Sparking Net New Innovation At Massive Scale — With LG's Sokwoo Rhee

Channel: Alex Kantrowitz

Published at: 2024-09-17

YouTube video id: K057TJl5Qd4

Source: https://www.youtube.com/watch?v=K057TJl5Qd4

let's talk with the Executive Vice
President of innovation at LG
Electronics about how the company is
working to spark Innovation within
itself and looking to build the
businesses of the future in a method
that itself is innovative we're joined
today by sokuri he is as I mentioned
Executive Vice President of innovation
at LG and uh first of all soku I'm
thrilled to have you here in a in a
conversation sponsored by LG great to
see you thanks for being here yeah great
to be here thanks for inviting me and uh
thank you for inviting me to LG inest
which is uh your Innovation Festival
it's going to be next week in San
Francisco September 25th and September
26th at I think the coolest venue in the
entire city the Palace of Fine Arts so
tell us a little absolutely yeah so
every year we have this Innovation
festival and it's our um it's our gift
to The Innovation Community put it that
way it's a party they threw in uh no
pressure I mean it's going to be
business as us business uh uh show
anyway however we want everybody to come
in and do not feel like they're pressur
to do business it's a party come in
enjoy talk about what your interest is
and you'll see a lot of people over
there that share the same interest and
same kind of um uh spirit so that's
going to be fun and do you have to pay
to get in no no that's what I parted
that is a party we we threw a party for
innovators okay well I'll be there I'm
excited I know you also have the one of
the founders of Siri that's going to be
there what a moment to have that
conversation especially as it's Ai and
voice AI this year more than ever is
something that people are speaking about
so let me ask you this to start because
when I first heard of uh LG Nova I was a
little bit surprised it is such a unique
structure within LG like ICS we all know
about LG products I've been a customer
I've used the LG phones back in the day
and I have more LG products here in my
house uh what is it like setting up an
incubator or is it even the right phrase
to call it an an incubator but an
innovation minded division within the
company that's trying to find net new
technology for it so not trying to
innovate on current products I believe
but really trying to find the technology
of the future that LG can co-invest with
and build and and help develop and
Foster and to stay on The Cutting Edge
tell us a little bit about it yeah Alex
I think you hit the head of the nail so
LG Electronics $70
billion annual uh Revenue with
appliances and TVs and so on so it's one
of the largest appliances companies in
the world uh we are doing very well uh
we grow every year uh you know five uh
they between 8 to 10%
consistently and is is just a great uh
growth uh from the perspective of a
hardware company now we also look at the
future so at the end of the day there
are nonh Hardware businesses in the
world that are growing probably faster
with a bigger profit margin so that's
what you're looking at and LG
Electronics uh thought that it would be
better to create a new division to
create new businesses and business units
uh uh for those kind of future growth
areas so that's what we are uh that's in
a sense that our mission uh you you said
it correctly is to create new businesses
that LG Electronics has never thought
about or they thought about it but that
couldn't make you work so that's our
mission okay so new division it's about
3 years old but you know it sounds
really logical when you talk about the
mission find new businesses but to
actually go about it in practice and do
it in practice that's hard I mean that
is hard work and I don't know to to be
honest if there's like a natural way to
do it from within a company that's as
large as you say so how how does the
process work okay do you are you funding
startups are you starting products
within the company uh what exactly do
you do to bet on this net new
technology yeah so we do everything we
just mentioned however we combine those
different pieces into a streamlined
process I think that's probably what is
the the most unique perspective and
unique point of LG NOA so LG Electronics
again is a huge large company but there
are very much a hardware minded It's
because the manufacturing is the bread
and butter of LG Electronics so it is
not that natural to think about doing
nonh Hardware businesses as a company as
a whole and there are probably less
expertise on nonh Hardware
businesses uh uh than uh expected or
than uh ideal so uh when he PR created
this new Division and I was first I
joined LG only three and a half years
ago so I'm new too um so when I came in
I looked at what I should do and and LG
actually asked me to design the process
asked me to think about what you should
do to make it work because traditionally
uh these Hardware companies have hard
time transforming themselves into non
hard Hardware companies so what he
thought about was pretty simple okay we
may not have all the expertise inhouse
because LG's hardware company we may not
have all the uh the collaborators and
partners that we can get to because we
are a hardware company let's get that
from outside when I say get that we're
not saying that we should bring them
into our umbrella as a whole it's more
like less find a Swiss bond that LG can
provide something and other non Hardware
minded topnotch companies including
topnotch startups can provide something
we can find intersection over there so
put it simply we are looking for startup
companies uh that are willing to work
with LG Nova to create the businesses
that LG has never done before so this
sounds like a little contradictory
because startups come to LG and say the
LG is a appliance company why would any
setup come to us and work with us that's
very very interesting so LG has to start
from somewhere so we created a separate
division almost uh sort of like
disconnected or disconnected probably
not the right decoupled from the
mothership or uh the
uh aircraft carrier the headquarter and
we hired our own employees uh from all
over the world and including obviously
mostly United States but with a deep
expertise in those non Hardware
businesses like AI health care and cint
Tech so what the status when stat comes
to us we have a venture fund that we
invest into them if they end up working
with us but at the same time with the
LG's capability existing capabilities
and existing uh uh Outreach capabilities
to potential Partners El just brand and
that's what startups come to us and work
together to create new businesses and
then those new business uh is designed
to grow with those startups that work
with us so that's how we uh how we
design this process okay great so one
question about focus and then one more
question about process so I hear you the
remit is let's find net new businesses
businesses that LG is not in uh but then
you started to list some very big
categories AI Healthcare so how do you
focus like how do you see a startup and
say this is one uniquely that we're set
up to help yeah so in some sense uh we
are very open to any sectors any
lucrative sectors that LG should pursue
for the future however we have to focus
to some extent so we look at all kinds
of different sectors and we we basically
picked Healthcare clean tech and AI as a
three Focus areas that we we should
focus on so stups comes to us uh and
then we work with them but if they are
not inside of those three Focus areas
then uh in terms of priority uh they're
probably going to become a little less
than the St of that on those three uh
major sectors so uh in some sense when
startups comes to us and work with us we
looked at them and we work with them and
when I say work with them we literally
get into discussion and brainstorm with
them and it's not only their setup
technology it's not only what LD wants
to do it's a OnePlus One has to equal
three so we look at we ask hey hey
startups great uh you have great stuffs
but what can you do with LG NOA to
create something completely new or or
some something that uh you know stups
can bring something to table and LG can
bring something to table it is very much
of ideation with startups not just us so
it's not a one directional conversation
it's basically ideation and through the
process uh we see some setups that are
very much fit to work with us and then
those setups are selected to work with
us in the long term right and so it's
not just an investment it's investment
and then working together with these
startups it's very active partnership
actually it's the other way around uh we
have a very specific investment
philosophy we invest into startups only
when we know we're going to work with
them it's not like we invest in them and
then try to figure out what to do with
them I mean it's a very different
process so what does LG bring to the
table then so we have uh so uh money
obviously the investment is one piece of
it start we also have yes most of the uh
the Partnerships we get into with the
startups it comes to the revenue sharing
so whatever we do together uh they get a
cut we get a cut so that's how usually
structured I mean some status prefer
straightfor licensing we are happy to
discuss about that but most of the cases
we want to grow with because we want to
grow with the startups together we come
up with a some kind of uh Revenue
sharing agreement so third this is
actually huge LG and it's not just LG LG
Nova has established a lot of uh uh uh
the Partnerships with a a large
corporations non-lg corporations and
also non-lg organizations including uh
West Virginia a state of West Virginia
which is which is was a huge deal so
when stles work with us they become the
first customer so for startups usually I
did my startup myself and there are
three things they struggle and there
those three things are critical in the
success of stuff so first obviously
money they need money second is usually
the first customer you need the first
customer and that's really it sometimes
makes or breaks uh that makes breaks the
the success of the startups so okay we
provide opportunity for the first
customer to do startups along with us
obviously third one the my experience
one of the most critical pieces is the
brand so when I go to talk to Big
customer potential customer and say hey
I am S I have my small company here and
I want to work with you most of the
cases they respond what who are
you that has it just takes a hard long
time and a lot of work for a small
startup to sort of like Get You Know
pitch themselves to large corporations
and large customers that's what El store
table we go to the those big customers
together with the startups so that's
what makes a big difference from startup
business that's what you offer to
startups you know Saku I want to say
that product Market fit is a myth it's
really a myth right but it's more than
just like you build a product and then
all of a sudden you have a brazillion
customers like that work to try to get
that introduction to try to get that
meeting how critical is that for a
startup to be able to take off well
product Market uh fit is is actually
important because if you have a product
that nobody cares about then you don't
have a business that's the bottom line
however so many startups do not even get
the chance of pitching or chance of
getting attracting some interest from
these customers that's what you're bring
to the table it's in sometimes it's very
much a perception issue because large
organizations whether it's a government
or Corporation
they want to work with with a reliable
partner reliable in a sense that not
just because it's s of a small reliable
in a sense that once they start working
with a a potential partner they're
looking at year or so business together
right they want the partner to be around
and actually they start business so
that's what concerns a lot of these
organizations when they work for the
startups now we are saying that hey
these startups not just startups these
actually Elders business
uh we are creating together so LG's
business means the LG is backing it LG
is uh in charge of it in some sense and
startup is being part of it so LG is not
going anywhere so when a big customers
and state government works with this
sort of like a uh this uh sort of a this
uh a group of the LG plus startups
together and there is a certain level of
credibility that it provides I think
that's how you grow your business if you
are a startup I mean at the end of the
day it's it takes it's it just it just
takes time A lot of startups just takes
time and many startups don't have that
time so that's what El proops right it's
so crucial in the areas that you're
talking about health Tech clean tech you
know it's there's we've heard VCS talk
about these areas forever and then
startups they go and they get lots of
funding and they think they have a
product that is really impressive and by
golly like the incumbents in some of
these areas really could use some disrup
rtion and they fail and I think what
you're talking about is exactly why it's
because the companies that make the
purchasing decisions here that would be
buying from the startups oh man like
it's the whole like no one got fired for
buying IBM type of thing it's like
they're going to go with the most safe
option because they want that longevity
and I really see how if you come in the
door and you say listen we're start up
our products better you know our
products better and we have a backing of
a company that's going to be around for
a while let's talk and that opens doors
and and this is why why we are not just
investing into compan investment
actually is not necessarily A a back I
mean it's a backing but investment has a
limited liability meaning that you just
put in money and the worst case scenario
you lose the money so from the customers
perspective okay you have a investor
large investor that's good for you if
you're a startup but that doesn't really
guarantee the longetivity longevity as
you just mentioned of the business so so
we are very different of course we
invest but that's really not the point
here we jointly create the business LG
creates our own business which we call
ourselves a newco or CNU and stos become
part of it becomes integral part of the
business so when we go to the big
customers we don't just go to go there
as a startup we go there as LG business
and as a part of it there is a setup
that that that becomes a comp comp that
becomes a critical component of the
business so in some sense our customers
are not just using setup technology they
you they use and they work with LG but
startup is part of it and that's how you
sort of like a if you are a startup
that's how you want to grow your
business look all sounds good in theory
but we want to know where what happens
when the rubber meets the road okay so
like can you give us an example of a
company that you've worked with that
you've been able to apply this
philosophy yeah yeah yeah so first yes
in theory everything sounds good in
reality there's a lot of work probably
there are double amount of work to do to
make this thing work and here here's why
if you are a startup you just want to
sell your product I mean that's that's
what you want to do you don't have a
time to you know mingle with a big
customer big like you know Partners like
LG so uh what they do want to do is they
just want to go to go to the customer
and sell it the problem with the model
is obviously as we just discussed
customers may not have a lot of uh uh
faith in the small companies and that's
what LG brings to the table but to make
it work they have to work with LG first
they have to work with LG to create a
joint business model or a model LG's
business model that incorporates stup
into it and that has to make money
that's where the product Market fit
becomes uh uh sort of like a scrutinized
and validated because LG will not going
to do business with the startup unless
we think there's a product Market fit
basically so in some sense that's a good
thing for settles because they don't
have to like you know if they the
disastrous situation for setup is they
talk to 100 customers and none of them
wants to buy it and LG becomes sort of
like a first gate or first um validation
point uh from status perspective now
that takes a long time I mean jointly
coming up with a business model that
both parties can
agree takes time and then we going to go
to the market doesn't mean that is is
everything's perfect even after that
point so I'll give you an example we
have a Healthcare company we just spun
out about three months ago which is
called Prime Focus uh that was the first
company we uh uh developed and
established through this process that we
just mentioned uh we started working
with about five startups that company
that we spun out is is a LG sort of a
company but it works with like studed
work the five companies it ended up
really working with only half of it the
reason is as I can you can imagine that
process is hard but that process if the
SLE went to any other company probably
would have done the same thing anyway
way because if you pit your product to
any other companies or customers they
will validate it they will look at it
and see whether this is really work this
is going to really work for so so it
took a long time it took about a year
for us to get there but once we started
the business with this Prime Focus with
new company now uh it brings LG's brand
and when you go to talk West Virginia
they already secured a multi-year part
partnership with the uh the West
Virginia is one of the largest Health
Care system is a martial Health Systems
uh and then startups that we are working
with are part of it so in some sense
yeah it take it took a it took longer
than you expected but once it uh start
rolling uh it becomes much faster for us
and for St all right and what does Prime
Focus do oh so they uh so the problem
they're trying to solve is uh in West
Virginia uh there are a lot of
population especially uh rural area
population they may not have easy access
to Hospital Systems it's a relatively
rural area in West Virginia and a lot of
senior citizens and a lot of the
residents are like you know 30 50 miles
away from the or hospitals the problem
with that equation that situation is
that there are a lot of chronical
chronic disease conditions that they
develop without them even knowing that
until the symptoms start emerging so
because they just don't go to hospitals
very often or even if they do it's very
hard to revisit them or in know in a
periodic basis so we work with those
hospitals to come up with a remote
Health monitoring you a you know you
know traditional sense Solutions and
it's not like you have to wear anything
it's a video camera and if you look at
the video camera and then actually it
automatically captures your blood
pressure and heart rate and so on so you
can just watch TV basically and it just
automatically uh continuously monitor
your health of course because of a
privacy you have a control of your
privacy you can set up the time that you
want it or you can almost you can even
on it turn it on and off on adog basis
if you want but all this information is
sent and reviewed by hospitals and when
there's a red flag they call the patient
is saying that hey you may not know this
but you got to come to hospital right
now okay so that's kind of like uh you
know business they are they are
establishing right now and I think
because of the West Virginia's unique uh
uh situation with the the you know the
relatively rural area and relatively
High uh uh this uh chronic uh disease
rate so I think it's working pretty
well awesome so let's say you're quite
successful here right let's say you're
investing in lots of very successful
companies good problem to have like kind
of change the composition of what LG is
because you're going to have like
basically stakes and lots of like very
promising new companies and so where do
you go from there yeah so let me explain
to you why we even studied this from the
beginning more specifically than just a
vision so LG is a uh is a a is a
collection of uh many many larger
companies actually LG Electronics is
just one of them LG in elg umbrella
there are about 64 companies it changes
every year plus minus but there are
about 64 companies including including
LG chemical uh you know LG uh Energy
Solutions and and all these things even
they even have a telom in
Korea uh there are vastly vast the vast
majority of those companies are hardware
and Manufacturing forus okay our job my
job is to create six fth and 66 of those
multi-billion dollar companies that are
very different from the composition of
LG that they have right okay much more
software Focus much more service
oriented businesses so you asked the
question uh will LG's uh you know
business composition change absolutely
if you're successful and that's exactly
what you want have those me
manufacturing is going to go away it's
going to still be there it's going to
grow but we're going to have additional
and new uh uh business lines that going
to probably grow much fast fascinating
what was the moment in the in the
company where it was decided hey we need
to do this I know you came in three and
a half years ago so right before it was
started but what was the sort of Eureka
moment where it was like ah we we
probably should do something about that
new future Tech yeah so it's not it's
not anything new from any large
corporation perspective because they all
know they have to prepare for the future
L has been trying that for for decades
it's not it's not it's not anything new
like you any big company uh you know
wants to do that the problem El had had
was uh they did not see a lot of good
success when they try to incubate these
businesses internally when they try to
start from Pure R&D and in the lab
I mean that's a typical and traditional
way to create new business in Hardware
uh uh uh world but that doesn't work
very well in a non hardware and service
oriented world so they've been
struggling frankly for for over you know
many many decades and it what it I got
to give credit to my boss who is our CEO
Global CEO Mr uh Mr Cho he was a
actually Chief strategy officer before
he became the CEO and he was the one who
hired me to create this LG NOA and his
idea was pretty simple okay we've tried
this for I don't know 20 30 years and we
are not seeing a lot of result out of it
so we should completely change the
approach to do something different okay
so how to do it maybe he didn't know all
the details that's why he reached out to
me and say hey I heard that you are a
interesting innovator good innovat do
you have any good idea to solve this
problem I I have PL of ideas and I I
told him what I had in mind and he liked
it he hired me to stud it uh and that's
where we are awesome do I have time for
one last question sure absolutely all
right great so I got to ask you uh what
what is the promising areas of
technology that you're looking at that
um you know there's like the clearly
defined ones but we hear all the time I
mean AI you're on AI oh here all the
time metaverse and you know this and
that so what do you think is quantum um
I don't want to give you the answers on
this one but I'm just kind of curious
what do you find to be like the most
promising new area of Technology yeah I
think Alex uh I get that question a lot
okay I always uh respond as saying that
you really need to look at the business
areas not technology areas because at
the end of the today all the
Technologies are enablers from my
perspective and and whether this is a a
really promising technology or not is
not decided by the technology itself
it's decided by how and where you apply
so for example AI yeah is interesting
technology everybody's on it great um AI
itself will it make money itself the
model and M uh some will I believe but
not in the scale that we're looking at
really it's going to come down to where
we apply the AI and it doesn't matter
which sector it is it could be healthc
care it could be energy it could be
retail it could be anything but where
can you create this step function where
can you create this Quantum lead by
applying this I think there's worse when
to come down to so and the reason I can
tell you this is because I went through
probably almost similar process when I
was working on iot Internet of Things I
mean everybody 20 years ago thought that
was going to be the game changer and it
was a game changer in the sense that if
you look at your home today I don't know
how many 20 years ago I didn't have any
sensors at home now I have probably 50
sensors at home you don't you just you
just cried in you know you know not in a
bad sense Crypt into our life without us
even knowing about it it has changed our
lives I think that's exactly what
enabler is so I don't buy that there is
a one single technology or one single so
technology that's going to actually
change everything it's more like where
you use it and you may not even you may
I can tell you AI we're going to go
through this typical uh Gartner hype
cycle it's really hyped right now it's
going to go down it's going to get to
the Robert Mr Road stage at some point
and it's going to struggle to some
extent but it will come back again when
it really comes into our lives without
us knowing about it everywhere so
healthc care definitely where AI can
help uh and and you know home the smart
life definitely AI can help so many
different things we going to happen so I
think the right question is where do we
think these Technologies can change our
lives for yeah so right uh I was just
experimenting this week actually so I'm
trying to I love taking the large
language model chat Bots and trying to
bootstrap different app ideas on them
and this week I was like all right I'm
going to try to stick with the Whole
Foods diet for the next little bit and
what I've done with Claude now is I have
a running thread and I just upload like
the labels of the food I eat and it like
gives it a little analysis about whether
it was you know uh hon onto the Whole
Foods diet and then I asked it give me
your rating 1 to 10 for each one of the
foods this is amazing this would be by
the way this would be like a huge Health
app a year AG or two years ago before
llms and I just think that we're
probably just on the surface of what
this stuff can do so your your point
about Ai and how it's applied right it's
not necessarily like you know um where's
the next leap although that's important
it's like what can you do with it and
it's pretty cool that you're you're
right there in the trenches working with
these companies and figuring it out and
that's exactly what you do so in AI
specifically uh LG Nova doesn't
necessarily develop another llm LG in
general they have their own LM models
but LG NOA doesn't our mission is to
find the next billion dooll business uh
that leverages Ai and everything else so
that's what interests well let me tell
you about this new app with llms tracks
your diet no I'm kidding but um I'm so
I'm so excited to be part of the event
uh next next week in San Francisco big
party for innovators everyone's welcome
it's called LG inest absolutely and it's
going to be September 25th and 26th at
the Palace of Fine Arts I'm pumped
so join us it's going to be fun and you
just relax and and this these two days
in a whole year just relax yourself and
enjoy I mean we are all paying a lot of
attention to a lot of importantance
stuffs and sometimes our brain needs a
little bit of fun and that's what we are
providing on those two days absolutely
and we hope to get you back on the feed
maybe from there we'll see folks stay
tuned all right so thank you so much for
coming on thank you everybody for
watching and we'll be back on the feed
shortly with another great video and
then hopefully we can continue this
discussion and maybe actually shoot
something from inest itself in San
Francisco next week stay tuned and we'll
see you next time right