Viber taking on the global giants

Djamel Agaoua Photo: PR

Rebranded as Rakuten Viber, half of the Japanese company's employees are based in Israel. CEO Djamel Agaoua tells "Globes" about the company's ambitious plans.

In early 2014, headlines accompanied another impressive exit: Japanese giant Rakuten acquired Viber, which developed an app for video and voice calls and instant messaging, for $900 million. Viber was registered in Cyprus, not Israel, but the people behind it were Israelis Talmon Marco, Igor Magazinik, Sani Maroli, and Ofer Samocha. Rakuten has not merged Viber into itself; it has enabled Viber to grow. At the time of the acquisition, Viber's app was installed by 300 million people, compared with 950 million last September. At the same time, various reports say that only one third of the people who installed the app use it at least once a month.

The company, which was rebranded this year as Rakuten Viber, has 400 employees worldwide, including 200 in its Bnei Brak offices and the rest in San Francisco, Minsk, Sophia, Moscow, Paris, Singapore, Manila, and Luxembourg, where the company headquarters is located. In its reports for the third quarter of 2017, Viber reported 104% growth in revenue, compared with the corresponding quarter in 2016, although the amount of revenue was not reported. 58% of the company's revenue growth resulted from calls for payment to mobile and landline phones, and 42% from content services, mainly the acquisition of stickers and emojis (Japanese ideograms) within the app. The company says that the app will also generate advertising revenue, but meanwhile has not reported revenue from this instrument.

Last February, more than a year after Talmon Mark officially resigned as CEO, Rakuten announced the appointment of Djamel Agaoua in his place. Agaoua, a native of France, has two decades of high tech experience as founder and CEO of a number of companies, some of which he led to exits. In the first decade of his activity, which began in 1999, Agaoua initially focused on software as a service (SaaS), then switched to Internet and mobile. Among other things, he served starting in 2012 as CEO of mobile advertising technology company MobPartner, which he managed from Silicon Valley, and led it to a successful exit within a few years. Chinese company Cheetah Mobile, the world's third largest app developer, paid $58 million for MobPartner, after the latter had raised only $3.5 million. Cheetah also appointed Agaoua as VP, a position he retained until late 2016.

Agaoua currently faces an extremely ambitious mission. According to Rakuten's reports for 2016, Viber's target for 2020 is no less than two billion users. The strategy selected in order to make progress towards this target is using the assets of the Rakuten group, which is listed in Tokyo at a $15 billion market cap and provides more than 70 services in 190 countries. Rakuten wants to also do the same thing in the opposite direction by introducing other services that it provides (financial, content, commerce, and others) into Viber, thereby reaching areas in which Viber is strong and the group's other services are less so, mainly in Eastern Europe, Russia, the Middle East, and some Asian markets.

"Globes": You have set very ambitious targets, although there are places, such as Israel, ironically, in which Viber has almost no users. How will you manage to compete with instant messaging giants like Facebook and Skype?

Agaoua: "The competition is tough, but it's not a matter of replacing the competing apps. You live in a country that is very loyal to a single service, but many users in the world have three or four instant messaging apps that they use simultaneously, so this isn't a problem. We have enough investment capability with Rakuten's backing, and we're also big enough in numbers to be successful, so there's no reason to fear. You know what? I'm very excited about competing with Facebook. Rakuten CEO Hiroshi Mikitani is very excited about competing with Amazon and Facebook. They're the biggest in the world? Great, let's compete, let's do it. We don't have to beat them in numerical terms in order to succeed. For us, success means a lot of revenue and profit in the bottom line, and satisfied users in the middle. The numbers don't tell the whole story, although a company like Snapchat proved that you can begin from scratch and compete quite quickly with the largest companies. It really doesn't scare me."

What are the next steps you'll take in order to strengthen the integration between Viber and Rakuten?

"The first step for me is to be closer to Rakuten by rebranding Viber as Rakuten-Viber, and trying to use Viber's platform to distribute more of Rakuten's services, and vice versa, to leverage Rakuten's assets in order to support Viber's growth. For example, in the US, where Rakuten is positioned in a very strong place, both in sponsorships, for example of the Golden State Warriors in the NBA, and in services, or in Japan. We're trying to use Rakuten's strong position in order to grow, and in places where Viber is very strong, such as Eastern Europe, we're trying to offer our customers some of the services that Rakuten is able to offer."

Can you give some examples?

"We built a version of Viber in the US - a keyboard extension according to subjects, which facilitates a connection to the Rakuten world of commerce (the online store). With one of Rakuten's companies in the US, OverDrive, which provides ebook solutions for public libraries, we're now building subscriber plans on the basis of Viber that make it possible to manage the activities of the libraries' reading clubs. In some Eastern European countries, we're starting to offer Rakuten's services in C2C."

Are you involved in shared travel services, in which Rakuten has invested?

"We haven't done things in this area, but there are many plans. We're talking with managers from Lyft and Cabify in order to check out possibilities for connections between services."

What is the role of chat bots in Viber's activity? It is considered an area in which you specialize, but as of now, the technology is not really taking off.

"Chat bots are an important technology, but the way they began, mostly by Facebook, which developed the door for everyone to develop a chat bot, has resulted in many poor chat bots that drew a strong counter-response. Millions of chat bots were created, and the vast majority was useless. At Viber, we decided on a different strategy; instead of opening the field to external developers, we're trying to be very selective.

"We're trying to select only chat bots that can be useful. We ourselves are developing chat bots, and are offering them to our partners, for example a bot for a soccer club in Barcelona that enables the fans to vote for the outstanding player in a game, and for other things. We've also built a chat bot for Shakira. This is an important feature, but it has to be used precisely."

Rakuten CEO on visit to Israel: You have excellent scientists and engineers

Mikitani , 52, is the founder, chairman, and CEO of Rakuten, Amazon's biggest competitor in Japan. A survey conducted in April this year by the DI Marketing research company showed that Rakuten was just ahead: 70.2% of people in Japan said that they were making online purchases from Rakuten's website, compared with 66.7% on Amazon's website.

Rakuten, which has upshifted in international marketing over the past year, with sponsorship contracts for Barcelona's soccer team and the NBA's Golden State Warriors, is trying to be far more than that. Since the middle of the preceding decade, the company has been on an acquisition spree that has made it a giant corporation providing services in 190 countries.

In addition to its ecommerce platform, Rakuten's fields of business also include tourism, ebooks, banking, insurance, commerce, telephony and communications, digital content platforms, sports, shared travel, and even drone deliveries.

The company boasts a customer club with almost 1.2 billion members. According to recent reports, 950 million of them use Viber, the Israeli company that Rakuten acquired in 2014 for $900 million.

Viber, half of whose employees are located in Israel, operates in instant messaging and voice and video calls against competitors such as WhatsApp, Skype, Facebook's Messenger, and Google Hangouts. During the past year, 100 million new users downloaded Viber's app. Viber's user base has grown by over 30% since 2014.

"When I founded Rakuten and began expanding into fields such as tourism and finances, people said, 'What is this guy doing?'," Mikitani told "Globes" during his lightning visit to Israel. "We have a substantial presence in the US. Our ebook service is very strong in Canada, Italy, France, the Netherlands, Spain, and Germany. Viber has a very strong instant messaging program in Russia, Eastern Europe, the Middle East, and some East Asian countries. My job is to connect the dots, and all of sudden, it looks logical to people, so I travel a lot. People need to connect to the entire organization, not just the services."

Mikitani is one of the wealthiest people in Japan with an estimated $6 billion in assets. He came to Israel for less than 24 hours in order to examine ways of achieving synergy between Viber and the company's other services, such as online payments, ordering shared trips, and including Barcelona soccer fans in the selection of outstanding players and other content related to the team. He came to Viber's offices in Bnei Brak in a black t-shirt and matching sweatshirt, and the question of why he chose to talk to the local media drew a laugh from him and an accusatory finger pointed at the media manager accompanying him. "You ask me why it took me so long to come here again," he eventually says, and made it clear that the importance of Viber to Rakuten justified more frequent visits.

Asked whether his visit to Israel was designed to consider additional acquisitions or other business in addition to Viber's activity, Mikitani answers, "Obviously, it's one of the world's most important technology centers. You have excellent scientists and engineers. That's very important to the future of the Rakuten group."

Published by Globes [online], Israel Business News - www.globes-online.com - on November 27, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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Djamel Agaoua Photo: PR
Djamel Agaoua Photo: PR
 
 
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