Entrepreneurship with a purpose

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Once upon a time there was a rice merchant in Japan whose business was shrinking relentlessly as bread, pasta and other staples replaced rice on the Japanese dinner table.

One day, a salesman from Rakuten visited the merchant and convinced him to set up shop on the company’s online marketplace. The salesman helped him create an at­tractive website, complete with personal stories about the family business.

Soon orders started to flood in, the merchant’s son returned from a city job to help him, the business – once seemingly doomed – thrived, and everyone lived happily ever after.

Such heartwarming stories abound in Marketplace 3.0, by Hiroshi Mikitani, the founder of Rak­uten, Japan’s largest online marketplace and the world’s third largest e-commerce company.

Mikitani sets out to demonstrate in this book not only what it takes to succeed in ecommerce but also how the internet can become a force for social good.

His tale of how he built Rakuten into an online powerhouse, while pursuing his desire to improve the world, is a fascinating one that should inspire would-be entrepreneurs with a penchant for doing good.

Diligent and ambitious from an early age, Mikitani went through the normal course of an elite upbringing and landed a highly coveted job at a big bank before deciding to do something radical, at least by Japanese standards. He left his prestigious post to set up Rakuten Ichiba in 1997 with just 13 vendors.

The business quickly grew to dominate the country’s dotcom scene. Mikitani ascribes this success to a corporate culture that challenges conventional wisdom, empowers employees and customers alike, seeks constant im­provement and measures relentlessly.

But as one of Japan’s most successful entrepreneurs, he was not content to just pursue riches. As he watched the company grow, Mikitani understood how the internet “was more than just a way for me to make money; it was a way for an entire segment of the population to make money”.

“This put my efforts as a businessman into a new category. It raised the purpose of my company from making money to improving the human condition,” he continues. “No company can be truly great unless it is doing something to make life on this planet better.”

Rakuten has indeed im­proved the lives of many small vendors, particularly those in remote regions trapped in shrinking rural markets. At the same time however, Mikitani’s decision to make English Rakuten’s official language has reportedly made life miserable for many of his employees.

His prescription for using the internet to benefit humanity is to do as he did with Rakuten: to empower all involved, from members of staff to vendors and their customers.

While Amazon and many other online dealers take control of the merchandise they sell and restrict contact between vendors and their customers, Rakuten’s model facilitates communication. The merchant can market directly to the customer, who can email the merchant with questions and so on. “All the parties can communicate, share information, ask questions and benefit from the experience,” Mikitani writes.

He tells the story of a jewellery designer who posted personal details on her Rakuten platform, from photographs of the trips she took to Europe for inspiration to her thoughts about her work, and built a loyal following.

By encouraging such engagement, Rakuten creates a circular ecosystem, which Mikitani believes will eventually replace Amazon’s “online vending machine model”. As he puts it: “If another merchant comes along with a way to shop online and have more fun, why should the customers stick with the vending machine?”

Marketplace 3.0 is high­ly readable and largely devoid of the jargon that often mars similar efforts. Mikitani gives a well-considered argument for why Rakuten’s business model should be the way of the future. But his thesis suffers from the indisputable fact that Amazon shows no sign of relinquishing its title as the leading force in internet retailing.

Nonetheless, Mikitani’s vision for the next stage of the online revolution and his conviction that internet companies have a responsibility to drive change for the better may be an inspiration to aspiring digital entrepreneurs.

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