Failure Analysis
Origami died from competitive asphyxiation in a subsidy-driven market war it couldn't afford to win. The mechanics of failure unfolded across three phases: (1)...
Origami \Japan
Origami was Japan's pioneering mobile payment platform, launched in 2012 to digitize cash-heavy Japanese commerce. The value proposition centered on enabling smartphone-based QR code payments at physical retailers, offering merchants lower transaction fees than credit cards (typically 3.24% vs. credit card's 3-5%) and consumers cashback rewards. The 'why now' was compelling: Japan had 94% smartphone penetration by 2015 but remained stubbornly cash-dependent (80% of transactions), creating a massive digitization opportunity. Origami positioned itself as the bridge between traditional Japanese retail and mobile-first commerce, partnering with major brands like Lawson, KFC Japan, and Aeon to build merchant acceptance. The platform processed payments through QR codes scanned at point-of-sale, with instant settlement and loyalty integration. However, Origami entered a market that would become brutally competitive, facing well-capitalized rivals like PayPay (backed by SoftBank/Yahoo with $1B+ war chest), LINE Pay (messaging app with 80M users), and Rakuten Pay (e-commerce giant with existing customer base). Despite $80M in funding from SoftBank and SBI, Origami struggled with the classic two-sided marketplace problem: merchants wouldn't adopt without users, users wouldn't download without merchant acceptance, and competitors were willing to burn billions on subsidies to win market share.
Discover the reason behind the shutdown and the market before & today
Market Analysis
Japan's digital payments market underwent brutal consolidation post-2018, with PayPay emerging as the dominant winner (55% market share, 60M users, 5M merchants as of...
Startup Learnings
Two-sided marketplaces in winner-take-all categories require 'unfair advantages' beyond product quality—either (1) an existing user base to bootstrap one side (LINE's 80M users, Rakuten's...
Market Potential
Japan's digital payments market remains massive and underpenetrated despite Origami's failure. TAM analysis: Japan's retail market is $1.4T annually, with cashless penetration reaching only...
Difficulty
Building a mobile payment platform in 2024 is dramatically easier than 2012. Modern infrastructure like Stripe Connect, Adyen for Platforms, or Rapyd provides white-label...
Scalability
Mobile payment platforms exhibit moderate scalability with significant friction. Positive factors: digital product with near-zero marginal cost per transaction after infrastructure is built; network...
Rebuild & monetization strategy: Resurrect the company
Execution Plan
Phase 2
Step 2 - Validation (Months 4-6): Launch payment rails for digitized invoices. Offer 0.5% transaction fees (vs. bank wire's ¥500-800 flat fee) + instant settlement. Partner with 1-2 regional banks for white-label processing. Add AI cash flow dashboard showing 30/60/90-day receivables predictions. Metric: $500K monthly GMV, 25% of invoice volume processed through platform, NPS >50. Validate that users will switch payment methods for AI insights + cost savings.
Phase 3
Step 3 - Growth (Months 7-12): Launch invoice factoring (advance 80-90% of invoice value for 3-5% fee). Use AI underwriting model trained on payment history to approve in <24 hours vs. banks' 2-week process. This creates viral loop: suppliers demand buyers use Kessai for faster payment, buyers adopt for cash flow visibility. Expand to Osaka and Nagoya via accounting firm partnerships (top 50 firms serve 80% of SMEs). Metric: $5M monthly GMV, 500 active merchants, 30% using factoring, 15% MoM growth.
Phase 4
Step 4 - Moat (Months 13-24): Build proprietary industry-specific cash flow models (construction payment cycles, seasonal manufacturing trends) that improve underwriting accuracy to 95%+ (vs. 70-80% for generic models). Launch SaaS tier ($100-300/month) with advanced features: AI-powered payment term negotiation, supplier risk scoring, automated dunning. Integrate with ERP systems (SAP, Oracle) for enterprise upmarket move. Metric: $20M monthly GMV, 40% gross margin (SaaS + lending spreads), Series A readiness. The data moat makes this defensible—each transaction improves prediction models, creating compounding advantage incumbents can't replicate without years of vertical-specific data.
Monetization Strategy
Hybrid model targeting 40-50% gross margins: (1) SaaS subscriptions ($50-300/month based on invoice volume): Free tier for <10 invoices/month with basic OCR; Pro tier ($100/month) adds cash flow forecasting and accounting integrations; Enterprise tier ($300+/month) includes API access and custom models. Target 60% of users on paid plans by Month 12. (2) Transaction fees (0.5-1% of payment value): Charged to payers for instant settlement vs. 30-90 day terms. Lower than credit card fees (3-5%) but higher than bank wires due to added value (AI reconciliation, instant confirmation). Target 40% of invoice volume processed through platform. (3) Invoice factoring/lending (3-5% of advanced amount): Advance 80-90% of invoice value within 24 hours, collect full amount at term. AI underwriting reduces default risk to <2% (vs. 5-8% for traditional factors). This is the highest-margin revenue stream (60-70% gross margin) and scales with trust/data. Target 30% of users adopting factoring by Month 18. (4) Data/API licensing (future): Anonymized cash flow benchmarks sold to banks, insurers, and industry associations. Blended revenue model: Year 1 = 60% SaaS, 30% transaction fees, 10% factoring; Year 3 = 30% SaaS, 30% transaction fees, 40% factoring. Unit economics: CAC $500 (via B2B2B partnerships), LTV $8,000+ (3-year retention, $200/month blended ARPU), LTV:CAC >15x. This avoids Origami's mistake of thin transaction fees by monetizing high-margin AI services and embedded lending.
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