Line to Shake Up Messaging Business to Spur Growth in 2017

(Bloomberg) -- Line Corp. is planning to shake up its staff and business to build on the 20-plus percent share gain since the messaging company pulled off the tech world’s biggest public offering of the year.

Chief Executive Officer Takeshi Idezawa is tapping top lieutenants Jun Masuda and Joongho Shin to lead the hunt for fresh growth ideas. Their new responsibilities will be announced as part of a broader revamp of the Tokyo-based company’s corporate culture at a town-hall meeting in mid-January, two people familiar with the matter said. 

While it might seem strange to alter strategy so soon after July’s market debut, subscriber growth is slowing, as is revenue from games and digital stickers. Line is under pressure to come up with new ways to make people spend on what is otherwise a free messaging service. At the same time, it’s seeking to expand its user base of 220 million in the face of competition from Tencent Holdings Ltd. and Facebook Inc. Line shares were down less than 1 percent on Wednesday, giving it a market value of 888 billion yen ($7.71 billion).

“We need to make sure that Line continues to produce destructive innovation,” Masuda said in an interview.

Idezawa, 43, a former life-insurance salesman, runs Line in a unusual arrangement, giving Masuda, chief strategy and marketing officer, and founder and Chief Global Officer Shin a lot of sway over the company’s strategy. Masuda is a high-school dropout, while Shin is a software engineer who created a competitor to Google’s search engine in South Korea. Between the three of them, they spent almost a decade trying out one idea after another -- online games, a social network and a blogging platform -- unsuccessfully until the company struck gold with Line messenger in 2011.

Expect to hear more about Shin and Masuda, who are more than just deputies to Idezawa; as a triumvirate, they jointly make all major decisions. They never vote and instead prefer to reach consensus, usually via a Line chat (with an occasional bear sticker thrown into the mix), instead of holding meetings with presentations.

“Having three people with very different backgrounds may be a really good idea,” said Parissa Haghirian, professor of management at Sophia University in Tokyo. “The main downside is that decisions you arrive at may not be very radical.”

While Line might be facing challenges, they’re nothing compared to what Idezawa experienced as a young executive at Livedoor, a now defunct web portal known to just about every Japanese person because its founder went to jail for cooking the books. Idezawa, then the head of the company’s mobile division, was left to clean up the mess.

Shin, 44, is in charge of overseas markets. While Line is already dominant in Japan, Thailand and Taiwan, the company has said it won’t enter countries where it has no chance of winning top share. Line’s current target is Indonesia, a fast-growing market that’s something of an anomaly in the messaging world because it is the only place where BlackBerry Ltd. remains No. 1.

Naver Corp., Line’s parent, bought Shin’s search company when he ran out of money and sent him to Japan to start operations there. Faced with the task of learning a foreign language, Shin spent hours a day memorizing the dictionary and watching yakuza movies. He was forced to switch to office melodramas after coworkers were shocked by the gangster talk that he was picking up. (He’s fluent now.)

Shin is a workaholic who answers emails in the middle of the night. He sleeps in two-hour bursts, a byproduct of Line’s explosive growth period that saw him circumvent the globe 10 times in two years. “I’m better at making things and prefer working back stage than being the front man,” Shin said.

Masuda, 39, will focus on creating new products in Japan. Line is already much more than a messaging service on its home turf, with people using the app to read the news, hail taxi rides and find part-time jobs. More breakout hits may come from its chatbot platform and services powered by artificial intelligence.

Masuda is an eloquent public speaker and a frequent panelist at startup events. He credits his gift of the gab to an unconventional upbringing. Masuda grew up selling things, helping out with his father’s often ill-fated ventures. Dinner-table conversations at his Tokyo home would often turn to business models and strategies for selling everything from household water purifiers to solar-panel systems.

In a culture where a formal education is a cultural prerequisite for success, Masuda managed to drop out twice: first, he first left high school at 15 and then later Waseda University, a top college in Japan. What resulted is an eclectic resume that includes writing scripts for TV quiz shows and organizing an odd celebrity birthday party, to a job on an assembly line and a stint at an internet policy think tank. Before joining Line in 2008, Masuda ran Japan operations for Chinese search giant Baidu Inc.

“I’ve learned something useful for Line from all this: just because something didn’t work for some people, doesn’t mean it can’t work,” Masuda said.

The three executives have spent the past six months crystallizing their experiences into a set of corporate values for Line’s 1,000-plus employees with particular emphasis on being wild, fast, embracing data and having fun.
 
“You need to be ready to change your philosophy, your culture and your brand,” Masuda said. “All three of us believe that the good times don’t last and everything can be lost in a moment. That’s why we’ve always remained hungry.”

--With assistance from Jason Clenfield To contact the reporter on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net. To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net, Reed Stevenson