Tag Archives: EDA

The end of a Silicon Valley adventure

I read this morning about Magma’s acquisition by Synopsys for $507M. In many cases, such an acquisition would look like a success. Here I am not sure…

EDA is an industry I appreciate because it is the perfect description of start-up dynamics. I will not describe it here but if you want to learn more you can read my previous contributions on the topic. I was also lucky to meet the CEOs of both companies, Aart de Geus and Rajeev Madhavan, two legends of the EDA industry, not to say of Silicon Valley (SV). Let me quote myself with a few paragraphs from my book in 2007.

“The only recent success story is Magma Design Automation. Its founder, Rajeev Madhavan, studied in his native country, India, then in Canada. He had founded two successful start-ups, LogicVision (sold to Synopsys) and Ambit (acquired by Cadence). He could have been satisfied enough but Magma became his new adventure.”

I should add that Andy Bechtolsheim, another SV legend, was a business angel in Magma, with investment amounts similar to a VC.

“It is still premature to bet on Magma’s future and its capability of becoming a giant. Some clouds have appeared on the horizon. Litigations are not a rule in Silicon Valley but they do happen. … In early 2005, Synopsys and Magma faced each other concerning the activities of one of Magma’s founders while at Synopsys and the ownership of some patents. The issue was finally resolved in 2007. But in 2005, Magma’s share price dropped by more than 50% from one day to the next and it only recovered two years later.”

Magma’s stock suffered again in the following years as the curve below shows it:

“Costello bitterly complains about a disappearing culture in Silicon Valley. The region has become greedy and individuals forget to give back to the community. There is too much litigation. Out of the ambitious start-ups of the nineties, only Magma has passed the main obstacles. But Magma has not proved yet that it can become a giant. Or will it disappear like Quickturn or Avant! ? No other new start-up seems to have the potential of threatening the established players. In the unstable, dynamic, innovative world of Silicon Valley, this is not a good sign.”

Now EDA is left with three big players, Synopsys, Cadence and Mentor. No start-up seems to be threatening them and the market is not really growing anymore. This is indeed not a good sign.

PS: Just as a reminder and because I now do this often, here is Magma’s data at IPO. Just note it is not very different from the price it is bought for in 2011…

How Aart has poisoned the EDA start-up ecosystem

The return of Electronic Design Automation? Apache IPO Filing.

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As you noticed recently if you read this blog, IPO filings are piling up. The latest one (I heard of) is Apache Design Solutions and it is very interesting for me because the company belongs the the field of Electronic Design Automation (EDA) which I covered as a full chapter of my book and I follow from time to time the EDA domain on this blog.

EDA is an interestign market because it has reach maturity so you can look at its dynamics over 30 years. I will come back on it at the end of the post. But first, Apache. John Cooley on his DeepChip web site has the best possible description of the company: A brief history of Apache and its IPO.

So here is my usual cap. table. It took Apache 10 years to file despite the fact that the company has been profitable for many years. Not very famous investors (though Intel and Bechtolsheim are not bad!), solid revenues and profits. It shows how much the tech sector has suffered. Such companies would have been public easily ten years ago. In fact,a s Cooley notices, tehre has not been any EDA IPO since 2001.

So what about the EDA market? The last EDA IPO in 2001 was… Magma. I will just let you look at the market data and judge about the market.

Figure 1 – EDA Market and Players 1983, – 2010.

Figure 2 – EDA Market and Players, 1983 – 2010.

Table 1 – EDA Market and Players, 1983 – 2010 (Revenues in $M).

NB: the 2010 figures for Total and Magam are assumptions (as they are not known yet).

The Good Old Days

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Two pieces of news caught recently my attention. One is entitled Frank Quattrone, Star Banker of Technology Ventures, Talks Wistfully of the Good Old Days—Before Netscape’s IPO.

The other one is less nostalgic because of the web site name, which I quite like: You’re in Deep Chip Now.

Here is the full text captured from the site:

I will not comment this but let me come back on Quattrone. Quattrone was a star of the IPO world as you may read from this Xconomy blog. What is striking is that in the last 8 years, following the Internet bubble, there has been less venture capital, fewer IPOs. The reasons are many. But the key question remains: are we facing a major innovation crisis? After the transistor in the 60’s, the computer in the 70’s and the PC in the 80’s, the Internet and mobile communications in the 90’s, what have the 00’s given us? And what about the 10’s… I do not have any answer. What about you?

A European in Silicon Valley, Aart de Geus

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Here is my fourth contribution to Créateurs, the Geneva newsletter, where I have been asked to write short articles about famous success stories. After women and high-tech entrepreneurship, Adobe and Genentech, here is Aart de Geus, founder of Synopsys.

Aart de Geus was born in the Netherlands in 1954. At the age of 4, he moved with his parents to french-speaking Switzerland and in 1978, he graduated from EPFL, the Swiss Institute of technology in Lausanne (where I currently work). He then moved again to the USA and got his PhD from the Southern Methodist University in Texas. After a few years with General Electric (GE), he founded Synopsys in 1986, raised $15M of venture-capital before Synopsys went public (in 1994). In 2008, Synopsys had 5’600 employees, $1.3B in sales and a $3B market capilalization.

According to him, « Everybody from Europe who comes to the U.S. or Canada is looking to discover something ». In his case, when he arrived to the USA, he was lucky in being assigned as a graduate student to Ron Rohrer “He took a liking to me. […] Rohrer essentially gave me the freedom to do whatever I wanted within the graduate school research facilities”. Rohrer became his mentor. He learnt how to manage a team, a know-how he changed in a management style. “everybody counts on the team and there’s always a role for everybody, which produces an ecosystem that manages itself.” He recognizes it is as much luck as destiny.

He also shows how difficult it is to predict anything: “In fact, I’ll tell you a story. In 1978 or ‘79, I attended a conference in Switzerland of leaders in the field of electronics, or microelectronics. They all agreed on 2 things. Number 1, electronics was going to be a big deal and would move forward for many years to come. Number 2, one micron was the hardest barrier that we would never move across. And [laughing again], those same people who made the predictions are the ones who made 22 nanometers happen!” and he adds: “The lesson here: whenever one predicts the end of something in high tech, there’s always a twist or new perspective that makes a new breakthrough possible.”

Aart de Geus, a born entrepreneur?

The art of metamorphosis…

Aart appreciates complexity and metamorphosis. Everything is important and everything changes. In the early days of a start-up, ideas and people matter. When you have an idea, what do you do? “First, you write a business plan. Then, you ask, is it ethical? Is it okay to do that? How do you go about planning the business so as not to go up against GE?” Well, according to Aart, “there’s a simple answer. You write a business plan and propose it to GE. After all, it was clearly their IP. Period.” GE not only backed the idea but invested in it. Money and values are essential at that stage.

But the baby has to grow. The teenager will have to develop the products, sell them to customers. This may be a tough crisis. Does Aart feel lucky to have survived? “Luck favors the well prepared,” and added that a fortuitous combination of management, graduate students, geographic location, viable business plan, and marketing expertise were augmented by having the “right technology at the right time.”

Back to EFPL in 2007.

… with the risk of becoming a dinosaur !

The adult age means processes, experienced managers so you need to survive the tornadoes that Geoffrey Moore describes so well. Aart summarizes these permanent metamorphoses through a parallel management of teams, customers, investors, products and their cycles, but also managers, leaders, implementation. All these things are interdependant and it is often underestimated. In a talk he gave to EPFL in 2007, he showed the history of Synopsys acquisitions in the form of the animal below! His sense of humour was certainly very useful. This sense of humour hides the humbleness of the individual who succeeded without giving any lesson. If there is one lesson in all this, is that you must try, be curious and flexible. Success may come.

As usual, I finish with my beloved capitalization table and charts.

Sources :
-Aart de Geus at l’EPFL (vpiv.epfl.ch)
-Peggy Aycinena (www.eetimes.com)
The Aart of Analogy is alive and well at Synopsys -2001
The Aart of Analogy Revisited -2009

Next article: A Swiss in Silicon Valley

Aart de Geus receives the Kaufman Award

EDA, an industry from Silicon Valley

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Penny Aycinena asked me to write a short article in EDA confidential, which summarizes my concerns and hopes about innovation and start-ups. It is published today (June 30, 2008).

Let me add more here:

The chapter of “Start-Up” which has been the least noticed is Chapter 6. It is one of my favourites though. It is about EDA, which stands for Electronic Design Automation. Today, no architect would design a complex building without software, nor would an automobile engineer. It is exactly the same with digital circuits.

Twenty five years ago, EDA was nearly non-existent. Forty years ago, chips were designed internally (and manually) at IBM, Motorola… and little by little, some new players emerged, tiny start-ups became big and an industry was born. It was more than $5B in revenues in 2007. The typical ebb and flow of start-up creation and acquisition went on for two decades. But since 2001, not much has happened: no IPO, small M&A deals and a few days ago, Cadence, the biggest EDA vendor, announced a hostile acquisition bid against Mentor, the number 3 player. Both companies were founded in the 80s.

EDA is a good illustration of what Silicon Valley is: a rich network of individuals, academics, entrepreneurs, investors. What is interesting about EDA is that its center is probably Berkeley (rather than Stanford or Sand Hill Road) as the picture below shows. Let me quote again two legends of the EDA field, two recipients of the Kaufman award, the Nobel Prize of EDA:

– “Risk taking in EDA is gone.” Joe Costello

– “If there is a single point I wish to make here today, it is that as a discipline, both in industry and in academia, we are just not taking enough risks today.” Richard Newton

It could be that the maturity of EDA and of Silicon Valley is not such a good sign.