Inside Rakuten’s DNA: A chat with three founding members
The term shutter-gai reveals much about Japan’s post-bubble economic landscape. A riff on the word shoten-gai (shopping town or arcade), shutter-gai refers to the many ghostly shopping arcades littered across Japan whose tenants rolled down their shutters for the last time after the curtain closed on the spectacular economic boom of the 80s.
By 1997, shutter-gai was a well-established part of Japan’s cultural vocabulary. But despite the doom and gloom that pervaded Japan’s markets at the time, six young entrepreneurs, led by Mickey Mikitani, set out on a journey of optimism — a journey to revitalize Japan.
Together, they built and launched Rakuten Ichiba, a platform so simple that even small rural business owners who had never touched a computer could take advantage of it to compete with major retailers. Nearly 23 years later, Rakuten has grown into a global innovation leader offering more than 70 different services, empowering businesses and consumers through the power of the internet.
At a recent Rakuten Social Accelerator event in Tokyo, three of Rakuten’s founding members gathered for a rare joint appearance. Shinnosuke Honjo now heads up Karuizawa Kazakoshi Gakuen, a regional school that he helped found in 2019 to break new ground in education in Japan. Akio Sugihara serves as president of Gurunavi, Inc., a restaurant booking service that has a business alliance with Rakuten, while Masatada “Seichu” Kobayashi was recently appointed as Rakuten’s first Chief Wellbeing Officer.
Below are some highlights from the discussion.
Rakuten Ichiba: The early days
Sugihara: My first job at Rakuten was essentially traveling around Japan recruiting new merchants to the Rakuten Ichiba platform. I was given a great big bag full of pamphlets and sent off to the countryside for weeks at a time. Mickey would say, don’t bother coming into the office — head west! I’d hop on a bullet train and visit every little city.
It was during those trips that I saw with my own eyes just how many shopping arcades were rolling down their shutters. And of the stores that were interested enough in our platform to warrant a visit, many were selling fairly standard products that you could find anywhere.
There was one knife merchant from Mishima that I remember very well, Sugiyama Knives. The owner was already using a pre-internet PC communication service so I figured his IT literacy would be high and getting started editing his shop page would be straightforward but that turned out not the be the case. In the beginning, we helped even with taking the product photos and getting them online. All the while, I was still a little worried about whether there would be customers for his knives, which could be purchased in any number of shops.
But there was something very special that people like this had in common. They were excited about the possibilities the future held. It was that period in time when some people were saying, “The internet is gonna be huge, right!?” and I felt like it would have some enormous impact on society. But then when I visited 100 or 200 shops and still sometimes had to come back without any contract to show for it, I’d have doubts myself.
So when I met people like Mr Sugiyama who were just shining with optimism, my confidence in our future together would surge up again. Merchants whose customers previously came from within a 5km radius now had access to customers across Japan: Just think of that they could do with that opportunity!
Seichu: We were all working together in line with Mickey’s vision of truly making the world a better place, of exploring Japan’s potential.
And that vision is still a core part of Rakuten’s DNA, its culture. We didn’t create that culture — it came about naturally as we took on more and more of these challenges from our clients.
Honjo: It wasn’t simply a case of helping these struggling merchants find a solution to their problems. We weren’t just sharing their pain — we were following our own dream of becoming the world’s best online services company. That dream just happened to match perfectly with these merchants’ desires to move more product and deliver more to the world. That’s essentially how we empowered people — not just by solving their problems but by chasing our dreams together.
I really do think we helped avoid a lot of bankruptcies and suffering for many people. Out in towns where the population was shrinking and shoppers were disappearing, the internet really blew some much-needed wind into merchants’ sails.
Especially those stores that had been in business for decades or even centuries: Talking to them, I really got a sense that we were making a difference. Even more than the increase in sales numbers, just the idea that entire families had been saved by the internet really gave us a lot of encouragement.
Seichu: For the generation in their 50s and 60s that had worked their entire lives offline, stepping into the world of IT was a bit much. But their children — those who would be taking over the family business as 3rd or 4th generation owners — we were able to work extensively with them.
There was one older gentleman who had been struggling to find a successor for his business. He told me he was happy to see sales go up after joining Rakuten Ichiba, but what made him even happier was that his son and family came back home to take over the store. If it weren’t for Rakuten, he said that would never have happened. That was the moment I truly felt like we were making a difference.
What is a company’s role?
Sugihara: Over the last 20-plus years working mostly inside Rakuten, I’ve really thought a lot about what the role of a company is in our society. With the internet directly connecting people in a way that never happened before, I think that role is really changing.
Personally, I want Rakuten to keep playing that trailblazing role — one or two steps ahead of everyone else. It gives me something to follow!
Seichu: You know how we call countries with advanced industries “IT powerhouses” or “internet-advanced nations” and things like that? Well, I think Rakuten is a “problem-solving powerhouse.” We’re always running headfirst into problems that no one else has gotten around to even thinking about. It’s because we’re all about speed. We were tackling everyone else’s 21st century problems before the 21st century even began.
In 2010, Rakuten made English its official language. Mickey believed that if Japanese companies were going to go out and do business with the rest of the world, not being able to speak English would put them at a huge disadvantage. He was sure that if Japanese people put their minds to it, they could learn. Fast forward 10 years and we’re all working in English. We were able to do this exactly because we play that “problem-solving powerhouse” role so well.
I don’t think companies should only be asking how to maximize profits, increase their market cap or boost their share price. They should be asking, what do we mean to society?
Try, fail, try again
Sugihara: Recently I’ve really been feeling old. Talking with younger people — people chasing their own dreams — their minds are full of things I don’t know about and things I’m behind on. I’ve been thinking that it’s time for me to switch to a more supportive role.
Luckily, I’ve experienced a lot during my career and I think I’m in a good position to support other people. Whatever they’re trying to achieve, I’m in a prime position to give them suggestions and push them along.
I used to think I was good at creating something new from nothing, turning zeroes into ones. But now I think I’m at the age where I should be helping others turn the ones that they’ve created into tens, hundreds.
Honjo: At the same time, I think we still need to keep challenging ourselves. We need to keep failing, keep embarrassing ourselves, keep showing the world what that looks like. By losing that fear of failure, there’s a lot to be learned.
As long as it doesn’t kill me, I want to keep on failing.
Seichu: As long as it doesn’t kill you — that’s the important part. That’s something Mickey was always saying — go out and fail as quickly as you can. “Just make sure you can survive that failure. As long as it doesn’t kill you, you can try again.”
And it’s true, anything that doesn’t kill you is nothing more than a scratch. For better or for worse, Mickey was never one to follow the rules of common sense. He’s always coming up with new ideas so we inevitably keep stepping up for new challenges.
The full transcript of this discussion is available to read in Japanese here.
