Swan Song: Kranen bids Adieu to EDA
October 8th, 2014 by Peggy Aycinena
Exhibiting that unique combo of energy, hubris, and eloquence that’s the hallmark of Silicon Valley CEOs everywhere, Kathryn Kranen bid adieu to the EDA industry tonight. Sitting on the Cadence stage in conversation with Vista Ventures’ Jim Hogan – an event billed as part of EDAC’s ongoing Emerging Companies Series – Kranen walked the audience through highlights of her career, with special emphasis on the last 11 years serving as CEO at Jasper, a company she sold to Cadence earlier this year for a reported price of $174 million.
Up until the end of the evening, the exchange between these seasoned veterans of EDA proceeded as advertised – full of pithy advice on starting up startups, as well as enthusiastic endorsements of opportunities in the industry and good-natured banter between two highly successful people who know what it takes to grow and sell a company in high-tech. In the end, however, the evening turned out to be far, far more. It turned out to be Kathryn Kranen’s swan song in EDA.
Toward the end of her 90-minute interview with Hogan, things went historic when Kranen offered not only that she’s leaving Cadence just 4 months after the Jasper acquisition, but she’s leaving EDA completely. According to Kranen, she wants to serve at a company in the size range of Jasper, 100 to 150 employees, but enterprises of that scale are almost impossible to assemble these days in EDA. Since she wants to lead a moderately-sized company, but those options are not available here, she’s looking instead for opportunities outside the industry.
She assured her audience such opportunities would present themselves – “My investors love me!” – but if she were to spend the next 5 years contributing her talent and energy to Cadence, she would be too old at that point to be chosen for a leadership role anywhere.
Hence, comfortable in the knowledge that “everyone from Jasper has safely landed at Cadence,” Kranen’s leaving the company straightaway, taking the rest of the year off to recharge her batteries, and looking forward to January when she will assemble a panel of opportunities to be examined side-by-side in order to optimize the chances of choosing the appropriate next chapter of her career.
Of course, the just-closed chapter on Kranen’s leadership at Jasper was totally textbook if this evening’s performance was any indication, so the chances she’ll choose the next chapter correctly are pretty darn good. With prompting from Hogan, Kranen spent the bulk of her time on stage tonight articulating a primer on how to grow, manage, and sell a startup in EDA.
Kathryn Kranen’s Rules of Engagement in EDA are tough and intuitive and, per her evaluation, formed the basis for the successful sale of Jasper to Cadence.
1) Don’t give away anything for free. If you give your product away for free at the outset because you’re a startup, your first customers will happily take the tools, for which you’ll get thanks, but no respect. Only if they pay for your product are they going to realize from the get-go that what you’re delivering has value.
2) AE time should be included in the cost of your tool. CAD tools require help to install and utilize, recognize that’s the reality in EDA, and factor those human resource expenses into your bill. Your customers need to understand the full cost of what they’re buying from you. They’ll respect your product and your enterprise all the more if you force that recognition upon them.
3) Play hard-to-get. If customers are not willing to pay the price that you’ve set for your product – assuming you’ve calculated a fair price that truly reflects the resources required to produce the product – then walk away. They’ll come back soon enough when they hear from their competitors that your tools are giving those companies a competitive edge.
4) Presume your exit’s going to be an M&A. IPOs are neigh-on impossible these days in EDA, even for a company like Jasper which enjoyed far more revenue than “the junk” that went IPO in EDA at the turn of the century. So make sure your books, your tools, and your staff are all “squeaky clean.” Make sure that everything you should have been doing all along, has been done all along. And if that’s not the case, take a deep breath, accept the reality that it will take a year or more to clean things up, and only then shop your company around to potential buyers. Don’t put your company on the auction block until everything’s gold in the organization.
5) Join EDAC. That’s the best way to hobnob with the Big Guys in EDA. Then when you go to sell to them, they’ll be fully aware of who you are and why they should go into a bidding war to win the acquisition.
6) A bird in the hand is worth two in the bush. If somebody like Cadence comes along, has done their due diligence and makes a fair offer for your enterprise, but only gives you a handful of days to decide, let alone court other bidders, it’s probably best to accept them then and there. Offers from others will not get any better.
The final Rule of Engagement Kranen articulated was specific to her own arc of history – gratitude. She heaped pounds of praise on Foundation Capital’s Mike Schuh, Lanza techVenture’s Lucio Lanza, and Jasper’s own VP of Marking and Corporate Counsel Oz Levia for the guidance, mentoring, and wisdom they brought to their combined efforts at Jasper.
Kranen made it clear that these types of success are the results of a group effort, and that her entire team at Jasper deserved credit for the win. A true and fitting tribute upon which to conclude Kathryn Kranen’s swan song in EDA.
A note …
Tonight’s conversation featuring Kathryn Kranen and Jim Hogan was taped and will be posted shortly on EDAC’s website.
Tags: Cadence, EDA, EDAC, Jasper Design Automation, Jim Hogan, Kathryn Kranen, Lucio Lanza, Mike Schuh, Oz Levia