By Yoon Ja-young
It happened at a roadside makeshift speakeasy or “pojangmacha” near Seoul National University in 1989. Byun Dae-gyu, then an engineering graduate student, was talking with his colleagues about what they were going to do when they got their Ph.D.s They were half joking when they agreed that they should start their own business ― none of them imagined that this would grow to be a 1 trillion won company.
“We challenged endlessly, but tried never to hit below the belt. We tried to be honest even in failure,” Byun, CEO of Humax, said in a meeting with reporters last week. The set-top box manufacturer marked 285 billion won sales in the fourth quarter of last year, pulling up annual sales to 1.05 trillion won.
Humax, which started in a small office near Seoul National University with 50 million won in capital, has written a new chapter in the history of Korean venture firms. Its sales stood at 125 million won in the first year, but the company has now grown into a small but truly global firm with production facilities in seven countries and subsidiaries in 15.
This is a remarkable achievement in a country where conglomerates run everything. As Byun noted, only five or six startups survived to breach 1 trillion won mark in the past 40 years. Amid harsh surroundings for such firms here, most disappeared during the Asian financial crisis and collapse of the IT bubble, but Humax survived. The CEO said it succeeded by focusing on the global market from the outset. Exports accounted for 98 percent of its total sales last year, and it has the biggest market share in retail markets in Germany, the U.K. and the Middle East. Its products were used in North Korea and Saddam Hussein’s palace as well.
Byun set up Humax at a time when few people here had ever heard of ventures or startups. It was natural for people like him to choose a stable track in universities or R&D centers of conglomerates, but he was determined to take the venture route. His professor, impressed by students of Stanford University advancing into Silicon Valley, also encouraged Byun.
It was tough. “We never went without trial and error for each change in the market,” Byun said. At first, they produced what they could instead of what the market wanted. After a few tepid years, Humax launched an image processing board for PCs. At the bottom of the instruction manual they wrote that this board enables users to add captions to images. It was written at the bottom because as engineers, they never regarded this as an important function.
However, customers’ inquiries focused on the caption writing. This was the turning point for Humax. They came to develop what the market needed. Their product was later used to put lyrics on karaoke players.
Humax chose to focus on digital home electronics, including digital satellite set-top boxes. Humax was the first Asian company to develop the product, and recorded $10 million in exports upon development in 1996. Unlike other Asian companies, Humax chose to make its own brand instead of seeking an original equipment manufacturer (OEM) deal. Humax listed on the Kosdaq in 1997, years before the venture boom here, and rose to the top in the European retail market in 2000, surpassing Philips and Nokia.
The CEO cited innovation as the keyword for survival. He noted that Japan quickly caught up with the U.S. electronics and automobile industries, but it had no Microsoft, Google or Apple. As it had no innovative firms, Japan suffered stagnation. “If Korea continues mimicking without innovation, it will be caught in a stagnant track just like Japan,” he said.
Humax is preparing for a new growth engine ― car infotainment, as IT applications in cars are increasing. It is planning to sell set-top box and TVs for cars applying its know-how in home digitalization, and advancing into the Japanese market in the second quarter. It has acquired a 16.67 percent stake in Daewoo IS, a supplier of car audio to GM and Renault Nissan, as a preparatory step.
Humax is aiming for 1.8 trillion won in sales in digital set-top boxes by 2015, advancing into the U.S. cable market in a year or two, and 500 billion won sales in the infotainment business for cars.