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| Taihei Kobayashi in Tokyo. Photographer: Shoko Takayasu/Bloomberg |
Taihei Kobayashi has gone from sleeping on the streets of Tokyo to heading a technology startup whose market value topped $1 billion. His rags-to-riches story is among the most remarkable to emerge from a small-cap stock boom that’s minting fortunes in Japan. Kobayashi’s company, which helps startups and other firms to design and create new businesses and products, went public in July and its shares have since more than tripled. As Kobayashi tells it, his parents kicked him out at 17 when he quit a prestigious high school to focus on his band.
He was one of the core members in establishing the predecessor to the company now known as Sun* Inc. , pronounced Sun Asterisk, in Vietnam in 2012. «The winters were cold,» Kobayashi, 37, said of his experience on the streets. Attempts to contact Kobayashi’s parents were unsuccessful. Kobayashi ended up spending two winters on the streets of the Shinjuku and Shibuya districts of Tokyo.
Mostly Outdoors
Yushi Fukagawa, a close friend since Kobayashi’s school days who currently works at Sun*, recalls the time the entrepreneur became homeless. At 19, a manager of a live-music club took pity on Kobayashi, offering him a job and saying he could crash at the club. Eventually, Kobayashi decided it was time to move on. First, he made some money trading music records online.
Start Company
They decided to start a company to bridge the gap. Kobayashi moved to Vietnam in 2012 to hire staff from the country’s pool of young engineers. «Our stance was to commit ourselves to the growth of those startups, regardless of whether it left us mired in losses,» Kobayashi said. The company listed in the Tokyo Stock Exchange’s Mothers market for startup firms in July.
Its shares rose almost sixfold to a high in September, taking its market value above $1.4 billion. They’ve since dropped 37%, with the company’s market capitalization dipping back below $1 billion. Kobayashi’s 7.9% stake is worth about $74 million. Sun* posted net income of 649 million yen on revenue of 3.97 billion yen for the nine months ended September.
Stiff Competition
«You have to see whether the company is able to sustain its pace of growth. » Kobayashi, who returned to Japan from Vietnam in 2019, said the company is winning business from bigger firms, including those in the blue-chip Nikkei 225 Stock Average. Sun* is seeking to increase earnings by at least 20% to 30% a year, and doubled staff in its Tokyo office to about 130 people this year, he said. The startup gauge hit a 14-year high in October before paring some of its gains.
The company’s shares trade at about 200 times earnings and about 20 times book value. «It’s what you’d call a momentum stock,» said Tomoichiro Kubota, a senior market analyst at Matsui Securities Co. in Tokyo, noting its «extremely high» price-to-earnings ratio. «It’ll be impacted by how long the positive trend for the startup Mothers gauge will persist».
Kobayashi said he’s aware of the risks but not daunted by them. He has since reconnected with his parents, and his time on the streets is a distant memory. «What I want to do now is keep working to realize our company’s vision,» he said.
Source: Min Jeong Lee and Komaki Ito | Bloomberg
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