This morning, I woke up to the news that the SmartThings hub technology will be shipping inside Samsung TVs starting next year. This is fantastic — as good or better than I imagined when we (I was on the board then) decided to accept Samsung’s offer to acquire SmartThings back in the summer of 2014.
SmartThings was the first investment that I led as a partner at Greylock. When we invested, just like with every company, I planned to be part of a many year journey with the target of building an independent, self-sustaining business and public company. SmartThings was an early pioneer of the Internet of Things. They started building the core apps and system to connect all of the devices in your home and make them starter before it was obviously a trend. I believed they could be the leader and define the trend.
Only nine months after we made the investment, and the company was just two years old, they faced a very interesting decision. The connected home space was heating up — Google had just spent $3.2B on Nest and Apple (vaguely) announced their plans here with Homekit. For SmartThings, this meant they could continue fighting as the leading independent company in the space. Or, Samsung presented them a compelling offer — SmartThings could join forces and immediately be competing on the same level with Google and Apple’s plans to define the future of the connected home.
We had a lot of debates. It is never an easy decision to sell your company, and especially one that is early in its life and still has a ton of potential. But one of the things I respected Alex Hawkinson (SmartThings CEO) most for in this process is that he only thought about the potential for his company. He never talked about selling the company as selling out on the potential, but instead he focused on whether joining forces would increase its potential. He believed Samsung was such an important company across consumer electronics (mobile, TVs, appliances, etc) that with SmartThings they could help build the systems that connect these devices in a new way. He also believed Samsung would be able to help aggressively distribute the SmartThings hub and system within its products in a way that would be harder to deliver as an independent company. Ultimately, he decided to take the bet that Samsung would help him do all of that that.
There are countless stories of acquisitions of companies early in their life where the acquiring company ends up not investing or living up to the commitments expressed in the process. And I’m sure just as many where the company that sold gets caught up in the sale process, culture changes, and learning to work for new bosses, and doesn’t reach the opportunity it started to. I hear a lot of people I meet talk about how selling a company feels like a failure, or staying at the acquiring company feels like being trapped with “golden handcuffs”. When evaluating an acquisition offer, I like to think about a sale as a new beginning — a chance to further accelerate the dream the founder started with and to reach their goals even faster. (*I don’t think this applies to cases where the company may feel they are not on a path to an independent success and looking for a buyer).
I’m no longer an insider at SmartThings. I’m sure there have been plenty of challenges — both political and cultural — integrating a startup within such a large company as Samsung. But announcements like today’s — that the hub will be integrated into the TV show the promise of what great strategic acquisitions can look like for both buyer and seller. And they show the promise that SmartThings has to provide the connective layer for all smart homes — one which I still want and am very excited about!