Next 2013: Conference on Innovation and The Future

We are hosting a pretty kickass conference on June 14th in Seoul exploring technology, innovation and future trends. The lineup of speakers is awesome with Ray Ozzie, Richard Florida, Catherine Mohr and others. These slides provide details on this event that I've been working on.

Next 2013: Conference on Innovation and The Future from Bernard Moon

Mobile TV in Korea on Galaxy S, FaceTime is Behind in Korea

Just a video shot (from my Samsung Galaxy S) of a Galaxy S in South Korea. My friend, Eugene, was just showing me the mobile TV (terrestrial DMB) service which comes standard on many phones in Korea. Korea was the first to launch mobile TV in the world with initially satellite DMB/TV and then regular terrestrial DMB/TV became available several months later. One source states that this was launched in 2005, but I remember some of my friends getting early access to mobile TV in Korea during 2004. Maybe my memory is fading as I hit forty.



Also since mobile video conferencing has been in Korea for several years (Apple calls this "FaceTime" like it was something they invented), Eugene talked about how it was lame on the iPhone 4 since it's limited to other iPhone 4s while in Korea other mobile phones allow video conferencing across all phone models and wireless networks.

Does Language Influence Culture?

Insightful piece by Lera Boroditsky in The Wall Street Journal,

"Lost in Translation
New cognitive research suggests that language profoundly influences the way people see the world; a different sense of blame in Japanese and Spanish"

Emphasizes things my mom discussed with me growing up...

"Dear, you have to realize Korean language is indirect and not descriptive, so this affects the culture and people. Which is why Koreans are vague and indirect at times."

Also when my cousin was an officer and translator for the South Korean army, he told me that it was frustrating translating from Korean to English because there were multiple ways to translate various sentences. If he didn't know the writer's intent then it was 4 or 5 ways. Of course, there are certain words and descriptions not in English that are in Korean, but he was referring to the general structural differences between Korean and English.


UPDATE: There was a pretty interesting thread on my Facebook page, so I asked some of the people if it was cool to repost their comments here. Good comments and insights from various sides of this topic.

Mike Lanza: A Japanese friend used to work at Microsoft in Tokyo. The working language among employees in the office was Japanese, but whenever a disagreement emerged, they would spontaneously switch to English. Apparently, they felt the Japanese language was a hindrance to resolving disputes efficiently...

Bernard Moon: Reminds me of Malcom Gladwell's "Outliers", which I didn't read but Christine told me about. She discussed with me the chapter on Korean Airlines pilots and how they use to have the highest crash rates in the industry. A study found that it was a combination of Confucian hierarchy and language that led to grave mistakes in the cockpit. A junior pilot wouldn't want to challenge the authority of the senior pilot and would make vague, non-challenging statements, such as "hmm, it seems a bit foggy... it might be difficult to land...". So the resolution was that Korean Air pilots speak English in the cockpit and the result was a dramatic decrease in crashes.

.....

Bernard Moon: Han, Korean has more adjectives and more descriptive words in certain categories, but the structural differences create the indirectness.

I know when my cousin was an officer and translator for the South Korean army (liaison between the Korean and U.S. senior staff), he told me that it was frustrating translating from Korean to English because there were multiple ways to translate various sentences. If he didn't know the writer's intent then it was 4 or 5 ways.

Mike Lanza: When I studied Japanese, I found at least 15 or 20 different words that translated to English as "feeling." My first reation was to think the Japanese can articulate far more nuances of feeling than we English-speakers. This is akin to the discussion about Eskimos having over 500 words for our word, "snow."

After reflecting on the feeling question more, I'd say that Japanese gives many more options than English for obfuscating or lightening a strong feeling. So, I'd venture to guess (I haven't researched this) that they have more subtle "feeling" words, while we have more strong feeling words like "fabulous" or "shitty" or "stupendous" or "horrific".

.....

Paul Y. Ahn: we'll be qualified to make statements like some of the ones made in this thread's comment section once we've attained a native to near-native proficiency in Korean.
as of now, none of the people that have shared their opinions in this thread, including the TS and me, have that level of proficiency, thus, the opinions are inherently (and unbeknown to the communicator) heavily ethnocentric ("englishcentric" or "englishlanguagecentric" may be a better words but i doubt they exist).

for example, the story about Bernard's translator cousin: for every one story about a person's frustration stemming from translating Korean to English, there is another about a person's frustration stemming from translating English to Korean

Bernard Moon: paul, actually it was a common frustration discuss among my cousin's fellow translators in the army. and i don't think you get more concrete proof than crashes decreasing when the language was changed. i believe this was a similar issue among japanese airlines too.

and my wife is a native speaker :)

Paul Y. Ahn: I'd bet on two things:
A. your cousin and his fellow translators are predominantly more comfortable speaking English than Korean and/or have been educated in the States even for a limited period (as are almost all people that play that role in the Korean army). thus, the opinions of their social group also showcase one side of the equation.
B. changing the language spoken in the cockpit from Korean to English was merely one of many significant changes that were made after the results of the study were published. probably one of the more significant changes that were made which decreased crashes and has nothing to do with the language spoken was that now first officers fly the plane and the captains run through their inspection process checklists which is the other way around.

tangentially, I think Malcom Gladwell, the pop sociologist, sucks

Korea is Second Tier to Japan for President Obama

HatTip to friend in D.C. Obviously South Korea has secondary status with President Obama. Take a look at these pictures :)

Korea's Cyworld Shuts Down US Cyworld

I received this notice today from Cyworld:

"Thank you to all members with Cyworld.

Due to Cyworld shuts down US service, US Cyworld will no longer be able to service.
We sincerely apologize for shutting down the service with unavoidable reason.
Before US cyworld close the service, you will continue to access to US cyworld contents but not purchase items. Also, you will not use your acorns.
If you have unused acorns, you will be given a full refund for paid acorns only."

Obviously, they already let go of all U.S. staff since it's written in broken English along with poor spacing, but this also could be reflective of the overall problem of Cyworld's efforts in the U.S. market. They didn't localize their product. Cyworld assumed they could bring their team that was successful in Korea, target the same market and execute in the same manner. It didn't work out.

I'm focused on their early efforts, which I believe was a critical factor for their failure. Cyworld attempted to target the similar demographic in Korea, but for the U.S. market I thought their avatar-based social network was more suited for a younger demographic of junior high and high school students.

It seems that SK's other entities have made similar mistakes in trying to enter the U.S. market. A prime example is their MVNO effort with Earthlink, Helio, where they invested over $400 million. They tried to target Korean Americans by assuming ethnic affinity would drive consumer purchasing habits not quality of service, pricing, or phones. Hopefully, SK, which is one of Korea's largest conglomerates, will learn from these spectacular failures.

Hip Hop Pachelbel's Canon in D... Very Cool Korean Commercial

Awesome commercial from Korea that plays Pachelbel's Canon in D with a classical Korean instrument and hip hop mixed, and a couple B-boys dancing. I believe they are from the world championship team, which was featured in "Planet B-Boy."

Google Acquires TNC (Tatter and Company)

Google acquired TNC today. Congratulations to Chester and Chang!

TNC is a Korean blogging platform is similar to Automattic. This acquisition will help Google gain more traction in a market where it barely breaks the top ten of search engines and is the 5th largest online ad market in the world.

I met Chang and Chester a couple years ago and now a co-organizer with Chang and a few others on Open Web Asia '08, which is first pan-Asian web technology event.

Chang has more here, "We've been Googled!"


UPDATE: VentureBeat, "Google buys Korean blogging software platform TNC, one of first purchases in Asia" and Mashable, "Google Starts Shopping in Korea; Buys Blog Platform Maker TNC," picked this news up.

Keeping Your Ethics Afloat For The Next Generation

Watching and hearing about my parents’ business experiences in Korea provided me with an excellent base of knowledge and expectations when I moved there in 2000 to start HeyAnita Korea, a joint venture between HeyAnita and Softbank.

Early on, I had a discussion with my friends and co-founders, Jimmy and Peter — Jimmy and I were the two on the team who had an explicit biblical worldview — in which we agreed we would hold to our principles and not conduct business in the manner that many people do within our space. Our company was a voice technology platform that depended on working relationships with South Korea’s telecommunication giants and government entities. Closing deals with people from these entities typically involved drinking with them in room salons, establishments similar to Japan’s geisha houses where most are not places of prostitution but drinking establishments.

Jimmy, Peter and I determined that it wasn’t practical for a startup to conduct business in this manner and we wanted to hold to our ethical principles. This caused some dismay among our employees, but we were happy and comfortable with our decision. I suppose it was a blessing that we were perceived as executives from the U.S. extending a U.S. company to Korea because this allowed people to more easily accept our scruples about providing money under the table or taking them drinking to room salons. Jimmy’s disarming personality certainly helped. I think his contagious laugh and engaging conversational skills could calm a raging grizzly. In any event, we found these primarily elder company representatives willing to back off from their typical expectations.

To be honest, there were rare situations in which we reluctantly agreed for some of our managers to take a customer drinking to close a big deal. We didn’t like it but we decided it was a reality we had to face. While it might seem silly to most people, we actually had executive meetings on these decisions. We acknowledged that not everyone holds the same values in the business world nor are they bound to respect our values. We definitely weighed the costs of our decision, balancing our corporate values, our responsibility as executives of the company, our obligation to our investors, board, and employees. Compromise was not an easy pill to swallow.

I believe these decisions were made somewhat easier because they never directly harmed an entity, never directly lined our pockets, never paid for unlawful activities and we were not personally involved in questionable social-business behavior. Had there been bribery involved, we would have not done the deal no matter how much revenue it generated for us.

Over the years, I have seen and experienced numerous difficult situations where I and others have had to wrestle to remain conscientious and hold onto our ethical principles. I saw one person walk away from tens of millions because he refused to tarnish his reputation and deceive his colleagues. His colleague who didn’t hold the same values walked away with tens of millions — but lost many relationships and his reputation forever. When my close friends and I heard this, we were baffled. Why would anyone sacrifice their friendships and reputation for money? A million, ten million or hundred million…none of it would be worth it for us.

I’m grateful for what I learned from my parents and by working with honorable partners like Peter and Jimmy about the value of standing on principle, even when principle threatens the bottom line. This is a legacy I plan to pass along to the next generation in my household.


Originally published at InsideWork

UPDATE: The people over at Blogged were nice enough to feature this post in their business section.

Keeping Your Ethics Afloat in Unfriendly Waters

More than two decades after immigrating to the U.S. my parents returned to Korea to establish a coffee chain. They were young when they first emigrated from South Korea and their formative business ventures were in the United States. So this was their first time doing business in a foreign country and, though they started life in Korea, the business conditions were unfriendly waters to them. In the post-war years, Korea rose rapidly to become the 11th largest economy in the world, but many corporate and social practices were still underdeveloped, especially in terms of ethics and moral obligation. My parents faced a system of commerce that was filled with graft; where sharks regularly swam across all industries.

I recall one situation very clearly to this day. My parents were trying to obtain a space in a major Korean department store. When the manager of the store made it clear he expected some money under the table, my parents stuck by their principles and didn’t give in to this “traditional” form of business in the department store industry. My father knew the supervisor several levels above this manager, but he didn’t want to play that card — at least not yet. My mother told the manager she would report him to his superiors. He was livid that someone would dare to say such a thing. The meeting ended abruptly and my parents returned to their office. After simmering on it for a few hours, my mother decided to address a letter explaining the situation to the local manager’s supervisor. Her employees freaked out.

“That’s not the Korean way, Mrs. Moon! You just don’t do that here… It won’t work!”

My mother replied, “There is no ‘Korean way’ — there is never only one way to do things. I will show you that you can change how things are done. Don’t limit your thinking!”

My mother prayed about the conflict, drafted the letter and my parents set another meeting with the local manager. I don’t know what the manager expected from them, but what he got was a stern warning and a promise. They showed him the letter, but also gave a promise that their coffee store would generate the most revenue for his division. Amazingly, he backed down from his demand for a bribe. My parents established their location in his store and it came to generate the most revenue for several years.

My parents’ employees were shocked at the turnaround. It was an incredibly rare occurrence to avoid the established order of business in Korea. They learned that change can come about in small ways by holding to the principles you decide to follow.

I learned too. Whether national culture or corporate culture and norms, my parents’ principled actions and evenhanded tactics taught me that change is always possible, even when the waves of tradition seem too strong to resist. One stand against those waves can disperse them and create ripples of positive change in a company, industry or nation.


Originally published at InsideWork

Upcoming Asia Web Conference

Chang Kim, CEO of TNC (leading blog software company in Korea) and blogger of Web 2.0 Asia, initiated an effort to have a conference in Asia on the Internet/Web 2.0. He was nice enough to invite me to be part of the organizing committee even though I'm no longer living in Asia.

Anyway, if you have any speaker suggestions or interested in sponsoring, just contact me. More from Chang's post, "Progress update on the Asia Web Conference plan"

"Tearing Down the Walls of Confucianism"

My op-ed went up at OhmyNews earlier on Wednesday. Check it out!

Tearing Down the Walls of Confucianism
March 6, 2008

Last Monday, Lee Myung-bak was sworn in as South Korea’s new president amidst a general sense of excitement and anticipation about whether he’ll be able to fulfill his ambitious economic goals for the country. Some of these goals are fueled by education policies that seek to increase the English-language proficiency of South Korea’s citizens—the impetus of which is to prepare Korea for a flatter world in which it will serve as a significant Asian financial and commercial hub. While I find these policies noteworthy, I also believe them to be premature—needing, as they do, to at least coincide with (if not follow) an effort to liberate South Koreans from strict Confucian social structures and a collective thinking that hinders a majority of its citizens from being effective beyond their country’s borders.

I began to ruminate on this last week while reading on South Korean politics and attending the Socrates Society Seminar on “Democracy in America” at the Aspen Institute. A motley group, America’s founding fathers were as diverse as possible for their time—a fact which allowed for the brewing of new ideas, compromises and a continuation of the concepts that emerged during the Enlightenment and became a reality in this experimental new nation. Their fledgling democracy, however, was neither perfect nor complete, and its ideals of liberty faced a direct threat from issues of slavery and women’s suffrage.... (full op-ed)

Qbox Facebook App Launches!

Qbox is a cool startup that I advise. It's a social music play that allows users to access and play free music through their player/application. You can either download it for your desktop, embed a player on your blog (e.g. Xanga, Blogger:), or as they just launched several hours ago on your Facebook profile. What's cool is that typically a video from YouTube or another social network plays in the embedded player, so your blog or site becomes more active and lively.

Here are some screenshots from my Facebook profile:




I didn't post this before, but VentureBeat referred to them in a longer piece on online music sites, "38 free/cheap music sites — Welcome to the fray, Qbox!"

Google Launches Universal Search in Korea

I knew about this for a while that Google was working on launching "Universal Search" in Korea. This allows Google to compete in South Korea, which is the 5th largest online ad market in the world. Universal Search is standard in Korea and Naver.com, which has almost 80% of the search market in Korea has provided it since 2002... I think (Chang or anyone? I forgot the exact year).

"Google adopts universal search in South Korea"

Here's a sample of Universal Search within Naver.com. Even though it's for the Korean language, I entered "Michael Jordan" and here are the results:





So you can look above or go to this link and see that the search results are categorized by blog results, online groups, books, videos, image, news, etc.

Search Engine Land has an in-depth review of the updated service in the U.S. here.

Where Technology Is Ubiquitous, Opportunity Abounds

My second column is up at AlwaysOn. Check it out!

Where Technology Is Ubiquitous, Opportunity Abounds
What the United States and others can learn from Korea's ubiquitous broadband environment.
Back in 2001, during the second year I was living in Korea, I encountered Hangame.com just as it was launching paid services for its online casual games (for example, Tetris, blackjack, chess, and pool). The world's leading casual online gaming company was about to begin charging users a fee of less than a dollar to do things like extend playing time and host private group games.

"Only in Korea or Asia could this happen," I said to myself. Americans would never pay 50 cents for such a service. If the price were that low, Americans would expect it to be free; they wouldn't recognize the value that Korean online gamers have accepted.

Or so I thought in my American arrogance. Within months, Hangame's revenues hit $30,000 per day on micropayments of 50 cents on average. Within a year, that number had risen to $80,000, and by 2004 revenues per day exceeded $254,000 and accounted for more than $93 million for the year.

Two years ago, when camera phone sales exploded in Korea, I said once again -- though with a tad less arrogance -- "Only in Asia." I simply couldn't imagine Americans taking to camera phones in the same way that the Koreans and Japanese had. Once again, American consumers proved me wrong: When I came back to the United States last May, I found that the camera phone market had exploded here as well -- and so I ate my words again.

As I passed my second year in Asia, I came to realize that while I'd once deemed cultural factors to be a driving force behind the use of technology and the Internet, the real driver was the ubiquity and power of technology itself. The Korean government's build-it-and-they-shall-come approach spurred a broadband revolution in that country that the U.S. cable industry could learn from. With 75 percent of Korean households having broadband access (compared with 20 percent of U.S. households) and almost 80 percent having wireless phones, the ubiquity of broadband and wireless services has created a development environment that's completely different than that which exists here in terms of services, products, and human behavior.

Camera phones provide one example. Blogs provide another. With 98 percent of Korean Internet users having broadband access -- and their average pipes providing speeds of 20 megabits per second (vs. 2 megabits per second in the United States) -- the blogging phenomenon in Korea has evolved quite differently than the blogging phenomenon here.

Blogs, in fact, were relatively late coming to South Korea, with Korea Telecom's portal service Hitel representing the first major launch (in April 2003) and NHN (Korea's leading portal by revenues and the parent company of Hangame) the second (in October 2003). But here's the interesting part: While in the United States text blogging led to photo blogging, which led to podcasting and finally video blogging, Korea's immersed broadband world allowed its providers and users to skip all of those stages: All blogs were text, photo, audio, and video blogs from the start -- without any distinctions.

Says Doug Yeum, CEO of Xfiniti (the company that developed Korea Telecom's blog service), "We wanted to make [blogging] multimedia from the beginning. Since our target base was the younger generation, having multimedia was essential. In the United States, developers are too conscious about speed -- and they probably have to be -- so most blogging services utilize static HTML, while in Korea we use dynamic page formats."

If you visit any Korean blogs, you'll soon discover that they're all like MySpace on steroids ... lots of steroids. One hybrid service to develop out of Korea's broadband incubator is CyWorld (HatTip to Pip Coburn, who mentioned this site in a prior post). Think of a blog, social network, and Flickr (a social network that lets users manage and share their photos online) rolled into one, and you begin to get an idea of what CyWorld is all about. In about 18 months, CyWorld went from nothing to being Korea's leading Web site in terms of page views and visit durations, and 19th in the world in terms of traffic (after AOL.com and Amazon.com), according to Alexa Traffic Rankings. (And we thought Friendster -- the hot social network that gained millions of users -- was viral and sticky.) It also makes money.

CyWorld's 10 million users -- who represent approximately one-fifth of South Korea's population -- make free "mini-hompies" (blog, social network, and Flickr combinations) and typically select who can access their personal sites. These sites typically include photos (for which there's unlimited space), background music, and customized avatar products. (For an example of one such customized avatar, check out my friend's mini-hompy: His avatar shares his hairstyle!) CyWorld charges approximately $1 to $2 a month to maintain background music or to purchase a virtual couch-micropayments that amounted to more than $114 million in 2004 for SK Communication, owner of the NATE portal that provides Cyworld.

As broadband becomes ubiquitous throughout the world, we can expect certain behaviors and protocols to evolve that transcend culture. And as the pipes grow fatter for everyone in this country, I believe we'll witness the following trends here:

Rapid growth of micropayments. Although micropayments have met with skepticism in the past, much of that criticism was directed at paying for content, not services. Even in Korea, efforts to sell content haven't met with much success: It's services and products (even if only virtual) that people are willing to spend their hard-earned dimes on. A recent survey by Peppercoin and Ipsos-Insight revealed that from October 2003 to September 2004, the number of Americans who bought something online for $2 or less grew from 4 million to 14 million-figures that indicate Americans are growing more comfortable with micropayments. Expect this slice of the U.S. online market to explode well beyond iTunes.

Increased presence of avatars (and avatar-related services). In Korea, avatars-which are targeted primarily at teens and 20-somethings-represent a significant portion of online revenue. Expect avatar services and sales to grow in the United States (and elsewhere) as well -- but to spread well beyond the under -- 30 demographic. I believe the U.S. market will see older users innovate and adopt such virtual representations as well -- though the cartoonish representations that dot Asian Internet services will probably be replaced by icons and information slides that follow the user around the site (and possibly other sites). In fact, I believe AlwaysOn creator and editor-in-chief Tony Perkins has a similar vision for AlwaysOn, so perhaps we'll see them on this site within the year.

Significant growth of the video game industry. Although the $11 billion video game industry already surpassed the movie industry's annual box office receipts a couple years ago, get ready for it to overtake the overall movie industry within the decade: As broadband grows, so too will the gaming market, driven by casual online gaming, wireless gaming, and advertising within video games (which the Yankee Group predicts will increase from $79 million in 2003 to $260 million by 2008).

A move to the PC as entertainment epicenter. More than 70 percent of South Koreans chose the PC over the TV as their preferred source of entertainment in a recent survey, making Korea the only member nation in the Organization for Economic Cooperation and Development (OECD) in which a majority of its population preferred the PC to the TV. While a lack of content and quality programming from the network and cable industries has something to do with this preference, it's also driven by the presence of high-speed access on every street corner along with abundant libraries of music, movies, and entertainment. When an always-on environment truly comes to fruition in the United States, look for a significant portion of the population to shift to the PC as their entertainment epicenter.

Total blog integration. According to a recent Pew Internet & American Life Project study, 27 percent of Internet users read blogs-a tremendous jump from the 11 percent who were doing so in spring 2003. Still, 38 percent of Internet users don't know what a blog is. Expect this to change within the next five years as broadband enables more functionality on blogs, increasing their viewership to more than 60 percent of the online population.

Korea's broadband environment allowed a nation of just 48 million to create the first MMORPG (massive multiplayer online role playing game), the first paid online casual gaming services, the first avatar services, and the first mini-hompies. Just imagine, then, what America -- with all of its resources and people -- will be able to do once broadband is finally ubiquitous here. You can't learn to swim until you get in the water, but once that pool is full, expect a flood of innovation on these shores!


UPDATE: OhmyNews International, the site that launched "citizen journalism," is reprinting my article in their English/tech section. I posted on them earlier here. Thanks to the OMNI editor, Todd!

UPDATE (04/07): Since AlwaysOn's old pages were deleted and I don't think they will restore it for a while so you can just read it here or at OhmyNews. Thanks!

WILL CHINESE OR U.S. COMPANIES LOSE OUT IN THE END?
Intel and Broadcom's China Headaches... Fortune Cookie Crumble?

China's growing arrogance and protectionist measures are beginning to bring forth questions for certain companies and industries on how much should they actually invest into China, what will the return on their investment be, and whether it is worth it at this juncture and early stage of China' growth to build a signficant presence their market.

These questions and others might be easy for some companies, such as Dell, HP, and KFC. But Intel and Broadcom are encountering some hurdles towards success in China's market. The following are a couple articles with slighty different spins on the same story. News.com explains:

"The Chinese government has passed a law stating that, starting June 1, all Wi-Fi chips sold must comply with the Wired Authentication and Privacy Infrastructure (WAPI) standard. The encryption algorithm was developed in China and is controlled by local Chinese companies." (full article)

TechWeb's Mobilepipeline headline reads, "China Tells Intel To Calm Down."

A little more sensational article, it quotes a Chinese official saying, "China is such a strategic market. I think Intel should calm down."

Overall, both articles reflect China's growing arrogance and long-term policy position to protect its domestic companies, and to rapidly acquire as much management know-how and technology from foreign companies. These are similar approaches that Japan and Korea have taken in targeted growth industries over the past decades. Japan and Korea in the early stages of their automobile markets completely blocked out foreign car-makers with high tariffs and policies allowing only a very minuscule presence.

In the wireless industry, Japan created their own standard, W-CDMA (Wide Band Code Division Multiple Access), with a similar intent as China, to protect their domestic market. In the end, the result hindered the long-term growth of their wireless companies. Korea went with Qualcomm's international accepted CDMA standard, and this resulted in their handset manufacturers' (e.g. Samsung, LG) effectively penetrating the U.S. and other global markets. The intent of China's economic policy makers are understood, but I don't know if it's the best approach for their nation and their corporations.

On the issue of forcing foreign companies, such as Intel and Broadcom, to create Wi-Fi joint ventures with one of the approved local WAPI standard companies creates a threat and loss potential (i.e. proprietary technology) that can scare off new entrants to the degree of preventing Chinese companies from obtaining what they want: management know-how and the transfer of technology.

Intel has already invest almost $1 billion into China, so they are going to work through this as much as they can. But for smaller companies and new entrants, it is a great concern.

The reality of the China market is that it is still like the Wild, Wild, West. The provinces are like cities dotted throughout the untamed West each with their own sheriffs and laws. Laws sometimes don't apply and even signed contracts don't mean much. I know of some Korean companies (favored technology partners with many Chinese companies) with signed agreements with wireless carriers and electronic manufacturers that have the most difficult time collecting their revenue or getting their domestic partners to execute on their contracts.

Korea is far more developed, but similar qualities can be seen and lessons learned for foreign partners new to Asia. When Costco initially entered the Korean market, it signed a joint venture with Shinsaegae, one of Korea's leading retailers. They created E-Mart, a Korean-style Costco, but then Shinsaegae broke the agreement (backstabbed) with Costco. Taking their know-how, but not paying the royalties. Costco re-entered the market on their own with some bitterness. Korea companies like to do and build things on their own and I have seen a similar quality in China. They will try to take and copy whatever they can get their hands on, and of course with the least amount of expenditure.

When Starbucks entered Korea a few years ago, it also signed with Shinsaegae as their domestic partner, but they came out with a favorable deal and Shinsaegae didn't. So I'm sure various industries and partners in China will also have numerous stories to tell.

So do U.S. and other foreign company take such risks to capture a piece of the China market, especially as more protectionist laws are created? How do they ensure their proprietary technologies will not be stolen and copied? How will China's legal system improve to protect foreign investors and partners? How long will China's corporate feifdoms continue?

The greater questions rest on China's policy-makers. Will this protectionist stance be better for Chinese companies or worse in the long-run? Will creating their own technology standards contain them to a domestic market of 235 million consumers, growing towards 1 billion, or allow them to dictate global standards? I really wonder how much thinking went into some of their policies and how many of them were dictated by the new rich in China.

Korea Venture Capital Firms Suck

Assinine is Better Than Clueless

A few days ago I had a meeting with one of the major domestic venture capital firms in Korea. For the software company I'm helping out, we started the process of seeking a second round of venture capital financing. A local firm expressed interest so they visited on Tuesday to hear our presentation and see our software demostration. The end result was the same frustration on my end and cluelessness on their end I encountered when we were raising capital for my first two startups.

I waited a couple days to write this entry because I wanted to put down my thoughts in a calm state of mind. I wrote about the immature venture capital industry in Asia before, especially Korea, but this is a more blunt assessment. Vast majority of the professionals are simply morons. They are clueless. Especially with many of these domestic funds, they don't hire the best people since these people don't get carry (percentage of the earnings) in the fund. They are just managers hired to find and decide on investments, but incentivized to avoid risk. Many are not even the best and the brightest from their schools or professional backgrounds, but even if they are they all function in a similar manner... being clueless.

So during my meeting, I was reminded of my prior efforts in pitching for HeyAnita Korea. We met with many of the domestic venture capital funds in Korea and didn't expect much after the first few meetings. Same reaction, same hand-holding, same cluelessness. It was frustration to a painful degree for our team. When we met with U.S. venture capital firms, we were challenged with probing and insightful questions, feedback that made our business model better, and we always felt like we came out better from our meeting whether they were interested in us or not. I was hoping for just half of this from Asian venture capital firms, but this dream never solidified.

So on Tuesday, these two professionals didn't know how to ask questions or really challenge our thinking. Their two main comments I remember were, "I don't see the market for it." and "I don't see many potential applications." Typical Korean venture capitalists. This is after we explained how potential customers we spoke with saw so many applications and we gave several examples. Encountering cluelessness is frustrating for anyone pitching for financing.

Afterwards, I spoke with my friend, Jimmy, and talked about the meeting. He started to laugh because he knew the firm and said, "Of course they're like that... they're a typical Korean firm and the most conservative fund."

I replied, "I would rather that they be extreme assholes but friggin' brilliant, so that they could tear our business model and company apart, and give us a hundred reasons why we won't succeed or what we should change to improve the company. "I don't get it" just doesn't do it for me. At least ask me one good question..."

Immature Venture Capital Industry in Asia

My Experience as an Entrepreneur in Asia

During the time of my first startup with Jimmy and Peter, we envisioned starting an early-stage venture capital fund 7-10 years down the road. Especially because we already enjoyed helping friends and other entrepreneurs in their startup efforts while we were involved with our own. By the time of our second startup, the desire became a little more focused towards helping entrepreneurs in Asia because our experiences on both sides of the Pacific showed us the differences in being an entrepreneur in Asia versus the U.S. We realized we were serial entrepreneurs and enjoyed working on the early stages of company growth. We also knew Asia didn't have the best elements or culture to start a new company, so we eventually wanted to be in a position to help new entrepreneurs in Asia achieve their goals and vision.

We thought about doing another startup and then raising a fund several years down the road, but an opportunity came up last year to try to start a fund so we went forward with it. Everyone didn't need to take the risk, so I volunteered to start the process and if it succeeded the other four would quit and join. If it didn't succeed, which was almost expected, we would just try again five or more years down the road. Failure was expected because we went through the process of fundraising in the U.S. and Asia. 1% of all startups receive venture capital funding in the U.S., and this was during the booms times when money was supposedly being thrown around. I'm guessing this figure is higher in Asia, but still a difficult road. Even though we were successful in raising capital for two companies, the road for raising a fund was more difficult and the odds were worse, so we were confident but realistic in our expectations.

The economic conditions were horrible in trying to raise capital, especially for a new fund, but we thought the other factors were good... lower company valuations, continuing innovation coming out of Korea and China, and a shortage of early-stage capital. We tried for a year, but it didn't work out so we'll just regroup a few years down the road and try again. The following are excerpts from our PPM, or prospectus, explaining the landscape of the venture capital industry in Asia:


"Members of our team were former entrepreneurs in Asia and much of our company’s vision was cultivated from numerous meetings with almost every venture capital and private equity firm in the Pacific Rim. From our encounters, we noticed that the majority of the professionals in Asia were former bankers versus experienced entrepreneurs or managers from corporations as in the U.S. We noticed the distinction from U.S. firms, especially in our meetings since firms in Asia would focus more on the financial projections, which were crafted from part research and part dreams. Also the outcome, whether good or bad for our fundraising goals, infrequently provided benefits in terms of business insights or advancement of our business model. While our discussions with U.S. firms tended to challenge our thinking and assisted in us improving our business model. In the end, we successfully raised capital from some of the top firms in Asia, but the seeds had been planted to change the processes that we experienced.

One explanation for this difference is the venture capital industry’s brief history in Asia. The cycles of entrepreneurship and high-tech innovation have been relatively short resulting in a lack of infrastructure ideal for entrepreneurs, whether legal, financial, or cultural. Additionally, this has resulted in a smaller pool of experienced entrepreneurs and managers from larger corporations entering the venture capital industry creating a distinction with U.S. firms. Whether from the venture capital industry or entrepreneurs working on their second or third venture, fledging entrepreneurs in Asia do not have easily accessible role models or guidance in creating new businesses due to the small pool they can draw from.

Another resource that is not readily available to all entrepreneurs is a strong personal network. In Asia, family, educational, and other personal relationships are essential for doing business. In the past, some great entrepreneurs did not succeed due to the lack of these types of relationships needed to create partnerships with larger entities, fund-raise, or deal with bureaucratic issues. Additionally, bad ideas received funding due to a founder’s status within the social ladder.

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In Asia, there is little distinction between private equity and venture capital firms. While in the U.S., the former traditionally tends to be more conservative, diversified in old and new economy, maintains investments that range in both public and private entities, and commonly evaluates a company on the financial data and potential returns. Generally, venture capital firms are less risk adverse, more focused on private technology companies, and strongly weighs softer issues towards a company’s potential, such as the management team and strength of technology.

The composition of their teams also greatly differs. Private equity professionals generally come from the financial service industry since many funds are related to an investment bank and this prior experience matches the nature of their typical investment. Venture capital firms differ since they are composed of former entrepreneurs, experienced managers from larger corporations, and some professionals from a financial service company. One reason for this difference is that technology has been a cornerstone for the venture capital industry and disregards conventional financial analysis. The short and long-term marketability of a technology can be difficult to predict and derivative ideas and products are challenging to discover at any stage, whether it is an older existing technology like telephony or cutting-edge nanotechnology. For practical purposes, a mixed team is needed for a firm to better assess investment opportunities in technology-related, early growth industries, or really any industry. Additionally, these types of companies undeniably need assistance beyond financial support. Only 25% of startups successfully achieve the second stage of growth and financing. The success rate increases to 80% when the venture capitalists supporting the company has prior experience from running a startup and working at a larger firm.

In Asia, most venture capital firms are primarily composed of individuals from the financial service industry. This has limited the ability for these firms to effectively evaluate an investment opportunity and the scope of impact it can have towards the company’s success. We believe this homongenous grouping of financial professionals is a contributing factor to the overall lack of success in Asia for venture capital firms."