How a Harvard dropout founded South Korea’s most valuable start-up
SEOUL — For many would-be entrepreneurs, Harvard’s prestigious MBA program provides an important step in the journey from dreamer to founder.
But for Bom Kim, that step was quicker than most. Just six months into the program, he dropped out, determined to make it on his own. Now, less than a decade on, Kim is the billionaire brains behind South Korea’s most valuable start-up.
“I had a belief when I was in grad school that I had a very short window to really make something that had an impact,” he told CNBC Make It.
Kim is the founder and CEO of Coupang, the $9 billion e-commerce giant that’s been dubbed the Amazon of South Korea.
He started the business in Seoul in 2010 to take advantage of what he saw as a growing technology opportunity. Today his company boasts a user base almost half the size of the country’s population.
However, as the 41-year-old founder recently told CNBC Make It, he didn’t exactly set out to become the next Jeff Bezos.
The shape of Coupang, the business model of Coupang … went through a lot of change.
Learning to pivot
In fact, when Coupang started out in the late-2000′s, it was a Groupon-style daily deals business.
But, as Kim noticed the growing scope of e-commerce, he quickly transitioned to an eBay-inspired third-party marketplace.
“The shape of Coupang, the business model of Coupang, what Coupang looks like today, went through a lot of change,” said Kim.
The business was a success. Within three years, Kim said the company crossed $1 billion in sales and was on the cusp of an initial public offering.
But at the eleventh hour, he pulled the deal and radically changed the business model, convinced he could build something better.
“We had to ask ourselves: ‘Was the business we had built, were the services and experiences that we were providing … creating that kind of world where the customers we love, their jaws would drop?’ said Kim.
“The reality was no,” he noted.
Starting over
So Kim decided to start over; this time reinventing Coupang as an end-to-end shopping platform designed to manage the full customer journey from desktop to door.
That included creating Coupang’s own UPS-style logistics business, Rocket Delivery, intended to “delight” customers and improve South Korea’s disjuncture postal system, said Kim.
“The only models that we had seen were primarily like that of Amazon … And at that time, we really envied that,” he said.
South Korea’s e-commerce market has been growing rapidly over recent years, and this year is projected to become the world’s fifth-largest after China, the U.S., the U.K., and Japan. Meanwhile, long working hours and densely populated cities make the country ripe for on-demand delivery services.
Coupang responded to those market characteristics in spades. Today, its more than 5,000 drivers — known as Coupangmen — deliver 99.3% of orders in less than 24 hours. Its new Dawn Delivery service even promises to go beyond Amazon Prime, providing 7 a.m. delivery for orders made before midnight the night before.
Kim said he believes that level of detail is what has helped set his business apart in an exceedingly competitive market. While Amazon is not active in South Korea, Coupang last year outranked local names such as Gmarket and 11Street to be named the consumers’ preferred online retailer.
“What seemed like a curse at that time — that we had to build this entire infrastructure, and build the technology to integrate it all, end-to-end, by ourselves, from scratch — ended up becoming a huge blessing,” he said.
South Korea as a model
That market advantage has gotten investors excited, too.
As of November 2018, Coupang had received a total of $3.6 billion from major names including Softbank, Sequoia Capital, and BlackRock.
That’s given the company an estimated valuation of $9 billion, making it South Korea’s most valuable start-up, according to Forbes, and propelling Kim to iconic billionaire status.
Kim noted, however, that he and his investors are in Coupang for the “long-term.”
He said Coupang, which recently surpassed $10 billion in sales, is using that money to expand the business domestically, before potentially rolling it out overseas.
“The environment that Korea has — the high urbanization, the extreme population density, and the IT infrastructure — those are things that I think will be shared by customers in many areas, many regions, especially in Asia, as they modernize,” said Kim.
