Podcast Summary: This Week in Startups – Japan’s Startup Revolution (feat. Kathy Matsui) | E2235

Host: Jason Calacanis
Guest: Kathy Matsui, General Partner at MPower Partners
Date: January 14, 2026

Episode Overview

This episode explores the growing momentum behind Japan’s startup ecosystem, the country's unique economic challenges and opportunities, and the cultural and geopolitical factors shaping Japan's next generation of entrepreneurs. Kathy Matsui, an influential investor and advocate for women in business, joins Jason Calacanis in Tokyo, where they discuss topics ranging from Uniqlo’s global dominance to immigration, talent, the government’s pro-startup policies, the role of ESG, and Japan’s relationship with the US, Middle East, and China.

Key Discussion Points & Insights

1. Japan's Workforce & Economic Transformation

• Shrinking Workforce Creates Opportunity

  • Japan faces a declining population, creating a "seller's market" for young workers with abundant opportunity.
  • Quote:
    “Japan has a very, very small and shrinking workforce. So young people… have so many opportunities in front of them.” — Kathy Matsui [00:00], [12:33]

• End of ‘Deflation Mindset’ and Startup Risk Appetite

  • After decades of economic stagnation and deflation, there is a cultural shift from seeking safe jobs in large companies to embracing startup risk, especially as economic conditions improve.
  • Quote:
    “If you're a decent young person… you could work at that blue chip, you know, trading company or bank, but you also could take a little bit of risk and work at a startup.” — Kathy Matsui [13:00]

2. Uniqlo as a Japanese Global Success Story

• Origins & Mindset

  • Uniqlo began in rural Japan and transformed from a simple apparel shop to a global retail powerhouse by focusing on affordable quality, durability, and innovation (e.g., HeatTech, AIRism fabrics).
  • Quote:
    “Their business is actually greater overseas than in Japan… They have a truly global team and a global mindset.” — Kathy Matsui [05:25]

• Customer Service & Manufacturing Quality

  • While most manufacturing is done outside Japan, Uniqlo maintains "Japanese-style" quality through strict standards and global supply chain optimization.
  • Quote:
    “They’re very focused on consistency of quality across the board.” — Kathy Matsui [08:22]

3. Social and Cultural Qualities Attracting Entrepreneurs

• Quality of Life & Safety

  • Japan's famously safe public spaces, efficient transportation, and world-class food culture make it highly attractive, especially for families and visitors from the West.
  • Quote:
    “As a measure of… quality of life, this country is very hard to beat. Our kids are riding the subways alone at night. I never had to shuttle them around…” — Kathy Matsui [00:14], [15:35]

• Geopolitical Alliance with the US

  • The enduring US-Japan relationship is seen as vital for security.
  • Quote:
    “That security umbrella that is provided by the United States is crucial.” — Kathy Matsui [17:54]

4. Recent Shifts Favoring Startups and Immigration

• Policy Changes & Startup Visas

  • Japanese policies recently evolved to better accommodate both local and foreign entrepreneurs, with startup visas and government-backed funding/subsidies.
  • Quote:
    “The government is now creating an environment that is conducive for people to launch startups, whether you’re a Japanese founder or a non-Japanese founder.” — Kathy Matsui [18:16]

• Changing Ambitions Among Young Graduates

  • Where once blue-chip jobs were the only goal, now “over 40% of Tokyo University students” want to launch or join startups.
  • Quote:
    “40% plus of the respondents said I want to start a startup or work at a startup. That was unheard of.” — Kathy Matsui [21:59]

5. ESG, Women in Startups, and Investment Trends

• ESG Perspective in Japan vs. US

  • While ESG is polarizing in the US, Japan treats it more pragmatically as part of core business building.
  • Quote:
    “What we’re doing is… helping [startups] integrate critical ESG considerations to help their businesses scale and accelerate growth faster.” — Kathy Matsui [23:15]

• Focus on Female Founders

  • Only 2% of startup funding in Japan goes to female founders, despite evidence their companies outperform at IPO. MPower Partners pioneered a women-focused fund.
  • Quote:
    “We looked at IPOs between 2020 and 24 and… the companies [founded by women] were valued 1.5x greater than [male peers]. As an investor, you get in at a discount and exit at a premium.” — Kathy Matsui [27:09]

Notable Quotes & Memorable Moments (with Timestamps)

• On Deflation’s Psychological Impact:
  “If you're a rational consumer… buy this for me — no, we're going to come back in a month and guarantee it'll be cheaper… That is like poison.” — Kathy Matsui [10:55]

• On Building Trust in Japanese Business:
  “Having somebody, number one, is have a face on the ground that hopefully is a Japanese face… relationships are very important.” — Kathy Matsui [35:14]

• On Long-term Perspective:
  "There is so much pride attached to the fact that you have a family business that's been around like 300 years...This long-term durability, sustainability of your enterprise, that's really proof of, oh, you really know how to run your business." — Kathy Matsui [36:33]

• On Male-Dominated VC and Boardrooms:
  “...when we launched fund one in 21... many female founders, early stage, knocked on our door. No surprise because we’re the only upscale female GP in this country.” — Kathy Matsui [25:31]

• On Pragmatism and Immigration:
  “At the end of the day… Japan will face a reality that they do not have enough people to do a lot of the jobs ... they may not call it immigration reform but I think they will quietly accept more people who want to come to Japan.” — Kathy Matsui [59:38]

Important Segment Timestamps

• [00:00] Japanese workforce challenges and opportunities
• [02:14] Uniqlo: Brand, origins, and approach to quality & global scale
• [06:18] Uniqlo’s technical innovation: HeatTech, AIRism fabrics
• [10:35] The psychological trap of deflation and Japan’s inward focus post-bubble
• [12:33] How seller’s market for talent is changing young people’s career ambitions
• [15:35] Cultural and lifestyle advantages of Japan
• [17:54] Japan-US alliance and strategic importance
• [18:16] Policy changes favoring startups, startup visas, and government support
• [21:29] Dramatic change in career ambitions for top Japanese graduates
• [23:08] ESG differences between Japan and US; focus of MPower’s second fund
• [24:32] Women in startups: investment stats and fund focus
• [32:09] Mindset shift: Moving from domestic to global startup ambitions
• [35:14] Advice for western startups entering Japan—regulatory and cultural nuances
• [39:31] Japan’s relationship with Middle East and infrastructure opportunities
• [43:42] US as an ally: Japan’s geopolitical pragmatism and uncertainties
• [46:54] AI, China–US dynamics, and Japan’s optimism for peaceful global leadership
• [49:11] Live Q&A: Making impact as a “Sony or Uniqlo” with sustainable tech
• [54:35] Live Q&A: Supply chain, policy, and helping startups scale
• [57:20] Live Q&A: Immigration, automation, and future of labor
• [66:42] Japan’s acute need for automation and eagerness for AI
• [67:27] Episode sign-off

Final Takeaways

• Japan's startup landscape is rapidly maturing due to demographic pressures, government support, and a cultural shift towards risk-taking.
• Women founders are rising, and data shows their companies outperform, though they still face major funding gaps.
• Government policy and openness to global talent and capital are accelerating, but cultural trust-building remains essential.
• Japan’s unique blend of stability, safety, and quality of life continues to attract both founders and investors, setting new standards for innovation with a global mindset.
• Geopolitical uncertainty is driving Japanese pragmatism in foreign policy, partnership, and investment—especially in technology, defense, and sustainability.

“We are trying to help them [Japanese startups]… It's not so much lack of ambition… but they just don’t know where to start or how to start.”
— Kathy Matsui [34:17]