KakaoTalk CEO talks of innovation

The following is the keynote speech from Lee Sir-goo, CEO of KakaoTalk, at the Mobile World Congress. -Ed.

My name is Sirgoo Lee, and it is a great honor to be presenting to such a distinguished audience today. I would like to especially thank the GSMA, and especially Director General Anne Bouverot, for inviting me to speak at this prestigious event.

The theme of this panel is ‘Mobile Disrupted.” As such, I would like to talk about disruption and also innovation in the mobile industry today, seen from an OTT’s perspective.

But before we get to that, I think that many of you in the audience may not be familiar with our service. And so, let me give you a short introduction of who we are and what we do.

Kakao Corporation is based in South Korea, across the continent from where the MWC is being held.

In March 2010, we launched a mobile messaging application called KakaoTalk. A small team of four people spent just two months to come up with the initial version.

Over the years, KakaoTalk has evolved from a text messaging service into a rich communication platform, where users can share photos and video clips, engage in group chatting, and also talk to one another using mVOIP technology.

KakaoTalk is available in 14 different languages and has users in 230 different countries around the world.

Currently, we have 130 million users worldwide, who send about 5.5 billion messages each day.

South Korea has one of the highest percentage of smartphone users in the world. As of the end of last year, 73% of the population of Korea owned a smartphone.

Of that 73%, 93% are KakaoTalk users.

Without any marketing, we were lucky enough to accumulate a concentrated user base in Korea. As a result, our application has become the most heavily used mobile service in Korea.

Today in Korea, ‘to KakaoTalk’ or ‘Ka’Talk’ has become an everyday verb used by Koreans when they want to say ‘lets keep in touch.’

Thanks to the concentrated user base in Korea, KakaoTalk has evolved from a messaging service into a mobile social platform. The key asset of this platform is our social graph; the online network of friends that our users have. On average, each KakaoTalk user has about 180 friends. It is through this network of friends that new services and content is discovered and recommended.

Through this social graph, we were able to expand our reach into content, advertisement and mobile commerce.

For instance, we have a photo-sharing application service called KakaoStory. Within the first nine days of launch, we accumulated 10 million users through the power of the social graph. As of today, we have a total of 55 million users, becoming the number one mobile SNS.

Another example of the power of the social graph is mobile games. By providing games for our users to play together on our platform, seven games have received more than 10 million downloads, and two games have received more than 20 million. Over the year and a half since we provided mobile games, we were able to generate more than 1 billion US dollars in total revenue from games, providing a huge revenue source for our gaming partners.

Just a couple of weeks ago, 30 of the top 40 revenue grossing applications on Korea’s Google Play were Kakao games.

And on Korea’s App Store, 20 of the top 40 grossing apps were Kakao games.

Looking back, I think there was a fundamental difference in the approach that we took in providing our service. This difference in approach comes from a historical and cultural heritage. Here we have two paintings, which symbolize the difference in how we view the world. The painting on the left, drawn by Chung Sun, a famous Korean painter of the 18th century, shows nature and humanity in coexistence; the only trace of man is the small house at the foot of the mountain. In comparison, the painting on the right of Columbus ‘discovering’ the new world, shows mankind expanding its scope into new territories.

Here, we have a cow and a bundle of hay, and a chicken. If I were to ask you that one of these objects did not fit with the other two, which would you choose?

Children in the US chose the bundle of hay, thinking that both the cow and the chicken were farm animals. Their reasoning was based on categorization. In comparison, children in China chose the chicken. They thought that because cows eat hay, the chicken did not fit. Their reasoning was one based on relationship, rather than category.

Here is another example. This pictogram was drawn by a Chinese artist Yang Liu, who spent her childhood in Germany. It shows that westerners have a simpler and independent relationship with others, whereas Asians have a more complicated and dependent relationship. This is more evident in a party situation where westerners tend to associate in groups of three or four, whereas Asians tend to gather as a large group.

As you can see from these examples, the average westerner thinks in terms of You and I.

But in comparison, in the East, we are more conscious of the concept of ‘We”, encompassing both you and I, together.

This enlarged concept of “We” is the spiritual foundation of our service. Rather than thinking about ‘What can I sell to you” we were thinking more in terms of how can We as a collective group, create value.

So we defined our business as one of creating value by connecting people.

First we started with text messaging.

But then we thought we could create new value by providing emoticons for our users to express their emotions through cartoons and pictures.

New value could be provided to our users by allowing them to play games together.

Sharing music. And also by sending and receiving gifts.

We are now in the process of creating means for our users to send and receive money through our messaging platform.

And so as you can see, we are working to create shared value with our users and business partners using innovative technology.

Our users play an important role in creating this value. We constantly receive suggestions from our users and this is implemented into our services. Most of the new features and services are a reflection of these user suggestions. We are building our service together with our users.

Currently, we are working together with more than 300 artists to provide creative emoticons for our users. We do a fair revenue share with these artists.

More than 200 game developers provide us with nearly 400 games. We service only third party developed games and do not develop games ourselves.

And we work with more than 900 digital content providers to offer quality books, music, video and other digital content for our users.

And we are working with all 16 commercial banks in Korea and the Korean KFTC to enable out users to send and receive money through our messaging service

We are also working with the major Telcos in Southeast Asia to provide data plans in that region. We hope to expand our cooperation with carrier in other regions and into creating new business models together.

So, I ask you: Is what we are doing, disruption or innovation? In a way, I think the answer is both, and these two concepts are not mutually exclusive. By taking a different approach is focusing on 'WE' and creating new value for all in the process, i believe we are pioneering innovate ways. We should not frown upon disruption, but rather, welcome it as a new opportunity through innovation.

Change cannot occur without disruption, but I believe we can all benefit with innovation, through which we can create new value that did not exist before. We are at the initial stages of a new age of the smartphone revolution. Disruption is inevitable but new possibilities and opportunities arise where WE, carriers, OTT service providers and other business partners can work together to create new value through innovation.

This painting symbolizes the vision I have for the future of this mobile industry. Drawn by the famous Korean painter Jung-seop Lee, it shows a large family working together in an orchard harvesting mandarines. I sincerely believe that service providers like us can work closely together with carriers, device manufacturers and other business partners to innovate and create shared value for all. This vision may sound naïve, and I’m not saying we should all love each other and become a big family, but I think this is the only way for this industry to grow in the future. And I hope all of you in the audience will share this vision of mine.