Singapore: As a kid in South Korea, Brian Kim grew up with the opposite of social distancing: Coming from a humble background, he had to share a room with seven family members. Those days are gone, and measures keeping people apart are now helping his fortune.
Kim, 54, is the founder of Kakao Corp., the maker of a mobile messenger app that has become almost ubiquitous in South Korea and increasingly used elsewhere in Asia. The firm, which started with a social-messaging app, has expanded its businesses over the past decade by purchasing a K-pop entertainment company and merging with the country’s second-largest portal site, while its mobile-hailing and payment services are now daily necessities for many consumers.
Kakao’s shares have surged 55% this year through Thursday, adding $1.2 billion to Kim’s net worth, which now stands at $3.7 billion. That puts him closer to inclusion in the Bloomberg Billionaires Index, a ranking of the world’s 500 richest people.
Hwang Seung-taek, an analyst at Hana Financial Investment Co., attributes the surge in communication on Kakao to the abrupt halt in person-to-person interactions caused by the the coronavirus pandemic. While Korea managed to control infections without imposing a lockdown or banning international travel, the government closed public places such as parks and libraries and encouraged people to stay home. Many companies asked their employees not to come to the office.
“That has contributed to revenue growth for Kakao services despite reduced consumer spending,” Hwang wrote in a research note this month.
Kim owns 26% of Kakao directly and through his wholly owned holding company. The calculation of his fortune excludes shares pledged as collateral for loans. A company spokesperson declined to comment on his net worth.
Kakao reported revenue of 868 billion won ($705 million) for the first quarter, with more than half coming from platforms including the messaging app, web portal and payments business, according to an earnings presentation. Commerce activity on its KakaoTalk messenger jumped 55% from the same period a year earlier.
“When Covid-19 was at its peak, time spent on the KakaoTalk chatting tab recorded weekly highs,” co-Chief Executive Officer Mason Yeo said on a May 7 earnings conference call. “Voice-talk and face-talk call traffic recorded a sizable increase. We saw increases in gift deliveries and categories such as health care, hygiene and indoor activities.”
The company’s other verticals, such as its payments and online-banking businesses, could grow further as they are primarily operated with no physical contact, Ebest Investment & Securities Co. analyst Sung Jonghwa wrote in a May 21 research report.
KakaoTalk has 52 million users globally, including more than 45 million in South Korea — almost 90% of the total population. Hope Kang, who’s from Seoul but works at an art gallery in Hong Kong, has been using the app to keep in touch with her family back home.
“It is practically the only way I can communicate with my family in Korea now,” she said. She hasn’t gone back since January because of Hong Kong’s quarantine and travel restrictions. “I can still talk to them and see their faces through video calls. I guess this will continue until I get to meet them again, but am not sure when that will be.”
Global lockdowns have led to increased demand for services such as online streaming, gaming and e-commerce, boosting other fortunes. Tim Sweeney, the founder of Epic Games Inc., now has a net worth of $9.6 billion, up 32% this year, thanks to the popularity of Fortnite, while that of Zoom Video Communications Inc. founder Eric Yuan has swelled to $9.1 billion, according to Bloomberg’s wealth ranking.
It remains to be seen whether the pandemic-induced growth will be sustainable when life returns to normal.
Kim was the first of his siblings to attend college, studying industrial engineering at Seoul National University, where he offered private tutoring to help pay tuition. Playing games like poker and pool provided an escape during those years, and that’s what led him to create his first business, online game portal Hangame Communications, in 1998, surmising that sleepless nights playing games would work online, too.
The bet paid off.
Hangame merged with Naver.com, now South Korea’s biggest internet portal, in 2000. Kim led the combined company, NHN Corp., before stepping down in 2007.
It was a turning point for Kim, who contemplated what type of life he wanted to pursue after having already achieved some success.
“I came across this quote saying: ‘A ship in harbor is safe, but that’s not what ships are built for,’” Kim said in an interview released by Kakao last month. “It drove me to venture into the world again.”
That pursuit took him to the U.S., where he spent time with his family.
The introduction of the iPhone prompted his next move. Fascinated by the product, Kim returned to Korea to develop apps for it. The breakthrough for Iwilab, Kakao’s predecessor, came in 2010, when KakaoTalk was created and the company became Kakao. Four years later, Kim struck another deal, as his company merged with South Korea’s second-largest internet portal operator, Daum Communications Corp. He became the largest shareholder of the combined entity.
Kakao is now the 10th-biggest company in South Korea, with a market value of about 21 trillion won — almost as much as Hyundai Motor Co.
“I’m motivated by new challenges such as technologies like artificial intelligence and blockchain and ideas like going to Mars,” Kim said in the Kakao interview. “There shouldn’t be limitation on what Kakao does, so I continue to think about new challenges.” – Bloomberg