BBC Capital

The Japanese start-up founder who beat the odds

About the author

Chana is a journalist based in New York City, writing about business, finance, and workplace life. She has written for The Wall Street Journal and spent more than a decade at Forbes, including three years as a Tokyo-based foreign correspondent.

Tomoko Namba.

Tomoko Namba.

In Japan, only the rare startup finds success. Venture capital is scarce and failed entrepreneurs have a tough time getting another job. One of the few women to overcome these odds and found a Japanese public company is Tomoko Namba, a former McKinsey & Co consultant who received her Master of Business Administration degree from Harvard Business School.

Namba started Tokyo-based social gaming company DeNA Co Ltd (pronounced “DNA”) in 1999 and led it to the top of Japan’s mobile auction and social gaming markets. DeNA’s mobile gaming platform, MoBaGe, is now rolling out worldwide.

Namba stepped down as chief executive officer in June 2011, although she continues to serve on the company’s board. Thanks to her stake in DeNA, Namba has a net worth of $545 million, making her the 47th richest person in Japan, according to Forbes magazine.

BBC Capital spoke with Namba about her secrets for success and what she has learned about starting and managing a multi-billion dollar global brand.

BBC Capital: What are you doing now that you’ve left the CEO role at DeNA?

Tomoko Namba: I’m a member of the board involved in important decisions. I’m leading one or two new business development projects and I’m in charge of our e-commerce business as well as leading recruiting. When we founded the company it was an e-commerce company. (But now) our biggest business line is social gaming, MoBaGe. We keep growing in the social gaming business, but the growth rate has decreased and now we are paying more attention to e-commerce. It’s fun to be back.

BBC Capital: How did you get started?

Namba: I was a management consultant. In 1996 I made partner at McKinsey and around that time I started doing a lot of internet-related projects, giving recommendations to old-fashioned or established companies about new businesses using the internet. I was 34.

I was really happy at McKinsey. I was able to do almost everything I wanted to do, but as a consultant I was not able to be involved in the implementation of recommendations that we made. In 1999 I got the idea of starting my own company.

BBC Capital: How did you get the courage to leave and start your own company?

Namba: I was having dinner with the CEO of an internet service provider, Senji Yamamoto of Sony’s So-Net service. I was telling him to start doing internet auctions. There was eBay in the States, but nothing like that in Japan, and I thought it would be a great idea for them to start internet auctions. I got really energetic and the discussion got heated.

Finally Senji said, “Why don’t you do it? You look really excited about it.” It was the first time in my life I thought about starting my own business.

Chantal Glenisson, Sallie Krawcheck, Julia Hobsbawm.

Chantal Glenisson, Sallie Krawcheck, Julia Hobsbawm.

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Very few consultants from McKinsey started companies at that time. And there are very few women entrepreneurs. I thought I would be able to do well because I was giving advice to CEOs. My specialty was internet business. I thought I would be able to do far better. But… I made every single mistake I could think of.

BBC Capital: What were some of your mistakes?

Namba: We decided to outsource the systems development (of our service’s core software). We were in a hurry and wanted to become the first into the market. We kept getting good reports that the system was working. I thought I would check it in the test phase. But the day before the testing phase started, we found out not a single line of code was written. They were cheating us. So there was nothing to test!

BBC Capital: What did you do?

Namba: We panicked. We brought in another systems house and started from scratch. In the meantime, our biggest competitor, Yahoo, came in and started their auction service ahead of us, and they became No 1 in this market. Then Rakuten started. We were able to catch up with Rakuten but not with Yahoo. Yahoo was a phenomenal success. We became No 2, but we had promised our investors we would be No 1. Yahoo was 30 times bigger than us. We also promised investors that we would turn profitable within a year, but it took four years.

BBC Capital: When did things start going right?

Namba: We did everything to catch up with Yahoo but we were not able to. In 2001 I shifted our focus … to becoming profitable. We changed our business model from internet auctions to an internet shopping mall. By doing aggressive marketing, we got a sizeable customer base. And that worked really well. We turned profitable quickly in 2002.

Now, I said, let’s start something new to become No 1 again with this profit. We tried many services and one of them was extremely successful, which was our mobile auction service (a system to let consumers bid for products using their smartphones). Then we started a mobile ad network, mobile social networking service, and mobile social games. We kept throwing huge hits since then.

BBC Capital: Were you able to use a personal network to help you expand the company?

Namba: At McKinsey all the projects are confidential. It’s not an organisation that makes it easy to develop a network externally. I tried to raise capital in 2001 and 2002, and nobody was willing to give me money; nobody wanted to invest in a losing company. One of my partners at McKinsey invested as an individual. Friends did help me, and I made more friends after founding the company and they also wanted to help. But I wouldn’t say that I was able to capitalize on the network that I had at McKinsey.