I am what people like to refer to as “Internet 1.0”. That term was thrown around in the mid-90s. My first gig on the internet was LYCOS. If you remember LYCOS, then I know that you are old because that was over 20 years ago. At the tender age of 23, I brought out LYCOS U.S. to LYCOS Korea, LYCOS Japan, and LYCOS China. Then I was able to launch China.com as the CFO and it was listed on NASDAQ. That was the first internet IPO out of Asia on NASDAQ. From then on I became more of an investor type, I started with SoftBank. I opened up the venture capital in Korea and in China. Then it has just been a lot of investments into the old 1.0 models such as mail.com and DAUM.
Over the last 20 years, I’ve been investing in and have been executive of, sat on boards of, six different IPOs and publically listed companies.
Where the market is as I see it.
100 years ago in the U.S., the world looked very different. The biggest companies in the world were mostly manufacturers. The ones that actually supplied materials like steel companies, oil companies, etc. Then about 50 years ago, was what we would consider kind of the height of the consumer market. This is where you have your car companies, your IBMs, your service companies. Now we are all tech or some form of tech. New media, digital media, and the biggest companies like Apple, Alphabet, Google, Microsoft, Samsung, Alibaba, Tencent, etc. The companies that are actually setting the agenda and the mood of markets globally are usually tech, media, online, app economy, type of companies. That is where we are today.
The Asian Market
Although the U.S. is the single largest market in the world, Asia cannot be ignored. Somewhere between China, Japan, and Korea and in that order. In terms of market size, you have three of the 12 largest economies in the world. Technology moves extremely fast and arguably a lot of the models that became successful overseas are actually modeled after what already happened in Korea, sometimes a bit too early. Whether you are looking at the GDP growth percentage or population or income explosion. All of the numbers that are the biggest globally in terms of change are definitely in Asia.
The Korean Market
It is not just that the economy is getting big, Korea has been in the top 20 for the last 15-20 years. What is changing now is the huge growth of the middle-income market. This is not unique to Korea or Asia. Globally there is a growth of the midmarket that is the base of the consumer market. The mix of the geography and the market being as robust as it is and it being much more consumer-oriented where most of the product or services that you’d want to create. You are not making it for the top 1% that are the millionaires or billionaires because they are a very small segment of the population. Obviously, you are not targeting those that can’t afford your products and services. You are going for that big fat part of the curve that actually has the interest and the money now to buy. That is actually very unique, certainly in Asia but globally this is a trend. Therefore, all the products and services that you’d want to be marketing would be hitting this market.
So what does all that mean?
That means that especially in Asia, the businesses that you are trying to grow has to address that fat part of the bell curve that is able to buy and the models that you have to pursue. Whether it is the technology tweak or the service tweak, it will be different than the traditional models of the Internet 1.0. These days it has to be specific, focused, and that is the challenge for all the entrepreneurs that are trying to start businesses today. It doesn’t have to be an earth-shattering technology or service. There are many “me too” models in Asia that have worked. Alibaba is nothing more special than an E-bay. They are just addressing that middle-income market in China so they have a much bigger market to play with.
Even with clones and with new technologies, there is a lot of room to grow because what else is happening is that there is actual internationalization. With the new app economy, there are very few barriers and other than localization, language, and culture. There really isn’t the reason why you shouldn’t think more globally. All those companies need capital. Unless you have a rich uncle or an Aunt that is going to provide the seed funding, you need to actually have “Smart Money”. Most companies that I’ve been over the last 20 years. Money is just one part of the equation. What you really need are steady hands, experienced business people who can actually guide you through the growth of the business. You need to find capital that actually works well for you.