Korean Startups Underperforming in Silicon Valley
Korean startups’ underperformance in Silicon Valley is an ongoing dilemma. A dilemma for which few in the Korean startup community have answers. It is a much-discussed topic, but little has been written about it. The present writer conducted a Google search, albeit in English, but found no noteworthy results. Furthermore, it is now such a critical governmental issue that it spends numerous resources annually for the Korea Trade-Investment Promotion Agency (KOTRA) to help Korean startups refine their product/market fit and networking in Silicon Valley.
Is Silicon Valley all that important anyway? Despite a few domestically focused startup success stories like Dabang and Baedal Minjeok for example, most Korean startups are born global from the outset. Therefore, for Korean and their global contemporaries, Silicon Valley success serves as the ultimate litmus test in becoming a globally acclaimed startup. If a startup can make it in Silicon Valley they can make it anywhere.
“The Valley sets a high bar for startups everywhere in the world. If you can make it in the Valley, you can make it anywhere. Regardless of whether it’s true or not, this idea drives entrepreneurs elsewhere to be better.” Says Silicon Valley tech analyst Chris Shipley.
How other Asian Startups Compare
Other Asian groups have had a much greater impact on Silicon Valley: Indians comprise of around 20% of Silicon Valley startup founders while many top Silicon Valley companies have an Indian occupying one of its leading positions e.g. Sundar Pichai. Also, Taiwan which has half of Korea’s population but has 5% of the Valley’s founders and sports Nvidia’s Taiwanese born CEO Jensen Huang.
Q & A with Jonathan C. Baer
Given Korean startups’ difficulties and complexities precluding Silicon Valley success, I asked Jonathan C. Baer who is the coauthor of the globally renowned “Decoding Silicon Valley” and a mentor for countless foreign startups about the Korean Startups’ underlying reasons for underperformance. As well as how they can improve:
Why haven’t Korean startups experienced more success in Silicon Valley?
There are many barriers to international entrepreneurs being successful in Silicon Valley. In addition, language and culture differences exacerbate the problem. Therefore, it often manifests in a Korean entrepreneur’s inability to assimilate, to find talent, and to have an assertive posture with customers, investors etc. Building a curated network is part of that challenge. The lack of successful Korean entrepreneurs in SV makes it harder to leverage the diaspora.
Entrepreneurs need to break rules. However, I would say that in some cultures such as Korea that is not well accepted. In addition, Korean culture is highly structured and obedient. Therefore, it is more challenging for Korean entrepreneurs to break away from government programs in Silicon Valley and chart their own growth path. Lastly, there are a few serial entrepreneurs in Korea. Therefore, the lack of experienced entrepreneurs and teams takes years to build-we see lots of first-time entrepreneurs in Korea, but few teams with lots of startup experience.
Could you give some recommendations for Korean startups to better perform in the Valley?
- Experienced teams (which means entrepreneurs must be willing to try, fail and try again)
- Get initial market traction in Korea
- Surround the entrepreneur with well-connected experienced mentors and advisors plus #4 below
- Local training and support from folks who live and work in the Valley (it is the reason Michelle and I spend so much time on the road, in the country). Too many entrepreneurs show up in SV ill-prepared
- Spend lots of time in SV-entrepreneurs need to spend 3 weeks a month in SV on a regular basis and in most cases move here to build a business in the US. Building a network and presence here take time and persistence.
- The CEO needs to be the chief evangelist/salesperson-too often. There is a belief that initial sales and fundraising can be delegated to junior folks. It cannot. Also, there is a mistaken belief that you can just hire a salesperson locally or bring on a distributor. Neither of these is likely to work early on. Product/market fit is hard and takes time to sort out for the US as well as non-US based companies.