Mercari President Koizumi × TRINUS CEO Satō Interview
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Mercari as listed in June 2018 in the fifth year since its establishment, continues to launch new services one after another without stop. Mercari, inc. President Mr Koizumi and our CEO Satō engaged in conversation, revealing that they share common roots, having started their careers at Daiwa Securities at the same time. Being acquaintances for 20 years, the two comrades engaged in a heated discussion regarding their businesses and their aspirations for the future.

Unexpected Common Grounds between TRINUS and Mercari

As TRINUS’ speciality lies in bringing the most value out of intangible “skills, techniques and technologies”, I’d like to ask what are your opinions on “Japanese Technology”? I would like to hear from both sides, what your views Japanese Technology are.

SatōWith regards to technology, I think there there’s a lot which goes to waste. I have heard from many companies that it’s common for there to be a mismatch between what the research department focuses on, and what the company’s business department focuses on. There are cases where technologies with potential are buried away because the company’s business model doesn’t know how to incorporate those ideas. However, looking at these technologies from another industry and as a third party, it is possible to realise their true potential.

For example, our company helped a material called “MAPKA” find a new lease of life. MAPKA is a new material derived from recycled paper which is used as a plastic substitute. Though it is commonly used in food containers and as a building material, viewed from the eyes of a designer, it could be transformed to make a product such as the “Flower Pencil HANA”. Just by changing the perspective a little, it was possible to breathe new life to an underutilised technology, create a whole new sense of value.

KoizumiFrom the point of view of “Finding new value”, I think value changes with respect to situation and environment. For example, under the scorching heat of the summer sun, you’d be happy to spend 200 yen to drink a glass of ice-cold water right? However, if it was a cold winter’s day you wouldn’t want it right? In this way, value varies greatly depending on the circumstances.

Taking this into account, we at Mercari provide a marketplace where our customers can buy and sell whatever they want. I also believe that modern technology can be used to match products and services, giving them new value to prevent them from being buried in a sea of redundancy.

SatōWhat a great summary! (laughter). Though from a different perspective, TRINUS’ business model aims to realise new value similarly. For example, we took a dormant technology from Sapporo Beer and published it on our platform. This allowed for a designer from Toyama Prefecture to come up with a design, which is soon to become a brand new product to show the world. Using our platform we aim to bring together technology, creators, and users to bring new value to the world. Though the things that we deal with are different, I think that our company thinks about ‘value’ in a similar way to Mercari.


The things people yearn for in a global society where uniformity and discontinuity are advancing

How do you think Japanese services are perceived across the world?

KoizumiAren’t we free to export and provide services abroad? Whether or not they’ll be accepted is a different matter though.
Recently I’ve felt that people’s lives around the world are becoming more and more similar, for better or worse. The world is becoming a little more boring, as people live ‘cookie-cutter lives’. Don’t you think that the people who live in Tokyo, New York, and Paris lives similar lives? In the morning, they buy Starbucks coffee, consume the same sort of social media and news… people’s lives are becoming more or less the same. Amongst this wave of globalisation with similar sorts of products and services, I think our lives are becoming more immobilised as they are surrounded by the same old infrastructure.

Based on this wave of global ‘uniformization’I think it has become easier to deliver services across the world. However, in this case it just becomes a battle of capital power. In order to get as much publicity on GAFA, effort is placed into existing services and infrastructure, leaving no room for startups to emerge.

Amongst this however, I sense that there is also discontinuity. For example, between different towns and cities, people have a different way of thinking. Even in America, people have different ways of thinking between states, resulting in support for different political parties.
Diversity diminishes and discontinuity develops, I think our problem is [what sort of a future shall we create?]. In a larger, global context, the key issues are what position do we wish to take, and how exactly do we go about creating the future.
What do the products and lifestyle proposed by TRINUS bring to a world such as this one? How will they integrate into this society? I think that this is an era where matters such as this are becoming ever so important.

SatōDo you mean to say that as people’s lifestyles become less diverse, uniformity becomes more and more desired?

KoizumiAmongst this wave of uniformity, I think it’d be nice to find what this society needs, and to create small communities and market places between the cracks of discontinuity. I think it’s a struggle to sell generic goods which compete on the grounds of functionality and price, in this age of consumerism. The challenge is trying to get your intentions and context across to the buyers.

SatōTRINUS main business is manufacturing but, in this society with an abundance of stuff, in a society where it’s pointless making useless things, what sorts of things do people actually want? Is it daily necessities and infrastructure which will help people’s lives or is it art which will enrich their lives; I think it falls into one of these two categories. When it comes to daily necessities, as previously discussed large manufacturers’ products and services have the upper hand so I think it’s difficult to compete here.
That’s why TRINUS has opted for the latter option, making things which have story and context. Here it is possible to create goods with ‘individuality’ which have great ‘ideas’ which don’t fit into the cookie-cutter society. When people see things created by such people, they may laugh or find enjoyment from that which is unique. That’s why I think such products will overcome this disconnected cookie-cutter society, being accepted by a wide range of people. That’s also why I put so much emphasis on product ‘stories’.

KoizumiI think there’s no mistake in saying that this is an era where products with stories will thrive.

An era where products with stories are embraced

TRINUS and Mercari emphasize the ‘experiences’ and ‘stories’ of their products and services. What opinions do you think people have on the stories of manufacturing processes and user experiences?

KoizumiMercari is a platform and so I think it’s great for people to use it to create their own stories. There’s space for people to create their own communities on our platform. Even if a user’s motivation is to make money, I think it’s a waste to simply throw things away. Whatever the emotion is, it’d be great if the things on our platform each had their own story to be appreciated for.

SatōGoing off on a tangent, when I started my business I had hardly any money so I sold a bunch of my stuff using Mercari (laughter). If you think about it that way, your company has effectively supported mine. I guess this means that Mercari has been an important part of my entrepreneurship story.

KoizumiWhether it’s satisfying your need for approval or whether its housewives wanting to communicate, I’m happy for our platform to be used for any reason.
The average use time of EC websites is about one hour per month, like on Amazon for example. In comparison to that, Mercari averages five and a half hours per month. This figure is comparable to and exceeds that of social media. This is because Mercari isn’t solely based off an EC model, but incorporates elements of gamification and user approval.
This makes it easier for our platform to be embraced by users, allowing them to use it all they want and for as long as they want. I aim to create services with room for user input so people can create their own communities in which they can thrive. For example, mixi is mostly an empty blog site, populated by their users, allowing them to do whatever they want (laughter).

In this way, I like creating frameworks which allow users to thrive and do whatever they want, fundamentally speaking that is.

TRINUS makes things but Mercari does not. Tell me about each of your businesses and your impressions of them.

SatōOur company is a manufacturer, and Mercari is more or less a company which strives for efficiency. Rather than making new things, they take what already exists and create a value stream by connecting those things to people. In contrast to this, I wonder what Mercari thinks about our business as a manufacturer (laughter)

KoizumiPlease go ahead and keep making things (laughter)

SatōIf there’s anything you have to say about manufacturing I’d like to hear it!

KoizumiWe previously talked about stories, and there are things on Mercari that sell well and things that don’t. To put it simply the things which sell well are “things which have stories”.

Currently, apparel sales and luxury brand goods are selling well, aren’t they? I think that is in part thanks to Mercari. Even if the retail price of such goods is high, people are more likely to buy them if they think they can sell them on Mercari. Essentially, if there’s a secondary distribution channel, it makes it easier to buy expensive things on the primary distribution channel. In short, the reason why foreign cars and SUVs are selling well is because people know they can get a good trade-in price for them. Such trading culture helps boost the economy.

Thanks to the secondary distribution channel, primary distribution is better off. In addition, people may be afraid to buy brand new things but, by getting to try them out at a reduced price on the secondary channel, they might think “This is pretty good, I like this brand!”, and then later proceed to buy their new products. The secondary distribution channel has the power to affect the primary distribution channel, and it continues to influence the economy.

SatōIndeed, the economy really is changing. I really feel that not only making things but the way things are sold has a big impact.

KoizumiThough luxury brand goods are selling well on Mercari, the best selling brand is UNIQLO. Their goods are relatively trendy, and because their clothes are so popular, everyone knows how they fit, and this makes them easy to buy.

Comparing luxury cars to hatchbacks is like comparing luxury clothes to fast fashion but this polarisation is also happening on Mercari. It’s difficult to sell goods which are in the middle price range. If it’s something that you really like, you can just buy it at its regular price brand new. Whether it’s luxury brands or UNIQLO, there’s a clear story or benefits in both cases. It can be said that brands and products which do a good job of telling their own story, and defining their value do well.
As a reason to why people buy things, people like things which have clear benefits, a fair price and a story and if it’s something that they are particular about, there’s almost no limit to how much money they will spend. I think purchasing falls into these two categories, and also believe that the products of this world will be redesigned to fit these demographics.

SatōThe cycle of buying and selling repeats itself, sometimes you end up selling things with a bit of profit. This cycle continues to speed up thanks to the help of technologies and infrastructures such as Mercari. Consumption behaviour really is changing.

TRINUS is also involved in a lot of food products too. Do you think food has a particularly strong “experience” element to it? If you were to specialise on food products do you think consumption behaviour will change?

KoizumiFood is also becoming a more story-driven product than ever before, with the face of the manufacturers becoming more and more involved. In the past, or even now actually, the value of food was placed on its safety, security, shape, visual appeal and its colour. Such qualities don’t have much to do with the face of the manufacturer and as a result, large chain companies with capital have ended up dominating the food sector.

However, now even without capital intervention, you can guarantee the quality of food by putting a face on it and putting “the producer’s information” on it. For example, even on Mercari, grocery sales are doing well but, that’s because people can “review” them. You can review the groceries sold by a particular individual, and those reviews are there to be read by everyone. By making the reviews public, people can establish trust in the quality of those goods without the need for financial investment. I think of it as a platform with mutual benefits.

Once mutual trust has been established, it’s quite easy for the producer and buyer to engage in direct trading without the need for a middle-man. This allows the producer to make a higher profit, whilst allowing the buyer to purchase at a reduced cost. Mercari charges only a 10% transaction fee, allowing the producer to sell even if their goods are slightly off in colour or shape. The allure of the internet it empowers is users. Giving both the producers and the consumers freedom of choice is linked to their empowerment.


The importance of consumer initiative

Is it possible that TRINUS and Mercari will work together?

SatōHmm, I wonder. I think the concept of empowering the individual is something that we both share. Creator’s designs are published directly on our TRINUS platform, and the products that are made from those designs are published on our website for users to directly purchase from us. In that regards, we could be considered similar. Using the internet to connect people is something that I think we share in common.

Are there any points that you empathise with TRINUS on?

KoizumiOne of the things that I agreed on was that a given company will only look at certain technologies from a single perspective, preventing them from being evaluated wholly and their value fully realised. I think there’s lots of value yet to be realised by various industries. Looking at such technologies from various perspectives should allow them to be interpreted in various ways.

Large corporations are encouraged to engage in open innovation with various other companies, and I think the time will come where companies will realise that there is a limit to what they can develop alone. By using a model such as TRINUS’, collaborating ideas and fantastic technologies from various industries, I think we can make the world a much more fun place for consumers. There’s a story to be had there, and I can already imagine the joy that the users will have. I think it’s this is the era for that sort of consumerism to become a reality. In the end, I think it is the end for bubble growth period type consumption, where there’s less choice than meets the eye, to come to an end. Instead, it’s an age where the user is entrusted with the decision of choosing what they want to buy. Even with this choice, there will still be people who choose the ‘cookie-cutter life’ and that’s of their choosing.

I think that people should be able to freely choose between purchasing mass-produced goods and not so mass-produced things.
People may say “Well then Mr Koizumi, if the age of mass production is to come to an end, does that mean there will be no more mass production and consumption?” but that’s not the point. It’s to do with giving the consumer initiative and allowing them to create their own reasons as to what they choose to buy.

Making this a binary conflict, take lodging for example: “Do I stay in Hilton or Airbnb?”. Rather than condensing it down to one choice, it’s about allowing the user to make their own decisions based on their situation and mood. Like “If I’m staying with my girlfriend I’ll take Hilton, but if it’s a solo trip Airbnb will do fine”. I think that “giving the consumer initiative” is one of the biggest benefits that technology has provided us with. Story-based consumer behaviour is evolving, and so I think TRINUS has a good stance to influence this era of consumerism.

Birthing serendipity with the power of technology

It appears that the power of choice is more in the hands of consumers than was the case before. Even in such a society, do you not think people will take the safe route of the ‘cookie-cutter’ purchasing lifestyle?

KoizumiI think purchasing behaviour will change greatly based on whether people are interested or not.

SatōThose who are happy with anything can just go with the mass manufacturing flow, and those who are particular with their purchases will appreciate the importance of the product stories.

KoizumiI think that consumers with taste have both their known tastes and subconscious tastes. Their known tastes are easier to get a grasp of, but it’s also important to note their subconscious tastes.
When some sort of coincidence results in me stumbling across a product with a story, I realise that “this might be just right for me”, and I wish for technology to support such serendipity.

EC services can only give you recommendations based on your purchasing history right? However, now and into the future, all sorts of information is becoming stored as data, and I think that can be analysed by AI to predict all sorts. There are bound to be people who will say negative things about this, but if you look at the positive aspects, AI can be used to propose “hey, if this is your lifestyle, wouldn’t you fancy something like this?”. If you only look at peoples known tastes as is the case now, I think you miss out on the opportunity for serendipity. The sort of serendipity where a purchasing experience makes a positive difference in people’s lives.

Up until now, ubiquitous companies access the internet and gather all of the data they can themselves. However, it is soon turning towards a world where AI is prevalent, and such technologies will support decision-making processes.
For example, “It’s nearly your child’s third birthday, do you want to sell these clothes on Mercari?”.
I think of AI as a tool which supports decision making and so I reckon this will bring about a new type of consumer behaviour.

What is TRINUS’ approach?

SatōWhen it comes to potential needs, I think of innovation as creating potential needs that people have, and this is something that I’d like to do. It’s hard to determine the potential needs because it’s not the sort of thing you can find out from product development phase questionnaires. You can find out what users are dissatisfied about and how they think existing products can be improved, but it’s difficult to hear about the preferences they aren’t aware of themselves. I think that technology will be the key to solving this issue.

I often use this as an example; back when we lived off candlelight, if you were to ask how you could improve lighting, you’d get suggestions like “it would be handy if it lasted longer”, or “candles are dangerous so make it more difficult for them to fall over!”. You’d just end up getting answers which try to improve upon candles. However, if you incorporate a technological background to this, you can get a completely new idea such as [the lightbulb]. In this way, you can go from 0→1 to create something brand new.

Using technology as a base allows all-new products to be created beyond people’s imagination. That’s why TRINUS continues to engage in technology, to influence consumer behaviour, and I think this will dynamically change people’s lives.


The three essential elements for manufacturing and incorporating large corporations

From the point of view of discovering potential needs, what are your thoughts on manufacturing?

KoizumiThe three essential elements to manufacturing are 1. A new idea, 2. Listening to the voice of the customer, 3. Homage existing products. I think these three just about cover all bases. If you disrupt this balance, you’ll end up producing products which don’t satisfy customers but, also looking at the customers too much you won’t be able to make impactful products. If you can do a good job of balancing these three aspects, I reckon you have a good chance of your products and services being embraced by customers.

SatōThat’s also an important part of TRINUS’ theme. The [TRI] in TRINUS is Latin for [Three – as in triple], and our image is to bring together “users”, “technology”, and “design”. The company’s name comes from the concept of pursuing these three pillars and overlapping them together. The three elements that Koizumi mentioned are also an important part of what we do. For example, even if you think, “Let’s pursue this technology!”, you won’t get very far in creating a meaningful product if you don’t think about it from a design and end-user perspective.

Straying away from manufacturing and looking at the business side of things. The pair of you started as venture companies and have succeeded in working together with large corporations. Do you see yourselves continuing to work with such companies in future?

SatōI strongly believe that large corporations need to engage in new challenges but, their current operating model is too effective that it’s difficult to interfere with it to start something new. That’s why I think there is merit to be had in large corporations collaborating with smaller venture companies, to use their momentum and achieve something.

TRINUS’ dreams don’t just stop at “let’s achieve something between a large company and a venture”, we aim for our efforts to actually be realised. Not only do we engage in design development and test marking on our platform, but we go to companies to present our efforts, follow the companies to help them make decisions, and follow them till our products reach the market. Because of this, I believe there is meaning to be had in large corporations working together with TRINUS.

KoizumiLarge corporations in this era of mass consumption are self-contained, and they’ve coped fine with doing everything by themselves however, I think it’s becoming increasingly difficult for them to meet diversifying customer needs. On the other hand, I don’t think that it’s necessary for ventures and large corporations to collaborate unless there are clear merits for both, making it a win-win situation. There are many problems which stem from large corporations having management teams which lack a CTO who is familiar with technology. This results in it not being possible for such companies to conduct in-house technology assessment, making it difficult for them to work together with ventures and other external companies. It sounds like a laughing matter, large corporations don’t always do a great job of communicating and they can find it embarrassing to ask an external venture company for help, for the venture company to say “The technology you are looking for is right under your nose”. It can also be the case where the venture company comes in thinking that they can help, only for them to bite off more than they can chew (laughter).

I think it’s important for both parties to step up, and for them to understand each other’s strengths and weaknesses to work together. Otherwise, nothing good will come out of the partnership. Forming an alliance is similar to marriage in this regards. There are lots of couples who are lovey-dovey after getting married, but once facing the reality of the burden that is raising children, they become disheartened and fall apart. That’s why I think it’s important for partner companies to understand each other’s strengths and forgive each other’s weaknesses from marriage to the child-raising phase.

It’s quite common for both large corporations and venture companies to ask us “How come Mercari is doing so well with large corporations?”. For example, when we went to propose our idea for Mercari Deliveries to Yamato Transportation, we looked at their reports and plans from the past three years to get an understanding for them, so that we could make a meaningful plan and push our strategy. There’s little point in trying ventures and large corporations working together with they don’t think about what their current strategies are, and also think about ‘what sort of story they want to tell in the future’ right? I think communication and establishing mutual understanding is really important. Hence, I think it’s easy to understand such a relationship as being similar to love and marriage (laughter).

SatōWe also work with large manufacturing companies quite regularly, and we’ve found that it’s quite expensive to deal with patented technologies which aren’t utilised. Do we use it? Do we throw it away? Do we publish it? These are just some of the concerns that large manufacturers have.

We get manufacturers to show us what technologies they have, and then discuss what has potential to be developed as a product, before progressing it as a collaborative project. When organising such things, both parties need to assess each other. We have companies come up to us and say “only since working on this project with Satō, we realised that our company has such technology” (laughter). When I hear things like this, I get all excited as if digging up a hidden gold mine (laughter).

Expecting linear challenges “I don’t care if your company collapses, I want you to keep going”

Finally, please tell us what you expect from each other as people and as businesses!

KoizumiFor Satō, I don’t care if his company collapses, I want him to keep going. Rather than following a life on rails, I also chose to quit being a salaryman and find what it means to be alive. I want TRINUS to also keep going with its ambitions and fulfil their aims. I believe such purity of heart to be the key to overcoming hardships.

If you start wondering “Is what we are doing helping us to achieve our goals?” you might start wavering, losing sight of why you are working and it can be very tough. Do what you are doing until your hair falls out (laughter), that’s what I’d like from you. I want you to tackle your challenges head-on. Mercari also had a go at setting foot in America but, I have little motivation in what I have no interest in, and I want TRINUS to be egoistic and pursue their own goals!

SatōMercari is a shining example of what a start-up company is capable of… I want them to keep up their momentum and stand as a role model for everyone. I think they have all sorts of challenges ahead of them whether that be going abroad or engaging in new themes. I think it’s unprecedented for a Japanese company to have a successful platform overseas. I think it’d be great if you could go all the way with this!

KoizumiA world of excitements awaits us both indeed!