What is the reason why 'SmartNews', which was said to be America's strongest app, has fallen from grace?
SmartNews, a Japanese news aggregator, once reached a valuation of $2 billion (approximately 280 billion yen) and was described as '
Smartnews was ready to take on the US market. Where did it go wrong?
https://restofworld.org/2023/smartnews-japan-unicorn-layoffs-media/
SmartNews started its service in 2012, and at that time, Japan's largest media companies such as Nikkei Shimbun, Asahi Shimbun, and Yomiuri Shimbun were resisting digitalization. This is because Japanese newspapers maintained strong sales even into the 2010s. Meanwhile, SmartNews, along with competing services such as NewsPicks, Gunosy, and LINE News, became an opportunity to encourage major media outlets to go digital.
After steadily expanding its business in Japan, SmartNews plans to enter the more profitable American market in 2014. Even within the company, it was believed that entering the American market was essential for SmartNews to become a more powerful app.
A former employee of SmartNews said, ``At the time, people at the company said, ``Why don't we expand into Brazil?'' ``Why not expand into this region?'' Because we had a large user base and potential for growth. There were frequent conversations like, ``We want to conquer the American market first,'' and that's when our entry into the American market began.'' Looking back.
According to data from market research firm Parse.ly, SmartNews consistently outperformed competitor Flipboard in traffic through 2021. As a result, SmartNews has grown to the point where it can be said to be a rival to overwhelmingly popular news aggregators such as Apple and Google. In 2021, SmartNews was valued at $2 billion, and the number of employees has increased to nearly 900, making it a ``unicorn company'', which refers to unlisted companies with a valuation of more than $1 billion (approximately 140 billion yen). We have also joined the ranks of
SmartNews gathered employees from the United States and Tokyo headquarters to hold a 10th anniversary party in San Francisco, USA in June 2022. Mr. Suzuki, who was the CEO at the time, appeared on stage with an expensive bottle of Japanese whiskey in his hand, and while serving whiskey to employees, he frequently boasted about the price of the whiskey.
But just months after making a big splash at its 10th anniversary party, SmartNews is laying off more than 100 employees. Additionally, Mr. Suzuki retired from his position as CEO and President of SmartNews in October 2023. According to sources, Suzuki's 'voice was trembling and he had a gloomy expression' when he notified employees of the large-scale layoffs.
It turns out that the news app SmartNews has fired about 40% of its employees in the United States and China, and plans to recruit voluntary retirement workers in Japan as well - GIGAZINE
by Focal Foto
Due to the impact of the new coronavirus pandemic, many companies have had to cut staff in 2022. But SmartNews' layoffs were particularly large-scale. In October 2023, Rich Jaroslovski, who has been an integral part of SmartNews' relationship with American media for nine years, will step down as vice president of content. Upon his resignation, Mr. Jaroslovski said, ``We are entering a stage of maturity with new challenges and opportunities. I think the time has come to make way for others.'' Rest of World points out that SmartNews' business expansion in the American market has 'completely stalled' as people who have contributed to its development have left their positions one after another.
Rest of World has spoken to six former employees who were fired by SmartNews in January 2023, who described the company's expansion in the U.S. as a 'chaotic product development process' and He said that it failed due to factors such as 'Mr. Suzuki's obsession with the far right .'
To expand SmartNews' U.S. operations, Suzuki cast himself as an outsider and aimed to create an app that could address the polarizing issues facing American news media. Specifically, the company's strategy was to handle political news without disrupting the balance between left and right wing groups, and to turn SmartNews into a news aggregator app that would bridge the gap between Democrats and Republicans.
As SmartNews actively handled American political news, it seems that the attention of political news has increased in the United States. However, one former employee said, ``Mr. Suzuki was so fixated on the issue of polarization in American politics that he overlooked business issues.'' Specifically, Mr. Suzuki spoke about QAnon (a far-right conspiracy theory and political movement) at a company-wide meeting at SmartNews, and used company funds to attend a Donald Trump rally. Apparently it worried the staff.
Mr. Suzuki of SmartNews
It has also been pointed out that SmartNews had problems with its basic development process. Mr. Suzuki said that when the deadline for developing a new feature was about to reach, he would often cancel the project and start the development of the new feature from scratch.
According to a person familiar with the matter, it appears that Suzuki had brought development back to the drawing board 'at least three times' in the years before the layoffs. A project that was developing a function to post comments on the app was close to release, but as a result of beta testing led by Mr. Suzuki, implementation was completely postponed.
Regarding Mr. Suzuki's on-site intervention, one former employee described it as ``Japanese workplace norms clashing with Silicon Valley's ``move quickly and break things'' ethos.'' Another former employee said, ``Mr. Suzuki probably wanted to be the CEO of a Silicon Valley startup, a powerful technology company. He admires Silicon Valley celebrities such as Jeff Bezos and Elon Musk. I think they wanted our company to be run like the companies started by these people.'
Although Rest of World has branded SmartNews a failure, in Japan Suzuki is still praised as one of the few Japanese founders who successfully entered the American market, and SmartNews also won the Japan Startup Award 2023. We received the Japan Startup Award (Prime Minister's Award), which is given to highly rated companies .
In addition, GIGAZINE interviewed people in SmartNews in 2014, so if you are interested, please check out the following article.
'SmartNews' head office is like this We asked various questions in the report and interview - GIGAZINE
◆Forum now open
A forum related to this article has been set up on the GIGAZINE official Discord server . Anyone can write freely, so please feel free to comment! If you do not have a Discord account, please create one by referring to the article explaining how to create an account!
• Discord | “Have you ever used “SmartNews”? How is it comfortable to use? ' | GIGAZINE
https://discord.com/channels/1037961069903216680/1186233335417147393
Related Posts:
