There is a new Korean “Unicorn” (a company valued at US$1 billion): Yello Mobile. Founded in August 2012, Yello Mobile is a company that bought 61 mobile companies just last year in Korea. This might make you wonder if it’s really a startup. Yes and no. The company has became huge, with 74 companies in its portfolio, but it tries to retain the startup culture and managing style and prevent having a centralized culture among its divisions to avoid the bureaucracy endemic to large companies.
Last year, Yello Mobile received US$100 million investment from Formation8 with valuation at over US$ 1 billion. It helped the company to acquire even more startups and marketing them. The company runs Yellomobile Service Incubating Center, providing startups with services for member development, design, marketing, and operations.
Following this business model, NHN Entertainment, which operates the nation’s top search portal “Naver”, has acquired TicketLink, PNPSecure and GodoMall to keep up with tech trends. This doesn’t always indicate that an acquired company will grow larger or faster, or that it will increase the synergy within the parent company. However, Yello Mobile has helped companies grow even more after its acquisition. For example, COOCHA, the e-commerce service grew from 850,000 monthly active users to 3 million users, and revenues increased from US$160,000 to US$810,000, after acquisition.
Yello Mobile’s name comes from the Yellow Pages phone book – just as Yelp’s does, indicating its aim to be the leading directory of mobile apps. To become a leading mobile company in Asia, the company cherry-picks the best mobile apps based on their operations in SMATO: Shopping, Media, Advertisement, Travel and O2O. Jinsuk Lim, previously founder and CEO of Goodoc, currently works as a CSO in Yello Mobile helping the startups. He introduced some of the startups soon to be available in China, such as COOCHA (mobile commerce), Pikicast (social curation), Dieter (dieting), Malang Studio (morning call service), Jihacheol (subway app), E-motion (web agency), and Hopenmoa and TourBaksa (travel apps). O2O apps include Goodoc (finding nearby hospital services). As Yello Mobile has targeted the broader Asian market, it is planning to work with Chinese third party publishers to help deliver its services.
Lim said that Yello Mobile’s success was due to internal and external factors. Externally, the company has made worked with the market. When the company acquired COOCHA, people wondered if Yello Mobile were a mere bundle of social commerce services. Later the company featured hot deals for its users, riding on the rapid growth of the Korean mobile market.
Internally, the synergy effect among the startups drove company growth. The various subsidiaries cross-marketed and promoted each other, helping them grow together without cost. Also, the advertising companies built a cross-sales strategy, running it on forms of viral marketing, banners, and so on. Later they suggested co-advertisements, which increased efficiency.
By acquiring startups, Yello Mobile not only helps its subsidiaries, but also helps the Korean startup ecosystem as a whole. In fact, Korea’s VCs depend heavily on IPO rather than M&A for investment recovery, according to a Financial Industry report released by Kotra. Their analysis showed that M&A accounted for 14.6% and IPO for 85.4% of exits by June 2013. Lim pointed out, “Given the lack of M&A in Korea, Yello Mobile helps make a virtuous circle in Korea by acquiring companies and helping them grow even more within its ecosystem.”
Image Credit: Yello Mobile
Reporter: Eva Yoo (TechNode)