After an acquisition spree, a Japanese software testing engineer becomes a billionaire.
Masaru Tange, president and CEO of Shift in Tokyo, has joined the ranks of the world’s billionaires following an 88 percent increase in the value of his software testing company’s stock over the last year.
As of Friday, the company’s market value was $3.4 billion. Tange, 46, who owns slightly more than a third of Shift, has an estimated net worth of $1.1 billion.
Shift’s strategy has been to acquire smaller firms in order to increase its engineering headcount, and then to eliminate layers of subcontractors who acted as middlemen for those firms. This way, the business can increase both its sales and profits. Shift has acquired at least 23 businesses since its inception in 2005, ranging from game software and smartphone app developers to used computer sellers.
As of May, Shift reported having 3,719 permanent engineers, up 41.5 percent from the end of 2020. The software testing company now serves 433 clients in industries such as gaming and finance, a 29.3 percent increase from 2020.
Shift’s third-quarter net profit increased 83.4 percent year on year to 1.9 billion yen ($17.2 million). The company reported a nearly 59% increase in revenue to 32.9 billion yen during the same period.
Tange founded Shift 16 years ago as a business improvement consulting firm, transitioning three years later to software testing. However, it initially failed due to the fact that software testing was conducted by developers rather than third-party professionals at the time.
“Because outsourcing software testing contradicted established industry practices, few companies were receptive to our ideas,” Tange explained on the company’s website. “However, we believed in ourselves and the worth of what we were attempting. We have carried this spirit forward into the modern era.”
Shift’s shares were listed on the Tokyo Stock Exchange in late 2014, and the stock has since risen more than 1,400 percent.
Outsourcing firms like Shift still account for less than 1% of the total software testing market, which was valued at approximately 5.5 trillion yen in 2018, indicating that there is still “enormous potential” for growth, according to Shift’s 2019 investor briefing document.
Shift’s services enable clients to conduct testing at nearly half the cost and with a higher deficiency detection rate, the company claims. According to its website, Shift has identified over 1 million deficiencies to date.
Tange worked at a consulting firm for five years prior to founding Shift. To pursue his initial goal of founding a robotics company, the Japanese native studied engineering at both Kyoto University and Doshisha University.
