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Bernard Moon on Korean startups

South Korea, The Oracle of Global Trends

Oct 16, 2020 (Gmt+09:00)


Bernard Moon
Back in early 2004, my friend and I met with Bill Gurley and Mark Evans from Benchmark Capital, who were visiting Seoul from Silicon Valley to gather market intelligence. I was living in Seoul for the first time as an adult brought there by the craziness of the first Internet boom in early 2000 to launch a new voice portal (think Siri for landlines).

With fresh money from Softbank for our $7 million seed round, a solid team and great technology, we were riding high and set out to conquer the world. This lasted a quick five months. The Internet bubble burst, the global equity markets crashed and we were scrambling to survive for the rest of 2000.

Fast forward back to 2004, I learned during my time in Seoul that South Korea was a living lab for new technologies. This is what brought Gurley and Evans to meet me and my friend, David, who worked at NHN during that time. I remember Gurley saying, “I come to Korea to see what will happen in the U.S. five years from now.” It’s amazing how some statements stand the test of time.

In 1996, a small startup called Nexon launched the first online MMORPG game, and a few years later along with Hangame pioneered online microtransactions, which Facebook and others would implement almost a decade later. Nexon and NHN, which was the merger of Hangame and Naver in 2000, became two of Korea’s first tech unicorns from the Internet boom, and today their market caps are approximately US$22 billion and US$40 billion (combined entities) respectively.

Both were also my clients in 2001 when I worked at a boutique investment bank, iRG, during that time. I remember in 2000 when I would visit PC game rooms for research (some leisure) and think to myself, “Only in Korea would people pay 25 to 50 cents for these online enhancements or powerups while playing these online games.” Obviously, my ignorant American take would be proven to be sorely presumptuous and wrong a few years later.

South Korea would continue to churn out innovations when Cyworld launched the first virtual economy and major social network in 1999, which grew to over 23 million users. Kakao launched in 2010 to pave the wave of new mobile messaging platforms, and pioneered the distribution of online gaming over mobile. Both LINE (owned by Korea’s NHN Corp) and WeChat soon copied Kakao’s game distribution strategy.
 
Driving all of this early adopter activity and rapid pick up by South Korea’s consumers was an infrastructure that is still one of the best in the world. Since the late 1990s, South Korea has had the highest broadband penetration rates in the world and the fastest speeds until the recent couple years.  When wireless technologies launched, Korea also led the way. I remember when we launched SparkLabs and I visited Seoul in early 2013, I could be five stories below ground or sixty stories up and I could still access the faster wireless speeds in the world. This ubiquity of connectivity drove innovation and the rapid early adoption of new technologies.

This didn’t end with Kakao, and continued as the world discovered bitcoin and blockchain technologies. During 2018, South Korea had less than 1 percent of the world’s population, but responsible for 30 percent of all cryptocurrency trading in the world. South Korea was the only nation where investing in cryptocurrencies was truly mass market. With China soon launching their own national cryptocurrency, there will be others that follow. Once again, Korea and its population of rabid early-adopters signaled to the world that crypto and blockchain were here to stay.

When COVID-19 shocked the world, some industries were impacted more than others. One that seemed destined to suffer was the music industry since the majority of its revenues were from off-line concerts. Tech-centric Korea, once again led the way with SM Entertainment working hard to launch virtual concerts for the K-pop starved world. On April 26th, 2020 SuperM, the South Korean boy band, hosted a live stream online concert that had over 75,000 paid viewers and generated over US$2 million in revenue.  

Of course, Bit Hit Entertainment and BTS didn’t sit on the sidelines. BTS’s Bang Bang Con: The Live was held on June 14, 2020 had over 750,000 paid viewers attend and generated over US$18 million for this single online event. To place things in perspective, the highest single concert show in history generated approximately $6.9 million by The Rolling Stones last year. In 2019, the second-highest gross revenue for a concert was Gun N’ Roses at approximately $3.5 million. BTS’s first attempt at an online concert generated 2.5 times more revenue than the highest ever in live music concert history.

For over 20 years, South Korea has served as a crystal ball into the technology adoption and innovation trends of the world. In a fairly unrelated analysis, Bloomberg ranked South Korea as the “Most Innovative Country” for six years in a row from 2013-2019 until it dropped to number two this year. What this signals beyond my brief history lesson is how impactful South Korea’s innovations have been across the globe and its continued staying power over two decades.

This global trendsetting will only continue, especially since South Korea has shined and become a leader during this pandemic. This is why more and more people should embrace The Korea Economic Daily’s new online publication to learn the pulse of South Korea and to come here for continued insights on how technology will shape your future and the industries that you work in.

By Bernard Moon

Bernard Moon is co-founder and Partner at SparkLabs Group, a network of accelerators and venture capital funds.

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