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Rakuten (RKUNY): Company Profile, Stock Price, News, Rankings

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Rakuten (RKUNY): Company Profile, Stock Price, News, Rankings | Fortune

Ewa SZYMANSKA, Global Head, Rakuten Institute of Technology (RIT); Executive Officer, Rakuten Group Moderator: Clay CHANDLER, FORTUNE

Brainstorm AI Singapore 2024: The Future Of E-Commerce

Conferences

Lia. Thank you so much for joining us today. We've had a lot of discussion about Southeast Asia, Southeast Asian firms and policies. So it's refreshing to be able to get a chance to have a little bit of a discussion about a Japanese company. Uh show of hands, how many know who, what rocket is, everyone pretty good. All right. So why don't we just start there? And you can tell us a little bit about Rocket 10 and maybe about the, the Rocket and Institute of Technology. But this is a, this is a company that's into all kinds of businesses. Right. Right. Right. Right. Right. Um So starting from the beginning, Rockton was founded in 1997. So it's a time of economic downturn um in Japan, um many businesses are struggling uh shutting down um small businesses uh need help. And this is when um r and online marketplace um opens up new markets to small and medium merchants, to rice sellers and uh you know, second brewers before could only sell um to in their cities in their rich regions. Now, the whole Japan uh opens up to them, um you know, fast forward to today. Uh We have 57,000 merchants uh on our platform and uh e-commerce still at the very heart of Ragon. Uh But since then we, we expanded and we are now in fintech in uh digital content in Telco. So, uh we have over 70 businesses. So overall, um can think of, you know, if you want to do travel, booking or uh no um hair salon or uh uh horseback racing. Uh uh there's just a wide variety of payments, car, credit card insurance, you know, I can go on overall, we have over users in Japan. Um So most of people in Japan are involved with at least one of our businesses with a cross usage of, of over 76%. Um and uh 40 million uh users a month engaging, engaging with, with R and which is uh basically a third of, of Japan population. So it is very much a household name in Japan. So you, you here in Singapore, tell us about the Rin Technology Institute and what that does. Right. Right. Right. So rec of technology is Rin's Research and Development Center and our mission is to bridge the science with business applications. And I'm sure that Rin benefits from this tremendous advance in uh in A I. Um so we worked uh with uh computer vision language or customer behavior from our 70 businesses and uh we do both work traditional A I as well as now uh generative A I and your background is that you're a, you're an expert in, in the science of human decision making. Right. Right. Right. Right. So, before artificial intelligence, I was studying human intelligence, it's a good, a good combination. You make an interesting point about Japan, which is that, although, you know, I mean, we, we rank its giant companies in the Fortune 500 list and they're probably globally well known that Japanese Japan's economy overall is very heavily dependent on small and medium sized enterprises who are often not as technically savvy or sophisticated as Sony or Toyota or, or something like that. Um And these are, these are kind of the bread and butter customers for, for rocket. Tell us a little bit about their level of kind of technological sophistication and what, how we should think about how, how tech savvy they are. Sure. So we're uh serving all our, our partners. So regardless of their technological proficiency. So we make sure that they have the know how um and, and, and skills to make the most out of our platform. Um You know, when, when we started um no, uh most of these sellers actually didn't know much about internet at all. I mean, we're talking about late nineties. Um So very early on um we established this function of the Ecommerce consultant. Um So that's uh uh uh uh a person that works uh very close mostly with the merchant and assist them with you know, whatever is that, that they need, uh it might be help with setting up a storefront, uh running a marketing campaign, educating them about, you know, search engine optimization. What are the social media out there? What is Facebook, what's uh Instagram and how to take advantage of those? Um So, uh so, so very much uh this partnership with, between the consultants and the merchants is at the, you know, the heart of uh R and marketplace. So a lot of these folks would maybe be, you know, small merchants, maybe live in a kind of rural area, uh might be older, kind of mom and pop type businesses. So that's um that's, that's very intense to reach out directly to those people. Um How big is the, the kind of force of these, these consultants? Right? So we have our regional offices all over Japan and we have ecommerce consultants in all of the three offices, making visits to merchants sitting at the table with them and uh working out the strategy, you know, for, for sales for next year, for, for, you know, Valentine's campaign, et cetera. And so do you see that A I will make it easier or, or actually more complicated for those kinds of merchants to, to operate? Yeah. No, that's, that's a great question. I mean, we're uh extremely uh positive about this technology about A I I mean, Rin was founded on, on this belief that technology brings people closer together, you know, even internet, our online, online uh service people can think no online means uh impersonal. It's convenient like a vending machine where Drax and have a very different approach, right? And from the very beginning, it was all about allowing merchants to express their personality of their business, tell their story uh of the product of the family. So with generative A I, um we see a lot of opportunity to help merchants uh you know, do this even better. So, you know, a lot of them, as you pointed out are, are small merchants, they may not have marketing teams or designers on their team and getting in their hands, tools that allow them to, you know, create more beautiful storefronts, tell their story more visually compelling way. Um It's something that we are really excited about. Um Another area is just to give them ways to connect with their uh their, their customers better allow for personalization, uh help them to craft responses to the customers, which of course they have full of control over the, the final output. Um We believe that this will help them be, you know, even closer to their uh and customer. Um which kind of plays also on this um idea of Amo Teni. And we discussed this at clay earlier uh which is very central to uh Japanese culture. And it, it um uh uh goes back to the tea ceremony and this is the mindfulness and the principle of um really uh care and hospitality, understanding the needs um of, of, of your guest, of your customer and then going above and beyond to, you know, meet and exceed those expectations. Uh So we believe those tools will now allow our merchants to practice that. Oh, very Japanese kind of idea. Let me ask you just a quick question about, about language and culture and how it combines with A I I mean, obviously, you both develop in House Rogen's own large language models in Gen A I. And you're also working with companies like open A I and others to um to collaborate in rolling things out. So you, you kind of pick and choose as to when and where to make use of, of which one. How can you give us a Japanese perspective on this question that we discussed earlier this morning about whether or not uh large language models that are trained mostly on Eng in English can actually be very responsive and useful in different cultures. You know, like, like Japan, Japanese language where the culture is so specific, right? Um Very good question. Um a few months ago, I would give a different answer. Um Today. Uh My answer is that these models are, are pretty good. Uh They are not as good as they are in English. Um There is still certain um cultural differences and uh I think the panel discussed this before as well for other Asian languages, the politeness levels. Um, there's some, you know, some, some country might, might not be correct and, but, but it is close, um, having said that it's still a little bit more effort for the Japanese user to, um, to utilize that and the reasoning skills are not as good as, as, as they are in English. But, uh, but yeah, it's actually pretty impressive, an interesting perspective. I think it's a question about which there's a lot of uh different opinions and points of view, especially the more advanced the technology, right? But I would like to know something however, and that um there are certain, so, so tokenization for Japanese um was not working. Um so, so well. Um and basically tokenization is that, you know, when you go from, from text to uh uh numeric encoding, you need to uh kind of parse these, these uh text input into, into tokens. It can be as long as a word or a sub word or a character. And basically these um you know, commercial large language models that they have been available, they were very inefficient in a way that they tokenize Japanese, specifically Japanese language. And they would use multiple tokens for uh a single country, for example, which was very inefficient, very costly. So what we put effort into when we uh developed and, and open source, our uh our act and LLM um 7 billion parameter model, we put effort into developing a tonier that is much more efficient and uh you know, is able to take in more context uh into uh uh and uh and be just uh more uh less computer computationally intense. Um So that was kind of the, the contribution that, that, that we made and that was something that had to, that was very language specific, right? So, you know, my uh my view is that uh you know, we are very close, but certain things have to be solved in order to close the gap. So that's all the time we've got, but a fascinating Japanese perspective. Thank you so much. Thank you. Pleasure.

Dane Cheng, Executive Director, Hong Kong Tourism Board Poman Lo, Vice Chairman And Managing Director, Regal Hotels Group Munekatsu Ota, Chief Executive Officer, Rakuten Travel Xchange Jane Sun, Chief Executive Officer, Trip.Com Group Moderated By Diane Brady, Fortune 

Innovation Forum 2024: Reimagining Tourism And Travel

Dane Cheng, Hong Kong Tourism Board, Poman Lo, Regal Hotels Group, Munekatsu Ota, Rakuten Travel Xchange, Jane Sun, Trip.Com Group

Thank you very much. Again, I feel like any, any panel on travel, travel is such a personal passion. I feel I have to put all of our panelists on the spot on a personal level. First of all, to say, what, what is your and you're not allowed to say Hong Kong, by the way, Dame, what is your favorite type of travel or destination on a personal level for myself? I'm no different from a lot of our Hong Kong. You know, friends that Japan is always my one of my favorite destination because a lot of the things you have to be there to experience and they have all sort of, you know, many different levels and layers and aspects of uh experiences. So Japan and particularly the most important thing we know in the industry. Number one thing for travel is currency, currency. OK. There you go. And we will have a discussion of the Yen. No. Um Paul. And how about you? I don't have a particular place in mind, but I think um it will have to be first of all sustainable. Um And that it can be ideally a leisure trip followed following a business trip. So they're more mission saved. Um That's number one. And secondly, a balance between culture and tradition and innovation, um meaning and innovation. So a place with culture, but with also new attractions in modern architecture. And thirdly a balance between activity and some moments for mindful reflection. OK. That's gonna be hard to talk, by the way. Congratulations on your One Earth Summit. Thank you. So I thought that was very powerful. Oh to Sun. How about you? And again, you are not allowed to say Japan or in Singapore. I know that. But I'm Japanese, of course, Japan is a very good destination of especially so this timing is very, very good for foreign to come to Japan. So Japan is very weak then. So in Japan, so many so attractive point. But now I'm living in Singapore and then I like the beach resort then. So this year I visit Phuket. Yeah, it's a very nice place. And then, yeah, thank you very much. This is the Phuket tourism, big type of dinner with my family. And then we stay in the same. So and then we stay on the base for long time with the family and then watching the TV. And I order the cuisine and the drink and then so everything to the restaurant and the restaurant that brings us for every cuisine going to my house. And I spend much time with my son and wife and then I enjoy the beaches. It's a perfect destination. Of course, Singapore has been nice. Yeah. Ok. Good. That we know exactly how to serve you on your perfect vacation. And that's good. Yeah, I just went to South Paul. If you're into Chinese New Year with my family. It's fascinating. But, uh, I love Africa safari. Yes. I mean, that was my last trip too. Well, I, I love that because I do think it's very personal and I wanted so Jane, let me go to you. One of the things we're talking about reimagining here. I wanna ask you first, what has really changed when you look at travel patterns, you know, people, a lot of people talk about the pandemic being this big pivot point. What are you seeing um for us in doing tourism marketing, that's exactly what you want to sort of um get a, get a grip on, you know, what, what's happening, what's going on, you know, the P reading and so on. And II, I think these, what's going to happen um after post pandemic for travel is something that for the last couple of years people have been, been watching and, but I, I must say what, what we see here in this part of the world may not be the whole picture, but just a couple of things I think number one, it's uh we haven't seen um the night vibes for Hong Kong to for example, to come back yet. I, I think the whole technology uh changes uh matures, you know, the whole development. So people have more choice. So we have to now compete with, you know, the, the Netflix and chilling at home, you can order food and so on. So you have to have very good reason to get people out of the house to actually travel, to see things. I think that's universal. You have heard people in New York complain about the same thing. Exactly. So secondly, is the shopping bit. So the shopping is very different now because everyone can order online from anywhere in the world, from the best in a price and everything, the right delivered in front of your door. So that's why we got a lot of our merchants in Hong Kong businesses complaining about, oh you said our tourists come back by 70% but our business is only back by 30%. So I think that that bit is also an important one. And the third thing is, as I said, people need very good reasons to travel. So events, you know, big events, small events, anything that can hit, you know, your interest. And you say, hey, I really want to go and do this and experience that then they will be willing to do that. That's a very good experience. Yeah, I've not been but I've heard. So what, what do you think? I agree. I think a lot of conferences, meetings have become hybrid. So even for those that used to be completely offline would often offer a live streaming or zoom option. So, what we're seeing is honestly, I think it's the people connection that cannot be replaced. Um So for leisure travel, obviously, you know, there's this carpet die mentality. So, you know, I think especially for the younger generation, as long as they have saved enough, they hop on the trip and in terms of business trips, I think um networking events are still very much appreciated. Uh I've seen that on our summit. I think every everyone is grabbing every chance to meet and connect with people. Um And I I would say for business development, people still would appreciate meeting off hand to first establish that connection. But if it's like purely work, I think a lot of that has been indeed replaced by Zoom. So obviously a complete change in focus. So oi I want to hear from you in terms of what you think, but talk also about racket and travel exchange. And I think that's something people may not be familiar with. And it's quite a different model, exchange, a new type of wholesale services for B to B subsidized for accommodation um in distribution. So we integrate over 700,000 so global hotel inventory into our platform. Then also we have left and travel services in Japan and the and T is the leading number one travel agent in Japan. And there are several hundreds of staff doing the support for the hotel and the new to secure the competitive inventory. Then we connect, then at the same time, we have over 1000. So sales are partners in over 90 countries that we try to connect to LA to Japan inventory to global sales network. And then now we are enhancing Japan inbound table and the same time now we are enhancing outbound travel and then global transactions. So what how does this reflect the different way people are traveling and how they want to have accommodation now? So in terms of the transaction, so nowadays, so people, so they like so wide and so they are to compare with Jane, what are you seeing? You actually, you're like one of the world's largest, you know, I'm not supposed to clarify. We don't, I don't think we need to explain crypto. Sure. So uh the new trend we have seen uh I call it three ss. Uh the first s is much smaller group uh rather than getting on the big bus with 50 strangers. Uh We have seen our customers much prefer to use tailor made tool or small family tour with a couple of friends. Uh The second one is more sustainable driven. Uh young people really pay attention to the product that is uh green driven. So we offer electronic vehicle for rental car. Uh We give them hotels for great hotels to choose. The third one is short booking window. Uh customers try to stay until the last minute to make the booking and in terms of products, uh young people focus a lot on happiness. So events, concerts uh get lots of attention, middle aged white collar customers prefer to choose wellness products. So high end hotels, Yon or Rosewood, which gives very good wellness program get a lot of attention and older generation. This is the first time people who have money who have time can travel. So we have seen uh old people who enjoy historical tools, uh cruise tools get lots of momentum. I love that the middle aged or the wellness and the older people are not. Yeah, you know, it's not so much. That's interesting. Does that resonate with you in terms of when you think about those different demographics? Talk about what you, you talked about some of the ways in which the consumers changed, talk about how Hong Kong has changed and the marketing strategy around how you're trying to meet the new needs of the market. There are a couple of uh um new or surprises or pleasant surprises. It's uh during the lockdown, we uh we have opened our West Kowloon Cultural District uh with the M PLUS Museum which is, you know, regional is one of the newest um um visual arts museum and also the Palace Museum for Hong Kong. Uh that gives us a very pleasant surprise because people come and then tell us the the survey and they say, hey, we got other than your, your, your traditional like dining and theme parks. Uh We really like your art and culture stuff. And the other area that we found it is the green nature and, and, and that's actually something that we notice, but we haven't actually promoting it that more. The millennial, which is Jane suggested, not only JZ but even for businessmen and particularly, I think it's actually been reminded to us by our colleagues in Europe UK and also the US, they said, hey, we come to Hong Kong people telling us that, you know, hustle bustle city, but within 20 minutes, 30 minutes hop onto a cab or a bus, we can go to a beach, go to, he was hiking the other day. Yes, so fantastic. So this is something to us is a pleasant uh you know, discovery. So we want to sort of promote that. So where people are doing like, like Pullman said, leisure business, you know, you can combine so a diversified experience. So one other thing because I want to get this with you when you think about that younger generation or whether it's the Tik Tok generation, as we're talking about reimagining travel, I feel like they engage differently with the environment. They have a different set of what excellence looks like, like, you know, even what types of restaurants they want to go to. Is that something that you're noticing? And, and I'm just curious because I think those are um universal lessons we can draw from how younger people want to consume. May maybe I just want use one example very simply uh not just Hong Kong, but also our friends in Macau were telling me that uh before pandemic, people would go to a Michelin Star restaurant, take a picture of the food they're having and so on and say I'm here with this very luxurious restaurant. But now things have changed. They would take a picture of themselves queuing up in front of a noodle store shop for like two hours to have that bowl of noodle. That's the finance secretary say there's more than 200 Michelin. So that's, well, there you go. Let's, here's some more noodle shops. That's interesting. Pa what are you seeing and also with the sustainability from a generational perspective? Are you seeing differences in the demand? Definitely. I think Gen Z as Dane says, I, I think they, they really appreciate values. So when a brand stands for values that resonate with them, um it really doesn't matter. Uh You know, what, what's the pricing? I think they have gone beyond that. Um It's, it's kind of somewhat even deeper can I ask because on a level, all of us like to have the same values. What's the challenge for you when you think about from a sustainability point of view, we rarely talk about the pain point from a travel perspective. So what would be some of the challenges in sort of implementing, you know, the type of sustainability that you want to have. So, of course, there's sometimes there's a bit of trade off, right, in terms of convenience and sustainability. Um And also during COVID, um it was very difficult to forego the use of one off uh disposable packaging, for example, the mask um you know, your your amenities in the room. But now that COVID is finally over, um we are moving towards completely, you know, plastic free across the industry. And it is possible because of technology, for example, guess how many plastic bottles we used to consume on an annual basis in Hong Kong alone across our 12 hotels. Oh my God, this is a test uh 1 million, no 3 million, 3 million over 3 million. But now that we have just invested in a in a water treatment uh technology company uh actually from Stanford, we can actually forego 3 million everybody there water filtration and there you go. Well, I think let's talk about innovation because I think that's obviously the theme of this um Otis on rocket and stay, which is basically uh not a human free experience but but talk about the technology that goes into that and how it feels different, say than an airbnb or yeah, basically la business model is simple key speaking new type of real estate investment business by using data and A I then I think I mentioned. We have LA and travel business in Japan is the number one travel agency in Japan. And we have a lot of data. Then we already have over 70 services and then we have 100 million membership in Japan. As you can see, total total population is 100 and 20 million, but we already have 100 million. So we have a lot of data. Now we are enhancing A I so utilizing A IG BT and then by using these data as we try to increase user expenses and then our investment, then we try to find the appropriate potential land by ourselves and then we design so property type and by by using data, then we manage uh property. So uh by using or IOT and then yeah, everything, everything is smart. That's well, I want, I want to do some lightning rounds I no time. But let's start with the lightning round on budget travel, you know, because it's, that's obviously been a big driver of travel. It's, it's um give me some sense of where budget travel sit right now and I'm gonna start with Jane and this will just be quick because I want to just do a few. Sure, sure. So budget travel is just like students like budget travel. We call them K being meaning uh special force. Uh the young people, they have backpack every day, they march through one city to another. So what we need to do is really connect them with the transportation vehicle which offers the best value high speed railway train M pr when they come to Hong Kong uh so that they can enjoy as much as possible. Anybody else on the way on budget travel, then what do you think? How important is that it is important? Um You know, we are under a lot of pressure by our businesses and said, hey, why are you promoting this and promoting that? People are not spending money, you know, they just want to come have a look and go back. But what we are trying to support and help the businesses is that um people will spend money if you have um a good uh proposition to them. So we bring in the people, the number you figure out how you want to attract them to spend money with your offers, any advice to you, budget travel? How I don't, is that an important market for you? Oh, totally. Um we actually launched ICL as our kind of limited service brand uh 2010 in 2010. So 13 years ago, it also happened to be the first carbon neutral hotel in Hong Kong since then, we have opened another six and it was a very uh resilient business model. I would say even during COVID, we remained profitable and I see that probably as the fastest growing brand within our portfolio because there's huge demand, people want affordable convenience and world class hospitality. So even I myself, I very seldom choose six star hotels when I travel. So with new rules, you know, implemented in China across the board, I think people get a bed. I'm just kidding beds here, by the way. Ok. Final thoughts, I'm going to go to you first Otis. And um it can be a prediction. It can be just what you're excited about innovation wise. What are some uh thoughts you want to convey to this audience in terms of messages around reimagining travel. So we want to expand the model and then it's like using the IOT and database and A I and two maximum investment and to maximum user satisfaction. There are new type of accommodation that we are enhancing in Japan. But from now we want to expand this business model, not Japan domestic only but global. Then in Hong Kong, Taiwan, other countries. So we want to expand this business. You're investing in Hong Kong we are looking for. Thank you. Yeah, I'm kidding. But that's excellent. So final thought from you. Sure, the most expensive tour trip.com sale cost about 200,000 us D per person per trip, 80 days around the world. Uh Guess how long did it take us to sell these packages? Uh 24 hours, 17 seconds and they bought one of those $200,000. No. Ok. Yeah. In the future, I love to bring our customers to the space. So I would love that I would love to go to space and I, what about you? I'm excited about the role that innovations can play in fostering both personal and planetary well being. So I think technology really helps us to better understand our customers preferences, their needs and take better care of them. So we want to take hospitality to the next level. And from a planetary point of view, I do think that technologies like prop tech, clean tech, um food tech can all really help us take better care of our planet as well. Do you want to go to space? No, I think we only have one of our home to you. I don't have any sort of big questions, but my very small would be actually for our friends or ot A because one of the major travel ot a founder actually been telling me about this. They are quite worried about the future of ot A sorry, because they think the social media is taking over so people can go to the social media, watch something very interesting in terms of the content and they can just book exactly right away. So do they really need to look at the content? They like it, then they go to search it? So I was wondering how it's going to pan out? That's very true. I actually had to open a because it is the most effective if that just intermediation. I think it's about reinvention and reimagining then too I, I do wanna ask one last question since we are here in Hong Kong. What do you think is gonna look different? Five years from now? Anything when you see the trends on the ground? How is the experience of being here gonna change? I I think what we will be seeing is that there'll be more people coming through Hong Kong, not just as a destination itself, but also as a hub going into our Great Bay area into China mainland or going out. I think uh you know, with, with our, you know, our international aviation, everything would be making it more convenient. So convenience hub is still the most key things for travel. Excellent and around the world in 80 days. That sounds very exciting. Please join me in thanking our panelists and happy travel everyone. Thank you. You run.

 ANDREW NUSCA: So the Rakuten of today is internet services is your largest segment, which includes retail. You've got the financial arm, which you mentioned. An industry unto itself. And then your newest one, last year you began reporting mobile as a breakout business. It's your smallest, but that's a relative term. So let's talk about your telecommunications ambitions, 5G and all the plans you have. You have great ambitions. Tell us about them. MICKEY MIKITANI: Rakuten has been evolving centered around our membership. So Rakuten is not really a pure e-commerce company. We're a membership company. And managing the brand and also our reward program, which we are doing in the US, Rakuten Rewards. And also the data. And so this has been a playbook. How we can bring the customer to the stores, or to the internet shops, or to the hotels and cross use the members. But I have started to realize the communication is going to be very, very important part of our ecosystem. And so that's why we wrote one of the largest messaging app company called, Viber. And it has been number one messaging app in most of the eastern European countries and some Southeast Asian countries. But I started to realize, we got to go to the hard core and why don't we try to get into the mobile space. Where lifetime value of the customer is very, very big. And also the synergy with our other ecosystem is also very, very large. And initially, I just thought we're going to do this mobile [INAUDIBLE] business in Japan. But as we move forward we started to realize, oh my gosh. What we are building is not just mobile service, but we are trying to transform mobile network from the architecture point of view, by converting hardware to software. To be very, very honest, this is a secret talk thing. But-- and just about buying the network devices and equipments from Chinese Vendors Chinese equipment companies. And that's when I realized, oh my God. We may have a little bit of political risk here. And started to the alternative. And I realized buying the network device that's existing, Western network device companies, is too expensive for us. And we can not justify it. So we came up with the conclusion, why don't we try to convert all these hardware to software and make it like a Cloud? And everybody thought we were kind of crazy. And in some of the [INAUDIBLE] in your country, categorize us as pie in the sky. My friends who are big CEOs of big [INAUDIBLE] and network device companies, it was laughing at us. Hey Mickey, I'm going to warn you. You guys are going to fail. But you know, I challenge that, we change that. And now everybody was shocked that we made it happen. ANDREW NUSCA: So Mickey. MICKEY MIKITANI: Yeah? ANDREW NUSCA: Let me ask you a little bit more about this. So telecom is indeed a brutally competitive industry. It's also a very, very expensive one. And indeed your company has plowed billions of dollars into the investment that you've outlined here. You just mentioned that you see it as kind of connective tissue for other parts of your business. Could you explain that a little bit more? How will you see the return on all that investment? MICKEY MIKITANI: Well, it depends on how you define the competitiveness. Obviously, [INAUDIBLE] is very, very high for three reasons. One, upfront capital investment is huge. Because you need to build a network. Or maybe you can do a roaming agreement, but which is also very, very expensive. The second is spectrum. You need to have a spectrum. Whatever how good you are, you don't have a spectrum, you don't have any business. Right? And Sometimes it's a location, like in Japan, or sometimes you need to be over the ocean. And the third is membership accretion. Right? But we have hundreds million members already in Japan. So membership accretion is not a problem for us, it's about the first two. And now we are convinced that we can really decrease initial investment by more than technology, by virtualizing, by automating using AI here and there. Our capital investment is probably less than half of what they have paid. And then, once you get in, it's not like e-commerce. You have a limited number of players, which is a lot like Amazon, Google, Facebook. So it depends on how you characterize the competition. And I'm very, very confident we will be extremely competitive for network mobile services in Japan, as well as mobile platform provider in the world. 

Rakuten CEO lays out ambitious plan to enter the telecom industry

Tech

Mickey Mikitani at Fortune's Brainstorm Tech conference.

Rakuten CEO lays out ambitious telecom plans

Mickey Mikitani spoke at Fortune's Brainstorm Tech conference.

Watch: Rakuten CEO lays out ambitious plan to enter the telecom industry

So we met years ago, when I think both Larry Ellis and [ UNKNOWN ] introduced me to you when your father was sick. Yeah, yeah, that's right. And obviously, I saw the caring you had for him, I saw the respect you had for him. And you did something in honor of your father to respect your father which was create a bio technology company with a remarkable new drug on cancer. That's not a normal response to a tragedy is to try to do something to help others. Explain to us a little bit. I mean you have to understand Miqetani is He created Rakutan, which is one of the great companies of Japan. It was in the Wall Street Journal that he was the largest shareholder of Lyft that just went public last week. He's creating a new, a whole new way of doing telephone networks that will be in Asia and hopefully global soon. He's a technology pioneer yet you got into biotechnology. Yeah, what a funny story, right? Well, so it was my kind of personal reason. My father was diagnosed as a very difficult pancreatic cancer and I'm kind of crazy entrepreneur And I initially thought there should be some new ongoing development of a new advanced treatment to basically cure the pancreatic cancer. So I contacted you, I went to UCSF. I went to Harvard. I went to The Colombia University, I went to Paris University, I literally did all these research in my capacity as much as I can. But I couldn't find any really good looking cure. But interestingly. One of my friend call me and he was also the friend of my father and he said hey Mickey I heard the very bad news about your father having a very difficult cancer. By the way my cousin is doing this new project. Trying to cure the cancer was light. And that's it. I was desperate, right? And then he initially so it's kind of this must be a joke, curing the cancer with light. But I was desperate so I said okay, I'm gonna have a meeting with him. And then, you know, I thought this is completely two totally different approach and you know, it may work ..>> So, what he's talking about is something called photo immunotherapy. I think the best way to show it is a quick video. Can we go to the video? I don't know where I'm supposed to point. Photo immunotherapy is a new precision anti- cancer treatment platform under development by Rakuten Medical. Consisting of tumor targeting antibody conjugates that can illuminated at the tumor site using non- thermal red light. [ MUSIC ] Treatment of patients with cancer is initiated with an intravenous infusion of the antibody conjugate. [ MUSIC ] It distributes systemically. And accumulates at the tumor, where it attaches to specific antigens present on the surface of tumor cells. After infusion of the conjugate, the patient undergoes photo- immunotherapy treatment by illuminating the tumor with non- thermal red light. transiently excite the antibody conjugate to elicit anti cancer activity. A laser is used as the light source superficial tumors are illuminated with frontal diffusers deep subcutaneous and large tumors are illuminated with cylindrical diffusers inserted into catheters place using image guidance. Total illumination lasts about five minutes for each treated region. Antibody conjugates bound to the antigen on the cancer cells are transiently excited upon non- thermal red light illumination to induce a bio- physical process that compromises the membrane integrity of cancer cells. Leading to cancer cell death and tumor necrosis with minimal effects on surrounding normal tissue. Moreover, this mechanism of action may activate immune cells, such as antigen presenting cells and NK cells, and may stimulate tumor specific cytotoxic T cells. [ BLANK_AUDIO ] All right, so an idea, photoimmunotherapy. You go through clinical trials. It's now on phase three clinical trial in head and neck cancer. How's it going? I think it is going well. Well, of course, I think we're moving pretty fast I think. And internally we have a very strong confidence .>> So we heard before we were talking to one of the CEOs of, or the head of R & D of a pharmaceutical company and they said the current hit rate is 10 %. If this works you'll be 100 % one for one which is pretty wild if you think about it. When did you start, so what's the time frame from beginning till now? Beginning we started our, the phase one clinical study, three years ago, maybe Three years ago. Yeah .>> And so the idea is you put in this antibody you activate it with this light. Yeah. And then the tumor shrinks. You know what we in the cancer field dream of is something called the [ UNKNOWN ] Scoble effect. Yes. Which is where you can kill one lesion right. But the immune response to this legion that cures away the cells will cure away or attack other legions also and so that's the dream especially now with immunotherapy where we can make immune responses even greater that dreams becoming a reality in some cases but you've seen some benefits? We are in a clinical trial. [ LAUGH ] Got it. My [ UNKNOWN ] guys are Warn me? Yeah! You can say this, you cannot say this, but I think, just to summarize it, the mechanisms we are conducting are very different from even other immunotherapy I think we have seen some cases which were very difficult to see in traditional approach. I possibly invested over $ 200 million into this company, believing this will be one of the breakthrough for cancer therapy, including what you just mentioned. That's fantastic. And so, obviously, the world hopes this works. We need new ways to treat cancer. But your background is very different. You own soccer team, you're investing in tennis you obviously have [ UNKNOWN ] doing so many things doesn't overwhelm you? Well, I'm crazy enterprenuer and I love business. But I think this project is very different from other projects, right? Of course, our major network operator business is going to be I think the game- changer for Fortune project business. But this is far more important than anything else. This is of course. Incorporation, but at the same time, this is kind of a different sort of project for myself. To kind of revenge to the cancer, which took the life away from my father. I mean, and it's certainly a beautiful story. I was called by a number of people in Silicon Valley who invested, and what do you think about this? I go, I don't know, it's Mikitani, it's a technology company. And then we had dinner, and it was interesting. A bunch of scientists around the table, and you're the one who showed me the data. I saw your passion, I saw your excitement around the data and the science, and it certainly was beautiful to watch. How'd you teach yourself about antibodies, about immune cells, about cancer? How did you learn all this? Well I take notes. I Google all these- [ LAUGH ] New words, which is very very strange to ordinary people. And also, just to be honest to my colleagues, the scientists and doctors And tell them I don't understand please teach me. Right. But I have been doing this for five years. At this moment I'm reasonably knowledgeable and sometimes I have a fresh eye. Whereby the traditional people in this industry are kind of trapped by the conventional wisdom. I think I have kind of an amateur fresh eye to find the possibility. And I was probably, you know, ignorant enough to bid on this one, you know? And I think, in my personal opinion, the future looks very good. What would your father say if he knew you were doing this now? Well, I hope he will be proud of it. And I hope my sincere hope this will work and for my father, but we're hoping we will be able to save millions of people. That's beautiful. The company is based in San Diego. Yes. And the technology, where did it come from? Where did you find this? Yeah, so everything is connected. I was listening to the speech of Steve Jobs, who was your patient, right? He said everything is connected. And this was originally introduced from my friend. Who is also the sponsor of my football team? or soccer team is not [ CROSSTALK ] Yeah. So and he was very close to my father too and researcher is a Japanese researcher. At National Institute of Health or NCI. In Bethesda. Yes. Great, His name is Dr. Hisatato Kobayashi. He's also from Kobe from where I grew up. So he's my personal friend, and but nobody really believed. So this company was running out of money The company who, he licenced that to us, running out of money. They were so desperate, and I didn't know whether it's gonna work or not, but I first gave them that $ 20 million to them to keep doing research. And now, yeah, we progressed so much, so. I think, you know, definitely I am not the farmer specialist. But I think I have the eye to analyze the theory of how it works, and hopefully it is going to work. As an outsider looking at this industry, biotechnology and the pharmaceutical industry, what do you observe? I mean from our side it looks rather inefficient. What does it look like to you? Of course this clinical trial and approval process is so long. And I understand the sensitivity of the issues, but at the same time now there are so many innovations being approach, taking place and being develop and it is Too expensive to go through this process. So I think it is time for entire world to reconsider the traditional approach is the right way to do it. Or do we want it to be a little bit, of course we need to be concerned about safetyness. But other than that small comparison of a data that is going to be worth pursuing or not. That's my candidate opinion. That's interesting and have you seen patients yourself benefit? Did you actually meet the patients? Yes, in Japan. You did? Yup. And what was that like Of course, there was crying. In Japan, because of the initial inventor of the technology is Japanese, he's very famous. They have been waiting To get treated for a long, long time. So these are locally advanced head neck cancers where there is nothing else to treat them with a mass on their head or their neck. Yeah, and I think the entire family were, very, very happy. Well, I think the world is happy and I did know your father is smiling down for what you've done. You have something to honor him which benefits humanity. And it's a remarkable thing you did and hopefully, this drug will benefits patients with cancer. So I and everybody, thank you for what you're doing. And admire you and what you are. Thank you very much. So thank you. Thank you. [ APPLAUSE ] [ BLANK_AUDIO ]

Rakuten CEO Explains Photoimmunotherapy

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A cancer treatment that Mickey Mikitani invested his time with after his father passed away. 

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