Samsung to buy SmartThings

[scottinpollock (Scott)]

@tslagle13

If you actually knew the facts you would be 100% satisfied with this

I am still waiting for the facts. As to a wholly owned subsidiary, there is nothing inherent in the definition of that term that prevents the parent from taking control; quite the opposite actually. The do have control, and unless something extraordinary is in place, can do what they want. Been there, done that.

The main advantage to this kind of arrangement is more akin to maintaining tax and other financial advantages a little company might avail themselves of as opposed to a juggernaut the size of samsung.

[tslagle13 (Tim Slagle)]

@chrisb

As someone who has no clue what this means (other than that Samsung wholly owns ST), can you enlighten me? I’m not aware of any special rules with subsidiaries.

Basically it means that Samsung just owns all the proprietary stuff… but can’t really do much more than that. To absorb them another process has to be gone through… unfortunately that is over my head…basically i understand it as Samsung would have to give the rest of the money STs deserves… but its not just like Samsung can wake up one morning and say Hi STs, you’re now dissappeared…

I wholly owned subsidary is basically a company within a company and that subsidiary has a lot of the same protections it always did. IE unless smartthings goes out of business another company can’t just swallow them up. including samsung…

@scottinpollock

You’re right about that. I only have decades of their past behavior to go by. Perhaps the leopard can indeed change his spots.

There is a huge difference between buying and making a them a subsidiary My company outright BUYS companies ouright quite regularly. When you outright BUY a company those employees become employees of the parent company and they ow get paid by the parent company, in some cases get interviewed by the parent company to see if they are “worthy”… im betting these are the type of buyouts you have experienced @scottinpollock…

We have made one company a subsidary and basically you buy a company for a fraction of its real value… they stay completely independent… The employees remain employess of the same company, get paid by the same company, have coffee with the same people every morning… and the parent company gets to use the new company’s cool stuff in their stuff

[garrett]

This…

…is what it’s all about You’ve caught the vision.

[chrisb]

I just want to make sure that people understand, those of us who are expressing possible concerns are NOT of the opinion that Samsung is going to totally change how things operate at ST by Halloween.

It’s more of a long term outlook that we’re concerned about. Right now the people who were in charge of acquiring ST might have a very specific idea of how they want to handle ST: Give it help financially, and marketing-wise, but leave it otherwise alone.

But as we all know things never stay the same. The people right now who are making the decisions about ST might be fired, promoted, retire, or leave for another company. And there’s no guarantee that the replacements will feel the same way.

This is not a knock on Alex or Ben or Urman or anyone else who’s helped to make ST what it is today. Rather, it’s just expressing a concern when there’s a larger entity that ultimately has the power to force certain things. If in three years there’s a lot of change over in various places in Samsung, what if the new people in charge say: “Enough of this part of Samsung but separate – it’s time to bring ST fully into the fold and start dictating the Samsung way of doing things…” If this happens, is there really anything that SmartThings could do to stop it?

I may be wrong, but I get the feeling that this company is important to Alex and I doubt he went into this deal without some solid assurances that protect ST. But again… things change. How well with those assurances stand up in the face of different executives who weren’t part of the initial deal who want to do things differently? That’s the concern we’re expressing.

[scottinpollock (Scott)]

@tslagle13

im betting these are the type of buyouts you have experienced @scottinpollock…

@tslagle13 See my post above. I’d like to see some documentation on WOS’s as you envision them. If SmartThings was public, as a WOS, samsung would acquire 100% of their common stock by definition. They would have complete control.

BTW, the last WOS I worked at was indeed handled the way you describe (payroll, hires, etc.), but that had no bearing on the parent company’s decision to roll it back into to the fold for a sale to Adobe). When you own it, you own it.

Of course if you know something I don’t please share it with us.

[tslagle13 (Tim Slagle)]

@scottinpollock

samsung would acquire 100% of their common stock by definition. They would have complete control

EDIT: my bad, got some terms mixed up… rephrased below.

As a subsidiary Samsung would only own the controlling interest of stock… NOT 100% ( they COULD own 100% but only need to own 51%) they do own 100% of common stock which gets them an automatic vote on the board essentially…

This is the key difference

I suspect that why the buyout happened at 200 mil… and not the 4-500 mil STs is most likely worth.

[scottinpollock (Scott)]

@tslagle13

As a subsidiary Samsung would only own the controlling interest of the common stock… NOT 100%

Tim… I don’t think you know what a Wholly Owned Subsidiary means. Not all subsidiaries are wholly owned. But the wholly owned ones are.

[Ben (Ben Edwards)]

@tvinhas

I just would like you guys to be more open about the development of new functions and support for new devices. I’m not asking for an exact ETA, but just some realistic prevision of when support to Nest and Foscam will be available, just to mention a a few.

Interestingly enough, this acquisition should help with our speed and ability to share our roadmap a bit more due to the simple fact that our entire team can be 100% focused rather than being distracted by months upon months of venture capital discussions and acquisition talks. It was a distraction that I am sure many of you felt. Back to business. This is going to be fun!

[tslagle13 (Tim Slagle)]

Lets just say this…

STs has promised us the same product… They have never lied to us yet, and have treated us very well… SO i am going to trust them and Alex that they did the right thing…

Excited to see what the muscle of Samsung can do to enhance the brand. Excited to see where this takes us.

I am an optimistic person and my Lord Jesus tells me to trust in others, so that what I am going to do

@Ben @urman @garrett @Tyler God has shown some amazing grace over your team and I am super excited for you guys.

Let the fun times begin and the good times roll!

From a certain point onward there is no longer any turning back. That is the point that must be reached.
-Franz Kafka

[Ben (Ben Edwards)]

@chrisb

I may be wrong, but I get the feeling that this company is important to Alex and I doubt he went into this deal without some solid assurances that protect ST. But again… things change. How well with those assurances stand up in the face of different executives who weren’t part of the initial deal who want to do things differently? That’s the concern we’re expressing.

To everyone expressing concerns over the nature of Samsung’s control over SmartThings’ future, legal and financial structure aside, we are being treated uniquely inside Samsung. They realize that we have a much better chance to remain innovative and provide them MORE value by remaining separate and independent. @chrisb is exactly right that Alex, and really everyone at SmartThings care deeply about what happens to it. This isn’t an “exit”. This is a circumstance that is allowing us — in the best way possible — to continue what we set forth to do in the Kickstarter days and before.

Obviously, no one knows the future and what it holds, but we have every confidence, that we can continue to grow our community, create better experiences, and additional devices at a level and at a pace we have not yet been able to achieve — unencumbered by the constant need to raise money or participate in other distracting negotiations.

All we can ask for if the benefit of the doubt and your patience.

[garrett]

100% agreed, Tim. God has been great. Thanks to you for your continued support in our vision and pursuit. Couldn’t do it without you.

[chrisb]

[quote=“Ben, post:150, topic:3461”]All we can ask for if the benefit of the doubt and your patience.
[/quote]

You’ve certainly got that from me. While I’m concerned, I’m also cautiously optimistic as well. I’m by NO MEANS jumping ship, that’s for sure. ST has been a wonderful experience so far. I’ve loved getting back into programming, even if it’s just little bits. I’ve loved being able to automate my home.

Presently, there’s no reason for my to run anywhere else. If that changes in the future, then I’ll deal with that in the future.

[Tyler]

Interview up here:

Why did SmartThings sell to Samsung?

[chrisb]

Thanks for sharing that @tyler.

There’s some real positives to take from that interview. Again, only time will tell if Samsung does something radically different with ST in the future, but for right now, I’m feeling good about the possibilities:

Samsung Exec-VP Eun: “We [OIC] are independent from any single division of Samsung, yet we work with all of them. We think that’s a unique platform for SmartThings. To be at a healthy arm’s length from any single division, so they continue to run independently, yet have access to effectively all of Samsung. That’s what OIC does as a mission, which is why at that level it’s a great fit with SmartThings. All we do is work with startups and entrepreneurs.”

[quote]Interview: “Alex, it can be easy getting lost inside a big company. How are you going to avoid that?”

Eun: “They don’t have to get lost, because they’re not looking to integrate. They’re running independently.”[/quote]

It definitely seems that right now Samsung is committed to keeping ST independent. They are part of a group (OIC) that operates independently from the whole of Samsung, and the head of the OIC is saying that ST will be independent from OIC as well… so there’s sorta a “double layer” of independence from the “Mothership.”

[scottinpollock (Scott)]

@chrisb

I’m also cautiously optimistic

Man! It is hard to be optimistic with samsung. I understand the grind of working at something you love in a struggling startup. And the elation you feel when the right benefactor comes in and removes the pressure. But the terms ‘samsung’ and ‘benefactor’ don’t belong in the same book, let alone the same sentence.

Ben is confident. I am too with respect to the short term. I expect things to really take off now. But at what cost?

SmartThings has some of the best customer support I have witnessed in recent years; samsung has among the worst in the industry.

SmartThings is all about open (the main reason I opted in); nothing about samsung is open. Samsung is an Apple wannabe, but only in the sense they want you to own everything samsung. They offer none of the benefits of Apple’s closed ecosystem, only the requirement that your devices need be all samsung to work with S-this and S-that.

SmartThings is committed to their goals; samsung is committed to nothing. They throw anything against the wall hoping it will stick, and if it doesn’t, simply move on. $200 million is pocket change to them. If they see SmartThings as the next big thing, 10 to 1 we’ll see it as an S-thing rolled into touchwiz. If it is not, doubt we’ll see it at all at that point.

The issue is not just about the product. It is about the sweat equity involved in supporting a new platform. Very hard to make the decision as to when to cut your losses. If it were practically any company other than samsung I would not be so concerned about this.

Since the beginning, HA has been about the little guy. Now we are finally seeing everyone get involved; from Lowes to Comcast to even Best Buy. Hard to have confidence in the johnny come lately corporate players as you know their development is just farmed out to the lowest bidder.

And with “acquisition” firmly on page one of now-a-day’s corporate handbooks, hard to know if the little guys can stay true to their philosophy as a small fish in a big pond.

I am starting to think it is going to take the likes of an Apple or a Google to really pull this off; to put it into a class where it is an ongoing standard; one we don’t need to re-think every couple of years.

So, for now, I am going to nail my lawn chair to the top of my fence and sit in it for a while. Much of my enthusiasm for SmartThings has escaped for the moment (sorry, I just can’t help it). While there isn’t anything I would replace it with now, there most likely will be soon. In the meantime, I’m gonna try to scale back on anything that is SmartThings dependent and just wait and see.

[Ben (Ben Edwards)]

@scottinpollock

SmartThings has some of the best customer support I have witnessed in recent years; samsung has among the worst in the industry.

Our support will remain awesome. It is a huge point of pride for us. We are not out or insourcing it. It will remain a function of our independent company.

@scottinpollock

SmartThings is all about open (the main reason I opted in); nothing about samsung is open. Samsung is an Apple wannabe, but only in the sense they want you to own everything samsung. They offer none of the benefits of Apple’s closed ecosystem, only the requirement that your devices need be all samsung to work with S-this and S-that.

But Samsung values openness. At least in the communications with us. They see the need for a real alternative to the closed systems out there. This an be seen by their involvement in various attempts at standards creation, etc. and now with us.

@scottinpollock

If it were practically any company other than samsung I would not be so concerned about this.

if it makes you feel any better, we had other suitors and for us, this deal allows the MOST autonomy and promise of retaining who we are and only enhancing those aspects.

@scottinpollock

I am starting to think it is going to take the likes of an Apple or a Google to really pull this off; to put it into a class where it is an ongoing standard; one we don’t need to re-think every couple of years.

And now SmartThings is firmly seated with the group you mention here. Frankly, we were at risk, if we continued to be the scrappy startup, of losing ground to Google/Nest, Apple/Homekit, and even GE/Wink. Now we can compete at scale as we have always competed with great experiences.

[vnangia (Varun)]

@tvinhas

@vnangia , I’m guessing you are an Apple fanboy, for so much hate for Samsung.

Yup, that’s exactly it. I couldn’t have a more nuanced viewpoint based on my experience with Samsung. Definitely not. Never mind my G1, Nexus One, Nexus S, Galaxy Nexus, Nexus 4 or Nexus 5 phones, or the Nexus 7-2012 or Nexus 7-2013 tablets that I have (would you like a picture?). Must be the fanboyism.

@tslagle13

Smartthings will remain a WHOLLY OWNED SUBSIDIARY.

Oh good, as a lawyer, you can tell me exactly how that’s preventable without knowing the terms of acquisition. What’s the ownership structure? Do you know? Are you just guessing and making up stuff hoping for the best?

@chrisb

It’s more of a long term outlook that we’re concerned about. Right now the people who were in charge of acquiring ST might have a very specific idea of how they want to handle ST: Give it help financially, and marketing-wise, but leave it otherwise alone.

Very well said. Precisely this.

@Ben

All we can ask for if the benefit of the doubt and your patience.

And that’s what you should have said from the get go, instead of making it sound like you’re confident nothing will change (except for the better). Telling us that you’re unique only reinforces my concern - large companies prefer consistency in everything, including legal relationships.

Replacing my Smartthings hub was not on my “list of things to do this summer” so at least until the Vera or another alternative gets here and I get comfortable with it, I’ll be here, though future purchases will be optimized around the other hub, not Smartthings.

[beckwith]

@Ben

Frankly, we were at risk, if we continued to be the scrappy startup, of losing ground to Google/Nest, Apple/Homekit, and even GE/Wink. Now we can compete at scale as we have always competed with great experiences.

To me this is the bottom line. As much as you (or we) may have wanted you to stay independent, you had no choice but to take on a bigger partner.

[iHavequestions (Mike)]

@Ben, congrats! Wish you guys got more money though! It’s great you have autonomy. I guess if you went with Apple or Google, it wouldn’t work as well with the other side, whichever you chose. So maybe this is for the best although on some level, I guess I wish you got with Apple. Oh well. Either way, I will be a loyal customer!

[yvesracine]

Hi, if this acquisition means better overall user experience on Android (without any other impact on support and the current ecosystem), then it could be positive from my point of view.

It seems that, so far, android users were always left a little bit behind…

Also, the integration with future appliances should not be limited to Samsung hopefully.