Archive for the ‘Korean Entrepreneurs’ Category

Korean Entrepreneurs: Lee Jae-Bum of KakaoTalk

July 12, 2011

KakaoTalk has been South Korea’s biggest smart phone app success story. KakaoTalk has already 18 million users worldwide as of July 2011. KakaoTalk is top download in the App Store and the most successful social network service across iPhone and Android platforms in Korea. Number of users is estimated 20 million by the end of this year. KakaoTalk’s success continues outside of Korea as well. KakaoTalk has approximately 1 million users overseas and this figure continues to grow by ten thousands users per day. KakaoTalk now handles over 300 million messages per day. The success led Google to choose KakaoTalk as one of top developers in the Android Market. Yahoo! and Skype are chosen neither top apps nor top developers yet. Mr. Lee Jae-Bum, CEO of KakaoTalk, is in charge of creating this remarkable product and fan-ship.

Jae-Bum has envisioned himself as a future owner of enterprise from his college days. He majored in industrial engineering at Seoul National University, which is the nation’s top university in Korea. He heard so many great stories about his alums at school becoming successful venture entrepreneurs. So, he also took his own venture by establishing an Internet company right after college with hope that he could join those successful entrepreneurs shoulder to shoulder. One day, his professor made introduction to Jae-Bum to work with Mr. Kim Bum-Soo, one of SNU alums and a very successful venture entrepreneur who founded Hangame, a leading online game company. Hangame was eventually merged with the NHN, a top Internet property in Korea with gross annual revenue over $1 billion. Jae-Bum’s challenge to dare to start a venture business from scratch somehow proved himself to Bum-Soo and other board members. So, Jae-Bum landed his job at KakaoTalk (previously known as IWI Lab) and he was eventually promoted to lead the business while Bum-Soo sat on the board as chairman.

Jae-Bum’s early work with KakaoTalk was not that brilliant. Few pet projects such as memo aggregation or personal ranking chart combined with social network features were in production but never really took off. There were already global power brands such as Facebook or Twitter dominant in the SNS market. In a popular business strategy term, web based SNS was already in the “red ocean” and competition was high. So, Jae-Bum turned his attention to the app market. The advent of smart phone and rapid growth in European and North American markets inspired him. Jae-Bum had expected that Korea would follow such a big wave of smart phone penetration soon. So, Jae-Bum made a decision to develop mass appealing smart phone app like a messenger for smart phone. Sending short message is not too expensive but mass market loves KakaoTalk that allows users to send short messages back and forth for free. Now, users on KakaoTalk can send messages as well as photos and other attachments like other popular PC-based messenger like MSN or Gtalk. Jae-Bum’s prediction for surging smart phone market really hits the bull’s eye. iPhone was finally introduced in Korea in late 2009 through Korea Telecom and SK Telecom quickly fired back with Android phones from Samsung, HTC, etc. App market has rapidly grown, too, as demand for smart phone usage has grown. KakaoTalk has become de facto messenger tool for smart phone users in Korea.

Jae-Bum has made few interesting points on his success that could be note-worthy to those folks who build their products in the smart phone universe. First, Jae-Bum emphasizes on “venture mind.” Without it, KakaoTalk wouldn’t be materialized. He values highly of those people with hearts for innovative ideas than lucrative business model. For instance, up until last year, the company didn’t turn any revenue from KakaoTalk. Team tried to design a more stable product and service first. Generating revenue was always second in the row just like Facebook did during its early days. Revenue-demanding culture often misses out this point even if that is what venture is all about. Second, KakaoTalk is also unusual in the sense that it has created a horizontal organization. Unlike other Korean companies, where top-down management is sort of cultural norm, Jae-Bum encourages active communication and debate among peers in order to keep the organization away from unnecessary bureaucracy. As an example, Jae-Bum has made office policy calling peers by their initials or nickname. In Korea’s typical office setting, it is not common practice. Though, this policy really helps and makes people to get friendly to each other even if there is 10~20 years of age gap between peers. Third, the company has done reorganization of internal team almost 40 times since its inception. It has contributed to KakaoTalk’s unhindered communication among different parts of the company and the team to collaborate. It has also made the company can better understand and react to fast-changing market needs and reflect them into the product development faster.

KakaoTalk plans to elevate its popular app to the next level becoming ‘social-hub’ for smart phone users. Commerce, culture, music, and game contents are likely to be added to its main property soon. Similar to Facebook, it is likely to embrace different services and contents and want to be total service platform for smart phone users. Few market observers estimate KakaoTalk will make $15~$20m in revenue this year. KakaoTalk’s revenue model is fairly weak as yet because it only makes money from mobile gift card sales from strategic partnership with Korea Telecom. Though, KakaoTalk already has huge user base and other revenue model should be easily deployed. With its recent angel funding of $4.5 million from those top tech entrepreneurs in Korea such as Mr. Kim Taek-Jin of NCSoft and Park Sung-Chan of Danal would add key components to accelerate its product development and sales growth. KakaoTalk has its own challenges such as Apple’s strict in-app purchase policy biting back large proportion of its revenue. KakaoTalk also faces battle with top mobile telecommunication companies in Korea because KakaoTalk seems to eat up potential revenue stream from short message (or SMS) that telecom companies could have earned if there was no such thing like KakaoTalk. KakaoTalk has successfully finished its baby steps to build a profound communication platform on the wave of smart phone. We look forward to seeing how Jae-Bum would turn this business to become a global franchise in the near future.

(This article was developed with Steve J. Min, a staff writer.)