Insights From South Korean Unicorn Toss
Fintech is increasingly a global movement. Over 64% of consumers globally have used a fintech product.
Yet, the way fintech startups are built is not uniform on the global stage.
There are now 480 startup ecosystems around the world. For many of these, and as chronicled in my recent book Out-Innovate (HBR Press), entrepreneurs are operating under tougher circumstances, with less resources, infrastructure, or capital, and more precarious environments. But it’s within these constraints, that they reinvent the playbook altogether.
One such entrepreneur is SG Lee, the CEO and Founder of Toss, South Korea’s sole fintech unicorn now valued at $2.6 billion dollars. Toss has become a key financial super app for South Korea. What started as a mobile payments transfer business in 2015, rapidly evolved into a financial supermarket, offering a plethora of products including loans, insurance and savings. Imagine combining the business models of venmo or cash app for money transfers, Mint or Credit Karma for credit management, and more recently expanding into products like Robinhood or Wealthfront for investment management. There are over 40 products total on the platform.
The Toss story offers some prescient insights on the unique strategies global entrepreneurs undertake to survive, scale, and ultimately succeed. Notably, SG demonstrated how to cross-pollinate ideas, foster resilience, find and engage an A-team, and create the enabling ecosystem required for this fintech to thrive.
Introspection, personal resilience and developing mastery is where it starts
For SG, the entrepreneurial journey starts with introspection — the source of inspiration and the force that keeps you going. As he told me: “I urge entrepreneurs in Asia to know oneself. Spend a couple years focusing on introspection. This will lead you to your true interest and journey.”
For SG, this exercise took him from his first career as a dentist, offering the promise of a stable and comfortable life, to becoming a founder. As a dentist, during his three year-mandatory service in a remote part of South Korea (in lieu of military service), SG had plenty of time to reflect – and to realize it’s not what he wanted to be. He wanted to create something novel and have a bigger impact on people’s lives. He wanted to buck the trend, his parents’ expectations and cultural norms. SG would become an entrepreneur.
Of course, introspection and entrepreneurial will won’t alone lead you to find a problem, develop a business model to solve it and build one of the largest South Korean startups.
Perhaps most critically, SG’s story is about personal resilience. As he explains it: “The problem of being an entrepreneur is that a large part of success is determined by luck. Not necessarily your performance…Sometimes everything goes the right direction. Companies succeed in a year. In other cases, it takes years, or even decades. Look at the founder of Kentucky Fried Chicken. He started his business at 62, and it took him over 20 years. You need to be strong enough to keep that up, year after year.”
SG speaks from personal experience. Before founding the highly successful Toss, he founded 8 failed businesses, spanning social media to mobile apps. Toss itself is already over a decade into its story.
Sometimes, a single product isn’t enough — build the ecosystem necessary to truly satisfy customer needs
At the Frontier, entrepreneurs often have to build the ‘full stack’. In some cases, this is a range of enabling infrastructure that must be built in order to offer the final product. Other times, in regions where customers are significantly underserved by modern experiences, to reach customers requires offering an entire ecosystem (much earlier than elsewhere).
Toss is a case of the latter. As SG explains it: “There are so many gaps in the financial services ecosystem in South Korea. For example, only 9% of millennials trade online, and only 10% accessed unsecured loans online vs. over 50% in the US. We couldn’t understand why there was such a huge gap in every market in finance. That’s why Toss could not just be for money transfers.”
Philosophically, Toss is a horizontal ecosystem, allowing others to build on and within their platform. Internally there are over 40 different product groups, all working towards a financial goal. That’s how they’ve come to offer everything from insurance to bank accounts to wealth management.
This flies against Silicon Valley conventional wisdom – to stick to your narrow lane. But when it is not a pool but instead an open ocean, and capturing (and retaining) a customer requires more than one product alone to solve the problem, a wider strategy can be required.
To succeed – find, engage and put trust in an A-Team
SG realized that in order to be successful across multiple financial offerings, product development could not be strictly top-down. There’s no way the original founder and executive team could dictate the full strategy across the breadth of products. Instead, it had to be driven by a range of independent “founding teams” within the Toss ecosystem.
As SG told me, “At first there was one squad. I was product owner and was leading all product and management activities. As we grew bigger, we became more ambitious. We needed the next generation of leaders.” That’s when SG hired CEOs of many startups in the ecosystems. And from there, he let them do what they wanted and lead how they wanted. The foundation was trust.
That’s when things really took off. “While it was hard to delegate, it was a leap of faith.” But the teams adapted their product to customer needs and tailored their positioning as necessary. Investment was then sent to those that succeeded to help them accelerate. To foster the A-Team, for SG “the management team doesn’t have to control things. They just need to align and coordinate. Essentially, they are playing coach.”
There’s no one recipe for success when building a successful fintech – or startup more broadly. But one common thread we see in breakout companies around the world is that it requires different skill sets. It requires rethinking conventional wisdoms, for instance around the full stack, or on the experience to become a founder, or how to build a team.
The ingredients for a successful startup will naturally vary across regions, sectors and industries. But if we’re to takeaway anything from the incredible rise of Toss, it is that resilience, trust and truly understanding customer needs – which may very well be beyond one product or solution — is absolutely key.
What do you think?