No one is suggesting that the chaebols’ influence will eclipse anytime soon, but “policy leaders realize there needs to be a more diverse economy,” as Tom Coyner of Soft Landing Consulting in Seoul puts it. Shortly after taking office in February, Korean President Park Geun-hye launched the new Ministry of Science, Information-Communication-Technology, and Future Planning, which is charged with jumpstarting creative industries and assisting small businesses.
As home to the world’s fastest Internet download speeds, Korea might seem a natural place for tech startups to thrive. Indeed, there is a nascent startup scene in Seoul, and it benefits from exposure to the country’s tastemaking media and entertainment industries. Korean soap operas play on TV sets inside Chinese apartment blocks and Mongolian yurts, and satirical K-Pop star Psy’s “Gangnam Style” video became an international YouTube sensation last year.
“Korea is big enough for a local market, but its size also forces you to think beyond,” says David Lee, the 33-year-old founder of Seoul-based video site shakr.com. He says that many Korean startups, like the country’s media companies, cater first to a domestic market. But because Korea has just 50 million people, startups concerned about long-term growth need to think internationally from the get-go.
On Shakr.com, developers can upload video templates for everything from weddings and children’s birthdays to real-estate sales. A user can insert personal photos into the template and download a low-res video for free, or pay about $40 for an HD version. Since the website launched on May 1, about 40 percent have chosen to pay for the higher-quality version. To date, Shakr has received about $2.4 million in seed funding from domestic and international investors, including Silicon Valley-based venture firm 500 Startups. Much of Lee’s growth plan centers around real-estate video templates for the U.S. market.
“It’s probably the best strategy to go international as soon as possible, without becoming dependent on the domestic market and inevitably bumping up against, or being subsumed by, the chaebols,” says Coyner, the consultant. He’s seen many promising Korean startups sign lucrative but demanding contracts with chaebols, overextend themselves and lose focus, then have to cut back or go bankrupt. “There are plenty of good engineers and ideas in Korea. The problem is how to scale up without being absorbed.”
Larson is a Bloomberg Businessweek contributor.
