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Hiroshi Mikitani

Rakuten's founder and CEO is well known for his critiques of the Japanese business establishment. His company will soon become a household name in the West as it takes on e-commerce giants such as Amazon.

Hiroshi Mikitani is the founder and CEO of Japan’s e-commerce giant Rakuten. The company’s B2B2C e-commerce platform is the biggest in the country and one of the largest in the world by sales. With revenue of $4.7 billion last year, it is valued at over $14 billion. Founded in 1997 as MDM Inc., Mikitani changed the name to Rakuten, which means optimism in Japanese, in 1999 as the internet start-up expanded rapidly against the backdrop of the country’s macro-economic difficulties.

Since 2005, Rakuten has pursued an aggressive strategy of expansion abroad through acquisitions and joint-ventures and Mikitani made no secret about his desire to take on Amazon CEO Jeff Bezos. In the United States, the company purchased Buy.com (which is now Rakuten.com), before expanding into France (Priceminister), Brazil (Ikeda) and Germany (Rakuten Deutschland). Internally, Mikitani extended the company’s international horizons through his controversial “Englishization” campaign.

Shaking up Japanese business culture

In 2010, he announced to employees that he planned to make Rakuten an English-only corporation within two years, including both verbal and written communication. In Japan, the move stirred controversy as the country lamented the loss of traditional Japanese culture in increasingly Anglophone working environments. Rakuten’s CEO famously responded to a skeptical corporate colleague, “if you want to become successful in other countries, you need to internationalize the headquarters.”

Aside from his experiment in Englishization, Mikitani and a pack of anti-establishment entrepreneurs have also pioneered the use of business practices largely unknown to Japan’s post-war corporation-as-family culture, such as merit-based pay, cut-throat competition, unapologetic self-promotion and the hostile takeover. In 2011, he created waves again when he left country’s all-powerful business association, accusing it of blindly backing the nuclear industry.

In his home country, Mikitani’s critiques of the traditional business establishment have made him a controversial figure. A younger an more international generation of Japanese admires his brash style, seeing him as something of a role model, while a graying generation finds his business practices distasteful and loathes his billionaire-sized ego. Mikitani is everything that old-school corporate Japan is not: a young, outspoken risk-taker fluent in English.

Shaken up

He says he first encountered the brash Western ideas that he has made his hallmark during his days studying at the Harvard Business School. “I didn’t even know the word entrepreneurship,” he remembers of his first days in Boston. He’d been sent there by the Industrial Bank of Japan, one of the country’s top finance institutions at the time, where he worked from 1988 to 1996 after graduating from Hitotsubashi University.

Mikitani says he quickly became stifled by the antiquated environment at the bank, but felt a certain allegiance to the company that had sponsored his American MBA and introduced him to his wife. It was finally the devastating Kobe earthquake in 1995 that would help push him to blaze his own trail. Seeing the names of family members killed in the disaster on TV, he says he, “realized anything could happen…nothing is eternal.”

This brush with mortality pushed him to found his first company in 1997. The Crimson Group, an ode to Harvard’s Crimson, was to be short lived. The consulting business was soon overtaken by another start-up based on the harebrained scheme of an internet shopping mall, which would eventually become Rakuten. And with his company, he intended to do things his way. “No VC [venture capital], no grey hair,” he said, just a team of freshly-minted, internet-savvy graduates.

Taking on Amazon

Forbes has ranked Mikitani as the fourth richest person in Japan, with an estimated net worth of $6.4 billion in 2013, but his fortune has not satiated his appetite for success. While Mikitani remains relatively little known in the West outside of the highest spheres of the corporate world, both he and his company will soon be a household name if he gets his way.

Rakuten’s push into the American market inevitably poses the question of how the company plans to take on the American e-commerce giant Amazon. “Our model is really different than most of our competitors,” he says. “We’re trying to empower our merchants.” While Amazon has created its own vast marketplace and uses independent retailers to fill in the gaps, Rakuten is completely built around its retailer marketplace. Rakuten will even provide tools and counseling for merchants as to how it suggests pages look.

Amazon is utilitarian, fast and efficient, while Rakuten’s approach makes for a more authentic shopping experience, like customer’s will be used to in a brick-and-mortar mall. “I think shopping is about the experience. It’s not just purely about price or convenience,” Mikitani argues. For the customer, it offers a unique alternative to the Amazon “big store” model and, for sellers, a more merchant friendly platform. “A very large number of Amazon sellers are quite angry with Amazon’s policies,” says industry news site FierceRetail. “That should worry Amazon.”

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