FROM ENTREPRENEURS

09 STORY JDSC UTEC

Upgrading Japan with Data

Representative Director
and CEO, JDSC Inc. Partner/Managing Director, COO

PROLOGUE

In 2020, Japan Data Science Institute, Inc. rebranded itself as JDSC. JDSC’s objective is to “Upgrade Japan” by effectively utilizing data from different companies and industries, including the combination and modeling of data across supply chains. JDSC offers comprehensive support services, ranging from the organization and conceptualization of data utilization to consulting services on AI and data implementation. The transformation of the company from an incorporated association to a joint-stock corporation was spearheaded by its founder, Satoshi Erdös Kato, in collaboration with his old friend and colleague, Noriaki Sakamoto of UTEC. Their reunion resulted in a strong alliance between JDSC and UTEC, marked by investment and hands-on support. The company's journey is a testament to the transformation of old friends into "comrades-in-arms."

SCROLL or CLICK

SECTION01 : Addressing Common Problems in the Data Science Industry

SCROLL or CLICK

SECTION01

Addressing Common Problems
in the Data Science Industry

JDSC, previously known as the Data Science Institute of Japan that is a incorporated association, stands for ‘Japan Data Science Consortium’. The name accurately embodies the company's mission and purpose.

Sakamoto:
Can you explain the significance of the company’s name once more?
Kato:
Prior to founding JDSC, I worked for a pharmaceutical company. To my surprise, I learnt that the competitors in the pharmaceutical industry collaborate with each other. For instance, they recently shared their compound libraries for the common goal of finding a cure for the novel coronavirus. In the marketing sector, they engage in joint campaigns, stating, "Our drug is for internal medicine, and yours is for cardiology, so let's work together."

However, despite the various collaborative relationships in the value chain, the data science sector was not one of them. The problem lies not with the pharmaceutical companies but with the vendors. When I was promoting DX (Digital Transformation) at the pharmaceutical company, I felt that since all companies were going to build a similar system anyway, they should just sell us something that we could all use. But when I brought this up with the SI (System Integrator), they politely declined, stating, "No, your company is unique." I wondered if what they were actually telling was, "We can't do that because we profit from defining the requirements, building the system, and maintaining and operating it." This resulted in each company having to "reinvent the wheel," leading to slower progress and higher costs. Our starting point was to find a solution to this problem.
Sakamoto:
We have been discussing co-marketing in the pharmaceutical industry, among others, since the inception of the company. Since then, we have tried and tested our applications in various industries, ranging from logistics to electric power, shipping, and many more.
Kato:
In most cases, common challenges in the industry can be addressed using the same algorithms. As a result, we have evolved our business model to offer our data science expertise to industries facing common difficulties, not just the pharmaceutical industry, by creating consortiums where companies collaborate towards a common goal. Returning to the topic of company name, the term "consortium" reflects our desire to assist various companies in achieving their objectives through cooperation.

SECTION02 : It would be a waste to let a diamond lie dormant in the rough.

SCROLL or CLICK

SECTION02

It would be a waste to let a diamond
lie dormant in the rough.

In 2013, Satoshi Erdös Kato founded the Japan Data Science Institute, Inc., with the aim of addressing common problems in the digital domain within the pharmaceutical industry. His passion and dedication were recognized by his former colleague, Noriaki Sakamoto, from their McKinsey days, who encouraged Kato to expand his horizons and make a greater impact.

Kato:
During our time as an incorporated association, we primarily served university hospitals and medical sector by developing and providing software to aid doctors in writing medical papers on renal diseases. The business was successful, but it was Mr. Sakamoto who pointed out that we could have a greater impact by pursuing a different path.
Sakamoto:
While we are at McKinsey, Mr. Kato and I worked on different projects for the same client in rural areas. I was impressed by Mr. Kato's serious and determined approach when he shared his plans to start his own business, and eventually stayed true to his words and started JDSC. After I moved on to become a Venture Capitalist at UTEC, I reconnected with Mr. Kato in 2016.

At that time, the incorporated association was doing well with no financial challenges. However, I felt that it would be a waste of opportunity to limit the association’s collaborative data science approach to just medical industry – like a diamond lying in the rough. The reason Mr. Kato joined consulting in the first place was to make a big impact on the society, so I nudged him to look beyond the present.
Kato:
I was greatly encouraged by the guidance of Mr. Sakamoto, who advised us to incorporate a company with a view to making a significant impact. Despite our eagerness to establish the company, it took us approximately a year to finally incorporate it, not due to hesitation, but as we were working to determine the nature of our venture. During this process, Mr. Sakamoto introduced me to several professors at The University of Tokyo, a highly regarded academic institution with a wealth of research accomplishments. However, we learned that academic research, no matter how valuable, does not always translate to practical applications in society. Through ongoing discussions and brainstorming sessions with Mr. Sakamoto and the professors, we gradually defined our projects, some of which, such as AI-powered demand forecasting in the supply chain sector, remain in use today, while others, such as automation in the accounting industry, were abandoned after only being considered. Currently, we are expanding our operations into the logistics, electric power, and maritime domains, which would not have been possible without the expertise of Dr. Kenji Tanaka, who was introduced to us by Mr. Sakamoto, and Dr. Tanaka now serves as an outside director. I am immensely grateful to Mr. Sakamoto for his support and guidance.

NEXT

SCROLL or CLICK

PROBLEM

In 2018, the JDSC underwent a reorganization from an incorporated association to a joint-stock corporation with an investment from UTEC. Despite Mr. Kato's extensive business experience, derived from his prior career in consulting, he acknowledges that the transition to a joint-stock company brought with it significant pressure and at times, he felt overwhelmed.

SECTION03 : I received significant emotional support from UTEC during high-pressure situations

SCROLL or CLICK

SECTION03

I received significant emotional support
from UTEC during high-pressure situations

UTEC not only provided hands-on support to the startup, but also contributed to elevating the value of the company, both in terms of hardware and software development and strategy, after its establishment.

Sakamoto:
Are there any specific value-add activities from UTEC that have had a significant impact on you?
Kato:
The most significant contribution from Mr. Sakamoto was his daily guidance and encouragement towards the success of the business. Our discussions covered a range of topics, from securing customers to organizational strategy, pricing, and fundraising scenarios.

Mr. Sakamoto was also a great source of emotional support for me. During my time as a consultant, I was able to make sound and rational decisions despite the challenges I faced. However, when starting a business and assuming full responsibility for employees and stakeholders, the pressure and weight of decision-making can be overwhelming. As a startup evolves into a larger enterprise, there may be individuals who are unable to keep up the pace. This raises the difficult question of whether it is appropriate to sever relationships that have been built over time. Such decisions cannot be made solely based on logic, and it is natural to experience hesitation and regret. Throughout such difficult times, Mr. Sakamoto was a steadfast source of encouragement for me. He is someone whom I trust completely, and consider to be a dear friend.
Sakamoto:
Less than a year after the establishment of our joint stock company, Mr. Kato and I began holding weekly discussions to review every detail of the business. Our first office was located in a small multi-tenant building and lacked a meeting room, so we would often meet at a nearby coffee shop for confidential discussions. However, as our business grew, we were able to move to a larger office near The University of Tokyo, which provided ample space for meetings, and also attracted students from the university. Although the cost of the larger office was a concern at the time, it proved to be a wise decision as more and more people joined the company. Eventually, our business reached the point where I no longer had to partake in day-to-day decisions, and the only task left for me was to finalize the preparations for a successful public listing.

FINAL SECTION : We want to Upgrade Japan’s Industries.

SCROLL or CLICK

FINAL SECTION

FINAL SECTION

We want to Upgrade
Japan’s Industries.

JDSC went public in December 2021. We asked Mr. Kato to speak passionately about the company's future prospects.

Kato:
JDSC offers comprehensive support to our clients, ranging from identifying common industry challenges to developing and implementing algorithms to address such challenges. In November 2020, JDSC formed a joint venture with Mitsui & Co., Ltd. called "Seawise, Inc." that utilizes AI to tackle challenges in the maritime sector. As demonstrated in this initiative, we envision an increasing number of instances in the future where JDSC will take the lead in investing risk capital to solve industrial problems, in addition to our traditional consulting and system integration functions.

However, JDSC's ultimate goal is not simply to upgrade the ocean or energy industries, but to Upgrade Japan. Our mission is to go beyond the optimization of individual companies and foster collaboration between various industries in Japan to achieve greater outcomes.
Sakamoto:
I share your philosophy of seeking to enhance Japan by transforming industries, which aligns with the approach of UTEC. I am confident that Mr. Kato will bring that vision to fruition. However, I must admit that I have grown to love this company so much that I can no longer objectively evaluate it (laughs).
Kato:
I am thrilled to hear that. I consider myself fortunate to have met Mr. Sakamoto. Products and strategies can be changed, but cap tables are much harder to reverse. Entrepreneurs must carefully choose investors. Money may not have a color, but it is important to assess the willingness, ability, and character of the person holding it. It can be difficult to determine the quality of a Venture Capitalist (VC), but one can judge if the VC is trustworthy. I am grateful to have found a dependable partner in Mr. Sakamoto, and I hope that entrepreneurs considering fundraising will also prioritize these qualities.

Back to List