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How a musician-turned-entrepreneur built a company that generates over $400 million per year

septeni-CEO-koki-sato

In Japan, people in the IT industry will have heard of Koki Sato (pictured above), CEO & President at Septeni Holdings.

A law graduate of Rikkyo University Japan, Sato chose a path different from most of his fellow law students. Forgoing a career as a lawyer, he chose to pursue music. Of course, he still had bills to pay, so after graduation he worked at a traditional HR company called Septeni while doing music in his free time. Like most salarymen, he was just an average Joe in the company, and he immersed himself in the world of music while off the clock.

Sato pursued his music dream since age 16. But as he started to get his hands dirty in the music industry, he came to realize that he couldn’t quite compete with other musicians:

I experienced two obstacles in my music career. Firstly, I came to realize that there are a lot of other musicians who are more talented than me. Secondly, the traditional structure of music industry in Japan was failing. It was vulnerable because of technology and the internet.

(See: Tokyo Otaku Mode: From hobby to blog to e-commerce)

A new path

After thinking long and hard, Sato decided to throw in the towel and put an end to his musical ambitions. Instead, he decided to be an entrepreneur.

He wrote a list of ideas he thought could work. On it were about 50 possible businesses in industries like finance, food, and internet. He eventually chose online advertising. It was 1999, a period when companies were exploring internet advertising but didn’t quite know how to do it. There were no experts, resources, or guidelines available, and there were very few companies enthusiastic about internet marketing.

“The internet can disrupt the advertising industry. Back then, I realized that there were no experts. So I thought it was a good opportunity,” said Sato.

With the idea in mind, the then CEO of Septeni gave resources to Sato to venture into the world of online advertising. At age 24, Sato couldn’t imagine himself leading Septeni’s online advertising arm. His goal was to innovate on the company’s business model.

In 1999, online advertising wasn’t flashy like today. Search engine marketing didn’t exist yet, and online ad banners weren’t popular due to slow internet speeds. What worked back then was email. Sato says only two or three other companies were doing email advertising at that time, but Septeni was growing the fastest.

In the first year of operation (2000), Sato’s new online ad marketing department roped in $2 million in revenue. In 2001, Septeni’s sales increase by more than five times, hitting $12 million. In the same year, the corporation went public on JASDAQ stock exchange. Sato was only 26 years old at the time.

Sales continued to grow like wildfire. By 2004, Septeni’s hit $63 million in sales revenue and his online advertising department had already outgrown the old HR business by a wide margin.

(See: Jack Ma: “Times of change are for the younger generation.”)

Bigger, wider, farther

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Septeni obviously had to adapt to new trends, which saw growing ad revenue from hot online platforms like Facebook, Twitter, and Line. Last year, Septeni’s sales broke $459 million.

Backed by its success in Japan, Septeni expanded to Singapore, Vietnam, and the U.S. In the first quarter of FY2014 alone, overseas sales was bigger than its total overseas sales in all of 2013.

Septeni also ventured into other new areas of business. Other projects include Axel Mark, a subsidiary that makes mobile games, Comicsmart, a subsidiary in the mobile manga business, and Vivivit, an online recruitment platform.

Sato, now 39, remains as passionate as ever to continue building Septeni. He thinks the most important thing for the company to continue growing is to keep evolving with new trends. As Septeni grows to over 800 employees, Sato says the biggest challenge during business expansion is to reform the organization in accordance to the scale of its operations.

“It is hard organizing people at a fast-growing big company,” Sato says.

When asked what advice he would give to today’s entrepreneurs, Sato urges them to think for the longer term.

“You can’t build your business like it is a sprint contest. Think as if it is a marathon,” he says.

(See: 10 useful tips for newbie entrepreneurs)

Editing by Paul Bischoff

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