
Uber's Failure in Japan - jmadsen
http://www.disruptingjapan.com/how-ubers-failure-in-japan-can-help-startups-everywhere/
======
pnathan
The advantage of Uber has nothing to do with price and everything to do with
grotesque incompetence on the part of the taxi operators.

Five-six years ago, when I asked for a receipt for an expense report, I got a
hand-scribbled note. Running credit cards often required hand-based crank
mechanisms. Autoplaying TV on the back of a seat that was billed unless you
explicitly opted out. It was, in short, a scammy operation designed to squeeze
you in all the impolite ways, and there was _nothing_ you could do about it.
When Uber/Lyft came on the scene, it took the scam out of the taxi industry
and transformed the situation into one where you had a clear understanding of
the price, where you could get a clear and reasonable receipt (emailed,
even!), where you could pay with a card. You get a clear idea of how long the
operator will take to arrive.

I had to use a taxi in St Louis, MO last summer. In order to do this I had to
call the taxi company. No app, no website, nothing. It took 45 minutes to show
up, period. The driver couldn't find me when he got near. I am very glad I did
not miss my flight. It reminded me again of how deeply I support the "ride-
sharing" services.

I consider the taxicab operations to be corrupt and effectively incompetent,
frequently propped up by asinine medallion systems and graft at the city
level. Therefore, I refuse to use taxis if Lyft or Uber are available. I will
NOT intentionally contribute one red cent to these jokers.

Now, all of what the author said about Uber's flouting of the law is true. And
that's not something I'm terribly happy about. But I think there's a certain
value in simply ignoring bad law and fixing it on the fly. Might be the
American in me, but so it goes.

In any case: if the taxi industry in Japan is honest, competent and well
executed, Uber/Lyft will not have the profound advantage it has over the taxi
industry in the US.

~~~
greggman
I feel your pain. That's what taxi service has been like for me in SF and LA.
Also it was effectively non-existent except for calling to be taken to the
airport because there were so few.

Japan, or at least the populated parts generally have tons of taxis so they
are easy to find. They are polite and very clean, one thing western cabs are
not. If they do something wrong (go the wrong way, end up taking the wrong
road) more often than not they'll refund a portion of the fare without asking.
I've had this happen a few times a year over the last 20 years.

Singapore is similar. Tons of cabs. In fact in Singapore you could book cabs
in an app / online since like 2009. You get told the number of your cab so
when lots of cabs are driving up you know yours is #27B-6. I had similarly
nice experiences. I tried to tip a driver $3 for a $7 fare just so I could
give him a $10 and he was like "too much lah!" and gave me $2 back.

I don't know how Uber is doing in Singapore but my understanding is not well.
It's higher priced than local cabs for one.

My point being I agree with you. It's totally the taxis fault for providing
sub-par service. In places where that's not the case Uber is having
difficulty.

I suppose there's also the issue of car ownership though. For Uber to work you
need people who own cars and are willing to drive them. Places like Tokyo and
Singapore where most people don't own cars would probably make it harder to
find drivers. I guess NYC has people from outside to drive in?

~~~
dzhiurgis
Worth mentioning that in Singapore taxi's have special stops where people
queue up just to get into one (much like a bus stop).

I wonder how Uber drivers get away stoping everywhere they feel like. It is
somewhat of a traffic disruption.

~~~
jsemrau
Well one Uber driver at least got fined and jailed.

[http://www.channelnewsasia.com/news/singapore/uber-driver-
ja...](http://www.channelnewsasia.com/news/singapore/uber-driver-jailed-
fined/3047314.html)

But punching an LTA officer sure does not help improving the image.

------
betadreamer
The article has a point but didn't get it right. I'm a startup developer and
my family runs a taxi business in Japan, and believe me I thought about making
Uber for Japan the moment I heard about Uber, but I realized it's not going to
work out. Here are my notes I jot down at that time.

1) People don't drive

In US everyone drives, in fact you need one. But you see none of my friends in
Japan own a car. The only people who owns one are people that are well offed.
This is because owning a car in Japan is expensive (there is thing called 車検),
a hassle (no parking), and getting a driver's license is long and hard. Supply
is low.

2) Cash

In Japan most people still carry cash. Their preferred method of payments (in
order) are: cash, Suica (debit card for train), and then credit card tied with
NFC in phone that charges your phone bill. So Taxis are more convenient than
Uber.

3) Part-time jobs are everywhere

You see it's very easy to get a part-time jobs. In fact most college students
are doing it all the time. In US Uber looks attractive "I can drive and make
money!", but in Japan it is "I just have to go to that place that dispatch
part-time jobs and will make money".

4) Zoning

This is a bit similar to what the article talks about but in a different
perspective. Don't forget that Japan fits in California. Each city have its
own law and you need to pay a lot for each zone. My family operates in one
district and have 2 competitors. Other district have its own. Each city have
its own market and demand. You can't even pilot in a small region because if
you drive 15 minutes you are already in another district, which you are not
allowed to pickup. These zoning are strict, and japanese people know about it.
It existed from the day yakuza used it as protection fees.

5) Anybody can be a taxi driver

You see its not hard to be a taxi driver if you really want to be one. These
are called 個人タクシー and can operate on your own.

~~~
mahyarm
How big is smartphone penetration? Is the app based dispatch useful in japan
or are they really everywhere? Are there normal taxi dispatch smartphone apps?

~~~
frivoal
Everyone has a smartphone, except a handful of old people who have an app-
capable high-end feature-phone.

Taxis are pretty much everywhere, never had to call for one except when it
rains and I want to be picked up at my door.

------
apsec112
"In fact, there is a school of thought in the West that when the fines are
cheaper than the cost of compliance, it is not only OK to break that law, but
that the CEO has a fiduciary duty to break the law."

This claim seems absurd. Fiduciary duty is a legal concept, and for obvious
reasons, there can never be a legal obligation to break the law. Americans
might think it's ethically OK for corporations to break some laws. But a claim
that a CEO had violated legal duties to shareholders by not breaking the law
would get instantly laughed out of court.

~~~
pyre
> a claim that a CEO had violated legal duties to shareholders by not breaking
> the law would get instantly laughed out of court

I think that real issue here is that it would not get laughed out of the board
room or a shareholders meeting.

~~~
TheSpiceIsLife
I agree. And as Slavoj Zizek is fond of saying many (most) people are ok with
someone doing the dirty work for them (break the law, torture, what have you)
they just don't want to explicitly be told about it.

And anyway, if there's a better service to be had, that people want and are
willing to pay for, screw the law, it's a high-latency side chain of authority
that has built-in, but slow and political, update mechanisms, not the actual
Word Of God.

~~~
TheSpiceIsLife
To follow up on this, here is the full quote from Slavoj Žižek in conversation
with Paul Holdengräber:

Zizek: Here I’m a little bit of anti-democratic pessimist in the sense that if
you really ask people, cut the bullshit, what do you really want from
government, I don’t think people really want that government should not
torture people and so on, the point is do it but do it discretely I don’t want
to know it.

1\.
[https://www.youtube.com/watch?v=PIPjmmmh_os](https://www.youtube.com/watch?v=PIPjmmmh_os)

------
jsnathan
The article basically states that Uber's cavalier attitude towards the law was
the wrong approach to use in Japan, because the Japanese public does not
respect this attitude, and that they should have worked it out with regulators
before they started operations.

I guess the broader lesson implied is that you need to put in the effort to
understand the local culture, and adapt your strategies accordingly, before
you try to enter a new country.

~~~
2bitencryption
That and, having taken taxis in Japan... they're honestly very decent. Much
better than the taxis I've taken elsewhere.

Partly because the roads are less congested, even in the heart of Tokyo, since
so many take the train. I never found myself wishing I could take an Uber in
Japan -- a taxi was always there when I needed it... and that was only if I
wasn't near a train station, which was almost never.

~~~
ajmurmann
The biggest culture shock coming back to the bay area from a long Japan
vacation was the taxi from the airport to a nearby hotel. The day before out
return we had a driver in Tokyo who had approached it hotel from the wrong
direction and had to drive around the block to get us to the front entrance.
We were happy to walk half a block but he was very embarrassed and insisted to
drive us to the front door and took way more off the charge than seemed
reasonable and refused extra money we wanted to pay. Needless to say the car
was immaculate. The taxi at SFO was filthy and the driver got grumpy as soon a
we told him that we were going to a nearby hotel. He ignored both the
directions from his navigation system which he claimed was broken as well as
our instructions and kept missing roads leading to the hotel that he claimed
he couldn't find despite it being in sight and us telling him where it is.
When I protested and told him that I'm concerned about having to pay higher
charges because of his obvious mistakes he insured me to not worry that he
would take that off the charge. When we arrived at the hotel he took less than
10% off and got rude and insulting when I protested. Bottom line: I would not
hesitate to take Japanese taxi any time even over an uber black. I can't wait
for the SF taxi industry to completely collapse.

Edit: There is a flip side to this though. In Japan it was obvious to me that
people take pride in their work. Even people who drove taxis out clean train
stations. The resulting quality of work was astonishing. However, I also got
the impression that these people are give respect for their good work. I don't
think many taxi drivers in the US respect their own work and society for sure
doesn't make them feel respected. Respect seems to be much tighter coupled to
monetary success and I can't say I'm free from that.

~~~
BurningFrog
> _I can 't wait for the SF taxi industry to completely collapse._

“The arc of the moral universe is long, but it bends towards justice.”

~~~
draw_down
Good grief, I'm having trouble thinking of a less-apt deployment of that
quote. What the hell.

~~~
BurningFrog
I do get carried away some times...

------
dasil003
Better title would be "How Uber's Failure in Japan Can Help Multinational
Corporate Expansions Everywhere". It's a bit of a stretch to still call Uber a
startup, and even if you grant that, these lessons are not for startups.

I happen to have co-founded a multi-national startup. The best advice I have
for going multi-national as a startup is don't.

~~~
vmarsy
If the start-up core product isn't something that bypasses laws, why would it
be bad?

Was dropbox not a startup when it went to become available outside the US?
Their expansion plans didn't require offices in each country

~~~
mtanski
> If the start-up core product isn't something that bypasses laws, why would
> it be bad?

This seams like a pretty naive rhetorical question.

Regulatory burden is different in each country. Look at github problems with
Russia in the past. Or Google and EU's "right to be forgotten," worse yet,
local politicians that make your business model illegal.

Also, culture / sales process is different in every country. VP of sales for
North America is not going is going to have a hard time making a dent in Asia.
The sales culture in Japan is very different from the one in China.

Some places have a culture of bribery to get anything done. And you know what
the SEC/FTC can go after you in the US because the money goes through a bank
in the US.

Now if you happen to have employees in that market place (and in some cases
you're require to sell locally) you have to follow local labor which vary
tremendously from country to country. Then you have local taxation laws, then
you have your home countries taxation laws that deal with foreign sales.

If you multiply these headaches by say 10 or 20 markets. That's something very
difficult for most startups (or even mid-size companies) to tackle.

> Was dropbox not a startup when it went to become available outside the US?
> Their expansion plans didn't require offices in each country

Dropbox being a self service product over the web is not a great example. Sure
that can be a replicated by some segment of SaaS companies... but there's a
lot more segments out there then SasS.

------
jrockway
> If you’ve attended a movie in Japan ... you understand that many laws can be
> broken as long as everyone breaks them together.

What is this referring to?

~~~
duerrp
I was wondering the same thing...

------
jiqiren
This whole argument doesn't work when you consider AirBNB. AirBNB is thriving
in Japan with the same Uber playbook.

The real reason for Uber's failure is public transit and taxis in Japan are
amazing (and for a decent price).

------
Spooky23
Sounds like Uber's failure in Japan is related to a reasonably honest and
effective government.

The biggest failure of Uber that I'm familiar with of is ex-NYC New York, and
that's essentially because the Feds are tapping every politician's phone at
the moment[1], and it's difficult for their lobbyists to do whatever they do
to "influence" outcomes.

[1][[http://nypost.com/2015/05/04/state-majority-leader-dean-
skel...](http://nypost.com/2015/05/04/state-majority-leader-dean-skelos-and-
son-charged-with-corruption/)]

~~~
jjawssd
"honest and effective government"

Dream on. The Yakuza simply have not been paid off.

~~~
mahranch
What is this, 1982?

Japan's Yakuza hasn't been a thing since the U.S mafia was a thing. They have
similar political influence these days; little to none. They've either all
gone legit, gone into grey area markets (pachinko, porn, etc) or flat out
folded. Many have actually gone white-collar, getting into internet start-ups
and investing in the stock market.

See here, "Where Have Japan's Yakuza Gone?":
[http://www.thedailybeast.com/articles/2014/03/09/where-
have-...](http://www.thedailybeast.com/articles/2014/03/09/where-have-japan-s-
yakuza-gone.html)

Japan has cracked down on the Yakuza governmental/political corruption so much
so, that it doesn't exist anymore.

Don't get me wrong, the yakuza exists, sorta, but not in the same way they
existed back in the 1970s or 80s when they ran the show. Things have changed
dramatically since.

------
unicornporn
You know what, it's not going super well here in Sweden either. Can't say I'm
sorry about that. There are some things I'd rather not "disrupt", one of these
things is basic workers rights. I'd like to see Uber as masters of
gamification. They've successfully gamified fast money, and screwing yourself
(but perhaps mostly others) over in the long haul.

------
sergers
Uber and other type apps are successful disrupting traditional taxi services
where a heafty price tag is on medallions.

Where countries like Japan who do not have a medallion system really, there is
not much to drive prices up for taxi fares for Uber and like to undercut to be
successful.

A good taxi and transit system isnt everything... I live near YVR, we have
taxis lined up at YVR for convenience. You are also paying way more cause
first, the taxi medallions are so expensive... Then there additional fees for
being licensed to do pickups at YVR in the designated area.

Everyone I know who commutes via taxi or transit wishes Uber types were here
(banned).

Especially when u fly to DFW and the only options for a taxi is a broken
minivan 20 mins later.

And then Uber being less than half and a lot quicker.

Convenience and cost. If Japan has those covered, then no reason for a Uber
type to be operating there

~~~
nattofriends
I don't know about the details of constraining supply (medallion system), but
taxis in Japan are not cheap. In Tokyo, they start at about 7 USD.

------
noir_lord
About 5 years ago we had a new taxi firm open in my home town, the boss(es)
invested heavily in technology, you could book via a text, app or call.

They had a ruthless focus on clean cars, uniformed drivers (I was talking to
one of the drivers, if they where not clean and presentable he wouldn't put
them in service), they'd even jump out and help you load your shopping etc.

You got a text with the drivers number and plate number and could even set it
up so someone else got the same details (handy for parents, partners etc).

He absolutely decimated the local badly run taxi firms, the good drivers moved
to him and the other firms had to run to catch up or die out.

It was fascinating to watch as an outsider the change across the whole city
once word got out.

------
blockshock
In Japan, taxi services fall into broadly 2 categories, \- large to mid size
fleets 2000+ and - private 'kojin' taxis

There is yet another category commonly referred to 'izakaya' taxi, these are
also private taxis who work together as a network to compete with the big
players.

Things to know * all taxis are clean * some are spotless ie washed every
morning * 75%+ are equipped with wireless radio * 90% of cars in general in
japan have gps, so it should not come as a huge suprise to see taxis who have
2 units. * Most of the big fleets accept every credit card under the sun
including certain cards from some processors not too popular elsewhere (JCB).
Some accept nfc 'type' payments from several different incompatible
processors. * In the good old days 90s - you could call a cab company and they
would radio (motorola) a taxi to your location. Now the big companies have
apps developed by 3rd party vendors which support points for free rides etc.

People in Tokyo prefer the subway because its quicker in most cases- So you
are left with * people use cabs to get from pt a to pt b by making an on the
spur of the moment decision. i see a cab i jump in. Uber would have a problem
unless the fleet was huge from the get go.

* other people who 'plan' and use a cab can easily call one of the established players. Addresses are fairly resonably defined in tokyo and gps kits are excellect after having being engineered for 10+ years. Uber would have a problem because their software is not adding any value to what incubments are offering

* then there is this segment of people who use taxis for everything- thats where the izakaya taxis come in. They provide a first class experience using luxury grade cars (think lexus++) that are able to handle the longer distance rides, they might offer you a beer, tea etc. This is a premium service, you call the cab and he has you registered if youve used hiw before so he knows you by name. If hes busy enroute with another customer, he will just route you to his buddy. They mostly have 2 smart phones to help with this and they do this while driving with off the shelf apps well configured.

All factored in Uber's traditional model is challenged. But Uber hopefully has
deep pockets, they should start by buying a small fleet and focus on
certain/towns.

~~~
new299
I don't understand where this notion that 90%+ of taxis in Japan have GPS
comes from. I can only think it's from people how hang out in central Tokyo.

Even at the main Shinkansen station in Osaka, there's a 50% probability that a
taxi driver wont have (or wont know how to use) a GPS. I've regularly had taxi
drivers dig out dogeared maps to try and figure out where I want to go.

If you give an taxi driver and address, they often take you to the general
location and then need help from there.

------
yashap
Good article, but I think the author understates a bit how hard it is for ANY
foreign tech company to do well in Japan. You can almost always take your
American business, apply it as-is (with some decent translation/localization)
to major European markets, Australia, Canada, New Zealand, even South America,
and so pretty well in most cases. Try the same in Japan, though, and you'll
generally fail.

It's a wildly different culture in so many different ways, and there are
tonnes of local competitors who are likely in your niche, but specifically
targeting Japan, with an intimate knowledge of Japanese culture. The few
foreign tech companies that have done well in Japan basically have a separate
business and product just for Japan, like Yahoo Japan.

If you're thinking about investing significantly into entering Japan as an
American tech company, you probably shouldn't, unless you're willing to invest
HUGE resources into it (and even then, it's a massive gamble).

------
kizza
I think in many countries companies like Uber and AirBnB are seen to be a
challenge to the democratic will of the people. It should be no surprise that
we don't care very much for this!

I wonder if Uber could have achieved success in markets with more trusted
governments (Germany, Japan) if they started with a softer approach.

~~~
blisse
Really? I find that most people think it's the other way around, that Uber and
AirBnB represent the democratic will of the people, challenging broken systems
that the people do not endorse now that a better idea is available.

At least, that's how it looks over in USA/Canada.

~~~
lathiat
feels that way as an Australian, also. We probably have a worse relationship
with our government than the USA.

~~~
kizza
At least with Uber I think Australian governments are getting it right because
even after (imo) Uber acted in bad faith by ignoring the law, ride sharing is
still being legalised. I think US governments are still a bit behind,
especially as Uber has been there for longer.

------
jj1bdx
I think Uber's failure in Japan means the failures in Tokyo downtown and other
large cities like Osaka. In those cities you don't have to wait much to pick
the cars up. It's not the same like in SF. Discovering a niche market for Uber
in Japanese large cities might be difficult.

~~~
2bitencryption
Yeah, Japan does not really have the problem that Uber is supposed to solve.
At least, not to the degree that we have in the US.

EDIT: however, I did see TONS of AirBnB (or the like) in Japan. Temporary
housing is certainly a problem they DO have (at least in the cities)...
perhaps even more than western nations...

~~~
jj1bdx
Hotels or rooms for visitors to stay is indeed in shortage nationwide, and a
big problem, presumably since 2014 or so.

------
pixelbash
Personal anecdote, we flew into Narita and the customs line caused us to miss
the bus that would have connected us to Haneda for our next flight. We were
certain we would miss the flight, but instead we got one of the best taxi
drivers I've ever met.

From what I gathered, in Japan you basically pay a set fine for travelling
over a certain speed. So he added that into the fare (vaguely recall it was
15% or so).

Long story short, after some very impressive driving we got there in time. I
gained a massive appreciation for Japanese taxi drivers that day.

------
hunvreus
If you're interested in this topic, I'd recommend this great explanation of
why Uber lost to Didi in China: [https://www.quora.com/How-did-Didi-beat-Uber-
in-China/answer...](https://www.quora.com/How-did-Didi-beat-Uber-in-
China/answer/Wang-Di-8?srid=p6yy)

There are ultimately many reasons why US startups fail in some Asian markets
(including China and Japan), and it can't be reduced to cultural differences
or protective regulations.

------
brandonheato
Taxis are about 20% (rough estimate) cheaper than Uber in Japan. That, plus
the already mentioned abundance and good quality of service of taxis in Japan
(as well as the ease of booking one through phone/internet/mobile apps),
leaves no real reason for most people to use Uber in my opinion.

~~~
jpatokal
Uber in Japan is just a routing service for regular taxis, since UberX is
banned.

------
known
Japanese are different from rest of the world :)
[https://en.wikipedia.org/wiki/Utility_frequency](https://en.wikipedia.org/wiki/Utility_frequency)

~~~
nattofriends
Technology was sourced from different companies, it just so happens that this
is how they chose to deal with this problem. From your link:

> In Japan, the western part of the country (Kyoto and west) uses 60 Hz and
> the eastern part (Tokyo and east) uses 50 Hz. This originates in the first
> purchases of generators from AEG in 1895, installed for Tokyo, and General
> Electric in 1896, installed in Osaka. The boundary between the two regions
> contains four back-to-back HVDC substations which convert the frequency;
> these are Shin Shinano, Sakuma Dam, Minami-Fukumitsu, and the Higashi-
> Shimizu Frequency Converter.

------
wruza
Uber is just a management that controls bunch of small entities providing a
service. You can hate it or feel envy, but actually there are millions of
companies with bad and foolish management that cannot even do their service at
all.

I hope someday I'll see the company that will act as an umbrella to all
service companies out there, and will filter out all those pretending fools
unable to clean my carpet, install new furniture or repair pc. I'm really
tired of this local 'legal market'. I need it done, not legal.

------
riotdash
Uber may be fighting against the law, but when the government does not respect
the democratic will of the people, it is actually ok and in the long run will
benefit all.

I'm based in Helsinki, Finland and Shanghai, China (50/50). Two very different
countries in all aspects. In both countries government used to regulate taxis
and today China does not anymore but Finland still does.

In Finland taxis are very new (BMW, Mercedes Benz, Audi, Tesla etc.) and
expensive (supported with tax payers money) and they are REALLY expensive to
take. Way too expensive. This may sound ridiculous, but in my home town (major
Finnish city) during the weekends it was common for people to walk home 7-10km
after the night out, because taxis are so expensive. They are not seen as
normal transportation service but instead more as a luxury service that you
have to carefully consider before taking. They are still very safe, clean,
have their own Uber-like app etc. Finns have demanded many many years (long
before Uber) for the taxi-monopoly to be destroyed, but the government has
happily turned a blind eye to them. Ubers in Finland are usually Toyotas or
Volkswagens, quite new and clean. Prices are only 50-60% of traditional taxis.

So what about China? Taxis are old/medium-level volkswagens, little dirty,
driver may be smoking inside the car, quite safe but there are many people
playing with the meter or overcharging in some other ways. Some drivers are
also really greedy and arrogant: They may ask you where are you going before
letting you into the car and if they don't like the route they'll not take
you. Anyway they are relatively affordable for average people in China. When
Uber and it's Chinese competitor DiDi came to the market, the government was
confused at first but later legalized them when they realized that competition
will benefit all in the long run. Now? Uber and Didi are extremely popular,
significantly cheaper than traditional taxis, clean, safe and no more people
have to worry about getting bullshitted with the cab fare.

So once again Uber made things better for all. Sometimes breaking the law in
not only acceptable, but required for a greater good and change to happen. In
Finland however it might take a while since the government is still living in
their 1950s mentality and currently hunting down Uber drivers and suing them.

Some might say it's wrong that Uber is putting all the responsibility on the
driver. You know what? It's not. They know what they are signing up for and
besides if Uber as a company was responsible for every single incident all
over the world in every country, the company wouldn't exist anymore. No
investor money could cover all those fines. The current way is the only way
Uber can exist and only way the change can happen.

------
ertigen
Cool

