Freestyle is Korea's popular online game, letting you play street hoops against other users. The news that Freestyle started its beta service in the US reminded me of a meeting that I had with a prominent Silicon Valley VC around February of last year.

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At that time, I met with Peter Fenton, then at Accel Partners and was on his business trip to Asia. Peter is one of the well-known VCs in the Valley, and was recently named as one of top 5 VCs under 40. I gave him a brief overview of the Korean IT and web industry, and asked if he was interested in making any investment in Korea. Immediately after asking that question, I realized that was a bit of a stupid question - Why would a VC who presumably gets hundreds of business plans a day from within Silicon Valley alone bother to invest in Korea? But Peter's answer, to my surprise, was yes - and I could sense it wasn't just a lip service. Peter said he was particularly impressed by the online games of Korea, and is considering an investment in the sector.

I don't know if Peter went on and funded Freestyle or other Korean online games, but I do know that Korean online gaming industry is fascinating enough to draw the attention of Valley VCs, even that of the most prominent ones. If you are familiar with the US street hoops culture, a single five-minute play of the Freestyle game will give you the sense that this thing will surely work in the US, if properly marketed.

Korean cars might not exactly be world-best, but when it comes to the online gaming, Korea rules. It's said that one third of all Starcraft games were sold in South Korea. But what's more mesmerizing than the market size per se is the unique gaming culture of Korea.

This is a true story, and believe me, this will blow you away. In Korea, online games are so popular that many people pay real money to buy virtual items for games. In fact, this "game item economy" is so huge and real that some people even regard in-game properties as a good place for financial investment (real money, of course!). So there was this gentleman who put $200K, which was a large portion of his lifetime retirement pension, into an online game and bought a virtual "castle", hoping for a good monthly return - a property within a popular online game is supposed to earn you nice money, as the "tenants" pay you monthly rents.

What happened the next? The kid who sold the castle at $200K to the gentleman, soon after selling the castle, called in a team of highly skilled players (all of whom are kids barely 15 years old) and won the castle back through a massive in-game battle. The money had already exchanged hands, the castle was conquered in a perfectly legal way - the poor gentleman who lost his $200K couldn't plea to anyone.

So Korea is the place where you could even lose your lifetime pension in an online game. (Hopefully we won't see many US folks losing their 401(k) in Second Life or other online games.) That means Korean online game companies have "seen it all" and possess good experience/skillset with regards to online game services, both development and operation. This might be one reason why VCs around the world, even those from the valley, might be interested in Korean online games.

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