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CH247 | GSI
🕑 Added 2025-03-24 04:22:37 +0000 UTC"Travel safely!"
With the send-off from CEO Ahn Byung-seok and Director Yoon Nam-ho, who had followed him down to the first floor, Seok-won’s large Mercedes sedan glided smoothly away from the Seocho Startup Support Office.
As the car exited the side road and merged onto the main street, Yoo Hyun-seok, seated beside him, stole a cautious glance at Seok-won before carefully speaking up.
"Excuse me, sir."
Leaning back against the plush rear seat and gazing out the window, Seok-won turned his head.
"What is it?"
After a slight hesitation, Yoo Hyun-seok finally spoke his mind.
"I’m a little concerned that you made the investment decision too hastily."
"Does it seem that way to you?"
Noticing that Seok-won didn’t seem particularly offended, Yoo Hyun-seok gathered the courage to elaborate.
"I doubt whether Digital Wave truly has the capability to develop an MP3 player. More importantly, we’re covering almost the entire development cost, yet we’re only receiving half of the patent rights in return. That seems like a highly unfavorable deal for us. Wouldn’t it be wise to reconsider the terms before finalizing the investment?"
Since no formal investment contract had been signed yet—only a verbal agreement—there was still room to renegotiate the terms.
"Do you really think this deal puts us at a disadvantage?"
"Yes, I do."
"I see it as a gain rather than a loss."
"…?"
Seeing the puzzled expression on Yoo Hyun-seok’s face, Seok-won offered a faint smile.
"Just as the Walkman turned Sony into a global electronics giant, the MP3 player will become an iconic product in the upcoming digital era."
"……."
"If we play a major role in bringing such an innovative product to market, Daeheung Venture Capital won’t just make a name for itself domestically—it’ll gain global recognition. Naturally, substantial investment returns will follow."
With a look of conviction, Seok-won painted the best-case scenario.
"It’s true that Digital Wave is just a small, obscure startup. But CEO Ahn Byung-seok and his team are passionate and highly skilled engineers. Think about it—world-renowned IT companies like Apple and Microsoft also started as small ventures in tiny garages. If they could succeed, why should Korea be any different? Who’s to say we can’t produce an equally groundbreaking product?"
The reason Seok-won could speak with such confidence was that, in his previous life, he had already witnessed Digital Wave succeed where even major electronics companies had failed.
‘They made it happen once, so there’s no reason they won’t do it again this time.’
What’s more, with Seok-won providing ample financial support, there was even a chance the prototype could be completed sooner than it had in the original timeline.
Yoo Hyun-seok, however, still wasn’t convinced that Digital Wave had the capability to develop an MP3 player. But seeing Seok-won’s unwavering faith, he hesitated to argue further.
Instead, he cautiously brought up another point.
"If MP3 players are really going to be that profitable, wouldn’t it be better to acquire shares in Digital Wave rather than just securing partial patent rights? The patents will eventually belong to the company anyway."
At first glance, owning company shares seemed like the more valuable option, making Yoo Hyun-seok’s argument sound reasonable.
But Seok-won shook his head with a knowing smile.
"It might seem that way, but if you analyze it carefully, you’ll realize that holding patent rights is far more valuable."
After pondering for a moment, Yoo Hyun-seok still looked unconvinced.
"Maybe I just lack the knowledge, but I’m struggling to understand your reasoning."
"Hmm. Let me explain with an example."
Loosening his posture, Seok-won unbuttoned his jacket and leaned back comfortably.
"Let’s say Digital Wave successfully develops an MP3 player, launches it, and it becomes a massive hit. What do you think will happen next?"
Yoo Hyun-seok tilted his head, unsure of what Seok-won was getting at.
"If it sells well, they’ll make a ton of money. Isn’t that a good thing?"
"For a while, yes. But soon, not just in Korea but all around the world, knockoff versions of Digital Wave’s product will flood the market."
"Hmm… I suppose that’s inevitable if there’s money to be made."
Yoo Hyun-seok answered with a slight furrow of his brow.
When thinking of knockoff products, China would typically come to mind first. However, at this point in time, the companies that made things difficult for Digital Wave by aggressively copying its MP3 player weren’t foreign—it was other Korean companies.
‘Instead of supporting each other, they ended up cannibalizing their own industry.’
Even in his past life, Seok-won had witnessed countless instances where a single industry’s success would cause a flood of imitators, ultimately ruining the market. It was a recurring issue in Korea—perhaps even a deeply ingrained structural problem.
"But isn’t that exactly why patents exist?"
"Of course. But as you know, there’s always a gap between ideals and reality."
Seok-won continued, watching as Yoo Hyun-seok knitted his brows.
"If rival companies start selling similar products while simultaneously filing lawsuits to invalidate Digital Wave’s patents, it’ll be difficult to respond effectively."
"Ah! I see… so that’s how they could do it."
Yoo Hyun-seok let out a low exclamation.
It was a nasty trick, but one that was commonly used in the business world because it worked.
"Some of those companies producing knockoffs will likely include major corporations like Saseong or Hyunwoo. A small venture like Digital Wave won’t stand much of a chance against them, even if we support them from behind the scenes."
Even though Daeheung Venture Capital was backed by a large conglomerate, there were limits to what they could do. Yoo Hyun-seok nodded gravely in agreement.
"While all this is happening, Digital Wave will struggle to focus on MP3 player production and sales, making it much harder for them to stay afloat."
"That may be true, but lawsuits don’t last forever. Eventually, a ruling will be made, and once that happens, those knockoff companies won’t be able to manufacture their products anymore."
"By then, a significant amount of time will have passed. And at that point, those companies will have likely found ways to bypass the patents, allowing them to continue producing MP3 players through legal loopholes. In the end, it would be a hollow victory."
Faced with this realistic scenario, Yoo Hyun-seok hesitated briefly before offering a counterargument.
"Even so, completely avoiding the core patent would be difficult. In that case, wouldn’t it be better for us to file lawsuits instead?"
"Sure, we could try to stop other companies from selling MP3 players that way. But that would be the worst possible strategy."
"Why do you think so?"
Yoo Hyun-seok looked at him, puzzled.
"It might seem beneficial in the short term, but monopolizing the patent would ultimately shorten the MP3 player’s lifespan as a product."
Straightening his posture, Seok-won suddenly brought up a seemingly unrelated topic.
"Are you familiar with the Betamax and VHS competition?"
"VHS? You mean the videotapes we use to watch movies?"
Seok-won nodded slightly.
"That’s right. Not many people know this, but there were originally two competing video tape formats—Sony’s Betamax and JVC’s VHS."
Though unsure why Seok-won was suddenly talking about videotapes, Yoo Hyun-seok remained silent and listened.
"Sony’s Betamax was released a year earlier than VHS. It was also smaller, had better picture quality, and was technically superior in almost every way. Yet, as we all know, the format that won the standardization war was JVC’s VHS. Why do you think that happened?"
"I'm not sure..."
Lowering his voice, Seok-won seriously explained the reason.
"Unlike Sony, which enforced a strict and closed licensing policy, JVC took a much more open approach, freely allowing others to use its VHS format. This had a decisive impact—despite Betamax being superior in terms of performance, VHS ultimately won the battle and took over the market."
Seok-won continued, looking at Yoo Hyun-seok.
"The same logic applies to MP3 players. If we hold onto our patents too tightly and get greedy, what do you think will happen?"
After a moment of contemplation, Yoo Hyun-seok responded, a beat late.
"…We could end up with the same fate as Betamax."
"Exactly. Our priority should be to spread MP3 players as quickly as possible so consumers adopt them. If we try to keep everything for ourselves, we might end up losing everything instead."
From Seok-won's perspective, holding key MP3 technology patents meant that the faster and wider MP3 players spread, the more profitable it would be for him.
'Besides, MP3 players are destined to disappear once smartphones take over anyway.'
As revolutionary and disruptive as MP3 players were, their golden age was astonishingly short-lived.
'Come to think of it, the company that profited the most from MP3 players and then ultimately rendered them obsolete was the same—Apple. How ironic.'
Unlike Sony, which hesitated to develop MP3 players out of fear of hurting its existing product lineup, or Kodak, which invented digital camera technology only to shove it into storage out of concern for declining film sales, Apple had taken a vastly different approach.
'Looking at cases like this, I have to admit—Apple, or rather, Steve Jobs, was truly a genius.'
Most people wouldn’t have had the audacity to make such bold moves.
Shaking off his brief digression, Seok-won refocused.
"In the end, to let MP3 players dominate the market without killing the golden goose, Digital Wave has no choice but to license its patents to other companies. What happens next will depend on how CEO Ahn handles it, but given Digital Wave’s weak manufacturing capabilities, its market position will likely shrink. Developing a product and efficiently mass-producing and selling it are two entirely different things."
Yoo Hyun-seok, who had never imagined Seok-won had thought this many steps ahead, stared at him in shock.
"So… when you requested control over the patents, this is what you had in mind all along?"
Seok-won responded with a knowing smile.
"Exactly. If we had taken company shares instead, we would’ve had to be deeply involved in production, sales, and additional investments."
"That makes sense. Manufacturing would require large-scale production lines, after all."
Yoo Hyun-seok nodded in agreement.
"On the other hand, if we focus on protecting and managing patent rights, we can simply sit back and collect substantial licensing fees every year. No headaches, no risks—just steady income. Isn’t that a much better deal?"
Realizing the true extent of Seok-won’s strategy, Yoo Hyun-seok’s mouth fell slightly open in admiration.
"You're absolutely right. I hadn’t considered it from this angle. My thinking was too narrow."
Without criticizing him, Seok-won simply gave a calm directive.
"Finalize the contract with Digital Wave as soon as possible and provide them with whatever support they need to successfully develop the MP3 player."
"Understood."
With that, Seok-won leaned back in his seat and gazed leisurely out the car window.
