Know What You Want

Entrepreneurship 101

Surprisingly enough, there are many young entrepreneurs who don’t know exactly what they want to achieve with their business. Great product idea, agile development skill, and abundant resources are all good only if you know what you want to do with them. Know following three items before you intake any venture project-

1. Target and core customer base
2. Problem you want to solve
3. Key components you have to deliver

In order to maintain high level of focus, “knowing what you want” is quite important to keep you moving forward. This is something that other people cannot easily help but you.

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Social commerce big bang

Nearly a year has passed since the introduction of social commerce by local operator named Ticket Monster. Triggered by Ticket Monster’s remarkable success, other local operators such as Coupang and WeMakePrice have sprouted and it is estimated that around 800 social commerce sites are in business throughout South Korea. This burgeoning market has even attracted U.S. online commerce giant Groupon recently and Korean social commerce trading volume is anticipated to reach $550 million in 2011.

Aside from this thriving appearance, however, the dark side of the industry is also detected. Including flooding in of customer complaints, problems arising due to rapid-growth of business may have significant influence over the future of social commerce. Therefore, it seems very important to know the possible results the industry may bear within Korean market and recognize the potential risks.

First and foremost, poor customer service is on the table. Most of the players in the market are likely to be at an embryonic stage of growth and tend to focus more on promoting their presence than on quality controls. Therefore, low-value deals are mass produced which in most of the times exceeding supply. Customers feel deceived when they find out voucher they purchased do not match its value promoted on web sites. Customer-related complaints include denied refunds and no unilateral customer service policy as well. This growing of customer discontent may be attributable to the industry’s low entry barrier which requires nominal start-up costs. With massive influx of unqualified players, they tend to overlook the sound relationship with customers and only seek short-term profits. They should know what is best for achieving their long-term survival of the industry as a whole. With respect to this issue, a measure has recently been taken by Fair Trade Commission to address the problems of social commerce. On May 10th, 2011, the governmental body announced that social commerce firms will also be subject to the same consumer protection codes applicable to other e-commerce sellers. This allows customer refund of vouchers within 7 days of purchase, and the use of escrow services for any purchase exceeding roughly $100 and penalties for exaggerated advertising.

Whether the market is growing or not in the long run is an important issue. It is notable that social commerce has expanded its horizon to areas that could not have been a part of traditional e-commerce market. Restaurant business is a good example. Under past circumstance, there were limited ways, such as handing out leaflets, etc., for restaurants to promote themselves. Social commerce came to their rescue by giving new opportunities of marketing. While admitting the benefits of promotion from social commerce, business owners also complain about low-profit margin or sometimes even loss. Since they have to offer a huge price-cut to be entitled to sell vouchers on the social commerce sites, and with commission fees social commerce business charges, significant opportunity costs should be endured to gain desired promotion effect. This fact leaves one question. Is this business model sustainable? It may attract short-term promotion opportunity seekers only and no one may be left in the long-run. Additionally, social commerce is ultimately a commission business. More and more competitors are entering the market and only way to out-stand among groups seems to rest in low price offers by cutting commissions from what they charge currently somewhere between 20-30% in average. Under this dog-eat-dog competition, no one is for sure who is going to smile in the end.

Last but not least, alteration in promotion strategy of social commerce sites is changing the landscape of the business. Originally, the term ‘social commerce’ was used to indicate collaborative purchasing of goods through SNS. However, from early this year, major local social commerce operators have begun relying on traditional mass media, such as TV ads, public transportation ads, rather than promoting their products through SNS. Because of this, some experts question whether operators in the market are truly performing as social commerce business since they no longer use SNS as vital ways in promoting themselves. This results in high burn rate among current market players and keeps new players from walking into the market as entry cost has got way expensive.

It is uncertain whether the ongoing criticism over social commerce is a fundamental issue or part of a trial-and-error process that all start-up businesses go through. And, of course, there is more downside of social commerce industry in South Korea not revealed in this article. But one thing seems to be clear: Korean social commerce industry just took its baby steps and is at a critical point whether it is going to generate permanent return or end as one-time business opportunity.

(This article is developed with Steve J. Min, a publicist at KingsBay Capital.)

The breathing company: significance of business life cycle

How well do you know your business? Organizing a venture and eventually longing for it to be listed or included in the Fortune 500 list are common long term tasks. You only think of prosperity, projection of cost and profit which indicates a green-light for you to execute the business. Not to mention you have done market studies of other factors that should be considered when it comes to setting up a startup. Why do you think ventures that are at its primitive stage are called “startups?” Breaking this word into two and mixing them would give “upstart,” which implies a head start at an activity if used as a noun, and as a verb it means “to spring up into existence.” For it took time to be extant, businesses do not necessarily prosper as initially planned. Likewise, even well-established companies may file for Chapter 7 or 11 at any point in time depending on what placates the predicament. An article from the Harvard Business School on the subject states that “Average life expectancy of Fortune 500 companies is 40-50 years” and that “1/3 of Fortune 500 companies in 1970 had vanished by 1983.” In other words, startups and a company of considerable size have the same outcome if mismanaged by the entrepreneurs.

When organizing their ventures at an early stage, entrepreneurs usually tend to believe highly in themselves to a point where it brings acrid results. Life expectancy of a firm in the Fortune 500 is to be “less than 15 years and continuing to decline.” If companies cannot adapt to the changing environment, they will inevitably go bankrupt. To prevent such calamity, entrepreneurs need sound management to navigate through the heavy turbulence. Entrepreneurs do employ peculiar strategies when it comes to the entrance and exit of a venture. However, those distinctive ways may not suffice to be everlasting. Furthermore, there are a few companies that have not been moved by the storm and still standing strong. For instance, The Sumitomo Group has its origins “in a copper casting shop founded by Riemon Soga in the year 1590.” This Japanese conglomerate exemplifies that the natural average lifespan of a corporation should be for centuries, to say the least.

Nevertheless, why do so many companies die out prematurely? In terms of business in general, there is much speculations about that matter and this area is still in the gray. Corporations fail because they do not adapt themselves properly or link themselves ‘emotionally’ to the community they conduct business in. Not focusing on the importance of community or catering to specific people. Mismanagement is not the sole problem that exasperates the problem. Acknowledging business’ life cycle provides the significance of understanding the basics. Entrepreneurs only think about the products and services they can offer that should have comparative advantage over their competitors, but they neglect the life cycle notion, the very fundamentals of management.

Of course, there are a lot of factors that contribute to the fall of companies, whether it is a company at its baby steps or one that has a long history. You should recognize the importance of your business’ life cycle, as other factors that proves detrimental or the opposite will eventually follow after the fundamentals have been covered.
(This article was developed with H.G. Byun, a publicist at KingsBay Capital.)

Women have the final say now: Mrs. Lee Ki Nam, Female entrepreneur in Korea

The word entrepreneur commonly associates a goal-driven male leader. However, the perception of such a notion is rapidly changing as more successful women enter the arena and have final say in the boardroom.

Studies between female and male entrepreneurs suggest that women with powerful, decisive, multitask-oriented personalities are a good fit for the competitive world of business. With their modern leadership style, they head corporations and dominate certain well-known companies alongside male underdogs.

Likewise, Korea has plenty of examples on such female entrepreneurs, but this particular article is focused on one particular female entrepreneur who should be acknowledged for her contribution to the country.

Mrs. Lee Ki Nam, a female entrepreneur and chair-woman of the Hunminjeongeum Society, is gaining global publicity through her unique export: the Korean alphabet. The Hunminjeongeum Society, also known as the Hunminjeongeum Research Institute, was founded in 2007 and is an organization that exports the “Korean” language to countries where phonetic language is nonexistent. One case of successful exports was to Indonesia’s Cia-Cia tribe, which gained global recognition and publicity on the cover of the NYT and WSJ. In interviews when asked the reasoning behind her actions, she stated that her main objective was to express the will of her ancestor King Sejong, who created Hangeul. Interestingly enough, she is a direct descendant of King Sejong. Funding her business through the fortune she raked in from her involvement in real estate and construction businesses when she was younger, Mrs. Lee decided to expose the importance of language to a particular society, in which written systems were inadequate to record their languages.

Some accounts of Mrs. Lee’s work highlights her noteworthy background in terms of entrepreneurship. Even in her late 70s, she is still very active in the entrepreneur world, be it for profit or non-profit. Her career began as a junior high school teacher and later devoted herself to family business in the real estate industry, allowing her fortune to build and fund her businesses. One of her earlier ventures was to initiate the Korean font for Macintosh PC in the 1980s, which many are unaware of. Another interesting fact is that she also instigated the Korean-Israel Chamber of Commerce in the early 90s before Korea-Israel ties were officially recovered from their foreign diplomatic ties. Mrs. Lee is also heavily active in philanthropic work involving arts and culture through the Wonam Culture And Arts Foundation. Currently, she is working on a prospective business to satiate the growing demand in the G2 community; factors such as fierce competition, age and gender will not stop her from doing what she loves.

With extraordinary experiences in entrepreneurship, Mrs. Lee is definitely an excellent role model for upcoming entrepreneurs. This includes both male and female, as both are striving for the same goal in terms of moving up the ranks. Furthermore, Mrs. Lee’s positive energy, focus, determination and thinking outside the box, has made her dreams into reality. Her noble ambition shall continue to be observed and appreciated.

In summary, prospective entrepreneurs should not only be profit driven but also should organize their ventures that could lead to creating shared value, wherein those in need of support should be given a lending hand.

(This article was developed with H.G. Byun, a publicist at KingsBay Capital.)

Open your eyes to Work-Life Balance

Try to question yourself on the above notion, is your entrepreneurial life well balanced? To a certain extent, you would say it’s rather well-balanced, however, is it truly balanced is the question you should ask afterwards. The idea is if you firmly believe you won’t regret to what you’ve answered, then you can simply ignore this piece; however, for those who have a little bit of guilt should continue to scroll down.

Maintaining a “proper” work-life balance is on the minds of many, especially entrepreneurs. It may take days, weeks, months or even years depending how fast you understand the relationship between them. It could be acknowledged through countless trial-and-error’s, thereby experiencing acrid accounts that inadvertently enable them to take into consideration for future endeavors. For Brad Feld, an MIT alumni who is a managing director at Foundry Group, vents through his blog that it took him almost 15 years, “a failed first marriage,” and his “current wife almost calling it quits” for him to realize that he had to “figure out what work-life balance meant.”

So, what is a “work-life balance” anyway? To simply put, it is a concept that blends the management of business and personal life to attain optimal working hours that can eliminate stress and improve overall life. In other words, you, as an entrepreneur, should manage your time efficiently, plan your activities effectively, prioritize your goals wisely, and know best what fully satisfies you, thereby enjoying work as well as having enough leisure time to cool off the heat. It is probably easier said than be done to many of you.

Starting a new venture is no easy task. You are passionate (and maybe obsessive, too), and have a blueprint of where the startup is heading in the coming years. Over-commitment to the startup at an early developing phase could lead to an exhausting daily life, which could alter physical well-ness or even personality in the long run. Perhaps, accomplishment and recognition from others outweigh or at least put these life factors behind. How long will this last anyways? Imagine yourself being totally burned out to a point where you find yourself sleeping more than half the day lying in bed on the weekends, too tired to get out of home. Is this what you’ve longed for all these years? Enjoying the fact that you’re doing what you love but at the same time feeling physically uncomfortable that you begin to struggle with yourself by attempting not to make it an obstacle to your long journey in venturing out a new business.

We all have a small knack to set up businesses at some point in life. Thanks to technology and its vast use, young and ambitious entrepreneurs are currently diverting from the conventional fresh out of college and landing jobs to build a career through work experience for future endeavors. Hyun-Sung Daniel Shin, Founder and CEO of Ticketmonster in Korea, a fast growing social commerce powerhouse is a prime figure who sets an example to young entrepreneurs in the search for success. In an interview with the JoongAng Daily, he mentioned “I want to enjoy what I do.” After graduating from the Wharton, he quit his job at McKinsey believing that one day his company would become “McKinsey’s client,” which his colleagues even strongly encouraged doing that. Nonetheless, even with all the passion and positive energy exuded to operate their venture, entrepreneurs will eventually find themselves worn out. The question is persistency. Venturing will pause when the physique does not cope with the mind. Hence, finding one’s distinctive way of balancing work and life will help the venturing process seem less exhausting.

(This article was developed with H.G. Byun, a publicist of KingsBay Capital.)