An Investor Who Sees The Future

AMZ operates the world’s largest online shopping mall, accounting for half of all online sales in the US.

MS makes Windows, which holds over 80 percent of the PC operating system market.

Taek-gyu asked.

“Here’s a question. Where do these two companies generate their biggest profits?”

Common sense would make you think that AMZ earns money from its shopping mall and MS from selling Windows. But the answer is…

“Cloud services.”

The reason most people don’t know this is because these services are primarily used by businesses. No matter how profitable a B2B business is, its public recognition is bound to be lower than a B2C’s.

The name of the neighborhood bakery is more familiar than Cargill, which dominates the global grain market, and the name of some loan company promising instant cash is more likely to stick in your ear than RCK Bros, a private equity firm that handles multi-billion dollar M&As.

I probably wouldn’t have known this well either if I hadn’t invested in CarOS or FaceIt. In fact, when it comes to IT, Taek-gyu is more knowledgeable than I am.

While President Ichikawa was off meeting with representatives from Korean game companies, Taek-gyu and I looked up related materials.When you use the internet or social media on your smartphone, you connect to the respective servers to receive information. Therefore, any company that provides an internet-related service naturally needs to have servers.

So, where exactly are these servers?

Some companies keep them in a corner of the office or a basement, while others build dedicated data centers to house them all.

It takes an enormous amount of manpower and money for each company to build, manage, and operate its own servers. The salaries of high-end IT professionals are nothing to sneeze at.

That’s why big IT corporations have jumped into the cloud services business, renting out servers to companies that need them.

You can think of cloud services as a rental business in virtual space.

In the past, to start a business, you had to build your own building in cyberspace, clean it, and even hire security guards to prevent theft or intrusion.

But what if someone built a ton of buildings and started looking for tenants? The tenants can move in and out at any time, cleaning and management are taken care of, and the building is kept safe 24/7.

Of course, you have to pay rent, but it’s much cheaper than building and managing the building yourself.

There are other advantages, too.

If you temporarily need more server capacity for an event, you can pay an extra fee to briefly increase your capacity and then scale it back down. It’s also possible to pay to use programs that are already within the cloud.

Currently, this market is dominated by AMZ and MS.

AMZ, as everyone knows, started as an online bookstore. As they began providing services for e-books and videos, they wondered if they could rent out their surplus server capacity to other companies, which led to the ZWB (Z Web Service) business.

AMZ attracted many companies to its cloud. They even went so far as to run their own online shopping mall entirely on the cloud.

MS was a relative latecomer compared to AMZ.

Satya Shamalan, who succeeded Bill Gates and Steve Ballmer as the third CEO of MS, broke from the old model of relying solely on Windows and Office and plunged into the cloud services market.

As you can tell from his name, he was born in India, spent his childhood there, and later graduated from a university in the United States.

In Korean terms, it would be like someone born and raised in Vietnam or Malaysia becoming the chairman of Seosung Group.

Taek-gyu nodded with a look of deep admiration.

“It’s so different from our country’s chaebol, who struggle to pass down their companies to their children no matter what.”

“It’s the kind of thing that’s only possible in America.”

The idea of not caring about origin or nationality as long as someone has the ability is easy to say, but the United States is probably the only country that actually practices it.

In any case, his appointment as CEO was a stroke of genius.

If not for him, MS would likely have sunk along with declining PC shipments. But as profits from the cloud market grew rapidly, it now vies with AMZ, Gooble, and Enple for the top spot in global market capitalization.

The reason why both the frontrunner, AMZ, and the latecomer, MS, could succeed is that the cloud services market has been growing at a high rate of tens of percent every year.

Recently, it has gone beyond simply retrieving stored data to running entire programs within the cloud itself.

This is thanks to the dramatic advances in communication technology. When the 5G era begins in earnest, data transmission speeds will become even faster, and the cloud services market is highly likely to expand further.

Countless companies are tenants in AMZ’s and MS’s clouds.

The companies we invested in are no exception. CarOS and OTK Games use AMZ’s cloud, while FaceIt and ArcIT use MS’s.

Giant IT corporations like FaceNote and Gooble operate their own data centers on a scale that beggars imagination.

If in the past, a company’s most important assets were its buildings and factories, for today’s companies, it’s data.

If Gooble or FaceNote were to lose all the user information they’ve accumulated, their stock prices would immediately plummet to a tenth of their value.

Conversely, this is also the reason why the big IT companies survived the unprecedented disaster of the ”Big One.”

Data centers are usually built in cold regions where land is cheap. For that reason, there weren’t many data centers within Silicon Valley itself.

Also, before the Big One hit, almost all companies had backed up their data to servers in other regions. (Important data is normally backed up in multiple locations.)

At the time, IT companies even created some heartwarming scenes, lending each other their remaining server capacity.

In any case, for console games, all the information is stored on a CD or Blu-ray. Therefore, you can enjoy the game without an internet connection.

However, mobile or online games require a connection to a server via the internet. The higher the specs and the more users connected, the more capacity is required, and the amount increases exponentially.

Taek-gyu said.

“Each server has a set capacity it can handle, and if you exceed it, it crashes or connections are lost. That’s why large online game companies try to build their own servers for stable operation. When they expand overseas, they entrust it to a local publishing company.”

Shigeru Ichikawa left LinixPentagon due to friction with management. Then, with the support of OTK Company, he created a mobile game.

At that time, our finances weren’t very robust, so instead of building our own server, we used AMZ’s cloud service, ZWS. And the same was true for Lost Fantasy Online.

Since we could save on the costs and manpower for server management and operation, it was a great help in allowing us to focus solely on game development.

For a typical online game, servers are divided by country, but for Seruana, we plan to operate a single, integrated server regardless of country.

The problem is whether the ZWS we are currently using can provide the capacity required for a VRMMORPG. If not, we might have to halt the expansion of the service at that point.

And it’s not like we can tell AMZ, ”Our game might be a huge hit in the future, so you should go ahead and maximize your capacity for us first.”

It was natural for President Ichikawa to be concerned.

Actually, when you think about it, this isn’t just a problem for OTK Games.

CarOS’s autonomous driving system is accumulating a massive amount of data at this very moment, and enough porn to take decades to watch is uploaded to FaceIt every single day. And the customer data from M Pizza, ArcIT’s software, AI, and so on are all in the cloud. And on top of that, there’s the Cainfotainment service.

Everything is literally data.

There’s no need for OTK Company to enter the cloud services market now and compete with existing players, but building our own data center is necessary.

“The problem is, this is no small undertaking.”

A data center isn’t something you can create by just throwing a bunch of servers together.

The most important things are stability and security.

It must not go down or be destroyed, and data must not be leaked through hacking or other means. That’s why companies that provide cloud services stake their lives on stability and security.

The location of the data center is also important.

“Realistically, Korea is not a suitable place to build a data center.”

“Because of North Korea?”

“Well, that’s part of it, but the bigger reason is that with a single word from investigative agencies, companies have to scrape together and hand over every last bit of information they have.”

The prosecution and the National Intelligence Service not only openly requested personal information from companies but also didn’t hesitate to conduct real-time surveillance.

When the controversy erupted, NeoTeen announced that they would immediately delete server data from then on and no longer provide information. After that announcement, the CEO of NeoTeen was not only dragged to a parliamentary audit and publicly pilloried by the ruling party members but was also investigated by the prosecution on suspicion of illegal gambling at a Las Vegas casino.

The government’s basic mindset is that an individual’s privacy can be lightly disregarded for the public good.

Who would build a data center in a country like this?

On the other hand, American companies will never hand over personal information without due legal process. That’s why companies all over the world trust and use the cloud services of MS and AMZ.

***

I asked CarOS, FaceIt, and others for their opinions on the establishment of the OTK Data Center (tentative name).

[There’s no problem for now, but I believe it will be necessary in the long term. As the number of cars increases, so will the amount of data. We need to build a data center before it’s too late.]

This was the opinion of CarOS CEO Daryl Segan.

[The demand for high-definition porn is increasing. Porn is currently evolving beyond 4K to 8K. We need to create an integrated server that surpasses A-Tube and NetPlay to serve even more porn.]

There’s no need to say which company’s CEO this is, right? He just can’t open his mouth without talking about porn…

We met with President Ichikawa again.

Deciding the initial server capacity is a matter that must be approached with great caution. The most important factor to consider here is the estimated number of concurrent users.

To use a restaurant as an example, if you build a large restaurant expecting many customers but only a few show up, you’ve just wasted money on construction and interior design. Conversely, if you build a small one expecting few customers but hundreds show up, you have to turn most of them away.

“How many concurrent users do you anticipate?”

To my question, President Ichikawa answered cautiously.

“I’m thinking over 20 million.”

“Excuse me?”

When Taek-gyu asked in a dumbfounded tone, President Ichikawa cleared his throat awkwardly.

“Of course, you may think that’s too many. But it’s a fully achievable number.”

Taek-gyu and I looked at each other.

Predicting how big of a hit a game will be is no easy task. However, we already knew that this game would have 100 million concurrent users. Knowing just this allowed us to estimate the required server capacity to some extent.

Before I could open my mouth, Taek-gyu spoke.

“Twenty million is absurd. If you do that, we’ll go bankrupt.”

President Ichikawa desperately tried to persuade Taek-gyu.

“I will definitely make it happen. Please, believe in me.”

“No, what do you mean, a mere 20 million? If we’re going to do this, we should aim for 100 million.”

“...Excuse me?”

This time, it was President Ichikawa’s turn to be shocked.

His eyes went wide and his jaw dropped. Even Team Leader Jung Gi-hong, who was interpreting beside him, was startled.

“One hundred million? Really?”

Taek-gyu nodded.

“Yes. We must assume 100 million concurrent users and build the servers in advance to match. What kind of loss would it be to turn away customers who come to play the game?”

A moment later, after regaining his composure, President Ichikawa said.

“W-wait a minute. One hundred million is too much.”

Taek-gyu gave him a double thumbs-up.

“What are you talking about? The father of Lost Fantasy, Shigeru Ichikawa? Of course it’s possible for you! Leave the data center problem to us and just focus on development. Me and all the gamers of the world will put our faith in you, President Ichikawa! By the way, what’s with that expression? Are you not feeling well?”

“...N-no, I’m fine.”

The legend of the gaming world, Shigeru Ichikawa, looked like he was about to die from the pressure.