At B Dash Camp in Fukuoka, Japan on Friday, April 10, 2015, leading Japanese social and gaming Internet company GREE’s enigmatic CEO Yoshikazu Tanaka took the stage, but not to talk about a new GREE service or a new vertical; rather he talked to the startups and journalists present about the struggles of building one of Japan’s leading Internet companies.
“I started GREE out of my apartment, as a hobby. I never expected any of this to happen,” he said, referencing the very beginnings of GREE in 2003.
Yoshikazu was inspired to create GREE, which got its name from the ‘Six degrees of separation’ theory postulated in the 60s, after seeing what Friendster was doing in the United States.
The service proved wildly popular amongst the youth of Japan. However, while all this was happening, Yoshikazu was holding a full time job at then startup poster boy Rakuten. He was just running GREE as a hobby, paying for the server and operating costs out of his own pocket.
There came a point, he said, when the service had hit 100,000 users that he had to make a decision. Either he would have to quit his full time job at Rakuten to work on running GREE or he would have had to shut down GREE and go back to his day job.
Fortunately for GREE’s user base, Yoshikazu chose the former, “I had more than 100,000 people using my service. How could I let them down,” he said.
What followed next was a whirlwind of activity for Yoshikazu that saw him officially launch GREE together with friend and then CNET Japan Editor Kotaro Yamagishi in 2004.
“Ventures are not glamorous,” Yoshikazu explained. “We needed to recruit talent but we did not have any money. We were about to go bankrupt,” he shared.
Yoshikazu was then forced to take a very risky loan and for a time, GREE seemed to be doing well. Its mainly PC market was growing rapidly, new users were flocking to this new kind of social network and Yoshikazu’s gamble seemed to have paid off. “We had to make the company succeed or die,” he said.
Then came the mid 2000’s and the rise of the cellular device.
At the time, GREE was a PC-only platform and the rate at which people were ditching traditional PC-based social networking services for mobile ones was a course of concern for Yoshikazu and his team. “We realised things would move to the feature phone and that we would have to make the shift from PC to feature phones. It was a struggle but we would have to do it,” he said.
However, there was discord amongst the ranks as not all the members of his team, in particular, the engineers disagreed on whether the move to feature phones was the best idea. According to Yoshikazu, his engineers told him that they “did not become engineers to build things for such a small screen.”
However, as far as Yoshikazu was concerned, the smartphone would not only rise in popularity but that it would inevitably surpass the PC as a social media platform.
He managed to convince his staff of the urgency of this and by late 2009 and early 2010, GREE rolled out fully functional versions of its platform for iOS and Android.
“We had to do this or we would have failed,” he said.
“Leadership needs to govern,” he went on to explain, stating that while certain things can seem like a fad, as the smartphone did back in 2007 and 2008, it was important to keep an open mind so as not to miss out on a potentially market-changing moment.
In the time since launching the mobile platform, over 200 million use GREE either as a social networking service or play one of the company’s many mobile games, some of which have become successes even outside the Land of the Rising Sun. Yoshikazu has since become the world’s second youngest billionaire after Mark Zuckerberg.
As to what he sees in the future, Yoshikazu remains bullish on gaming. “Gaming will definitely grow in the future. China will especially grow fast,” he explained saying that overall, in the coming years, he sees the gaming market growing two to three times its current size, led mainly by China and Southeast Asia.
As for his own future, Yoshikazu seems content to stick to GREE, “Starting up a company is so painful, I will never want to do it again,” he concluded, to uproarious laughter and applause from the audience.
Disclaimer: B Dash Ventures is an investor in e27’s parent company Optimatic Pte Ltd.