ICT Startup League

The 8th Startup League Academy was held in Tokyo on December 17th.

This time, we welcomed Mr. Toshikazu Koike, Chairman of the Board of Brother Industries, Ltd. (affectionately known as "Terry" by his associates) as a guest for a special extended session. Consequently, while the Value Up Session typically features two companies, this event featured a special configuration with just one pitching company.

In his opening remarks, Mr. Tadashi Fukuda, Head of the Steering Committee, shared the purpose of the meeting: "Brother Industries has grown from a sewing machine shop into a trillion-yen massive enterprise. Today, I want you to hear from Terry (Mr. Koike) about how he built the company together with those around him, and to learn the mindset necessary for startups and the factors behind their success."

■ Special Session: "A 100-Year Company Continually Challenging Transformation"

Born in Ichinomiya City, Aichi Prefecture in 1955, Mr. Koike is currently 70 years old. Although his father, Shiro, was an executive at the family-run "Koike Wool," Terry decided to "carve out his life with his own strength." After graduating from Waseda University's School of Political Science and Economics, he joined Brother Industries in 1979. Two and a half years later, he was seconded to the United States, where he stayed for about 23 years. After returning to Japan, he became President two years later, serving for 11 years, and has held the position of Chairman since 2018, having been involved in the management of the Brother Group for nearly a quarter of a century.

Through the history of the company, which has drastically changed its business forms from manufacturing sewing machines, knitting machines, and typewriters, he clearly stated, "Companies that cannot adapt to change will be left behind." Based on his own experiences and insights, he spoke about the inevitability and importance of companies challenging themselves to transform.

Point 1: Flexible Conversion of Business Portfolio

Capturing market changes, the company's current core businesses have shifted to communications, printing, and labeling fields, such as laser printers, inkjet all-in-ones, and label writers known as "P-touch." Mr. Koike reflected on success stories, such as becoming the official typewriter supplier for the 1984 Los Angeles Olympics and deploying fax machines to mass retailers at a strategic price of $399 when the market price was $699. In addition, they have diversified their business development to include reducers such as gears and gear motors, industrial sewing machines, machine tools, and industrial printing equipment. Furthermore, Mr. Koike explained, "About 60% of sales in consumer printers come from continuous revenue sources like ink, toner, and labels (consumables). Therefore, even if demand drops temporarily, the likelihood of falling deeply into the red is low." He explained that this structure has led to maintaining past performance, and while expanding business through portfolio changes and acquisitions, they have kept sales scale and profit margins within a stable range.

Point 2: Exploration of Technical Possibilities

Against the backdrop of massive global deployment of printers and all-in-ones, they connect customers and devices via IoT and Wi-Fi to understand usage status, building long-term relationships through subscriptions and proposal-based services. By aiming for a contract-based business model that includes the use of next-generation models and automatic delivery of consumables, they suppress mere one-off sales and third-party intervention, promoting the use of genuine products. "For households, we launched a platform centered on mobile apps that consolidates Brother product-related content sales, consumable sales, and user-to-user transactions. We are securing stable sales through billing models and achieving growth with a low dropout rate," he stated. As the shift proceeds from hardware-centric to service-type businesses including software and content, they are currently focusing on strengthening security aspects as well.

Point 3: Diversity in Global Expansion

With about 90% of their business conducted overseas, he says they have always kept a close watch on the rapid changes in customer values and demand. Reflecting on his time stationed in the US, he recalled, "I thought it was necessary to anticipate global expansion by forming teams with diverse talent, including foreigners and women. Since we started selling printers, we have taken on challenges with many products and businesses." He added, "I feel that new businesses and products are born not only from genius inventions but also by combining existing business seeds hidden in the market. As a result of not giving up and engaging in trial and error until the end, there were many failures, but sometimes we succeeded, leading to where we are today."

When facing a new business, what he values most is "whether I can be emotionally moved by it." His stance is that if he is not attracted to the product himself, he will not commercialize it. He expressed his conviction that value is born from ideas like "making the inconvenient convenient" or "making the inconvenient normal," and that "it's not just a transient business of selling things, but a polished business plan and a mechanism for connecting with customers that become the crucial points."

Point 4: The Key to Growth

Mr. Koike revealed an experience where he focused on the potential of solid ink inkjet printers, resulted in a huge loss, and caused great trouble for the company. However, even after the failure, he attempted a comeback by applying the same technology to T-shirt printing and introducing garment printers to the market. He also developed new inks, including white ink, and utilized industrial sewing machine channels to develop it into a business worth tens of billions of yen. From such examples, he says the key to growth lies in "the attitude of trying new things quickly, and not missing the timing by pursuing perfection too much." In addition, he stated, "I recognize that it is important to have people who can carry things through with passion, provide rational value that is persuasive to customers, and connect with customers through a business plan accompanied by content."

Point 5: A Corporate Culture that Tolerates Failure

Mr. Koike says that it is the role of top management to build a culture where challenges are made without fear of failure. "Business is not perfect; there is an element of luck. To attract luck, continuous effort to increase the probability of success is necessary. For that, it is important not to work yourself to the bone, but to naturally acquire the habit of constantly thinking and acting," he preached. He says that if that habit takes root, daily efforts and work will not feel like a burden, and the success beyond overcoming difficulties will be felt as greater "fun" and "joy." He concluded, "I myself want to fulfill my life by cherishing brightness, fun, and energy to continue working for a long time, while not forgetting consideration for those around me, and I want my employees to change in that way too."

Summary

After Mr. Koike's lecture, the secretariat introduced the attendees, including steering committee members, selection evaluation committee members, guests, and support organizations. The selected startups introduced themselves and shared their thoughts: "I resonated greatly with the attitude of continuing new challenges without fearing failure, and I learned a lot," "I was very impressed by the leader's mindset and his ability to speak about past failures and successes in his own words," and "Hearing stories of various failure cases gave me courage, and I learned the importance of executing measures after thinking them through deeply." Words of appreciation and impressions of the lecture poured in one after another.

Mr. Fukuda prefaced his comment by saying, "It might be difficult to talk individually at length today due to time constraints," but declared strong support for the selected startups, stating, "Terry responds actively and with speed if the story is interesting. We intend to persistently ask for opportunities for future collaboration and technological development through Brother's massive platform."

■ Value Up Session

SonicAI Inc.: Development of AI Edge Devices for Automating Transport and Inspection Processes in Manufacturing

The presenter for this session was Mr. Hiroyuki Tanaka, Representative Director and CEO of SonicAI Inc.

Business Overview and Challenge:
Founded in June 2024, SonicAI Inc. provides AI image processing systems that automate visual inspections for the manufacturing industry. Through his experience in technical sales at Keyence Corporation and working on management issues in the manufacturing industry at a US consulting firm, Mr. Tanaka recognized three major issues surrounding the industry: "labor shortage, quality control, and traceability." To solve these, he proceeded with R&D and announced a beta version in October 2025. He realized a product that can be used immediately on non-automated lines or standalone inspection tables just by plugging it into an outlet, completes model registration just by scanning good products, and allows anyone to finish inspection settings in 10 seconds.

The trained model detects anomalies in about 0.03 seconds using real-time video and can recognize not only known defects but also potential defects with unregistered characteristics by indicating them with a heat map. The system supports multiple uses, such as capturing multiple sides of small parts using cameras, internal inspection of screw holes in automotive engine parts, assembly inspection for wire bursts, and foreign object contamination inspection inside air bed mattresses.

While the primary target is SMEs and manual inspection tasks, the product is not affected by the size of order lots. Since it can be applied not only to SMEs but also to semi-automated processes in large corporate production lines, the policy is to expand aggressively. Furthermore, because it can instantly read barcodes and labels that were difficult to read due to folding or curvature, use in a wide range of fields such as food, logistics, and construction is expected. Having secured an order of about 10 million yen in the first month from the Aichi Prefecture Federation of Societies of Commerce and Industry, they plan to open a Nagoya office in addition to their development base in Tokyo to expand the market.

Golden Advice from Experts:

Mr. Koike, Chairman of Brother Industries, pointed out that since resolving quality differences via image recognition is not novel in itself, the key to success is "to improve accuracy and achieve labor savings/automation by collecting extensive data for training, and to gain customer trust by practicing and verifying the effects on-site." To that end, he challenged them, saying, "I want you to differentiate yourself by thoroughly mastering AI, customizing it, feeding it massive databases, and raising it to be smart."

Selection Evaluation Committee member Mr. Hideharu Taira (Chairman, Class A Capital Partners) evaluated Mr. Tanaka's presentation, saying, "It came across that you are proceeding with business with confidence," while also speaking on the importance of "seeing the real thing." Just as Rosanjin Kitaoji's pottery appraiser cultivated the sense of "saji-kagen" (nuance/dosage) to distinguish authenticity by thoroughly looking only at genuine articles without looking at fakes, he said SonicAI's approach of thoroughly learning from good products has value. On the other hand, he expressed concern, saying, "I believe the essence of DX is autonomy and future prediction, but the process often involves failure and heartache. There are cases where people suffer economic and psychological damage and lose heart." Hoping it would serve as a reference for Mr. Tanaka should he face such experiences, he requested, "I would like to ask Mr. Koike, who has experienced countless failures, about his experiences on how he overcame and conquered them, and whether there was support or help from those around him."

In response to Mr. Taira's question, Mr. Koike recalled that when he was young, he aimed for top management and decided to gain experience without fearing failure. As a result of continuously taking on challenges, accidental luck and the expectations of those around him overlapped, leading to success. While acknowledging that significant losses cause great mental damage, he answered, "At the same time as reflecting, I tried to improve with a positive attitude." He also advised that in the unlikely event of failure, "It is okay to rationalize that the venture capitalist's evaluation was wrong and even blame others to an extent," adding, "If you take everything too seriously and heavily, your actions will wither, and you'll only have negative ideas. You can't survive without a certain degree of defiance."

Mr. Fukuda added his view: "Ultimately, thinking 'Que sera, sera' (whatever will be, will be) isn't enough; it's important to actively continue exchanges with connections, customers, and colleagues. This creates opportunities to learn, grow, and grasp favors and destiny. It means the possibility of success increases if you consciously expand your circle of interaction rather than shrinking back in fear of failure."

Mr. Nobuyuki Matsuda (CEO, Booster Knob Inc.), also a Selection Evaluation Committee member, mentioned his experience searching for similar solutions while consulting about 10 years ago and asked, "Please tell us what is decisively different about the technology and approach your company provides now compared to that time." Mr. Tanaka answered from a technical perspective, "The development of Generative AI has accelerated with the introduction of the Transformer model (a type of deep learning model that demonstrates high performance in natural language processing, etc.), and since that technology is being applied to image processing, the progress in the last six months is more significant than the last few years." From the customer perspective, he explained, "I think the major changes are that the burden of construction and operation at the time of service introduction can be significantly reduced, and that AI utilization eliminates the need for detailed programming, allowing anyone to easily build a system."

■ Event Conclusion
At the networking session held at the end of the Academy, attendees flocked to Mr. Koike. A long line formed to exchange business cards, but even as the closing time approached, Mr. Koike responded politely to each person.

Mr. Tanaka of SonicAI Inc., having taken the stage for the Value Up Session, said, "Receiving interest and evaluation from the supporters for our service gave me great confidence and served as an opportunity to grow further. On the other hand, since the current hardware/software model cannot be easily deployed horizontally to large enterprises or some manufacturing sites, the challenge is how to enter that market in the medium to long term. Based on the insights gained from the dialogue with Chairman Koike, I want to solve this in the future."

Mr. Fukuda closed the meeting by expressing his expectations: "This Academy session is not a place for technical advice, but an opportunity for the younger generation to recall and dig up the words and attitudes of their seniors, like burying a 'time capsule.' I feel that every single story from Terry serves as a useful suggestion based on practice, helping to build the future for all the selected startups, so I hope you will refer to them."