How Sansan became the biggest IPO in Japan
Business cards are out — or are they? Nowadays, it seems so much easier to connect with a new contact via social media platforms like LinkedIn than exchanging flimsy pieces of paper. Yet, the latter evokes a sense of connection — physical tokens, however minuscule, create a human bond. And this token of human relationships is big business. In 2019, business card-based contact management firm Sansan was the biggest IPO on the Tokyo Stock Exchange, raising JPY33.8 billion ($411.69 million). As of April 5, it had recorded an astounding P/E ratio of 371.99, symbolising remarkable bullishness from typically conservative Japanese investors. Eight, Sansan’s B2C solution, had 2.86 million users in Japan in 3QFY2020 ended May 31, 2021, which is more than LinkedIn’s 2 million as of 3Q2020.
Perhaps this is just a Japanese cultural quirk. A junior employee from Sharp sent to escort visiting guests from their hotel to the company’s premises remarked that modern-day Japanese salarymen are like the samurai retainers of their feudal lords, wielding their business cards like swords on the corporate battlefield. Like these deadly blades, a business card is an extension of the self and woe to all who treat it with discourtesy.
“Japanese people exchange business cards every time they meet someone for the first time. I would say it’s like shaking hands for the American people. You should give your business cards and you must receive business cards [in return],” Sansan’s CEO and founder Chika Terada tells start-up podcast Disrupting Japan.
It seems that this business of virtual business cards has caught on outside of Japan too. Sansan’s investors include US cloud-based software firm Salesforce and venture capital firm DCM Ventures, which is backed by Softbank, raising start-up fundraising up to Series E. With the expanded warchest, Sansan has been making a concerted push beyond Japan, with operations in 34 countries outside Japan.
Covid-19 has contributed to the increasing use of the app. Users, it seems, wish to reduce physical contact from exchanging business cards the old way. Net sales rose 24.3% y-o-y in 2QFY2020, with an operating profit of JPY492 million, a 12.4% profit margin. The firm currently controls 84% of the Japanese market for business card-based contact management — a market it claims to have single-handedly created.
The pandemic has also created a ripe opportunity for business card apps to embed themselves into social rituals. Edward Senju, Sansan’s regional CEO for Southeast Asia, recalls an event where participants did not know if they should shake hands or exchange physical business cards. Virtual business cards that do not require physical contact could prove attractive as people draw away from physical contact post-pandemic.
Beyond being just a meeting souvenir, business cards are also important sources of “first-party data”. This refers to information collected through daily business, such as what clients and prospects buy and what webpages or apps they use. This is in contrast to more expensive “third-party data” purchased or leased from third parties, with HubSpot noting that a list of 1,000 consumers with perceived health conditions can cost around US$79 ($106).
“First-party data is considered the most powerful because it is relevant and accurate, and you know where it came from, and when. You are also more likely to have the consent to use it for your business,” says a Sansan insight piece. Business cards are a good source of such data. Besides containing contact information, a card represents a meeting and also carries tacit agreement for contact to be made.
Analysing data from the business cards one collects can therefore yield valuable business intelligence. For instance, salespeople can potentially better analyse the type of prospects they meet based on the number of firms that have their representatives exchange business cards with them. “If you can digitise and share that information, you can see and use all the connections you have available... It’s really a gift,” says the insight piece.
Paperless greetings
Sansan was founded as a way to streamline the process of building business connections. As a former employee of Japanese conglomerate Mitsui, founder Terada had spent months trying to obtain a meeting with a business contact, only to realise that they shared a mutual contact who could have saved him all this trouble with an introduction.
Realising that this was likely a common occurrence in the corporate world, Terada established Sansan to help businesses understand the business networks of their employees. “In Japan, business cards are often not digitised to the cloud. Opportunities are lost and time is wasted because people do not know who is connected to whom, or even have a solid organisational grasp of their
own contacts... In Southeast Asia, where there are many emerging markets, this challenge is even more pronounced,” he tells Entrepreneur Asia Pacific.
To use Sansan, users have to upload their business cards into the system via a phone app. Enterprise clients can also use a bespoke business card scanner provided by Sansan, which can quickly perform a mass upload. Sansan allows virtual business cards to be uploaded onto the database as well, with the firm helping to perform this task on request. Over 4,300 of Sansan’s 7,000 corporate clients are using virtual business cards, Senju tells The Edge Singapore.
To exchange business cards, users either share a web address or quick response (QR) code with one another, allowing them to access and subsequently save business cards. With Covid-19 increasingly bringing human interactions online, Senju reports rising demand for virtual backgrounds that include such QR codes. These backgrounds can be integrated with communication systems like Microsoft Teams for easy scanning.
When a new business card is scanned, AI and machine learning (ML) technology breaks down its details into small pieces. The details are then subject to human checks by 50 to 60 personnel — many of whom are data scientists — remotely, with some even performing this task on their smartphones. If the same business card is uploaded again, ML technology match its details with existing information on the database.
While a business card typically comes in a flat 3.5 inches by 2 inches landscape format, Senju has seen more unusually shaped cards, such as cleaning company Supersteam, whose business card was designed in the shape of a toilet cleaning sign. Sansan was able to upload the card without much difficulty.
The uploaded business cards are then entered into a back-end dashboard that neatly presents the data. Users can see all business cards associated with the company that a contact is affiliated with, as well as which of their colleagues share that contact. More advanced business intelligence can be derived from API integrations with other technology solutions like Salesforce, allowing users to tailor intelligence gathering to their needs.
Sansan’s B2C solution, Eight, also contains social media functions to facilitate networking and business matching between individuals. Users can add a profile picture, career information and skill tags to facilitate connections; the app cannot be used without a business card. One can share news and updates and receive notifications from one’s network, as well as reach out via instant messaging. But Senju notes that while this functionality dominates Japan’s social media market, B2B remains Sansan’s focus overseas.
The Sansan app is minimalistic and easy to navigate. The fact that so much of the data transcription is performed by the firm itself means that even less digitally savvy users can make use of it by simply taking a photo or scanning a QR code. Consequently, Senju notes that many small businesses in Southeast Asia use Sansan.
But can’t all this be replicated on social media networks without business cards? Not so, says Senju, who notes that contacts verified by business cards are usually of higher quality and more trustworthy than social media connections without these, where contact tends to be more superficial. Using business cards is also a barrier against fraudulent users as few scammers would take the trouble to make a business card to defraud a Sansan user.
Even if social media firms roll out their own virtual business cards, Senju is not worried about the competition. “Our strength lies in the back-end behind the database. Even if you exchange cards by yourself, it will not be a shared connection inside your company,” he explains. New players could even increase market size by normalising virtual business cards, benefitting the industry as a whole.
Into Asean and beyond
Southeast Asia is a key market for Sansan due to its fast-growing digital penetration and rapid economic growth. “The advantage Southeast Asia has is that it can skip many of the legacy systems that businesses have used over the past decade in more developed markets, which in some cases have required tremendous investments for relatively small returns. The cloud is a very affordable and effective solution for [the region],” Terada tells Entrepreneur Asia Pacific.
With Singapore as its regional base, Sansan has won over clients in Thailand, Indonesia, Malaysia, Vietnam and India, where it has around 1 million users as of December 2018. “We saw a stronger kind of need [for business cards] in Asian markets and we wanted to choose a place where people could exchange English business cards,” says Senju.
“Business cards are a very important part of business culture in Asia and around the world. If a new acquaintance fails to give a card to me, it does sometimes make me forget them more easily,” says Glenn Lim, managing director at CEO Asia, a Singapore-based company using Sansan’s virtual cards. Before the pandemic, he usually handed out about 200 cards a month, but in the six months following the “circuit breaker” last March, he has handed out just five cards. Sending virtual cards pre-meeting, he comments, helps meeting participants avoid the awkward situation of not knowing the designation of fellow participants.
Expanding overseas has been a process for adaptation to unfamiliar markets. Senju notes that while Japanese clients put a premium on accuracy, Indian clients are willing to sacrifice accuracy for shorter uploading times. Sansan thus relaxes human checks it uses in Japan and relies more on technology to speed up the upload process in India, filling up accuracy gaps later. Southeast Asian clients are more speed-driven than Japanese clients but not as much as Indian clients.
Sansan hopes to improve the functionality of its integrations. It is looking to adapt its functions to email, calendar and online greetings, integrating data collected from these for individual users, going beyond business cards to become an integrated contact management business. It has launched an online invoicing business in Japan called Bill One, which Senju is thinking about introducing to Southeast Asia. It will be launching a new integration with Google Calendar too.
“We see huge potential among Singapore and Asean businesses seeking to capture, track, and benefit from the millions of contacts their employees have every single day,” Senju said on his appointment as regional CEO in October 2019. “Our staff here, the energy, the passion — we’ve got something special in the works.”