00:10:46 · Eric Kim
And that was a key to making that investment back in 2011. Kakao is a really interesting story. I'm I'm very thankful to Han Kim, who's a very close mentor and friend of mine that helped introduce me to the company. Prior to that, we had a overall thesis about mobile, the the power of smartphones, and this whole transition away from desktop to mobile computing and how there are opportunities for gaming, for commerce, for communications to happen on mobile, and we were looking for that killer app. What prompted me to really become interested in Kakao and and to seek out the company was a really close friend of mine actually was visiting from South Korea at the time. That person had a Samsung smartphone. And I asked her, why did you buy this Samsung smartphone? And she said, so I could use Kakao. It actually saved her money. At the time, every time you sent a text message, you are charged per text, and Kakao made that free. Buying a smartphone, which was very expensive, that upfront cost was an investment to save money over time because it provided this core utility to everyone to be able to communicate for free. And that was an insight that it really struck me is that people were willing to buy 300, 400, $500 smartphones so they could just use Kakao because they were saving money on the other end of that. That love, that customer love was something we saw tremendous potential in. So I remember approaching the CEO, the founder, the management team at Kakao once I got introduced. I remember flying to South Korea and practicing the night before, presenting in Korean, and the next day... Actually, when I I visit the the Kakao headquarters, and there's only, like, 20 people. I remember pitching in Korean to the to the the team there. They weren't pitching me. I made this whole presentation about our thesis and the research we had done, all of the consumers we had talked to. It was in Korean, so I'm sure it was terrible, and it was, with a lot of stuttering. They maybe were impressed.
00:12:38 · S0, S1
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00:13:03 · S1, S2
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00:14:48 · Eric Kim
[00:14:48] S4: By that, and, they were willing to take our capital early on. But we really saw not from the outside in, but through the consumer voice, the love for the product. I remember at the time, there's a lot of people who thought that investment in cacao was crazy. Maybe even some of the early team members weren't quite sure about the future. But when we talk to consumers, when we talk to people who actually use the product, they loved it so, so much. Oftentimes, one of the things I love to do when I go to cities, whether it's London or New York, I just like to hang out in the subway. You can see what apps they're using, just the color of the icons they're using. And when you go to Korea, a lot more people were starting to use this yellow icon, Kakao, and then you would talk to them. Why did they use it? I can save money. I can communicate with my friends. There's a group chat that becomes my community. And so that was our key insight is that you could scale this and create a powerful network effect that as more people got onto the platform, it would benefit all the preexisting users as well. That's a really powerful phenomenon that increases retention, that as more people get onto the product, the product gets better. How many of those can you name? There are very, very few companies that do that. And so once we saw that insight, we felt a very strong commune... Conviction to invest in the company. They were both very early stage deals, series a for the cacao and kind of series a plus for Coupang. The returns were massive on kind of a venture scale, kind of the 100 x, 300 x type scales. I think most venture capital firms, in my experience, do great work, but they don't necessarily have a strong sense of mission. And that's what was important to us when we started Goodwater was to have a really clear mission statement, again, to empower exceptional entrepreneurs everywhere to change the world for good. Goodwater had a tremendous impact on the venture capital ecosystem because we changed the mindset to go from an ecocentric mindset where you have individual venture capitalists being celebrated for how much money they made. Shifting that there's nothing wrong with that but shifting it more to a mindset of how can we, as a venture capital industry, have positive impact itself.
00:16:56 · Eric Kim
If Goodwater, many, many, many years from now, is known for that, Capital is a really, really valuable resource that you have to steward, and that's why we're called Goodwater. We think water is similar to technology and capital. Water is the source of life for every living organism, but the lack of water or too much water can lead to destruction itself. And technology and capital is the exact same thing, that you have to steward it. It can be a source for so much positive influence in the world, but it can also be used for not so good things too. That technology and capital isn't always the source of goodness in the world too. So we want to be the good water in the venture capital ecosystem. We also thought that the world didn't need another venture capital firm. There are so many great venture capital firms out there, Sequoia, Benchmark, you know, Accel Partners. There there are so many great venture capital firms out there. The world didn't need necessarily another venture capital firm. But what if you could create a venture capital firm that was not only mission oriented but focused on consumer Internet, consumer technology itself? A lot of venture capital firms at the time and still to today diversified away from consumer tech. They went to enterprise SaaS or security or hardware or climate tech or biotech. If you think about the best venture capital firms, where they started was by investing in companies like Google, like Amazon, like eBay. Six out of the eight largest companies in the world are all consumer tech companies like Facebook as well. Not only are there great equity returns there, but if you own that end customer relationship, then you can create so much innovation that backward integrates all the way into the enterprise as well. So we had this thesis that consumer technology, consumer Internet was incredibly powerful, that owning those end customer relationships was very powerful, that would span not just social networking, not just ecommerce, but that would span also.