The following interview is a translated transcript of Hyuk-jae Choi, CEO of Spoon Radio, who spoke at the 2023 Tokyo Startup Forum and shared insights on entering the Japanese market with participating startups.
“Today, rather than boasting about the company, I would like to share the ups and downs and growing pains we have experienced since launching the service. Let me begin with a brief introduction of the company. The name of the company is Spoon Radio, and we currently have about 120 employees, one-third of whom are foreigners. Our headquarters is in Seoul, and we operate two overseas branches, one in Japan and one in the United States. In 2018, while preparing for the Japan launch, we received investment from SoftBank Asia, and in 2019, while preparing for the U.S. launch, we received investment from SBI Investment. Therefore, although we are a Korean startup, we have received a total investment of about 68 billion KRW from Korean, American, and Japanese sources to develop our business.”
“Let me talk about the service. Not myself, and probably most of the people here are not Spoon’s target users, so you may not be familiar with it. Our target users are students from their late teens to mid-twenties. Japanese users actually say on Twitter and other social media, ‘Our parents listen to FM radio, and from our generation, we listen to Spoon Radio.’ You can think of it as a new radio medium that defines a generation. By installing the app from the App Store, anyone can immediately open their own personal live radio broadcast.”
“The service began with the goal of replacing conventional FM radio. Television has been replaced by YouTube, and MP3 players by music streaming services, but traditional FM radio, tuning frequencies, had not yet been digitized. Seeing this as an opportunity, we created this service.”
“In reality, many users wanted to broadcast but felt burdened about showing their faces. For those who found it inconvenient to run a radio show on YouTube or other video platforms, we recommended podcasts, but podcast production procedures took about two weeks and were very cumbersome. So, we started the service to allow easy broadcasting through an app.”
“Spoon’s first MVP model launched with only a recording and upload function, and we conducted market testing in Korea. From August 2015 to July 2016, over about a year, we carried out 54 updates, through which the service developed into its current interface. As a result of these updates, we achieved the No. 1 audio sales ranking in Korea. From that point, we began meeting investors in earnest, and there were negative opinions about the limitations of the audio market. The company agreed with this and began to set a goal of overseas expansion.”
“In the Korean market, when comparing TV and radio, radio was only about one-fifth the size of the TV market, and all other countries had roughly the same ratio. Other benchmark services at the time included Spotify, valued at about 70 trillion KRW, and SoundCloud, valued at about 10 trillion KRW. We judged that if we expanded globally and succeeded, we could create meaningful results, and thus we decided to pursue overseas expansion. After receiving Series A investment in 2017, we began simultaneous entries into Indonesia and Vietnam.”
“The reason we chose these two countries (Indonesia and Vietnam) was that they had a large Gen Z population, and we thought it was a good testing ground to verify the product in different environments—one socialist country and one Islamic country. When we launched in Indonesia and Vietnam, the entire company team was about 20 people in size.”
“We hired one local staff member each, as team leaders in Jakarta and Ho Chi Minh City. Because of limited funds, it was more cost-efficient to hire young, talented people locally and bring them to Korea than to hire in Korea. With Seoul’s status rising, many young talents were eager to apply when offered airfare and housing to train in Seoul for three months, and we were able to recruit excellent people this way.”
“Currently, when Spoon prepares for overseas launches, our strategy is to hire business development managers with about 3–7 years of experience locally, bring them to Seoul, and have them prepare for launch together with headquarters members. This strategy is applied commonly to all countries and regions. At the time of launching in Indonesia and Vietnam, many nearby startups and B2C companies discouraged us from entering those markets. The reason was that GDP and purchasing power were only one-tenth or even one-twentieth of Korea’s. Even if we acquired more users than in Korea, revenue remained at only one-twentieth. As a result, those businesses were not viable and were shut down. In early 2018, while preparing to launch in more promising markets, we turned to Japan.”
“In Japan, growth was faster than in Korea, and we were able to raise capital more quickly. As we expanded to new countries, we documented the internal experiences and lessons learned into what we call an ‘Overseas Expansion Playbook.’ It is currently about 100 pages long. By pursuing such aggressive expansion, our operating revenue last year reached about 43 billion KRW, with operating profit of about 6 billion KRW. The situation may differ by company, but since January of last year Spoon Radio has aligned all KPIs with operating profit, making profitability in each country the top priority. All work, including marketing, is focused on generating operating profit. Among all markets, Japan has shown the most outstanding results. In fact, if we had not entered Japan, the company would have faltered, as more than 60% of all indicators now come from Japan.”
“Regarding Japanese expansion, let me summarize some frequently asked questions and provide answers.”
Q. At what point should Japanese expansion be pursued?
“We began preparing for overseas expansion as soon as we found PMF (Product Market Fit) in Korea, because the market cap for the service was clearly there, making expansion necessary. We launched in six countries, but looking back, the country that worked best, especially Japan, was actually the one that was run from headquarters in Korea with ‘small, light, and almost no funds.’ That yielded the best results.”
Q. What is the secret to Japanese local operations?
“Japan is the only country in the world that has a strong voice-actor fandom. Because of this enthusiasm for voices, we thought it was advantageous to enter. But once operating, we found differences from Korea and faced difficulties. For Spoon, it took about three years to gain trust in the service. For example, even after establishing a corporation, payment gateway companies would not open payment processing for us. In Japan, business culture involves more thoroughly checking reputation than in Korea. After receiving investment from SoftBank, we could say, ‘We are not a ghost company; we are a company backed by a major Japanese corporation with recognition,’ and from that point, meetings and partnerships began to open up.”
Q. What is unique about Japanese users?
“A unique experience was with the personal information agreements shown at sign-up. Most people don’t read them, right? Japanese users carefully read through all of those long texts.”
“We also experienced Japan’s advanced culture of consumption for content. For example, when a DJ broadcasts music, after the broadcast ends, they voluntarily submit a music list. This is a common phenomenon in Japan. Using these collected lists, Spoon pays copyright fees quarterly to the Japanese equivalent of a copyright association.”
“The Japanese market is difficult for user acquisition, but once acquired, users tend to spend for a long time. Internally, we call them ‘mid-spending users,’ who spend around 10,000 to 50,000 KRW per month. Japan has the highest proportion of such users.”
Q. How about hiring in the Japanese market?
“For Spoon, in all overseas expansions, we use every possible method for team building, recruitment, and hiring overseas business development managers. I tell my team, ‘If it is not illegal, use every possible means.’ The very first member we send to a new country we call the ‘first man.’ This person determines the success or failure of expansion in that country. We sometimes ask investors to recommend local talent, post job ads on top university websites or bulletin boards, or even use Korean language schools and local foreign communities to post job listings.”
“In Japan, recruitment is one of the most difficult among our markets. What has worked best for us is finding talent through referrals from existing Japanese employees. We also use headhunters and LinkedIn Business Plan to hire. Once a new team member is hired, they first undergo an internship period in Japan and then spend three months in Korea. Even though I cannot speak Japanese, I do this to check their working attitude.”
Q. What is the secret to product localization that looks as if it was made by Japanese?
“Right after the Japan launch, I had the chance to meet executives from Kakao and LINE. A LINE executive told me that the key to LINE’s success was ‘hiring excellent local talent and thorough localization in Japan.’ I immediately executed that advice. For example, we even removed the company address from our website, because it showed as Korea. We left the website renewal entirely to Japanese staff. The App Store images and service descriptions were also not written by Koreans using Japanese, but created directly by Japanese.”
“And three months after the launch, there was a post on Twitter. A Japanese startup CEO wrote that a Japanese company had created a truly Japanese-style app. They naturally assumed Japanese people had made the service. Receiving such consumer feedback was what allowed us to grow. Even now, whether meeting users face-to-face or online, we maintain the principle of ‘operations must always be run by locals.’”
