Samsung + SmartThings = A good marriage but ...

While France is starting to come back out of the summer doldrums, the deals across the Atlantic Ocean continued to emerge. On August 14th, Samsung announced th $200m acquisition of SmartThings, a maker of smart hubs for home appliances as well as a platform developer. Having raised a relatively modest total of $15.5m in Seed and A Rounds, the 3-year-old startup that started its life on Kickstarter in 2012 no doubt has netted a homerun for it's investors such as Grelock Partners. This most certainly is yet another good news for hardware startups and VCs.

The marriage seems good, too, not just for the price tag. Samsung, after all, is one of the largest home appliance makers with a significant presence in refrigerators, TVs, etc. The fact that SmartThings had merely sold tens of thousands of its $200 starter kits didn't deter Samsung from signing a big check since obviously the value of the company lies in the platform it created, which they claimed now supported more than 1,000 smart home products and thousands of mobile apps. If the platform is good enough and the developers are engaged and growing enough, Samsung would be the ideal partner to put that platform into scale and more so than Google or Facebook, push the idea of smart home in a concrete way.

SmartThings CEO Alex Hawkinson at home (CREDIT: Steve Voss / Forbes Magazine)

SmartThings CEO Alex Hawkinson at home (CREDIT: Steve Voss / Forbes Magazine)

What seems interesting to me, however, is how the 40+ employees of SmartThings feel about the acquisition?

For a hardware startup that got acquried for $200m, 40-ish employee number seems quite reasonable, even efficient. However, following the acquisition the startup will be moved to Silicon Valley from its Washington DC site.

Truth is: working for Samsung might not be the dream of most Silicon Valley engineers. Despite its success in Android smartphones, Samsung is still less frequently seen as a destination for ambitious engineer talents but more like an opportunity for corporate ladder climbers who had hit the ceiling in Microsoft or Yahoo!. While SmartThings will remain operating independantly — they all do — they will be physically inside Samsung's Open Innovation Centre in Mountainview. It'd be interesting to see how the former DC residents react to the ever flowing employment environment of Silicon Valley, especially that Google and Facebook will all be now within 10 minutes of drive.

Honestly I don't know SmartThings enough to comment. Maybe their model doesn't hinge on high density of brilliant engineers but more with eco-system savviness and hence is less sensitive to the potential departure of talents. In any case we should all be happy for such a development and I sincerely wish them the best.

Execution, Scaling and Defensibility

Why VCs invest? And why not? (Howard Hartenbaum, August Capital)