tv Bloombergs Studio 1.0 Bloomberg March 24, 2019 3:30am-4:00am EDT
♪ emily: he started an e-commerce company in 1995 around the same time as amazon when nobody believed anyone would ever buy anything from the internet. today, mickey mikitani's rakuten is known as the amazon of japan but also competes with google, netflix and airbnb, a streaming service, credit card and banking services and more. though many outside of japan still don't know how to pronounce rakuten's name. >> rakuten. >> ra-cue-ten. emily: they might recognize it from the jerseys of the golden
state warriors and the barcelona football club as the company makes a push for global recognition. joining me today on "bloomberg studio 1.0", founder, chair and c.e.o. of rakuten, hiroshi mikitani, mickey. mickey: please call me mickey. that's better. emily: your new grand plan, a very grand plan, is to launch japan's newest wireless network, it would be the fourth wireless network. mickey: yes. emily: what is the strategy here? mickey: the strategy is very, very simple. our credit card which we started to issue 10 years ago. after 10 years, now we are the biggest credit card company in japan and we are still growing close to 25% year on year. the power of our ecosystem is -- so we can acquire using our network. we can reach out to them, give
them special package and ask them to join our network. the cost is pretty low and with this new architecture, we can reduce our investment. since everything is virtualized and software controlled, mostly automated, our maintenance people is going to be less than 1% of our competitors. emily: so you say you can do this for 600 billion yen or 10 years. investors are skeptical you can pull this off. what makes you think you can? mickey: because we can. i can't control the emotions of our investors but i know we can. emily: are you prepared to pay more? mickey: no, we will do it within budget. i'm confident. it's a totally different concept
and everywhere think it is impossible but just wait another few months and everybody will be very, very shocked. emily: how does this wireless network fit into the bigger story of rakuten vs. amazon or who else? mickey: our motto is create membership program and use data so we can cross our services and mobile services, a big project we can heavily discount and provide to our merchants. emily: in japan, some would say that you're losing share to amazon in e-commerce. is that fair? mickey: i don't think so. emily: looking at the chart. mickey: i do not believe so. it is totally different aspects of the how to count. emily: how would you characterize the competition in japan? mickey: they don't have the
numbers, to be honest, so it's hard for me to compare but as far as our growth is concerned, we are growing at the right speed. the challenges, logistics, so now we're engaging in logistics so i think we're in good shape. emily: jeff bezos might be distracted lately so that could be an advantage? mickey: i don't think jeff is so concerned about japan that much. emily: he has doubled down on india. do you think they've not taken full advantage of the opportunities in japan? mickey: japan is a different market. the consumers are so sophisticated. the variety of the product they want is very high. they want to receive very clean package, not necessarily the amazon approach in the u.s. will do well in japan. we have more smaller stores, smaller merchants. we need to make them happy. conceptually, it's very different. we are more partnership driven
than amazon. amazon wanted to dominate everything. we would like to help small and medium sized merchants. emily: who's the bigger threat? jeff bezos or masayoshi son? mickey: everytbody is a threat. everybody is a rival. we are well positioned because we are not only one single service provider focusing on one -- we provide our value as a package including banking, telecom, credit card issuance, shopping, travel, content -- as a package. so if you want to just focus on one vertical, i think it's very, very risky. emily: masa is obviously a competitor in the wireless business, now with the vision fund investing huge amounts of money in tech companies which you also do. what do you think they're doing with the vision fund? mickey: i think he's an excellent investor so he may or may not make it, i don't know. but accomplishments in japan,
the quality, cost of our service will be better than anybody for sure. and when we go to 5-g, our network will be 5-g ready from the beginning. the only company in the world. so i think the future looks very, very good to me. of course, there will be a competition. they will try to do everything to block their usage moving to rakuten. maybe our growth will not be as fast as we initially planned but i think after all the structure difference is very, very clear and i don't think they can match, anybody can match our quality and our price. emily: one more question about the vision fund. do you think there are any ethics issues with their ties to the saudi government?
mickey: that depends on the philosophy of the company and i am very careful about taking money from whom. some companies do not care, because money is money. but, you know, it depends on the character of the founders. some companies i have seen are becoming a little more careful about the source of the money because, you know, these innovation companies are very, very emotion driven. it's not just about money. so therefore some people are more careful, some people don't care. so it depends. emily: is that a mistake? not to care? mickey: not to care? emily: is it a mistake to take money from a government tied to the murder of american
emily: you have been busy making investments yourself. you've taken stakes in companies around the world, not just e-commerce companies but a giant stake in pinterest, a big stake in lyft. what's the strategy with your global investments? mickey: we are not a softbank. it's a side business. side business have two meanings. one is to understand what is
going to happen. so we invest in the ride sharing company to understand what does it mean to our productivity strategy in the future. also, we would like to know where the sharing economy will go. so now we have a deep understanding of sharing economy, not just limited to ride shares. we started to give attention to home business in japan. now we're talking about potentially launching. emily: lyft hasn't done much internationally yet so that would be a big deal. mickey: there are lots of issues still. emily: what would need to happen? the company's taxi market is a hard one to crack. mickey: yes. legally speaking, pure ride sharing is still illegal in japan so i think we need to be very, very smart. emily: are you talking to the japanese government? mickey: of course i'm talking
with the japanese government for many, many issues. and this one has been -- i haven't been pushing it too hard because reaction from the taxi unions is so strong. so i just want to be very careful. so we invest into the companies which has something to do or we think will have something to do with us in the future but performance has been excellent, by the way. emily: yeah. mickey: way bigger than any other business. emily: what are your returns? mickey: 28%. emily: softbank is an investor in uber and lyft, do you find that odd? mickey: uber is much more ambitious than lyft, for sure. i cannot tell you the percentage but when we joined, came to my house, they were kind of desperate because travis was also good friend of mine but trying to crash lyft.
and i gave them $300 million. emily: what was their plea? mickey: plea was about $2 billion. emily: what were they asking you for? mickey: the bank account, uber was trying to crash them so they needed to have help. but i did my homework and i researched through my data team and i find out, ok, 50% of young people, millenials in san francisco, use lyft, not uber. i said, oh, this is encouraging news. younger people were rising up, even the entire market share is very small so i felt, ok, this company has potential to reach, at least 20% market share focusing on younger people. it's different. and they did it. they did so well, executed, they
partnered with us. and now their market share is way bigger than what we intended. emily: how do you think the uber vs. lyft competition plays out? mickey: i talked to travis long time ago when he was very angry, when i invested into lyft, you know, you need to at least have two players for this kind of totally new services, which is going to displace huge set of service. we're talking about converting part ownership to mobility as a service. this is big. and i don't think there will be just one company can do it. there needs to be at least two or even three companies who do it, competitively.
otherwise, they will face many, many difficulties -- antitrust, push-back from the drivers. so i think it is healthy to have two companies competing each other. emily: is it healthy to have only one search engine or one social network or one e-commerce site in the united states? google and amazon and facebook have virtual monopolies. mickey: yeah, that's a problem. that's a problem. but, you know, people's behavior are also changing, right? for example, many people go to amazon instead of going to google in u.s. in japan, they go to rakuten instead of going to google. some people have a different idea of getting to the product. all these products, the platform
is to go into the -- need to think about it, how to to democratize their platform. emily: you're a huge investor in pinterest. they filed to go public. how big do you think pinterest can be? mickey: i don't know. when instagram came up, i thought, oh, my god, this is going to be a crisis for pinterest, but i was wrong because instagram is about people and pinterest is about product. so, again, more product focused rather than people focused. so, definitely there are still many people who like pinterest and they are diversifying their source and hopefully they will
-- and their international seems to be going well. emily: how closely are you following the u.s.-china trade war? mickey: one thing i can tell you is when we are deciding what kind of network equipment we are going to use, i talked with the japanese government and asked about whether i should use chinese network or not and they said, no problem, use it. but i kind of sensed the potential risk, even if 1%. i told myself, i should not take 1% risk, that something may happen to prohibit chinese network to be used for japanese mobile network. so i decided not to use huawei or z.t.e. emily: because of the risks of espionage? mickey: because of the risks. i don't know whether it's true or not. i'm very, very happy i did not choose them. if i had chosen them, that means i have to roll back one year and
i cannot manage my service. emily: who did you choose? mickey: we chose nokia but basically we are building our own hardware. we buy the hardware from nokia but maybe in the next generation we're going to build our own so it's totally different concept. we are i.t. company integrating building core network, radio station network, all the technology by ourselves versus other telcos are asking system integrators to integrate everything. emily: so do you think, then, that huawei's business, z.t.e.'s business, do you think those could be seriously compromised as a result? mickey: that's for sure. it's obvious, no? emily: yeah, i guess they're still huge companies. they have the chinese market. mickey: but i think -- i don't know whether it's going to happen, to be very honest. but as far as the telecom
emily: you're perhaps best known in the bay area for sponsoring the golden state warriors. why did you decide to do that? rakuten is on every warriors jersey. mickey: i like that. that's the point. emily: is this delivering for you? sports marketing, has it been a good bet? mickey: yes, our brand awareness has risen so much. it is not as high as it is in europe yet but i think it is going to get there. most importantly, the warriors
is iconic team. it works very well for hiring and partnering with other companies. also just pure exposure of our brand to the consumer. so we are extremely happy. emily: you're in a multi-year partnership with steph curry. what do you hope to get from that? mickey: steph will be our brand ambassador showing up in our tv commercial and also we are sponsoring his unrated tour to discover kind of hidden player who can potentially become very big. so, it kind of is very aligned with our concept. emily: you've also sponsored the barcelona soccer team. what is that delivering for you? mickey: barcelona is the biggest sports club in the world, right? not just the performance of the team, but also the culture and philosophy of the team is very important for us.
emily: you made a big splash by switching all your internal communications to english. mickey: yes. emily: how has that worked out? mickey: it's working very, very well. emily: you did this because you thought it was the only way you could be a truly global company, right? mickey: yes, and at the same time even to survive in japan because it is obvious that advancement of i.t. technology is speeding up, accelerating, and just doing business with japanese engineers and scientists is impossible. talking about why we are so strongly in japan is because of our a.i. engineers in japan and most of them are japanese. emily: i imagine it was hard to push everyone over to english. mickey: yes, it was very hard and we still struggle a little bit but mostly done. it was a commitment, never
compromise, and patience. emily: i understand you've got a new commitment and you want everyone to have a certain level of digital literacy, programming skills. mickey: yes. emily: tell me about that. mickey: well, for sure, if you're working for toyota, for example, you know about the how automobile works, right? if you work for i.t. service company, you need to have the basic knowledge of what's in a computer. that's very, very basic stuff but the entire organization, at least they understand how the computer program, processing power, processing units, gpu, cpu, what's the difference between gpu and cpu, what is a.i.? what is deep learning? 10 years from now the world will be totally different. most of the services we do by human will be displaced by a.i.
and if our managers are not aware of it, it is going to be a big problem. emily: you're also pouring money into cancer research. mickey: yes. emily: tell me about that. mickey: the story is, my father had pancreatic cancer. we found out five years ago. and i was crazy enough to believe that i can find a cure somewhere in the world so i traveled all around the world -- to stanford, to columbia university, harvard -- i went literally everywhere to look for a cure. at first i didn't find any effective one. but one day my friend who is also the friend of my late father called me and, hey, mickey, i heard your father has
bad cancer but, by the way, my cousin is doing this very interesting project to conquer the cancer and i asked what it is and he said using light. so i flew over to washington, d.c. and had meeting with him and then find out, oh, my god, this is going to work. i don't know how much extent it is going to work but am instantly confident this is going to work. emily: you think we're going to find a cure? you think you already found a cure? mickey: already found the secret key to unlock your immune programming, specifically targeting to the cancer, the type of cancer you have -- whether it's protein or d.n.a. so what we do is we target only
cancer cells, we light, we made scratches to the surface of the cancer so will explode. once cancer explode, there's no immune system for cancer and your immune system will see it and start to attack your cancer cells. we finish our phase two clinical trial, about to get into phase three, last phase of clinical trial globally in japan, u.s., europe, and in asia. the result has been outstanding. sometimes drugs are strong enough to cure everything with our own drugs. sometimes we need to combine it with other drugs. but long story short, whatever combination people want to do -- by the way, our drug is going to be key. emily: that's incredible. mickey: maybe i will be known as
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nejra: coming up on "bloomberg best," the stories that shaped the week in business around the world. the fed grows even more dovish, saying it won't tighten in 2019. scott: i'm a little surprised. i think they're overreacting. andrew: the real question now is will we actually we get through the end of the year with no rate cuts. nejra: with brexit d-day looming, the u.k. pleads for an extension. mr. barnier: we have done our best. we have done our best. david: there is not much optimism this side of the channel. nejra: deutsche bank and others in talks.