Not so long ago, South Korean students dreamed of lifetime jobs at Samsung Electronics Co. (005930) Now, many are shunning the juggernaut, intent on trying to emulate the likes of Facebook Inc. (FB:US)’s Mark Zuckerberg.
Sim Cheol Hwan, 27, is typical of the trend. He wants to take a break from college in Seoul to set up a company rather than line up for job interviews at Asia’s biggest electronics company paying an average of 77.6 million won ($68,300) a year. So he’s set himself up in his own business making apps for Samsung and Apple Inc. (AAPL:US) phones.
“I don’t want to get a job at a top 10 Korean company,” said the Hanyang University engineering student, who spent two years in the military. “Zuckerberg’s success proves that there is a lot of money to be made” in startups.
Thousands of aspiring entrepreneurs like Sim powered an 83 percent surge in the number of technology startups in the four years to 2011 in South Korea, where Samsung and Hyundai groups lead globally in products including phones, TVs and ships. Mobile downloads are expected to rise 10-fold to $58 billion between 2010 and 2014, helping lure graduates away from the decades-old tradition of working at the corporations that helped pull the country out of poverty after the Korean War.
“There are risks of failure, but there’s also a merit that you can personally grow your own business,” said Lee Kap Soo, a researcher at Samsung Economic Research Institute. “It’s hard to have a big success like Facebook, but people start their business with the hope of hitting a jackpot like that.”
Software startups in South Korea rose 61 percent between 2007 and 2011, while the number of information and communications-service providers more than tripled, according to Korea Venture Business Association, an agency that supports new enterprises. Revenue from Internet social media will reach $16.9 billion by the end of this year, according to forecasts by Gartner Inc., a 43 percent increase from 2011.
Even so, Samsung Electronics is the most favored employer among South Korean job seekers, followed by carmaker Hyundai (005380) Motor Co., because of its relatively generous salaries, according to a March survey conducted by SaraminHR Co., an online job site operator.
The average pay at Samsung Electronics, competing with Apple for leadership in the global smartphone market, was more than three times South Korea’s per capita income last year, according to the Suwon-based company’s annual report.
The nation’s top 30 business groups -- led by Samsung, Hyundai and SK -- employed 6.8 percent of the country’s workforce last year, according to a June 6 report by the Federation of Korean Industries. Samsung Group alone accounted for about 20 percent of the national GDP.
In a life-satisfaction study of 32 countries in the Organization for Economic Cooperation and Development by the World Values Survey Association, South Korea came in 31st. Surveys by Korean research institutes find that happiness among teenagers is the lowest in the OECD.
“Everyone used to think if you go to a good college, that means you’ll get a job at a big conglomerate,” said Kim Dae Ho, professor of service management at Mokwon University in Daejeon, South Korea. “Now, people are thinking they can also start their own company and run it, rather than working for someone else. The whole environment has changed.”
Yoon Bahn Seok, 31, founded Darez Inc. in 2008 with three friends to offer brand analysis and consulting services, even though his industrial-design background could have landed him a job at a conglomerate. Subsequently, he shifted focus to mobile apps.
“After seeing Facebook take over Instagram, I realized there’s endless market potential in developing mobile applications,” he said.
In April, Menlo Park, California-based Facebook, owner of the world’s biggest social network, agreed to buy Instagram Inc. photo service for $1 billion.
Another startup is SesiSoft Co., a Seoul-based online personal-computer game publisher set up in 2009 by former Samsung employees. It plans to expand into mobile games next year after almost doubling revenue to 10 billion won this year, Chief Executive Officer Kang Sung Wouk said in an interview.
All these businesses share a common thread: each of their founders have drawn inspiration from the success of Silicon Valley startups.
Zuckerberg, the 28-year-old chief executive officer of Facebook who started the social-networking service in his college dorm room, has a net worth of about $12 billion, according to the Bloomberg Billionaires Index, though Facebook shares (FB:US) have dropped 39 percent since the May 17 initial public offering.
“Hearing these stories enormously motivated me,” said Lim Hyung Cheol, a 21-year-old college student who last year founded Gameberry Inc., an app marketing firm that generates as much as 20 million won in revenue in a month. “Right now, I’m focusing on doing bit by bit with a big vision in mind.”
Some startups have already made it big.
The new app entrepreneurs are taking their place in a long tradition of South Korean startups. Even Samsung began as a simple produce and fish exporting business. More recently, NHN Corp. (035420), owner of South Korea’s largest Internet search engine, was founded in 1999 by a former employee at Samsung SDS Co. and is now a 13 trillion-won company.
Similarly, Nexon Corp. (3659), an online game maker founded by a graduate school student in 1994, raised $1.2 billion in an IPO in Tokyo last year, making it the second-largest technology or Internet IPO globally in 2011.
Running for President
Probably the most successful South Korean entrepreneur of all is Ahn Cheol Soo, founder of Ahnlab Inc. (053800) that makes anti- virus software, and who has been dubbed by the local press as Korea’s Bill Gates. His entrepreneurial success propelled him into the lead as the preferred candidate to become president in December elections, according to a poll published yesterday. Ahn is yet to announce whether he will run for president.
The government helps startups by giving them tax incentives and making it easier to get loans. It also may help reduce unemployment rates among youths that stood at 8 percent as of May, more than twice the national average.
“Precious talent shouldn’t go to waste,” President Lee Myung Bak said July 9.
Even as Samsung’s recruitment nears, engineering student Sim has no plan to add a link to the Web page on his browser.
“I don’t think I can maximize my full potential at these companies,” he said. “Ultimately, any person starting their own business should think big.”
To contact the reporters on this story: Jun Yang in Seoul at firstname.lastname@example.org; Sangwon Yoon in Seoul at email@example.com.
To contact the editor responsible for this story: Michael Tighe at firstname.lastname@example.org.