ITC DIA Europe

What’s behind the brand on the shirt of Lionel Messi

Written by Roger Peverelli and Reggy de Feniks - Founders The DIA Community on Feb 11, 2019

For many, Rakuten is the brand on the shirt of Lionel Messi. But there is just so much more to it. Think of Amazon,, ING Direct, E*Trade … Now think of combining such activities into one company … That is basically what Rakuten is doing. And this is why we consider Rakuten the posterchild of building successful ecosystems that create new levels of conversational commerce. In this interview, Rakuten’s Oskar Mielczarek de la Miel shares some of the secrets behind Rakuten’s success story. 

Oskar Mielczarek de la Miel is Managing Partner at Rakuten’s investment arm, Rakuten Capital, where he is leading the USD 100 million Rakuten Fintech Fund in close cooperation with Rakuten’s various financial services and business units. Its holdings include among others highly acclaimed insurtech companies such as Simplesurance and DIA Barcelona alumni Everledger and Dacadoo. Rakuten’s Oskar Mielczarek de la Miel was one of the thought leaders who shared his vision at the 2018 edition of DIA Amsterdam. Expect a similar level of keynote speakers at the upcoming DIA edition. Just click on the banner below to find out more.​​


Oskar, can you share a bit about the history of Rakuten?
Oskar: “Rakuten was founded about twenty years ago in Japan as a B2B2C marketplace with just six employees, one server and 13 merchants. In Japanese ‘Ichiba’ means marketplace and the first couple of transactions were conducted by our CEO and founder Hiroshi Mikitani. He did that with a great deal of optimism and ‘optimism’ is effectively what Rakuten means in Japanese.”


Optimism …
Oskar: “Yes. That is how he got the company going. It is optimism and this optimism is still very well served as we see in 2018. Currently, Rakuten has a global membership of around 1.2 billion users, including the users of our messaging and calling app, Rakuten Viber. In Japan we have an extremely high market penetration with about 95 million members. Currently, Rakuten provides more than 70 services, has local operations in 30 countries and has a global workforce of more than 14,000 employees. Our gross transaction volume in 2017 was US$115bn with US$8.4bn revenue and an operating income of US$1.5bn.”

In Europe, most consumers, and probably also most insurance professionals, know Rakuten from the shirt of Lionel Messi.
Oskar: “Rakuten’s partnership with FC Barcelona began two years ago as the club’s Main Global Partner. Incidentally, Rakuten TV, a video-on-demand (VOD) streaming service offering movies and TV series for subscription, rental and purchase available in 11 European countries, is also headquartered in Barcelona. So, we had an affinity with FC Barcelona and specifically with their tagline ‘més que un club’ (more than a club) since Rakuten TV became part of the Rakuten global family. ‘More than a club’ also strongly aligns with our own corporate values of actively empowering consumers, communities and society.”

The partnership probably also adds to the brand awareness of Rakuten …
Oskar: “Absolutely. We also have a partnership with reigning NBA champions Golden State Warriors in the United States. In Japan we are the owners of the professional baseball team, Tohoku Rakuten Golden Eagles, and J1 League soccer club, Vissel Kobe that recently signed Andrés Iniesta, David Villa and Lukas Podolski. These sports teams and partnerships are great in terms of raising branding and obviously gives us a lot of exposure.”

So, in fact, these kinds of partnerships play an important part of your business model and ecosystem.
Oskar: “Effectively, our ecosystem works by combining traditional e-commerce or internet services ranging across e-commerce, c2c, travel, mobile with financial services and digital content. Financial services are important to us and right now close to half of our operating profit is related to our fintech services, such as Rakuten Card, Rakuten Bank and Rakuten Securities.”

How do you tie all these different services together?
Oskar: “Rakuten is like a micro-cosmos of an economy. The secret ‘sauce’ that unites the ecosystem is our membership loyalty program called Rakuten Super Points (the little coins in the chart that have a P).
On every single Rakuten service you engage with – whether you shop on the Ichiba marketplace, book a hotel on our travel site or go to on one of our dating sites, you can earn loyalty points, called Rakuten Super Points, which you can spend on any other of our services, including paying credit card or mobile phone bills or invest in funds available through Rakuten Securities.
For any transaction that you consume, you are effectively getting one percent back in loyalty points that you can spend on another Rakuten service. These points are fully exchangeable and tie our ecosystem together. This is quite powerful. So far, we have issued an aggregate number of points with a value of close to US$9 billion.”

Is this loyalty system restricted to Rakuten companies, or are you offering this to other companies as well?
Oskar: “We have a point partner system. Right now, we cover close to 700,000 stores around Japan. Not just purely online stores but also brick and mortar stores like convenience stores, retail chains and fast-food outlets.”

So, you basically create network effects; leveraging the customer base of all partners to grow the value of the ecosystem for each of the nodes.
Oskar: “Yes. The Rakuten loyalty program is one of the most popular points programs in Japan and consequently people get to see our brand and logo at a lot of places in the streets and in the stores. Our mobile payment system, Rakuten Pay, and credit card, Rakuten Card, are two other very popular services that are used by members and partners all across Japan.”

Contact frequency as an important part of the economic engine …
Oskar: “Yes. Rakuten launched our MVNO (Mobile Virtual Network Operator) business in 2014. And now, we are about to become Japan’s fourth network operator with the launch of our MNO (Mobile Network Operator) business later this year. The growth in mobile has been massive. We are doing this is, again, because of our ecosystem. Over the years we have proved very effective at migrating consumers from one Rakuten brand to another through cross selling.”

You mentioned financial services play an important part in the Rakuten ecosystem …
Oskar: “We are the leader in Japan across several verticals, including credit cards, e-commerce, online banking, mobile payments and online travel. We established or acquired these companies and helped them to become part of the Rakuten ecosystem.

How about insurance?
Oskar: “Insurance is probably the latest addition to the system. Similar to what we’ve done with other financial services we actually conducted another acquisition; Asahi Fire and Marine Insurance. This insurance provider offers a range of general insurance products including product warranties, travel, credit cards, motor and even pet insurance. This company will continue to grow using our point system, our ecosystem and the Rakuten way. So, it all comes together through the interaction of the different assets that we have in the system.”

Rakuten is also at the forefront of innovation in financial services, through fintech and insurtech investments …
Oskar: “Fintech used to refer to back-office technologies, in particular in trading systems. Over the last years this has changed and it now refers primarily to the internet, empowerment, anything using artificial intelligence, IoT. I believe it’s more important to think about the trends that are taking place. In card and in payments for instance, we’re looking at an increasingly cashless world and decentralization. In China the entire market has leap-frogged and almost bypassed the use of credit cards. Simply by using cell phones and apps that facilitate any type of payment. Large parts of the world still operate on a cash basis. Even in a modern and advanced country as Japan about fifty percent of the trades still happens in cash. There are a lot of stores that don’t even take credit cards yet. All this is now moving to payment apps and to blockchains solutions.”

With such diverse trends in mind, what is the philosophy behind Rakuten Capital?
Oskar: “We created our FinTech Fund four years ago with the vision of being at the forefront of the technology revolution within it the fintech industry. Of course, we do invest to make a return, but it is also important that we learn from young and innovative founders that are delivering disruption and change.
The denominator in our investments is that all startups that we’ve invested in have a new perspective on financial services. For example, online lender Kreditech looks in a new way at credit; empowering people and lending money to those that might not be given credit if the traditional metrics were followed. In investments, we’ve moved into process externalization through robot advisory businesses.
In insurance we have among others Simplesurance that empowers marketplaces and PremFina, a UK-based company that increases access to insurance by providing financing options for the purchase of insurance premiums. And of course, DIA alumni Everledger and Dacadoo.
Everledger built a significant ecosystem to fight diamond fraud using blockchain technologies and Dacadoo offers one of the most innovative, digital wellbeing solutions on the market. All these insurtech companies are bringing innovation to the insurance sector.”

We noticed that apart from investments in fintech companies, Rakuten Capital is also a big player in ride sharing …
Oskar: “Ride sharing is a very interesting market. There’s a lot of competition and everybody’s taking sides. What makes it interesting for us is that we see how ride sharing companies are expanding into payments and other financial services as a way of increasing their margins.”

Apart from the investments that you provide to fintech startups and other new innovation companies, we can imagine that you also bring them the synergies of our ecosystem.
Oskar: “Of course; this is where it all comes together. The Rakuten executives work very closely together with the companies in the Rakuten Capital portfolio. We now have about close to US$3bn of carrying value across 30+ companies we’ve invested in. We try to deploy capital very smartly. We’re now also launching an accelerator program in Japan to empower local founders.”

What role do you envision for The DIA Community?
Oskar: “Insurance is quite a traditional industry with very little disruptions so far, with a lot of bureaucracy and administration. It is through technology, through creative, innovative and entrepreneurial minds that we can change the industry. And this is where The DIA Community comes in. This is how we get together and grow as an ecosystem. There are too many incumbents and too many startups out there that are basically trying to do everything on their own. It’s only through cooperation – incumbents with startups, startups with startups and incumbents with incumbents – that we will change the industry and effectively empower society; making insurance more accessible and enhance the economy.”


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