Biographies are prominent sights on non-fiction shelves, and many become classics. Business bios? Less so. But a new entry to the genre – Geoffrey Cain’s Samsung Rising: The Inside Story of the South Korean Giant that Set out to Beat Apple and Conquer Tech (Penguin Random House, 2020) – is a corker.
Samsung, which Cain calls a “strange labyrinth of a company,” in many ways mirrors South Korea itself. Indeed, when Koreans call their country “The Republic of Samsung” they are only half-joking. The high-tech juggernaut was a zero-to-hero success story that accelerated from low-end commodity player to high-tech super brand in virtually the blink of an eye – and now stands nose-to-nose with Apple.
That is the upside. The down: Samsung is also a vastly powerful, opaque and abusive entity – one that many Koreans consider representative of the unfairness of native capitalism.
Cain reported from the front lines as a journalist in South Korea between 2009 and 2016 and has chosen a subject worthy of his pen. The end result is a book that speaks to both corporate strategists and big-business haters. And though agonizingly researched – it contains 90 pages of end-notes – the narrative gallops along.
Heroic days
That this is no hagiography is stark from page one. Things start in sizzling style when Galaxy Note 7s start self-combusting – but if your only familiarity with Samsung is products, Cain has your back.
While its chairman is treated “like a god,” the foundation of Samsung (“Three Stars”) was humble. In 1938, in then-colonial Korea, founder Lee Byung-chul (“BC”) kicked it off as a dried-fish and vegetable stall, before expanding into beer.
BC was inspired by Mitsubishi (“Three Diamonds”), but while Japanese zaibatsu – family-owned conglomerates – were dismantled, post-World War II, and their place taken by keiretsu – groups owned by shareholders’ collectives – BC would create a family-centric management structure that persists to this day. Thus were born the chaebol, or wealth clans, that also include Hyundai, LG and Lotte.
Samsung expanded into media, sugar refining, textiles and insurance; BC was a star businessman by the 1950s. Corruption made him vulnerable when stern general Park Chung-hee seized power in Seoul. Park let BC off the legal hook; the price was aligning Samsung with Seoul to build a brave new industrialized South Korea in the 1960s and ’70s.
Generously funded by government, Samsung became a pillar of “The Economic Miracle” but the Lee family – like Korean kingdoms of yore, and North Korea’s Kim dynasty today – was disunited. Feuding children battled over inheritances: one BC son was jailed for corruption, another was exiled for violent instability.
BC’s successor was youngest son Keun-hee, or“KH,” (who has been in a deep coma and on life support in a Samsung hospital since 2015). Cain showcases a complex character, a loner with a creative mind, a dog lover and race-car driver who deployed secret cameras to spy on employees and had a bullying personal style.
Cain also slings some salacious mud. KH was addicted to a powerful opioid, and was secretly filmed being serviced by four hookers.
But he had vision. KH invested his own cash in semiconductors. Electronics components and devices would become the heart of a company that, once derided as “Sam-suck,” rose to challenge the tech world’s giants.
How?
Government backing was an early factor. Decisive, top-down decision making was another, as was HR. Cain relates tales of legendary diligence. We learn of executives memorizing technical manuals, of a dedicated semiconductor design team working bonkers hours for Apple to enable the iPhone. A brutal culture of berating keeps executives on their toes, while strategies to crush competitors – all of whom underestimated Samsung, to their detriment – were craftily formulated.
We learn of the manic demands for quality control that lifted Samsung from good to great. Cain invites the reader to the infamous “Frankfurt Conference” where KH harangued executives, breathlessly, for four days. His message was reinforced when a US$50 million heap of sub-quality Samsung products was torched and bulldozed. Samsung executives, from then on, would never rest on their laurels; a sense of “permanent crisis” was imbued.
Dark side
But there are missteps. Samsung made a foolish leap into autos based purely on KH’s whim, and the idea that Koreans “would surf the web” on telephones was originally derided.
The sprawling conglomerate has little in common with Silicon Valley firms. With its militaristic culture and engineering focus, Samsung lacked competence in the soft side of business – hence much design, marketing and branding nous was sourced from the US. American hires often struggled and the average tenure on the US marketing team was 7.5 months, Cain discovers.
Miky Lee – the Parasite producer who delivered the Best Picture speech at this year’s Oscars – was KH’s niece and personal favorite. Tasked with recruiting foreign talent to upgrade Samsung design, she delivered, creating an in-house college and training arm. The product placement of Samsung phones in The Matrix was so successful it entered Samsung’s official history, but the gifted Lee would break away and turn CJ, a Samsung affiliate, into a powerful entertainment conglomerate.
Though most of his book’s action takes place in the US, Cain casts a harsh light on the dark side of Samsung in its native land. It’s compelling stuff.
Cain admires many executives, but is bemused by Samsung’s leadership cult. Red carpets were literally rolled out for chairman plant visits, and when KH went to Germany to vacation, Samsung rented two floors of his hotel and established a “situation room” to ensure his holiday went swimmingly.
A reverence for leaders and a militaristic spirit, Cain avers, are shared by Samsung and Pyongyang. He even details mass-games-type pageants held by and for employees.
The routine bribery of officials and dubious financial maneuvers that loyal captains undertake on the ruling family’s behalf are extensively detailed, as are the political and judicial decisions that keep the Lees (mostly) out of jail. Whistleblowers are socially and professionally ruined.
In order for the Lees to maintain control despite minimalist shareholdings, the vast group has a bewildering ownership makeup. In what may be an exemplar of chaos theory, a diagram of Samsung’s corporate structure looks suspiciously like a semiconductor’s guts.
This is war
Cain covers Samsung’s bypassing of Sony in short order. The Japanese giant, it appears, was more victim of its own errors than Samsung’s devious brilliance. More central is the Apple-Samsung war. (Perhaps to lure US readers, perhaps to forestall Samsung lawyers, the dust jacket features the Apple, not Samsung logo.)
The opponents are a study in contrasts – Apple is the innovative leader with a narrow, specialized product portfolio, while Samsung is the uber-efficient fast follower with the miles-wide portfolio.
Relations began amicably. A youthful Steve Jobs visited a gritty Samsung in 1983 with plans for a tablet computer. His brilliance was recognized by BC, but Apple booted Jobs before a partnership could form. Samsung subsequently supplied Apple with chips, but a legal war was declared in 2011 when the US firm accused the Korean of copying its smartphone technology.
Cain dives deeper into marketing than technological or legal strategies, explaining how Samsung hired Nike veteran Todd Pendleton to muscle-up its brand. Pendleton released his edgy anti-Apple “Next Big Thing” ad before Seoul approved it. Head office hated it, but it landed squarely in Apple’s groin. Before long, Samsung phones were outselling Apple’s.
Still, Samsung – a hardcore hardware firm – never rivaled Apple in software. It declined to buy Android two weeks before Google acquired it, its in-house OS went nowhere and Samsung’s failed thrust into software irked Google.
A celebrity endorsement from Ellen De Generes on Oscars night soared, but attempts to create dedicated user communities in partnerships with US entertainment giants foundered due to resistance from engineering-centric head office chiefs and dodgy execution.
Samsung’s third-generation leading Lee, Jae-yong (“Jay”) comes across as pleasant and more easy-going than his predecessors. He sensibly sells off non-core assets and tries to dampen hierarchies. But he is also painted as somewhat dim-witted, lacking the charisma and vision of Dad and Grandpa. The exploding Galaxies debacle unfolds on his watch.
The story of his ascent to de facto leadership – de jure, the comatose KH retains the chairmanship – typically involved a shadowy inheritance play/bribery scam. As usual, minority shareholders took hits, infuriating activist fund Elliot Management. Despite the support of Korea’s spy agency and pension fund, Samsung was found out.
That contributed to a snowballing scandal that sparked the downfall of hapless President Park Geun-hye, impeached in 2017. Today, she rots in jail on a combined 33-year rap, while Samsung lawyers sprung Jay, convicted of corruption and bribery, within a year.
Verdict
Cain cooks up a fast-moving feast.
Even this writer, who has covered Korea for more than a dozen years, is awed by his sources (albeit, Cain has an irritating habit of telling the reader what he ate and drank with them). The author meets a battery-explosion investigator, retired Samsung executives and aides, distant relatives and foreign veterans of the company. All tell tales, granting the book a rich vein of anecdotes.
BC was infuriated to see a North Korean invader commandeer his Chevvy in 1950. In 1983, Samsung executives undertook a day-night hike in snowy mountains to toughen them up before inaugurating the first semiconductor fab. Cain even reveals why Samsung’s flagship smartphone was dubbed “Galaxy.” (It was named for an American wine quaffed by Samsung execs.)
With all this detail, the reader is in danger of losing sight of the wood for the trees, but overall, Cain paints a picture of a company you might like to buy from, but would never work for. No Samsung staffers will be seen dead with this book, but rest assured, they will devour it behind locked doors.
Criticisms? Samsung endures, but Samsung Rising ends with a quote-heavy epilog and a cliffhanger related to the never-ending legal woes facing Jay. Readers may find themselves calling out for a more ambitious “Quo vadis, Samsung?” analysis.
Another issue is timing. Samsung Rising has been long in gestation – Cain granted Asia Times an interview on the book in 2017 – and Apple vs Samsung is old hat. Cain does not address the central issue in tech today – the Trumpian decoupling underway as rift widens to chasm between China and the US.
Where Samsung – and Korea, for that matter – fit into this clash of the titans is ignored; Chinese contender Huawei merits but a single line in the book.
Yet, Cain provides essential reading for the 21st century, for his subject is a central player in the sector that is transforming our world. Populated by a cast of alpha+ characters, alive with incident and weighty with import, Samsung Rising is a masterclass in business bio-writing – one that reads like a cyberpunk thriller crackling with circuitry, lit by neon and fueled by soju.