All Segments
Hiroshi Mikitani at Startup School 2012
20 segments available
Hiroshi Mikitani, founder of Rakuten, at Y Combinator Startup School on October 20, 2012. Presented in Stanford Memorial Auditorium by Y Combinator and the Stanford Technology Ventures Program.
Segments Timeline
The Birth of Rakuten
Hiroshi Mikitani shares the inception of Rakuten in 1997, detailing his vision for an internet shopping mall in Japan. He discusses the challenges faced in the early days, including the lack of venture capital and how he built the company from a modest initial capital of $200,000, leading to its public offering in 2000.
"start you could just tell us a little bit about what Rocket is and how you got started. Okay. So um I founded Rockton in 1997. As a matter of fact, you know, I was trying to partner with uh uh one of ..."
Rakuten's Market Dominance
Mikitani outlines Rakuten's impressive growth, achieving a 35-40% market share in e-commerce and leading in various sectors like online travel and banking. He emphasizes the company's expansion into 13 countries and the acquisition of Coobo, a significant player in the e-reader market.
"uh never raised any money uh from any VC uh just hired uh young guys and went public in year 2000 and started to uh you know buy many companies. Uh now we are number one in e-commerce about uh 35 to 4..."
Challenges of Japanese Entrepreneurship
Mikitani contrasts the entrepreneurial landscape in Japan with Silicon Valley, highlighting the absence of a robust venture capital ecosystem. He explains how he learned to manage and grow Rakuten without traditional VC support, focusing on creating a sustainable cash flow model.
"business. How is starting a company in Japan and and growing a company in Japan different than Silicon Valley? Well, you know, there is no really, you know, venture capital ecosystem. Not at all. Ther..."
Building a Cash Flow Positive Business
Mikitani discusses his innovative approach to ensuring Rakuten's cash flow positivity from the start. By requiring upfront payments from merchants, he established a self-sustaining financial model that allowed the company to thrive without external funding.
"much so just kind of providing uh the capital so how did you learn the lessons that VCs in Silicon Valley tradition traditionally help entrepreneurs with how did you learn how to run a company and gro..."
Lessons from the First Year
Reflecting on Rakuten's early days, Mikitani shares insights on patience and the importance of developing a unique business model. He emphasizes the need for a strong company culture and the decision to avoid mimicking competitors like Amazon and eBay.
"rely on on BC uh we asked our merchant uh to pay uh $500 per month but we asked them to pay us 6 months up front. So from the second month of our service uh my company was cash flow positive. You've b..."
Facilitating Merchant-Consumer Communication
Mikitani explains Rakuten's distinctive approach to e-commerce, focusing on enhancing communication between merchants and consumers. He believes that creating enjoyable shopping experiences is crucial, setting Rakuten apart from traditional e-commerce models.
"family and my friends happy. Uh but how far along were you when you did that friends and family round? No. Uh that was like 6 months before we go public. Uh you know 2 days before we our IPO uh my fri..."
Growth Strategies: Brand and Loyalty
Mikitani outlines Rakuten's growth strategies, including building a strong brand through sports sponsorships and loyalty programs. He highlights the importance of consumer data analysis and the development of a robust rewards system to drive customer engagement.
"uh because I knew that I'm going to uh be in this business for a long long time. So we didn't rush. We we were very patient. Did did you figure out that kernel on the first try? Did you get right the ..."
Acquisition Strategy Explained
Discussing Rakuten's acquisition strategy, Mikitani describes two types of acquisitions: geographic expansion and ecosystem enhancement. He shares examples of successful acquisitions and how they integrate into Rakuten's existing business model.
"idea and I was 100% confident uh my employees uh will really uh like the idea of helping small to mediumsiz companies rather than trying to destroy their business. So I mean as you said this is very d..."
Integrating Acquisitions into Culture
Mikitani emphasizes the importance of cultural alignment when acquiring companies. He explains how Rakuten ensures that new acquisitions share its values and mission, which is crucial for successful integration and maintaining company culture.
"how did you grow in both in the early days when you were signing up these small and medium businesses that you wanted to help and then in the later days obviously you've uh made a lot of acquisitions ..."
Learning from Failures
Mikitani candidly discusses Rakuten's challenges, including a failed venture in China. He reflects on the lessons learned from this experience and the importance of adapting strategies based on market conditions.
"of the consumer database to analyze consumer data. And now about uh 8 80 million so about uh 90% of internet populations are are member and then and we can use our currency our points to cross- sell v..."
Cultivating a Strong Company Culture
Mikitani shares insights on maintaining a strong company culture over the years. He believes that fostering innovation alongside operational excellence is key to Rakuten's success, emphasizing the need for shared practices and quantitative management.
"our uh ecosystem uh our value chain like cobalt uh which is not doing uh as uh well as in other countries but they're very strong they have number one market share and in Canada and uh in France and i..."
Investing in Pinterest
Mikitani discusses Rakuten's investment in Pinterest, highlighting its unique position among social networks. He sees Pinterest as a valuable platform for e-commerce due to its visual appeal and influence on consumer buying behavior.
"Oh, it's a difficult question. I don't know but uh they're still on our one uh you know only one failure we made uh was uh we went uh into China uh partnering with BU uh which is largest search engine..."
Future of E-commerce
Mikitani shares his vision for the future of e-commerce, predicting the rise of digital content sales and the increasing importance of logistics. He discusses the potential for social shopping and the evolving role of mobile devices in consumer purchasing.
"is operation and innovation is kind of not so difficult to really encourage people to be uh innovative but at the same time if you want to scale your business you need to have a very strong operation ..."
Understanding Japanese Consumer Behavior
Mikitani explains the unique characteristics of Japanese consumers, emphasizing their preference for shop-centric marketplaces. He discusses how Rakuten tailors its approach to create engaging shopping experiences that resonate with local preferences.
"very different from other social networks. Uh it's very uh you know graphical uh and appeals to the heart of your interest. Uh and it has a strong influence over to uh buying behavior and buying decis..."
Mobile Commerce Growth
Mikitani highlights the rapid growth of mobile commerce in Japan, noting that 25% of Rakuten's transactions now come from mobile devices. He predicts that this trend will continue to rise, significantly impacting the company's future strategies.
"games, everything will be digital and online. Uh definitely the uh the logistics will become more and more important. Uh uh and there are lots of uh innovative uh logistics companies uh you know using..."
Focus on Innovation Over Competition
Mikitani shares his philosophy of focusing on innovation rather than competition. He explains how Rakuten differentiates itself from giants like Amazon by supporting small to medium-sized merchants, fostering a unique business model.
"marketplace. uh meaning that we there every shop uh have a very different uh you know characters and also the design and the user experience and we provide all sorts of tools uh to for them to make fa..."
Hiring Practices in Japan
Mikitani discusses the evolution of hiring practices in Japan, emphasizing the importance of attracting young talent to maintain Rakuten's culture. He reflects on the shift in perception towards startups and the growing interest among young professionals.
"know I think uh you know you should ask professionals uh so that was our approach and u I think um it worked extremely well in Japan and now we're testing in other countries and I think it's it's work..."
The Decision to Go Global
Mikitani explains the strategic decision to make English the official language of Rakuten, aiming to foster a more open and global company culture. He shares the positive impact this decision has had on employee engagement and international collaboration.
"and smartphone transaction is growing about uh 300 to 400% yearonear. So it will be soon more than uh 50% within a couple of years. It's it's huge. Yeah, that is huge. You said something earlier that ..."
Open Culture and Knowledge Sharing
Mikitani emphasizes the importance of an open culture at Rakuten, where information is shared across departments. He discusses the concept of 'yokotan' or horizontal knowledge transfer, which he believes is a strength of Japanese companies.
"uh try to match uh if I have to uh but I think the the way we um approach e-commerce is totally different from Amazon.com because again we are trying to facilitate the transaction uh with medium to sm..."
First Meeting with Paul Graham
Mikitani recounts his first encounter with Paul Graham, reflecting on the excitement and energy he felt during their meeting. He shares how this experience influenced his entrepreneurial journey and the missed opportunity for collaboration.
"scale uh our business. How are we doing on time, by the way? Five. Um all right, let's see what's most interesting here. We were talking a little bit backstage about just sort of Japanese culture and ..."