m a r k a n d e y a

Thoughts on our Cafe

Posted by Brian on May 27, 2005

It has been six months since my business partner and I closed down our game café. The fallout from our failed venture has settled, giving us room to look back on the situation with a sense of detachment on what went wrong, and what there was to be learned from our failed business. Being an optimist, I felt compelled to analyze the situation because such an analysis would allow me to extract something positive from such a negative situation. Yes, mistakes were made, but what’s done is done. The important question to ask now is, “What can I learn from those mistakes?”

To quickly summarize, a Korean business partner and I decided to pool our resources and start Korea’s first internationally owned and operated board game café. We believed that an internationally owned café would have significant competitive advantages over its competitors (namely, a broader possible pool of customers, Koreans plus foreigners in Korea, who might be attracted to the café due to having a foreign owner; and access to foreign resources that other competitors might find difficult to exploit). With this strategy in mind, we decided to set up our business in Hongdae, an area well known to foreigners in Seoul. We began our enterprise with great confidence in our future success.

The problems began almost immediately. The furniture we ordered wasn’t nearly as nice as we had expected it to be; we had squabbles with other businesses in the building regarding the use of space in front of the building for advertising; and the owners of the building, who lived just above us, turned out to be very uncooperative. We thought these snags were merely examples of what one might charitably describe as a “rocky start,” but these problems, along with others, proved to be the rule rather than the exception. As time went on, we saw that our plans to attract foreign customers were not working, despite our best efforts at targeting the foreign community through online advertising and ads in English-language periodicals. With very few foreign customers coming in, we found ourselves competing with every other café in the neighborhood for the small number of Korean customers, a number that slowly shrank as the game café trend slowly died. Business at our café peaked in May of 2004 (when we actually turned a slight profit), but it was all downhill from there. We closed our doors at the end of November of 2004, at the end of our one-year contract. We were unable to find another tenant to take over the place, so we lost all of our investment money.

In hindsight, we made two critical mistakes. First, it was a huge misjudgment to think that foreigners could be counted on as potential customers. A huge factor in the initial success of game cafes in Korea was the nature of friendship among young Koreans. Korean friends will do nearly anything as long as it is done together, and there is a lot of pressure from within the group to conform to what the majority wants to do. Westerners are very different, however, and are quite willing to splinter the group so that everyone can do what he or she wants to do. There may have been a few Westerners who were interested in coming to our café, but it’s simply not the kind of activity that they could drag their friends to. Second, we underestimated the amount of operating capital we would need, putting us in a bit of a bind from the very start. We just did not have the luxury to search far and wide for a place to set up our business (and this was also partly due to the relatively late point in the industry cycle at which we started our business). We did not have a lot of time so we had to rush, and we ended up choosing a pretty lousy location to establish a business. Because of these two mistakes, and others, our business suffered.

What did I learn from my experience running the café? That operating a small business really is a complex endeavor, fraught with unexpected challenges. I also learned a more philosophical lesson on the cold, harsh reality of the limits of optimism and hard work. Being an American, I’ve always felt that if one simply worked hard enough (and stayed positive), one could accomplish anything. While being a nice sentiment, such a rosy view is simply not true, especially in the dog-eat-dog world of business. Companies sell products and services, not optimism or hard work, so if there is little demand for your product or service among consumers, there is little a small-business owner can do to recover (short of shutting down and then starting up a different venture). Optimism and hard work can help to make products or services better (and are, I think, foundational requirements for success) but neither hard work nor optimism can compensate for a lack of demand. Due to bad decision-making, we became stuck selling a poor product during the downward turn of a trend industry, and no amount of optimism or hard work on our part could have changed the operant economic dynamics. This realization has given me a keener business sense than I had two years ago, as well as a more realistic view of how the real world operates.

On a more positive note, I learned the true value and strength of my relationships with family and good friends. My family was incredibly supportive of my plans and helped me immensely with their encouragement and financial aid. My many friends in Korea were also helpful with both their business (at a discount, of course) and their efforts at bringing more customers into the café. In the end, it turned out to be one of the more difficult periods of my life, but my friends and family helped me make it through the darkness, and for that they have my eternal gratitude.

People around me tell me they are proud of me for taking such a risk. After all, they explained, it takes a lot of guts to start up a new business in a foreign country. All that support aside, I am (at the risk of sounding immodest) proud of what I did, regardless of the outcome. I had a dream and did everything I could to make that dream come true, but things didn’t work out. Nevertheless, I can sleep peacefully at night knowing I gave it my all, and that’s a good feeling.

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