(Bloomberg) — It was one of the most infamous companies in Japan, rocking the nation with a corporate scandal that ousted a prime minister and then nearly collapsing under a mountain of debt.
Now, Recruit Holdings Co. is back, reinvented by a group of employees who quietly turned the magazine publisher and job-placement firm into an internet giant that touches the lives of almost every consumer in the world’s third-biggest economy.
If Recruit were a U.S. company, it would be like having LinkedIn, Zillow, Yelp, eHarmony, Booking.com, Square and dozens of other apps — all under one roof.
“We are there, every time people choose to do things,” said Masumi Minegishi, Recruit’s 55-year-old chief executive officer.
As the biggest internet companies compete for world domination with apps that track consumers and use artificial intelligence to crunch data and provide tailored services, Recruit is Japan’s leading contender. With a value about a tenth of Alibaba Group Holding Ltd. and barely 5 percent of Amazon.com Inc., it’s up against giants. But Minegishi’s goal is to attract the most consumers in the world by 2030, and he’s betting that Recruit has the cash and experience to mount a serious challenge.
“Recruit was an internet pioneer, starting their first website in the same month that Yahoo launched in 1995” said Sandra Sucher, a Harvard Business School professor who published a case study on the company last year. “This is not their first rodeo — they know how to leverage new technology.”
Born more than half a century ago during Japan’s economic boom, Recruit found infamy in the 1980s when founder Hiromasa Ezoe concocted a shares-for-favors scheme to grease business deals and gain insider information. He gave more than 70 politicians and business leaders stock in a subsidiary that was about to go public, netting many of them a fortune.
When the bribes of “Recruit jiken,” or “The Recruit incident,” came to light, even cabinet ministers were implicated, forcing Prime Minister Noboru Takeshita to resign. Then, in the 1990s, Japan’s asset bubble burst and Ezoe’s speculative property bets saddled the firm with $14 billion in debt, leading to his resignation and the sale of a controlling stake to Daiei, a Japanese retailer.
The experience left Recruit in the hands of its employees just as the internet era was dawning and they soon began moving their job-recruitment services and publications onto the web.
Now, when the archipelago’s 124 million citizens look for a job, an apartment or a haircut, most tap into one of Recruit’s 200 websites and 350 apps. The company’s magazines, such as the “Jalan” travel guide, “Travail” for women seeking jobs and “Car Sensor,” a three-inch thick tome that used to be stacked waist-high in bookstores, are now all online.
That constellation of web portals, apps, and its job-placement business has given Recruit a valuation of about $46 billion, three times more than Yahoo Japan Corp. and four times that of Rakuten Inc., its nearest web and e-commerce rivals. Recruit went public five years ago, after paying off its massive debt and buying back some of its shares from Daiei.
“Like Alibaba and Tencent, Recruit has a very large home market to build and grow its multiplatform businesses, but it is far more focused in its mission and strategy,” Sucher said. Investors have backed Minegishi’s strategy, with its stock almost tripling since listing.
Instead of delivering search results like Google, or shipping merchandise like Amazon, Recruit acts as a go-between, matching businesses with customers and taking a cut or selling ads along the way.
Its restaurant-review site Hot Pepper is Japan’s No. 1 dining portal, and property website Suumo has the most real-estate listings. Many of its online booking services are linked to a tablet-payment network called AirRegi that gives the company valuable troves of data on shoppers.
“It feels radically different from any other Japanese company”
Using information generated by web traffic, reservations, payments and a loyalty-point network, Recruit can track consumer behavior in minute detail, and pass that knowledge on to businesses eager to attract and retain customers. “It not only benefits consumers with easier and faster payments, but also retailers,” said Taro Yamato, a researcher at Euromonitor International.