At the end of last summer, I traveled to Seoul, an ultra-modern city of 25 million, because I wanted to know how a twentysomething kid with limited money and limited language skills could become this country's great economic hope. I wanted to know what in the world was going on in Seoul—and also, what in the world was going on inside the head of Daniel Shin of Wharton and McKinsey and McLean, Virginia. Why would a guy who could have just as easily written his own ticket in the U.S. decide to do so on the other side of the world?
The first thing I learned was that Shin was not alone—he wasn't even the only young, ambitious American in the coupon business. His chief competitor, Coupang, was founded by a 33-year-old Korean American serial entrepreneur named Bom Kim, who last year dropped out of Harvard Business School and relocated to Seoul to start his company. After a little more than a year in business, Coupang has 650 employees and $30 million from U.S. investors. Kim hopes to take the company public on the Nasdaq by 2013. "There's an opportunity here," says Kim. "I want this to be a company like PayPal or eBay."
Kim was one of more than a dozen American entrepreneurs I met in Seoul. They were the founders of media start-ups, video-game start-ups, financial-services start-ups, manufacturing start-ups, education start-ups, and even a start-up dedicated to producing more start-ups. "It's a big trend here," says Henry Chung, managing director of DFJ Athena, a venture capital firm with offices in Seoul and Silicon Valley. "There's a growing number of students studying overseas and coming back."
The country to which they are returning is an entirely different place from the one they (or their parents) left years ago. In 1961, the southern half of the Korean peninsula—formally known as the Republic of Korea—was one of the poorest places on earth. South Korea has no mineral resources to speak of, and it ranks 117th in the world in terms of arable land per capita, behind Saudi Arabia and Somalia. Fifty years ago, the average South Korean lived about as well as the average Bangladeshi. Today, South Koreans live about as well as Europeans. The country boasts the world's 12th-largest economy by purchasing power, an unemployment rate of just 3.2 percent, and one of the world's lowest rates of public debt. South Korea's per-capita GDP growth over the past half a century—23,000 percent—beats that of China, India, and every other country in the world. "A lot of Koreans still say that the market is too small," says Shin. "But it's not. It's huge."
South Korea is smaller in area than Iceland but has 166 times its population, meaning that 80 percent of its 49 million citizens live in urban areas. In the capital, retail shops and businesses reach high into the air and far below the earth in miles of underground shopping malls. Many of Seoul's bars and nightclubs stay open until sunup, but just walking the city's narrow, hilly streets—jostled by hawkers and flanked by the neon signs that advertise barbecue joints and karaoke rooms and the ubiquitous "love motels"—can be intoxicating all by itself. An hour's drive west, in Incheon, 50- and 60-story apartment buildings abut rice paddies and vegetable gardens.
The sense of claustrophobic density is magnified by the country's embrace of communications technologies. In the 1990s, the South Korean government invested heavily in the installation of fiber-optic cables, with the result that by 2000, Koreans were four times as likely as Americans to have high-speed Internet access. Koreans still enjoy the fastest Internet in the world while paying some of the lowest prices. The easiest way to feel like an outsider in this country is to board one of Seoul's subway cars, which are equipped with high-speed cellular Internet, Wi-Fi, and digital TV service, and look anywhere but at the screen in your hand.
Have you ever heard the term Pali pali?" asks Brian Park, the 32-year-old CEO of X-Mon Games, which makes games for mobile devices. The phrase—often said quickly and at considerable volume—can be heard all over Seoul; it translates roughly to "Hurry, hurry." Park, who founded his company in early 2011 with $40,000 in seed capital from Ticket Monster's Shin and another $40,000 from the South Korean government, invokes the phrase in trying to explain the three beds I had noticed in his company's conference room.
"It's normal," he says, gesturing at the makeshift bunkhouse. "Our crazy culture." By that, he doesn't mean the culture of the seven-person company. He means the culture of the entire country of South Korea, where the average worker spent 42 hours a week on the job in 2010, the highest in the Organization for Economic Cooperation and Development. (The average American worked 34 hours; the average German, 26.) I saw similar sleeping arrangements at most of the start-ups I visited, and even at some larger companies. The CEO of a 40-person tech company told me he lived in his office for more than a year, sleeping on a small foldup futon next to his desk. He had recently rented an apartment because his investors had become concerned about his health.
In their personal lives, South Koreans are relentless self-improvers, spending more on private education—English lessons and cram schools for college entrance exams—than do the citizens of any other developed country. Another obsession: cosmetic surgery, which is more common in South Korea than anywhere else in the world.
And yet despite this outward show of dynamism, South Korea remains in its soul a deeply conservative place. Shin told me about meeting, in Ticket Monster's early days, with an executive from a large Korean conglomerate about a marketing deal. The executive refused to talk business. He wanted to know why a young man with a wealthy family and an Ivy League diploma was messing around with start-ups. "He said that if his kid did what I'm doing, he'd disown him," Shin recalled. If this sounds like hyperbole, it's not: Jiho Kang, who is chief technology officer of a start-up in California and CEO of another one in Seoul, says that when he started a company after high school, his father, a college professor, kicked him out of the house. "My dad is seriously conservative, seriously Korean," Kang says.
