Startup Europe Partnership is a platform established by the European Commission in 2014 with an aim to scale up Europe’s startups through strategic partnerships with global corporations. Two of SEP’s founding partners, an open innovation advisory firm Mind the Bridge based in Italy and the United States and a British innovation foundation Nesta, hold the SEP Corporate Startup Stars annually to showcase the best models of corporate-startup collaboration.

SEP Corporate Startup Stars Awards has seven award categories including ‘Accelerator’, ‘Procurement’, ‘Investment’, ‘M&A’ and ‘Open Innovation Approach’. Among these, Samsung ranked first for the highest award – ‘SEP Europe’s Corporate Startup Stars’ – this year, acknowledged among local startups in the continent as the friendliest and the most rigorous supporter in terms of company acceleration, procurement and investments.

“Collaboration between established corporates and startups benefits them both. Startups get the resources and market insight to help them scale up, while their supporters are driven with innovation and cultural change,” commented Jyrki Tapani Katainen, the European Commission Vice President for Jobs, Growth, Investment and Competitiveness. “Organizations cooperating well should be recognized as trailblazers that can inspire others.”

Roberto Mauro, Managing Director Europe, Samsung Strategy & Innovation Center (Right) is receiving the SEP Top 1 Europe’s Corporate Startup Stars Awards from Jyrki Tapani Katainen, European Commission Vice-President (© European Union, 2018 / Source: EC – Audiovisual Service / Photo: Lukasz Kobus)

“The explosion of data and the revolution in core technologies is creating incredible opportunities in nearly every sector,” said Roberto Mauro, Managing Director of Europe at Samsung Strategy & Innovation Center. “By combining venture investments with Samsung’s vast technology ecosystem – spanning innovation, research, procurement, sales, and marketing through local, regional, and corporate channels – we can enable the next wave of innovators in Europe and around the world.”

In Europe, Samsung has been engaging with startups in ways that are uniquely tailored to each market – accelerating the development of innovative products and services in industries such as cybersecurity, healthcare, retail, banking, logistics, mobility, real estate, and education.

On the wider international stage, during the last two decades, Samsung Electronics has worked tirelessly to build a broad and deep engagement with a variety of startup communities – particularly those active in hardware, software and services, mobile communications, consumer electronics, and automotive industries. Last year, Samsung invested more than $200 million in 75 startups worldwide and expects the investments to continue to grow in the future. Global startups and companies have also been provided access to a spectrum of Samsung global venture platforms, including:

• Samsung Strategy & Innovation Center (SSIC): Global organization focused on driving the next generation of growth for Samsung Electronics in the new data economy, through innovation, investment, and mergers & acquisitions
• Samsung Catalyst Fund (SCF): Evergreen multi-stage venture capital fund that invests globally in strategic ideas for Samsung’s mobile, device solutions and consumer electronics groups. Investment spans across innovation in areas that include: artificial intelligence, smart factory and robotics, digital health, autonomous systems, and cloud and data infrastructure
• Samsung NEXT: Builds, grows and scales transformative software and services to complement Samsung’s global hardware footprint. A leading driver of Samsung’s transformation into an integrated hardware and software company, Samsung NEXT combines product development, investment, M&A and partnerships under one roof. Samsung NEXT operates an $150M fund to invest in early stage software and services startups
• Samsung Ventures: Early-to-late-stage investments that are relevant to the current and next generation of Samsung products and services
• Samsung Research: Collaborates with universities, research institutes, corporates and startups to drive innovation for Samsung’s Consumer Electronics and IT & Mobile businesses

It is Samsung’s plan to foster even deeper relationships with the innovation community through knowledge exchange, strategy discussions, deal flow presentations, and collaborations with companies funded through a variety of investments and commercialization efforts. Samsung will continue moving forward to strengthen and create more partnerships with startups across the world.

SEP Europe’s Corporate Startup Stars Awards 2018 participants at the ceremony (© European Union, 2018 / Source: EC – Audiovisual Service / Photo: Lukasz Kobus)

1. Faster, more transparent machine learning

Artificial intelligence (AI) will dramatically expand within the next 12 months. It is already changing the way people interact with a number of applications, platforms and services across both consumer and enterprise environments.

In the next couple of years, there will be new approaches on two fronts. Firstly, less data will be required to train an algorithm. This means an image recognition system that currently needs 100,000 images to learn how to operate will only need a small fraction of that number. This will make it easier to quickly implement powerful machine learning systems.

Secondly, the technology will become more transparent. Advances in technology will mean researchers will be able to open the black box of AI and more clearly explain why a particular model made the decision it did. Currently, a lot of academia and start-ups are putting much effort into understanding how a machine makes decisions, how the models are learning from the data and what are the parameters of data that influence the models.

Scott Phoenix, The CEO of Vicarious, makes a presentation about human-level intelligent robots at the Samsung CEO Summit last October in San Francisco. (source: www.vicarious.com)

Samsung plans to build an AI platform under a common architecture that will provide the deepest understanding of usage context and behaviors. This is one of the core strategies to make the user-centric AI ecosystem. Samsung NEXT has also invested in various companies innovating in the field, including Vicarious, a company developing neuroscience-based artificial general intelligence (AGI) for robots for simpler deployment with faster training and Bonsai, which develops an AI platform that empowers enterprises to create, deploy and manage AI models, and FloydHub, a start-up that has developed a cloud service for machine learning.

2. New AR and VR form factors and viewing models

Both augmented reality (AR) and virtual reality (VR) are increasingly being relied upon to create more immersive worlds where technology enables users to get more hands-on with virtual overlays and environments. In the case of AR, devices won’t remove us from our world, but will rather enable us to have objects appear as if they were really there.

2018 will witness more developers embracing AR, starting to make interesting applications moving beyond the world of gaming. One such example is a furniture company planning to make its full catalogue available in AR. Samsung NEXT has invested in companies like 8i, which provides a platform that enables true 3D (fully volumetric) video capture of people, allowing viewers to walk around as real humans in VR and AR.

8i’s Holo augmented reality application enables digital recreation of people and characters to be seen in the real world through a smartphone camera. (source: www.8i.com)

Head Mounted Displays (HMDs) will see foundational technology improvements in the quality of their displays, sensors, and materials. In 2018, there will be a lot of excitement in the industry in the form of M&A and investment activities. “For VR, we will see more standalone devices, falling between existing HMDs powered by mobile phones, and high-end hardware connected to powerful PCs. This will enable more people to experience the technology in new ways,” said Ajay Singh, Samsung NEXT Ventures.

3. Blockchain to look beyond cryptocurrencies

“In 2017, we saw blockchain technology increasingly applied to develop unbanked countries and communities,” said Raymond Liao from Ventures. “With underpinnings in peer-to-peer transactions, blockchain has the power to democratize transactions by removing the middleman and reducing the needless fees that so frequently hamstring those deprived of banking services.”

Cryptocurrency is the dominant killer application for blockchain up to now. However, we will see blockchain entrepreneurs and decentralization idealists, freshly financed by token sales, marching to either empower consumers against the one-sided data monetization paradigm, or break up enterprise data silos in, e.g., supply chain and healthcare industries.

Samsung’s focus on security will be an advantage for the company as far as blockchain is concerned. The elephant in the room around blockchain is that the entire technology is only as secure as the users’ keys. Samsung’s technology enables enterprise customers to be assured of a certain level of security in how their employees interact with their blockchain-based apps. Furthermore, Samsung NEXT includes in its portfolio companies like HYPR that provides enterprise with enhanced security and user experience using blockchain and Filament that secures Internet of Things (IoT) devices with their blockchain protocol.

4. IoT to put power in the hands of healthcare patients

Healthcare is an industry that is ripe for disruption. We will begin to see the power of IoT in healthcare with the emergence of inexpensive, continuous ways to capture and share our data, as well as derive insights that inform and empower patients. Moreover, wearable adoption will create a massive stream of real-time health data beyond the doctor’s office, which will significantly improve diagnosis, compliance and treatment. In short, a person’s trip to the doctor will start to look different – but for the right reasons.

Samsung is using IoT and AI to improve efficiency in healthcare. Samsung NEXT has invested in startups in this area, such as Glooko which helps people with diabetes by uploading the patient’s glucose data to the cloud to make it easier to access and analyse them. Another noteworthy investment in this space from Samsung NEXT is HealthifyMe, an Indian company whose mobile app connects AI-enabled human coaches with people seeking diet and exercise advice.

(source: www.healthifyme.com)

Samsung is uniquely positioned among tech companies in that it already has a significant business in healthcare. The company has solutions in wearables, hospital screens and tablets, and X-ray and MRI machines. By tying all these solutions together and cooperating with other partners, it will enable patients to manage their health from their own devices.

5. IoT breaks free from homes and enters the city

In the next couple of years, one should expect to see IoT transform urban environments thanks to the combination of learnings from smart homes and buildings, and the proliferation of 5G. Transformation will happen in waves, starting with innovation that requires fewer regulations. It is expected to impact the daily life of the community in meaningful ways, such as parking solutions, mapping, and bike share schemes.

Samsung NEXT already has various IoT investments including Stae for data-driven urban planning, and Swiftly that provides enterprise software to help transit agencies and cities improve urban mobility.

The company has its own IoT platform SmartThings—an acquisition that came through the Samsung NEXT team. The platform is connected to ARTIK for enterprises and HARMAN Ignite’s connected car platform, creating a comprehensive IoT ecosystem. Based on its progress on IoT, Samsung showcased its vision for ‘Samsung City 2020’ at this year’s CES, which is on its way to realization.

Samsung today is an unquestioned global technology leader – yet, in this complex and competitive global landscape, the company has been embarking on an active course to transform itself, navigating emergent challengers and new technology categories, as it sets course for the future.

A major driver in this transformation has been Samsung’s expansion in Silicon Valley, where the company has had roots for over 30 years. Since 2012, Samsung has been investing heavily to broaden its operations and strategic partnerships in the valley, assembling a cadre of area veterans and innovators to cultivate emerging areas such as AI, health, IoT, and the cloud, and at the macro-level, to transform Samsung’s own organization and operations.

From the decision to expand operations in Silicon Valley, to the current efforts there, to Samsung’s relentless mission to remain at the forefront of technology change, this three-part special feature hears directly from Samsung leaders in the valley on what the company is doing there.

What’s Next for Samsung Silicon Valley

Samsung’s presence in Silicon Valley has come to represent a new way of operation for the company. The traditional Samsung approach had always involved a deliberate examination of a market before the company would introduce a new technology.  In contrast, and spearheading the next chapter in Samsung’s growth, Samsung Silicon Valley will remain focused on the pursuit of a radically open style of innovation to drive, as Jacopo Lenzi, senior vice president at Samsung NEXT, shared earlier in this series. “The evolution of Samsung from a hardware manufacturer to a comprehensive tech company that ultimately is focused on delivering experiences and solutions for consumers, beyond devices,” he said.

The approach will be surely, disruptive, and one-rooted in examination, exploration and, at times, error.  But it is these learnings and experiences that Samsung leaders firmly believe will help the company not only stay ahead, but continue enormous growth into new areas. “We recognize that the best time to disrupt is during a point of prosperity, not panic,” said Chris Byrne, Head of IP Strategy at SSIC.

So what’s next for Samsung in Silicon Valley? As various Samsung leaders in the valley shared, the movement will very much be around a pursuit of partnerships to drive opportunity coupled with the strategic consolidation of technologies, all intended to infuse a new spirit of openness throughout Samsung.

Partnerships to Drive Opportunity

For the Silicon Valley team, the approach to innovation will continue to be the openness to ideas from anywhere, from inside and outside Samsung. “Partnerships are the difference between winning and losing. You cannot do it by yourself anymore,” said Francis Ho, Head of Digital Health at SSIC.

In the pursuit of partnerships to drive opportunities, Samsung leaders in the valley share a commitment to examining where the latest trends are going, with the end aim simple, to enrich people’s lives. Towards this goal, areas of particular interest like the cloud, AI, smart health, and privacy and security may not be related to current Samsung businesses, but represent future areas of growth for the company. “This is the great challenging experiment—how do we Silicon ‘Valley-ize’ Samsung? How do we make it think and operate like a start-up?” said Chris Byrne.

In practical application, Samsung’s investment arms in the Valley, the Samsung Catalyst Fund and Samsung NEXT Ventures, will continue in their work to discover and engage with new partners. For example, the Catalyst Fund team of just 10 already spends half of their time meeting with startups and entrepreneurs and the other half promoting collaboration with Samsung business units. This approach, underdriven by a spirit of openness to trial and error, won’t change. Brendon Kim, Managing Director of Samsung NEXT Ventures , says that “being bold often means having a strong point of view and vision to invest ahead of the clear opportunity.”.

Also, in their continuing work, the teams will remain committed to persuading internal and outsides stakeholders to think outside and beyond the traditional value proposition of a venture. “We don’t have a 10-year time horizon like typical VCs. We just don’t look at it like they do, with five years to invest and five years to harvest. Our approach is to invest in things that are disruptive and defensible, regardless of the time horizon,” explained Shankar Chandran, Head of the Samsung Catalyst Fund.

Dr. Francis Ho added, “When you are a $200 billion company, everything we touch has a ‘B’. But sometimes, the work we are doing, to truly embrace open innovation, has no ‘B’ yet. So, we have to be very persuasive internally to stay focused and invest.”

Strategic Consolidation of Technologies

In its future work, Samsung leaders in Silicon Valley are also keen in their vision to consolidate across technologies. From vertical platforms for IoT to cloud and data storage to smart machines, the team is looking at ways to cross boundaries, and explore and capitalize on synergy areas.

One example is artificial intelligence. Of course, AI isn’t a new concept. It’s one of the most talked about topics in tech circles, both in the valley and around the world.  Yet, the technology is still in its infancy. “AI is still pretty early. We’ve positioned ourselves at the starting line. Now we need to deliver down the line,” said Jacopo Lenzi.

Presently, AI is very transactional, but Samsung leaders view the future of AI in the development of reasoning and planning capabilities – a field they hope to lead precisely by leveraging and consolidating across technologies. With Samsung’s vast portfolio of consumer devices, the company understands human/device interaction better than anybody, and the company has more touch points than any other through which it can bring AI to life. That might mean looking at ways a personal assistant comes to life in VR, for example, as opposed to how it works on a mobile device. “People may not think of us in AI, but we have this user base and portfolio of products with which to work. We want to use AI to make these products work better,” said Nick Cassimatis, who heads the Intelligence Lab at SRA.

Henry Holtzman, who leads work into convergence at SRA, is taking a similar approach to the work he and his team are doing. With more and more networked devices in our pockets, homes and cars, Samsung sees the need to make how consumers interact with devices even more fluid and convenient. “There is real user interface fatigue. Content is disorganized. And different generations consume information and content in different ways — older people interface with Netflix and younger people use Snapchat. So how do we make these gaps less confusing and more convenient?”

Infusing a New Spirit of Openness throughout Samsung

The ultimate aim of both this pursuit of partnerships, as well as consolidation across technologies, is to serve as a new model of openness that Samsung can emulate in how it operates throughout. To help business units no longer just look at the year ahead, but instead focus on long-term ideas that can change the way people live, with work bridging multiple business units. “The goal is getting our various business units to see beyond the next year and understand the impact,” said Shankar Chandran.

The easiest way to accomplish this, of course, will be through real life-results that help Samsung achieve breakthroughs in innovation.

Henry Holtzman shares an example of how several years ago, SRA was challenged to rethink how families shared information and memories. Team members visited homes to see the ways in which people posted information, pictures or notes.  What they noticed was that many families had calendars, photos, and messages on their fridges, turning it into a focal point of their everyday lives. This observation led the team to begin early design and concepts that would turn analog information sharing, like paper post-it notes and taped up pictures, and make them digital. The result? Calendar, sticky notes, voice, and camera features that came to life as part of Samsung’s award-winning Family Hub refrigerator. It is precisely this type of innovation and collaboration that the Silicon Valley team envisions being applied across Samsung in the future.

“The common element in this process was advanced concepting, which is a three-year concepting period for developing ideas,” said Holtzman. “After ideas are developed, they head through the innovation system — which includes trusted agencies and accelerators. This is the open innovation community that the Silicon Valley team is fostering.”

The Future is Wide Open

Technological innovation is moving faster than at any time in history, and thanks to Samsung’s efforts in Silicon Valley, the company is better positioned than ever before to be a leader in innovation and transform lives.

“The world will change more in the next five years than it did in the last 50,” says Chris Byrne. “And innovation in the next five years can and will come from anywhere. There are no geographic boundaries on brain power. So, our challenge is to be open—open in terms of how we innovate and open in terms of where innovation will come from.”

Even after working in the technology world for more than two decades, Lenzi said, “No other company has the same reach as Samsung and the opportunity to partner with innovators all over the world to realize Samsung’s vision is why I’m here,” and it is that passion for changing the way people live that will continue to drive Samsung’s efforts in Silicon Valley to achieve new heights for the future.

Samsung today is an unquestioned global technology leader – yet, in this complex and competitive global landscape, the company has been embarking on an active course to transform itself, navigating emergent challengers and new technology categories, as it sets course for the future.

A major driver in this transformation has been Samsung’s expansion in Silicon Valley, where the company has had roots for over 30 years. Since 2012, Samsung has been investing heavily to broaden its operations and strategic partnerships in the valley, assembling a cadre of area veterans and innovators to cultivate emerging areas such as AI, health, IoT, and the cloud, and at the macro-level, to transform Samsung’s own organization and operations.

From the decision to expand operations in Silicon Valley, to the current efforts there, to Samsung’s relentless mission to remain at the forefront of technology change, this three-part special feature hears directly from Samsung leaders in the valley on what the company is doing there.

As part of Samsung’s efforts to lead in emergent, the company has established two major operations, SSIC and Samsung NEXT, in Menlo Park, San Jose and Mountain View, respectively. While SSIC focuses on the development of core technologies and components and Samsung NEXT into software and services, their driving approach is similar: openness and agility. With a series of transformative successes from both units, Samsung, throughout the organization, has taken notice of the effectiveness of this approach with traditional businesses from mobile to home entertainment benefiting from the wellspring in innovation.

“There is the perception that what we are doing at Samsung NEXT and SSIC is untraditional approach to the core culture of Samsung, but from my perception, that couldn’t be further from the truth,” said Jacopo Lenzi, who heads business development and M&A at Samsung NEXT. “Samsung is a company that has an amazing history of innovation, of breaking the rules and reinventing itself constantly. This is simply the next chapter in that.”

SSIC, Investments Driven by Open Innovation

To understand SSIC as a typical funding vehicle is only a partial picture. Gaining access to the resources of a technology giant such as Samsung is a huge boon for startups, and when SSIC determines to invest in a company, it does so with strategic reciprocity in mind: how will this investment contribute real value, particularly in open innovation, to Samsung at-large?

“We have to wear two hats,” said Shankar Chandran, Head of the Samsung Catalyst Fund(SCF), which is the investment arm of SSIC. “We have to think about how to make each company successful. But as employees of Samsung, we also have to think about how to add value back into Samsung. We have to wear both these hats at the same time.”

SCF’s lean team of just 10 people is strict in its approach. Each year, the team meetswith 1,500 startups , but selects only 100 for a second meeting, and then 15-20 businesses for ultimate funding. When it comes to choosing which startups to invest in, the business approach of the SCF team has been developed with deliberate intent and is spreading enthusiasm for its effectiveness.

Promoting collaboration makes up the largest proportion of SCF’s investment decisions. It’s linked clearly to the ethos around open innovation – the initiative to identify and grow the technologies and infrastructure of the future. Another key reason behind an SCF investment is to establish a toehold in a company, to find out its way of working and the competency of its leadership before an acquisition takes place. Finally, SCF also decides to invest in order to learn about a new, growing area, , such as AI. SCF might not work with the company immediately, but it might invest so that it can learn about the sector, the technology driving it and be in a leading position to work with the company in the future.

Chandran provides an illustration from a current project: “We’re investing in a company at the moment that does proteomics; technology that has the ability to measure thousands of proteins in the blood with high accuracy. If you can do that, you can tell when there are early signs of cancer. It’s possible that there may be opportunities if the company gets productized with a chip, as we’re the world’s largest chip company. We can’t work with the company today, but we may be able to in the future and when they are ready, we will be first in line.”

Carefully Selected Technology Domains for Large-Scale Samsung Growth

When it comes to focus areas, SSIC has the big picture in mind. “We’ve chosen five strategic technology domains in response to core questions: how does Samsung best become a fast leader, and how do we most aerodynamically achieve enormous growth?” said Chris Byrne, Head of IP Strategy at SSIC.

Described by Byrne as “working together like the five fingers of the hand,” the strategic technology domains are not distinct, but interactive, with one enabling the other:

• Internet of Things: Seen by Samsung as not just as a concept, but practical necessity given the company’s diversity of products
• Cloud and Data Storage: Tactically key because so much of cloud and data storage is being migrated to flash and semiconductor storage, traditional strengths for Samsung where innovation can enable new business models
• Smart Machines: Leveraging Samsung’s competence in smart technology and a huge potential boon area, expansion into a new character of smart machines which possess the ability to sense their environments, understand their learnings, and, ultimately, interact and engage
• Smart Health: Exploration based on two key synergistic trends, technology devices becoming increasingly biological, and at the same time, human biology becoming more computerized
• Privacy and Security: Beyond a product, the concept and assurance which will be interwoven into all new innovations

To elaborate on how these domains are meant to interact, Byrne provides an example, “You could be wearing a smart watch, and it detects something in your biology, which it then sends to be analyzed in the cloud as well as interact with other connected devices — an IoT phenomenon. Throughout this process, privacy and security provide the ultimate assurance and protection.”

Based on its strategic technology domains, the SSIC team has made several key moves which have already paid off to the larger Samsung ecosystem. For instance, SSIC created a partnership with Imec, a Belgian microelectronics company specializing in wearables, which soon was transitioned into Simband, an open developer platform for creating wearable health applications. SSIC is also currently working with Nestle to look at the science behind the food we eat to investigate ways of giving better recommendations for how we can be healthier—just another example of open innovation, with two leading companies in their respective fields working together for the greater good.

Samsung NEXT, and the Evolution of Samsung into a Comprehensive Tech Company

The Samsung NEXT team has deep roots in entrepreneurship. This stems from the leadership team’s collective 80+ years of first-hand experience in building, growing and scaling startups. The company’s intimate knowledge and drive to innovate through software and services startups is core to its mission: to help Samsung expand as a comprehensive technology company, beyond the proposition it’s consumers have traditionally known.

“Samsung has built itself as an incredible hardware company with great work being done in the software and services side, but the DNA and way it approaches its work is very much from its hardware core,” said Jacopo Lenzi, senior vice president at Samsung NEXT. “At NEXT, our mission is to co-drive the evolution of Samsung from a hardware manufacturer to a comprehensive tech company that ultimately is focused on delivering experiences and solutions for consumers, beyond devices.”

While many other tech companies in the valley may have disparate incubation, investments and acquisitions efforts that work independently to one another, Samsung NEXT deliberately eliminates these siloes and houses all of their functions under one organization. This unique approach gives early-stage software and services startups the opportunity to work with Samsung at any step in their journey and also allows NEXT to partner with entrepreneurs throughout the entire lifecycle of their startup, from idea to scale.

“If our Ventures investment group sees a startup that has a talented product and team, but may be a bit too early in development and haven’t quite found product-market fit, they may pass the company along to our Start team for an opportunity for that group to invest in the team at the incubation level.” said Lenzi. “This level-agnostic approach gives us the best opportunity to work with great entrepreneurs and provide Samsung’s rich resources to as many strong startups as we can. It’s our way of being able to utilize the right levers and tools to maximize achieving results for Samsung and startups everywhere.”

Strategic Objectives, the Key Aim Driving Startup Investments & Acquisitions

Samsung NEXT makes investments through the Samsung NEXT Fund, a USD 150 million vehicle for empowering early stage companies with capital. The Fund seeks to invest in startups—both their talented teams and ideas–that align with Samsung’s focus areas and objectives. Post investment, the NEXT team works closely with these startups to create partnerships that deliver strategic returns to Samsung and big financial returns to entrepreneurs and investors. Investments support Samsung’s current business initiatives, but more importantly, have the potential to create new, large business opportunities.

“Given the scope of Samsung’s interests, we invest in a variety of areas. We’re especially focused on AI, IoT, AR/VR, security, mobility and health,” said Brendon Kim, Managing Director of Samsung NEXT Ventures. “But, more than any specific tech category, we look for startups that have strong teams and disruptive solutions – startups where we can accelerate success and help us chart Samsung’s future.”

A majority of Samsung NEXT’s investments include companies based in the US, but the company has also invested in startups in Tel Aviv and are looking into Asia and Europe.

“Great ideas and entrepreneurs are definitely not limited to the US. They are found in all corners of the world and we are committed to finding and empowering great startups wherever they are,” said Kim.

In the case of acquisitions, Samsung NEXT will not only lead the purchase of a startup, but also the integration ofits management team and employees. Therefore, in the process of evaluating whether a company is a good fit for Samsung, Samsung NEXT needs to ascertain how well its product, people and processes will integrate into the larger fold.

One example of how the team at Samsung NEXT was able to do this successfully is with the acquisition of Loop Pay in 2015. Samsung NEXT identified that legacy systems were an obstacle in getting into the mobile payments market, so they found a company addressing this issue in a unique and scalable way. But the first step was to look for the right partner they could work with to build organically. It started with an investment before progressing through to a relationship with Samsung’s mobile business.

Lenzi explains, “In the case of Loop Pay, we didn’t immediately go for the acquisition. We didn’t see it as the ideal way to create a relationship with their company initially. It’s always about organically getting to the right place and solving the problem in the way that makes sense for both Samsung and the startup. It requires very close work with the startup, business units and our internal teams. That can only happen when all the right people are in one place and share a similar vision.”

Loop Pay became Samsung Pay and is now being rolled out around the world.

In other notable examples, late last year, Samsung NEXT spearheaded the acquisition of Viv Labs, the open AI platform, intended as a bold move to position Samsung firmly in AI and deliver down the line. In 2016, Samsung NEXT drove the acquisition of cloud-computing company Joyent to grow Samsung’s cloud-based services and capabilities for smartphones and internet-connected devices.

Samsung NEXT believes an acquisition is about finding the right fit within Samsung and that could be in a business unit or within Samsung NEXT’s own house. The latter is the case with connected and smart home IoT player, SmartThings which Samsung NEXT purchased in 2014.

These acquisitions as Lenzi explains should not be viewed in isolated verticals, but as part of the comprehensive evolution Samsung NEXT is seeking to effect throughout Samsung:

“In the transformation of Samsung to a comprehensive tech company, we have the opportunity to assemble and ultimately scale all the components of a software and services consumer stack. When looking at Viv, Joyent and Loop Pay, they may seem like three disparate dots on a very large map. It’s difficult to understand how they connect. But in thinking about the consumer experiences Samsung can deliver, these various acquisitions start to paint an amazing and surprising pointillistic picture. It’s Samsung NEXT’s job to execute against that vision.”

In the final part of this series, we’ll look at how Samsung plans to continue to spread the spirit of change being nurtured in Silicon Valley throughout its entire organization.

Samsung today is an unquestioned global technology leader – yet, in this complex and competitive global landscape, the company has been embarking on an active course to transform itself, navigating emergent challengers and new technology categories, as it sets course for the future.

A major driver in this transformation has been Samsung’s expansion in Silicon Valley, where the company has had roots for over 30 years. Since 2012, Samsung has been investing heavily to broaden its operations and strategic partnerships in the valley, assembling a cadre of area veterans and innovators to cultivate emerging areas such as AI, health, IoT, and the cloud, and at the macro-level, to transform Samsung’s own organization and operations.

From the decision to expand operations in Silicon Valley, to the current efforts there, to Samsung’s relentless mission to remain at the forefront of technology change, this three-part special feature hears directly from Samsung leaders in the valley on what the company is doing there.

Through strategic investment in products and hedging against risk in market entry, Samsung had, by the first decade of the new millennium, become the world’s largest technology maker. It leads various product categories – ranging from semiconductors to smart devices to home entertainment. Intent on continuing growth for the future, however, Samsung leaders actively sought to explore ways to cultivate innovations like IoT, AI, and the data economy, with their enormous potential and ability to break across traditional silos.

In leadership gatherings throughout the late 2000’s, Samsung Electronics’ top management articulated the direction even more directly to their brain trust of leaders: “How do you grow when you’re already the largest company? What are we going to look like ten years from now? It will be our critical mission to figure that out.”  While the past approach had involved Samsung benchmarking other players and finding a strategic position in ripe markets, the future called for it to take ownership of its growing industry leadership and be the catalyst to lead the future.

Having established Samsung Semiconductor (SSI) in Silicon Valley more than thirty years ago, Samsung leaders had long recognized the area as a nexus of open innovation, with SSI having played an instrumental role in the valley’s growth. In addition, and perhaps more importantly, Samsung leaders had also experienced in the valley prime example of the benefits in innovation to be cultivated from a ‘failure as fruitful’ approach – where mistakes and failure, both individually and with others, could drive innovation, and fine-hone developments.

In considering Samsung transforming for the future, the insights of SSI seemed a natural place to start, and the prospect of leveraging expansion into the valley as a vehicle for change, tantalizing. Realizing they were onto something, Samsung’s brain trust next went on a manhunt to recruit the best and brightest industry leaders as well as valley veterans, and soon had the core pieces in place including Young Sohn, currently president and chief strategy officer of Samsung Electronics, and David Eun, president of Samsung NEXT and Samsung Electronics.

Shankar Chandran, who also was recruited into the mix to head the Samsung Catalyst Fund after 15 years as an active venture investor and former engineer, describes the vision coming together: “The tech world is consolidating behind certain major players and Samsung is one of the most prominent technology companies of the last decade. Joining the company and investing on behalf of Samsung is much more rewarding and impactful than as an independent investor. Our driving vision is simple. How do we lead in new areas?”

Today in Silicon Valley

After beginning strategic expansion in 2012, Samsung in Silicon Valley today boasts about 2,000 employees working across five major units throughout the Bay Area. The scope of work is both diverse and comprehensive from investments and partnerships in disruptive technologies and start-ups to hardware innovation in semiconductors, storage, and LCD panels to work in advanced software and the user experience.

While Samsung’s presence in Silicon Valley is diverse, each unit plays a unique and key role:

Samsung Strategy and Innovation Center (SSIC) (est. 2012): SSIC’s mission is to develop and accelerate disruptive technologies through open innovation, investments, and acquisitions by working in collaboration with entrepreneurs and strategic partners.  Its investment arms, the Samsung Catalyst Fund (SCF) as well as in-house M&A team, have hit the ground running since inception. For example, SCF, which has offices in Menlo Park, California, Tel Aviv, and London, has completed more than 40 investments globally. This year, SSIC’s M&A team executed the USD 8 billion acquisition of audio, automotive and connected technologies leader, Harman International – South Korea’s largest overseas deal and Samsung’s largest acquisition to date. SSIC also spearheaded the development of the ARTIK Smart IoT platform, an open platform for simpler, faster development and deployment of IoT devices and applications.

Samsung NEXT (est. 2013): Samsung NEXT (formerly Open Innovation Center; Global Innovation Center) partners with innovators to build ideas into products, and grow products into businesses that scale, leverage and transform the broader Samsung ecosystem. Samsung NEXT has empowered thousands of entrepreneurs around the world through incubation, investment, partnership and acquisition. To date, the company has made more than 70 investments and has led the major acquisitions of startups including the mobile-payment solution LoopPay (Samsung Pay), the open IoT platform for connected home SmartThings, and the next-gen AI assistant Viv. In early 2017, Samsung NEXT launched a USD 150 million fund to increase Samsung’s global support of early-stage startups, pursuing advanced software and services innovation in areas such as cybersecurity and IoT, among others.  Beyond Silicon Valley, Samsung NEXT also has a team in Korea and has expanded to include locations in the hubs of San Francisco, New York, Tel Aviv, and most recently, Berlin.

Samsung Research America (SRA) (est. 1988): With roots tracing back to 1988, SRA moved into its new Mountain View campus in late 2013. SRA, which also has campuses across North America, researches and builds new core technologies to enhance the competitive edge of Samsung products, and strengthens open innovation by leveraging key relationships with start-ups and academic institutions. SRA consists of several labs from the Mobile Payments and Security Lab which focuses on technologies like Android, Knox, and Samsung Pay to the Digital Solutions Lab which feeds into Samsung’s visual display business to the Computer Science and Innovation Center focusing on areas like AI and convergence. The key approach of SRA is to bring all these units under ‘one roof’ to improve synergy and interwork across Samsung’s R&D efforts.

Open Innovation Transforming Samsung Operations

Samsung’s efforts in Silicon Valley are transforming its very own operations and business strategy. Innovating today to transform tomorrow, the focus is on priming technology and partnerships to identify, address and guide human-centric trends that will ultimately transform society, for real people everywhere.

While the investment portfolios are not always directly related to Samsung’s core businesses and existing product portfolios, they do aim to forecast wholly new sectors for the future. Samsung leadership is also very much nurturing this spirit to percolate throughout the entire Samsung organization – the aim not simply about the consumption of products, but the way the technologies become tools to transform the way Samsung invents, works, and collaborates with its broader ecosystem of industry peers and partners.

Part two of this series will look more specifically into the work of SSIC and Samsung NEXT, and how the teams there are driving for change and success across unique platforms and innovation areas.