By Peter Rothenberg: Credit: Tech In Asia
Yoshi Yokokawa is a fintech pioneer in Japan. You can read about other new fintech in Japan here.
Yoshi Yokokawa brings a new meaning to making your money work for you. From a career in banking to losing his savings and being cursed out on stage, Yoshi has finally found what makes him happy.
Yoshi joined the Lehman Brothers Tokyo office full-time in 2005 but was hesitant to tell me exactly what he did. “We were making products out of consumer risks,” he says. Spoken like a true politician, but eventually the truth came out, “it was subprime mortgages… home equity loans.”
“You did it! You did it!” I jokingly screamed at him for his role in the 2008 global financial crisis.
Yoshi’s experience at Lehman left a lasting impression on him. “What is happiness?” he thought. “What do I enjoy the most?”
He watched his team and friends fall apart after the downturn. “It was really miserable,” he says. “About three or four people left the team. They became physically ill.”
Yoshi started doing ultimate endurance sports like extreme marathons to stay fit, but the long hours and loss of purpose took its toll. “I felt sick every time I went to the office,” he remembers. “I didn’t find real happiness that I was searching for with money.”
50K for grandma
While weighing up his career, Yoshi’s grandmother’s health began to deteriorate. “She was living alone and not doing well, so I decided to take care of her.” He left his banking position and moved in with her, but it wasn’t all milk and cookies.
Looking for a way to support himself and his grandmother, Yoshi turned to day trading. “Why not? I was in finance and I can do it from home,” he thought naively. Although Yoshi had a lot of experience in due diligence, he found it hard to keep his emotions in check. “When I was managing my own money, I realized how stressful this is and how difficult it is to keep your logic in place.”
“I lost a lot of money,” he concedes. After blowing US$50,000 in savings, Yoshi found his holy grail in a book. “Oh shit, this book has all the mistakes I made,” he exclaims.
He started to make money but found himself returning to traditional banker hours. He woke up at 2:00 am to prepare for Chicago markets, stayed up until New York close, and then reviewed his trades until finally sleeping at 11:00 pm.
Yoshi reconnected with his super hacker friend who returned to Japan to take care of an aging teacher. They began talking about working from home and sharing business ideas. “I felt that excitement where you talk and your partner understands ten times more.”
Using his friend’s Nintendo connections, the two started a company, AlpacaDB, to work on image recognition and deep learning, signing the gaming company as one of their clients. “We didn’t know anything about starting a company. We thought it was just about getting a job, finding projects, and making money.” Although they also did collaborative research with big names such as Yahoo Japan, the team was struggling and VCs weren’t interested.
I’m sorry, Dave. I’m afraid I can’t do that.
In 2015 Yoshi was a finalist at Slush Asia, one of the largest startup events in the region. Investors had been questioning AlpacaDB’s image recognition technology and were confused about the exact use case, but Yoshi figured that being a finalist proved they were on to something.
Dave McClure from 500 Startups killed that idea. “Who the fuck is going to use this?” Dave shot at Yoshi on stage. Known for being frank, Dave’s comments made Yoshi rethink the future of the company.
Luckily for banker-turned-entrepreneur, Japanese electronics company Kyocera proved Dave wrong, acquiring the image recognition technology in January.
Find the pain
The team realized that making a business out of a single technology was hard. So they tried to think from a user’s perspective. Yoshi remembered his struggles as a day trader.
During his three years as a day trader, Yoshi would look at historical market charts, identify movements, and then save those images to test investment assumptions. He imagined a service like Instagram where you simply add a filter to make a photo look more professional. And so he envisioned a way that a trader could produce professional financial algorithms easily.
AlpacaDB’s new service, Capitalico lets users find trends by selecting peaks, sections, or movements in market graphs. The deep-learning algorithm originally developed for scanning images helps find similar patterns in the chart. Users can create custom algorithms and do simulations – all without doing any kind of programming.
So far Yoshi and his team have raised over US$1 million and are working on equity markets with AlpacaScan, in app trades, and an algorithm marketplace.
While social trading apps like eToro are becoming popular, Yoshi knows from experience it may not be good to rely on emotional beings. “You never know if they will go bust one day because it’s a human,” says Yoshi.
Capitalico’s goal is to make human trading processes repeatable. With over US$2 trillion predicted to be handled by our RTD2 friends by 2020, lets hope Skynet doesn’t come too soon.