Today, we are very happy to have a distinguished guest
A widely recognized CEO, Gangnam-gu in Korea
CEO Gangnam-gu is the founder of Jaksim Study Cafe,
a fast-growing education brand in Korea
Under his leadership, the company has secured
more than $22 million in funding
and launched over 1,000 franchise branch nationwide
Building on their success,
he recently launched Pico Partners,
an innovative unmanned store management software
and QSYS system, which is now being used under
I'll do it again
Why is it so hard to speak?
You can do it!
It's hard to move on
I'll do it again
I'm almost done
Let's do it again
Welcome
Today, we are very happy to have a distinguished guest
A widely recognized CEO, Gangnam-gu in Korea
CEO Gangnam-gu is the founder of Jaksim Study Cafe,
a fast-growing education brand in Korea
Under his leadership,
the company has secured more than $22 million in funding
and launched over 1,000 franchise branch nationwide
Building on their success,
he recently launched Pico Partners,
an innovative unmanned store management software
and QSYS solution, which is now being used
in more than 3,000 locations all over the country
In addition, he has recently appeared
on popular Korean variety show,
establishing himself as a true celebrity
Today, we will be talking with CEO Gangnam-gu
about the kind of dynamic nature of the markets
and what it's like to run your startup
in such an environment
From now on, this session will continue in Korean,
but English subtitles are available when you turn them on
Are you ready? Let's begin
Hello, Mr. CEO
Hello
Thank you for coming despite your busy schedule
Thank you for inviting me
Could you briefly introduce yourself?
I'm CEO Gangnam-gu of ING Story,
and I run Jaksim, a premium study cafe brand
Nice to meet you
How did you start your startup?
I have to go back to my school days
My parents had a hard time running their business
I wanted to start my own business,
but I didn't know how to do it in a short period of time
I was thinking about what I could do
to support my family in the long run
When I was young, I thought I could do anything
if I started a business
So I dreamed of starting a business when I was young,
and when I became an adult and had a chance,
I started my own business
Is there a particular reason
why you chose the study cafe as one of the many items?
At the time of my startup,
old bookstores were disappearing,
and they turned into coffee shops
Just like the process of a shopper turning into a convenience store,
the old bookstores,
the bookstores that were like tables
that were made by suppliers,
respected the diversity of supplies
and were designed and made in various forms
That's how I got to know the market
So I thought,
this market is going to grow,
so I jumped into this industry
We are very close to the study room,
but other countries don't have this model
Can you briefly explain what it is?
In Korea, not only do people study at home
or in libraries,
but there is also a special space
where you can only study like a cafe
So you can think of it as a study room
where you can study like a cafe
So it's been around for a long time,
but has the situation changed
since you joined the market?
Yes, that's right
At first, there was a study room
about 30 to 35 years ago,
but at that time,
it was designed as a space
centered on suppliers
that can maximize profits
So we put as many seats as possible
in the one-person room,
without respecting the convenience of the customer,
and made it possible to maximize profits
Some of you may like a more enclosed space
centered on suppliers,
and some of you may like an open space
I think it's a study cafe
that is developing
as a study space
That's why I started this business
So it's not just you,
but other people and companies
have seen it, right?
That's right
Can you explain
how the market was at that time
as a player?
When I thought I had to do this business,
before I opened the first store,
the biggest competitor
already had more than 200 stores open,
and hundreds of billions of won
were invested in a large office fund
And other competitors
were invested by Korean medium-sized construction companies,
and friends from prestigious universities founded the company
In addition,
dozens of competitors
were already looking at the market
and making it first
That's how I became a successor
So you didn't have any competitive advantage
Right
You didn't have any experience
I didn't have any capital,
and I didn't have any special social experience
That's when I boldly became a successor
Is there a strategy
to get out of the business?
Is there anything like that?
First of all, I didn't have any capital,
and what I thought was that
if we don't differentiate perfectly,
we won't even get attention and we'll just die
That's what I thought
So I first looked at
what the players in the market were doing
The first thing I paid attention to
was that most of my friends, no, all of them,
were doing modern-concept interiors
But on the other hand,
there must be friends who like classical music
So I thought,
why don't I bring all the demand to modern-concept interiors?
So I thought,
since everyone else is doing modern-concept interiors,
let's do classical-concept interiors
That's how I differentiated the market
Also,
most of my friends
opened their first branch in an area where
they were highly educated
And they expanded their business
On the other hand,
I thought, no, this isn't Daechi-dong, Mok-dong, or Bundang
in Gyeonggi-do, Seoul
So I thought,
there must be places outside the city
that are highly educated
and require education
So I opened my first branch in an area where
the education in the city is highly competitive
instead of others
And on the other hand,
I expanded my business
in Seoul, Gyeonggi-do,
and came up with a strategy to penetrate the competition
There was no competition
No
There was no competition
It was all a dark, supply-oriented reading room
Seoul is already changing a lot,
but the region hasn't changed yet
But the key here is
that I didn't try to do it,
but naturally,
since the rent is cheaper in the region than in Seoul,
should I say it's the payback rate?
To pay back the cost
of investing in the facility,
how much do we have to receive
when we measure the cost?
If I opened a branch in Daechi-dong, Mok-dong, or Gyeonggi-do,
which is the key area of Seoul,
the rent is expensive here,
but since the client was able to pay a high cost,
the payback rate
doesn't have a big impact
But if I open a branch in the region,
the client has to pay a higher cost
than the Gyeonggi-do client,
and it's a burden to use it,
so I had to lower the start-up cost
So naturally,
if the average cost
to build a branch is, for example,
4 million won,
if I don't set up a start-up cost
at a 50% discount
at half the price,
there's no competitiveness in the first place
So naturally, I came up with a strategy
to reduce the start-up cost
and make it faster
That's how you expanded the region
Yes, that's right
And then you opened a branch in Seoul
That's right
If I started competing in Seoul,
I didn't have competitiveness,
so I raised the brand awareness in the region,
and now I'm in Seoul, Gyeonggi-do
So when you opened
in Seoul, Gyeonggi-do,
did you have competitiveness?
That's right
For example, the most important thing is
whether the brand has been evaluated
by the market with the item
called the reading room
If so, I experienced the possibility
that it could be done
in Seoul, Gyeonggi-do
Secondly, if the cost is the same,
the response is the same
the profit margin was much higher
to make our own brand
So with that advantage,
we opened a branch in Seoul,
and then there was a immediate response
The principal recovery rate was also significantly higher
That's how the word spread
Now, every year,
we sell 100 items
and become the No. 1 brand in Korea
Congratulations
Thank you
When you opened in Seoul,
how did the competitors react?
It was simple
At first, they didn't want to admit it,
they might thought theirs would be overwhelming
cause they have their own brand power
But I thought it was simple
If you live in a big house,
it's uncomfortable to live in a small house
If you drive a big car,
it's too small to drive a small car
Like that, we paid half of the startup fee,
so we don't have to pay the same money
and make 100 seats
If we have the same money,
we only need to make 50 seats
Still, it is possible to recover the principal
Then we can use the desk
of a friend who used
a 100-centimeter desk
and a 150-centimeter desk
I thought there was a difference in convenience
But once the customer used our desk,
we invested a lot
in the size of the desk and the chair
that the self-guided students needed,
and we won the competition
Did the competitors collapse?
Yes
So the first thing we did
was to put our brand next to the biggest store in the market
It was a strategy
To put it simply,
it was like opening a coffee shop next to Starbucks
Because the startup fee
was the most expensive
and the brand was well-known,
the startup fee had to be expensive
As a result,
the size of the seat naturally decreased
If you don't make a lot of seats,
you can't get the money back
On the other hand, we lowered the startup fee by half
and made the seat 1.5 times bigger
so that all customers could absorb it
So we only placed it next to the top brand
That's impressive
I heard that you launched
a brand called Pico Partners
Can you briefly introduce it?
When you open a coffee shop,
the machine that you must use
is a coffee machine
Because you have to make coffee with that machine
In order to open a study cafe,
the customer management program is a must
For example, you have to develop
admin, application,
and automated kiosk
so that it can be operated without people
I thought these three were
the veins of the study cafe
Because this is a must,
we don't just do the study cafe
We need to develop software
which is the blood vessel that the market needs
so that the market can
eventually take the money
We grew the hardware
but there is a limit to the growth of the hardware,
so we developed a software
called Pico Partners
so that we can take the data
of people who does self-directed learning
Who supplied the software
when you opened the study cafe?
The lighting company is really interesting
because if you use the lighting,
the green, gray, and pink software
that was made 30 years ago
was provided for free
We used it, too
It's a fancy interior
when it's shown on the outside,
but the software is completely old
We were using the software
that the study cafe was using in the past
But you're going to go in and develop it
Right
Then the employees will say,
We're not that kind of company
Why do you do that?
How do you overcome that?
One of the most frequently asked questions is,
Let's just use it
It's not a big market, but even if you develop it,
you'll have a lot of development costs,
so how much will you use in the market?
Those were the main reason for the adverse opinions
Investors, employees
But I didn't think like that
No, in the end,
the online education market
is growing fast in Korea
In order for the online education content to grow,
the self-guided learning space
that consumes of the education content has to grow,
in order to make the online education content will grow,
and then the self-guided learning space will grow eventually
So I told them, I think we have to invest
chance in the market will follow in the end
At that time, I was like,
I don't know how much I'll make
but let's make it first
When no one was developing at the time,
I invested in it
and made it
Are you monopolizing
the kiosk market
and unmanned management software market?
We are number one in the market
It's not a complete monopoly,
but market share is number one in the market
The study space is number one,
and the software is number one
There are two markets
Right
You're doing both at the same time
Correct
Has the status changed?
At first,
people saw the company
only as a franchise model,
so they thought
that 1,000 stores would be the end,
and that 1,500 stores
would no longer grow
No, in the end,
we'll create a new marketing channel
that could target local-based marketing
like Carrot Market,
by spreading a new software system
and to go further, as a no.1 company
that brings in the most customers to the study cafe,
we will become a platform
that provide a customized service
And now, we can prove that we are enabling all that
So the value of our company
became higher than before,
the time when we focused on offline business
And they are stepping stones for our potential growth
Is the Pico Partners program being applied
to other areas as well?
Yes, as it's being expanded, the study cafe,
the study room reservation system
can be used in a shared office,
and if you customize it a little,
it can be used in a shared warehouse,
and it's being used as an expansion concept
in table tennis courts
and badminton courts
that are becoming unmanned, more and more
Did you expect this from the beginning?
Or did it just happen?
I didn't expect it at all
When I first started the study room,
I didn't think it would evolve
into a study cafe,
and I didn't know
that this was some kind of software that we had to do,
and I didn't know how to do it,
but as I did it,
there were inquiries from the market,
and I learned that
there will be a change
there would be possiblility of expansion
to the study room reservation system
and the meeting room reservation system
and the shared office reservation system
I realized that as I run it
So, to sum up,
you entered the study room industry
when it changed
from a traditional industry
to a new industry,
but the market is now very competitive and saturated
so you started a little
from the outside to the inside,
by building brand image
but you didn't stop here,
but you developed a system
called Pico Partners, an unmanned automated system
to develop a new market
You didn't plan this process,
but you kept coming up with ideas,
which makes it all possible, right?
That's right
One of the things that investors always said when I went to get investment
was that if Kakao,
which is a huge Korean company,
if go global, it can be google or facebook, meta
becomes a competitor,
how will you compete with them?
That's the question I got from them
But how do you beat them?
What I thought was
that if they come in and spend huge amount of capital,
I might not be able to win
but rather than doing business themselves,
they can invest in themselves
or make them think that
it is much more efficient to acquire us
So, when I entered this market,
it merely seemed like a hardware business
when I only did the franchise model
but when I entered this business
and provided software to the study cafe,
I thought that I could create value in the study cafe,
and when I actually opened the software,
I didn't just open it,
but I had to create an entry barrier,
so I signed a 10-year contract
when I signed the contract
But when people heard it, they said,
who would sign a 10-year contract?
They are not idiots
But I thought
The 20-year contract
has no intention of harming the self-employed
who use our program
What I thought was
that when Kakao and Naver entered this market,
they shouldn't be harmed
when they take away
the business that I made with all my effort
So, if they explain it
and said, closing the store
or if there's situation where it's not working well
we'll not gonna charge you penalty for breach of contract
However, only if it has been transferred to the same type of business
Even transferring our program free of charge under the same conditions is totally okay
but there is a penalty if a competitor
suddenly comes in to replace the program
for the rest of the remaining contract days
So, they made a contract with us
cause our rule was so reasonable
As expected,
Nexon and Netmarble entered this market
Is that so?
Korean market is really interesting
Nexon and Netmarble together hold
about 55% and 45% of the PC café market share as an affiliated company
So, if they want to distribute games,
they can't supply games to Korean PC rooms
if they don't work with Nexon and Netmarble
So after I knew that market, I thought
When the market of the study cafe grows,
big companies will monopolize it
So, before they come in,
let's take this market first
So, we got invested and entered this market
As expected, and happily,
the big companies came into this industry
They've now fallen behind in the competition
so we don't even consider them as competitors anymore
Because of the entry barrier
That's impressive
So, to the students who are preparing for the startup
and watching this lectures,
what is the most important thing?
If you have anything to say,
please tell us
First of all,
Hard working is a base line
Working hard is a default
It is kind of needless to say
I think that's very important to do something sedulously
I think that is the most important thing
So, of course you'll be anxious,
but working hard is a default
And persistence
That's important
And another thing is
if the industry grows,
you'll definitely run into big companies
There are so many students who don't prepare
even though they know
they'll run into big companies
But I think that's stupid
When I was invested,
I got a lot of questions like that
If I didn't prepare in advance,
I would have lost everything
But I prepared in advance and made a hypothesis
that I could be a competitor and a partner with them
I think that's why we can be competitive now
It seems to have laid the foundation
to make even major corporations give up
when they tried to enter
So, I want to tell you
You must be prepared even when you succeed in your job
Most people only prepares for the failure
but that's what everyone thinks
If you don't prepare when you succeed,
you can collapse again when you succeed
I think you can collapse
faster than anyone else
Thank you for your good words today
Hi guys
We hope it was very valuable time, full of insight
That wraps up our conversation with CEO Gangnam-gu,
Thank you so much for watching