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Ramesh Dewangan
Ramesh Dewangan
Ramesh is VP of Product Strategy at Real Intent. He brings 25+ years of experience in engineering, customer management, product management and marketing to Real Intent. Prior to joining Real Intent, he led the product marketing of the core product suite related to RTL design at Atrenta. Previously, … More »

Billion Dollar Unicorns

 
March 19th, 2015 by Ramesh Dewangan

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Courtesy of Fortune Magazine, illustration by Jeremy Enecio.

The business magazine, Fortune, in a Feb. 2015 article proclaimed The Age of Unicorns  — private companies valued at more than $1 billion by investors. Unicorns are the stuff of myth, but billion-dollar tech start-ups seem to be everywhere, backed by a bull market and a new generation of disruptive technology.  According to a recent New York Times article, there are over 50 unicorns in Silicon Valley right now.

Upcoming unicorns formed a popular discussion topic at the Confluence 2015 conference organized by Zinnov, on March 12th in Santa Clara, Calif. The conference theme was “Building the Technology Organizations of Tomorrow”.

Here is a sampling of six unicorns that have emerged as real winners using innovative strategies:

Airbnb

Airbnb (San Francisco) is a web marketplace for the rental of local lodging, with listings in 192 countries. It uses social media technology to conduct background checks for both providers and renters, to amplify stories, connect with travelers and ultimately drive business growth. And you thought Facebook was just for time-wasters!  Watch this YouTube video to see how Airbnb leverages social media.

Uber

Uber operates a mobile-phone based transportation network using private cars and taxis. It employs just 3 people per city when it first launches operations in a new location. The teams get support from the San Francisco headquarters mainly for IT operations. The team also leverages the network of operators in other cities. In contrast, rivals employ hundreds of employees to manage a driver network. This fat-free model is helping Uber to roll out operations at a rapid pace.

Flipkart

Flipkart (Bangalore) is a web store and sellers marketplace in India. It was established in 2007, and is valued at $12 billion. One specific feature – “Cash on delivery” – introduced in 2013, accelerated their sales significantly. You hand over the required cash to the delivery staff, and get the product handed over to you in return, all with a human touch. They figured India is primarily a cash driven economy where plastic card penetration is extremely low in India (<1%). Why couldn’t Amazon think of it?

Go Pro

The high-definition personal camera company, GoPro is based in San Mateo, Calif.  It raised $427 million when it went IPO with a valuation of $2.96 billion in 2014.  It turned its customers into a stoked sales force, by enabling users to flood the Internet with videos of their own adventures. In 2013 alone, GoPro customers uploaded 2.8 years worth of video featuring GoPro in the title. Each video not only serves as a customer testimonial, it is guerrilla advertising, giving potential customers millions of reasons why they should buy one of GoPro’s little cameras. To learn more, read the Wired article Why GoPro’s Success Isn’t Really About the Cameras.

Pivotal Labs

Pivotal Labs, based in San Francisco, offers a next-generation Platform-as-a-service (PaaS) for creating web applications in the cloud.  It has grown to over 400 consultants, with an office presence in nine major tech hubs in the US and now internationally in Toronto and London. They use pair programming (agile software development) with their clients, a technique in which two engineers work together at one computer, write code, and collaborate on solutions to problems. Pair programming with the clients is the most common reason they choose to work with Pivotal since it accelerates learning and expertise. Check out this video article on how Pair Programming is the secret sauce to Pivotal Labs’ growth and success.

ZOHO

Zoho University, in Chennai India, started as a corporate social responsibility experiment a decade ago. The IT university has no exams, deadlines or assignments, but students are paid to attend and graduates receive a professional certificate. Zoho University is now among the largest contributors to the 2,600-strong workforce of the India-based IT company Zoho Corporation. Nearly 15%, or about 300, of the company’s employees are graduates of Zoho University. Learn more about this innovative educational institution in this video interview of Sridhar Vembu, CEO of Zoho.

So, what about the design automation industry?

First of all, startups will not have billion dollar valuations, given that market value of the whole industry is less than 20 billion dollars. So, let’s define our one-horned-wonders as the hot startups that are ready to deliver significantly superior products compared to the big 3 of EDA.

So, where are the EDA unicorns? Where will they come from?

I believe that unicorns will be the ones using innovative strategies to provide solutions that tackle a highly difficult pain-point in chip design, and prevent chip killer problems. I mentioned in my blog Redefining Chip Complexity in the SoC Era, we are dealing with chip complexity that is orders of magnitude higher than the past. The complexity comes not only from the sheer size (approaching 1 billion gates) or lower process nodes, but also the scale of IP integration, complex low power requirements, asynchronous interfaces, x-propagation risks, verification bug escapes, and so on.

EDA unicorns will create high capacity and high performance methodologies to prevent chip failures and provide a reliable sign-off solution!

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5 Responses to “Billion Dollar Unicorns”

  1. Matthieu Wipliez Matthieu Wipliez says:

    Allow me to answer your question “Where will EDA unicorns come from?” First I believe it is highly unlikely that there will ever be a unicorn in EDA per se, because the client industry that EDA currently serves (the semiconductor industry) is just so damn old-school and conservative. See my numerous blog posts for more details, explanations, and examples.

    With that in mind, just for argumentation’s sake, let’s assume there can be a unicorn in EDA. It will NEVER come from solving problems of huge chips. Why? Because the one distinctive thing about a startup is growth. To quote Paul Graham, founder of Y Combinator [the most prestigious incubator in the world, which hosted a bunch of unicorns] “To grow rapidly, you need to make something you can sell to a big market. That’s the difference between Google and a barbershop. A barbershop doesn’t scale.” (source: http://www.paulgraham.com/growth.html )

    Now… how big is the market of companies that create huge chips? It is ridiculously small, so much that in fact, a barbershop scales (a lot!) more than a traditional EDA company. This is why EDA startups are valued so little!! What is a big market, however, is the market of companies that will design very small chips and put them everywhere (aka… the IoT). Of course the IoT is not really addressed by EDA, whose main target remains Intel, Qualcomm, and co, which is why as I said at the beginning it is unlikely we will see a unicorn in EDA per se :-)

  2. Ramesh Dewangan Ramesh Dewangan says:

    Thanks for the prompt reply, the comparison of EDA to the barber shop is amusing! :)

    The semiconductor industry is large enough (>$300B) for unicorns to emerge in EDA. I agree most of the industry is old-school and conservative, but there is a culture change taking place. The old-schools are losing out, as seen with Texas Instruments, ST Microelectronics, Nokia, Ericsson struggling. But the new school is companies like Apple, Qualcomm, ARM, Mediatek…are thriving. Some seeming old-school companies like Intel, Samsung are adapting fast.

    The complexity of the today’s chips are not limited to large chips alone. Small chips, IPs, and FPGA have become complex enough to face problems they didn’t have before. High end FPGA is getting burned by Clock Domain Crossing (CDC) problem as much as large chips. I am glad you mentioned IoT. If IPs going into IoTs have CDC issues, you have a huge problem at your hand that EDA will benefit from.

  3. Matthieu Wipliez Matthieu Wipliez says:

    The best way to avoid CDC problems in my opinion is to use better languages that make it impossible to have CDC issues in the first place :-) I believe that linters are a necessary evil only because VHDL and Verilog themselves are evil, they are too low-level and allow you to shoot yourself in the foot while cutting your head in the process!

    We only view CDC as complex because most designers have to deal with it at a low level, being painfully aware of the ten different ways to make a signal cross from one clock to another.

    One might wonder what that has to do with this post, when it has everything to do with it. The best way to create a unicorn in EDA is to make hardware design more accessible to a lot more people. This is what I’m talking about when I talk about the market size. Sure the semiconductor industry is large, but how much of this value goes in tools? And again, market size is about number of clients. You mentioned AirBnB and Uber. Do they have 100 clients spending $10 million each? Or 10 million of clients spending $100 on average?

    Look at past EDA startups. Most of them have been targeting the few, large semiconductor companies. Sure Intel makes $50B (as in billion!) revenue, but they ain’t gonna spend it just on your tool! The result is that the majority of startups in this domain get acquired at prices that are 100x smaller than in the software industry. Because there companies target many, many, many more people.

  4. […] conference theme: “Building the Technology Organizations of Tomorrow.”  In my previous blog, Billion Dollar Unicorns, I discussed which companies were leading innovators, but the question remains: how do companies […]

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