US Entrepreneurs are Chickens, Korean Entrepreneurs are PigsPosted: March 25, 2010
A Chicken and Pig are making breakfast together. The Chicken lays eggs and makes fried eggs. The pig cuts its belly and makes bacon.
The question is, who’s more committed to making breakfast?
Some might say that the Chicken is more committed because it’s contributing its future generation. Others might say that the pig is more committed because it’s contributing its own body. On other hand, a chicken can always lay more eggs. The pig also has a pretty big belly. The argument can go both ways and it’s an interesting way to discover and discuss people’s values.
The story can also be used to illustrate the differences between US and Korea Entrepreneurs.
When it comes to starting technology companies, US Entrepreneurs are Chickens. They typically start multiple companies with the mindset that their companies are like their offspring. They grow their companies by bringing in the right team and then move on when the company has outgrown them.
On the other hand, Korean Entrepreneurs are like Pigs. It’s rare to see serial entrepreneurs. They usually have the mindset that the company is an extension of themselves. They tend to focus on ownership and have difficulties in transitioning control to the right people who can take their companies to the next level.
These are generalizations and there are always exceptions but it’s interesting to analyze why there are such differences between the US and Korea. One interesting area to examine is the risk and reward profiles. Entrepreneurship is a risky endeavor but many people don’t realize the stark differences between the US and Korea.
In the US, Entrepreneurs typically invest some of their own money, but the majority of their initial investment is in sweat equity and opportunity costs. This is offset by various exit options that can potentially result in significant returns on their investment.
Even if their companies fail, investors value their experience and are willing to give them multiple opportunities to prove themselves. They also have the option of returning to the corporate world since employers value their entrepreneurial spirit and experience.
In Korea, it’s a different story. Entrepreneurs put up most of the seed funding themselves or through close friends and relatives. There are exit options but they are limited and the returns are much lower.
However, if the company doesn’t succeed, the opportunity cost and consequences are pretty dramatic when compared to the US.
In the US, the opportunity cost is what they could have earned in the corporate world. It’s also possible to get a new job or even return to your old job and start climbing the corporate ladder again. They might have missed out on a promotion but it’s usually offset by the experience they gained as an entrepreneur.
In Korea, it’s difficult for entrepreneurs to find corporate jobs if their company does not succeed. The cultural expectation is that careers should be a straight diagonal line headed upwards. Career trajectories with peaks and valleys are seen as a failing and basically put you at a significant disadvantage in finding employment and climbing the corporate ladder.
In other words, the opportunity cost for Korean entrepreneurs is their entire stable corporate career.
It gets even worse when you factor in the venture funding environment. In the US, Venture Capital firms trust Entrepreneurs with large sums of money based on their due diligence and background checks. In Korea, many institutional investors require collateral to secure their investments. What you have is essentially venture lending instead of venture investment.
Essentially Korea Entrepreneurs ends up personally taking on the liabilities and debt obligations of their companies. It’s not uncommon to see founders go bankrupt and end up with debt obligations that follow them for the rest of their lives.
Given these risk and reward profiles, it’s not surprising to see differences between Korean and US Entrepreneurs. Chickens can continue to lay and share their eggs but Pigs who cut out their bellies don’t have that luxury nor mentality. It’s hard to let go when you have invested and risked so much of yourself.
As a corollary, it’s interesting to note that there are quite a lot of successful Korean Entrepreneurs who have some really interesting stories that are quite different from US Entrepreneurs.
The US has lots of success stories that follow a similar pattern. Founders assemble the right team with the right pedigree and receive funding from top tier VC’s who help them launch their business. They then get bought out by a large company that pays a huge premium to leverage their innovation and market momentum, even when they have questionable business models and limited revenues.
In Korea, Entrepreneurs face significant business, social, and cultural challenges and their paths to success tend to be more diverse and interesting. Unfortunately, many of them shy away from sharing their experience and wisdom to help the next generation of Entrepreneurs. Some of this is due to cultural reasons but some of it is understandable given what one has to go through to succeed as an Entrepreneur in Korea.
It’s a shame really. Hearing about Chickens laying eggs again and again is fun. However, we all might be able to learn a lot more about by hearing from Pigs who were willing to risk everything just to make breakfast.