View Full Version : Inside The Life Of This 35-Year-Old Self-Made Billionaire

12-18-2014, 01:41 AM
Like Facebook's Mark Zuckerberg, Yoshikazu Tanaka became a self-made billionaire after he started a social networking site.

Tanaka heard about Friendster in 2003. He wanted to create a social network like Friendster in Japan, so he coded the first version of what is now GREE out of his Tokyo apartment.

GREE began as a hobby while he was working at an eBay-like commerce company called Rakuten. Tanaka was paying out of pocket to run the service until he had too many users so he decided to start a company to support its growth.

Now GREE has 200 million players, and Tanaka is worth more than $1.6 billion, according to Forbes. Zuckerberg is the only younger billionaire.

But Tanaka wants a billion users, so he's expanding the company worldwide.

Today, GREE announced its investment in IUGO Mobile Entertainment, a Canadian based gaming studio, that fits into his plans for expanding into North America. GREE also bought U.S. social gaming platform OpenFeint for more than $100 million last year.

We sat down with Tanaka in the company's San Francisco office, which just opened this month. Here's some of what we learned.
He bet five years ago that mobile gaming would be bigger than PCs or game consoles. He was right, and now one-third of all people in Japan have his app on their phone.
Japanese tech companies are smaller, but more creative. As Tanaka said [through an interpreter]: "Japanese companies are smaller. We value creativity. We can compete with bigger companies like Microsoft and Apple, which have a ton of people. So we play to our strengths of being creative."
As a kid, he was addicted to playing games on the Nintendo NES. (It was marketed as the Famicom, or Family Computer, in Japan.) "From morning to night after parents bought it. When my parents were asleep, I'd start again. My family used to think I was wasting time. But I had a passion and dedication to games, that's why I've been so successful."
What makes a good video game addictive: "I feel a sense of accomplishment drives people. A great thing about gaming is that you can work really hard and see success. It makes it worth it. In the real world, even if you work really hard, you can fail."
His favorite movie. Cinema Paradiso. (Read on to find out why....)

Here's a lightly edited transcript of our conversation, which was conducted through an interpreter.

Business Insider: The office is nice. Is this your first time seeing the office?

Yoshikazu Tanaka: Yes, yesterday was my first time seeing this office.

The office is starting to look like the Tokyo office. We value the white and the glass you know that modern clean look. It's like Sony, Nintendo and Apple and has that cool vibe. The games we make are fun and colorful and fun. We want the clean image in the office.

We have 200 employees at the San Francisco office. And 1400 employees worldwide.

BI: What have you had to sacrifice to build your company?

YT: I'm 35. I haven't had a personal life.

And I'm not married either. So I've had to sacrifice that as well.

BI: By 35, are men expected to be married in Japan?

YT: Most of my friends are mostly married.


That's a complete joke. The marriage thing is a joke, don't take it too seriously.

I don't have too much personal time, I'm dedicated to growing the business internationally.

BI: What difficult decisions have you had to make in building the company?

YT: Originally, about 8 years ago I did this as a hobby out of my apartment. At the time, there was a huge service in the US called Friendster and I wanted to have it in Japan. That was my inspiration. I was doing it by myself and had 100,000 users. Because it was a hobby, I was paying out of pocket for the server.

And of course I didn't have a lot of money so my savings went to the business. I had two directions, quit the business because I didn't have money or quit my job and focus on growing a company. Because I had a 100,000 users, there was no way I would just give up. So I focused on making it a success.

I was really worried about creating my own business. I never had experience.

I was really nervous about pulling in my co-founder Kotaro Yamagishi, who was editor of CNET Networks in Japan. I felt really nervous. He had much success at CNET. To suddenly start this business and not know the direction [was risky]. I felt really bad, I couldn't ask him.

He said, if you are going to start a company, I'll join you. We were friends from university.

I honestly don't think this company would have existed if he hadn't approached me.

After him, I decided to invite my other friends and other successful people. The next person, our CTO, is a famous engineer in Japan. I paid for his dinner and said, you have to join my company.

BI: Everyone wants to be the next Mark Zuckerberg and wants to create the next social network and gaming company. What advice to you have for those entrepreneurs?

YT: I think the number one advice I can give is you just have to start it. Just get your feet in the water and do it. I learned a lot from just trying it out.

I really believe in a good team. Originally, when the company started out, it was a PC social network. Now we are a social gaming network. There's a lot of change that happened and I learned from that.

I foresee mobile growing a lot. As a proof point, five years ago, I knew the mobile wave was coming and changed my strategy.

In order to create new services and be successful, you have to look ahead and look into the future. I knew the PC era would be over and mobile would come next.

BI: What about Facebook's acquisition of Instagram?

YT: They have a lot of money and acquired a good company. I'd do the same thing.

BI: Well, you did. You bought OpenFeint for $100 million.

YT: [Laughs]. That's 10 times!

Creating a good product is a good goal. Generating revenue is important after all, we are building a business. We've grown a lot. In the last two years, we've been more financially flexible.

We've invested into 10 companies in China, Japan, and the Asia area. We are definitely focusing on the North America and Canada area for investments. I really think it's a good opportunity now to invest in a Canadian game developer and co-develop games with them.

BI: How do you position against Zynga and Facebook?

YT: If I explain to you what's happening in Japan, GREE is growing. Facebook is also growing. Each social network has its own niche market and they can co-exist. We do see Facebook growing. However, we don't think it is an ideal space for games.

Facebook is really not a pure platform for games, there's a hole in the industry that needs to be filled.

Zynga heavily relies on the Facebook platform. In terms of that, Zynga hasn't grown as a platform. They are creating it right now.

In terms of mobile, Japan is at the core of that. The mobile industry is a lot larger than the console market. That change, we've seen over the last 3 to 5 years. If I said something like that 3 years ago, nobody would have believed me.

BI: Why do you like the gaming business?

YT: We think being creative is very important in the gaming business. And going to my point about creativity, Japanese companies are smaller. We value creativity. We can compete with bigger companies like Microsoft and Apple, which have a ton of people. So we play to our strengths of being creative.

BI: Are most of the games developed in-house?

YT: In Japan we have 1,000 games, 30 of them are in-house - everything else was made by third party developers. We've partnered with Sega and other gaming companies. For the most part in Japan, their leading titles are on mobile through us. For example, a popular game is Biohazard which is known as Resident Evil here in the states.

BI: Are you the kind of guy that played a lot of videos games growing up?

YT: I used to play on Famicom entertainment system at lot in the first grade. From morning to night after parents bought it. When my parents were asleep, I'd start again.

My family used to think I was wasting time. But I had a passion and dedication to games, that's why I've been so successful.

BI: But on a society level, how does it make you feel to make games that are addictive? Do you think there's a downside to this?

YT: I'm also told that when I'm working, I shouldn't be playing games. But it is our lifeline here. Some people get inspired by games. Some people might find it a waste of time.

My favorite movie is Cinema Paradiso. It's an Italian movie. It's about a boy who used to watch movies and he grew up and became a movie director. He was inspired by all the movies. He created scenes because he could draw inspiration from movies he had seen. I think that because I grew up playing so many games, now when I check out a game, I know what a game lacks and what I should change.

BI: What does a game need to feel addictive?

YT: I feel a sense of accomplishment drives people. A great thing about gaming is that you can work really hard and see success. It makes it worth it.

In the real world, even if you work really hard, you can fail.

But I think I can get inspired and learn by playing a game. I can work hard at a game and succeed. There's a lot of things about building a company that I have learned from my gaming success. If I work hard, some day I will see that success.

BI: What are some things you haven't achieved that are important to you?

YT: A third of the population in Japan uses my app. It's on feature phones and smartphones including iPhone and Android.

One of my biggest goals is to have as many users around the world using our services.

I was reading a Wired magazine about Netscape and Yahoo. It was like at the end of high school/early college years. I really surprised that all these young people could change the industry and the world.

Just like looking up to a favorite musician, I looked up to the companies like Yahoo! and Netscape, and wanted to create something that could change the world. It is my life long dream to create something everyone would use.

BI: Who plays your games?

YT: Right now, we are seeing the division between men and women in Japan. Most of them are in their 20s and 30s. We are seeing a lot of growth in the 40 plus market.

BI: What motivates you?

YT: Companies that are changing the world still exist right now. So my primary objective is to make the world a better place and connect all these people.

BI: Why is connecting people so important?

YT: I remember when there was no email and social networks. It's a great feeling for me. I used to play games on my own, now people are picking up their smartphones and playing with their friends. That hopefully will not just be a trend and will become mainstream.

With smartphones, it's a different trend. Seeing a lot more adoption in shipments around the world. You know the barrier to entry is not as expensive to purchase [compared to consoles]. If we can exceed that number and connect one billion users, that would be a huge accomplishment.

BI: Do you play games every day?

Not so much everyday anymore. I like creating these games more than I like playing them. I feel a lot more sense of accomplishment when I see people playing the games.

Read more: http://www.businessinsider.com/gree-inside-the-life-of-35-year-old-self-made-billionaire-yoshikazu-tanaka-2012-4#ixzz3MEkUp8AD

12-18-2014, 01:42 AM
Japan’s Gree Founder Loses $2.6B on Mobile Gaming Miss

In five years, Yoshikazu Tanaka became Japan’s youngest billionaire as investors piled into Gree Inc. (3632) (3632), valuing his controlling stake in the early maker of phone- based games at $4 billion. Just 18 months later, that has shriveled to about $1.4 billion.

For a youngster -- at 36, he’s 12 years junior to the next on Japan’s billion-dollar list -- Tanaka was slow to pick up on the global smartphone craze. Half a decade after Apple Inc (AAPL).’s iPhone went on sale in Japan, Gree relies on the generation of handsets that preceded smartphones for 60 percent of revenue.

The company says it will make its first annual profit decline as consumers flock to games available through Apple’s App Store and Google Play, abandoning the social-network gaming platforms of Gree and rival DeNA Co. that once dominated the local market. Since their November 2011 peak, Tokyo-based Gree’s shares have slumped more than half, the worst performer of 108 members in their industry group on the Topix Index.

“They’re up against Apple, they’re up against Google,” said David Gibson, a Tokyo-based analyst at Macquarie Group Ltd. who advises investors sell both Gree and DeNA and forecasts a 25 percent drop in the shares in the coming year. “We’re moving into an industry structure of anywhere up to potentially nine players doing mobile games now.”

Investor euphoria over Japan’s new government and its policies to spark growth has passed Gree by. The Nikkei 225 Stock Average is off to its best start to a year in more than four decades. Gree’s drop from its peak is almost the reverse of the gauge’s 55 percent rise.

Introducing Titles

Currencies haven’t helped Tanaka either: a week before Gree’s shares peaked, the yen hit a post-war high and has since slid 21 percent. That exacerbated the decline of Tanaka’s 48 percent stake in dollar terms. He hasn’t reduced his holdings as the value has fallen by about 180 billion yen since the peak.

Net income may reach as low as 31 billion yen ($311 million) in the year ending June 30, from 48 billion yen a year earlier, Gree said Feb. 12. That’s the first drop since the company went public in 2008. Gree closed today at 1,244 yen, down from its peak of 2,840 yen in November 2011.

The developer of “Fishing Star” and “Driland” is trying to increase game downloads by introducing more titles, said Shinichi Iriyama, a spokesman. The company declined to make Tanaka available for an interview.

Founded in 2004, Gree started as a social-networking service for mobile phones and began offering games through its networking platform three years later. The company introduced its first game application for smartphones in 2010, a year after Rovio Entertainment Oy’s “Angry Birds” debuted. It also offers games that can be played in Web browsers.

Smartphone Subscribers

The number of smartphone subscribers in Japan surged to 37 percent of all contracts as of March 31 from 3 percent three years earlier, according to Tokyo-based MM Research Institute Ltd. The proportion may grow to 58 percent in March 2015 and to 65 percent in March 2016, the researcher said. Global smartphone sales will probably rise 28 percent this year to 836 million units, according to IHS Inc.’s iSuppli.

“Both Gree and DeNA will be badly impacted by rising penetration rates of smartphones,” said Amir Anvarzadeh, a Singapore-based manager for Asia equity sales at BGC Partners Inc. The market for smartphone games is “hugely crowded,” he said.

DeNA (2432) has fallen 0.6 percent this year. Net income may rise 44 percent to 44.8 billion yen for the year ended March 31, it said in February. The company is expanding services by offering free Internet calls and online music distribution and cooperating with developers such as Cygames Inc. and Nexon Co. in mobile games.

Mobile-Game Market

Japan’s mobile-game market may have expanded 37 percent to 387 billion yen in the year ended March and may grow 10 percent this fiscal year, according to a forecast by Yano Research Institute Ltd. in January.

Although the market is growing, Gree and Dena’s revenue may stagnate as they’ve lost their duopoly on Japanese mobile games, Macquarie’s Gibson said. He expects Gree’s shares to decline to 925 yen by Feb. 13, the second-most bearish of 13 analyst estimates compiled by Bloomberg.

Naoshi Nema, an analyst at Cantor Fitzgerald LP, expects the shares to drop to 800 yen. That would cut the value of Tanaka’s current stake to about 90 billion yen -- $912 million at today’s yen rate.

“We’re most concerned by the social-game companies such as DeNA and Gree,” Nema said in a March 7 report. “The Japanese market does not have enough room to expand their subscriber base in any meaningful way.”

‘Puzzle & Dragons’

Tanaka, who pioneered social-network gaming for mobile phones in 2007, first browsed the Internet in 1996 while visiting the U.S. Three years later, he graduated from Japan’s Nihon University with a bachelor’s degree in law, according to Gree’s website. Before founding Gree, he worked at Sony Corp. (6758)’s Internet unit and online retailer Rakuten Inc.

Tanaka is Japan’s youngest billionaire, according to a March ranking by Forbes magazine. The next youngest is Rakuten’s 48-year-old President Hiroshi Mikitani, with a fortune of $5.6 billion, according to the magazine’s ratings.

Gree is hiring more engineers to strengthen mobile-game development, it said in February. The company introduced titles including the “Sumo” card game and Namco Bandai Holdings Inc. (7832)’s “One Piece Adventure Log” in the second half of the fiscal year ending June 30.

Gambling Feature

Development efforts have been delayed as Gree and Japanese rivals had to remove a feature from their games under pressure from regulators. Japan’s Consumer Affairs Agency said in May 2012 that a sales-generating game feature known as “comp gacha” (pronounced “gotcha”) may have been illegal due to its similarity to gambling, prompting companies including Gree and DeNA to abandon it.

Gree is also trying to boost game offerings by buying smaller developers. Since 2009, the company has acquired stakes in 17 companies, including Pokelabo Inc. and Funzio Inc., according to data compiled by Bloomberg.

In February, Gree formed a mobile-game partnership with Yahoo Japan Corp (4689)., Japan’s biggest Web portal. The game developer tied up with Pac-Man creator Namco Bandai (7832), Toei Animation Co. and broadcaster TV Tokyo Holdings Corp. last month to start an animated program and sell related merchandise.

‘Very Cheap’

“Gree is investing aggressively for future growth,” said Keiichi Yoneshima, a Tokyo-based analyst at Barclays Plc, who expects the shares to climb to 1,600 yen, the fourth-highest of estimates compiled by Bloomberg. “The valuation of the company’s shares is very cheap.”

Gree trades at 6.6 times most-recent earnings, about a quarter the cost of the Topix.

Although the social-game market in Japan won’t return to past growth rates, Gree and DeNA, also based in Tokyo, still have opportunities as the mobile-game market continues to expand, Yoneshima said.

Even so, at least one early backer of Gree is reducing its stake. KDDI Corp (3632)., Japan’s second-largest mobile-phone company, said Feb. 19 it will sell half its 6.8 percent stake in the game developer by May 12.

KDDI is selling the holding to book an investment profit, and there won’t be any change in the relationship between the companies, said the Tokyo-based wireless carrier, which invested in Gree in 2006, before the game developer went public.

By contrast, SoftBank Corp. (9984), the nation’s No. 3 wireless carrier, will spend as much as 25 billion yen to raise its stake in game developer Gungho Online Entertainment Inc (3765). and make it a subsidiary, the mobile-phone company said March 25.

Gungho Profit

Gungho boosted operating profit almost eightfold to 9.3 billion yen last year on the rising popularity of its “Puzzle & Dragons” game, it said Feb. 14. The game, available through the App Store and Google Play as well as Amazon.com Inc.’s Kindle Store., reached 12 million downloads in Japan as of April 9, the company said April 11.

KDDI and Softbank’s moves are indicative of the future of mobile gaming, Macquarie’s Gibson said.

“The industry is changing away from existing platforms onto the new,” Gibson said. “I think Softbank and KDDI recognize that.”

Ant venom
02-06-2015, 10:57 PM
Great post guys.