Hiroshi Mikitani

THE POWER TO COMPETE. Born in Kobe in 1965, Hiroshi “Mickey” Mikitani is the founder and CEO of Rakuten, a Japanese company based in Tokyo that he started in 1997. Mikitani wanted to build a business that would empower people to pursue and fulfil their business dreams online, and Rakuten has one of the world’s most comprehensive service ecosystems. Today Rakuten spans e-commerce, fintech, digital content, and communications, and has become a global leader in internet services, with more than 1.2 billion members across the world. Mikitani has also moved into healthcare, and in 2019 Rakuten is also preparing to become Japan’s newest mobile network operator.

In 2012, Mikitani was awarded the Harvard Business School Alumni Achievement Award, one of the school’s highest honors. He is also a recipient of the Legion of Honour, awarded by the French government in recognition of contributions to the economy and culture of France. In 2011, he was appointed Chairman of the Tokyo Philharmonic Orchestra, which has the longest history and tradition of any orchestra in Japan. In July 2017, Rakuten became the Main Global Partner and first-ever Official Innovation & Entertainment Partner of one of the world’s most admired soccer clubs, FC Barcelona, and, in September of the same year, became the first ever jersey partner for NBA Champions, the Golden State Warriors, an American professional basketball team.

You run a Japanese company. Which are your major concerns for Japan for the longer term?

There are about 125 million people in Japan, but the decline in population, the shrinking population, is one of the big issues; combined with the huge fiscal imbalance of too much government debt. The third is the globalness of the Japanese community. For example, we often lack the ability to communicate in global languages such as English.

Have you tried to convince the Japanese government to address this?

Yes, as President of the Japan Association of New Economy (JANE) I am one of the ten members of the advisory committee to the Cabinet. Japanese people can read and write reasonably complicated books in English, but they cannot speak and listen, so they are isolated, and we have to open up.  For example, this company changed its language from Japanese to English eight years ago. We operate in English. Everyone thought I was crazy, and we struggled to begin with, but after eight years almost everybody can manage to communicate in English and we don’t need any translators.

How many people work in your company?

Here in this building in Tokyo 10,000.  In Japan about 14,000, and in my company globally 25,000.

Rakuten Drone taking off to make a delivery.

When did you start Rakuten?

22 years ago, when I was 32 years old.

After studying?

Yes. First I went to Hitotsubashi University in Tokyo, and then I joined one of the most prestigious banks, called Industrial Bank of Japan (IBJ), and then I went to Harvard Business School and came back and was an investment banker at IBJ for two years. There was a big earthquake in my hometown city of Kobe and my uncle and aunt and some of my close friends died. The city was on fire.  I recognised that life is short and I wanted to start my own company, to be an entrepreneur and to make a new trend of entrepreneurship in Japan with a start-up that adapts and is enterprising.

How much money did you start with?

I began with 200,000 dollars.

What did you do with your 200,000 dollars?

I hired four young guys, university graduates, and started with online shopping. Amazon was a bookstore when it started but we were a marketplace from the beginning.  The small merchants could use our platform, but only in Japan.

And then?

Then in three years we went public. Our market capitalisation was about 3.8 million dollars, but the internet bubble burst and all the market crashed in 2000 and our market capitalisation went down to $500 million in a week.

What did you do?

I couldn’t do anything about it. It was not my fault! We kept growing and our valuation and market capitalisation came back.  In 2002 I started to evolve our business model from just a marketplace or ecommerce company to what I call an ecosystem and we started to diversify our business model. We diversified into travel, we are the biggest online travel agency, and also into finance.  We entered sports with a baseball team in 2004.

Why travel?

Travel makes sense online. Rather than make a phone call to a travel agent you can just go online and reserve, so there was a very natural evolvement.

At this time were you still only operating in Japan?

Yes.

Why finance?

Because the most valuable asset we own is members, customers, and we asked ourselves how we could utilise the asset of our member base. Finance was the biggest answer, so in 2004 we acquired an online brokerage company, ELJ Securities.

Are you also in the credit card business?

In 2008/9 we bought a consumer finance company. They had a small credit card operation but that was not their main business. We had to convert the business model from a consumer finance company to a credit card company.

Is each of these many Rakuten operations run by a different team which you are on top of?

Yes, we own 100% of these, and each team has its own business field. Sometimes the title is General Manager, sometimes CEO.

Are they very different to run?

Yes, but at the same time they share a brand, called for example Rakuten Bank, Rakuten Travel, Rakuten Card, Rakuten Shopping, Rakuten Drone delivery service. We share many things and we have the same membership and we have Rakuten points. Members can use the same username and password for each, but in some businesses which need extra security, like the bank, you use a special code only for the bank. Also we use Rakuten Super Points and the more you use Rakuten services the more points you get. You can pay your credit card bill, and we are the biggest ecommerce company in Japan, so you can also buy your sandwiches! We recently got a licence for our own cryptocurrency and we are going to start that soon.

How come you went into baseball with the Tohoku Rakuten Golden Eagles in Japan, into soccer with FC Barcelona, and into basketball with the Golden State Warriors in the USA?

I think sport has basically one of the most important contents. It is the best unscripted show because you don’t know what is going to happen. It is a hugely important asset for society and it is a great way of promoting our brand. For instance, FC Barcelona is seen by over 2 billion people in a month.

Is sport a publicity vehicle for you?

Not just publicity, we also do business with FC Barcelona. For example we provide the technology for pricing the tickets and we use our social network for the promotion of FC Barcelona.

How do you advance and build your company?

It’s about construction and innovation, and also the creation of the business values in society.

Now you are also going into health care?

The medical business is a little more distant from the consumer and is a pure bioscience product and is more about innovation. In future we will be able to use our DNA samples for diagnosing tissue samples for cancer. We have a company called Genesis Healthcare which is the biggest DNA company in Japan.

Are you going into telephones this year?

Yes. If you think about the mobile phone business it is closely linked to our business.  You can pay by mobile, so there is a kind of synergy with the other things.

Where are your companies?

All over the world, but sports are basically in Japan. We own our own soccer team, Vissel Kobe, and our own baseball team, the Tohoku Rakuten Golden Eagles. In Barcelona we are the sponsor with a concession but we don’t own the team.

How many countries do you operate in now?

More than 40 countries.

Are the leading Chinese companies like Alibaba and the leading American companies like Amazon competitors of yours?

Alibaba not so much. Amazon is our competitor in Japan, but Amazon is our client in the US where they use our platform to promote their business.

What are your new ventures?

When 5G comes the industry will be very different because the speeds will be so fast. The format is going to change, and the behaviour of smart phone users will alter considerably. It will be even more difficult than it is today to draw a line between life and work.

Are you optimistic for the future of Japan?  

Very optimistic. But we need to change some things, as I said at the start.

Tokyo 2019

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