Visions of a Circular Future— An Interview with Yoshihiro Kawahara and Shintaro Yamada on How Mercari Aims to Achieve “Planet Positive”
“Planet Positive”—This is Mercari’s philosophy for realizing a circular economy and the company’s vision for the future that lies ahead.
While this term may still be unfamiliar to many, “planet positive” is a vision for a world in which people can continue to create new value by sharing the limited resources of the earth across generations, and it represents a way of thinking in order to achieve such a world.
So, thinking backwards from the realization of this vision, where does Mercari fit into all of this, and what should Mercari do to become a more planet-positive company? We asked Mercari Representative Director and CEO Shintaro Yamada and The University of Tokyo Graduate School of Engineering Professor/Mercari R4D Head of Research Yoshihiro Kawahara their thoughts.
Sparked by this idea of “planet positive,” this dialogue revealed some new and important indicators, including a “shift in values” for society as a whole and the state of “human potential.”
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Shintaro YamadaRepresentative Director, CEO Born on September 21, 1977, in Seto, Aichi. After graduating from Waseda University, he established the company Unoh Inc., where he was responsible for launching 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, he sold Unoh, Inc. to the mobile games company Zynga. After leaving Zynga in 2012, he went on a trip around the world. In February 2013, he established Mercari, Inc.
Yoshihiro KawaharaDr. Kawahara was born in 1977. He currently serves as Professor at The University of Tokyo’s Graduate School of Engineering. Dr. Kawahara completed his doctoral thesis at The University of Tokyo’s Graduate School of Information Science and Technology in 2005. He obtained Ph.D. in Information Science and Technology. After acting as assistant, adjunct professor, lecturer, and associate professor of The University of Tokyo’s Graduate School of Information Science and Technology, he was appointed Professor of the Graduate School of Engineering in 2019. He also served as Project Director of the JST ERATO Kawahara Universal Information Network Project from 2015 to 2022. He became Director of the Research Institute for an Inclusive Society through Engineering (RIISE) in 2019. Also in 2019, Kawahara became an Advisory Board Member of Mercari R4D, and since April 2022 he has also held the position of Head of Research.
Mercari declares its pursuit of “planet positive” through business activities
──“Planet positive” is the key for Mercari in building a circular economy— but what’s the intention behind a phrase like this?
Shintaro:Mercari has long touted the concept of “becoming indispensable to a circular economy,” but we have also wondered if there is a another way to word our business philosophy that would be easier to understand. “Planetary boundaries” denote the thresholds of the earth’s limited resources within which humankind can survive safely. In contrast with this idea, Mercari decided to adopt the term “planet positive” to instill the idea of being a company that has a positive impact on the environment through our growth.
By pursuing planet-positive ideals, we will realize a circular economy, allowing the planet’s limited resources to be shared across generations. And on the bedrock of that foundation, we aim to create a world where anyone can demonstrate their potential.
Naturally, in the name of sustainability, we are always trying to make reductions wherever possible. As we do so, we also want to highlight the many positives that Mercari’s business brings to the world.
──When did Mercari decide to adopt this approach?
Shintaro: Mercari has been talking about our goal to realize a circular economy since around 2019, but this new term—planet positive—was used for the first time in last year’s Sustainability Report. This term is the keystone of the entire Sustainability Report, even though it has only existed for about a year. So, while it is finally starting to catch on within the company, in terms of public recognition, we still have a long way to go.
──What is your impression of the phrase “planet positive,” Yoshihiro?
Yoshihiro:I have heard several other similar terms that relate to the circular economy, but the first thing that struck me when I heard this term was its association with quantitative indicators, which struck me as very “scientific.” We throw around words like “wasteful” and “green” a lot—and words like that are a bit general and vague—but I like that “planet positive” brings a more scientific approach to the table.
──There are a lot of external factors, for example social conditions, entangled with this idea of planet positive, but what changes have you seen over the last year?
Shintaro: The COVID-19 pandemic, Russia’s invasion of Ukraine, and economic inflation have caused sweeping changes to our world. However, I don’t think that Mercari’s stance in and of itself has changed much.
I don’t think that Mercari has been particularly vocal about its environmental efforts until now. However, it is evident that the world’s resources are limited, and primarily those in developed countries are enjoying the benefits of these resources, while the rest of the world isn’t really. This disparity, as well as the growing social interest in sustainability, is what is fueling Mercari’s commitment to doing whatever we are able to do to contribute to sustainability.
We are now beginning our planet-positive journey in earnest, so that users can feel that they are making a difference when they use Mercari’s products. I knew that this time would come sooner or later, but I also feel that the pandemic has somewhat accelerated the timeline.
──What do you think about the changes to our world we’ve seen in recent years, Yoshihiro?
Yoshihiro：There has long been a push to make better use of our resources, but this argument is nowadays more often linked to an ever-clearer and more present danger. In the latter half of the 20th century, mass production and mass consumption were seen as the driving forces behind building a better world, leading us as humans to directly link energy consumption with economic growth. There was definitely a time where it felt good to just “put the pedal to the metal,” so to speak. Now a dark cloud has descended upon that thinking, and we have a rising sense of urgency to create this circular economy. However, there’s a sense of hesitation about putting on the brakes, and things won’t change dramatically just yet. At the same time though, we either we put on the brakes, or we barrel headfirst into a wall. We’re starting to see people’s values organically begin to change, with a sense that we can let off the gas and still enjoy fulfilling lives.
We can’t—and shouldn’t—do this alone.
──Many are now realizing the shift in values on a societal level, and this realization is driving their actions. In terms of becoming a planet-positive company, to what extent should Mercari be viewing the present through the lens of the future? Is there a specific way that you quantify this?
Shintaro:Of course we align ourselves with the various policies and accords of international bodies and governments, but we don’t make reactionary decisions based on those things. Rather than fixating on precisely when we will achieve something in the future, it is more important to maximize the positive impact of Mercari’s existence and business. Instead of having to do one thing as a trade-off for something else, I see the promotion of Mercari’s business itself being linked to planet positive.
Of course I think that the impact of this should be precisely quantified, but I also believe that the need for secondary distribution marketplaces like Mercari will increase, and that this is closely linked to the growth of primary distribution itself. Manufacturers must use some degree of resources in order to create things from scratch—this is not inherently negative as primary distribution gives birth to culture and enriches people’s lives.
On the other hand, reuse promoted through Mercari’s business will enable items to have even longer lifespans than they have ever had before, and that positive impact will lead to the creation of a circular economy. When we look at all of those things holistically, the importance of aiming for planet positive really comes into focus, and I think it’s something that all of society should be aiming for together.
Yoshihiro： I believe that much of the waste in the world today comes from the over-optimization of business and production systems. There is an ever increasing distance between those who make and sell and those who buy. This results in mismatches, which causes waste. For example, things like fashion items and daily necessities go unsold in retail, and restaurants often throw out excess food. This is due in part to the fact that businesses are divided, for example, into categories like “distribution” and “restaurant”.
Shintaro:When restaurants and manufacturers were in trouble during the pandemic, we thought “wouldn’t it be good if we could somehow use the Mercari platform’s easy listing functionality to help?” This simple idea led to the release of the online store service Mercari Shops last year.
While Mercari Shops is one good example of Mercari providing solutions to various issues, we aren’t trying to solve everything all by ourselves. But, we are dedicated to doing whatever we can to help. When Mercari first launched in 2013, of course nobody knew us yet, but it is because we have had so many loyal users over the years that we have become what we are now. Therefore, I think an important priority is to first make sure our users are satisfied with the service.
In the process of doing so, we have had many opportunities to collaborate with educational institutions and other external businesses, and I feel that this has allowed us to provide even more useful services. I believe that if we can find a way to naturally continue to do what we’ve been doing, Mercari can become indispensable when a truly circular economy has been realized.
Yoshihiro:This is a bit off topic, but as universities are both educational and research institutions, they also have quite large budgets. I think this is probably true for tens of thousands of university faculty members and students, but clean rooms for scientific experiments, for example, are constantly circulating large volumes of air 24 hours a day. So the air conditioners are running—even when there is no one in the room.
There is also an issue with the constant introduction of more and more modern equipment, which unfortunately is leading to the disposal of older equipment that can still be used. This is obviously wasteful, so we at RIISE are trying to figure out a way to implement some sort of distribution mechanism for educational institutions, taking into account legal perspectives and usability issues.
Although it started out as a project to reduce unnecessary equipment waste, we are now also trying to show that new communication methods and “knowledge creation” can be created through a platform like Mercari’s. It’s a bit ambitious, but we think our platform could eventually be used all over Japan.
Investigating future business potential by researching changing values
──So this is a bit of a repeat question, but what do you think is Mercari’s role in realizing a circular economy?
Shintaro:At the core of Mercari is this idea of an easy-to-use, safe marketplace for exchanging items and value. This idea itself is how people have been doing business for ages, and is maybe even one of the origins of civilization. Because this idea is so old, it has broad, hidden potential. Mercari’s business is also quite broad—in addition to the Mercari marketplace app, we also work in cryptoassets, blockchain, and logistics.
In that sense, I think it is important for us to collaborate with the University of Tokyo in researching “value exchange engineering” in order to explore possibilities for the future. Even if it does not immediately link with Mercari’s business, I think it is an interesting field that can expand into various categories and areas.
Yoshihiro:Even with the lab equipment issue I was talking about earlier, it’s not just about getting the equipment at a low price—what is especially meaningful is the communication that takes place during the transaction.
Let’s look at another example—let’s say we are currently deciding whether to tear down an old building and put up a new one, or renovate the old building. This includes quantitatively analyzing the break-even point from a number of different perspectives. In terms of cost alone, it would be more beneficial to clear the land and build a new building with a higher capacity, but renovating has other benefits worth considering, for example creating unique value that attracts people to the shopping area and enriches it.
I think the mission of value exchange engineering is to make it possible to measure value more scientifically and quantitatively, rather than making short-sighted value judgments like whether it would be profitable to throw something away at a particular moment. I think a lot of that probably exists in the products bought and sold on Mercari.
Shintaro:When you hear “value exchange”, you may think of a one-to-one exchange, like “A and B” or “thing and price,” but that’s not quite right. Because there’s also value that comes from time passing.
Yoshihiro:That’s true. The value of an item may change between when Person A bought it and when Person B bought it from Person A. Also, Person B may be more capable of maximizing the value of the item itself. Also, depending on the communication between Person A and Person B, another dimension of value could be created.
I see Mercari’s strength as being the creation of platform systems. I think Mercari is excellent at creating mechanisms that encourage people to participate in the C2C marketplace in a way that makes it easy for end users. In my opinion, Mercari should look to expand the platform to further accommodate people who want to be able to somehow use the resources currently available to them—in other words, people who want to circulate value.
──Do you feel that there is a large technology gap that needs to be filled in order to achieve a circular economy?
Shintaro:Technology is extremely important. The advent of the smartphone was essential for even coming up with the idea for Mercari’s business. Many services used by many people around the world would not be possible without smartphones. In terms of interpersonal transactions, I was involved in the launch of Rakuten Auction as an intern during my college years and found it very interesting and exciting, but the possibilities were limited in an age when only personal computers were available. But then, smartphones became so mainstream to the point that, now, nearly every person in the world has one. This was the seed for the concept of interpersonal transactions on a global level.
In addition to technology, global and diverse perspectives are essential if we want to provide our services to more users. Minority opinions and perspectives can be the driving force behind creating something new and making an impact. Ultimately though, I think that being diverse gives us a lot of leverage. That is why I believe that becoming a true global tech company will bring us even closer to achieving our goal.
A circular economy is both a method and a foundation— what we are aiming to do is unleash the potential in people
──So how should individual people embrace the planet-positive mindset?
山Shintaro: I think it would be wrong to expect that of all of our users. We can announce our own planet-positive goals as much as we want, but I believe that the ideal scenario would be for people to naturally come to share our cause through using our products.
I want people to feel like they are doing something good when they use our services, and in doing so gradually build and naturally create a sense that they are also participating in our planet-positive efforts.
Yoshihiro:I don’t think it is a good idea for governments, countries, or platforms to forcibly impose anything on their citizens or users, but I think an effective call to action is appropriate. I think it’s helpful to encourage others to do things to be helpful—”growing the circle of goodwill,” so to speak. I think that individuals will gradually change their behavior if we can convey the quantitative benefits of planet positive while also making it feel tangible, rather than framing it as just being about personal gains or losses.
Shintaro:Doing that would change the very nature of value exchange, in my opinion. Value might not have to be centered around “goods” and “money”—maybe the future of value lies in NFTs. I think incentive design will become even more important.
──Last question: What is Mercari’s plan beyond achieving a circular economy?
Shintaro: In my mind, the biggest thing we have to contend with is that, while developed countries have plentiful resources and education, emerging economy countries do not, which I believe limits the potential of the people living in those places.
In that sense, a circular economy is like a foundation—essential infrastructure that must be in place. If we fail to realize a circular economy, this planet will be unlivable in 50 to 100 years; we must not fail to create an environment in which people can pursue whatever they want to pursue, and to whatever extent they wish to pursue it.
──It all comes back to “people” in the end, doesn’t it?
Shintaro:Sure does. Because we humans are essentially social creatures, living up to our potential gives us the feeling that we are providing some value to society. Ultimately, Mercari should be trying to achieve a scenario in which people are not just exchanging goods, but are also able to play an active role in providing value to society. But, as you said, it all comes back to “people.” The circular economy is a means to achieve that scenario. Building that future is the whole reason Mercari is pursuing “planet positive.” As we pursue this goal, we will also continue to focus on the issues we set out to solve with Mercari from the very beginning.