What are the essentials of managing and growing a startup? Two CEOs from Japan-based firms that have successfully gone into initial public offering (IPO), CROOZ, Inc and Drecom, answer questions posed by moderator Koki Sato, CEO of SEPTENI HOLDINGS, as part of a panel held at B Dash Camp 2013 in Osaka.
With so many merger and acquisitions (M&A) happening in the startup scene, why did Yuki Naito, President and CEO of Drecom Co Ltd, and Koji Obuchi, CEO of CROOZ, choose to aim for IPO instead? There are so many opportunities to sell and exit, but the two panelists seemed adamant that it wasn’t for them.
For Drecom, a web service provider which deals with social gaming applications and other solutions, Yuki Naito quipped that if they had sold the company, he would get really bored. He added, “If the founder get 50 percent, personally you get 300 or 700 million JPY. But you can use that money in such a short time. You can’t live all your life with that amount of money. One year after we went public, our company went deficit. We try to acquire (other companies) and it was difficult to procure so we borrowed money from banks.”
In fact, in 2008, Drecom was “rescued” by Rakuten in a bid to get back on track. The huge e-commerce company had then become the company’s second biggest shareholder with 20.02 percent of shares, as compared to Naito’s 43.2 percent.
Having been founded in 2001, the company recently released a social card game Reign of Dragons. For the first time in 2013, they managed to score a spot in the top 10 list of top grossing apps on the US App Store.
Meanwhile, CROOZ, who also deals with social gaming, shared that change could be paralyzing at times. Koji Obuchi said that they have been making many hits in the gaming industry, but switching business models come as a big fear.
Obuchi added that the company is incredibly flexible with that sort of change. He said, “I wasn’t fully involved with planning the games but we need to create a competitive edge. They (competitors) are all copycats at the end of the day. We need to have a license so there is proprietary. In our company we change our main business one after another. Now, it’s the era of ads. If that doesn’t happen, we go to social games.”
With offices in Japan, San Francisco, Singapore, Vietnam and Korea, their games like RAGNABREAK, The Knights of Avalon and HUNTERxHUNTER BATTLE COLLECTION have been seen in the top 20 list on Mobage, a portal for games. Also founded in 2001, CROOZ also supports services like SHOPLIST.com which powers the largest fashion festival in Japan, Tokyo Girls Collection.
Drecom’s Naito also shared that it is important to make decisions when there is the luxury of time. There are often two signs. Firstly, you should change when there isn’t progress. Secondly, you need to aim higher if you wish to increase profitability. He said, “When you have the luxury to think about it, make those bold decisions.”
However, not all bold decisions are wise. Obuchi recounted about times he had to decide whether a certain person should be hired. He said, “Sometimes, you couldn’t have the guts to make a bold decisions. It’s regretful. You should have had him or her, that very talented person.”