South Korea is well-known for innovation, but not the first country that comes to mind when the topic is startups. Dr. Steve Ahn, professor, startup founder, and a leader of K-School, the entrepreneurship program at Korea Advanced Institute of Science & Technology (just call it KAIST) came to Taiwan to answer questions about startups and innovation culture in South Korea.
Before KAIST, Steve founded Leadis Technology, which delivered color LCD drivers for cell phones, and took the company public. Essentially, Leadis invented a product that made possible cellular phones with color screens — a good and acceptable product for an enormous market. This part of Asia is full of innovative companies like Leadis that most people have never heard of.
These are notes from a talk Steve gave about his ‘Journey from Engineer to Entrepreneur’ at NTU Garage, a startup incubator at National Taiwan University.
South Korea’s Innovation Culture
Innovate from Within, not Acquisition
South Korean companies tend to hire top talent from universities to innovate from within, instead of buying startups and companies — unless they’re in a field like artificial intelligence or dealing with Industry 4.0. There’s more inside-out development, so we see less coming from the outside-in.
In other words, the innovation is in the company, even though the working group might not be visible. Apple will also buy promising startups, not necessarily for the technology, but because they also want the team. The goal is to develop an entrepreneurial spirit, or intrapraneurship.
Strength in Numbers
South Korea was able to get ahead of Japan in certain areas, because compared to Japan, there are fewer companies in South Korea hiring the top talent. Most of these are chaebol, large family-owned conglomerates.
Also, a massive amount of resources was put into transitioning the South Korean economy from agrarian to industrial, and promoting targeted industries – like high-tech – when South Korea’s economy faced “do or die” moments.
One Thing Global Investors Care About
Getting investors isn’t necessarily more or less difficult in Asia, even though his company was headquartered in Silicon Valley. It depends on product-market fit, which is how much a product satisfies market demand. Most people will not understand the market.
Assuming the team is baseline competent and the product is fundamentally acceptable, a great market will tend to equal success and a poor market will tend to equal failure.Marc Andreessen, founder of Silicon Valley venture capital firm Andreessen Horowitz
IPO is All About Timing
You want your IPO to go quickly because the window of opportunity to get the most money may close quickly. This is important because the longer you wait, the more people speculate on your competitive position. Speculation decreases confidence, less confidence cuts your valuation. When I shifted careers to deal advisory, I learned valuation is a measurement of confidence.
Which Side of Korea Has More Advantages?
Before the Korean War, North Korea was wealthier than South Korea, because it had more natural resources. What’s the lesson of this story? The world can change quickly.
KAIST K-School for High-Tech Entrepreneurs
I don’t have an opinion of entrepreneurship courses and programs, because the world changes quickly and they generally teach basic things that don’t outweigh the price of tuition. It’s possible KAIST, South Korea’s first research-oriented science and engineering institution, is a different story.
While running Leadis, Steve made the kind of connections that made it possible for him to convince companies to bring their problems to K-School for students to solve. Now this is quite rare. Companies in East Asia are less likely to admit they have challenges, even the comparably small ones. It’s a complex issue, but in general, the business and living environment is not as open as the West.
KAIST has a clear mission to build a high-tech startup ecosystem. To have an ecosystem, you need to have an environment, resources and a culture that supports it. Most schools can’t or aren’t built to adapt. For example, many universities produce skilled graduates for local industries. The purpose of a KAIST education is very different.
But, it seems like there’s an uncommon commitment to ecosystem at K-School, which also provides entrepreneurship education to all KAIST students. I haven’t seen something comparable in Taiwan, which has a different approach to innovation. It works in its own way, but in my experience, there’s quite a bit of unnecessary friction.
If you’re building a tech-based startup in or for this part of Asia, you should take some time to get to know K-School.