Masaru Tange, president and CEO of Tokyo-based Shift, has joined the ranks of world’s billionaires after shares of his software testing company surged 88% over the past year.
The company’s market value has risen to $3.4 billion as of Friday. Tange, 46, whose stake in Shift is just over a third, has an estimated net worth of $1.1 billion.
Shift has adopted a strategy of acquiring smaller firms to increase its headcount of engineers, and then it cuts out layers of subcontractors who acted as middlemen for those firms. By doing this, the company can boost both its sales and profits. Since it was founded in 2005, Shift has acquired at least 23 enterprises, ranging from game software and smartphone app developers to used computer sellers.
Shift said it has 3,719 permanent engineers as of May, up 41.5% from the end of 2020. The software testing service provider serves 433 clients from industries like gaming and finance, a 29.3% jump from 2020.
Shift’s net profit surged 83.4% year on year to 1.9 billion yen ($17.2 million) in the third quarter ended May. The company said its revenue jumped almost 59% to 32.9 billion yen in the same period.
Tange first started Shift as a business improvement consulting firm 16 years ago, and transitioned to software testing three years later. However, it did not do well at first because software testing at the time was conducted by the developers themselves rather than third-party professionals.
“The outsourcing of software testing went against ingrained industry practices, so not many companies were willing to listen to our ideas,” Tange said on the company’s website. “But we believed in ourselves and the value of what we were trying to achieve. We have carried forward this spirit into the present.”
Shift listed its shares on the Tokyo Stock Exchange in late 2014, and the stock has soared more than 1,400% since then.
Outsourcing firms like Shift still only account for roughly 1% of the total software testing market that was valued at around 5.5 trillion yen, so there’s still “enormous potential” for growth, according to Shift’s 2019 briefing document for investors.
Clients pay nearly half the price to conduct testing with a higher deficiency detection rate by using Shift’s services, the company says. Its website shows that Shift has detected more than 1 million deficiencies so far.
Before establishing Shift, Tange spent five years working at a consulting firm. The Japanese native had originally wanted to build a robotics company, so he studied engineering at both Kyoto University and Doshisha University.
—With assistance by James Simms