June 2, 2017 / 7:26 AM / 6 months ago

Art world upstart sprays tech fortune on canvas

HONG KONG (Reuters Breakingviews) - Yusaku Maezawa has a tech fortune to spray around. The art-collecting entrepreneur recently paid $111 million for an untitled 1982 Jean-Michel Basquiat painting, one of the biggest sums ever spent on contemporary art. That throws a spotlight on his fashion e-tailer, Start Today, which is the means to his end.

Yusaku Maezawa, chief executive of online fashion retailer Start Today Co, poses next to a catalogue of his online shopping site "Zozotown" after an interview with Reuters at the company headquarters in Chiba, east of Tokyo, March 27, 2012. A commitment to innovation and a laser-like focus on making consumers happy are shared traits experts agree set off Japan's emerging successes from once-proud but now-struggling firms such as Sony and Panasonic. Experts say more such success stories - found in sectors ranging from retail, Internet and mobile games to niche manufacturers - could help revive a Japanese economy stuck in the doldrums for decades and saddled with an ageing population. Picture taken March 27, 2012. To match Insight JAPAN/BUSINESS-SUCCESSES REUTERS/Toru Hanai

Japan boasts a few iconoclastic billionaires in technology and fashion, including the bosses of Rakuten, Fast Retailing and SoftBank. But the former musician seems unusually willing to spend freely on what moves him. It looks like he has effectively funded some of his art purchases with equity in the firm he founded, Start Today. Over the last decade, the number of shares he owns in the $8 billion company has nearly halved, leaving him with a stake of slightly less than 38 percent, Eikon data shows. 

Graphic: A pretty picture: tmsnrt.rs/2sjToA3

Start Today has drawn less attention abroad than Maezawa’s splashy purchases at Sotheby’s and Christie’s, but financially his e-commerce firm is also something to behold. Since joining Tokyo’s main stock exchange a little more than five years ago, the company’s value has quadrupled. 

A large part of this is about fundamentals. This financial year, analysts reckon sales will increase nearly 28 percent to slightly more than 97 billion yen ($878 million) and earnings per share will rise by almost one-third.

Those are eye-catching rates for a stagnant economy famous for its frugal consumers – and show internet economics apply as much in Japan as elsewhere. The best online firms are lean, winner-takes-all businesses that can grow quickly by usurping real-world incumbents. For Start Today, success centres on the fashion portal Zozotown, which dominates the local space online between high and mass-market fashion retail.

But perception matters too. Wowed by the sector’s prospects, investors are pouring money into technology worldwide. In Start Today’s case, that means new shareholders are now willing to pay nearly 37 times forward earnings for the stock, roughly double what they would five years ago. Cynics might say that screams “top-of-the-market” as much as any art-world record tumbling. But no wonder Maezawa feels entitled to paint the town red.

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