If there is one phrase that encapsulates the Hiroshi Mikitani approach to running a business, it would be along the lines of the famous Nike slogan to “Just do it”.
Asked about a string of bold overseas acquisitions launched in the past year by Rakuten, the online shopping mall he founded and heads, the 45-year-old says simply: “If we don’t take drastic action [the globalisation of Rakuten] is going to take forever. Either you do it, or you don’t do it,” he says, speaking in a spartan room in his office in central Tokyo.
That combination of ambition and can-do attitude runs through the history of Rakuten. Over the past 13 years, Mr Mikitani has built it up from a six-strong operation into the country’s most widely recognised internet brand, with more than 35,000 merchants offering goods and services, and gross transaction volume of Y1,800bn ($21.4bn, €16.8bn, £13.8bn).
Now Mr Mikitani has his sights on the global market. Before long, he wants to see the group operating in 27 countries and generating global transaction volume of Y20,000bn.
As a first step, Rakuten recently acquired PriceMinister, France’s biggest online marketplace operator, following its acquisition of Buy.com in the US.
Although Rakuten is almost unknown outside Japan, Mr Mikitani’s ambitions include surpassing its bigger overseas rivals such as Google, Amazon and Ebay. “I am confident that our business model is going to work in other countries,” he says. “Our ultimate goal is to become the number-one internet service company in the world.”
That self-assurance and willingness to set ambitious goals has been crucial to Mr Mikitani’s success.
Dismissing the conventional wisdom that Japan is not conducive to new ventures, he says: “I don’t think starting a business in Japan is hard.”
He does, however, admit that “you need guts”. Indeed, Mr Mikitani must have had “guts” when he decided to leave a prestigious, secure job at the Industrial Bank of Japan to strike out on his own.
Setting up an online shopping mall may have been timely in 1996, amid mounting excitement over the possibilities of the internet. But it was also fraught with difficulties. Much bigger companies with greater brand recognition and deeper pockets were already offering online shopping and failing miserably.
Moreover, the idea of selling goods on the internet was utterly alien to the kind of small merchants Rakuten wanted to sign up for its online mall. In the first few weeks of talking to potential vendors, Mr Mikitani and his five staff persuaded only five to sign up.
Undeterred, however, they persevered, with optimism, Y20m in capital and plenty of ingenuity.
Lacking the software tools Rakuten needed, Mr Mikitani enlisted Shinnosuke Honjo, his business partner when the company was founded, who was a novice in such matters, to develop them. He believed Rakuten’s eventual success would depend on setting tough goals and on people’s ability to achieve them through constant improvement.
In Mr Mikitani’s book Principles for Success, published three years ago, he wrote: “At least in the business world, breakthroughs are only born when you achieve goals that seem unachievable. There is not much point in setting goals that are clearly achievable.”
But it is equally clear that Rakuten’s success rests on much more than mere ambition, guts and determination. Every big decision and initiative taken at Rakuten has been based on detailed strategic analysis and thorough reasoning – whether by the top management or by Mr Mikitani himself.
In the early days, as a result of an analysis of the vendors Rakuten sought to woo, Mr Mikitani and his employees would walk at speed around the neighbourhood – or even do push-ups – before approaching the potentially sceptical small-business owner. The idea was that the business owners would be more likely to trust someone looking a little sweaty from hard work and who looked like he was trying really hard to win business than a slick salesman in a fine suit.
As a result of analysing the failure of earlier online shopping malls, Mr Mikitani adopted a business model based on direct communication between seller and customer. Because of this, Rakuten is purely a mall – where vendors bring their wares and where customers find them – and does not take on inventory of its own.
The direct interaction between online vendor and buyer means that “it’s more alive than the very serene marketplace of our competitors”, he says. “We have a more human touch. The reason why we created this company is to empower small and medium-sized businesses through the internet.”
Rakuten’s online mall enables even the smallest vendors in the most remote regions to reach millions of potential customers; some, says Mr Mikitani, have transformed themselves from ailing operations into ones generating more than Y100m of sales a month.
Rakuten has had its share of luck, too. Mr Mikitani started the company with his own funds, earned at IBJ and then through his private consulting business. But it was fortunate that he raised Y50bn in an initial public offering just before the dotcom bubble burst. Rakuten listed on Jasdaq, the market for start-ups, in 2000 and has since raised about Y230bn in four equity offerings.
But listing has not changed the way the group is run by Mr Mikitani, who, together with family members, controls about 44 per cent of the shares and is still very much the dominant force.
He has also brought in experienced outsiders, such as Kazunori Takada, chief operating officer, and Kentaro Hyakuno, head of global business – both from Toyota.
Yet even as Rakuten has developed into a broad-based group that encompasses consumer credit and travel agency services, as well as online securities brokerage and banking, Mr Mikitani has continued to innovate and challenge the status quo.
In 2004, when Japanese baseball was threatened by poor finances, Mr Mikitani started Japan’s first new baseball team in 50 years and ensured it made a profit in its first year. And in 2005, Mr Mikitani shocked the business community with an ultimately unsuccessful hostile bid for one of the country’s biggest national broadcasters, TBS, which he wanted to merge with Rakuten.
He also guards against the danger of becoming hidebound by travelling overseas at least once a month, even if it involves a two-day round trip between Tokyo and Barcelona.
Mr Mikitani heads JeBA, an association aimed at strengthening Japan’s competitiveness through the expansion of the internet and e-business. By taking Rakuten overseas and pledging to make it the world’s leading internet services group, Mr Mikitani is staying true to his own dictum that leaders must set high goals.
Not only is going global a challenge for Rakuten, he says, but it is also a way for him to “pave the way for younger people” in Japan. After two decades of economic stagnation, they “are becoming very, very conservative, which is bad.
“Obviously, I am doing this for my company ... But at the same time, this is an extremely important experiment for Japan.”