Peggy Aycinena is a freelance journalist and Editor of EDA Confidential at www.aycinena.com. She can be reached at peggy at aycinena dot com.
eSilicon: Jack Harding unplugged
June 19th, 2014 by Peggy Aycinena
Among the least likely events to take place at a conference as big and noisy as the Design Automation Conference is an intense, unplugged conversation with an industry leader, especially in the midst of the Exhibit Hall. Nonetheless, I had a chance to sit and talk with eSilicon co-founder and CEO Jack Harding for almost an hour in his company booth on Monday morning, June 2nd, at DAC in San Francisco.
In the background, outside the flimsy walls of the suite in which we were talking, one could hear the roar of the opening-hour crowd in the exhibit hall, mixed with the unmistakable sounds of Gary Smith revving up nearby for his annual Pavilion Panel in that blues band style he favors.
Prior to June 2nd, I hadn’t seen Jack Harding for 7 years. At that time, thanks to Brian Fuller’s eavesdropping on a private conversation, my disagreement with Jack about how tech leaders get their kids to study technology ended up in Brian’s blog for all the world to read. If Jack knew, he probably didn’t care – he’s always lived by his own rules – whereas I followed rules written by others, so I did care and hence approached this month’s appointment at DAC with marked trepidation. How unnecessary.
Harding never mentioned our disagreement in 2007. Instead I found him a great conversationalist, honest, self-effacing in a particular way, and interested in a wide range of issues. Naturally, I don’t regret Brian Fuller wasn’t hovering nearby to report out on the conversation, but I do regret Jack and I didn’t have an additional hour to chat in San Francisco. He began by reminding me that success in the tech sector can depend on a host of “exogenous variables.”
For instance, he said, “Few outside the tech sector realize that since 2000 when we started eSilicon, the industry’s survived 2.5 recessions. In fact, our class of 2000 has had few survivors. Nonetheless, over the last decade we’ve seen the relentless growth of the semiconductor industry, which has created opportunities [for millions of people]
“Of course, everyone would prefer calm, global economic conditions, but chaos [can have its rewards]. The changes in the industry, the radical growth of companies followed by consolidation, has included a shift away from hardware and towards software.
“Today, two-thirds of companies [in the tech sector] are doing software, which actually places a high premium on ambiguity in the hardware. That in turn means people are scraping for pennies [in the hardware business] and having to deal with [the consequences].
“At eSilicon, we have actually had success [in our response to the chaos of the last decade], part of which has been to select the right venture backing.
“We have had [a lot of great advice] from Seth Neiman at Crosspoint Venture Partners. He’s had a remarkable hit rate, and is [well] schooled in how to pick ventures and the best business model. Seth has brought a great sense of partnership [to his work with us], and has set a tone that all of the shareholders respect.”
“Clearly, not all VC money is created equal. A lot of VCs think they’re smarter than the management of a company,” Jack said. “but that’s not the case with our investors. We’ve been lucky to be [associated] with Crosspoint, as well as Crescendo Ventures, Investor Growth Capital, and Fremont Ventures.”
These VCs all have positions on eSilicon’s board, as well as Crawford Beveridge, Amar Hanspal, Duy-Loan Le, Wim Roelandts, and Robert Selvi, from organizations as diverse as Autodesk, TI, and SonicWall. Jack reminded me that he serves on the board of directors of AMD, among other organizations, so understands the advantages of having good members on the board: “Our board lets management oversee the company, while the board oversees the team.”
Jack clearly feels this is one of the reasons that eSiicon has been successful: “The board knows I really love this business, and believes in our vision. When we started in 2000, we were the first fabless company. Fast forward 5 years, and suddenly there were 80 fabless companies.
“So then we went with the entire supply chain, offering our customers choices that [allowed them to develop] optimal chips for their requirements, while virtually all of our competitors were only offering a single process, a single foundry, and a single set of IP.
“At eSilicon, however, we optimize all of these things [to meet] the requirements of our customers. We are giving them an absolutely optimized product, up to 10-to-15 percent better than our competition – something that’s in the DNA of our founders. Our management are all EDA guys, experts in design automation and reusability.”
I asked Jack why the many fabless companies today are not copying eSilicon’s range of options.
He answered, “Unless you’re highly automated – and every stage of our business is automated – you cannot compete with us. We are not just a design shop, we are a one-stop shop [for developing chips] and running a highly optimized manufacturing pipeline.”
Well than, what about my Dick Tracy keychain, I asked Jack, and told him that during one of my recent interviews related to my hypothetical wearable, IPextreme CEO Warren Savage mentioned the IP industry today is akin to the Wild West.
Jack disagreed: “It’s not a Wild West from a technological point of view. The IP needed for your device is well understood, and completely different depending on which process you use. The semiconductor is nimble and can respond to [the needs of each type of customer].”
Good news, I said, and asked if Jack could give me ballpark figure for designing, manufacturing, and ramping my Dick Tracy keychain to volume production. He didn’t hesitate: about $150,000 for the design, another $150,000 for the IP, maybe $250,000 for the chip, and maybe half a million to build a prototype.
“Your device is a pretty low-end tech device,” he said. “At most, it would only take about $10 million to take it to volume.”
Wow, I said, that’s the first time I’ve understood the economic reality of getting my Dick Tracy keychain into the hands of a public thirsty for this extremely useful device. And eSilicon? What’s ahead for them?
Jack said, “I believe we’ve had a brilliant strategy. Of course, we’ve been lucky, but we have also always had a vision and it’s now [coming to fruition]. We want to be fully automated online.
“Our vision is to bring fabless ASIC services and automated business-to-business manufacturing online, to allow customers access to the entire supply chain – online. So far, we have [the system in place] that goes as far as GDSII – and nobody is doing this type of e-commerce today at our price – but we want to move beyond the EDA space.
“We want customers to see the full impact of a $200 million project, so they can commit to a process, a die size, a foundry. [It will be a project] incubator, and it’s going to be up in the cloud. Nothing is harder than making a chip, but we are going to [make it easy] by putting it online – something we see as the third phase of our contribution to the industry.
“Phase one was to launch our fabless ASIC business with automation, phase two was to integrate the entire supply chain electronically, and phase three will be to put it all online for the market to use.
“It’s not clear how much money we will make, but if we create value, create a community, and a way to commoditize [phase three], we will succeed. We are seeing waste with every chip developed today, whatever way you measure it, and feel that for an industry that makes insufficient profits, we need to share [our capabilities] across the ecosystem.”
Jack finished our conversation on a characteristically adamant note: “For anyone to do a design by hand today, they would have to be out of their minds. And I’ve bought the right to criticize these people, because of what we have developed. We will continue to earn the respect of the industry, and the customer base, and set a trend for people who need it.
“Twenty years ago, Michael Porter from Harvard said the future of technology in the U.S. means there will be no low-tech industries, only low-tech companies. The semiconductor business and the supply chain ecosystem will be bifurcated, those who have embraced the inevitable and those who have not. Our industry has to embrace this inevitable – the Internet and cloud computing – and eSilicon [will be part of making that happen].
“Dozens and dozens of companies have failed because they didn’t get a break, and we realize that luck is an inevitable piece of success. But while staying alert to our good fortune, we will execute on our vision with the greatest possible precision. It’s a brilliant strategy.”
Jack Harding, eSilicon Co-Founder, President and CEO, brings 25+ years of management experience in the semiconductor industry, spanning the EDA and IC sectors. Prior to co-founding eSilicon in 2000, Harding was the President and CEO of Cadence Design Systems, a company he entered by way of the acquisition of Cooper & Chyan Technology (CCT), where he served as the pPresident and CEO, and was responsible for leading the company to an IPO. Prior to CCT, Harding served as the executive vice president of Zycad Corp. Prior to Zycad, he began his career at IBM.
Harding maintains a balanced career, providing his services to industry, academia and government. He has held various directorships in both public and private organizations and currently serves on the boards of directors of AMD, RF Micro Devices, and the advisory board of Atrenta. Harding has also held leadership roles at Drew University and Indiana University, where he was Vice Chairman of the Board of Trustees and a member of IU’s premier School of Public and Environmental Affairs advisory board, respectively.
In the public policy arena, Harding has served as a member of the Steering Committee at the U.S. Council on Competiveness, and was a former National Academies’ Committee member for Software, Growth and the Future of the U.S. Economy.
In 2010, Harding was elected as the New Value Chain Producer Director to the board of directors of the Global Semiconductor Alliance. Previously, he served a 3-year term on the GSA board as a semiconductor director. He also serves on the GSA Finance Committee, and is a frequent international speaker on the topics of innovation, entrepreneurship and semiconductor trends and policies.
Harding holds a B.A. in Chemistry and Economics from Drew University and attended the Stern School of Business at New York University.
Tags: Amar Hanspal, Blake Winchell, Brian Fuller, Crawford Beveridge, Crosspoint Ventures. Crescendo Ventures, David Spreng, Duy-Loan Le, eSilicon, Fremont Ventures, Gary Smith, Investor Growth Captial, IPextreme, Jack Harding, Jose Suarez, Robert Selvi, Warren Savage, Wim Roelandts
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