SF vs. Tokyo-Technology’s SaaS Startup CEOs talk about their backbones, cities, and investors (1/2)

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  • Post last modified:2020-11-25
  • Post category:Interview
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When we think about founding a tech startup, many of you may think of San Francisco as a go-to city to start your business. Tokyo, where Sider is located, we have different perks and hustles here. Our CEO has chatted with Mr. Bjoern Zinssmeister from Templarbit, which provides security service for applications and enterprises. They talked about their background before becoming a CEO, what was the motivation behind founding a tech startup and their experience of founding a company that is unique to their cities; Tokyo and SF.

Background

Koichiro:
For the readers, I want us to talk about a little bit of our background.

Bjoern:
I was born and raised in Germany actually, and I started coding as really a young boy at age 10. It was always very clear that I would probably go study computer science, and that is what I did; I ended up studying computer science at the University of Trier in Germany.

And after studying computer science, I went to America. I thought I was going to go to London, but it was pretty clear that I had pretty good English skills and the job market seemed better in America or Britain. So, I ended up in Silicon Valley eventually. 
And as I had previously worked for a small start-up in Germany, I knew how the startup game was supposed to work, but I thought in Silicon Valley, everybody is really smart and everybody is much more talented, so there would be no way for me to work there.

But then when I showed up there as a tourist, I realized that with an education from Europe you actually pretty on par with some of the really smart guys at Stanford or Harvard. It seemed less intimidating as it was in my head. So, I decided to stay in America. I did early-stage startups as an employee many times before founding myself. That is sort of my career. Right after I graduated from college, I did work at a really large corporation. It was the Match Group, they own all the dating sites including Tinder and Pairs here in Tokyo, so that was the one corporate job that I had for about two years. It was also interesting perspective but other than that I have been doing startups my entire life, primarily in enterprise and security space.

These are all startups. userfox, my former workplace, was also a Y Combinator.

Koichiro:
Oh, really?

Bjoern:
Yes, it was one of the earlier Y Combinator companies from the summer 2011 batch. I was the first engineer there, and we sold it to AdRoll, which actually also has a Japanese office here. It is one of the larger Ad Tech companies.

And then after userfox, I worked at Synack. The company was founded by two NSA guys, so essentially spies from the government(chuckles). And the focus was to bring security hackers to corporations, and I was also the first engineer at that company. We raised a lot of money actually from Google and Kleiner Perkins so that was really a successful company.

And then I did Design Inc. as a CTO after leaving Synack. But then I decided I would much rather have stayed in enterprise space and do security and founded Templarbit.

Koichiro:
Thanks, Bjoern.

My background in coding starts in high school. When I was in high school, I was earning money from coding. I was running a rental server when I was a high school student. In college, I developed an app for iPhone and Android, which was downloaded by more than 4 million users. Then after college, I worked for Rakuten and CyberAgent. There, I was using Java, Objective-C, PHP, and Ruby for programming. I also helped them launch a new project.

After that, I started my own company.

I received investments from Open Network Lab(Onlab), which is a Seed accelerator by Digital Garage Group. They were the first Seed Accelerator in Japan, and has been called “Japanese Y Combinator.” Other companies that made it into SF through the help of Onlab were AnyPerk (YC W12), which is now Fond (employment engagement platform) and WHILL (Intelligent personal electric wheelchairs).

Initially, we were developing some smartphone apps then shifted our business model to the current Sider one, and increased the capital about four times.

Why Technology Startup?

Koichiro:
Now, can you tell me about what made you decide to launch a technology startup?

Bjoern:
That is a very interesting question because — where I am from in Silicon Valley, nobody asks this anymore. They used to because it used to be weird that you start a tech start-up. But now it is so common that people don’t ask that question anymore, so I have to think about this actually. I think when you are an engineer you grow up as a child and build similar tools, you always want to do more and more. And eventually, to do a lot, you need to have a company because you need more people to work with you on a big dream. And for me, it was always that I saw a lot of stuff that was broken, it seemed like there can be better software to fix the problem. But the problems keep getting bigger, so I needed to actually have a company to solve the big problems in the world. Right now, we essentially try to secure the connected world. Everybody has software or an IoT device, which could be vulnerable. Templarbit’s mission is to protect software while it is running on production. That is a really big problem and to solve that problem, we need to have a company. So, you very quickly end up becoming an organization of many engineers solvings a bigger problem form a bedroom engineer working on stuff. I think that’s, for me, how I ended up running a start-up.

Koichiro: 
Your education background is computer security, you have had interests in security for a long time?

Bjoern:
That is true, yes, but I think security has been actually the first thing that I have done before even writing code. I was playing around phone lines in Germany, trying to understand how the phone system works. So that was even before I went online with a computer. I would try to understand how the phone system works and find ways to trick the phone system.

And then later on, I became a software engineer, but security was always an interest.

Koichiro: 
Were you able to tap other people’s phone line when you were…

Bjoern: 
Maybe, maybe.

Koichiro:
Do you think it is more appropriate to call your company development start-up versus technology start-up?

Bjoern: 
Yes, I think we often get considered to be like a developer- focused company. A lot of people look at us the way they look at Stripe, which is really flattering because Stripe has done really well, though we are nowhere near that success yet. But they look at us the same way as Stripe because developers don’t want to do much outside of their core; they want to focus on building the product and everything that is distracting like taking payments or securing the software, they like to outsource. And that is why they look at things like Stripe or Templarbit or Sider to do stuff that they don’t want to do every day. So, we are a developer-focused startup for sure.

Koichiro:
What you just said really resonates why I started Sider.

I wanted to solve the problems that I was facing. That was why I decided to create what is called Sider now. It was around 2013, I was feeling that I spend too much time on code reviews. I asked around my CTO friends in Japan, and I was convinced that this problem is universal.

Right now, the developers are driving the world. I believe that software and hardware will change the world to a better place, and the developers are the ones who will make that happen. So, it is meaningful to provide an environment for developers where they can work with ease.

About Y combinator — Secret tips

Koichiro: 
I know Templarbit got into Y Combinator. It is the most popular seed accelerator. Many people want to join the Y Combinator, but many of them get rejected. What was the key for your company to get accepted?

Bjoern:
I actually don’t know. It is true that it is really hard to get into Y Combinator. It is easier to get into Harvard than YC. And a lot of people I know that went through Y Combinator with us have tried four or five times to get into the program. About half of the people I met had to apply multiple times, and the other half they got it on their first try.

Often they look for people that have done something weird in the past, they have this part of the question that says something like “what have you hacked in the past that is something not technology related?” And I think that question is looking for people that will do something that they are not supposed to do to get something done. That is something a founder has to do, right? You have to do weird things to get something done, maybe a deal or build a feature really fast.

So, maybe we had a good answer for that. I don’t know. We actually did a late application, so the deadline was already passed by two weeks, and so we never expected to get in. There is also a way to get a referral. If you have friends that have done Y Combinator, they can refer you to be part of the program, which increases your chance to get in. I had two friends that I could have asked for a reference, but I didn’t ask because I thought we would not get in because of the late application. It was more like we filled out the application because we knew the questions were really good to think about when you start a company, so we only did it to prepare the founding of the company, we didn’t actually expect to get into Y Combinator. It was a sort of an exercise to answer the questions you need when you found the combinator.

Koichiro:
When you got accepted into Y Combinator, how many people were working with you?

Bjoern:
It was just my co-founder/CTO, Matthias and me.

Koichiro: 
How about the product?

Bjoern: 
When we got invited to interview at Y Combinator, we had to build a prototype very quickly. We knew what we wanted to build and we had slowly started. But there was no working prototype. So, we thought that if we were to get in, we have weeks before we have to go to the interview. And we had two days, so in two days, we quickly built a prototype. We had a prototype when we started the program.

Koichiro:
Your teamwork between you and your company CTO is good.

Bjoern:
Yes, I think Y Combinator also liked that we worked together before. Matthias and I both worked at Design Inc and Synack. So we knew how to work together really well.

Koichiro: 
Now, how many people are working with you?

Bjoern:
Twelve.

Koichiro: 
It is pretty high.

Starting a startup in SF and TOKYO

Koichiro: 
What is the best thing about founding a startup company in San Francisco?

Bjoern: 
What is the best thing? I think it is the money. There is so much money in San Francisco. But besides the money, which is obvious, I think you have a lot of great ideas going around Silicon Valley. But you now also have a lot of noise because so many people often work on similar things, but there are still so many great ideas as well. So, when something comes up like blockchain, usually San Francisco knows everything about it, so you can very quickly make a decision whether it is interesting or not, and same with artificial intelligence which is what we build a lot. There is a lot of hype in some of the areas, so you also see a lot of stupid stuff, but generally that’s part of how things work. But, being in San Francisco helps you really understand a space really fast and find the true source and learn the good stuff. I think that is the best part about San Francisco. You have a lot of the best brains in each subject of whatever you are interested in.

Koichiro:
One of the nice things about launching a business in Japan is that the startups in Japan can start their business small. In Japan, the startups at seed round raise around 10 million yen to 100 million yen (as of July 2018, the amount equivalent somewhere between 90,000 USD to 900,155 USD). I believe Templarbit has raised $3M at Seed round, correct?

Overall, the entrepreneurs can start their business small and quickly. Without targeting the overseas markets, you can finance and make an initial public offering.

In San Francisco, there are so many high expectations for venture companies to provide high salary and excellent work environment and perks. In Japan, these expectations are a bit more relaxed, which makes hiring a bit easier than SF.

About Templarbit

Koichiro:
So, Templarbit provides security software. What kind of company is the target of your product? Is it a large company, a large bank company or big company or…

Bjoern: 
Yes, it is actually a mix of companies. The first one is obviously banks because they always have bought security. They are one of the big security buyers. Another target is the smaller technology companies. They have a small development team, and they are looking to secure what they have built. So it is those two things, large enterprises that are financial services companies, and smaller technology-focused companies.

And in Tokyo, we almost exclusively only talk to larger companies and some startups.

The startups we talk to is more about finding allies that we can help and they can help us, like Sider or Contelize. So, it is like like-minded founders that know this market really well, that can educate us, and we can educate them about America. I think that is a good relationship.

But for revenue and customer development, we only focus on the larger ones simply because they are easier to find. It is really easy for me to find Softbank, I know they exist by looking at Wikipedia. But the smaller businesses, I don’t know about them, because you have to be a local to really understand who exists where. So we only focus on the large brands right now.

Screenshot of Templarbit’s product page: https://www.templarbit.com/product

Next Goals

Koichiro: 
And What is the next goal?

Bjoern:
That’s a good question. I think we still have a lot of product features to build. There are a lot of things that we want to do.

We just celebrated our one-year anniversary actually. And I feel like the first year, we looked at existing solutions in security for protecting applications, and we picked things that make sense and put it in the product. We basically have a very polished solution with techniques that are sort of around, but we have put them together in a more smarter way. There is a lot of things you can build that are new and that are more exciting, and that are more intelligent and are new approaches. But we wanted to make sure that we have the foundation first, things that everybody needs before we get into the future. For us, the next goal is to build more of the future for security now that we have the foundation for everybody.

It’s kind of like Tesla, you know. When they built their car, they first had to make sure it had doors and drove before they start to do something fancier like self-driving.

Koichiro: 
I see. In my case, our investors tell us to grow our MRR(Mean Reciprocal Rank). We raised $2.4M. Templarbit raised $3M. It’s somewhat the similar amount of money. However, In Japan, If you “raised over $1M,” that means you are a Series-A company. So, investors need business growth. You are required to start making money then.

Bjoern: 
Yes. I mean making money is always a goal for a business but I think to make money, you also have to have a product that is really interesting for people.

Koichiro: 
Exactly. I am sort of jealous of the generous amount of the investment that SF investors offers, like your investors.

Bjoern: 
Maybe it’s our stage because we’re in seed stage, and as a founder, you are still fully in control.

I think when you start a company, you have about 18 months to build a product or so, people leave you alone but after a while, people will expect more dollars. We’ll see, but for now, I think our goal is mostly on the product side. Of course, we have a revenue goal in mind, but since it’s so early, we don’t know yet how that pans out right. You can close a big deal with a bank and secure some of their assets and make millions of dollars overnight. That’s a beautiful thing with enterprise security.

Koichiro:
Yes.

Bjoern:
Our bigger goal is to bring security to everyone, including smaller businesses but that takes a longer time.

Koichiro:
Same here. Our long-time goal is to have our product used by developers all over the world. We want our product Sider to be the synonym of the automated code review service. We want to provide a product that will do good for the developers around the globe.

SF vs. Tokyo?

In our next post, Bjoern and Koichiro talk about their up and down running a tech startup in SF and Tokyo, from hiring to raising funds. Is SF really the dream city for startups? Please follow Sider on Medium to find out.


For more information about Sider, please go to our website.

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