Emotional engineers

Posted on June 2, 2009 by paulmcl

People sometimes say that salespeople are emotional, unlike engineers. I think what they mean is that salespeople are (stereotypically) extrovert so if you mess with them they’ll make a noise about it. Whereas engineers are introvert and will just brood (“How can you tell if an engineer is extrovert? He stares at your shoes”). But actually salespeople are coin-operated. Change their commission plans and they’ll cancel everything they were doing and do something else. They’ll complain loudly but they’ll do it. Engineers are  much more emotional and have a lot invested in their products. Cancel their product and it takes a long time for them to become productive again. Unlike sales, they won’t complain but they won’t do it. They’ll waste a lot of time talking amongst themselves about how management shortsightedly delayed the salvation of mankind instead.

Every EDA startup, at least the ones that get that far, goes through a difficult emotional transition with engineering when the first product finally starts to ship.

In the early days of a startup, almost the entire company (maybe everyone other than the CEO) is in engineering. The focus of every review meeting is engineering schedules. The focus of any HR activity is hiring that next great engineer. Everyone is waiting for that first release of the product. Every small slip of the product, every minor change of specification, is minutely analyzed.

Finally the big day arrives and the focus of the company switches very quickly to sales. How is the funnel? What is the booking forecast? How are we doing hiring that critical application engineer? How long to cash-flow neutral? To the extent that management pays attention to engineering it is more focused on when showstopper bugs that are impacting sales will be fixed. Nobody seems to care nearly as much about release 2.0 as they did about release 1.0.

Anyone who has more than one child has seen something similar. Their first child is an only child, the center of their parents’ attention. Until that second baby arrives and suddenly they are no longer the center of attention. Firstly, there are now two children so attention would naturally be halved. But secondly, babies have an extremely effective strategy for getting all the attention they need: make an unpleasant noise and don’t stop until their needs are satisfied.

When sales start, engineering is like the first child. They go from having all the attention to having to share it. And to make it worse, the second child, sales, has a very effective strategy for getting all the attention they need: explain the reasons they are not closing business until their needs are satisfied. To make things worse still, the reason they are not closing business is probably related to deficiencies in the early immature product, which means that what little attention engineering does get is negative.

This is a very tough emotional transition. Engineering is on the start of a path from being almost 100% of the company declining to 20% of the company as it moves towards maturity. Engineering will hold headcount relatively flat as other parts of the company seem to explode. Engineering goes from being the star of the show to a supporting role.

The most important thing to do about handling this is to make sure everyone understands that it is going to happen, like telling your 4 year-old about the new baby. And, what is more, make sure everyone realizes that it is a symptom of success, a rite of passage. When all that anyone cares about is engineering, it means that the company isn’t selling anything. When management cares about other things, that’s the first taste of victory. It’s engineering’s job to get out of glare of attention as quickly as they can, and let sales start taking the heat.

After all, how much fun was it when the CEO was analyzing engineering’s embarrassingly inaccurate schedules in great detail. Every day.

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Early exits

Posted on June 1, 2009 by paulmcl

I came across the book Early Exits recently. It is definitely worth a read, especially for anyone having anything to do with EDA startups. An early exit is one after a relatively small number of years at a relatively small multiple to the original investment. As I discussed earlier, VCs don’t like this sort of deal in general. They need big returns on at least a few of their investments and they don’t care that much about the rest. Early exits don’t interest them.

There are a number of reasons that EDA startups are not getting funded by venture capitalists any more. The most obvious is that large EDA companies have stopped buying them at high valuations. This is for a mixture of reasons but one is that standalone tools are harder to ramp up profitably without tightly integrating them into the main body of pre-existing tools. For example, standalone statistical static timing is interesting, but much more important is integrating statistical static timing into the synthesis, place and route flow. Don’t just find the errors after the fact, stop them occurring in the first place.

But a second reason that EDA startups are unattractive is that they don’t require enough money. Venture funds are growing larger and it is a fact of life that being on the board of a company looking after a $3M investment is about the same amount of work as looking after an investment of $30M. If a fund is large, it can’t afford to dole it out $3M at a time; that requires too many investments. Instead, fewer but larger investments are required. This means that the size of investment is too large for an EDA company. Too large in two ways: too large since EDA tools don’t require that much capital to develop, and too large since the exit price required to make the investment successful is higher than is likely to happen.

I’ve been somewhat involved with several startups recently who are looking about how to raise a little money. Relatively small amounts are needed and venture capitalists are simply not the place to go looking. Individual investors (angels) and corporate investors (customers) are much more likely. New technology continues to be needed and this type of investor can live with the likely return on a successful company.

The new rules are raise only a tiny amount of money, run the company on a shoestring, validate the technology with some initial sales and exit earlier rather than later. If you wait, you will need more money to build a big channel, and any acquirer will have to tear it down anyway. EDA startups spend more money building sales channels than technology, and one thing Cadence and Synopsys don’t need more of is channel.

One thing that the book points out is something I’d not really thought about. The sales cycle for an EDA tool is about 9 months. What do you think the sales cycle for an EDA company is? More, a year or two from first contact to closed deal. If you are going for an early exit, the sales cycle for the company is about the same as the time you need to develop the product, so you need to start selling the company before you found it!

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Friday puzzle: sphere

Posted on May 29, 2009 by paulmcl

Last week’s puzzle was about a man who went on a triangular walk and shoots a bear. The well-known solution is that the man must be at the North Pole (since the triangle returns him to his starting place) so the bear must be white. Less well known is that the man can be near the South Pole too (yes, I know there are no polar bears in the Antarctic; there are none at the North Pole either, in fact). The key is that when the man walks one mile east in the middle of his walk, he must go all the way around the world, which he can do if he starts a bit more than a mile from the South Pole. In fact, at an infinite number of places since anywhere on that circle of latitude will do. But wait, there’s more. He could also go twice around the world if he was a bit nearer. Or three times. In fact there are an infinite number of rings near the south pole where he could start.

Today’s puzzle keeps on the spherical theme. A hole 6” long is drilled through a sphere. What volume remains?

And a bonus spherical puzzle that is very simple but surprising if you’ve never seen it. A string is stretched around the equator (that’s about 25,000 miles long). Simultaneously, a lot of people lift the string up 3 feet all around the world. How much extra string do you need?

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T.J.Rodgers goes to Washington

Posted on May 29, 2009 by paulmcl

You may have noticed, or maybe not, that on Fridays I often go off-topic. I still keep one foot in the technology space (no Brad and Jen or whoever it is now; no recipes…yet). But definitely less on-topic about design, EDA, software development, semiconductor and all the other stuff that makes up the daily grist for my mill.

T.J. Rodgers, the CEO of Cypress Semiconductor, is also a critic of government intervention in the economy, especially that of Silicon Valley. Whatever you think of the strategic decisions that he made at Cypress, most of which look pretty good in hindsight, he is a great writer. I wish I could write as clearly and interestingly as he does.

If you haven’t read it then I highly recommend reading every word of his 1993 testimony to Congress in the Clinton era, “Free Market or Government Subsidies?” It is especially worth reading in the light of the current extensive intervention in the economy by the government in all sorts of arbitrary ways. Luckily they aren’t intervening  much yet in technology. Of course, on one level, it would be nice to get some stimulus money, but without the interference that comes with it.

One area that technology that does have a large government dimension, at the very least in competing for the same VC money, is the environment. I regard most of the current venture-capital investments in “green” technologies largely as bets on governments subsidizing them whether they are economic or not. For instance, did you know that Germany, that famously sunny country with its enormous deserts, is the biggest installer of photovoltaic solar power, accounting for almost half the world market? And with the senate dominated by states that have few people but lots of agriculture, there are no prizes for which country has the most subsidies for turning expensive food into ethanol, a nasty fuel that corrodes pipes, attracts water and produces lots of aldehyde pollution at the tailpipe. Not to mention uses roughly as much energy to produce as it generates when used.

T.J. Rodgers’s plea to Congress in 1993 for a balanced budget (given that the budget was eventually in surplus on Clinton’s watch) looks absurd today, given the way we are racking up an unpayable tab. But his testimony from 15 years ago stands up really well today. This slide from Intel shows just how deep a hole we are digging (and don’t forget Medicare dwarfs all this).

Even more recommended is T.J. Rodgers’s piece for the Cato Institute, “Why Silicon Valley Should Not Normalize Relations with Washington,” that does a great job of contrasting what he, T.J. Rodgers, worries about on a daily basis, with what Dwayne Andreas, then-CEO of Archer Daniels Midland worries about. T.J. Rodgers worries about semiconductor technology, borrowing money, how much to invest in solar, which products to design. Andreas worries about…well, making sure that Congress passes the right laws to ensure that he can farm the subsidies. ADM is the largest beneficiary, even before the last changes of the law, of the policy of insisting that a certain amount of ethanol gets added to gasoline.

Since I’m having a rant, I’ll finish with a blog comment by someone called Bob on a response to a piece on…whatever. Anyway, it’s here if you want to read it in the original Latin. But I think it is a great expression, even if a little exaggerated (the "whole" point, hmm) of the difference between how Silicon Valley works and how Washington works, complete with Silicon Valley imagery in the last few words. I think T.J. Rogers would be proud:

“I reject the premise that capitalism is currently failing to ‘deliver the goods.’ The whole point of capitalism is to destroy companies like GM and Chrysler. The whole point of capitalism is to destroy unions like the UAW that favor older and retired workers at the expense of younger workers and workers yet to come. The whole point of capitalism is to destroy the "smart guys" who create defective financial products. The whole point of capitalism is to punish us for electing a government that enmeshes itself with the jokers above. The ‘current unpleasantness’ is a feature, not a bug.”

And, less this be interpreted as some sort of complaint about the current administration, remember that lots of this stuff, the first financial bailouts, Fannie Mae, GM bailout number 1 etc all happened on the Bush watch. It’s more of a plague on both your houses. Besides, so far most of that creative destruction has yet to occur so the shakeout is just being delayed.

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Another look at internal development

Posted on May 28, 2009 by paulmcl

I’ve talked before about internal development, by which I mean semiconductor companies developing their own tools. I just don’t think that it is going to happen in a big way.

In the early 1980s VLSI design techniques were being disseminated outside a handful of semiconductor companies where the priestly knowledge had previously been secreted. VLSI Technology and LSI Logic (primarily) invented ASIC design, whereby customers did part of the design and the semiconductor company (we called them foundries then, but they were not exactly the same as what we call a foundry today) did the rest. A lot of design tool development was internal. There was a good reason for that, namely that there was no 3rd party EDA industry providing the necessary tools, and so no tools meant no product to fill the fab. Remember that if you have a fab you are like an hotel; every wafer start slot with no actual wafer to start is like a plane with an empty seat. Once the slot has passed or the plane takes off, it’s gone for ever.

So VLSI Technology and LSI Logic (and HP, Intel, TI and everyone else) had a large amount of internal CAD. It was differentiation to some extent, and there wasn’t really an alternative. The CAD teams were staffed with top rate engineers, many of them M.Sc. and Ph.D. students from the first cohort of people from universities starting to teach and research VLSI design.

Then came the first wave of EDA companies, the DMV—Daisy, Mentor and Valid. They provided systems for doing some front end design, basically schematic capture and simulation. The standard ASIC methodology was to do design to netlist, ship the netlist to the semiconductor vendor who would do place and route (either as a standard-cell design or a gate-array) and provide back annotation of capacitance values (we didn’t worry about resistance back then, timing was dominated by capacitance) for resimulation and signoff.

This design flow didn’t work very well at first. Wilf Corrigan, CEO of LSI Logic famously complained that the EDA industry took all the profit from ASIC. Customers would buy tools but the semiconductor company would only get their money once a design could get through the flow. So much of the heavy lifting to mature the flows and make them workable was done by the semiconductor companies not the EDA companies. The next generation of EDA companies was SDA and ECAD who merged to form Cadence (this was long before Synopsys). The Japanese semiconductor companies adopted 3rd party EDA vigorously, since they had very limited internal development and this allowed them to get into the new markets that ASIC was opening up.

The writing was on the wall for internal EDA, at least in the long term.

So the EDA part of the business split into an external part, the EDA industry, and an internal part, the CAD groups. By and large the CAD groups were training grounds for entry level engineers, some engineers with deep design experience and, usually, first rate management (often drafted in from the design side of the company to keep the internal politics calm). They knew how to use tools but not how to create them. The internal tool developers migrated from the semiconductor companies into the EDA companies.

The two exceptions to this, companies that kept large internal development groups, were Intel and IBM who still, to this day, develop significant amounts of EDA software for their own internal use. But it is very expensive to do this, and even they don’t know how useful it is. I once asked someone in Intel’s Design Technology (their internal CAD/development group) whether their routers were better than the EDA industries. He admitted they didn’t have a clue; they had no bandwidth to even take a look at what was available externally.

So I don’t see internal development being a major force since the economics don’t work very well. However, that could change with consolidation of both EDA and semiconductor companies, and especially if a semiconductor company jump-started internal development by acquiring one or more EDA companies.

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Why are VCs so greedy?

Posted on May 27, 2009 by paulmcl

Why are venture capitalists so greedy? Why do they want a 20-30X return on their money? Why doesn’t investing $5M and selling the company for $15M a couple of years later make them happy? After all, when I’ve bought a stock and sold it for three times what I paid, I’m pretty pleased with myself.

To understand the reasons, you need to know a little about how venture capital funds work. There are two lots of people involved, the general partners, who are the people who work for the venture capital company; and then there are limited partners (LPs), the people (insurance companies, pension funds, whatever) that put up the money to be invested. The general partners may pay themselves 2% of the value of the fund per year a management fee, plus 20% of any profits.

One critical factor is that the fund has a lifetime, maybe 10 years. A fund would like return at least 20% per year. After all, the stock market has returned nearly 10% since 1900, including a great depression and the current downturn, and with a lot less risk. VCs should do at least twice as well as that.

The money isn’t actually all put into the fund by the LPs on day one, and taken out on the tenth anniversary. As the VCs find companies to invest in, they make capital calls on the LPs to get the money. If and when there are successful “exits”, meaning that portfolio companies are sold or go public, then money is returned to the LPs. To keep the math simple, though, let’s calculate returns as if all the money were invested early, and all the payouts arrive late.

There is one thing about VC investments that is different from you making an investment in the stock market but that is not often explicitly talked about: the venture fund (normally) only gets to invest the money once. This is a big difference from other types of investors, and is one of the reasons that you are happy if your stock triples in a couple of years and you sell it, and a VC is not. You can do something else with the money for the next 8 years and make more money. The VC typically cannot, it is returned to the LPs.

So let’s do a bit of math. Let’s say there is a $100M fund with a lifetime of 10 years. To keep things really simple, let’s ignore the management fees and the carry, the percentage of profits that the VCs retain to buy their Ferraris. A return of 20% per year means that the $100M fund needs to return about $600M in total (that’s simply 20% per year compounded for 10 years).

But not all investments will turn out to be wise. VCs, by definition, are investing in risky companies and at most 15-20% will make money, and often fewer (“fund 20, pray for 2”). So the $20M that turns out to be invested in great companies needs to generate $600M, meaning a 30X multiple.

That’s why VCs are so greedy. They have to get a 30X return on the good investments to make their numbers. Getting a 3X return in 2 years doesn’t do much to help them, even though it might be great for the founders, early investors and employees. If they have a company that is doing well enough to get an acquisition offer yielding a 3X return in 2 years, they will prefer to keep on being independent, and hope the company continues to do well and can generate a 30X return (or more) during the remanining lifetime of the fund. They are all like Barry Bonds was: home-run or strikeout. Getting on first base is just not that interesting.

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Strategic errors

Posted on May 25, 2009 by paulmcl

In the time I was at VLSI, we made a couple of strategic errors relating to EDA. It is perhaps unfair to characterize them this way since it is only with hindsight that the view is clear.

First a bit of history. VLSI was created in the early 1980s to do what came to be called ASIC designs. To do that we had internal tools and they made VLSI pretty successful, first in ASIC and later standard product lines for PC chipsets and GSM phones. VLSI was a pre-IPO startup when I joined and it grew to a $600M company that was eventually acquired by Philips Semiconductors (now called NXP) in a $1B hostile takeover. In 1991 VLSI spun out its internal software as a new company, Compass Design Automation, which never really achieved success. It grew to nearly $60M and eventually (by then I was CEO of Compass) was sold to Avant! for about $90M depending on how you count in 1997.

But let’s go back a bit. In the mid 1980s, VLSI had a major problem. It didn’t have enough money. It didn’t have enough money to build a 1um fab, and it didn’t have enough money to fund TD (technology development, meaning development of the semiconductor process itself) for a state-of-the-art 1um process. So they did major strategic deals with Hitachi and Philips Semiconductors that brought in process technology, patent licenses and money. This meant that VLSI was in business in 1um as a semiconductor company with a new fab in San Antonio and the Hitachi 1um process up and running there.

The really clever decision would have been to foresee that the profitable part of the business was going to be EDA, and VLSI was one of the leaders, if not the leader, at that time. If they forgot about all this fab stuff, they wouldn’t need the money, they wouldn’t need the process, and they could be a very profitable software company. They could have been Cadence, which was just starting to get going at the time. The trouble was that they had semiconductor management whose deep operational experience of running fabs would have been pretty useless for running a software company.

In effect, this would have been spinning out the Design Technology group from VLSI to become Compass, and leaving VLSI as a semiconductor company to die or become an early version of an eSilicon type of fabless ASIC company (since it would have limited money, no process and no fab). But, in any case, eventually it became really obvious that combining a semiconductor company and an EDA company was not a good idea and it was time to split into two viable companies.

The second strategic error was waiting too late to do this. By 1991 when VLSI did it, their technology was no longer way out ahead of the competition, and the industry was not yet looking for the integrated solutions that Compass had (since it had not grown by acquisition). This meant that Compass always struggled to both acquire customers and to acquire library support from other semiconductor companies. This would have been helped if VLSI had sold part of Compass to a VC or someone independent, since there would have been at least part of the ownership of the company that didn’t care about VLSI and only cared about the value of the Compass stock. That would act as a guarantee of independent arm-length behavior by VLSI, which wasn’t there when VLSI owned 100% of Compass (which it did until it was sold to Avant! in 1997). When LSI wanted to license our datapath technology, it was apparently vetoed by Wilf Corrigan because, if Compass’s resources got tight, VLSI would get them and LSI would not.

Interestingly, a couple of years earlier in 1988 Daisy had made a hostile bid for Cadnetix, and had merged the companies to create Daisix. For a number of reasons, this never worked and eventually in 1990 they filed for bankruptcy. VLSI turned out to be owed a lot of money by Daisix (or one of its parents, I don’t remember the details). Daisix was offered in settlement of the debt, but VLSI wasn’t interested and it went to Intergraph instead. If they had taken Daisix, up and running as an EDA company with huge breadth of 3rd party library support, and merged it with Compass’s technology then there was certainly the possibility for Compass hitting the ground running, rather than struggling to earn library party support from other vendors which eventually limited their market largely to people licensing Compass’s libraries.

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Friday puzzle: bear

Posted on May 22, 2009 by paulmcl

Last week’s puzzle was to continue the infinite series 110, 20, 12, 11, 10… The answer is that the subsequent terms are all 6. The series consists of the number 6 in binary, base 3, base 4 and so on. In all bases above 6, the number 6 is simply 6.

Now for today’s puzzle. You’ve probably heard this before, but I still love the unexpectedness of the actual question. You probably know “the” answer too. Less well known, the answer is not unique (well, geometrically; the zoology is dubious anyway).

A man goes for a walk. He goes one mile south, one mile east, one mile north and returns to his starting place. On the way he shot a bear. What color was it?

Answer next Friday. And to keep you busy, here’s another unexpected question:

You are the driver of a bus from San Francisco to San Jose. You arrive at the first stop in San Francisco and 20 people get on. In South San Francisco, 5 people get off and 8 get on. In Millbrae, nobody gets off but another 5 people get on. In Palo Alto, 15 people get off and just 3 get on. In Mountain View, 6 get on and 12 get off. Finally you arrive in San Jose. Everyone gets off. What was the bus driver’s name?

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Finger in the nose

Posted on May 22, 2009 by paulmcl

It’s interesting how certain phrases catch the popular imagination and almost overnight become clichés, appearing in all sorts of writing. The best of these phrases have the twin benefits that they are both memorable and also immediately communicate the point you are making. The first time you come across them, they may even seem brilliant. The thousandth time, rather less so. Do we really need to “rearrange the deck chairs on the Titanic” any more, to imply that we are addressing minor tactical issues while the major strategic issues remain unaddressed? Or rather, we are “ignoring the elephant in the living room.”

I don’t recall exactly when “change” didn’t seem to imply big enough, well, change. So we had to have “sea change” which sounds bigger, even though I’m not sure exactly what a sea change is. It sounds very nautical, and, as the son of a naval officer, I ought to know what it means but I don’t and neither does my father. Wikipedia tells me that it comes from Shakespeare’s Tempest but that hardly explains the recent change in its popularity. Or should I say sea change in its popularity.

It was George Orwell, in Politics and the English Language, an essay that anyone who does any writing should read, who pointed out that most of these clichés are simply ways of avoiding thinking through exactly what we mean.

In Britain, there are a lot of American television shows, so people there get very accustomed to American ways of saying things. The oddest is the way that British people know a lot of American sports terminology used in an everyday sense, without knowing anything about the underlying sports feature that the phrase is meant to conjure up. Some phrases are obvious: “in the ballpark” for example. But British people may well know that something “out of left field” is a surprise, without really knowing where left field is and what might be coming out of it surprisingly. Or know that a “Hail Mary pass” is a last desperate attempt, without ever having seen such a pass on the football field (er, that would be American football to the British, since football is what Americans call soccer). British cricket terminology doesn’t do so well in the opposite direction. Few Americans know what “batting on a sticky wicket” means.

When you get into other countries where English is a foreign language, you need to be very wary of using such imagery. It may simply be unknown even to people who are bilingual, and without sometimes knowing anything about the underlying image being conjured up, not something easy to guess at. I mentioned recently that some Japanese wondered what “low hanging fruit” meant, and guessed at some sort of sexual metaphor. Much better are metaphors that work immediately in any language, like “herding cats.”

When I lived in France, we had great fun translating colloquial phrases word for word from French into English or vice-versa. For example, the French have a phrase “doigt dans le nez” used to imply that something is trivially easy. Literally translated it’s “finger in the nose”, the implication being that it is so easy you could do it with a finger in your nose. I suppose we might say we could do it with one hand behind our backs. Or more fun, we could say it is a “piece of cake” and translate that word for word as a “tranche de gateau.”

So write a blog entry on weird phrases. Finger in the nose!

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What should Cadence do?

Posted on May 21, 2009 by paulmcl

Cadence is at an interesting crossroads right now. The current management team is trying very hard to re-establish Cadence as a technology leader and rebuild partnership relations with their long-term customers, many of whom have been deep partners since the days of SDA.

In the Fister years, customers would apparently never see anyone from engineering. That’s because Mike Fister considered himself technical enough he didn’t need any chaperone who really understood the underlying technology. After all, he was from Intel. In fact, many managers from Intel turn out not to be as good as they think they are. The facts of life inside Intel are that it is relatively easy to look good when there is so much margin bleed-through from their wildly profitable microprocessor line. And even with that leg-up, Intel does badly in most other businesses it has entered or tried to enter. However, the reality is that being a customer of EDA is not the same as having technical knowledge at the level necessary. So Lip-Bu’s approach of always taking a technical leader with him to customers is definitely positive (and Lip-Bu would win any technical are-wrestling match with Fister anyway). His modesty in doing this versus the Fister arrogance is also a welcome change. It serves both the requirement to educate customers on what is in development, and it allows engineering to hear directly what the customer issues are, unmediated by non-technical marketing and management types.

But one problem Cadence has, or may have, is comparative financial weakness. It has scheduled four weeks of shutdowns for the rest of this year. It has had one large layoff and is rumored to have another one coming. They had half-a-billion dollars in cash at the end of last year, which in a previous era they would have been able to use to make some key acquisitions (and, to be fair, more than Mentor or Magma has in the bank). But Fister said Cadence wouldn’t buy companies, so that was another nail in the coffin of VCs bothering to finance any startups for them to buy. They have to re-build their technology themselves, which they seem to be rolling up their sleeves and doing.

One thing that is unclear to me as an outsider (I used to work there but I’ve not had access to anything confidential for years) is just how much Fister/Bushby mortgaged Cadence’s future: they were rumored to be doing 6 and even 9 year deals, and then structuring them so the revenue was recognized up front. That gives Lip-Bu and his team a challenge, since customers like that are not going to be paying a lot of money for several years going forward. They were like those gyms that sell life-time subscriptions and then struggle since their gyms get full of people who expect service but are never going generate any money.

Last week, I met with Chi-Ping Hsu who runs the Cadence back-end tools (or “implementation products” as they call them). One thing that is very positive is that Chi-Ping himself, and all his direct reports, have experience of being CEOs or COOs of EDA startups. Those are jobs that require a great blend of technical knowledge, understanding of the development process, and business acumen, which is just what Cadence needs to recover competitiveness.

Cadence has acquired and developed a lot of technology over the last few years, and hadn’t historically done a very good job of integrating it together. The dirty laundry about the OA database when I was at Cadence was that there was really no roadmap to bring it into wide use internally. That issue, in particular, seems to be behind them, with both the custom and place/route flows now using OA (although they still have separate in-memory data structures). The Catena router, which was a skunk-works in Los Gatos for years, has been folded into the main development. Getting all the development done across Cadence (and the industry) to support the CPF power standard must have been like herding cats, but seems to have built a working flow.

The competitive environment is changing, of course. Synopsys, Magma and Springsoft are all circling around Cadence’s custom/analog franchise. Place and route has too many companies: in addition to Cadence there are Synopsys, Magma, Mentor/Sierra and Atoptech (plus a few other niche players). The front-end simulation is very commoditized and price-driven.

As an outside observer it seems that Cadence is doing a good job of getting its product development engine back on track and re-vitalizing the technology base. Everyone I know there says it feels different. But how much financial muscle they have to power that engine is an unknown.

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