Yellow cards and red flags – clues to watch out for when thinking about working in Japanese SMEs and startups

Written for and also published at Why Japan.

So I wrote this other article talking about why I think SMEs (including startups) can actually be great places to start your first career. But at the end I also noted that because of the giant variance within SMEs, you need to go in with your eyes open because joining the wrong company can be disastrous.

But there are some clues that you can use to kind of guess at whether the company is a good fit for you. The following is really my own experience mucking around in small-medium companies and the startup scene – so there is going to be much less objective data compared to other articles.

Nonetheless I hope this can add some perspective though. Do note that while the following talk about red flags and clue, none of the following are intended as immediate disqualifying red cards. This is because in the end, whether a job works for you will highly depend on your own motivations and very importantly personality when it comes to choosing a job. Therefore actually please do take the opinions below with a grain of salt and apply the information here into your own situation.

Clue 1 – The boss decides everything

If you see this it’s probably a good sign to run away

Because of the very few layers of leadership in SMEs, the “founder effect” is usually very strong. Therefore, the biggest decider of whether a company is a chill company, an internationally-oriented company or a gambaru company is really the CEO and Chairman – especially if either is the founder. (Note: usually for new companies they are all the same person).

In addition, birds of a feather flock together. Small companies and especially new companies have to recruit based on personal networks more than getting people to apply through a website. Therefore the core team’s personality will often attract people from the same background and also work attitude.

Therefore, it would be good to read the company blog, or videos where the CEO comes up. If you get the chance to when applying to, talking directly to the CEO to get their vibes can also be a very useful. Of course first impressions are not necessarily correct but they can be a very useful hint as to what you can expect if you join and whether it’s a good place for you.

Clue 2 – Ask people who quit

Gossip is not always bad
Gossip is not always bad

For big companies, someone having a negative experience in a company can be an indicator of the general company – or simply bad luck by being under a bad manager or a bad department. The same cannot be said so clearly for smaller companies. Often, once again because of few leadership layers, each individual person in a company often has a much higher visibility over how the overall company is working compared to big companies.

Naturally (and I certainly hope), you’re already talking to the company’s current employees. But of course there’s a high chance that they’d tell you a more positive story than things really are. What can be important is therefore hearing the story from someone who has left – through sending them an email through LinkedIn or even Facebook for example. In particular if you manage to secure the chance to ask them questions, asking them about the turnover (ie. rate where staff leave their jobs) and why people leave can be very interesting.

Of course though, be aware that they have their own biases too but they may add some important information missing from the official account. No matter how much they portray themselves to be, no company is perfect. But while you are formulating your own opinion, be aware that no employee is perfect either – not even you when you enter. Looking for the perfect company and therefore removing options because of some negative feedback sets you up for the self-sabotage mentioned in points (2) and (4) in this article.

Red flag 1: There’s only one type of employee

Image from the Matrix

Now we move on to the red flags that I would advise caution over. I assume that because you are reading this in English that you are a foreigner thinking about your career in Japan. But this applies to all sorts of minorities – be it LGBTQ+ minorities, women wanting to develop your career, if you have a disability etc.

If you visit a company and the moment you walk in you see … a full house of ojisan beware. Even if there are female staff, what’s important is to find out whether there is female management / leadership because women doing only secretarial duties does not a diverse company make.

If there is no other foreigner or at least foreign educated Japanese and they are saying that they want to hire you to internationalize the company also beware – most companies thinking so often think that just because they hire one foreigner they will be international. Actually this can turn out to be a very rewarding experience that will serve you well in your second and beyond job because you will first hand understand the trials and tribulations of working in a very Japanese environment. Just do be aware that it is rare that people last beyond their second year in these environments – but neither should you be too wary of job-switching.

Red flag 2: Heavily branded

Smells good, looks good, still may not be good for you
Smells good, looks good, still may not be good for you

Among startups especially there’s a subset of very nicely branded startups. You know, the ones with perfect photography, charismatic leaders and messiah-like mission statements. We are here to help foreigners in Japan! We are here to stop global warming!

At the beginning these often look very nice, but conversely in my experience these are often very bad workplaces. Among professional circles there’s even whispers that the correlation between branding and actual substance of a company can be inverse. After all, making good branding takes up resources. Naturally, some branding is necessary for a company to grow. But if so many of your resources are spent on branding, what else are you sacrificing? Or is hype really the main driver of your growth, leading for you to need to create more hype to sustain your image of growth, WeWork-Adam Neumann style?

Be especially aware of companies throwing around in-fashion-but-no-one-knows-the-definition words – AI, machine learning, algorithms, innovation, inbound business, sharing economy, synergy, serendipity and what not. Most engineers would say that at least half of the companies talking about machine learning and algorithms don’t actually use them – they simply don’t have a proper data set to do things in the first place.

This is not to say that branding in itself is a bad thing. This could be for example the result of a well coordinated marketing campaign that really presents the value of a company.

But when you hear a company pitch and it looks really nice, recognize the symptoms when you start to feel yourself get starry eyed. This is where asking the people who quit and the next point below is important.

Red flag 3: Too much future tense

Talking about the future is cheap. I can claim that I will be a billionaire next year. I will be bitten by a spider and become Spiderman. Of course all this would be ridiculous – but this is exactly how you should take “will” and “are going to” statements from not just SMEs but also all companies. The vast majority do not become true and the minority which do are often way off schedule.

The point is that the future is most often an extension of the past. What is more important than the claims for the future and lofty goals is actual traction. Therefore, do not be afraid to ask the company, what is the growth that you have had in the past year or two. What are the bottlenecks in the growth. Where do you come in in solving the bottlenecks?

Be aware that people often have prepared answers so be aware of what they are not replying. If you ask about growth and they talk about the network they have then ask what is their client growth numbers. Find out whether the company has competitors has competition from outside Japan too and ask if the company is aware and also confident that they will beat the competition?

Do not ask all these in a skeptical, haughty tone by the way unless you want to disqualify yourself. What is important is understanding the story and see if it it checks out with you. In fact proper asking of the above questions (in a non-offensive tone) probably increases your chances by showing your own business logic. And if the company thinks that you ask too many questions anyway then it’s probably not a good company for you.

Eyes ahead, wide open

I have to say though, while the above does indicate the dangers in SMEs, at least for SMEs you can generally enter a company knowing what you will get. For big companies you have very little control over where you are placed nor your immediate superior.

But this is all the more why you really should do your research before you enter – you can’t blame anyone else if you stumble in blind into what seemed to be the up-and-coming hot-shot, founded by Keio graduate, raised USD $2 million gurobaaru startup only for it to be a hype-addicted outfit meant to drive the founder’s ego.

As I mentioned in my other article though, SMEs / Startups can be a very good choice in your career – even as your first step. I hope this article helps you keep your eyes open, and if anybody else has other tips and comments please leave them in the comments.


  • Posted August 7, 2021
    by S

    Hello, I have been following your blog for a while and was just wondering if it would be possible for you to cover employment of overseas foreigners? I am thinking about finding a job in Japan in the future but am currently based in Singapore.

    • Posted August 8, 2021
      by AustZ

      This is quite a topic in demand – it’s not my main field of expertise but I am asking people who better know the situation. Once I get enough information and clarify my own doubts I’ll write an article!

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