Over the past few months I've been working on both kinds of search at the same time. Some clients are established software companies moving their customer base onto AI products. Others are AI companies building a team in Japan for the first time. The same strong country managers are being approached for both, and I get asked my view on which to take.
My answer is that neither is a wrong move. It depends on the person. For anyone hiring, that means the real work is knowing which kind of leader you need, and explaining your business honestly to the people who fit.
What the dot-com years taught us
I started placing leaders in Tokyo in 2003, when Japan was still dealing with the damage from the dot-com crash. It took years for the market to recover. At the time, CRM and supply chain software looked like good niches to specialise in. There were something like twelve global CRM vendors operating here. I only ever made placements with Siebel Systems, shortly before Oracle acquired it. Most of the others were already in decline.
I see a similar pattern today, on a much larger scale. There are a lot of AI startups with real traction. If the established vendors adjust their AI strategy quickly enough, many of those startups won't survive when the bubble bursts.
The sell-off at the end of October
Tech stocks had a rough end to October. On 29 October Alphabet fell 12% after its quarterly results, its worst day on record. The next day the Nasdaq fell 2.9%, and October was its worst month since March 2025.
I'd keep that in proportion. A lot of the stocks I checked had climbed a long way in the weeks before. The Nasdaq set new records in late September and early October, and even after the fall it was still up about 10% for the year. To me, much of this looked like prices coming back down after a very strong run.
What has changed is the mood about AI spending. Alphabet, Amazon, Microsoft and Meta plan to spend more than US$740 billion on capital expenditure this year, largely for AI. In their latest results, Alphabet, Amazon and Meta all reported negative free cash flow, which means they spent more cash than their businesses brought in. Demand is still strong. AWS revenue grew 39% last quarter. What investors want to know is when all that spending will pay back. Outside the big tech companies the evidence is thin so far. Torsten Slok, the chief economist at Apollo, wrote on 24 October that AI has delivered "zero financial payoff to corporate America outside of tech".
I don't read this as the bubble bursting. It may be an early sign of nerves. If the nerves last, I'd expect younger companies to feel it first, in their funding.
For builders, funding is the biggest factor
The levers for building a Japan business from scratch are well understood: hire the first team, win the first reference customers, get the product ready for Japan. What decides whether it works is mostly funding and resourcing.
If the bubble bursts, my main concern is that funding dries up. In the 2008 financial crisis it dried up quickly, and that was frightening for anyone running a young subsidiary. COVID was different, because money kept flowing into software.
A transformation has different levers. If you already have a subscription customer base and your mission is to move it onto AI, the job is to understand what your levers are and use them: which customers will expand first, which new buyers you need to reach, what the product team will deliver for Japan, and whether the team you inherit can sell the new products.
Who fits which
Risk tolerance. A startup role suits someone who can accept that the company may be sold, merged or closed within a few years.
Stage of life and family. A leader with children in school, a mortgage or parents to look after often puts more weight on a stable income than on equity.
Wealth. Someone who's already had a good exit can afford to take a bet. Someone who hasn't may need the base salary.
Track record. A younger, up-and-coming leader often gains most from a startup, because it gives them a title and scope they'd wait years for elsewhere. A proven leader's experience is usually worth more in a transformation, where they've taken a customer base through a big change before.
One more point. You don't always need to chase the newest company. Improving an established business, with customers who already pay, can be a very good career move with far fewer headaches.
What this means for how you hire
If you're hiring for an established vendor, don't try to compete with startups on excitement. Show candidates the facts: the customer base, how the AI products are selling, the support from head office, and where the business is going. Strong candidates will ask about all of it, and the ones who get straight answers early tend to stay in the process.
If you're hiring for a startup, be clear about how much funding runway you have, what happens if the next round is late, and how much authority the Japan leader will really have. Candidates with family commitments will ask, and vague answers will lose them.
In both cases, I encourage candidates to hear both stories before they decide. In my experience, a leader who has compared the options and still chooses you settles in faster and stays longer.
If you're working out which kind of leader you need for Japan, I'm happy to talk it through.
