Talking of being CEO of Cadence, not many people have been parachuted into running a troubled EDA company.
But I have.
At the end of 1996 Compass Design Automation was coming up to a fifth successive quarter in which the revenue declined, not just from the same quarter the previous year but simply from the quarter before. However, revenue had not cratered and was still running at well above $50M/year. Personnel turnover in the US had reached over 100%. With around 200 employees in the US, over 50 had resigned in the previous quarter. Overseas turnover was still much lower. So things were pretty bad, but not so bad that recovery was out of the question.
I had already left Compass a year or more earlier, due to major differences about how the company was being run, and I was working at VLSI, the parent company.
Al Stein, the CEO of VLSI came into my office. “You know you are always giving me advice on what I should do with Compass,” he said. “Well, put your money where your mouth is and go and run it.” Just like that I was CEO of Compass.
Al wanted me to turn around Compass and find an acquirer. I told him that was impossible. I could try and turn it around, which I guessed would take a minimum of two years, or I could try and stabilize it and find a buyer. Trying to fix it and find a buyer is like dismantling your car and advertising it on Craigslist at the same time. “Trust me, once you reassemble it you’ll have a great vehicle”. So we went for the second option, to stabilize the company and sell it.
So that’s your challenge. What would you have done? And for a bonus where we don’t know the answer1, what would you do if you were CEO of Cadence?
1 We managed to get our turnover down, produced three quarters of successively increasing revenue and sold the company to Avant! for over 1X revenue. When I first took the job, I wasn’t certain we’d last another quarter so I count that as success.