Kudos to Masa Son for investing $1B in a single round. That was BEFORE the Vision Fund. No one was doing such rounds back then. Only he could do such a thing. Masa is Japanese but ethnic Korean and one of Bom Kim’s heroes while growing up. He wanted to meet him.
Bom and Richard Song (former CFO, now one of my partners at Altos) met with Softbank in Silicon Valley. No Masa. But meeting went well and they suggested they try to catch Masa who was in Las Vegas. Masa agreed to give them 30 min prior to a golf tee time. The duo flew to Vegas!
Masa sat there and listened for 30 minutes. No slides. Just talk. That turned into multiple hours. Masa canceled his tee time. He saw the vision. HUGE bet to invest in physical infrastructure to change the game in Korea. Much more ambitious than what Amazon was doing in US
What Coupang wanted to do in Korea could not be done in the US. Korea is so much more dense. It cannot be done in China either. There was no FedEx or UPS. To do it, Coupang had to do it all. It was not just logistics or physical infrastructure. The entire tech stack did not exist
You cannot go out and find SaaS vendors to help do what they wanted to do. They had to write every piece of software. Everything had to be created from scratch. But they already had a large business that was growing FAST. So how do you do it??
It was a crazy ambitious effort all around. It was as if the plane was already in the air but the landing gear was not in place. And you had to rip out the engine and replace it. Had no idea if the plane could fly let alone land safely.
As crazy as that sounds, Coupang had one thing going for it that no US, Chinese or Indian startup had. It has $1B. Korea was such a small country that no major global VC was going to enter the market. No one else could possibly raise $1B to challenge Coupang. It was their to lose
In the other major markets, you can have multiple huge competitors raise billions in funding to go after a market. They will beat the crap out of each other. They will lower prices. Negative gross margins would not be out of the question, especially in China!
In a place like China, its a war of attrition. You have to get not only a deep pocket like SoftBank on your side, but bring in the real big guns. Tencent and Alibaba. Those battles are happening all over Asia. But NOT in Korea at the time. Still not happening.
At the time, the best thing that could have happened to Coupang was a major market crash or recession. We actually wanted such a thing to happen. If you have cash, when others cannot raise, you have an incredible advantage. But the crash never came.
Not only did the crash not come but it was far more expensive and too far longer to build it all out than imagined. We could not imagine burning through the entire $1B but they needed more. Again, kudos to Masa. By this time, VisionFund was in place and he committed another $2B.
No one else on Earth could commit an extra $2B to a company in Korea. But by then Masa had seen Bom operate. This was no ordinary entrepreneur. The childhood hero and prodigy had bonded. They decided to go for it. And the rest is history.
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