CEO Comments

Kaoru Hayashi

Representative Director,
President Executive Officer and Group CEO,
Digital Garage, Inc.

CEO Comment “Accelerating Global Expansion and the Capital and Business Alliance with Dentsu Inc.”

As of today’s board meeting, we have come to an agreement concerning the Capital and Business Alliance with Dentsu Inc. and have made the letter of intent public. I would like to make an update on the background of this alliance as well as reporting the upward performance revision and the recent business projects from the group including the “Lean Startup Conference” hosted by our U.S. subsidiary Neo, in San Francisco at the beginning of December.

The Alliance with Dentsu mainly aims to achieve two goals. The first goal is to develop cutting-edge marketing technology, mainly from San Francisco/Silicon Valley by making use of DG’s global network. We aim to structure the “incubation stream” by providing the latest marketing technologies to high potential users in Japan and then building towards Asia. We are able to realize a strong global monetizing platform with DG’s payment structure and the Dentsu Group’s advertising platform.

[The Incubation Stream Image]

Another goal we expect to achieve through this alliance is to deploy sophisticated marketing business by integrating Dentsu’s enormous business intelligence and DG’s payment and media data. With VeriTrans joining, DG has become one of Japan’s leading payment providers possessing shopping data worth 70 billion yen and also our group company holding an enormous amount of shopping related data. DG and Dentsu are planning on providing recommendation services and targeting advertisements to an extent where each consumer’s privacy is protected.

[Big Data/ Audience Data Image]

 We have shown high performances in order to accelerate the global expansion as stated above. The performance has shown healthy growth in accordance with the revised plan disclosed on December 6th. The payment segment will conform to the IFRS, to increase the speed of decision-making. In addition, on the 1st of December, the procedure of making econtext and VeriTrans a subsidiary of econtext ASIA Limited has completed. econtext ASIA works as the payment headquarters located in Hong Kong, in order to accelerate the expansion of the payment business in Asia.

[Reforming the payment segment Image]

 As the other key to achieving our mid-term plan, the U.S. subsidiary, which is responsible for the operation of the incubation center and the headquarters for agile development is also showing good results. The software development company, Neo (post New Context), successfully hosted the “Lean Startup Conference” in San Francisco. Neo’s general partner and author of the bestseller “The Lean Startup”, Eric Ries co-hosted this event, inviting prominent people from large corporations to startups. The 600 seats were fully occupied and more than 10,000 people attended through the Internet from all over the world. The U.S. Government CTO, Todd Park’s presentation drew a lot of attention. Todd stated, in order to rejuvenate the economy, it is not only important to promote startup businesses but also to incorporate the Lean Startup methodology within government projects and explained this by giving detailed examples. Other notable speakers at this conference included Netscape’s cofounder Mark Andreessen and Beth Comstock from General Electric. We were able to also network with a wide variety of companies, which will become our contact point for expanding our businesses towards the globe.

[Images from the Lean Startup Conference], our affiliated company, is also showing high performance. The total number of users in November for the group sites such as, “”, “Tabelog”, “4Travel” added up to 93.27 million users, increasing by 21.2% compared to last year and also recorded 2 billion page views in November, increasing by 18.2% which makes these media one of the most visited in Japan.

 I myself have been traveling across America and Europe to attend the Lean Startup Conference and to participate in investor’s meetings over the past two weeks. To see the change of the ruling party after coming back, gave me a positive feeling of the beginning of the recovery of the Japanese economy. I kindly ask all the shareholders and investors to continue your support for the remaining of this year.

 On the 18th to the 19th of January, the “MIT Media Lab@Tokyo 2013” will be held in our office building. Also, next spring, we are planning to open the incubation center in the heart of San Francisco. Please continue your support, as the board members, employees and myself will strive together to make 2013 a prosperous year for DG.

[Lean Global Poster by Nick Philip]

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