime minister, a shock in a country known for its low criminality. The country is also facing a severe demographic decline. And as we’ll see in this piece, Japan’s traditionally tech-forward economy almost missed the turn of one of our era’s major economic forces: startups.

Broad economic context

The Japanese economy, and subsequent workforce, traditionally rest on the backs of the country’s mega-corporations. Fed by Japan’s academic elite, the country’s corporate behemoths (Mitsubishi, Panasonic, Sony, Toshiba, Toyota…) have grown into uncontested global leaders. The rigid Nippon work culture often meant that jobs were meant to last a lifetime, with internal promotions often relying on seniority rather than merit. This process even has a designated term: Shūshin koyō.