Consistently placing second in terms of worldwide R&D spend, there’s a reason innovation springs to mind when thinking about Samsung.
The South Korean conglomerate spent $13.4 billion in 2013, representing 6.5% of its total revenue finding new ways to grow, innovate and improve.
And with all that money spent on growth, it turns out that Samsung wants to be more like a startup.
After all, startups are unparalleled when it comes to agility and innovation.
Its response was to open the Samsung Global Innovation Centre, an accelerator that would allow it to work more closely with the talented entrepreneurs and individuals lining the streets of Silicon Valley.
It turns out and old dog can be taught new tricks.
Hot Topics caught up with the Samsung GIC COO Marc Shedroff to find out more.
1. This is the first COO role you have held. What attracted you to it?
I joined David Eun, the head of the Global Innovation Center (GIC) at Samsung over three years ago to build the U.S. team. As a result, I started and have led most of the groups inside the Samsung GIC at some point.
In many ways my current role is one I’ve had since the beginning – we just happened to formalize it recently. The attraction for me was to help define this new organization designed to nurture entrepreneurialism and new ways of thinking, and ultimately integrate that innovation back into Samsung.
An exciting part of GIC is that we have the creative spirit of a startup, but the muscle of a major tech leader. My background has spanned from startups to larger companies like Google and Time Warner, so I appreciate the uniqueness of this role and am able to tap into a variety of perspectives to help bring it all together.
On a personal level, I also wanted to evolve my own career from managing deals and deal teams to be more of a General Manager, helping to oversee all aspects of the business, as I do today.
2. What are the big problems Samsung GIC is trying to solve?
GIC is working to support a specific mission within Samsung— which is to continue to evolve from purely a hardware-driven company to one that also leads in software and services.
Our charter is to tap into the culture and innovation of places like Silicon Valley and New York and do so in a way that has an impact within our global company.
As far as solving specific consumer problems, we’re primarily looking across a range of areas where we can leverage Samsung’s hardware expertise to either bolster our core business or create software businesses. For example, we’ve invested in IoT and smart home technology with SmartThings, mobile payments with LoopPay (now Samsung Pay), and virtual reality to name a few.
We have also purposely kept ourselves unconstrained, exploring everything from digital health to security.
3. How important is this to Samsung’s wider business strategy?
As a company, we need to deliver the best possible experience to our users by creating a thoughtful integration of hardware and software.
Some of that software may come from Samsung and others from partners, but creating that integration is exactly the focus of Samsung GIC.
For example, software technology developed in our Accelerators has played a pivotal role in our recent Smart TV efforts.
4. What does innovation mean to Samsung?
Samsung has innovation and entrepreneurship in its DNA, and a strong commitment to R&D and innovation.
In 2014, the company invested $13.7 billion to develop future technologies and registered 4,952 new patents in the U.S. alone, ranking Samsung Electronics as the second-highest patent winner in the U.S. for the ninth consecutive year.
Typically R&D refers to a traditional technology lab or research facility. What’s unique from Samsung GIC’s perspective is that we’re bringing a new level of commitment to what we call an open innovation approach.
This means partnering with other companies, startups, and entrepreneurs to drive that innovation.
5. Has anything surprised you in your time at Samsung?
I’ve experienced first-hand the challenges that startups face when trying to work with large companies. For example, just finding the right person inside a large company can be incredibly taxing.
So when we established Samsung GIC, part of the goal was to structure ourselves to work with startups and entrepreneurs in whichever way they want to engage with Samsung.
We can execute these partnerships directly or help navigate these startups to the right folks in our business units.
6. Many corporates have created similar Innovation Centers. What is the key to making them successful?
For us, it’s two things. First, we have the flexibility to work with entrepreneurs in a variety of ways, whether it’s via an investment, partnership, or acquisition.
Another key is to be incredibly open and transparent about what you’re trying to achieve.
Samsung GIC can only be successful if our incentives are aligned with those of the companies we are partnering with, so we spend a lot of time talking to entrepreneurs about what they can expect from GIC. Then, we remove distractions and empower our teams to deliver.
7. Samsung GIC also operates a venture investments team – what type of companies do you target?
We invest in early stage startups that have the potential for strategic partnerships with our business units.
Funding tends to range from $250,000 to $3M in Seed, Series A, and Series B rounds.
The team is interested in discovering new innovation in various fields, including virtual reality, augmented reality, artificial intelligence, connected car, digital health, big data, Internet of Things, and security.
We’ve made roughly 30 investments since 2012.
8. Which is more important for your investment team – financial returns or integrating the technology into the Samsung platform?
We are strategic investors.
Of course we care about positive financial returns from our portfolio, but the main barometers of success are the impact that our investing activities have on our core businesses and the value we bring to startups as an early-stage investor.
9. What are some examples of startups that have successfully worked through GIC and with parts of Samsung?
SmartThings, a company GIC acquired last summer, has already seen impressive growth and acceleration since joining GIC; and they are now the primary platform for Samsung’s broader IoT strategy.
The mobile wallet company, LoopPay, started its journey with us as an investment and now has been acquired by Samsung’s mobile division.
We’ve also incubated our own startups in the Samsung Accelerator. One example is Pixie, a smart TV publishing platform that was acquired by the Visual Display Business and later integrated into Samsung’s flagship TVs.
10. What does success ultimately look like for GIC?
Success is about delivering exciting new technologies that support a thoughtful integration of software and hardware on Samsung devices.
We’re also playing a key role in infusing a greater degree of open innovation into the Samsung culture.
Like many of us at Samsung GIC, I only get more motivated when I see truly game- changing startups like LoopPay and SmartThings become so central to Samsung’s product roadmap.