CEO Shintaro Yamada Tells of the Circular Economy Mercari Has Always Aimed to Achieve
“I want to help society thrive by circulating our limited resources.”
Those were the words of Shintaro Yamada, CEO of Mercari, Inc. Six years after Mercari was established and set forth in its efforts to circulate value throughout society, it now has offices and services in both Japan and the US, and boasts 13 million users per month in Japan alone. In 2018, the company went public on the Mothers (Market of the high-growth and emerging stocks) section of the Tokyo Stock Exchange. It is evident that Mercari has grown as a platform where anyone can easily buy and sell items, but Shintaro explains that big changes are coming. One of which is the role that Mercari will play in society.
We sat down with Mercari’s founder, Shintaro, to talk about the challenges that Mercari aims to tackle next, and the kind of society it aims to realize through its marketplace app.
A trip around the world shed light on the reality in emerging nations, and created an awareness of the issues they face.
ーLet’s start with a recap of when Mercari was established. Before you created Mercari, you were running a mobile game company, which was acquired by the American social game company, Zynga. After that you took a trip around the world, right? Why did you decide to take such a trip?
Shintaro: I’ve always enjoyed traveling, and until then I had mostly traveled around Asia whenever I could find the time. Some time after my last company was acquired, I left the company and had a good period of time for myself, so I decided to take a trip somewhere farther. I spread out a map, drew dots on each of the countries and regions I wanted to visit, connected them with lines, and decided those were the places I’d start with.
ーHow did you decide on the destinations you were interested in visiting?
Shintaro: Since it was a rare opportunity, I decided to pick places I would only have the chance to visit then. South America, Africa, India, the Middle East—I mainly focused on so-called emerging nations as my destinations. And my experiences in those countries vastly changed my values.
ーWhat sorts of experiences were they, specifically?
Shintaro: One of the experiences that left a deep impression on me happened on the way from Bolivia to Chile. I got on the tour car from Salar de Uyuni to Chile, and there was a young boy, around elementary school age, sitting in the front seat beside the driver. The driver was his father, and apparently he had been helping his father for days. It was necessary for them to prioritize earning even a little bit of extra money over going to school and receiving an education. Though that may be just the way things are, I thought about whether anything could be done to change this situation.
Shintaro Yamada (CEO)
ーSo it’s difficult for some people to receive an education simply because of the country they are born in?
Shintaro: Yes. There are many people out there whose lives and activities are limited by the environment they are in, regardless of how hard they work. Because of the country they are born in, it could be difficult for them to do things like travel abroad, or receive a proper education. But even so, these people are working their hardest to live more abundantly. That said, if you were to ask me whether it is possible for everyone on earth to live like people in developed countries, I think the earth’s limited resources makes that difficult to achieve. And so I returned to Japan with this issue on my mind.
―Was it witnessing their lives that sparked the idea for the Mercari app?
Shintaro: At the time I returned to Japan only with this new-found issue in mind, and honestly I didn’t have an answer for it then. But something that shocked me after I came back from my long travels was how widespread smartphones had become. Before I left, people were using flip phones and infrared to send text messages, but after I returned, my friends from university were chatting with LINE. Seeing such a sight made me certain that, one day, the people I met in emerging nations will be using smartphones, too.
ーSo the situation in Japan had changed entirely.
Shintaro: And not only that, but several services that allowed individuals to make transactions with each other via smartphone were appearing, too. I thought, if we could use smartphones to connect individuals around the world and share resources this way, we might be able to raise the standard of living in emerging countries, even by a little. In Japan there was already a huge service called “Yahoo! Auctions”, and because this market was already doing so well, there was no doubt a business in this field would either be a huge success or fail entirely. I decided to bet on it, and that’s when I created Mercari.
“Using and tossing” is a preconception. Create a cycle that is good for people, society, and our planet.
ーWhen you established Mercari, what kind of society did you envision this service would help create?
Shintaro: From the start, I wanted to help create a society in which things are used with care. Our resources are limited, so if we continue to use things with the intention of throwing them away eventually, people in emerging nations will never be able to achieve the same standards of living as those in developed countries. That’s why we need to create a more “circular economy.” Honestly, I think most of the things we own do not need to be thrown away.
ーCan you explain that further?
Shintaro: For example, I may buy a new laptop if I need it for work, but if I were only using it for entertainment purposes, it might be a better option to buy a cheap, second-hand one. Children’s clothing is another example. Your child may have grown out of it, but maybe another family needs it. The idea of throwing something away because you’re not using it is a preconception of sorts, and one that certainly is not good for our planet. This message hasn’t changed since Mercari was founded.The business documents from when the company was first created state, “In the future, as the global economy flourishes and resources are scarce, C2C (customer-to-customer transactions) will inevitably become crucial. We aim to provide a C2C service tailored to the times and achieve a “seamless society.”
ーThat said, simply spreading the message of “eliminating the waste of resources” won’t win over users, right? How do you balance the social message with doing business?
Shintaro: Frankly speaking, an internet service has no value if it isn’t used. Here’s an example. Mercari entered the fintech industry with our mobile payment service Merpay with the simple reason that “it’d be really convenient if you could use your earnings from Mercari directly to buy things in stores.” If we had told people, “the future is cashless,” that would have been harder for customers to grasp and Merpay would not catch on. For a service to be used, you only need to emphasize the specific benefits it offers. That’s why we don’t make grand advertisements of the concepts and messages behind the business.
ーWhen trying to grow the business, there must have been countless things that didn’t go as well as planned. What do you think helped you to persist?
Shintaro: I wonder. (laughs) I believed that there is definitely a need for this kind of service, and I think I really wanted to prove that. For example, if 100 people download our app, how many of those people will list items, and how many will keep our app on their home screen? Once I started thinking about just how convenient we can make this service for our users, I couldn’t stop. And before I knew it, here I am today. I think our message of creating a “circular economy” is something we can let happen naturally as the business grows. Until now we’ve been focusing on facing the users and the service that is before us.
ーIt seems your vision has remained consistent since you established the company.
Shintaro: Remained consistent, yes, but it hasn’t always been free of doubt. I believe that one should always maintain a skeptical eye. Mercari’s mission is to create value in a global marketplace where anyone can buy & sell, and I have no doubts there. However, I’m constantly thinking about how we go about achieving that, and whether there is a better approach or method we can use. There is no doubt that Mercari is a convenient service, and should be used by more people. But it is still nowhere near the scale that we envision it to be. When you think about it that way, you start to suspect that there may be a better approach to the one we’ve taken until now, right? That’s why I always keep a skeptical eye. And not just for the business; the same goes for the organization.
Mercari is serious about winning the world. Changes and decisions in Mercari’s 7th year.
ーMercari is in its 7th year now. I don’t think even you anticipated the rapid speed at which the service and organization has grown. What do you feel the biggest change has been?
Shintaro: I think the biggest change has been the role that Mercari plays in society. Of course, we are still in a phase of polishing and growing our service, but now that we are beginning to become a “public platform for society” of sorts, we cannot think solely about growing our service. For instance, in the past we unfortunately caused issues when cash was listed and it became a social problem. I think that personally I had been aiming for ideals rather than reality back then. But that won’t work anymore. It is important to face each and every problem with sincerity and ensure that our business and actions jibe well with society.
―So it isn’t a matter of being okay with things as long as they are within the scope of legal activity, it’s a matter of how it impacts society.
Shintaro: Exactly. We were late in realizing that Mercari needed to be the rule-maker. That might be my biggest regret of these past six years. Today, we actively go through points of concern and decide whether each one is okay or not, and we have started setting rules, as well. For instance, we must ensure that not only illegal items but socially undesirable items are not being sold, while still preserving the good things about C2C transactions. To achieve that, we work with organizations in the industry and the authorities to exchange opinions and revise our policies. We must be flexible to accommodate changes in society. I think this is what it means to be aware of your role as a “public platform for society.”
ーYou mentioned it’s important that the business jibes well with society. How is this connected with Mercari’s growth?
Shintaro: The expression may give off a negative impression to some, as if we are making compromises to suit society, but that’s not the case. In fact, you can think of it as a prerequisite to increasing the value of a business or service. Mercari is used by 13 million people on a monthly basis in Japan, but I think we still have plenty of room for growth. I want this service to be of use to even more people. And for that to happen, it needs to be accepted by society. If, when people hear the word “Mercari,” they think “it’s convenient, but it’s also kind of scary,” we need to face that with a sincere and serious attitude to change it.
And people’s impressions are not all we work to change. Just like villages develop into towns, and towns into cities, the scale and nature of Mercari is changing, too. As we change, it is essential that Mercari remains a safe and secure place. How we handle this will make the difference between a service that stops at 10 million users and one that can grow to 50 million, or even 100 million users. You could even say that any growth beyond this point is difficult without considering how we can be accepted by society at large.
ーSo essentially, no matter what values we hold, it means nothing if the service isn’t used. This stance has not changed since the company was founded, and I have a feeling it won’t change in the future, either.
Shintaro: That’s true. I’ve publicly announced before that I want to make Mercari a global service, but, of course, we receive many opinions from various perspectives on our current management and development structures. We’ve even been told, “Can something created by Japanese people in the Japanese market really be used globally?” Of course, in response to that, we are not afraid to change, and will create a system that can cater to users from around the world. No matter what difficulties we come across, we plan to overcome them one by one.
ーAnd that brings us back to Mercari’s mission, doesn’t it?
Shintaro: That’s right. Essentially what we’re trying to do is to reinforce areas in which we are lacking, and that’s in order to achieve our mission, as well. To do that, we not only need to achieve a “circular economy” and maintain a safe environment for transactions, we also need to strengthen areas such as governance and compliance. Within the company, we constantly discuss and suggest areas that are weak and need work. I really believe that facing each of those points earnestly and working to fix each one will benefit not just our company, but our society as a whole.
During his time studying at Waseda University, Shintaro launched Rakuten Auction as part of Rakuten, Inc. After graduating, he established the company Unoh, Inc., where he launched various internet services such as ‘Eiga Seikatsu’ (a movie information site), ‘Photo Zou’ (a photo community site), and ‘Machitsuku!’ (a city-builder game). In 2010, Shintaro sold Unoh, Inc. to the mobile game company Zynga. After leaving the company in 2012, he traveled around the world before returning to Japan and founding Mercari, Inc. in February 2013.