[THE INVESTOR] Although Kakao rules the Korean market with its immensely popular messenger app KakaoTalk, penetrating the global markets has remained a far-fetched dream.

The firm’s past efforts to increase its footing in Japan and Indonesia came to a naught due mainly to bigger competitors like Google, Facebook and Naver.

Kakao CEO Rim Ji-hoon, who took office in October 2015, said in a media interview on Sept. 20 that the mobile messenger and web portal operator will try to put more focus on what it can do best -- artificial intelligence and content platforms -- instead of trying to catch up with bigger rivals.

The following are excerpts from the interview with CEO Rim at Kakao’s Pangyo head office.

Kakao CEO Rim Jin-hoon

The Investor: More Korean companies, including Kakao’s rival Naver, are trying to tap global markets. Could you tell us about your global business strategy?

Rim: Going global has long been a dream that I have desperately wanted. Kakao concluded long time ago that its mobile messenger service would not make it in other markets since each nation already has a dominant player, and it is meaningless to become a runner-up. It is pretty much the same story for our portal Daum since its services are mostly in Korean and the global search sector is dominated by Google. So, since 2016 we have been doing what we can do best, such as services for webtoon, game publishing, emoticon, web novels, and entertainment. We are making progress with these services in global markets.

Black Desert, a mobile game made by our partner Pearl Abyss, is a prime example. It has been well received in North America and Europe. We are also seeing exponential growth of the platform for webtoons and web novels in Japan. The business model that allows subscribers to read webtoons and web novels for free after a certain period of time appeals to Japanese users.

In China, Kakao is collaborating with local internet giant Tencent for KakaoPage, a content platform, which has adopted the same business model of the webtoon platform in Japan.

In conclusion, I believe Korean content has a competitive edge in global markets, and Kakao can help its partners go global.

TI: Does Kakao have any plans to make a large-scale investment this year like it did in Loen Entertainment?

Rim: When it comes to investment or M&A deals, nobody knows what can happen until the deals are completed. Therefore, I honestly do not know what is going to happen down the road in terms of investment. Having said that, Kakao has been trying to grow together with great partners by investing in promising ventures. Its affiliates K Cube Ventures, Kakao Investment and Kakao Brain are continuing their investments as well.

TI: Kakao recently announced its partnerships with Samsung Electronics and Hyundai Motors for AI solutions. How broad and deep will the partnership with Samsung be?

Rim: I cannot disclose the details of business contracts with partners. What I can say is we will further discuss what we can do together and find ways to develop and offer great and convenient technologies for consumers. Along the way, we will be able to expand our partnership. Consumers will see more products fitted with Kakao’s AI solution Kakao I this year.

TI: Soe consider that Daum portal has failed to create synergy effects with KakaoTalk. Has Kakao ever considered selling off the portal or changing its name?

Rim: Kakao has not considered selling Daum. Synergy effects cannot be created by simply putting things together. Kakao has nailed it in connecting almost everyone in Korea through KakaoTalk. Another core role of the messenger is to help users to consume content in a convenient manner.

TalkChannel, a service that lets users see images and videos directly on the messenger, for instance, received lots of negative feedback at first. The number of subscribers for the service, however, has grown to 27 million now.

We are not satisfied with the status quo and we think we can do better. A myriad of content available on Daum can help us do better.

As for the name change, I do not think it will help Kakao in achieving outstanding business results.

Kakao CEO Rim Ji-hoon

TI: Could you tell us about Kakao’s technical capability and investment plans for AI?

Rim: Kakao has been developing AI technology for years and applying it to portal services since 2010, such as a voice recognition-based search solution, which was the first of its kind in Korea at the time. 

We have been doing research on machine learning, which plays an important role in voice recognition, and speech synthesis and understanding. Machine learning solutions for personalized services were applied to the portal three years ago. The one that identifies flowers was unveiled in 2015. Google recently announced Google Lens, which identifies flower species, and received the spotlight. 

The pilot version of Daum’s AI-based translation service, launched on Sept. 20, has shown great performance compared to other translation engines.

Investments in AI made by Kakao Investment, Kakao Brain, and K Cube Ventures are not intended to utilize the tech immediately, but they are being made from a long-term perspective.

TI: Can you compare Kakao’s chatbot services with those of rivals?

Rim: It has been more than a year since chatbots came in the spotlight, but the services are still incomplete, to say the least. Developing a software that simply gives answers to user questions is easy, but creating a chatbot that can converse like a human, which we are currently trying to do, is a totally different story.

What matters is how to create a successful useful case for a chatbot solution together with partners, not how fast you roll out such solution. It is not appropriate for me to comment on services of other firms.

TI: What is your take on criticism of Kakao’s unprofitable O2O businesses and you, as CEO, for making trials and errors in the sector?

Rim: I agree with the criticism. I learned a lot from running the chauffeur service KakaoDriver. Kakao believed that it could help individuals, who make their living with the chauffeuring service. 

Despite moderate growth, the service did not meet our initial expectations and is now considered a failure. It was my mistake. I had assumed the service would be welcomed with open arms in the market. In the end, each driver had different ideas and needs that Kakao did not satisfy. 

Previous plans to launch other O2O apps, such as the one for maid services, consequently came to a halt. It was a painful decision to scrap plans that we had long prepared. Instead of launching our own app, we later decided to be a platform operator for other players. I admit there was a time of trial and error, but that experience helped us realize what we should focus on.

By Kim Young-won (wone0102@heraldcorp.com)