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Exclusive Interview: Rakuten's Mikitani Calls $900 Million He Paid for Viber a "No-Brainer"

Also: "Messaging apps are taking over the world."

“This is a no-brainer,” was the first thing that Hiroshi Mikitani, co-founder and CEO of Japan’s online commerce giant Rakuten, said to me in his first interview after he spent $900 million in cash to buy messaging app Viber.

“Messaging apps are taking over the world and, while search is one of the strongest platforms, what is happening in communications is very, very important,” he added.

Yes, indeed. Perhaps software is eating the world, as entrepreneur and investor Marc Andreessen once famously said, but messaging apps are what it is enjoying most. Viber, launched in 2011, has close to 300 million users, for example, on all the major phone platforms.

And it’s a critical area of investment for Rakuten, giving it an international technology platform with the ability to make Internet calls on a range of devices such as smartphones.

“We have content and games and commerce and markets and services, but they need the ability to reach out and talk to customers wherever they are,” said Mikitani. “With this, we can make buying more secure, but also more human.”

The Cyprus-based Viber is a voice-call application, often called an OTT (over-the-top) service. Operating in almost 200 countries, it is the only messaging player with a globally significant presence besides WhatsApp. Others are big, but only regionally, such as Japan’s popular Line or Korea’s KakaoTalk. Viber — which is very voice-oriented — has also been aiming at claiming the Internet communications business from Microsoft-owned Skype.

Interestingly, linking messaging with commerce was the big idea behind eBay buying Skype many years ago — a deal that never jelled despite its promise. Besides execution issues, that was largely due to the lack of devices like smartphones and tablets at the time.

“Today, to survive, I think you have to have a messaging app, because that is where consumers are active,” said Mikitani, who noted that founder and CEO Talmon Marco and other key execs have a long-term commitment to stay. (Marco, an American-Israeli, was also co-founder and former president of the P2P media and file-sharing client iMesh.)

Mikitani’s talks with Viber began as a possible minority investment, much like the one Rakuten made in scrapbooking giant Pinterest. “Viber was very under-the-radar to U.S. companies and it did not have any VCs either, so we started talking deeply about being part of their fundraising,” he said. “You look at something like Line and it’s $10 billion valuation, so this seemed a real find.”

Line, which now will be Rakuten’s main competitor in Japan, is likely to go public and has significant revenue as a mobile gaming platform.

Rakuten, which has mostly been a huge e-commerce business, has been increasing its efforts to diversify, from buying e-book reader Kobo to investing in Pinterest to the most recent purchase of premium video service Viki. The company also has an Internet bank, a travel service and even a baseball team.

In Viber, Mikitani said he saw the major opportunity. “I fell in love and proposed to buy it,” he said.

“To me, it is a miracle and a huge deal.”

This article originally appeared on

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