Line Founder Named Co-Chief Executive as Japan Goes Cashless
Line Founder Named Co-Chief Executive as Japan Goes Cashless
(Bloomberg) -- Line Corp. is elevating its founder to co-chief executive officer as Japan’s largest messaging service looks to reignite growth by tapping into the country’s push to go cashless.
Shin Jung-ho’s promotion will take effect from April 1, the Tokyo-based company said in a statement on Thursday. Along with CEO Takeshi Idezawa, he is part of a triumvirate that also includes Chief Strategy and Marketing Officer Jun Masuda.
Faced with a stagnant user base and a business model that relies on advertising, Line is doubling down on payments to underpin other financial offerings and transform into an all-in-one app like Tencent Holdings Ltd.’s WeChat. Shin’s move comes just a day after the company announced a mobile-payments partnership with online marketplace Mercari Inc.
“What’s most important is that Japan is moving from a cash-centered society to a cashless one,” Shin said in an interview before the board meeting. “This year will mark a very important kickoff for competition.”
Shin, the third-largest investor in Line, will focus on making Line’s services competitive and promoting innovation with Idezawa concentrating on management, revenue and recruitment, the company said. Shin said he wants to break down silos and oversee the evolution of the messenger app, which boasts about 80 million users in Japan alone.
Shares of Line were little changed on Thursday before the announcement . The stock is little changed this year compared with a 5.9 percent advance for the benchmark Topix index. Naver Corp., South Korea’s biggest search engine, remains the controlling shareholder of Line with a 73 percent stake, according to data compiled by Bloomberg.
After a meteoric rise in Japan, fueled by rapid adoption when phone networks faltered after the country’s massive 2011 earthquake, Line set about expanding overseas. Since its 2016 initial public offering, the company has scaled back to focus on markets where it is dominant. While its position in Taiwan and Thailand is secure, Shin said it may struggle to get back to the top in Indonesia.
More importantly, Line is growing its share of the Japanese market, which is key to the push into mobile payments as it battles about a dozen rival services. That includes e-commerce giant Rakuten Inc., which runs its own bank, and PayPay, a venture with the backing of SoftBank Group Corp., Yahoo Japan Corp. and India’s Paytm.
Shin said the strength of Line’s position in Japan will give it an “absolute competitive edge” as it adds financial service because consumers will want to use the app they find most indispensable.
“Shin faces competition from very deep-pocketed rivals, but his advantage is in having an app with very high usage,” said Vey-Sern Ling, a Bloomberg Intelligence analyst. “In many ways, they are modeling themselves after the Chinese chat app, WeChat.”
Along with payments and content such as music and manga, Shin expects artificial intelligence and banking to help the bottom line in the next three years. Line last year raised 148 billion yen ($1.3 billion) in a convertible bond sale to help fund the expansion, adding pressure on Shin to deliver.
Smart speakers are another area of focus on to show off Line’s prowess in AI, Shin said.
A self-described workaholic, Shin said he is obsessed with calculating risks and reflecting on his past failures. Before launching Line, he led the company through about a decade of relative obscurity, distributing online games and promoting Naver’s search engine.
Shin said more than half of Line’s 8,000 employees joined the company in the last three years and his new title gives him the proper standing to drive a corporate culture that unites them while recognizing their differences.
“I never knew 10 years ago we’d be here,” Shin said at Naver’s headquarters in Seongnam, south of Seoul. “We’ve been successful when we read user needs accurately rather than just doing what we thought we could do well. We need to keep thinking that way.”
--With assistance from Pavel Alpeyev.
To contact the reporter on this story: Sam Kim in Seoul at skim609@bloomberg.net
To contact the editors responsible for this story: Edwin Chan at echan273@bloomberg.net, Robert Fenner
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