Golden Spoon Investment Portfolio - Chapter 247

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This chapter was translated by Lunox Novels. To support us and help keep this series going, visit our website: LunoxScans.com
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247. I actually think we came out ahead on this deal.

“Please drive safely!”

Accompanied by the farewells of Ahn Byung-seok and Yoon Nam-ho, who had escorted me down to the first floor, the Mercedes sedan glided away from the Seocho Startup Support Center. As I turned onto the main road from the side street, Yu Hyun-seok, seated beside me, cast a cautious glance before carefully breaking the silence.
As we merged onto the main avenue from the side street, Yu Hyun-seok, the department head beside me, stole a nervous glance before speaking hesitantly.

“Um, sir.”

I turned my head away from the window, where I had been gazing out while reclining against the plush rear seat.

“What is it?”

Yu Hyun-seok hesitated briefly before speaking his mind frankly.

“I’m somewhat concerned that you’ve made the investment decision too hastily.”
“Does it seem that way?”

Seeing that I wasn’t particularly upset, Yu Hyun-seok gathered more courage to continue.

“I have doubts about 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 securing half the patent rights. It seems like a losing proposition. Wouldn’t it be wise to reconsider the terms even now?”

Since we had only made a verbal agreement without signing a formal investment contract, we could still adjust the proposed conditions.

“You think we’re making a losing deal?”
“I do.”
“I actually think we came out ahead on this deal.”
“?”

I smiled faintly as I observed the bewilderment on Yu Hyun-seok’s face.

“Just as the Walkman elevated Sony into a global electronics powerhouse, the MP3 player will become a symbol of the digital era that lies ahead.”
“….”
“If we play a significant role in creating such an innovative product, it will establish Daehung Venture Capital’s name not only throughout Korea but across the entire world. Naturally, enormous investment returns will follow.”

I painted the best-case scenario with unwavering conviction.

“Of course, Digital Wave is a small venture company, but President Ahn Byung-seok and all the engineers there are passionate and exceptionally talented. Consider that Apple and Microsoft, now famous global IT giants, started as small ventures in garages. If they could do it, there’s no reason Korea can’t produce innovative products like that.”

I could speak with such confidence because I knew from my previous life that Digital Wave would achieve what major electronics companies couldn’t—becoming the world’s first to succeed in this field.

‘So naturally, we’ll be able to produce an MP3 player this time too.’

Moreover, this time I would provide generous funding, so perhaps the prototype might emerge even faster than in the original timeline.
Yu Hyun-seok, on the other hand, remained skeptical about whether Digital Wave could actually develop an MP3 player, but when I displayed such strong conviction, he refrained from voicing further objections.
Instead, he cautiously brought up a different concern.

“If the MP3 player is indeed such a lucrative product as you say, the patent rights would belong to the company anyway. Wouldn’t it be better to simply acquire Digital Wave’s equity stake?”

At first glance, Yu Hyun-seok’s argument seemed reasonable—company equity appeared to hold greater value.
But I shook my head with a slight smile.

“It may seem that way, but once you examine it carefully piece by piece, you’ll realize that patent rights hold far greater value.”

Yu Hyun-seok paused in thought, then his expression showed he wasn’t convinced.

“Perhaps I lack sufficient knowledge, but I’m not entirely persuaded.”
“Hmm. Would you like me to explain with an example?”

I unfastened the buttons of my jacket and settled into a more relaxed posture.

“What do you think will happen if Digital Wave successfully develops an MP3 player and releases a product that becomes hugely popular?”

Yu Hyun-seok tilted his head slightly, as if unsure what I was asking.

“If it sells well, they’ll earn substantial profits, won’t they?”
“For a while, yes. But soon, counterfeit copies of Digital Wave’s products will flood in from across Korea and the world.”
“Hmm… Yes, if something becomes profitable, that’s bound to happen.”

Yu Hyun-seok answered with his brow slightly furrowed.
When one thinks of counterfeits, China comes to mind, but unfortunately, it was Korean companies themselves who recklessly copied MP3 players and made things difficult for Digital Wave.

‘Rather than helping each other, we’re literally cannibalizing our own.’

Even in my previous life, I’d often seen how whenever one industry thrived, people would rush in en masse, ultimately destroying the market itself—perhaps it was a chronic problem unique to Korea.

“But isn’t that what patents are for—to prevent exactly that sort of thing?”
“Of course, but the ideal and reality rarely align, do they?”

Seok-won continued, observing Yu Hyun-seok’s furrowed brow.

“If companies producing knockoff products file invalidation lawsuits against Digital Wave’s patents while continuing to sell their products, it becomes nearly impossible to respond effectively.”
“Ah, so that’s how they do it.”

Yu Hyun-seok let out a low exclamation.
It was a vicious tactic, yet one so commonly employed in the market that it proved devastatingly effective.

“Among the companies producing similar products, there will certainly be major corporations like Saesung and Hyunwoo. A small venture like Digital Wave won’t find it easy to mount a proper defense. Even with our backing, the situation remains dire.”

Yu Hyun-seok nodded heavily, acknowledging the limits that even Daehung Venture Capital, despite its corporate backing, could not overcome.

“In the process, Digital Wave won’t be able to focus properly on producing and selling MP3 players, and the likelihood of severe operational difficulties increases substantially.”
“True as that may be, litigation can’t drag on forever—eventually a verdict will come. Then we simply ensure those companies producing knockoffs never manufacture the product again.”
“By that point, enormous time will have passed, and they’ll have already found ways to circumvent the patent cleverly. It’ll be a hollow victory.”

Yu Hyun-seok hesitated briefly before the entirely plausible scenario, then immediately countered.

“Regardless, it would be difficult to completely avoid the foundational patents, so couldn’t we simply file suit against them instead?”
“We could certainly prevent other companies from manufacturing and selling MP3 players that way. But that would be the worst possible strategy.”
“Why do you say that?”

Yu Hyun-seok regarded him with a puzzled expression.

“Because monopolizing the patent might benefit us in the short term, but ultimately it would shorten the lifespan of the MP3 player itself.”

Seok-won shifted his posture and suddenly broached a different subject.

“Are you familiar with the Betamax versus VHS competition?”
“VHS—you mean the tape format we used for watching videos?”

Seok-won nodded slightly.

“Exactly. Most people don’t know this, but videotape originally had two standard formats: Betamax, made by Sony, and VHS, made by JVC.”

Though Yu Hyun-seok didn’t understand why Seok-won had suddenly shifted to discussing videotapes, he listened attentively.

“Sony’s Betamax was not only developed a year earlier than VHS, but it was also smaller with superior technical specifications in picture quality and features. However, as you already know, it was JVC’s VHS format that ultimately won the standards war. Why do you think that happened?”
“Well….”

Seok-won lowered his voice and explained the reason seriously.

“Unlike Sony, which adopted an extremely strict and closed licensing policy, JVC was generous and permissive with their licensing, allowing almost everything. This had a decisive impact—despite Betamax being technically superior in performance, VHS was able to win the standards war and capture the entire market.”

Seok-won continued speaking while watching Yu Hyun-seok.

“The MP3 player is exactly the same. If we grip our patents tightly and act greedily, what do you think will happen?”
“…We might end up with a result like Betamax.”

Yu Hyun-seok answered after a moment of thought, a beat late.

“Exactly right. We need to spread the MP3 player as quickly and widely as possible so consumers will use it. If we try to keep everything for ourselves, we might end up losing everything instead.”

From Seok-won’s perspective, who also held the original MP3 technology patents, the faster and wider the MP3 player spread, the greater his advantage.

‘Besides, the MP3 player is destined to disappear into history once smartphones arrive anyway.’

Just as the MP3 player’s emergence had been disruptive and revolutionary, its golden age was remarkably brief.

‘Come to think of it, it’s ironic that Apple is the company that both reaped the greatest profits from the MP3 player and created the smartphone that made it obsolete.’

Compared to Sony, which was passive in developing MP3 players for fear of damaging their flagship products, or Kodak, which developed digital camera technology first but then shelved it in a warehouse corner out of fear that film sales would decline, this was a completely different approach.

‘When you look at it this way, Apple—or rather Steve Nolan—really is a remarkable genius.’

Most people would find it difficult to take such bold action.
Seok-won dismissed the tangential thoughts and continued.

“In the end, to avoid killing the goose that lays the golden eggs and to make the MP3 player dominate the market, Digital Wave has no choice but to allow other companies to license the patents we hold. After that, it depends on how President Ahn responds, but Digital Wave’s position will likely diminish considerably given their inferior manufacturing capabilities. Developing a product and actually manufacturing and selling it well are two entirely different things.”

Yu Hyun-seok, who never imagined Seok-won was thinking several moves ahead, stared at him with a look of surprise.

“So your demand for patent rights was made with all this in mind.”

At that, Seok-won’s lips curved into a meaningful smile.

“Exactly. If I held equity in the company, I’d be involved in everything from manufacturing to selling MP3 players, and I’d have to make substantial additional investments.”
“To produce the product, you’d need large-scale manufacturing facilities, so that’s likely what would happen.”

Yu Hyun-seok nodded slightly in agreement.

“With patents, on the other hand, as long as I protect and safeguard the rights properly, I can collect substantial licensing fees every year without lifting a finger. No headaches, and it’s far more advantageous.”

Now understanding the true intention, Yu Hyun-seok let out a small gasp of admiration.

“You’re absolutely right. I had no idea there was such foresight behind this. My thinking was too shallow.”

Seok-won didn’t reproach him, simply issuing instructions with calm composure.

“Finalize the contract with Digital Wave quickly and spare no effort in supporting the successful development of the MP3 player.”
“Understood.”

Seok-won then leaned back into his seat and gazed leisurely out the window.

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This chapter was translated by Lunox Novels. To support us and help keep this series going, visit our website: LunoxScans.com
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