From Fragile "Creation" to Solid "System": The Dawn of the Subscription Model That Supported 600 Stores
The production site constantly teetered on the edge of being “cut off.”
In my thirties, I established myself as an independent advertising production and agency, carving a niche into the massive pachinko industry market. I generated sales by specializing in flyer production for the industry, and at first glance, it might have seemed like smooth sailing. However, the reality was a constant feeling of walking on thin ice.
The business model at the time was a typical “flow-based” order-based production. Sales increased when clients placed orders, and dropped to zero when they didn’t. Furthermore, the job of flyer production was constantly at risk of being “switched to another company.”
“Sayon-san, we found someone who can do it cheaper next time.”
“The new person in charge wants to use a different company.”
With words like these, yesterday’s main revenue stream could vanish tomorrow. While I was busy acquiring new clients, I also spent my days handling the minute revision requests of existing clients. If I didn’t act, not a single yen would come in. Despite advocating for systematization, the reality was that my business was built on an extremely fragile foundation, entirely dependent on my own labor.
“If this continues, I’ll eventually be cornered.”
That sense of crisis is what propelled me towards the next big challenge.
From DVDs to the Cloud: Solving the Industry’s Common “Pain”
Instead of focusing on individual production orders, I identified the “lack of materials” that the entire industry commonly faced.
At the time, it was incredibly difficult for each pachinko hall to prepare high-quality design materials on their own. So, I conceived a business model of developing a library of design materials and offering it in an inexpensive subscription format.
Initially, I sold materials burned onto DVDs, but this had limitations in an industry where information freshness is paramount. So, I pivoted to a download service utilizing the internet. While cloud services are commonplace today, back then, internet lines were slow, and server maintenance was not easy.
I installed a dedicated server in our own office and secured multiple large-capacity hard drives, which were expensive at the time.
“An environment where the latest materials are available anytime, in unlimited quantities.”
I gambled the company’s fate on building this infrastructure ourselves.
However, the initial phase was a series of hardships. System investment and material production costs came first, leading to continued losses, eventually reaching 10 million yen. Some people around me called it “reckless.” Still, I didn’t abandon my conviction that if this “system” could be completed, it would surely become the industry standard.
The Missing Last Piece: The True Nature of the “Enthusiasm” for New Machine Explanations
The catalyst to escape the tunnel of deficits came from an unexpected place.
Even more than the design materials themselves, what the halls craved was content that could clearly explain the specifications of the “new machines” being released one after another by manufacturers to users.
In the pachinko industry, the introduction of new machines is the biggest event. However, translating complex specifications and attractions into designs is a labor-intensive process. I focused on this area, establishing a system to deliver high-quality graphics specializing in explaining specifications at the fastest possible speed for every new machine release.
This perfectly matched the needs of the field.
“This is what we’ve been waiting for.”
Along with such voices, contract numbers exploded. The service, which had been struggling, suddenly expanded its contracts to 300 stores, and then to 600 stores within three years.
Sales transformed into stable recurring revenue (stock), and I was finally liberated from the “fear of being cut off.” Instead of sales earned through my own legwork, the system automatically generated profits and supported the company. This was one of the ideal forms I had aimed for as a builder.
An Unexpected “Parting” Arrived at the Peak of Stability
Having secured a solid management foundation and developing a team, I felt I could finally take a breather. In 2013, just as I was confident of this, an event akin to a bolt from the blue occurred.
I found myself in direct opposition with a senior figure who was an investor, over management policy.
While I will omit the details, it was a clash at a point where my pride as a builder and their business perspective were irreconcilably incompatible.
“Although it’s a system I built myself, I cannot stay here by selling my soul.”
After a heated argument, I made the decision to leave the company I had poured my heart and soul into nurturing. I let go of my stable position, the accumulated revenue, and the days spent with colleagues who had walked alongside me, all in that moment.
In 2013, I was once again standing at a “zero” point, with nothing.
However, this sense of loss, experienced after passing the age of 40, became the catalyst that would lead me into a further “unusual realm.”
Founder Principles 4: Tools are not the goal; working business flows are.
Setting up our own servers and acquiring large-capacity HDDs was merely a means. The essence lay in providing an indispensable piece of the halls’ operational flow: delivering information about new machines to the field at the fastest speed. Even in the age of AI, what we should be creating are not “superior AI tools,” but the “series of flows” that advance our clients’ businesses.