Groupon will become the Sarah Palin of tech, and other predictions for 2011

My 4th annual technology prediction piece is up over at VentureBeat. Check it out!

Groupon will become the Sarah Palin of tech, and other predictions for 2011

2011 will be a year of economic recovery and continued drama in Silicon Valley, marked by the hyped battles of Apple vs. Google, Google vs. Facebook, and Oracle vs. the rest of the enterprise world. Without further ado, here is the 4th annual edition of my technology predictions.

The Groupon Juggernaut Will Slow Down
Groupon is quickly becoming the Sarah Palin of the technology world. It has its haters (Forrester’s Sucharita Mulpuru), doubters (Flybridge Capital’s Jeff Bussgang) and fans (FM’s John Battelle) like the former vice presidential candidate. Everyone seems to have an opinion of Groupon, whether through their own personal experiences or spurred by a coffee talk at Coupa Café in Palo Alto. Being from Chicago, where the company is based, I wanted to be a fan, but I have strong doubts on the sustainability of its business model. It will remain successful, but will it be the next Amazon or “Google of e-commerce” as many people predict? I just don’t see it. Maybe its critical mass and huge funding rounds will sustain its market share for a couple years, but the competitive barriers of entry are too low, so I predict its revenue growth will begin to slow towards the end of 2011. A few years from now, this darling of the ecommerce space will be a fading memory... (full article)


This was also republished in The New York Times' Technology section here.

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.

"Why We Send Troops to Afghanistan" by Kim Young-Hie

HatTip to Adrian H. Simply an excellent op-ed by South Korean journalist Kim Young-hie, so it gets a full post here...

Why we send troops to Afghanistan
Their eyes will be awakened to an entirely new world and their hearts inspired with a pioneering and enterprising spirit.

JoongAng Daily
February 27, 2010

South-Central Asia’s Silk Road, the crossroads of the continent and the focal point of the world’s oldest trade route, had taken ancient merchants, scholars, culture and soldiers from Asia to the Mediterranean Sea. The path to the south led to India, the one to the east lead to China, and to the north lay central Asia, home to nomadic tribes. In 330 B.C. Alexander the Great of Macedon raced through the region with his cavalry in his conquests in Persia and India. The area was reduced to a state of rubble by deadly Mongolian horseback archers led by Genghis Khan.

The harsh, inhospitable landlocked region borders China, Pakistan, Iran, Turkmenistan, Uzbekistan and Tajikistan. A melting pot of diverse races has been hardened by years of invasions and hardship. Into this land we plan to send 350 South Korean military troops in the summer to help rebuild Afghanistan... (full op-ed)

Tech Trends for 2010 — A Netscape Moment Coming Up

My third annual technology trends piece is up at VentureBeat...

Tech trends for 2010 — a Netscape moment coming up

When I made my tech trend predictions for 2009, we were in the middle of an economic meltdown. This year, I’m less focused on the recession and — thanks to my one-year old twin girls — am wading my way through a flood of information on baby products, toys and books. My mind has wandered between thoughts of Bugaboos and Ooyalas, Leapfrog and Playfish, or Seuss and Seesmic. Still, here are my tech trends for 2010.

Online Shopping Clubs Will Mature
Online shopping clubs aren’t anything new, but these post-bubble incarnations are. Leaders in this segment tend to hold “flash” sales (limited-time sales) and restrict sales to members only. Luxury goods lead this space with France’s Vente-Privee hitting $966 million in revenues this year and U.S’s Gilt Groupe earning almost $150 million in revenues in 2009. By 2010, within four years since launching in the U.S., the companies in this space will have achieved over $2 billion in worldwide sales. Talk about hockey stick growth!

This same model has transferred to other categories, with many luxury players launching travel offerings under their banners. There are also more narrowly focused sites launching, such as Totsy for moms and One Kings Lane for home décor. Woot in the U.S. and One A Day in Korea are flash sale sites that sell only one item everyday. One A Day hit $13 million this year and projects $28 million in sales for 2010 under this simplified model.

Much of this tremendous growth has been driven by the steep discounts all these sites have provided through access to excess inventory. There are concerns this category might see some trouble once the economy picks up and retailers begin rightsizing their inventory. But I believe it is here to stay because — similar to how Zynga and Playfish brought lazy interactivity to the online casual gaming space — these new e-tailers are pushing products and brand relationships to the lazy shopper. It won’t be just about discounted goods, since players like Gilt are already pushing exclusive, in-season goods. So I predict that 2010 will be a breakout year for this ecommerce category and it will move far beyond discounted luxury goods.

Gaming Will Advance Beyond PCs and Consoles
2009 was a great year for online gaming, with Zynga, Playfish, and others leading the charge and showing the power of Facebook and the social networking ecosystem’s distribution power. The next stage of online gaming will be led by more powerful gaming platforms and engines for mobile and the browser... (full article)

UPDATE: VentureBeat has a syndication partnership with the New York Times, so they select some articles everyday to republish in their Technology section and they picked my op-ed today.

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.

Asia's Very Smart Cities: Songdo, Korea and Meixi Lake, China

This month's Forbes magazine has an article entitled "Asia's Smart Metropolis: South Korea's Songdo and China's Meixi Lake are spending billions on intelligent networks with an eco-vibe" where companies such as Cisco and 3M are highlighted.

What's missing in this discussion is smaller technology company I'm an advisor to called Innotive. It's led by my two close friends, Jimmy and Peter, who I did my first two startups with. Innotive is an integrated platform that allows for the convergence of rich media content through an interactive, zooming interface. It powers interactive displays at retail stores, such as BMW and Nike, and provides a control room solution to manage CCTV camera monitoring efficiently through one workstation. The latter product is called InnoWatch which will be integrated into the Songdo City project with over 1,000 touch-screen displays installed.


Songdo is a huge development project that spans over 1,500 acres, 150 buildings and will cost over $35 billion. It is not only a "smart" city but a green city that will be the largest private LEED development in the world since the whole city will be based on LEED building standards.

Below is an example of Innotive's InnoWatch solution:

A longer, detailed version of the Forbes' article was published online, "Very Smart Cities," which you can read here.

Craziness of Christine Ahn and the Korea Policy Institute

Once in a while you come across such an outlier perspective on an issue that it's difficult to categorize as "far left" or "far right." Just reading a piece by Christine Ahn and Thomas Kim of the Korea Policy Institute it's not even possible to label it "far, far left" or "extreme left" because a couple of my far left friends didn't welcome such a viewpoint so one word remains: crazy.

This is the second crazy piece I read from Christine Ahn and beginning to believe she's from the halls of Pyongyang or Venus. Her latest article, "The Untold Story Behind Human Rights Violations in North Korea," states such fantasied notions as questioning why North Korea is on the State Department's terrorist list and being "tarred with the label of human rights abuser."

I doubt recent news of North Korea's increased missile threats and the recent plight of Laura Ling and Euna Lee will sway Christine or Thomas.

They even bring forth such a frivolous argument against sanctions because "no domestic group within North Korea supports sanctions, as did the African National Congress in South Africa and the National League for Democracy in Burma." Eh? It's a dictatorship. Hello!

So do they believe there are no concentration camps in North Korea? And no human rights violations? The food aid that was flowing into North Korea for years was not being diverted to the military or black markets? Do they believe there should be increased aid from South Korea or elsewhere? All very puzzling to me.

1Gbps Downloading in South Korea... Most of Korea by 2012

Gizmodo is reporting that the "Korea Communications Commission is spending $24 billion to secure 1Gbps access by 2012." A friend told me that Powercomm has already provide 1Gbps services in some districts in Seoul, so I assume the 2012 date is a target for all of Seoul and other major cities.

"There's one small catch to the commission's plan, which is that only large cities in Korea will have access to the top tier broadband. But surrounding smaller areas will still have access to 50 to 100 Mbps speeds...or about 10 to 20 times the speed of what I get in my DSL-only apartment building."

The amusing part of the Gizmodo piece above is that there is no small catch. Almost half of South Korea's 46 million live in Seoul alone. Most people live in large cities.

Korea Joins Visa Waiver Program

Congratulations to my friend, Thomas Kim! South Korea is now officially part of the Visa Waiver Program. Thomas has been working hard on this from the beginning. Part of his email to me:

"After three years of collective effort, as of Monday, November 17, 2008, Korea is now officially a part of the Visa Waiver Program! On this day in Seoul, U.S. Ambassador to Korea Kathleen Stephens highlighted a ribbon-cutting ceremony to welcome and send-off the first South Korean VWP passengers traveling to the U.S. from Incheon International Airport to San Francisco on United Airlines. It was a momentous event..."

Thomas worked under the Clinton Administration at the U.S. Trade Representative's office, but I'm not certain if he's going to join the Obama Administration. He's doing excellent work at his lobbying firm.

Anyway, here's an article on yesterday's event, "Visa-Free US Travel Possible From Today"

This great for the U.S. economy in the long-term since so many Korean women will fly across to Pacific to shop. :) Right now the U.S. dollar is strong against the Korean won, so I assume most of those plans are on hold.

"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)

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.

"U.S. TECH TRENDS FOR 2008"

So my op-ed went up on VentureBeat today, so check it out here. Thanks to Jill, my editor, for helping me refine this piece.

Also Matt Marshall, founder of VentureBeat, trimmed a bit of fat off my original article, so I decided to publish the whole thing here:

U.S. Tech Trends for 2008

A couple of months ago, my wife and I visited Seoul, South Korea—a trip that inspired me to come up with a list of technology predictions for 2008 and beyond. It’s been a couple of years since I’ve ventured to make such prognostications—and I didn’t really plan to do so now—but the land that brought us bottle service (with clubs there serving overpriced alcohol for more than 25 years), MMORPGs (massive multiplayer online role playing game), and paid online casual gaming serves as a good place for both spotting trends and thinking about those that are emerging back home. Hence my crystal-ball observations of what’s lurking on the immediate and not-so-immediate technology horizon—both the trends on their way here and those the United States will export to the rest of the world

Mobile videoconferencing reaches the states. If you’re a teen, the only thing better than gabbing on your cell with a friend would be gabbing on your cell with a bunch of friends—and seeing each of them on screen as you do so. In Korea kids are doing just this—videoconferencing as they speak to friends via mobile handsets—and loving it. Since kids are kids everywhere, we can expect to see a similar response in the United States, though we probably won’t see it happen before the end of 2008. Unlike Korea—which has the only commercial WiMAX networks in the world—the United States doesn’t have the Mobile WiMAX capabilities required to stream video at 8 megabits per second or greater (16 Mbps or greater for downloads). In this country, you’re lucky if your cable modem service gets 6 Mbps—and a range of 2 Mbps to 4 Mbps is far more typical. When mobile videoconferencing does become a reality here, how will it impact handset manufacturers? Can we expect to see larger mobile phones and bigger screens as a result? Only time will tell.

Virtual currencies warm up. Content is not the only driver for sustainable online communities; virtual economics play an important role as well, with virtual currency serving as an increasingly critical tool. Virtual goods already provide a viable business model in online worlds—with companies providing outlets in which players can convert in-game assets into real-world wealth (and vice-versa). Now, virtual goods are starting to find their way into every other area of the Net as well—only now it’s not just about generating revenue but about paying people (in virtual currency) for their eyeballs. Already used to grab users’ attention for online product launches and games, virtual currency (and virtual economies) could before long become a common feature in all online networks and worlds. As companies and services fight for users’ attention, we can expect to see more and more of them rewarding users with virtual coins or points that users can trade for cash or noncash goods and services. Worst-case scenario, we all turn into brain-dead mouse clickers obsessed with accumulating Yelp and Starwood points. Best-case scenario, we’re rewarded for our time and effort with healthy incentives.

Semantic Web begins to slowly gel. Tim Berners-Lee’s vision of the Web of the future—in which data itself becomes part of the Web and can be processed independently of application, platform, or domain—is finally becoming a reality … albeit slowly. Thus, in 2008, we can expect the various filtering, aggregating, and grouping efforts to continue as the Web 2.0 services that initially captured our attention (such as Radar Networks and Adaptive Blue) expand and evolve. Now, the questions become, how will data be organized—by advanced algorithms? Human-powered (no, not Mahalo)? And what format or tools will be used—tagging? Grouping? And finally, what do users want—friends’ feeds? Multimedia files? The latest books, photos, and gossip on Britney Spears? I believe we’ll see a couple of tangible and useful services take off next year (some of the stealth startups I’ll be writing about soon).

Location-based mobile services gain ground. According to Morgan Stanley analyst Mary Meeker, 20 percent of mobile phones currently include the satellite-based navigation system Global Positioning System (GPS)—a number that’s expected to grow to 50 percent within five years. This means that at last a critical mass of end users has emerged for the location-based mobile services that take advantage of GPS. Thus, we can expect to see a surge of activity in this area. I can visualize it already—my weight soaring as In-N-Out pushes me a coupon every time I get within proximity of an outlet, my credit card bills soaring as Nordstrom’s and Macy’s send my wife sales notices and coupons. It will be horrible; I’ll be dragged to these places more often. Forget it, I hate location-based services already!

Interactive TV makes a comeback. This won’t be like watching Evander Holyfield or Mike Tyson attempting a comeback—a one-time champ too old and worn out to rise to prominence again. Instead, it will be more like watching a boxer who debuted too early return and live up to his initial promise. This time around the infrastructure is actually cost-effective; the integration of the Internet and TV has created infinite collaborative possibilities; and new entrants (such as consumer electronics makers) are eyeing the market. Interactive TV won’t be a media champ; however, it will serve as an important secondary source for information, commerce, and social networking. Efforts such as Apple TV (which combines Internet content and television) represent the first step in Internet content being ported to millions of U.S. couch potatoes. With consumer electronics manufacturers eager to capture more of their customers’ mindshare, this represents a potential battleground for cable and satellite operators.

My trip to Korea made me appreciate our flat world—and the excitement it affords by allowing us to observe trends occurring across the globe and to witness the way technology bridges gaps in culture and human behavior. Watch for the trends I’ve spotlighted here to emerge in 2008 and beyond—and let me know what technology trends you see on the horizon.

"PEACE FOR OUR TIME"... GREAT OP-ED

Adrian Hong, Executive Director of Liberty in North Korea (LiNK), has a great op-ed and criticism of former South Korean President, Kim Dae-Jung:

Recently, former President Kim Dae-Jung's ``Peace Center'' sponsored a special event in Seoul calling for democratization and freedom in Burma.

Kim made laudable demands on the Myanmarese (Burmese) junta: access by the U.N. and NGO representatives, credible aid distribution, freedom of political dissent and the basic protection of human rights and liberties.

And while Kim's voice for such ideals in Myanmar, formerly Burma, is certainly noteworthy, it reeks of grehttp://www.blogger.com/img/gl.link.gifat hypocrisy that a man who was in a position of tremendous influence over the future of North Korea and did nothing now purports to stand for freedom and justice elsewhere in the world.

From 1998 to 2003, Kim could have called for transparency of aid to North Korea. He could have called for reforms by North Korean officials in return for South Korean motions and gifts ― gifts that ranged from political concessions to outright cash.

He could have pressed to allow humanitarian organizations access to any of the nearly 50 counties North Korea has marked off-limits. Instead, under his leadership, South Korea transferred hundreds of millions of dollars in cash to the North Korean government for use as they saw fit, on top of regular shipments of aid... (full article)

THOUGHTS AFTER THE HORROR AT VIRGINIA TECH

Adrian, a fellow board member of The Mirae Foundation, has an op-ed in The Washington Post today. Spot on. I agree with his take and a bit embarrassed by the South Korean President, South Korean Ambassador to the U.S. and first-generation immigrants apologizing for Cho's actions. It's awkward and seems misguided to me as an American.

On the other side, I understand from their perspective since they are a people with strong nationalistic thinking and the initial emphasis by the U.S. media that Cho was South Korean. Anyway, here is Adrian's piece:

Koreans Aren't to Blame

By Adrian Hong
Friday, April 20, 2007

Monday's events at Virginia Tech were tragic. As our nation mourns, countries around the world continue to send condolences and words of encouragement to the American people.

Included in the aftermath of these shootings has been the response of Koreans in the United States. Many first-generation immigrants, part of a diverse and vibrant community, have taken it upon themselves to apologize for the actions of gunman Cho Seung Hui, citing a sense of collective guilt and shame simply by virtue of a shared ethnicity. (full article)

Also Dinesh D'Souza, one of my favorite policy wonks, has a good blog post, "Where Is Atheism When Bad Things Happen?"

Chuck Colson wrote a good article called, "Something Horribly Wrong"

Why Is Google Getting Whipped in South Korea by NHN?

Notes on Korea's Leading Search Engine and the Global Leader in Online Casual Games

I've been meaning to write about the online casual gaming space along with NHN's coming entry into the U.S. market ever since I read a post at alarm:clock about PlayFirst's $5 million round a few weeks back. Of course, I'm swamped with our product launch, so things get easily pushed back.

Anyway, Mingi sent me an article in this week's BusinessWeek about NHN, so it served as a catalyst for me to try to blog about NHN again. First, here's the article:

NHN: The Little Search Engine That Could
Korea's NHN thumps Google at home, and it's teaching the big dogs a new trick

Quick. What's the hottest Internet search company on earth? If you answered Google, you'd be wrong by at least one metric. While the Silicon Valley sensation doubtless had a great year in 2005, shares of a Korean rival -- NHN Corp. -- have done far better. Google Inc.'s (GOOG ) stock climbed an impressive 103% in 2005, to nearly $415, but that paled beside NHN's 218% gain to $267.
.....
But in its home market, NHN's Naver.com search engine trounced Google's offering. Google's 4-year-old Korean-language search service accounts for less than 2% of search page views and search-related ad revenues in Korea. Under CEO Kim Beom Su's adroit direction, NHN sold about $228 million in online ads last year, nearly 40% of the country's total. "In the vibrant and volatile Korean Internet sector, NHN is clearly the star," says Jay Park, an analyst at Samsung Securities in Seoul. "NHN's user-friendly approach outshined its rivals." Google declined to comment for this story.
.....
"Google has a superb search engine," says Choi Jae Hyeon, NHN's search chief. "We have, however, built up knowhow and a database by extracting knowledge from users' brains."

GODS AND MORTALS
What he's talking about is a three-year-old initiative called "Knowledge-In." The program lets users ask and answer questions on anything from recipes for kimchi to the composition of rocket fuel. Readers judge the responses, and the millions of folks who have answered questions are ranked as "ordinary," "knowledgeable," "highly knowledgeable," "supernatural," or -- for 22 truly prolific answerers -- "gods." "Naver is great because you get all sorts of detailed information in very specific questions and answers," says Song Han Sil, a 25-year-old pianist in Seoul. "Many of my friends don't even know that Google offers Korean-language service." The database now has some 37 million questions and answers that can get returned with search results. The idea is so popular among Koreans that most other search engines in the country, including Yahoo! Korea (YHOO ), now offer their own versions of Knowledge-In services. (full article)


I've posted about NHN Corp before, but in bits and pieces so I'll give you some more information. I know NHN through my friend who has work their since its early days and because they were my client when I was at iRG, a boutique investment bank.

NHN is an interesting story because it was the marriage of two hot Internet properties in Korea back in 2001. One was Naver.com, a leading portal and search technology company, and the other was Hangame, the leading online casual gaming company in the world. Hangame was just starting its paid services and generating some incredible revenue numbers (i.e. $30,000/day from average user payments of 50cents) when Naver.com came in with a merger offer. The two decided to merge with Naver.com in the driver's seat since it was an already a mature Internet company and the expectation that Hangame was still developing. Within the first year of their merger, Hangame exploded and revenue from this side exceeded Naver.com. Over the past couple years, the revenues have been generally split since Naver.com's search technology group has been leading the charge.

As with many innovations in Korea, I believe the ubiquity of broadband and wireless was a catalyst. While recent startups, such as Wink and RawSugar, try to build community-based search services, as described in the BusinessWeek article NHN has been doing this for over three years and built it to such an incredible degree that Google can barely penetrate the fifth largest online advertising market in the world.

What the article misses is that Google was late in establishing any real operations in South Korea for years. While I lived in Korea, some friends and I would discuss once in a while how Google was missing an opportunity to capture the Korea market. If they invested beyond a couple sales people a few years back, this might be a different story.

Another important factor to note in NHN's search success was that the rapid growth and continuous activity of its "Knowledge-In" service was partially fuel by the integration of its casual gaming property, Hangame. One incentive for Naver.com users to build up its community search database was giving "Hancoins" as rewards. This is the currency that people can use to play various online casual games, such as Battle Tetris, poker, and virtual pool. Brilliant move by NHN.

Since I'm a former video gaming addict born from Atari's 2600 through the first Nintendo system and beyond, I had a bit of snobbery towards the Korean gaming market since I thought a vast majority of their games were poorly designed with horrible graphics, such as NCSoft's Lineage. Hangame was an exception. The quality of their graphics, design and gameplay was beyond any U.S. counterpart from 2001 to today, so it will be interesting to see how well NHN's online gaming effort does in the U.S. as they set to launch sometime this year.

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!

Generalizations of East Asians... Chinese, Japanese, Koreans

Parable of the Dragon and Ten Pigs... Are Japanese The Model?

A few weeks ago I read a column by an attorney in a Korean newspaper on his recent travels to Shanghai. I tried to find the article online but could not obtain it so the details will not be accurate. He was a Korean working at an international law firm in Hong Kong whose work had taken him often this year to the mainland. His article focused on the parable of the dragon and ten pigs that he learned from his friends in the mainland. The lesson in this Chinese parable was comparing the skills and characteristics of the Chinese with the Japanese. The Chinese are like a dragon, which they described as strong and skillful individually, but within a group they become like ten pigs squealing and running aimlessly in the pen. The Japanese are like ten pigs, who are weaker individually, but come together to become a dragon. The lesson is the work and sweat needed to get things done is in groups not by individuals, and a self-criticism by the Chinese.

I found this interesting because Koreans recognize and sometimes discuss the strength of the Japanese in their teamwork skills and ability to support each other, but it isn't often they are reflective on their weaknesses as much as I hear from the Chinese. I remember listening to various criticisms and comments from Japanese and others about Koreans when the topic of reunification of North and South first came into the forefront about a decade ago. The great potential of reunification would be discussed, but soon dismissed after noting that Koreans would eventually backstab each other and its maximum potential would never be attained.

Though disappointing to hear as a person of Korean descent, I see some of these characteristics. One example is when I first moved to Korea four years ago for work, I learned about a phrase in Korean that people state when good fortune happens for their friend or colleague: "my stomach hurts." This phrase means that you feel a sense of envy for your friend or colleague that receives a promotion at work, windfall of money, etc. It is also disheartening when you see and hear stories of backstabbing and jealousy in Korean corporate environments. I hope this generalized characteristic fades from Korean and Korean American culture.

It's interesting though to hear in the U.S. how Koreans were considered the "Asian Jews." Primarily in a positive spin, this comparison stems from the perception that Koreans are hard-working, intelligent, and very driven to succeed. Also there is a more tangible fact in that many businesses Koreans obtained when they immigrated during the 1960s and 1970s were from Jewish Americans, such as dry cleaners and various retail operations in Chicago and New York.

I grew up in a suburb with a large percentage of Jewish Americans, and some of my friends' parents acknowledged this perceived similarity. A few of them would say that they would allow their daughters "to marry either a Jewish or Korean boy" because they believed Koreans to have "similar values." I would state that one difference I recognize is the formal and informal support system that Jews have which Koreans do not in the U.S. This might originate from all those hurt stomachs in Korea.

It's interesting to hear while living in Asia that the Chinese are considered the "Asian Jews." Not always in these words, but Chinese are considered by most Asians to be the best "money makers" or the smartest with money. Even my native Korean friends and family state or agree on this stereotype of the Chinese. So I assume many of the Chinese in the U.S., being in there several generations longer than Koreans, are diluted too much by American culture. :) Anyway, my mother is one of those Koreans that believes once China has the infrastructure and economic and cultural maturity that they will dominate Asia and much of the world.

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..."