Shintaro Yamada and Makiko Shinoda Discuss How Mercari Aims to Build a Sustainable Organization that Unleashes the Diverse Potential in All People
In many ways, 2023 has been a milestone year for Mercari. In February, ten years after our founding, we established a new Group mission “Circulate all forms of value to unleash the potential in all people,” and in July we celebrated 10 years since the launch of the Mercari marketplace service. This year also marks five years since our initial public offering (IPO).
So what do the next 10 years hold for Mercari? What are Mercari’s goals, and what kind of impact does the company hope to have on the environment and society as a result of continuing to grow the business? To answer these questions, we interviewed Shintaro Yamada, Representative Director and CEO of Mercari, and Makiko Shinoda, independent Outside Director (Independent Director). During the interview, Shintaro and Makiko spoke in detail about the company’s role in society, its mission, and its promise for the future from a variety of perspectives. on topics such as the company’s approach to ESG, governance for sustainable organizational growth, and the meaning of “Unleash,” which is the keyword of the new Mercari Group mission.
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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, Shintaro 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. and in July 2021, he founded the Yamada Shintaro D&I Foundation.
Makiko ShinodaAfter graduating from Keio University, Makiko Shinoda joined the Long-Term Credit Bank of Japan (currently Shinsei Bank). She received an MBA from the Wharton School of the University of Pennsylvania, and an M.A in International Relations from Johns Hopkins University, then later went on to work as a management consultant at McKinsey & Company. Following this, she worked for Novartis and Nestlé to create and execute their business plans, build their internal management system, and lead the PMI. She joined Hobonichi in 2008 and led their IPO as CFO, Director & Manager-Administration. She left the company in 2018 to recharge, and joined YeLL’s Board of Directors in March 2020. Makiko is also the translation supervisor for the book “You’re Not Listening: What You’re Missing and Why It Matters” and has been an Outside Director at Mercari since September 2020.
Mercari’s past ten years—what we envisioned and where we are now
——The world looks very different than it did ten years ago when Mercari was founded. In your mind, what impact has Mercari had on society over the past decade?
Shintaro:When I traveled the world before founding Mercari, I visited many emerging countries. Seeing the lack of resources in those places, it occurred to me how difficult it would be for a person in a developing country to try to maintain the same lifestyle as a person living in a developed country. Upon returning to Japan, smartphones had already taken hold of society, and I began to wonder what I could do with this technology. Mercari was born from the question, “Would it be possible to create a more affluent society by using the power of technology to recycle the earth’s limited resources?” That said, our first priority was to focus on communicating and spreading the joy of buying and selling—at that time we did not specifically mention the environment or sustainability in our message, and instead focused on getting as many people as possible to use our service.
In the age of the smartphone—in Japan, at least—the buying and selling of goods between individual smartphone users has become mainstream. Over the past decade, we have been able to introduce many, many people to the joys of buying and selling things on Mercari. In a sense, the wide usership of Mercari points to a “return to normal” in consumerism.
——What do you mean by “return to normal”?
Shintaro: In the past, it was common practice for people to buy and sell things and for items to change hands at the individual level.
Today we live in a world where most things on the market are supplied by large-capital corporations, and the salaries that many people receive are paid for the work they do. This is why I think it was refreshing when Mercari came around and made it possible to make money from selling no-longer-needed items—not to mention getting to see the genuine gratitude of the individuals who buy those items. I think it’s fair to say that exchanging, buying, and selling things is a fundamental human behavior, so I believe that one of the reasons we have continued to maintain such a large usership is that Mercari brings the inherent joy of buying and selling right to your fingertips.
——This year not only marks the tenth anniversary of Mercari’s founding, but also the fifth anniversary of the company’s IPO. When Mercari was first listed, you ran a newspaper ad stating that the company would continue to invest in three specific areas. Reflecting on this now, how would you evaluate Mercari’s progress?
Shintaro:So, before I look back on our achievements, I want to briefly clarify what those three investment areas were. When we listed Mercari, we placed a newspaper ad to announce the achievement, and in the ad, we said that we would continue to invest in three areas that are core to Mercari’s business: people, technology, and overseas investments.
Mercari’s ad in the Nikkei released after the IPO. The ad included a message from Shintaro titled, “A Letter from the Founder” and a photograph of Hideo Nomo, a world-class baseball player from Japan.
At that time, our only solid revenue base was from our Japan-based Mercari marketplace app, so we were in a phase of directing our investments in order to form new business pillars. As such, we needed to invest in our overseas business in the US, and aggressively invest in technology and people with the goal of creating a global standard for manufacturing as a tech company.
Five years have passed since then, and I believe that we have made progress in each of these three areas. We have especially strengthened our investment in people and have nearly doubled the number of employees across the entire Mercari Group. In technology, we have continued to refine the Mercari marketplace app, launched our Fintech business, and most recently released Mercoin and Mercard. In addition, we feel that we will be able to find many applications within the Mercari Group for emerging new trends such as generative AI/LLM. Currently, our business in the US is also experiencing some headwinds, but it has become a service of substantial scale, distributing 150 billion JPY-worth of items each year, and it has great potential in terms of becoming a global tech company in the future. In Japan, more than 22 million people are Mercari users, but even if we could get the entire population of Japan to use Mercari, that would still be only six times larger than the current scale of the app. In that sense, we still have a ton of room to grow in terms of becoming a global company, and I think that the groundwork we have laid is an amazing achievement.
Makiko:From my perspective as an Outside Director, the last five years have involved a lot of work to maintain the momentum of ambitious business creation, while at the same time working to mature the business and the organization.
I don’t think the concept of sustainability had much traction five years ago when we went public. For publicly traded companies, this is similar to the concept of diversity, which has rapidly come to the forefront of society’s expectations. On this front, Mercari has reaffirmed to itself that diversity is embedded in the very DNA of its business model, and we are beginning to see the results of our steady, concerted efforts to match up to society’s expectations.
Additionally, society as a whole has been severely impacted by the pandemic in the last three years since 2020. From a macro perspective, since 2022 we have had political instability due to warfare overseas,, interest rates have shifted dramatically, and society has also drastically changed. I believe that our ability to face the many challenges that arose due to major changes in the external environment during this time contributed to Mercari’s evolution from a scrappy, young venture company to a mature corporation.
Revisiting our roots
——This year, the company renamed the Sustainability Report that Mercari has released annually for the past three years to the “Impact Report.” What is the background and intent behind this change?
Shintaro:Originally, the Sustainability Report was mainly a report on Mercari’s sustainability activities. At the time, the term “ESG” was becoming more widespread, so Mercari also considered ESG as a kind of framework, and our Sustainability Report also started focusing on ESG. However, when people say “sustainability,” our minds tend to focus on just the “Environment” part of ESG, so Mercari has made a concerted effort to also work on the “Social” and “Governance” parts. That’s why we decided to change the name to “Impact Report”—because Mercari is determined to make a positive impact on the environment and society.
I think that Mercari’s business is highly compatible with ESG, and in some respects this has allowed us to promote ESG naturally through our normal business activities. However, if we use ESG as a framework, it becomes easy to organize the things that matter to us into a solid structure—we have E, S, and G, and then within those elements we have our material topics, and so on. Speaking of which, we just recently spent about three to four months thoroughly reviewing the structure of our material topics in accordance with the formulation of our new Group mission. As a result, I think we were able to open up a very broad and comprehensive discussion.
Makiko:Something that was particularly memorable for me during the discussion process was the question, “Isn’t the fun of using Mercari material?” The key word of our new Group mission—”unleash”—was born from this question. I thought it was wonderful that the discussion took us back to talking about the essential values that Mercari should consider when creating a business. I think this produces a different quality of discussion compared to an approach where one simply fulfills an obligation or just does enough keep up appearances based on an obligation.
——I see! For many companies, I think it’s easy for these types of discussions to default into talks of “social good” or improving society, but I think that maybe the concept of “fun” is what Mercari should aim for, right?
Makiko:I feel that we have proven to ourselves that fun is itself a social good.
Mercari’s new Group mission demonstrates the company’s role in society
——In February 2023, Mercari released its new group: “Circulate all forms of value to unleash the potential in all people.” I understand that you have also revisited Mercari’s purpose in the context of this new mission, is that right?
Shintaro:Yes. Our previous mission was “to create value in a global marketplace where anyone can buy & sell” which focused on the “what” part of the question; it looked at what Mercari is trying to accomplish. However, as our business has diversified, that mission no longer fully expresses the reality of what we do as a company..
We then returned to the essential question, “What is Mercari’s purpose?” We came to the conclusion that our purpose is to unleash the yet undiscovered potential of goods, things, and people around the world. Through our discussions, we were able to reiterate that the most important thing is to “expand the possibilities of all people,” and that we aim to realize “the circulation of all values” as the foundation for this.
——As an Outside Director, what is your opinion on the role that Mercari should play?
Makiko:These days, companies are expected to do more than simply provide services or create jobs—they are also expected to become a positive force for society. I think that continuing to respond to these expectations is Mercari’s purpose.
Furthermore, in terms of corporate responsibility, it is not sufficient for employees and executives to simply pay lip service by saying things like, our company is good.. Companies must also clearly explain and implement their initiatives and strategies in a way that is convincing to stakeholders. This is especially important for companies like Mercari that are ambitiously striving to expand the domains in which they can contribute. When we receive harsh feedback, we must correct the situation, and be consistent and transparent with our words and actions.
I believe that our Group mission has created a foundation of trust with various stakeholders by allowing us to convey our unique raison d’être to the world.
Mercari must be resilient and sustainable as an organization in order to achieve the Group mission
——I want to ask you about two key areas you just brought up: consistency and transparency. In the context of expectations from society, what are some of the Go Bold initiatives Mercari has implemented in these areas?
Shintaro:I think we have been very Go Bold in tackling governance reform for the organization. In discussing the Group mission and roadmap, I have been thinking a lot recently about how to make Mercari a company that can continue to grow forever. To achieve this, I think that we need to make an organizational mechanism that will allow Mercari to grow even without me. The formulation of our new mission and our transition to become a company with a nominating committee are good examples of what I mean by this, but we have also decided to create mechanisms in other areas that do not rely on individuals. This is something we’re working on now.
On the other hand, I think we could have been more Go Bold on the business front in the last few years. It’s true that the pandemic and conflict overseas resulted in a lot of uncertainty, and even though things become clearer in hindsight, looking back I nevertheless feel that we could have taken more risks and been more Go Bold.
——What is your vision for the next ten years?
Shintaro:In the next ten years, we will focus on the core of our Group mission: unleash the potential in all people. What we need to achieve this is, for the value of all kinds of things to be discovered through the Mercari ecosystem. I believe that this will lead to a world in which people can do whatever they want to do, to whatever degree they want to do it. When we formulated the new mission, we set it to be something that could be achieved in ten years. So, now we are working backward from our final vision and reworking the roadmap so that we can visualize it in stages of one year from now, three years from now, and ten years from now.
We want Mercari to be “planet positive,” meaning we want to contribute to solving environmental issues by continuing to have a positive impact on the environment and society through our business. However, in order to do so we need to build more trust within society. I believe that we can achieve this naturally by working toward achieving our mission. Conversely, if we fail to build trust, we will not be able to accomplish our mission.
Sometimes, because I’m the CEO and founder, I can use my authority to make things happen. That can work for better or for worse, which is something that I need to properly manage. In order to continue to drive the business toward accomplishing our mission when I am no longer CEO in the not-too-distant future, I would like the company to transition to a Company with Three Committees, oriented toward an optimal governance model, and based on the idea that separating oversight and execution will enable healthier management. We discussed this for more than six months—including experts in our discussions—and were able to reach a consensus.
Makiko:In terms of the governance structure, I feel that we have been able to make speedy decisions—after all, the main focus is on the successor to the CEO position and how to create a good structure that will allow that person to build trust with shareholders. To take it a little further, we approached the problem by first solving the issue of quickly creating the executive structure necessary for expanding the business globally. As a result, we were able to choose the best method under Japanese corporate law, and we have asked people who have a strong understanding of our particular situation to serve as outside directors. I think we have made great progress without having to stray away from our goal of strengthening corporate governance.
——I know that creating an organization that can continue to grow indefinitely is a major theme at the moment, so could you tell me a little more about your thoughts in terms of successors?
Shintaro: If we include the perspective of how best to achieve our mission, my thoughts are that excellent management talent is indispensable. Succession is a very important part of creating the mechanism that will support an organization capable of indefinite growth; this is true of the CEO position and also other leadership positions, so we are working on succession for all management positions, including mine.
That is not to say that once a successor is in place, the person who currently holds the position will all of a sudden no longer be needed. As the business continues to grow and move toward achieving the mission, the current management members will regularly need to explore new and different domains. Whenever you start to work on something new, you will naturally need successors in place, so we should build that mechanism into the organization, right?
Personally, I can’t really imagine myself still leading Mercari as CEO when the mission is accomplished ten years from now. I want Mercari to always be a service that is loved by young people, and since Mercari will surely become more globalized, I think it would be good to have successors who are of a younger generation than myself and have diverse values. I think this is what will happen not only in the CEO position, but in all positions. I want to make this organization the type of place where successors can step up whenever necessary.
Striving to become a company that unleashes the potential in all people
——Last question, please tell us your thoughts on the keyword “unleash.”
Shintaro:Well, it just so happens that my own answer and aligns with what the company wants to accomplish; I sincerely hope that we can be a company that helps people around the world unleash their potential.
I have always believed that people’s potential is infinite. When it comes to other things like physical ability, it’s not like there is that much difference between people. Height and weight are within a certain, limited range—the fastest human being in history can run 100 meters in less than 10 seconds, while a normal, healthy person can still run it in just 20 seconds. I believe the same is true for intelligence, memory, and various other abilities like that. But potential is different. Combining of diverse abilities and perspectives can bring forth great and enormous differences differences to your life. If each person born were able to unleash the diverse potential inside of themselves, everyone would be able to live a life worth living.
When I was young, I didn’t know my own potential. But, when I first encountered the Internet, I was able to create a service just by watching and learning on my own, and I felt at that moment that my possibilities had expanded. Of course, I have also been very lucky with my timing and friends, but it has always been a passion of mine to help others unleash their potential.
Makiko:As individuals, expanding our potential on our own is no easy task. Often, we don’t even know our own potential in the first place, and I think there are many things that we only realize and can only be brought out through interactions with those around us.
The most unique thing about Mercari is that the underlying philosophy is built into both the service and the organization. In a marketplace, there are people who sell and there are people who buy. That is how the marketplace grows to have value, and that is where value circulates. Those who use Mercari discover value in our marketplace that they could not have found on their own, and as our business grows we will have more opportunities to expand our potential.
Once again, I think the concept behind this keyword “unleash” is one that recipients are drawn to and naturally want to support. For Mercari employees, I get the sense that “unleash” is becoming a sort of cornerstone.
Shintaro:At Mercari, we don’t translate unleash. We use the English word as a Japanese one. It’s of course a word that you don’t hear a lot in Japanese, but I think that actually makes it easy to use—precisely because it’s unfamiliar, it creates an opportunity for people to stop for a moment and think, “What was that word?” In this context, I think “unleash” has a sort of mysterious charm.
Nowadays, the concept of “value” is inevitably linked with “money,” but the way it should be is that diverse people have diverse values—not just “money.” In environments where that is achieved, people feel like they belong, which gives meaning to life, and in turn leads to better things and values. That is what unleash means to me.