Kim Beom-su, the founder of Kakao, is stepping down from his position as co-chair of the CA committee, the control tower of Kakao, for health reasons. This contrasts with the actions of Lee Hae-jin, the founder of Naver, who is returning to the Naver board after seven years. As the current period is marked by upheaval in artificial intelligence (AI), industry interest is growing in how the whereabouts of the founders of the two companies will impact their fates.
Kakao announced on the 13th that founder Kim Beom-su will step down from the co-chair position of the CA committee. The CA committee was launched as an independent body last January to coordinate interests and form consensus within the group. Founder Kim and Jeong Shin-a, Kakao’s CEO, served as co-chairs. In the future, while Mr. Kim will not step down from his position as the head of the Future Initiative Center, which is responsible for Kakao Group's future strategies, he is expected to effectively withdraw from management.
The activities of the Kakao management innovation committee will also end due to the absence of founder Kim. Until now, the management innovation committee, led by Mr. Kim, has spearheaded personnel renewal and governance reform within the Kakao Group. A Kakao official noted, "Founder Kim has recently received an early diagnosis of bladder cancer and must focus on treatment, such as surgery and hospitalization, for the time being," adding that "since CEO Jeong is already leading the current issues of the entire group, any changes in management are unlikely to be significant."
◇ Kakao’s long road ahead… it may fall behind due to founder's absence
The industry perceives Kakao's current situation as challenging. At this point, transitioning into the AI era on mobile platforms means that the absence of a founder capable of swift decision-making could affect the company's fate. The founder's absence is deemed painful for Kakao, which needs management innovation, such as rectifying its lagging AI business and reorganizing non-core subsidiaries. Mr. Kim, as Kakao's largest shareholder, holds authority to make important decisions regarding mergers and acquisitions (M&A), the sale of non-core businesses, investments, and management system reforms. Although CEO Jeong will lead Kakao in a sole-chairman system, Mr. Kim’s consent will still be necessary for substantial decisions.
The most concerning aspect is Kakao's AI business. Although Kakao has recently announced collaboration with OpenAI and is seeking breakthroughs for business innovation, no concrete results have emerged yet. The fact that CEO Jeong is not a technical expert is also cited as a weakness in advancing Kakao's AI business.
As founder Kim steps back from the front lines of management, the momentum for innovation is also expected to diminish. Kakao is in the process of spinning off the portal it acquired in 2014. The spin-off is seen as a measure aimed at a potential sale, according to industry perspectives. When Kakao acquired the portal, its search market share exceeded 30%, but it has recently fallen below 3%.
Government regulatory barriers are also challenges that Kakao must overcome in promoting its AI business. For instance, on the 12th, the Korea Communications Commission adopted regulations regarding Kakao's AI friend service "Kanana," which is slated for release this year. The commission decided that before the launch of Kanana, Kakao must establish safeguards to prevent disclosure of users' personal information and obtain separate consent when using user conversations for internal learning.
Founder Kim's legal risks have not yet concluded. He was indicted last July on charges of manipulating stock prices of SM Entertainment and was released on bail after 100 days in October. However, he is currently undergoing trial while remaining free, and legal experts believe that the deterioration of Mr. Kim's health may make it difficult for him to attend court, which could delay the first trial ruling. It suggests that legal risks could lengthen.
◇ The return of Lee Hae-jin accelerates the "management clock" at Naver
Naver's situation is the opposite of Kakao's. Founder Lee Hae-jin is slated to return on the 26th of this month. With his background as a developer, Mr. Lee's return is expected to speed up decision-making across Naver's management and enhance innovation in technical areas.
For example, it was Mr. Lee who directed the development of the global messenger "Line," which has more than 300 million users worldwide, primarily in Japan. After the Great East Japan Earthquake in 2011, as existing communication networks were paralyzed, the need for an internet-based communication tool grew. Mr. Lee initiated the urgent project to develop "Line," which was beta-launched in Japan within about 40 days. That is why it is said that the rapid decision-making of Mr. Lee enabled Line to become Japan's national messenger.
With Mr. Lee's return on the horizon, the progress of the projects Naver is pursuing is also accelerating. A notable example is the internet shopping business. Naver launched an AI-based shopping app on the 12th. Last year, the revenue of Naver's commerce division (including Naver Shopping) amounted to 2.923 trillion won, which accounted for about 28% of the total revenue (10.7377 trillion won), making it a significant part of Naver's business.
While Naver surpassed the 10 trillion won revenue mark for the first time last year, there are concerns inside and outside the company about the need for business strategies to sustain growth. Although Naver has been developing its own AI technology, it has yet to yield substantial results. Naver is recognized for its technological advancement, having unveiled "HyperCLOVA", a massive language model (LLM) AI model, in 2021, but it is still far from achieving performance on par with global generative AI models like ChatGPT, R1, and Gemini.
Kim Kyung-won, a distinguished professor of management at Sejong University, said, "When a founder returns to lead a company, the speed of decision-making quickens. However, if the founder governs the company solely based on their own ideas, it could become detrimental." Professor Kim added, "The company that successfully leverages the advantages of founder management while minimizing disadvantages will win in competition."
On that day, Kakao's stock price dropped 2.15% to 43,150 won, while Naver's rose 0.96% to 216,000 won.
Meanwhile, founders Kim Beom-su (Industrial Engineering) and Lee Hae-jin (Computer Science) are freshmen at Seoul National University in 1986. In 1998, when founder Kim launched Hangame, founder Lee established Navercom, and the two began their paths as managers. In 2000, Navercom and Hangame merged to form NHN, and they served as co-CEOs. However, as founder Kim left NHN in 2007, the two went their separate ways.