(Samsung Special) Learn from Mistakes, See Future in the Past

“Businessmen should have insight on changes in both local and international community. In order to do so, he or she should first control variables home and abroad, second abandon the reckless greed and thoroughly appreciate their own ability and limit, third shun any expectation on luck, fourth make the most of intuition, and last but not the least prepare for additional scenarios so that one can have another option in case of crisis.” (excerption from Ho-Am Biography)

Ho-Am Byung-chull Lee - founder of Samsung Group - was a man with every quality for a successful entrepreneur. However, even with his business record high of 96 percent in success, Ho-Am also had to go through bittersweet failures which caused him to lose everything he owned and face with the crisis where all the reputation and value he built up went in vain.

Failure is but the threshold of a stepping stone to success.

Ho-Am used to be a young entrepreneur with confidence in managing companies thanks to the previous success in business of rice polishing and transportation. His move was swift and inexorable so Ho-Am decided to invest onto land project as soon as extensive farmland at low price was out in the market due to the exodus of farmers in the late 1930’s.

Within a year, he became a landlord with whopping land of 2 million pyeong by receiving loan from a bank to purchase the land. He thought it would be so easy to make a profit out of the land he bought at such a low price even after deducting cost including wage, loan repayment, and tax. But the aftermath of the unexpected China-Japan War in 1937 forced him to go into liquidation because then colonial government took contingency measures ordering all banks in Korea to stop lending and recollect loans back. As a result, Ho-Am had to repay all the money he borrowed from the bank while the value on his real estate started going down. He had no choice but to sell all his property at a loss. Ho-Am was left with only 20,000 won in cash along with a land with space of 100,000 pyeong.

Ho-Am could taste the sweetness and bitterness in business all at once only after 2 years in real estate. He could have been made a young businessman with fortune if there had not been the outbreak of expected war between China and Japan.

But, Ho-Am put blame on himself for not having insight on what was going on in and around Korean peninsula before the investment, saying that self-conceit invites failure.

This experience gave him a lesson to confront the reality and step back without hesitation when losing is certain in a race.

The second failure came when the country suffered with Korean War in 1950. The North Korean soldiers literally looted all his property and he was left with nothing.

But, every cloud has a silver lining. Even though he had lost all his fortune in Seoul, his three acquaintances down in Taegu- the last resort city for Koreans to stay in safety during the war- gave a hand with a capital of 300 million won. Ho-Am, in fact, entrusted them with a brewery in Taegu that he bought right after the linearization from Japanese rule. Before the war, he was only an owner who used to be least involved with their management in the brewery. They decided to return his trust by providing Ho-Am with a capital to restart the business and left him a big lesson that complete trust draws more than what one is capable of.

His confidence in human being originated from the experience with them and later Ho-Am kept his faith in talents without any second thought until they show any discredit or mistakes.

The last failure which gave him a painful scar came in 1966 when the subsidiary Korea Fertilizer was detected by customs to reportedly smuggle sacks of saccharin, an artificial sweetener widely used in South Korea in the 1960s. The newspapers in the country continued to headline a story about the incident which was said to be smuggling by a conglomerate. Every minute, the politicians tried to find fault with the incident under the label of moral hazard. Even his son and some close aides to Ho-Am were under arrest.

“The prosecution forced to investigate the incident against the rule of prohibition against double jeopardy, which makes it nothing but a maneuvering by some politicians…I strongly believe that the truth of the case will be eventually brought to light,” he exceptionally showed strong feeling against the government. 

However, the incident caused Ho-Am to give up Korea Fertilizer just before the establishment of biggest fertilizer plant in the world.

A series of failures in business life gave him painful but invaluable lessons; Move forward after the thorough research on potential of new opportunity and step back with boldness even after you start the business; Give full trust to talents ; Keep your distance with politicians. 

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