For its 10th anniversary party in June 2022, the Japanese news aggregator app SmartNews spared no expense. The company rented out the banquet hall at the City Club of San Francisco, flying in employees from across the U.S. and its headquarters in Tokyo. Ken Suzuki, the company’s enigmatic CEO, took the stage with an expensive bottle of Japanese whisky, repeatedly boasting about its price tag as he poured it into glasses for employees. Later, he danced on stage, and colleagues belted karaoke late into the night.
Within months, over 100 SmartNews employees would be laid off. In November, Suzuki stepped down as CEO. SmartNews was one of the few Japanese startups to crack the U.S. market — and the second ever to clear a billion-dollar valuation and reach unicorn status. But employees told Rest of World the U.S. expansion’s initial success was tempered by a chaotic product development process and Suzuki’s own obsession with the fractures of American political life, distracting from more central business challenges.
SmartNews launched in 2012, at a time when Japan’s largest media companies — including Nikkei, Asahi, and Yomiuri — were resisting digitization. Japan’s newspapers continued to hold healthy sales figures well into the 2010s, and SmartNews was the first in a string of competing local mobile news aggregators to put pressure on the print giants, joined by NewsPicks, Gunosy, and Line News. It quickly became Japan’s mobile newsreader of choice.
Over the years, its Japanese business has only expanded, with a local news play that surfaces regional outlets based on location, and a ballooning coupon business that allows users to access deals with partnered retail outlets. But in 2014, founders Suzuki and Kaisei Hamamoto set their sights higher, planning a bold expansion into the profitable U.S. media market.
Within the company, the U.S. was considered a crucial milestone before SmartNews could expand further. “People were asking, why don’t we expand to Brazil? Why don’t we expand to this part of the world? Because we see a big user base and huge space for potential growth,” one former employee told Rest of World, recalling a companywide all-hands meeting. “One of the leadership [team] jumped in and said, we want to conquer the U.S. market first and then we do that.”
In terms of traffic and fundraising, the bet paid off — at least at first. By 2021, SmartNews was regularly outpacing competitor Flipboard in traffic, according to original data shared by the content analytics service Parse.ly. SmartNews had grown into an underdog rival to Apple and Google’s own dominating news aggregator apps. That year, the company raised $230 million off a valuation of $2 billion, fueling further expansion. A hiring spree in its San Francisco and Palo Alto offices pushed its head counts across the U.S. and Japan to nearly 900 people, including its contract workforce.
But in 2023, SmartNews’ success in the U.S. came to a crashing halt. In January, Suzuki announced on a Zoom broadcast that 40% of the U.S.-based staff — or about 120 employees — would be laid off, with some further reductions coming to Japan. Workers who watched the stream described Suzuki as somber, his voice shaking. “I feel very sorry,” Suzuki said in a screen recording reviewed by Rest of World. “I take full responsibility.”
It was a period of widespread media layoffs, but the cuts at SmartNews were especially deep. That October, Rich Jaroslovsky stepped down as the vice president of content. A nine-year veteran of the company, he had been essential to building relationships between SmartNews and U.S. media outlets. His farewell note to staff was vague, saying, “We’re entering a new phase of our maturation, with new challenges and new opportunities, and it feels like it’s time to make way for others.” Days later, Suzuki stepped down as CEO, transitioning into a new role as executive chairman of the board. The message to employees was clear: The decade-long experiment in growing SmartNews’ U.S. business had stalled out.
Reached for comment, a SmartNews representative emphasized the difficult economic environment in the tech industry, and the company’s hopes for its new CEO, co-founder Hamamoto. “Back in January of 2023, we had to make the difficult decision to conduct layoffs in order to maintain the health of our business in the wake of an unprecedented economic downturn. We are now focused on the future, guided by our new CEO Kaisei Hamamoto,” the company said in a statement to Rest of World. But former employees paint a more complicated picture, with crucial product improvements delayed at the last minute and plummeting metrics put aside in favor of the CEO’s pet obsessions.
An early challenge was building a single product that could traverse two radically different media markets and distinct design norms. Quickly, the content team saw political news as a way to bring new U.S. users to the app, and began crafting a non-partisan image that would appeal to advertisers.
Another program involved reaching out directly to existing publishers. In a program called SmartView First, the company would pay publishers for content, host it within the app, and take revenue from select ad slots on the page. Similar to the model used by Apple News’ Partner Program, SmartView First lacked the muscle and funding of a tech giant to convince publishers to sign on. And without a source of revenue beyond advertising, the company was especially exposed to shifts in online ad markets.
Why would I want to give up one week of my life showing some guy from Tokyo around a Trump rally?”
The focus on political news in the U.S. was also motivated by Suzuki’s own personal mission. He considered himself, as an outsider, uniquely suited to address the polarization facing American news media. But former employees told Rest of World that Suzuki’s obsession with the divided nature of U.S. political life distracted him from more urgent business challenges. Several employees pointed to Suzuki’s research into the American far right, which included him presenting on QAnon during a companywide all-hands meeting and attending Donald Trump rallies using company funds.
It was less a political statement, employees said, than an outgrowth of Suzuki’s desire to use the company to have a lasting impact on American democracy. “Suzuki wanted to be this Silicon Valley startup, to be this [powerful] tech CEO,” remarked one former employee, who said the founder aspired to the stature of American founders like Jeff Bezos and Elon Musk. “He worshiped those people and he wanted our company to run like that.”
Rest of World spoke to six former SmartNews employees, many of whom had their roles eliminated in January 2023. Each asked to speak anonymously due to nondisclosure agreements they had signed to receive severance. Together, they paint a picture of Suzuki as a leader unwilling to attend to a hemorrhaging advertising business or support new product launches.
“Ken is not a regular entrepreneur with a degree in computer science or engineering,” said one former employee, pointing out that Suzuki’s roots are as a researcher with a PhD in complex systems from the University of Tokyo. The employee said Suzuki approached his role with the mindset of an anthropologist or sociologist, studying the American electorate to better understand how SmartNews users were consuming political news.
The former CEO had sold a bold product strategy to early U.S. employees: Build a news app that would not only cross the Pacific, but bridge the American partisan divide. SmartNews would provide balanced, politically diverse news curation. The vision was at the center of the company’s sales pitch to American users and advertisers, promising to mend the fracturing of U.S. political news.
This mission would, at times, lead Suzuki down far-right rabbit roles, according to several former employees. “[He] really wanted to get inside QAnon and figure out what’s going on there,” one former employee told Rest of World, saying Suzuki’s interest in its conspiracy theories only heightened during the Trump administration. “We were worried for him.”
SmartNews also instituted an annual company road trip as part of this project. Employees, often accompanied by Suzuki himself, would drive through political swing states across the American Rust Belt and the South to interview SmartNews users, local voters, and politicians. The company’s most recent road trip in the fall of 2022 brought members of the marketing team to Atlanta, Georgia, ahead of the state’s midterm elections.
The trips often included visits to rallies for Donald Trump, multiple employees said. “Why would I want to give up one week of my life showing some guy from Tokyo around a Trump rally?” recalled one employee who declined an invitation to join the road trip in 2020. “The whole premise of the idea was very bizarre.”
You pretend you’re Google, but you just copy what the Google office looks like.”
At the same time, the company sometimes struggled with basic development functions. A redesign was planned as a way to keep new users on the app, limiting the need for costly user acquisition drives. But each time the proposed redesign neared completion, Suzuki would cancel the project at the last minute, only to start from scratch in the following months. This happened at least three times in the years preceding the layoffs, according to three people with direct knowledge of the events. The redesign was still listed as a goal for the end of 2023, but to date has not launched.
“Any time there was a high-visibility, high-impact project, it would never fully launch. It would be very piecemeal,” one former employee said.
Another project aimed to create posts and comment sections on the app to drive user engagement. It was initially slated to launch across the entire app — but after months of work, Suzuki chose instead to beta-test on a few thousand users first, then shelved the update entirely.
Some employees attributed the launch problems to a culture clash, as Japanese workplace norms of consensus-building and deference to leadership ran into the “move fast and break things” ethos of Silicon Valley. “No one was empowered to make a decision because [it was] consensus-driven, but then Ken has the ultimate say,” said another former U.S.-based employee. “So getting things across the finish line or getting people to align is really hard.”
In Japan, Suzuki is still lauded as one of the few Japanese founders to make a successful entry into the U.S. market. In June, SmartNews won the Prime Minister’s Award at the annual Nippon Startup Awards, a government effort to jumpstart the country’s startup economy. Suzuki personally accepted the award from Prime Minister Fumio Kishida, who heralded the company’s “breadth of business vision, originality, and innovation.”
But while SmartNews is still thriving in Japan, Silicon Valley success now seems even further out of reach. Reflecting on their time at the company, one employee wondered how close SmartNews ever came to establishing itself in the U.S. tech ecosystem.
“You pretend you’re Google, but you just copy what the Google office looks like. Internally, when you do things, you’re still using a lot of Japanese corporate strategy to do things,” the employee said. “I don’t think SmartNews has ever really successfully entered the world of Silicon Valley.”
