The Startup Scene in Seoul: A Talk with Nathan Millard and Erik Cornelius

Nathan Millard and Erik Cornelius, looking very startupish.

Though widely acknowledged as an economy dominated by powerful conglomerates like Samsung, Hyundai, and LG, South Korea is also home to a flourishing startup scene spread out across the capital city of Seoul.

Nurtured to life over the past few years through government initiatives and a dynamic mix of both Korean and foreign entrepreneurship, the peninsula has become fertile ground for the next household name. Or so the story hopefully goes.

More: Interbrand’s Michael Kim on Trends in Korea’s Top Brands and Samsung’s Continued Dominance

 
 

To better wrap our heads around what’s happening on the ground there, Branding in Asia caught up with Nathan Millard and Erik Cornelius of G3 Partners, a Seoul-based marketing and PR agency that focuses on helping startups get from point A to point XYZ.

Millard, a native of Scotland and Cornelius, a Texan, share their insights on the startup scene, the advantages, and disadvantages of hanging your shingle in Seoul, G3’s upcoming expansion to Singapore and more.


What’s been keeping you guys busy lately?

Nathan: Thanks to an unprecedentedly strong Q1 we’re on a new business tear. We’re gearing up to start working with the world’s busiest mobile-first food delivery platform. We recently ran a global PR project for the world’s fastest growing fintech startup. And a pioneering selfie app with over 300 million users just signed on for a long-term engagement.

 
 

Korea is an excellent 50 million person market to work out the bugs in your product before taking it to the other 4 billion consumers in Asia who are just a short flight away.

In exciting company news, we’re in the process of setting up shop in Singapore. This expansion places us in the epicenter of Southeast Asia’s tech scene and is step one in our own global expansion plans.

We’re also supporting two Kickstarter campaigns that launch this month, coaching startups on how to give better investment pitches, building websites, and promoting startups through the media.

Finally, we’ve just been drafted in again this year to vitalise global marketing and PR for K-Startup Grand Challenge. So there is lots to do for the eight of us!

Having been on the ground in the Seoul startup scene for the past few years what are its strengths and weaknesses?

Nathan: Engineers in Korea are world class and present good value to employers. This combined with the Korean work ethic means that startups can achieve amazing results very quickly. For example, one of our clients has created USD $15M in value with three staff in just the last nine months.

There is good access to venture funding and a strengthening support ecosystem for entrepreneurs in Korea. A number of recent headlines like Kakao’s multi-billion dollar exit and Coupang’s billion dollar investment from Softbank have also helped tempt an increasing number of would-be founders out of lucrative corporate careers.

Korea’s pro-startup agenda has also helped convince conservative Korean parents that being involved in a startups is actually OK.

Erik: On the flip side, we often see passionate entrepreneurs dedicate years to creating solutions without problems. This waste could be avoided by embracing more efficient product development methodologies. To succeed before resources run dry startups need to build a minimum viable product, launch it, see how the market responds, then incorporate those learnings. Build, measure, learn, iterate.

The homogeneity of Korea’s startup scene, as compared to New York or London, is an issue. It’s been proven tough to build for the world with all-Korean development teams and Kakao is a standout example of this.

But startups are already more racially diverse than big Korean corporations. Startups like SEWorks are demonstrating that concerted efforts to think AND act global can pay dividends, even though resource commitments can be high. And there seem to be opportunities for Korean women in startups that don’t exist at the conglomerates.

Is the startup environment friendly to non-Korean firms looking to hang their shingle there?

Nathan: Running a company here as a foreigner still isn’t easy. Forms are all in Korean. Getting a foothold in the market without a strong network is tough. An intimate understanding of Korean consumers and keen attention to localization is critical and requires resource levels that are often grossly underestimated by foreign companies.

Startup campus in Pangyo.

All of that said, a couple of years ago the government introduced points-based startup visas for entrepreneurs. The government is also publicly discussing giving startups a special exemption from the 20% cap on foreign employees that applies to most companies.

Programs like the K-Startup Grand Challenge make it easier for a few dozen highly qualified entrepreneurs each year to come here. The program provides vital funding, support and access to local networks.

The Korean startup community has also been very welcoming to us and Korean consumers are open to foreign brands. English is much more widely spoken within the startup community than outside of it, which also makes it easier to get things done.

Looking at funded firm like Memebox (cosmetics), Woowa Brothers (food delivery) and Lezhin Entertainment (publishing), you see a cross-section of industries. Is that the case down through the ecosystem or are there certain areas where Korea is particularly strong?

Erik: You’re right. This year, Viva Republica raised $48 million by filling the need for frictionless mobile money transfer. In 2016, Memebox did well because it surfed high on the K-beauty wave. Woowa Brothers (Baedal-e Minjok) recognized Korea’s appetite for food delivery and simplified the ordering process.

The year before, the major fundraisers were Coupang (e-commerce), JikBang (real estate), SoCar (ride sharing) and Yello Mobile (mobile services). E-commerce continues to boom in Korea, with TMon announcing a USD $115 million fundraiser last week.

Some large-scale success stories in Korea have come from applying existing business models, often from the USA, to the Korean market. While this points to a lack of brand new innovation, we don’t see that as an issue. The companies that achieve a massive product-market fit and then execute their business plans well are the ones that ultimately succeed.

What are some startups out there that you are most excited about?

Nathan: Viva Republica, the maker of the Toss money transfer app that’s transacted over USD $3 billion in just over two years, is making us giddy! The Korean media have been writing for a couple of years about the potential for fintech here, and Toss is the realization of that promise.

The app is ideal for development into a full financial services platform, and the concept would also work well overseas, especially in developing markets in Southeast Asia where not everyone has a bank account.

We worked with them on their recent USD $48 million fundraising announcement and we’re discussing ways of helping them build awareness outside Korea ahead of their international expansion.

South Korea, in general, has been called a good test market for Asia. What advantages does it have in that regard?

Erik: Korean consumers are picky, demanding perfection from their products and out of this world after sale support. It’s a developed, wealthy nation that boasts one of the world’s most developed technology infrastructures. Its cities are very safe. The political system is extremely stable, as recently demonstrated by the peaceful impeachment of the president.

All of this makes Korea an excellent 50 million person market to work out the bugs in your product before taking it to the other 4 billion consumers in Asia who are just a short flight away.

An intimate understanding of Korean consumers and keen attention to localization is critical and requires resource levels that are often grossly underestimated by foreign companies.

Korea’s cosmopolitan consumers and business leaders are more open to international companies and ideas than Asia’s less developed markets, but they’re less ossified than in Japan. Both culturally and economically, Korea also shares more similarities with the west than many of its neighbors, making it easier to understand its consumers and make hires.

We genuinely believe Korea has a lot to offer foreign tech companies and we’re working to disseminate that message – ‘national PR’ has not traditionally been as effective as Singapore’s.

Who are G3’s biggest competitors?

Erik: Our most ruthless competitor is the status quo. Most tech startups and SMEs in Asia are led by engineers who don’t have a deep understanding of marketing, especially marketing beyond their home countries. They might make some token gesture like going to a conference. Or they’ll hire a fresh grad who speaks English to head their global marketing efforts.

In Korean agencies productivity is often judged by the number of hours spent in the office – we’ve created a results-based culture by providing a working environment within which staff have the drive, the tools and the freedom to excel.

That’s a mission critical role that’s being tasked to an intern, and in many cases, the company’s executives aren’t able to provide much support or even help develop a roadmap or specific cross-border marketing goals.

There are thousands of companies in Asia with tech products that are poised for global success if they get the right push. That’s why G3 Partners exists and that’s the market we’re addressing. We haven’t found any other agencies that can provide that push, at least not at startup-friendly prices.

What are some projects that you’ve worked on since you launched that you are most proud of?

Nathan: Working on the very first K-Startup Grand Challenge last year put Cheshire grins on all of our faces. The program brought 40 startups from around the world to Korea for three months of acceleration. The Korean government enlisted our help to promote the program and set a goal of attracting 500 applicants. Through a combination of PR, direct outreach through our network and a concerted social media push, we helped to attract more than 2,400 applicants from 124 countries.

TechCrunch, VentureBeat, TechInAsia and a plethora of other high profile media from around the world covered the program at least once.

With China, we’ve adopted an attitude of look but don’t touch. After working with Korean entrepreneurs for five years we’re yet to see a single successful case of China market entry. Southeast Asia is much more appealing for now.

What made this project even more rewarding was leading the acceleration program for ten of the startups that came to Korea. This gave us an opportunity to put everything we’ve learned about startups into practice.

We recruited mentors, helped startups with strategy, organized events, provided practical support with marketing and promotion, coached them on how to deliver investment pitches, and also helped the startup founders and employees acclimate to Seoul. At the final demo day six of our startups were selected among the top 20.

Where are some other spots in Asia that have a strong startup scene?

Erik: Singapore’s startup scene is probably the most mature in Asia and it has plenty of support from venture capital and the government. It’s our highest priority market for setting up an overseas office.

Investors are very excited about India because of the population and pace of development. There are positive developments in Thailand, Malaysia, and Indonesia, all of which have large populations and rapidly increasing mobile penetration. Those are great signals for us to watch.

With China, we’ve adopted an attitude of look but don’t touch. After working with Korean entrepreneurs for five years we’re yet to see a single successful case of China market entry. Southeast Asia is much more appealing for now.

Korean startups have yet to hit it big in the U.S. market, where are they falling short?

Nathan: In the same way that may western startups flounder in unfamiliar Asian markets, Korean startups are often ill-prepared for US market entry. Many run out of money or patience before achieving product market fit – the first critical step towards success.

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Savvy Korean founders are beginning to realize that they build best for Asia. That’s neither a surprise nor something to apologize for. Often, places closer to home like Japan or the K-pop hungry countries in Southeast Asia are better targets.

That said, some like Memebox, DramaFever and Viki are examples of Korean founded startups that have gone on to do well in the USA.

You’ve mentioned before that government support has “gone too far”. Can you talk about that?

Erik: This is a discussion best had over beers, but I’ll try answering on a sober Monday afternoon.

The Korean government has achieved two important and positive results over the last four years of intensive support for startups. They’ve helped fund thousands of companies through partnerships and direct support. Their pro-startup agenda has also helped convince conservative Korean parents that being involved in a startups is actually OK.

Both culturally and economically, Korea also shares more similarities with the west than many of its neighbors, making it easier to understand its consumers and make hires.

The government also played an important role in helping Korean startups like Samsung and Hyundai become the global giants they are today.

But, the demands of startups have changed since the early days of Korea’s chaebols (family-run conglomerates). Government support usually comes with government sized reporting requirements, which puts the brakes on innovation.

Support programs are often planned and executed by bureaucrats who don’t understand the needs of startups or their customers. Some grantrepreneurs become so reliant on government support that they lose focus on securing customers at all. Learning how to game the system to get government handouts is not a recipe for building a sustainable business.

When I visited your office, it didn’t have the feel of a typical Korean agency. Was that intentional?

Erik: Our senior team (Nathan, Erik & Elli) have all worked at agencies in Korea and we wanted to create something different with G3. So, we’ve invested a lot of effort into creating a culture where people have real autonomy over their work, where we can be open and ask for help, and where we can all gather around Keggy, our famed kegerator on Friday evening for a beer or five.

Nathan: In Korean agencies productivity is often judged by the number of hours spent in the office – we’ve created a results-based culture by providing a working environment within which staff have the drive, the tools and the freedom to excel. Further developing the company and its culture continues to be an inspiring and enjoyable challenge.


If you’d like to know more, you can visit G3 Partners on the web at g3partners.asia. They’ve also put together an insider guide to the Seoul startup scene that you can download here.

More: The Worldly Marketer Podcast – Don Southerton on How Western Brands Can Succeed in South Korea

 

Bobby McGill

Bobby McGill

Bobby is the founder and publisher of Branding in Asia.

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