Samsung Rising is a new book from journalist and author Geoffrey Cain, and it is the best account of the colossal rise of the Korean conglomerate to power I have read. Cain’s book, thoroughly researched and reported, describes how Samsung changed from a vegetable vendor to a global tech titan, with plenty of colorful anecdotes along the way.
If you’ve ever wondered how the infamous Galaxy S II “Dude, you’re a barista” campaign came about, or what happened behind the scenes during the Galaxy Note 7 fire crisis, or how Samsung’s leaders in it have managed to survive multiple fraud beliefs, this is the book for you. Appropriately condemning Samsung’s failures and admiring its achievements, Cain’s writing provides a comprehensive overview of one of the most closed and consistent companies in the world.
I spoke to Cain via Skype to discuss the book, Samsung’s influence and where the chaebol is headed. Our conversation included topics such as how Samsung responds to crises like the Galaxy Fold and Note 7, how it is indirectly responsible for the success of Parasite, why allegedly incapacitated chairman Lee Kun-hee is still in charge of the company, and what the heir’s trip to North Korea says about the future of corporate culture in the South. “Despite its success, Samsung keeps making the same mistakes over and over again,” Cain tells me.
The transcript is condensed for length and clarity.
I have been following your work and knew this book is coming for a while. How was the road to its publication? Have you encountered obstacles that delayed it?
I ran into obstacles. Samsung didn’t really try to mess with or mess with the book’s publication – they were pretty good at sitting back and unofficially allowing me to run around and interview people and do my job. The main obstacles were only the opacity of what it is like to be a journalist in Korea. You may have seen this in Japan too. It can be difficult to access people, and executives and leaders don’t often interview foreign correspondents.
In the end, it was just perseverance. I had to research for years and years and years because there was no Samsung story. It’s not like Apple where you can grab a lot of books and read the storyline beforehand. When it comes to a large Asian company, even in the local language, there are a lot of public relations fluff and you don’t really get the real story if you read a lot of books published in Korean. So yeah, it was hard work and it was a long time in the making, and it was delayed a few times, but I finally made it. It was an intensely editorial process – I think my publisher really elevated the prose and made it more readable and accessible, and I think it was necessary in the end.
Have you been able to publish the book in South Korea? The book examines how difficult it is to get critical opinions about Samsung published there.
Yes, we actually have a Korean publisher called Just Books. I am astonished that they have decided to take this on because it is an independent publishing house, it is not a large publishing house and I assumed that many of these publishers would not be interested. After we first signed the US deal, my agent went through Korea and tried to sell it to major Korean publishers, and everyone rejected it. We’ve received 14 rejections, and some of them said bluntly that Samsung was sensitive and they just can’t publish such a book. And then my Korean publishing house Kyung came by and saw promise in this and she really was a champion of it. I think she is very happy with the potential in Korea that it could have. But there are also big risks, you know, because people are being charged, there are lawsuits for defamation. You don’t want to be on the bad side of Samsung, I can assure you.
How did you get the name? Samsung Rising? I saw some early titles floating around earlier, like Republic of Samsung.
So basically it was the title I originally chose Republic of Samsung and that was my proposal to the publisher. And then we changed the title a few times because we couldn’t really find a headline that captured the full momentum of what the book should be about. Republic of Samsung, I think it sums up the Korean side of the story – how Korea is this republic of Samsung and Samsung has such an impact on life in Korea, and Koreans call their country the republic of Samsung. But then we thought it might be a little too Korea-focused, and the book contains many global elements.
So another title we went to was The Battle for Silicon Valley, and that’s a title that represents the war between Apple and Samsung. And that’s something I think would appeal to a lot of techs and geeks, you know, who are based out of San Francisco and want to know the story of this big smartphone fight. Everyone has read about it or seen it on the news and they use their iPhones or their Samsungs, but there has never really been a full report on how that war really unfolded from within. But then the problem with The Battle for Silicon Valley was that it didn’t really resonate with the fact that this is an Asian dynasty competing with these major international multinationals. In the end we decided Samsung Rising because, you know, it has Samsung in the title – so that’s the Asian corporate dynasty there – but it captures the momentum of this small supermarket selling dried fish and vegetables back in the 1930s, which has been history and very crude series of wars and corruption scandals and political battles, turns out to be the largest technology conglomerate in the world.
The book follows Samsung from the days of its founding figures, looking at Japanese companies as a model and eventually eventually getting up and overcoming Sony. And it was striking to hear about the cultural reverence for Japanese companies at the time. Do you think that there is something in the current Samsung or has the success made them more insular and focused on their own way of doing things?
So I think the big story of their successes over the past decade is the smartphone. The Galaxy made up a huge, massive chunk of the entire Samsung group’s revenue. I think that was their goal for a long time. They knew they came from this poor, backward, dusty colony of Korea. and for a long time they knew they were essentially borrowing Japanese business practices. I mean, Samsung was essentially a Japanese company for a long time. In Japan, you have the war-era zaibatsu, and Samsung was essentially modeled after that divine business leader’s idea who has this top-down vision he sends to all executives. And thus, they were able to make all this rapid progress, that they undoubtedly did what they did. They did it for the glory of Korea.
Their idea was to change Samsung from a third-class component and semiconductor and microwave oven manufacturer that would put the GE logo into a manufacturer of premium smartphones that could compete with Apple and compete with Sony. And that is not an easy task, but they did it because of their militaristic culture. But I think it is very clear to many people that there is not really another success at the smartphone level in the pipeline. It is no longer so much about being a consumer-oriented brand. I think they are going to do more components. They’ve announced a big push in these NAND memory semiconductors, making chips for the future artificial intelligence systems that need powerful chips. And QLED, quantum LED too – they recently stopped making LCDs. They are entering a phase where I think they are innovating more on the component side and they are going to be doing technical work behind the scenes, not so much for the public.
That’s also what happened to Sony.
Yes, I think so. It is worrying because that is what China is doing. China is catching up fast. And perhaps the only saving grace at the moment is that the world has a trade war with China, or at least the West. And that’s why Samsung gets slightly less competition from them. But I think Samsung had seen its peak with the marketing, with the software, trying to compete with Apple and make their own version of the iPhone. They cut back on the idea that “we’re a manufacturing giant, we’re an engineering company. We’re not the cool kids in Silicon Valley.” But how do you distinguish yourself from Huawei or another Chinese company? I mean, if there isn’t a catastrophe in the meantime in five years, then Huawei, Xiaomi, Lenovo, these companies will have a huge impact on many of the same industries that Samsung is in now.
The book covers how Samsung has really gained a technical edge on Apple in certain ways, such as large OLED screens in the Galaxy phones and so on. But nowadays you hear more from Chinese companies. For example, if you look at the new Galaxy S20, the main features are things you could have got from Huawei or Oppo or Xiaomi last year. And this affects their market share in India and everywhere. Another thing you go into is the software issues – like disputes with Google over TouchWiz and trying to make Milk Music a success. Is there a way for Samsung to tell that story as a consumer brand in the future?
I think there is some kind of promise, but the problem is that it is not quite clear yet what that consumer brand will be. So in the past it was Galaxy. You know, it was “The Next Big Thing,” that’s a marketing campaign I covered in the book. It was Milk Music, it was the attempt to make Tizen OS. A lot of these things, Samsung did and they did well for a while, and then they pulled it back because the current headquarters did the work that overseas marketing offices and software didn’t really trust or enjoyed. They felt they should have control over it, which was a serious mistake.
It talks about the Korean chaebol culture of not trusting outsiders at work, of trying to control pretty much everything you can from the headquarters themselves. The Samsung consumer brand problem doesn’t come from the products themselves. The deeper problem is in the corporate culture – the reluctance to do something really big and new. I mean, I think many of the innovations we now see from Korean companies are just incremental ones. They essentially build on what the leaders have done. They’re tinkering with improvements here and there, you know, a new processor or a new OLED screen or a new curved screen. But they don’t really do the big product that’s going to change things like what the iPhone did in 2007.
But I honestly think it’s not just Samsung’s problem. I think a lot of industry is facing this problem because it really has been a long time since we had that one major technical glitch. The iPhone, the smartphone, followed by social media and the expansion of Twitter and Facebook, these were really the big disruptions of the past decade that have changed a lot of how we perceive the world and how we get our news and how we interact with our is alive and doing business. But it has been a while and it is not entirely clear now what the next major glitch is. You know, people say AI, facial recognition technologies, biotech. All these great technical movements are coming. So Samsung’s problem is that they have invested a lot in many of these areas that should disrupt the technology but have not made any progress in its development. Samsung was in biotech with a company called Samsung BioLogics. They decided to do incremental innovations in healthcare. And that company had fraudulent accounting issues, and its inventory was simply scrapped because of some of the fraudulent accounting that had happened in that company. And there was destruction of evidence when the prosecutors tried to investigate.
The other problem is artificial intelligence. Samsung has developed a software called Bixby that is similar to the Google Assistant. They want to have their own AI system that can power all their hardware, but they haven’t been able to turn that into something as big as what Google or Amazon are doing. AI is a forward-looking technology – in the future, it will take away people’s mental strain and AI systems will process a lot of what we do for us. That will change a lot of how we live our lives. But Samsung is lagging behind in that. They have invested a lot in AI-focused semiconductors, which is a good position to be in. But again, that raises the problem of what about when China starts this? China has its own industry. Over the past decade, China has made tremendous progress in AI with WeChat, particularly in software. Thanks to the data they collect about their citizens, AI can work well. And they also make semiconductors. So basically, China can do what Korea can do, and that’s Korea’s problem now.
There will be a glitch and then Samsung and other Korean companies will do what they have done in the past and catch up. You know, they will see the outage. It may take a while for them to realize what is happening. But as soon as they see it, they go into execution mode and they will follow and imitate them. They will do what they can to ensure that they can overtake the leader in that area when the outage occurs.
One question I still have after reading the book is how exactly Samsung is using the Galaxy Note 7 fire crisis. You go into that story in detail, but then you quote the Verge review of the Note 8 where Dan said it was even better than the 7, which was the critical consensus at the time. But I always thought that if there was something that would definitely sink a brand into the minds of consumers, it would be. Remember there were anti-Galaxy Note warning signs at every check-in counter in every airport around the world and so on? What does Samsung say they survived that saga?
Yes, good question. I think it shows that Samsung is such a huge company and so resilient. The Note 7 fires were devastating to them. But Samsung is a company that is doing well in crisis. I mean, Samsung has been through corruption scandals and sex scandals and political crises and faulty products and their leaders have been in and out of court for all kinds of embezzlement, tax evasion allegations, and dark stock sales and financial mismanagement and destruction of evidence. Samsung is a company that just has a track record of being confused, but then manages to survive intact. It is exactly what their system is. Their system is designed to sustain disasters and deal with crises and find ways to get out. And then move on very quickly.
And I think with the Note 7 fires, yes, totally devastating. I mean, that’s probably making billions of dollars in losses. And it was a major security risk to the public. But one of the great things about this company is how they can do that. Because they had so many product lines, they make so many things. Yes, it is terrible when the Galaxy brand name starts to drain. But then they will make a lot of money in the future from semiconductors or from displays. And they can invest those profits in another promising new area. They have the option to use different business units to their advantage. And that’s why, when the Note 7 fires happened and Jay Lee, their leader, was arrested, their gains hit record highs. It also caused the South Korean stock market to hit record highs.
The other factor here is that consumers quickly forget and move on. There was a lot of trademark damage at the time. But I think if you ask the average person about those Note 7 fires, I think they’ll vaguely remember and say, “Oh yeah, I remember when that happened, and that was Samsung, right?” But I don’t think they make decisions based on that. I haven’t met many people who have actively thought about those fires from a few years ago. To give a parallel, there is the famous memory of Tylenol from the early eighties, when Tylenol poisoned and eventually killed some people [as a result of drug tampering]. That could have destroyed Tylenol and that would have been the end of Tylenol as a brand. But people go on and eventually they just start to forget.
So even though I don’t think Samsung ever really got to the core problem of management culture, I think they managed to redo it and move on in a way that made everyone forget because they were producing so many products, they were producing so many things. They just have ways to get back from this.
Well, the difference with Tylenol is, wasn’t that considered a kind of transparent model and the problem stays with the reaction? While Samsung denied that the problem existed and then said it was solved and the replacement units caught fire as well. So I was just a little surprised people would forget. Maybe I’m too close to the whole situation.
Yes. When I was writing the book I didn’t forget and it was fresh in my head all the time. Samsung even attacked me at the time. They didn’t want me to write about this, they were not happy with what I said about them. I remember just sitting there when these attacks came against me and thought “isn’t this company concerned about its reputation?” I mean, they had these exploding phones and they’re busy writing letters for me, trying to discredit a journalist who handles them. Don’t they have more important things to worry about? I’m just a little boy here on my smartphone who writes emails to people, and they try to shut me down and lock me in like I’m a big threat to their brand. You know, it’s the phones that are the threat. Obviously, it’s your exploding phones that you should care about.
I was also surprised that people moved on quickly. But you’re right about Tylenol, which was a great example of success, while Samsung made things a bit worse. But regardless of the success or failure, you know, I just think people tend to forget. And that’s what I saw over time. I mean, the Galaxy they released right after that didn’t do very well, but it was still open to good reviews.
Do you think that bodes well for future foldable phones from Samsung what happened with the Galaxy Fold?
Yes, that was a pretty disastrous roll out, the first one. DJ Koh, who was the CEO at the time, went on record and said he rushed to market it. This is similar to what happened with the Galaxy Note 7. The difference with the Note 7 is that, you know, they took it to the full market, while the Galaxy Fold went to reviewers, thankfully, thankfully. That would have been disastrous if it went to everyone. I think if the Note 7 fires never happened, these reports can come in and still send the Fold in denial because that’s what happened to the Note 7. Many executives denied that this could happen and they told their employees not to talk about it. “Don’t deal with this, we’re going to suffocate this information.”
I had many resources at Samsung telling me about the rush job done first [Galaxy Fold]. They had it planned for almost a decade, which is incredible. They knew about this technology long in advance and they had done a lot of very careful work, but the pressure came on as the smartphone market came of age and Samsung thought it must have been some kind of cool new thing or a little disruption to the way phones are designed. And finally, they said, look, we’ve been working on this for ten years. We’ve gone through so many designs and patents, and none of them have really worked, but we just need to get this out. They ran it out, it didn’t work and it was a disaster because they had to remember.
I think with the newer phones, I’m sure they’ve fixed the hardware issues by now. I personally haven’t tried the newer foldable Galaxy phones but I think the problem is that this is still an incremental hardware innovation. I think internally the Samsung managers know that this will only take a few years before it turns into something else and before it can be made by anyone for a pretty cheap price. I don’t think these will have a big life ahead of them.
If you look at the history of phones, there was a day for smartphones that you could buy the foldable phone or buy the candy bar phone or the snap up phone. There used to be all these different designs that were super cheap and super easy to use. And I think that’s what happens with smartphones. I think the technology has gotten so good and matured so well that in the end it will be like getting the foldable or the snap up or the regular view. And in the end it will all get a little cheap. I don’t think hardware will be the future of what defines a smartphone.
Another thing that you write about in the book is the cultural power of Korea, which has of course been a highlight lately Parasite. I was wondering if you had something to say about that, if there had been time to get it in the book when it happened? Miky Lee from CJ Group was on stage to receive that Oscar and she is a central character in a few chapters. Do you think you can draw a line between Samsung’s success and things like Parasite and the growing prominence of Korean pop culture around the world?
Yes, actually me wrote an article about it a few months ago Foreign policy, and I used a lot of material from the Samsung book in it. You could draw a line, yes. So Miky Lee, the producer of Parasiteshe was heiress to Samsung’s founding family. She is an American citizen and has always been a bit of a movie buff and a cultural fanatic. She taught Korean at Harvard when she graduated. And she regretted that, you know, Korea was just seen as such an insignificant place, why would anyone want to get involved? And she actually made it her goal to make Korea this cultural superpower. She had a big hand in the Korean wave and received Korean cinema, Korean culture, K-pop music, all that in the open.
It didn’t really start until the 1990s, after the death of Samsung’s founder. There was an inheritance process, and each child inherited one of the five arms of this Samsung empire. And her family member happened to inherit Cheil Jedang, CJ, who was a food supplier at the time, just cheap confectioners and stuff. She knew she wanted to get into film and culture, and her uncle, the Samsung chairman [Lee Kun-hee], was negotiating with DreamWorks to get a full stake. He wanted to buy DreamWorks and make it part of Samsung. And his goal, as I understood from what Samsung executives told me, was to actually bring Steven Spielberg under his control as a director. Of course that’s a ridiculous idea in Hollywood. No respectable director will let a semiconductor company like Samsung take over and tell you how to make your films.
So Spielberg rejected the Samsung chairman, but the woman who brokered it was his cousin Miky Lee, the vice chairman of CJ. And Spielberg and his team were very impressed with her. They already knew her. And they decided to go back and offer her a $ 300 million stake, which, yes, she would be a smaller investor, she got a stake of about 10 percent, but she used her alliance with DreamWorks to transform CJ from this insignificant confectionery supplier into a true cinematic powerhouse. It didn’t happen right away, but that collaboration gave her access to the talent. You know, her filmmakers could learn from DreamWorks. She had distribution rights in Asia. And it was the use of this connection and these Hollywood networks that allowed her to promote Korea and bring movies Parasite forward. And before Parasite there was Oldboy and Common safety room and Snowpiercer. So far, there has been a very long line of very well-received Korean movies produced by Miky Lee and produced by CJ.
So, yes, I think that shows how influential Samsung’s founding family is. In the world of Korea and the spread of Korean culture, I find it incredible how they touch every facet of this nation. And they are so responsible that they come out into the world, be it a smartphone or not Parasite or something else. Samsung touches everything when it comes to Korea around the world.
What do you think this chaebol culture will look like in the future? It always seemed to be such a real estate in the past, but especially the consequences for Jay Y. Lee [former president] Park Geun-hye is serious and now [current president] Moon Jae-in wants to be seen as a reformer. How do you think this will shake up in the future, and how can it affect Samsung?
Yes, I actually thought a lot about that. So my opinion is that when I wrote the book, I always got the feeling that the chaebol culture and Samsung culture are about to change. I had a feeling that I was writing about a pregnant woman about to have the baby come out and you know life will be different for them. But as I went deeper and deeper, especially in history, I realized how deep-rooted the pattern is and how history keeps repeating and how Samsung, despite its success, makes the same mistakes over and over again.
Every Samsung leader has been in and out of court so far. They have been charged or convicted or convicted of tax evasion, bribery, embezzlement or perjury. I mean, these are serious crimes and serious allegations against Samsung’s best buyer, who are the most powerful people in Korea and some of the most powerful people in technology, despite not being so well known. Now, Jay Lee, he’s waiting for his latest lawsuit. He spent a year in prison and was released on parole. The judge maintained part of his bribery charges, but reduced the number of bribes he was charged with. And his judgment is coming soon. But the more I look at it, the more I start to get cynical and think he may be somehow fired. He may be sent back to prison or given a suspended sentence. But I feel like things are lining up so it will go easy for him and he will serve his business and his country again – that’s essentially how the government sees it.
And the reason I say things line up that way is because the current Korean president [Moon] came in and said he would reform the chaebol groups after some very serious corruption scandals that led to the demise and 33 years of imprisonment of President Park Geun-hye and the arrest of Jay Lee, Samsung’s heir. We are three years in a five-year period. And he appointed someone named Kim Sang-jo, who is the head of the Korean FTC, who he says will go against the chaebol. But in the end, I think we see more of the same, because even when Jay Lee was released from prison, he was still a convicted criminal. But the first thing Moon did was he brought Jay Lee to North Korea for this summit with Kim Jong-un, which is incredible.
I cannot think of any other country where you are the President, and you are going somewhere to a diplomatic summit, supposedly a historic summit, and the man by your side is a convicted criminal. I think I could see Donald Trump pull something like that. But it’s as if President Trump would go to Japan for a big summit with Shinzo Abe, and he decides to bring Bernie Madoff to Japan as a symbol of American goodwill. I think most people in Japan and America would look at that and think – I mean I don’t even have to say it would just be utterly ridiculous. And I think the fact that Moon Jae-in would even think about doing that shows that the government is still complacent and they are not as interested in reforming the criminal aspects of the chaebol groups.
Let’s wrap up with the biggest question. What do you think is going on [chairman] Lee Kun-hee, or how many people do you think really know what’s going on with him?
So this was not in the book, but actually I was talking to someone who was involved, not someone who actually treated him, but who was involved and familiar with the treatment that was being given. The word he sends me is that Lee Kun-hee is on ice, that was the exact expression. Rumor has it that he is incapacitated for work. Samsung is not entirely clear what the status of his health is. Maar ik hoor van veel mensen die dit bij Samsung kennen dat hij in wezen wordt gezien als een lijk. Ik moet gewoon verduidelijken dat ik niet in de ziekenhuiskamer ben geweest en ik kan zijn staat niet persoonlijk bevestigen.
Maar als ze dit over hun eigen voorzitter zeggen, dan neem ik aan dat, weet je, hij in feite arbeidsongeschikt is en zo dicht mogelijk bij de dood kan zijn. Maar Samsung houdt hem in leven vanwege de redenen om dit overervingsproces af te ronden, wat ik ook heel ongebruikelijk en excentriek vind aan de bedrijfscultuur van Samsung. Kun je je voorstellen dat Mark Zuckerberg in coma raakt en zes jaar later nog steeds levensondersteuning heeft en nog steeds de president van Facebook is? En Facebook zal je niet echt vertellen wat er met hem aan de hand is, maar hij bereidt zich voor om Facebook door te geven aan zijn zoon? Het is echt een ongebruikelijke manier om dingen te doen en ik vind het zo fascinerend.
De rol van Jay Lee is niet strikt uitvoerend in de zin van een CEO. Maar denk je dat de situatie in sommige opzichten de mogelijkheden van Samsung om te werken of om veranderingen aan te brengen, beperkt?
Dat is dus het argument dat veel Samsung-supporters gebruiken om de aanwezigheid van een stichtende familie te ondersteunen. I think that the founding family, instead of calling them the chairman, I try to think of them as the chief visionary officer. They laid down the vision and they might help make a big decision whether to make a multi-billion dollar investment in a semiconductor or display. But outside of that, the day-to-day business is run on its own. The Samsung executives can pretty much do what they want without the founding family directing them or meddling in their affairs. And that’s actually really similar to the Japanese zaibatsu model from the prewar times, which I find really interesting.
But you know, I’ve met hundreds and hundreds of very talented Samsung executives and whether they’re young or old, these are people who are highly educated, highly competent. They know what they’re doing. They know both, say, the guts of a smartphone in addition to what business decisions need to be made to improve their company. And I’ve always gotten the impression that they can run the show themselves, that there’s really not much of a need this far into their corporate history for a founding family to oversee them.
One of the problems with Jay Lee, and I don’t know if you sense this from the book, is the story around his life is so opaque. We really have no idea. Samsung has kept him on such a lockdown that really so many people just have no idea what he’s capable of — what major decisions he’s made, what successes he can post. Has he actually made a decision that has improved the actual balance sheets of Samsung? I think that a lot of the information that Samsung puts out on him is vague, and that’s not a good sign for an heir who’s about to take over one of the biggest technology companies in the world. And if the shareholders can’t vet and can’t say they have questions about this guy, then I would be very worried for the future of the company leadership.
I don’t even know if he’ll be totally capable in the position. I’m sure he’s smart. He’s been prepared for this all his life. But the only actual instance of him leading a business venture in Samsung was eSamsung, which is in the book. And that was a disaster. It was a dot-com bubble era online services firm, and within a year it was insolvent. It went bankrupt. And then Samsung bought up his shares and saved him from a financial loss.
It’s okay to fail in a business. And especially in technology, if you look at every big entrepreneur, they failed over and over and over again before finally making it. We tend to think of these garage success stories where the young kids just make the computer and then everything’s great. But when you look deeper at the story, it’s one of hard times or failure. And I’m sure that happened with Jay Lee, too. But then the problem is that he was saved by his family’s company, by his father’s protection that saved him from any kind of financial loss. If you fail, you have to take some kind of loss, and if you’re supported by VC then the VC will be the one taking the loss. But we can’t really have a system set up in which an heir like Jay Lee is given a ticket to become the heir but then he doesn’t have to show what he’s really capable of. It is worrisome.
I think that’s a good place to leave it: uncertainty and doubt. I really appreciate your time, and congratulations on the launch. You must be relieved to get it out.
Yes. Thank you, I appreciate that. It’s been a long time.
Samsung Rising is out now through Random House.