Biting the bullet
The author is a columnist of the JoongAng Ilbo.
There has been much talk about Korea’s food delivery platform Baedal Minjok being taken over by Germans. Some think the company has betrayed its own people by making money off them and then selling itself to Germans. That attitude betrays an ignorance about business and particularly start-ups and venture capital. The Korean company proved its worth through the sale of an unlisted start-up — which recorded revenues of 319.3 billion won ($276 million) and an operating profit of 58.6 billion won just nine years after its launch — for $4 billion.
Choi Jae-boong — a professor of mechanical engineering at Sungkyunkwan University and a champion of the digital economy — makes frequent mention of Boram Tube channels, which are hosted by a 6-year-old Korean YouTuber. The kid earns millions of dollars a year out of her two YouTube channels, and her family has recently purchased a five-story building worth 9.5 billion won in posh Cheongdam-dong, a southern Seoul neighborhood. A TV program criticized the family for some sort of child abuse.
The channels would have shut down if Korean authorities had their way. The programs attracted 33 million viewers around the globe and rank high among kids programs. (The KBS TV Kindergarten program, in contrast, has a paltry rating of 0.2 percent.) Choi claims the millennial generation’s future is being quashed by old-fashioned guidelines and querulous concerns of the fuddy-duddy generation.
In an innovation-led economy, academic backgrounds do not matter. It works in an entirely different way from the traditional world. Kim Bong-jin, CEO of Woowa Brothers, runs Baedal Minjok. He graduated from a vocational high school and a two-year college. Lee Su-jin, who founded top hospitality-booking app Yanolja, also went to a vocational high school and college. She got her idea for a motel-booking app while working as a cleaner at a motel. Sim Myeong-seob, CEO of Yeogi-eottae, another accommodation booking platform, took the same route.
Even if they went to four-year universities, few such entrepreneurs studied at well-known institutions. Cho Man-ho, founder of a budget shoe and fashion shopping site, studied fashion design at Dankuk University. Lee Jin-wook, founder of Dr. Jart, who has become superrich by selling BB cream, studied architecture at Wonkwang University in North Jeolla Province. None of them have an elite background.
In an innovation-led economy, anyone can become a somebody. All it takes is creativity and the ability to turn an idea into an attractive commercial product or service that can win consumers. President Moon Jae-in mentions “innovation” these days more than his “income-led growth” mantra. During tours around the country, he repeatedly promises to do away with government intervention and regulation. Sadly, actions have not followed.
The government asked van-hailing platform Tada to come up with a way to coexist with the taxi cab industry if it wants to pursue business. The government disallows the room-sharing business, citing a lack of legal grounds for such services and questions the safety of lodgers. Telemedicine has been allowed only for “trial services” for more than 10 years. It is no wonder start-ups are going overseas. Naver has kicked off a telemedicine business through its Japanese subsidiary Line. Hyundai Motor invested $575 million in ride-sharing platforms in Southeast Asia and India due to stifling regulations at home.
Joseph Schumpeter defines innovation as “creative destruction.” In a lecture in Seoul, Robert Atkinson, president of the Washington D.C.-based Information Technology and Innovation Foundation, said that Korea seeks “creativity without destruction,” which is impossible. Innovation stokes conflict and resistance. There is no innovation that can make everybody happy. In an interview with a local paper, Atkinson quoted an American expression “bite the bullet.” During the Civil War, wounded soldiers bit down on bullets to go through surgical operations because there was not enough anesthesia. To save a life, excruciating pain sometimes must be endured. Innovation can kill an old industry and make way for new ones. The process could be as harsh and painful as biting a bullet.
It is not difficult to differentiate what innovation is real and what is not. Prof. Choi said a genuine innovation puts consumer interests before those of producers and workers. Consumers should be free to choose what new products and services they like. Innovation is not real if it is intended to serve large companies or its unions. They warn that innovation will cost jobs. But there are ample studies pointing to increased jobs from innovation. When productivity improves, investment and consumption increase. Carriages and draymen are no more. But motor vehicles have brought about many more jobs — including for drivers.
Moon was once insightful about innovation. While opposition leader in 2015, he tweeted that innovation was not true if it was not accompanied by fear and pain. “If the path is smooth, it is not one for innovation,” he wrote. In another tweet, he went on to say that new tissue will appear only when the old tissue is removed. After becoming president, he no longer wants pain or the agony of shedding skin. History is a bloody battle over innovation. The time has come for Korea to bite the bullet. More children must be freed from the mind-sets of the dotard generation. Atkinson warned that Korea’s innovation was going the wrong way, as there is no appreciation of pain.