February 20, 2019
In Japan, Recruit Holdings, the center of a corporate scandal that ended with the ousting of the prime minister, is being put back together by a group of employees. Whereas the former Recruit was a magazine publisher and job-placement firm, the new version is an Internet behemoth that combines the capabilities of LinkedIn, Zillow, Yelp, eHarmony, Booking.com, Square and many other apps. Recruit chief executive Masumi Minegishi is betting the company has the experience and resources to dominate consumer spending by 2030.
Bloomberg reports that, currently, Recruit’s value is “about a tenth of Alibaba Group Holding and barely five percent of Amazon.” (Pictured below is Masumi Minegishi.)
“Recruit was an Internet pioneer, starting their first website in the same month that Yahoo launched in 1995” said Harvard Business School professor Sandra Sucher. “This is not their first rodeo — they know how to leverage new technology.”
The company launched during Japan’s economic boom in the 1980s, founded by Hiromasa Ezoe, who “concocted a shares-for-favors scheme to grease business deals and gain insider information.” He gave more than 70 politicians and business leaders stock “in a subsidiary that was about to go public, netting many of them a fortune,” and when the bribes were revealed, Prime Minister Noboru Takeshita was forced to resign.
In the 1990s, “Japan’s asset bubble burst and Ezoe’s speculative property bets saddled the firm with $14 billion in debt, leading to his resignation and the sale of a controlling stake to Daiei, a Japanese retailer.”
Employees began “moving their job-recruitment services and publications onto the web” at the very beginning of the Internet age, and now Recruit is made up of 200 websites and 350 apps, for travel, job seeking, and all kinds of material that used to be sold in bookstores. As a result, Recruit has a valuation of “about $46 billion, three times more than Yahoo Japan and four times that of Rakuten, its nearest web and e-commerce rivals.”
After paying off its debt and buying back some of its shares from Daiei, Recruit went public five years ago; its shares have since tripled in value. “Like Alibaba and Tencent, Recruit has a very large home market to build and grow its multiplatform businesses, but it is far more focused in its mission and strategy,” said Sucher.
With its panoply of websites and apps, Recruit can “track consumer behavior in minute detail, and pass that knowledge on to businesses eager to attract and retain customers,” selling ads or “taking a cut” by matchmaking businesses with customers.
Jeffries Group analyst Shinnosuke Takeuchi said the company is “extremely well-managed.” “The biggest weakness — and opportunity — for Recruit is whether it can come up with a completely new business model that can challenge companies like Google and Amazon,” he said.
Chief strategy officer Shogo Ikeuchi said that, “to compete globally, the company must figure out ways to combine user information from all its apps, websites, payment platform and loyalty-points network, and develop algorithms that use the data to deliver new services.”
The company recently bought Indeed.com and Glassdoor; European restaurant-booking site Quandoo, U.K. spa and salon reservation portal Treatwell and Dutch staffing firm USG People.