Businesses that are free from exploitation are supported. Interview with investor and signifier Mr. Murakami about the conditions for a growing startup

2022.09.06

In this age of rapid environmental change and difficulty in predicting the future, what do investors look at in a company to determine its future potential?

In September 2022, XICA raised 9 billion yen in funding. "We have high hopes for XICA's potential," said lead investor in this round,Signifiant Inc.Co-representativeMasanori MurakamiSan.

What potential did Signifiant see in XICA that led them to invest in it? Also, what do investors think are the conditions for a startup company to grow in the future?

CEO of XICAYoshiaki HiraoHowever, we will take a closer look at Murakami's investment philosophy.

Signifiant Inc.
Co-representative: Takafumi Murakami

Born in Hyogo Prefecture. After studying space development at the University of Tokyo's Institute of Space and Astronautical Science (now JAXA), he worked at Goldman Sachs before founding Signifiant Inc. He has consistently aimed to create industries that utilize technology from a global perspective. His specialties include sustainable management, ESG/SDGs, D&I, governance, finance, capital markets, and M&A. He currently provides management knowledge and capital as assets to the growth of startups across both listed and unlisted companies, and engages with them in his own engagement activities. He is involved as a director, management advisor, angel investor, and fund investor. He has founded several funds, including Japan's first independent growth capital, and currently serves as a GP. He currently serves as co-representative of Signifiant and an independent outside director for SHIFT, BitStar, and SmartHR, while actively engaging with investment destinations including XICA. His books include "Sustainable Capitalism: 5% of 'Thinking Consumption' Will Change Society."

CEO of XICA Corporation
Yoshiaki Hirao

After his father's bankruptcy, he strongly wanted to "eliminate the hopeless sadness in the world." He encountered statistical analysis while studying at the Faculty of Policy Management at Keio University, and founded XICA Co., Ltd. in February 2012, just before graduating. Before founding the company, he also had a unique career as a band member.

The criterion for investment is "whether or not it is supported"

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Hirao　Thank you for investing in XICA. First of all, could you tell us what aspects of XICA you appreciated?

(I.e.　XICA aims to change the inefficient structure of the marketing industry that has continued since the period of high economic growth when television was born, and bring benefits to companies and consumers.

There are many challenges that startups tackle, big and small, and some companies focus on a small part of a larger problem. But XICA's challenge was very big. I was attracted to the fact that they see the structure of the industry itself as both a challenge and an opportunity.

What I consider most important when making investment decisions is:Social and long-termI invest in companies with the expectation that they will be closely linked to social issues, will be in perpetuity as infrastructure in the market, and will continue to exist as a great company even after I'm gone.

Hirao　We are honored to be recognized as one of those companies. What do you think of XICA's organization and business?

(I.e.　For better or worse, Saikya is a company where Hirao-san's impression is strong. Compared to startups in a similar phase, the CxO layer is full of talented people. But still, Hirao-san's impression is strong.

However, in the future, as the product grows, the business will become more complex, and the number of customers and stakeholders will increase. I think this means there is an opportunity for change.

I feel that there is a lot of potential for growth in the business.MAGELLAN" has been accepted by the market to a certain extent, but XICA's ideals are much loftier.

Hirao　As you say, Magellan is still in its infancy in terms of the value it wants to deliver.

(I.e.　I'm sure there are some customers who feel the same way. But even so, those who are keenly aware of the market's challenges are buying the product with high hopes. It's not perfect at this stage, but the market has high hopes for the product's development.

In other words, Supported by the marketThis is the ideal state for a startup. It's unfinished, but it's interesting and should become more popular. Such things will spread more and more, and the product will improve.

XICA"A company supported by everyone"so,A platform that users can developThat is why I wanted to invest.

"Machine design" and "company management" are similar

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Hirao　One of Murakami's criteria for judging whether or not someone is supported is whether or not they have support.

(I.e.　That's right. In the past, during the postwar period of active growth, companies could grow by creating good products and services. However, we now live in an age where similar products are overflowing. Some companies are able to catch a passing fad, but it is rare for that to continue.

In the long run,Companies that receive support for the entire company, including the product, brand, culture, and personality of the president, are the ones that will grow.I believe.

This is especially true for startups. Since you are taking on a business with no guarantee of success in the first place, it is better to have fewer people holding you back. In this phase, there is not much difference in strength between companies, so whether or not you have support determines whether you succeed or fail.

Hirao　indeed.

(I.e.　The value of "support" can also be explained from a slightly different perspective.

I have a science background, so I use this analogy, but "machine design" and "company management" are similar. Machines that are not likely to break down always have a "buffer". This is also called robustness. Thanks to this, they can continue to function normally even when placed in a harsh environment or when there is a problem with a small part.

The same goes for management. Especially in startup management, there are always problems, big and small. To survive for a long time, you need a buffer. If you have abundant funds and a healthy organization, those will act as a buffer. However, startups are too small to overcome problems by themselves. That's why you needThe invisible asset of "support".

XICA is currently working to improve the unhappy situation where stakeholders are being exploited little by little by refining its services and products. In the process, it will become an indispensable presence in the industry. That is what I understand to be its goal.

"Management that does not exploit stakeholders" is the key to sustainability

A man sitting on a bed. Automatically generated descriptions with moderate accuracy.

Hirao　At XICA, we refer to companies that work with the market to bring about innovation as "next-generation innovative companies" as opposed to "disruptors" that bring about disruptive innovation in the market.Feature article introducing 10 next-generation innovative companiesWe have published an article. In this article, Mr. Murakami also introduced some companies.

I think there are many commonalities between the "supported companies that will survive for a long time" that you mentioned earlier and the "next-generation innovative companies" that we introduced in this project. What characteristics do you think these companies have?

(I.e.　In a nutshell"A company that does business without exploitative structures".

There are businesses in the world that exist by exploiting certain stakeholders. These are businesses that do not directly harm the environment or exploit labor, but have unfair exchanges of added value within their supply chains.

Such exploitative structures are not easy to see because each exploitation is small. Also, if we judge a company's return based solely on short-term figures, exploitation can be seen as a positive element, as it represents cost cutting.

However, such a business model is not sustainable. There is a risk that someone will step in and cause it to collapse in the future.

When we think about the fact that companies are more valuable if they remain in business for a long time, what is necessary for a company to survive for a long time is:"Stakeholder management" that does not exploit stakeholdersStakeholder management is management that broadly defines stakeholders and creates an environment in which many stakeholders support the company, and we believe that this will become increasingly important in order to continue to take on major social issues in a sustainable manner.

Hirao　What is needed to eliminate exploitative structures and move closer to stakeholder management?

(I.e.　Stakeholder management isIt all starts with understanding your stakeholdersExploitative structures are not created intentionally, but rather are created unconsciously with people who are not recognized as stakeholders. In the days when it was considered good to grow a company even if it meant destroying the environment, the environment was not considered a stakeholder. Human capital has been attracting attention recently, but this also comes from reflection on the fact that employees were not fully recognized as stakeholders.

The same is true in everyday business situations. Companies that are unable to recognize the exploitative structure they are using on their employees and customers are more likely to face problems such as increased competition, changes to rules, organizational collapse, and churn of existing customers.

If you are trying to run a business that has a big social impact, the range of stakeholders will expand. That's why a managerial background that requires a broad perspective, like that of former Japanese national soccer team player Hidetoshi Nakata, who watches what the spectators are doing, is required.

Hirao　As the size of the organization and the scale of the issues it sets increase, the stakeholders also become more complex and difficult to understand.

(I.e.　Yes, that's right. So the important thing isManage your business with a healthy fear that you may not be able to fully understand your stakeholders.It is important that we are a company with that kind of culture.

For example, I invest in a space business company. The company is supported by as many stakeholders as I can see, but that is only what we can see from our current perspective. There may be some aspects of the impact on people and the Earth in the more distant future that we cannot imagine.

That is why you need to have a healthy fear and observe your business carefully. If you can recognize the existence of new stakeholders and the exploitative structure of existing stakeholders, you should be able to deal with them before major problems occur. First of all,It is important for management to increase their sensitivity to stakeholdersI think it 's.

In an era where the value of "invisible things" is increasing

Hirao　What are the conditions for a company to continue to grow sustainably?

(I.e.　in the long run"A company supported by society"However, in the short term and only in Japan,Companies that make people think, "I want to work here" will continue to grow.I think that's because the biggest challenge facing Japan and startups is the lack of human resources.

for that purpose"Rethinking employees as important stakeholders"Japanese companies, which have long adopted a system of lifetime employment and mass recruitment of new graduates, tend to think of their employees as a single group. However, now is the time to redefine that relationship.

Building trust with external stakeholders is the responsibility of each and every employee. Stakeholders' impressions of a company will be very different between those with employees who are highly sensitive to external contacts and those who don't.At the heart of the brand are people

Of course, people will quit,A company will grow if its former employees are proud to have been there.I think so.

Another important thing is to take advantage of diversity.Cultivating a culture of dialogueIf you want to provide great value to society, you need support from a diverse range of stakeholders. It's clear that having a diverse range of employees is an advantage.

For example, if all the members of Johnny's were Kimutaku, there wouldn't be as many Johnny's fans as there are now. It is because they had such a diverse group of members that they have such a wide fan base.

The same is true for companies, where it is necessary to increase diversity while maintaining a certain degree of homogeneity in discipline, dignity, culture, etc. To do this, a culture of dialogue that accepts and utilizes differences is essential. A culture of dialogue will spread to external stakeholders, which will generate "support" and become a driving force for the company's growth.

Hirao　The other day, a client told me, "The reason we introduced XICA is because the people involved in the product are great," and I felt very proud. I would like to continue to foster a good culture.

(I.e.　That's great.Whether or not you can overcome a crisis depends on the attractiveness and trustworthiness of the people at your touchpoints.This is something I feel from my own experience.

From now on,The value of a company that can accumulate "intangible things" such as relationships with stakeholders, culture, and brand will increase..

I think the trend in society is for investors to pay attention to "non-financial information" because they have recognized that you can't understand true value by only looking at what is visible. Investors are now challenging themselves with how to measure invisible value.

I personally intend to do my best to ensure that as many of the investee companies as possible continue to be great companies in the long term.

Hirao　Thank you very much for your very insightful and informative talk. Once again, I am truly grateful that Signifiant agreed to be our lead investor. Let's work together to bring about change in the marketing industry. I look forward to your continued guidance and encouragement.