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Why Korea Will Become The Next Silicon Valley

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South Korea will become the next Silicon Valley. In four chronological layers that span several decades of development, Korea has fostered six key variables that feed off each other to create this viable startup atmosphere. These layers are:

  • Layer One: Educational Attainment (Historic)
  • Layer Two: Internet Connectivity + Hyper-Consumerism (90’s and 2000’s)
  • Layer Three: Government Involvement + Changing Korean Mindset (2o1o’s)
  • Layer Four: Migration of Younger Koreans (2010’s)

Internet Connectivity as a Foundation for Growth

Chances are if you have talked to anyone from Korea, one of the first things you will hear about is the unparalleled WiFi speed.

Just how quick is this Wifi?

Well, as you can see by this and this, it is the fastest in the world. Not only this but the connection is so spread out that on the metro most people stream TV shows or baseball games while commuting to and from work.

In many American metros, you’ll be luckily to get cell service — being able to live stream a baseball game is something out of the Twilight Zone

Internet, and the dispersion of connectivity, is the cornerstone of building a technologically advanced city. Unlike in other parts of Asia, Korea is not forced to develop technology around any Internet impediment. Rather, this connectedness pushes technological developments to the next level. The citizens of Korea have been spoiled by these Internet speeds and expect their technology to take full advantage of them. This means that, not only do developers have the technological means to create the next great application, but they have a people ready to adopt it immediately.

When is comes to Internet in Asia, Korea is King. (Source: Trak.in)

Why a Lifetime of Studying is Good for Startups

You’re born. You live. You die.

That’s how most people lives go — expect in Korea it is slightly different.

You’re born. You study. You live. You study some more. You die. Then you probably study some more in the afterlife.

The Korean educational system is one of the most intense in the world. Outside of class, Korean students study an average of eight hours a day. From an early age, children are expected to be learning from the early hours of the morning to the dead of night at cram schools (“hagwon”).

There are around 100,000 cram schools in Korea and over 3/4th of students attend at least one of them

Education is drilled into you in preparation for the Suneung — the test that decides where you go to college (think SAT but more deterministic of your future). Students study for thousands of hours for this 9-hour exam which is only offered once a year.

Suneung is a huge deal for the entire family. Families cheer as students march towards the test. No pressure, right?

So, what does this mean? It means Koreans understand the meaning of perseverance. Having the ability to study monotonous material for years and years teaches you how to push through your current struggles for a greater goal.

Ask anyone who has started their own startup and one of the most important things they will tell you is that you must be dedicated to your work and be willing to roll with the punches and face any hardship that may arise. What better people to take up this mantle that those who have been studying at 110% for years with societal pressure placed squarely on their shoulders to succeed.

If you have been waking up at dawn your entire life to study all day, persevering through the ups and downs of startup life is virtually second nature to you by now

Let’s Bring It All Together Now

Looping back to the introductory blog post, I set out trying to prove that South Korea is a ticking time bomb of startup growth that will put it on par with Silicon Valley in five to ten years. The variables at play are:

  1. Government Backing
  2. Migration of Younger Koreans
  3. Evolution of the Korean Mindset
  4. Hyper-Consumerism
  5. Technological Dispersion
  6. Nationwide Educational Attainment

I’ve shown how each of these power the startup scene separately but now I want to show how they work together. To do this, I’ve broken it down into four layers based on their chronological development in Korea.

First Layer: Educational Attainment (Historic)

Hagwon Life

Striving for high levels of educational attainment and the unrelenting effort this requires has been in Korea for decades in its current form, and centuries in the historic ‘gwa-goh’ system. This long cultural history begets a people that understand persevering and pushing through the hard times for a long-term goal. In order to be successful at a startup, you must be able to withstand the lowest of the lows. If the people of a startup ecosystem give up after they hit a few hard spots then the startup ecosystem itself will surely falter and cease to exist.

This perseverance, when looked at in isolation, does not guarantee anything. If you lack the proper technical infrastructure for development or have no demand for what you are creating then this is a non-starter.

Second Layer: Internet Connectivity + Hyper-Consumerism (90’s and 2000’s)

Korea’s fast Internet pre-dated the age of the startup and what it does for the budding startup scene is provide entrepreneurs a large canvas on which to create their technological works of art.

That being said, there would be no incentive to become an entrepreneur and leverage this technical backend without a pool of ready consumers.

This is where Korea’s hyper-consumerism comes into play.

The extreme sense of consumerism and accompanying peer pressure provide a demand function with a massive “X” variable upon which entrepreneurs can test out and distribute their product.

A metro with strong Wifi and long commutes adds another way for Koreans to consistently consume new technology.

Despite these first two layers, we are still lacking all the necessary pieces to create an environment in which creativity and startup growth can explode. At this point in Korea’s history, people still did not want to start their own company. Little funding was available for their ideas and the societal structure rewarded and reinforced the Samsung Mindset (i.e. get a stable job at Samsung and stay there your entire professional career).

What alleviated this was an influx of government involvement which informed and was informed by an evolution of the Korean mindset.

Third Layer: Government Involvement + Changing Korean Mindset (2010’s)

Government involvement came about a few years ago in the form of the Creative Economy. This gave additional means of support to then-current entrepreneurs while providing incentive for future ones to start their own companies. It helped take away some risk of becoming an entrepreneur by providing financial capital, co-working spaces, mentorship opportunities, etc.

President Park and the Creative Economy

Occurring alongside this was a steady dispersion of the idea that maybe the Samsung Mindset was not the best career path. Maybe there were other options — such as starting your own company — that would prove more fruitful. While this idea had been around for decades (not everyone bought into working for Samsung), it had not really picked up any steam until recently. This movement provided much needed human capital into the startup scene to go alongside the financial capital of the government.

That being said, there’s still a major issue with all of this. The corporate culture at Samsung and other international conglomerates encourages a specific way of thinking and tackling problems. In order for a startup to take off, it needs a bevy of new and innovative ways of looking at problems and planning for the future. This is where the migration of younger Koreans comes into play.

Fourth Layer: Migration of Younger Koreans (2010’s)

The return of native Koreans as well as movement of Korean-Americans into the startup ecosystem is a new phenomena that is helping provide a new outlook on management and strategy.

Coming to Korea, they are bringing with them different ways of tackling business problems as well as different views on company culture. Having people who have experienced different cultures migrate into a specific location is what helped drive Silicon Valley to greatness and can do the same for Korea.

MangoPlate, the Korean Yelp, is one of the many companies to benefit from this migration.

Why the Five to Ten Year Window?

So why did I give the five to ten year window? Well, all of these six variables are just now starting to work in unison and it takes some time before they can start to produce at their full potential.

When you combine all six of these points together you get an environment in which the necessary pieces for exponential startup growth — of which the world has not seen since Silicon Valley — are readily apparent. All that is needed is a spark to catapult Korea from an afterthought to the first thought when it comes to startups and innovation.

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About the Author

This article was written by Alex Gershon. Alex works as the global liaison for Send Anywhere, a venture-backed file sharing startup. Alex is responsible locating and nurturing global business partnerships for the startup’s API as well as optimizing all outbound material to guarantee the highest ROI and customer acquisition rates. Additionally, Alex has experience in Marketing for various Silicon Valley startups including one that was acquired (OpenDNS, 2015) in which his role varied from email marketing, to third party vendor management, to the project head on various efforts aimed at jumpstarting sales Reach Alex

Entrepreneurship

What Kills A Startup

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1 – Being inflexible and not actively seeking or using customer feedback

Ignoring your users is a tried and true way to fail. Yes that sounds obvious but this was the #1 reason given for failure amongst the 32 startup failure post-mortems we analyzed. Tunnel vision and not gathering user feedback are fatal flaws for most startups. For instance, ecrowds, a web content management system company, said that “ We spent way too much time building it for ourselves and not getting feedback from prospects — it’s easy to get tunnel vision. I’d recommend not going more than two or three months from the initial start to getting in the hands of prospects that are truly objective.”

2 – Building a solution looking for a problem, i.e., not targeting a “market need”

Choosing to tackle problems that are interesting to solve rather than those that serve a market need was often cited as a reason for failure. Sure, you can build an app and see if it will stick, but knowing there is a market need upfront is a good thing. “Companies should tackle market problems not technical problems” according to the BricaBox founder. One of the main reasons BricaBox failed was because it was solving a technical problem. The founder states that, “While it’s good to scratch itches, it’s best to scratch those you share with the greater market. If you want to solve a technical problem, get a group together and do it as open source.”

3 – Not the right team

A diverse team with different skill sets was often cited as being critical to the success of a starti[ company. Failure post-mortems often lamented that “I wish we had a CTO from the start, or wished that the startup had “a founder that loved the business aspect of things”. In some cases, the founding team wished they had more checks and balances. As Nouncers founder stated, “This brings me back to the underlying problem I didn’t have a partner to balance me out and provide sanity checks for business and technology decisions made.” Wesabe founder also stated that he was the sole and quite stubborn decision maker for much of the enterprises life, and therefore he can blame no one but himself for the failures of Wesabe. Team deficiencies were given as a reason for startup failure almost 1/3 of the time.

4 – Poor Marketing

Knowing your target audience and knowing how to get their attention and convert them to leads and ultimately customers is one of the most important skills of a successful business. Yet, in almost 30% of failures, ineffective marketing was a primary cause of failure. Oftentimes, the inability to market was a function of founders who liked to code or build product but who didn’t relish the idea of promoting the product. The folks at Devver highlighted the need to find someone who enjoys creating and finding distribution channels and developing business relationship for the company as a key need that startups should ensure they fill.

5 – Ran out of cash

Money and time are finite and need to be allocated judiciously. The question of how should you spend your money was a frequent conundrum and reason for failure cited by failed startups. The decision on whether to spend significantly upfront to get the product off the group or develop gradually over time is a tough act to balance. The team at YouCastr cited money problems as the reason for failure but went on to highlight other reasons for shutting down vs. trying to raise more money writing:

The single biggest reason we are closing down (a common one) is running out of cash. Despite putting the company in an EXTREMELY lean position, generating revenue, and holding out as long as we could, we didn’t have the cash to keep going. The next few reasons shed more light as to why we chose to shut down instead of finding more cash.

The old saw was that more companies were killed by poor cashflow than anything else, but factors 1, 2 and 4 probably are the main contributing factors to that problem. No cash, no flow. The issue No 3 – the team – is interesting, as if I take that comment ” I didn’t have a partner to balance me out and provide sanity checks for business and technology decisions made” and think about some of the founders and startup CEOs I know, I can safely say that the main way that any decision was made was by agreeing with them – it was “my way or the highway”. I don’t therefore “buy” the team argument, I more buy the willingness of the key decision makers to change when things are not working (aka “pivoting” – point 9).

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About the Author

This article was produced by Broadsight. Broadsight is an attempt to build a business not just to consult to the emerging Broadband Media / Quadruple Play / Web 2.0 world, but to be structured according to its open principles. see more.

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Callum Connects

Jasmine Tan, Director of Stone Amperor

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Jasmine saves her clients time and effort when doing kitchen fit outs with her biz Stone Amperor.

What’s your story?
I started working in the industry in 2003. I was in a marble and granite supplier company for 5 years. Even though I left the company, I still had customers calling me for my services. I referred them back to my previous company but they refused to because they loved the fast response service that I offered. I realised that customers do look at prices, however most of them prefer quality over quantity. Thus I have decided to establish a sole proprietor company also known as 78 Degrees which later rebranded as Stone Amperor in 2014.

What excites you most about your industry?
The kitchen countertop industry is a very confusing market. There are many brands, materials and prices to choose from. What excites me the most is my ability to help clients choose the best materials and brands within their budgets, whilst saving them time and effort.

What’s your connection to Asia?
I have been in Asia all my life and I love Asia. No matter where you go there is no place like home.


Favourite city in Asia for business and why?
I love Singapore. This is because Singapore has always been a stable country and it is great for doing business. However as it is a small country, it can be really competitive. I believe that if just do your best and give your best to your customers, you can overcome this.

What’s the best piece of advice you ever received?
“Take actions. Learn and improve continuously. An idea without action is just a dream.” This was really good advice that I received from my partner.

Who inspires you?
A very down to earth billionaire from Malaysia, Robert Kuok

What have you just learnt recently that blew you away?
Property is the foundation of every business.

If you had your time again, what would you do differently?
Own instead of renting property for my business.

How do you unwind?
I enjoy going shopping, watching movies and hanging out with friends. I am quite a simple being.

Favourite Asian destination for relaxation? Why?
I love going to Taiwan as I love the culture there. Everyone is so polite and the weather is great.

Everyone in business should read this book:
Sun Tzu, Art of war

Shameless plug for your business:
Perfect top, Perfect price, Perfect life from Stone Amperor

How can people connect with you?
Email me at [email protected]

Twitter handle?
@StoneAmperor

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started, built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

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