That older Koreans view risk taking with suspicion isn't surprising, given the country's history. The Asian financial crisis of 1997 nearly destroyed the South Korean economic miracle. (In a remarkable show of national resilience, South Koreans turned in hundreds of pounds of gold—wedding bands, good-luck charms, heirlooms—to help their government pay down its debt.) These days, Seoul, which is just 30 miles from the North Korean border, remains on alert for a nuclear or chemical attack. One afternoon when I was in Seoul, the city stood still for 15 minutes as sirens blasted and police cleared the roadways. These drills, which are held several times a year, can be even more involved. Last December, a dozen South Korean fighter jets buzzed the city streets to simulate a North Korean air raid.
Amid all this instability, the Chaebol, Korea's family-owned conglomerates, have been a redoubt of stability, providing the best jobs, training new generations of leaders, and turning the country into the export powerhouse it is today. The Chaebol grew thanks to government policies, instituted in the 1960s, that gave them monopoly status in every major industry. Their power was greatly diminished in the wake of the 1997 financial crisis, but the Chaebol still dominate the economy. The 2010 sales of South Korea's largest Chaebol, the Samsung Group, were nearly $200 billion, or about one-fifth of the country's GDP.
To many South Koreans, being an entrepreneur—that is to say, going against the system that made the country rich—is seen as rebellious or even deviant. "Let's say you're working at Samsung and one day you say, 'This isn't for me' and start a company," says Won-ki Lim, a reporter for the Korea Economic Daily. "I don't know how Americans think about that, but in Korea, a lot of people will think you of you as a traitor." Business loans generally require personal guarantees, and bankruptcy usually disqualifies former entrepreneurs from good jobs. "People who fail leave this country," Lim says. "Or they leave their industry and start something different. They open a bakery or a coffee shop."
The penalty for failure is even more onerous for female entrepreneurs. When Ji Young Park founded her first company, in 1998, her bank not only required her to personally guarantee the company's loans—a typical request for a male founder—it also demanded guarantees from her husband, her parents, and her husband's parents. Park persevered—her current business, Com2uS, is a $25 million developer of cell-phone games—but her case is extremely rare. According to the Global Entrepreneurship Monitor, South Korea has fewer female entrepreneurs, on a per-capita basis, than Saudi Arabia, Iran, or Pakistan. "Most of the companies women are creating are really small, and the survival rates are really low," says Hyunsuk Lee, a professor at Seoul National University of Science and Technology.
Entrepreneurs in South Korea often struggle to raise capital. Though Korean venture capitalists invest several billion dollars a year—about half of which comes from government coffers—most of the money goes to well-established, profitable companies rather than true start-ups. It's not that Korean VCs hate small companies; it's just hard to make money selling them. "The Chaebol don't buy companies," says Chester Roh, a serial entrepreneur and angel investor who has taken one company public and sold one to Google. "They don't need to. They just call you up and say, 'We'll give you a good job.'"
As an American, Daniel Shin wasn't subject to these constraints. His largest institutional investor was Insight Venture Partners in New York City, where his college roommate worked as an associate. "American Koreans have a big competitive advantage," says Ji Young Park. "They can raise much larger investments from outside of Korea, and they can take business models from the U.S. It is much harder for a genuine Korean." This has a cultural component as well: "Korean Americans aren't predisposed to the Korean mindset," says Richard Min, co-founder and CEO of Seoul Space. "They're open to risk."
Min, a 38-year-old Korean American, is a former college swimmer who looks as if he could still do a couple of laps. He dresses well and talks fast, with just a hint of an accent from his native New England. He launched Seoul Space last year with two other Americans as a redoubt of Silicon Valley–style entrepreneurship in Seoul. The company offers discounted office space to start-ups, mentors them, and then introduces them to investors, in exchange for small equity stakes. "We're trying to get an ecosystem going here," Min says, leading me through a sea of mismatched office furniture at which 20 or so young people are pecking away at keyboards.
Min moved to South Korea in 2001 because he was curious about his roots and because he saw an opportunity in his dual identity. His first Korean company, Zingu, was the country's first pay-per-click advertising company. When the dot-com bust hit Seoul, he turned Zingu into a consulting firm to help large Korean companies market themselves outside the country. Two years ago, when the Korean launch of Apple's iPhone gave local software developers an easy route to international consumers, he decided that the next big opportunity was in start-ups. "You have a new generation feeling like they have a pathway that's not working for Samsung," says Min, who is winding down his ad agency in order to focus on Seoul Space. "We're at the forefront of a major shift."
I had assumed that everyone working in Seoul Space was Korean, but when Min started introducing me, I realized that half of these guys were American—there was Victor from Hawaii, Peter from Chicago, Mike from Virginia. Others were Korean nationals but with a decidedly American way of looking at the world. "I was a pure engineer—one of those nerds," says Richard Choi, who came to the United States in 2002, as a freshman biomedical engineering student at Johns Hopkins. "I had no interest in business whatsoever."
