Samsung's home base is South Korea and that was good enough – but now, they have finally realized that to really make a huge splash and sustained ripple they must have a presence in the U.S in the fast-paced Silicon Valley. Young Sohn , Samsung's Electronics chief strategy officer, submitted a proposal back in January 2013 and in less than a day he got his approval from Samsung Electronics' CEO Oh-Hyun Kwon for $100 million. The money was to be used for startups in the U.S. and Sohn called it the Samsung Catalyst Fund – they have invested in 24 companies.
Although one of the largest corporations in the world, Samsung is still somewhat of an enigma – most people have heard their name and may even have a refrigerator or washer and dryer with their name on it or more likely a Smart TV. They are the largest manufacturer of TVs and mobile devices, but they also make toasters to tablets. It helps if you have heard or can recite one of the bosses – we all know Apple co-founder Steve Jobs and most even know Wozniak, or Facebook's Mark Zuckerberg or Zuckerman or Zucker -something, but who has ever heard of Samsung's CEO Boo-Keun Yoon or founder Lee Byung-chul.
In Silicon Valley it is commonplace for high-level executives to meet over lunch to iron out a deal – Samsung is conspicuously missing in this process…it is so much more personal to meet face-to-face rather than on a video chat conference. Apple, its fiercest competitor has a 2.8 million square-foot building to have the smallest to largest meeting whenever they want. Samsung needs to be there and tap into that local talent, meet with entrepreneurs, venture capitalists and talented software engineers that know what the U.S. customers are looking for in software. Being in the U.S., the entire mindset of their executives and workers could change – in Korea, there is a real stigma of failure that constantly looms over you at work. Sohn said, "Can we look at things we cannot do in Korea?"
There is a big future in smart-home control and Samsung recently purchased SmartThings to help them move forward in this area. Alex Hawkinson, CEO of SmartThings said, "We've seen how [Samsung has] really excelled in hardware. Where they haven't done as well is the entire synthesis of software and services. But they have a massive commitment to that." Having a presence in Silicon Valley can help bring the companies its needs literally closer to it, where deals can be made in hours or days rather than weeks or months.
There are still setbacks within the Korean culture of business – sometimes it is difficult to know exactly whom the U.S. firms are working for back in Korea, and the ultimate decision making always must be done in Korea. This is frustrating for both employees of the U.S. firms and even the Samsung employees working in the U.S. There are cultural misunderstandings, unreasonable expectations from the Korean project managers and even the support from Samsung back to the developers. Some developers refuse to work with Samsung and others are overly cautious before committing to a project with them. One developer said, "We felt in their development process, once you get turned over to Korea, with the lack of support, lack of understanding, and arrogance, we don't need them."
Some in Silicon Valley say that while they are influencing Samsung, Samsung is also influencing how they think…"It's more about the way they run their business and have made big and bold bets in their history," says John Lagerling, vice president of business development at Facebook. Samsung claims their commitment to Silicon Valley is permanent and within the next five years they may actually run some of its businesses from there, rather than making the decisions back in Korea. Apple is still the leader in Silicon Valley and even though developers have said that nobody has done more for them than Samsung, that it would still be hard not to "jump way higher" for Apple than Samsung.
It is way too early to see if Samsung's venture into Silicon Valley will be a success or not, but it must keep trying – if they want true success, they need to expand to the U.S. where businesses and resources are right around the corner street, not around the globe. Samsung will have to change their Korean mentality, but nobody knows if that is possible – perhaps the young people will help make the transition to the U.S. business world. To have the right connections and opportunities to make things happen at the pace needed in today's technology field, they will have to make changes quickly – directly in the Valley and not from Korea, and that is a tall order for Samsung.