T.J. made the case that if Samsung wanted faster results, it would have
to forgo building new capabilities in-house, as Samsung traditionally did. It
would have to explore the much-fabled promised land on the other side of
the Pacific: Silicon Valley.
“They didn’t want to wait seven, eight years before we started having
some traction,” he told me. “Meanwhile, Samsung was making money left
and right.” With the success of its smartphones, Samsung’s cash pile would
soon grow to $28.5 billion, money it could put to use in acquiring software
companies.
Chairman Lee II and his son Jay Lee, Samsung’s crown prince, came
out in support of acquisitions, and as a result the strategy won out. Over the
coming half decade, Samsung snatched up start-ups as if panning for gold
—you’d wade through a lot of junk, but the rare nuggets would hopefully
make up for it. Samsung set aside $1.1 billion in venture capital for start-
ups and began poaching software engineers from Apple and its ilk. Work
would eventually begin on a $300 million research facility in San Jose,
which broke ground in 2013. If Samsung wanted to hire software talent,
Silicon Valley was the place to find it.
“There was a rumor that Palm was being shopped around,” said T.J. He
saw Palm as a good buy for an operating system for Galaxy phones. Just as
he flew out to begin talks, Hewlett-Packard beat him to it with a $1.2
billion acquisition. Then HP approached T.J. about splitting ownership with
Samsung.
T.J. was prepared to negotiate with HP, when its CEO Mark Hurd
became “embroiled in this sex scandal,” in T.J.’s words, resigning when
news broke about a tryst with a female contractor. “There was a fight for
Hurd’s position,” he said. “The guy who led the conversation [with Samsung
about Palm] got distracted.”
In Cannes at the music technology conference Midem, T.J. stumbled on
the chance to bring his dream to life. He’d heard from an assistant about a
pair of California software entrepreneurs, Daren Tsui and Ed Ho. One of
them, Tsui, was giving a talk about “digital locker” technology.