Welcome to the first episode of What’s NEXT, a new podcast from Samsung NEXT exploring the future of technology. In each episode, we’ll share an interview with an expert or startup founder working on the forefront of tech segments like AR/VR, IoT, blockchain, and machine learning.
In this episode, I speak with Samsung NEXT President David Eun about the company’s mission, how we work with startups, and what you can expect in the years to come. As David was also recently named Chief Innovation Officer of Samsung Electronics, we talk about what the role will entail and how innovation happens within the broader organization.
Ryan Lawler: So today we’ve got David Eun, who’s the President of Samsung NEXT and the now Chief Innovation Officer at Samsung. So welcome to the What’s NEXT podcast. Thanks for joining us.
David Eun: Thank you for having me.
Ryan: First of all, let’s start with, what is Samsung NEXT? How did we get started? What’s our mission?
David: So Samsung NEXT is like a startup within Samsung Electronics. And our focus is exclusively on startups. We are looking for new software and services that will complement our hardware and help us redefine in some ways what Samsung could become five plus years out. So for me and for the organization, it’s an affirmation of our mission to really be ahead of the immediate opportunities, to really think about what could be in store for us a few years out.
Ryan: Okay. So what makes this really unique as an innovation group compared to what a few other corporates or, you know, strategic corporate investors might be doing?
David: As an organization we were, I think among the first to focus exclusively as I said, not just on startups but hiring people who had direct experience working in startups. So that we could act as a bridge, not just internally for employees within the company but externally with other startups seeking to work with Samsung. Being a startup ourselves in some ways, meaning we have the type of culture that a startup has, we recruit people who’ve worked in startups, we feel like we speak a common language and have a similar approach to developing products, to identifying potential breakthrough opportunities.
And by doing that we have to strike an interesting balance, which is I believe ultimately what makes us very unique. On one hand we are autonomous and at arm’s length from the main company so we’ve been able, as I said, to develop our own culture and lots of our own practices. But on the other hand, we have what I call the unfair advantage of proximity, meaning we interact with key decision makers, groups at a working level to really understand what are the things that Samsung is really interested in. What are the things that they think are around the corner? And vice versa.
And hopefully, you know, we end up with a situation where we’re able to do things that perhaps a group within the large company wouldn’t be able to do, nor a group completely outside would be able to do. So we’re trying to do the best of both.
Ryan: Right, and trying to bridge that gap.
Ryan: You talk a lot about startups and keep coming back to that. Like, why do we believe that, that’s where the innovation is? Or why are we focused so much on looking externally for that innovation?
David: Samsung Electronics is over 300,000 employees worldwide. For every year that I’ve been at the company, and this is my seventh year, the company spent over $12 billion a year on R&D. So in terms of investing and walking the talk of really looking into what could be innovation from hardware and software, the company has and continues to do that. And do it very well. However, what we’ve pointed out is that historically within software and services, especially consumer facing, most of the innovation has tended to come from startups, and so that’s what our group does. But it doesn’t mean that there isn’t innovation coming from the big company or other big companies or other sources.
Ryan: So you were recently named Chief Innovation Officer at Samsung. What does that mean? From innovation to Samsung, what it means for Samsung NEXT, and how we’re helping you drive that within the broader organization?
David: For me, it means a couple of different things. One is it affirms how important innovation is generally for Samsung. A lot of people don’t know what I told you before, that we invest more than $12 billion a year in R&D. And as Chief Innovation Officer, one of the things that I will be focusing on and increasingly focusing on is trying to develop a vision for what Samsung Electronics could be five years from now and beyond. And this isn’t something that we’ll do in a vacuum obviously. We’ll do it with other colleagues and other senior executives, but understanding what that vision could be and then representing the company and that vision internally and externally as a voice to share and interact with other companies and other influencers in particular areas.
So right now we are looking very closely at IoT, at AI, at AR and VR, Blockchain. And the other thing that we want to do increasingly is to deepen our relationships and interactions with leaders in other businesses, engineering schools and organizations that are also thinking similarly with us about what are the opportunities five years from now, and how might we work together so we can make certain things happen. In some ways, being Chief Innovation Officer is being one of the ambassadors, if you will, of the company to help inform people about what Samsung Electronics is, what’s important to the company and how best we might work together.
Ryan: Right. You mentioned you joined six or seven years ago, so walk me back to that time. What attracted you to Samsung? And why did you decide to join the company at that time?
David: Well, the company is an iconic company with a brand that people understand and respect around the world. And one of the things that really attracted me was the global scale and reach of the company. I think one of the facts that I heard when I was coming in, which I like to share with people, is that Samsung sells close to two TVs a second. And is also the largest, by market share, company for mobile phones.
As someone who spent his career in media and consumer internet services, sometimes you can build great products or have great experiences, but it’s sort of like when a tree falls in the forest, if no one’s there to hear it, if there’s no one there to distribute it or to consume it, then that’s a really big challenge. And so I thought well, since I know media and consumer internet, or I profess to know it, and here’s a company that has built what could be one of the world’s largest distribution platforms for software and services potentially, that could be a really interesting pairing.
Ryan: Okay. It’s my understanding that what Samsung NEXT started out as is not what we’ve become since then. So what was the idea back then?
David: Yeah, true to our self description as a startup, when I first came in we called ourselves the Global Media Group, GMG. And as the name suggests, our focus was gonna be on media and content and services that were specifically related to those areas. And very quickly we realized that while that presented some opportunities, there was a bigger opportunity and a bigger need in software and services broadly speaking. Within which of course you might cover content. But not just that. And so we morphed our way into becoming more of an innovation center. So what we thought is by focusing on what could be medium to longer term, the five year plus period that I had mentioned to you earlier, we could really be thinking about what Samsung could become next and what was next in terms of new opportunities and experiences for consumers. So we’ve gone from being very media focused, pivoted along the way, and now we’re a group that’s focused on any number of software and services.
Ryan: So tell me what’s changed with Samsung since you’ve joined? When we talk about innovation and the way that the company interacts with startups.
David: Well one observation that I’d make right off the bat is that there is absolutely an increased familiarity and comfort with startups at Samsung. And it’s not just because of Samsung NEXT, but just in general. One of the first things I did in my first year when I joined Samsung is we organized a Silicon Valley road trip. What we did is, with the support of the CEO at the time, we identified the top 25 executives globally in the company, and we had them come out to Silicon Valley for a full week, which was a big time commitment, something they’d never done before as a group. And what we did is we lined up different meetings with iconic companies, like Facebook and Google and different types of influencers and investors and people who were involved in all aspects of Silicon Valley life. It could be journalists, it could be people working in HR, you know, recruiters, etc., and we put together a calendar of different types of events and interactions.
And, you know, I think for many of those people who were very familiar with Silicon Valley and a lot of the companies, they saw a different part of Silicon Valley and for a sustained period of time. I think it’s those types of things, not just what Samsung NEXT has done, but what our operating divisions have done to deepen that understanding, and I would say that’s one of the biggest changes I’ve seen in the company. That kind of shift, and that’s been great to see.
Ryan: Sure. It’s my understanding that when you joined, you know, at the time Samsung wasn’t very acquisitive in M&A fashion. They just weren’t very active. Can you talk about why that’s changed and the impact that NEXT has had on that side of things?
David: When I first joined Samsung, there had been acquisitions before to be clear. But I don’t think that there was a common view that acquisitions were necessary. You could imagine that a lot of the conversations internally, as they are in many companies, not just Samsung where you have lots of smart engineers, but as we know it doesn’t mean that you will. Or even if you have a project somewhere in some pocket of your organization, it doesn’t mean that it will launch successfully and will resonate with users.
So one of the things that we proposed is that through acquisition, in some ways you have much more certainty than you might on anything that you develop internally because it’s market tested. You know, the benefit that you receive is talent and know-how from the people, early views on products that will most likely require more investment and scaling, relationships in some cases with consumers that you might not have, etc., etc. and what’s happened is because Samsung and the executives there, I think they’re super fast learners and, you know, they ask tough questions, and they’re very thoughtful folks, but once they understand what the benefit is, the company for a very large company moves very quickly. And it’s remarkable that a large company like that can move as quickly as it does.
And so now it’s not a question of whether we do acquisitions, which was the case when we first came in. But, when, in what situations we should do it and how we might do it. It’s not just a transaction but what your life would be like after the transaction. We have an entire team that’s just dedicated to this, and they start thinking about what happens post-acquisition during the due diligence of the acquisition. And so we have people really thinking about how can we make sure that after we do an acquisition, the people who come in through that acquisition can be successful. That the goals that we’ve identified are clear, and that we can attain them.
And in the last four years or so, Samsung NEXT has done over 20 acquisitions of different shapes and sizes. So, that’s been a pretty big change in a pretty short period of time.
Ryan: Yeah, I feel like M&A and how to do M&A well, you know, can be its whole own conversation. I’m curious about some of the other levers that we have to pull in working with startups or developing products. The venture side of things, partnerships and other ways that we touch on startups beyond acquisitions.
David: Well, I think we know that startups aren’t a monolith, and the evolution of a startup has lots of ups and downs, and there’s lots of different types of challenges and kind of support that you need.
One of the critical tools that we have in the tool belt so to speak is our investment group. We can go in very, very early at a seed stage and we can follow on for the life of that company. And we are strategic investors. We, of course, wanna make a return on our investment but what we’re looking for, the critical factor, are companies that can show us insight trends, talent about how to do certain things and use bases where there could actually be collaboration with Samsung. And this is something that the startups obviously value as well, if we can kinda make that connection.
We made an investment in a company called LoopPay, which was in the mobile commerce space based in Boston and helped connect it to different parts of Samsung Mobile. Ultimately, helping drive a vision for a deep integration, deeper than anything they’ve thought of and helped actually acquire the company and fold it into the Samsung Mobile division that’s today known as Samsung Pay. So we took an investment in an early stage company, helped drive the acquisition and then fold it into what is now a product in over 20 countries around the world. So, that’s been neat to see.
But we believe that we could only do that by having groups that sat right next to each other investing, partnering, acquiring and then of course working very closely with our divisions to make that all happen.
Ryan: Right. I feel like right now we’re at a point where Samsung NEXT has reached a point of maturity, where we have different functions, and we have some idea of how those functions interact and work together. But it wasn’t always like that. We talked a little bit about the history from the very beginning but along the way we’ve tried lots of different things. So what were some of the things that didn’t work out? How did we decide to sort of change things along the way?
David: Well, we have always looked at ourselves as a startup. We’ve always wanted to be nimble and to be honest with what we see as data and how we’re doing. One of the things that we did early on is we had an accelerator program where we could bring in entrepreneurs, typically serial entrepreneurs, and the purpose was to help them accelerate their product development by taking out all the extra work and the noise in the system surrounding financing by saying to them, “Look, let’s [inaudible 00:17:15] a product development roadmap and as long as you hit certain milestones, we will continue to invest. So you can devote yourself entirely on product development as opposed to raising money.” And at certain stages, I’m sure the entrepreneurs out there who are listening to this know that they can take 60, 70% of your time raising money for months sometimes, depending on where you are in your own development. So the idea, the experiment at the time was, well if we can guarantee financing, as long as the product was coming along would we come out with prototype products more quickly? Would there be a higher quality to it?
So we did that and the answer, it turned out to be was yes. The however here was that the products that came out weren’t guaranteed necessarily to succeed with consumers and they weren’t necessarily guaranteed to be acquired by Samsung. And so at that point one of the things we realized is unless we continue to invest as a sole investor, we’d have to shut down the companies. And one of the things that still makes me wince is that we had some great companies, great products that were built but at that stage they didn’t quite resonate with either a Samsung division or with audiences when we first launched it. And, you know, what you wonder about is, well what could have happened had they just gone on a little bit longer and tried a few other things. And we’ll never know.
So one of the things that we’ve done as a result of that is we’ve pivoted slightly to say, “Well, let’s make sure that along the way, if there’s a great product, we create opportunities for these companies to get investment from other parties earlier on.” So that they can continue, whether there is traction immediately or not.
The other thing that we’ve done more recently is we’ve turned that accelerator program that I was describing and evolved it into a Product Development Group. So we have a person who heads our Product Development Group. His name’s Travis Bogard. He was at Jawbone for many years, and he understands hardware and software development. And what we do now is we have project teams that are independent, run as startups themselves, but they’re entirely internal. And so what we wanna do is, of course make tough decisions along the way, but make sure that even if there isn’t immediate market traction, that there’s enough sort of patient capital and patient support so we can give a product the chance and the kind of breathing room sometimes products need to really figure things out. So we’re in the earlier stages of doing that now, but that was a result of a lot of things that we learned along the way from our accelerator program and other things where we were working very closely with products.
Ryan: I just wanna end on this one question, which is when you talk about where Samsung’s going to be or when you talk about where technology’s going to be in five to ten years, what’s one thing that you think most people will be surprised by?
David: Well, I don’t know if it goes against the grain, but I think the relationship that we have with our devices and the expectations that we have will evolve pretty significantly. Take the mobile phone that you have in your pocket. Today you look to it to access specific apps, to have specific experiences. I think in the future your phones will be capable of understanding who you are, what your preferences are, and will be able to knit together experiences by pulling together lots of different parts of different apps and services and customizing it for you. So it will have the intelligence and the understanding of who you are and what you’ve done while still, because it’s your device, providing you with the kind of privacy and protections that you want. So in some way you could expect that through hardware and software integration, you will have a much more customized sort of digital assistant, if you will, that will help you weave together what had been very disparate pieces across lots of different offerings. And that’s in the near future.
Ryan: Okay. Well, thank you David, for doing this with us.
David: Thanks for having me.
Originally published at https://samsungnext.com on June 14, 2018.