David Corbin from Tech in Asia, joined us to discuss the Rakuten Group, one of the fascinating Internet company in Japan. Starting from a chronological perspective, we analysed the company based on major milestones from how they started from an ecommerce online marketplace to a conglomerate that spanned from different Internet services (travel, digital media, financial services to others such as owning sports teams: Tohoku Rakuten Golden Eagles (baseball) and Vissel Kobe (football) in J-League. We also examined how Rakuten has rocked the Japanese corporate world with its switch from Japanese to English as the primary language of the company. We also discussed the charismatic founder of Rakuten, Hiroshi Mikitani and the management team, dissecting their businesses and current corporate strategy from acquisitions of Viki and Viber to investments to Pinterest & Lyft in Silicon Valley. Last but not least, we also mulled whether Rakuten is here to stay in the next few decades.
Here are the interesting show notes and links to the discussion (with timestamps included):
- David Corbin(@CorbinDB, LinkedIn, Tech In Asia) and has formerly worked in Rakuten.
- Tech in Asia Tokyo Conference 2015 and upcoming Jarkata 2015 conference. [1:00]
- The Rakuten Group [3:17]
- Rakuten Inc (Wikipedia, Bloomberg) founded by Hiroshi Mikitani (check his articles on LinkedIn and book “Marketplace 3.0“) with market capitalisation: 2.2T Yen (=US$17.5B), Here are Rakuten’s key figures and history. Check out their FY2015 2nd quarter consolidated financial results, online presentation.
- Official numbers: 100M out of 127M Japanese population is within the Rakuten ecosystem (78%). 77% of the population is over 24 (15-24 is another 9%; over 65 is 25%). The cross sales from other business units to the Rakuten site has grown from 25% (2006) to 60% (2015)
- Rakuten hiring cycles when David joined Rakuten in 2010 and was with the company in 4 years before joining Tech in Asia. [3:40]
- A chronological view of the Rakuten Group and an understanding of the company based on their milestones. [4:43]
- 1997: Founding of the company by Hiroshi Mikitani. Started off as a ecommerce online marketplace where Japanese retailing industry also sells on Rakuten, for example, Brandoff. [5:22]
- 2000: IPO & Expansion of Rakuten Group. [8:50]
- 2003-2005: Rakuten expanding their scope of the company into a group and scale of operations by acquiring and integrating businesses: mytrip.net to Rakuten Travel; DLJdirect SFG Securities; Ac Aozora Card Co., Ltd to Rakuten card and LinkShare and the introduction of Rakuten super points (a loyalty card system) in Japan. We also gained an understanding to how Rakuten has dominated Japan’s ecommerce with an omni-channel approach to commerce. [9:18]
- 2008: Ecommerce expansion overseas – China, Japan and Korea, Taiwan, but most failed and Taiwan is the only successful overseas venture. Subsequent expansion to Southeast Asia. Recently in Taiwan, Rakuten is introducing the Rakuten card from its financial services offering. [12:50]
- 2011: Rakuten Ichiba exceed 1T yen in gross transaction volume with 38K online shops (8.3B); SFDC, Belanja, Ikeda, Tradoria, Ozon, Play. It has grown to 42K online shops in the past year. Can they reach 10T yen and grow beyond the Japanese shores? [20:11]
- 2012: Acquisition of Kobo; wuaki; malaysia; ADS; life insurance/kenko
- 2013: Acquisition of Viki at a rumored number of US$200M and what happens after that? Did Rakuten successfully integrate Viki into its fold? [22:09]
- 2014: Viber at a price of US$900M compared to Facebook’s acquisition of Whatsapp for US$19B. Viber has grown to 236M users in the past year. What is Rakuten’s intention to acquire Viber? Prior to Viber, Rakuten has taken a long term view of Linkshare which became successful after years of investment. [25:07]
- Corporate structure: Hiroshi Mikitani and the Rakuten management team. Who are the key people in the Rakuten team beyond the CEO? A microscopic view of the senior management team and board of directors. Are Rakuten and SoftBank moving towards a more diverse board than most Japanese traditional companies? David also stated examples from how startups are also doing the same, for example, Crowdworks and Metaps. [30:40]
- Organization of businesses under the Rakuten Group: They organized it under Internet Services (E-Commerce, Travel, Other Internet Services in Japan and Global Businesses, for example, Rakuten.com, Viki), Financial Services (Rakuten Bank, Rakuten Securities, Rakuten Smartpay) and Others (Bridal Information, Tohoku Rakuten Golden Eagles baseball team, Vissel Kobe football team to J-League). Which parts of the businesses are generating the most revenues and least? [35:20]
- Why Rakuten invested in Pinterest and Lyft in Silicon Valley. [39:35]
- Does Rakuten has a coherent strategy in its investments and M&A activity? Contrast to SoftBank, which seemed to present a clear and coherent strategy. [42:22]
- Is the Rakuten Group here to stay in the next few decades? [46:35]
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