Harvard magazine published and sold… Son Jung’s possessed Kim Bum-seok’Business DNA’

Will the company value 50 billion dollars (about 55 trillion won) be recognized? (The Wall Street Journal’s estimated market capitalization)? Coupang submitted a report for listing on the New York Stock Exchange (NYSE) to the US Securities and Exchange Commission (SEC) on the 12th (local time). Kim Bum-seok, 43, chairman of Coupang’s board of directors, is the protagonist who has taken the challenge of’listing domestic companies on the U.S. stock market’, which has been unprecedented after 10 years of founding. He proposed a new goal of ‘50,000 jobs’ in the report. Currently, there are about 40,000 Coupang employees, or 50,000 when indirectly employed. It is an aspiration to hire 100,000 people within five years.

Chairman Kim spent his childhood mainly abroad, following his father, who was an expatriate at a large corporation. He settled in the United States in 1994 when he was a middle school student. After naturalization, the nationality is the United States. His business DNA appeared early. When he was a student at Harvard University, he sold the magazine’Current’ to Newsweek. Chairman Kim said, “I was very interested in combining content for readers and commerce for local advertisers.”

After graduating from college, he worked for the Boston Consulting Group (BCG). He entered the world of entrepreneurship again by establishing’Vintage Media’, a monthly magazine aimed at prestigious universities. He returned to Korea in 2010, the year after selling the company, and founded Coupang with a capital of 3 billion won. Looking at’Groupon’, a social commerce that was popular in the United States at the time, he predicted that the introduction of social commerce in Korea, where there are many self-employed people, would succeed.

At the time, he was close to an unknown venture business. Rather, the only daughter of the incumbent Minister of Strategy and Finance drew a lot of attention because he joined the establishment of Coupang. It is the former director of Minister Yoon Jeung-Hyun’s daughter Yoon Sun-ju (44). Former director Yoon and Chairman Kim, who were former SBS PDs, had a relationship at Harvard.

Coupang grew rapidly. The trigger was when the rocket delivery was introduced in 2014. Since exceeding 1 trillion won in sales in 2016, it has grown by 40-60% every year. Last year’s sales amounted to 12 billion dollars (about 13 trillion won). It increased more than 90% from the previous year ($6.2 billion). The operating loss from over $1 billion in 2018 (about KRW 1.1 trillion) fell by nearly half to $500 million last year (about KRW 550 billion). Sales have nearly doubled each year, but the deficit is halving.

Dominance over consumers is more than performance. 14.8 million people (as of the end of December of last year) bought more than one product in Coupang in the last three months. It has increased by over 60% in two years. Last year, Lotte Department Store, number one in the department store industry, had 8.38 million customers. His goal of “listening from customers to tell us how we could have lived without Coupang” became reality.

The amount used is also steadily increasing. Consumers spend an average of 256 dollars (about 280,000 won) per quarter in Coupang. That’s more than twice that of 2018 ($127). Statistics have also been revealed that those who once used Coupang continue to stay in Coupang and increase the amount of purchases. The person who spent 1 million won in Coupang in 2016 was found to have spent 3.59 million won last year. The “lock in” strategy represented by rocket shipping worked properly.

Chairman Kim said that from the beginning of the launch of rocket delivery, “I am lucky that Coupang can provide such a service, leaving the deficit and surplus as the only service in the world” (2015 press conference). That is why he calls “Coupang is an information technology (IT) company” (interview with JoongAng Ilbo in 2016). Currently, there are about 2,000 IT developers in Coupang. It develops software in Shanghai, China and Silicon Valley, USA.

Japan’s Softbank Chairman Son Jeong-eui is said to have invested 1 billion dollars (about 1.1 trillion won) in 2015 because he was attracted to rocket delivery. This investment was the driving force behind Coupang’s business. At the time, Chairman Kim explained, “Even if there is a deficit right away, Softbank’s investment amount of 1.1 trillion won is real, so we can look forward and invest in the future.”

Their relationship goes back a long time. “All I had was dreams and unfounded confidence. And it all started there.” Chairman Sohn said that he dreamed of becoming a world-class entrepreneur with Kim in his heart. Chairman Son also showed strong faith in Chairman Kim by investing an additional $2 billion in 2018 despite controversy over Coupang’s deficit. Chairman Kim introduced that “there is no interference in management or conditions for how to spend investment money” (Interview with JoongAng Ilbo in 2016).

It is analyzed that it is thanks to the full trust of investors that Chairman Kim has’differential voting rights’, which is a strong means of defense of management rights. According to the report, Coupang plans to grant 29 times the differential voting rights per share for Class B shares held by Chairman Kim. As it is, Chairman Kim can exercise the voting rights of 58% at the general shareholders’ meeting even if he has only 2% of the shares after listing. Chairman Kim’s share of Coupang was not disclosed.

Chairman Kim received 880,000 dollars (about 1 billion won) in salary last year. By adding stock options to this, it collected a total of 14.43 million dollars (about 16 billion won) last year alone. The younger brother and spouse, who are known to have been pole vaulters, were also confirmed to have received an annual salary of 720,000 dollars (about 800 million won) since 2018. Among the key executives, the most paid last year was Tuan Pam, Chief Technology Officer (CTO), who joined Coupang last year. He received a combined annual salary and stock options of $27.46 million (about 30.5 billion won).

Coupang’s listing on NYSE is expected to take place around April. Coupang said it would distribute 100 billion won worth of stock to employees accordingly. In his report, Chairman Kim said, “Unlike most companies cut employment last year, we announced that we will invest about 1 trillion won to build seven new regional distribution centers and create thousands of jobs. Besides Seoul, we will invest trillions of won to create new infrastructure and jobs.”

As such, it is analyzed that Coupang chose the US stock market instead of Korea because it is actually difficult to list in Korea due to the cumulative deficit. There is also an urgent reason to secure large-scale investments due to the nature of Coupang’s business model. Coupang has attracted a total of 3.4 billion dollars (about 3.800 trillion won) of investment through Softbank, but the cumulative deficit is over 4.1 billion dollars (about 4.5 trillion won) as of the end of last year. An official from the financial investment industry who requested anonymity said, “The New York Stock Market is the largest capital market with 70% of the world’s investment funds.” Said.

Reporters Chu In-young and Kwon Yu-jin [email protected]