We used this new Virtex family to drive a new generation of product. The PCIe-card version, ZeBu-Personal, would keep roughly the same amount of logic as its predecessor, while driving the speed up by 50%; it was launched in June of 2008.
While the board version was impressive, the box version was where the action was. We had started our little business by focusing where the big guys weren’t: smaller, lower-cost designs. And we had been successful there. Yet, as we gained the ability to emulate larger designs, we naturally started bumping into the kinds of designs that the big guys had owned up until then. We were entering the big time.
The ZeBu-XL box, being the first of its kind, had, of course, been a new design. The ZeBu-XXL was another new design, the original design not being scalable. But again, the XXL couldn’t be scaled to dramatically larger designs, and so yet another architecture was created, this time in a way that would accommodate growth over many generations. This means that we only need to revise the FPGA module with each new generation of FPGAs, and the box will naturally flow from that.
EDA WEEKLY: So the new product’s hardware was eminently successful...
Very. It let us leap forward to handle a billion gates at a top speed of 30 MHz on small designs. It was (and is) a big deal, and we had to let the world know. It would be a major announcement, and it had to be properly timed to be effective.
As the summer of 2009 approached, the new box was ready to go from a hardware standpoint; the software needed only “a couple more months to complete.” That would have put an announcement in the middle of summer, something no one wants to do. Also, no one wants to have a product ready to go, sitting on the shelf while waiting for summer to end and then making the announcement. So we decided to pre-announce before the summer started. This would put us on the map before people went on their summer vacations, and the system would be ready for purchase when they got back.
EDA WEEKLY: Oh no. This sounds like dangerous territory!
Yep! With great fanfare, we announced ZeBu-Server before the summer of 2009. And we got people’s attention.
In fact, we got too much of their attention. And the Osborne effect kicked in. The new box looked so good that people stopped ordering the old box. And the new box wasn’t yet available. This might not have been so painful if that had just coincided with the summer doldrums. But, instead of taking two months to finish the software, it took six months. So we were gripped by a sales gap of a half year.
EDA WEEKLY: Yep, when you become both a software and hardware supplier, it’s always a new ball game. But let’s not change analogies in mid-flight here. Assuming your collective love of the new hardware caused you to ignore the already deteriorating worldwide economy, what other things did you do that finally put the company in real jeopardy?
Well, based on the crazy growth rate we had been experiencing, we beefed up our sales team by tripling its size in just a few months. When you more than triple the size of a team, it’s extremely hard to train and prepare them and coordinate the activities in a manner that makes them successful. So, rather than launching our sales to new heights, we ended up floundering as we tried to smooth out our sales activities.
So we had a pre-announced product that killed much of our sales and we had a sales process that was broken. That’s two strikes.
EDA WEEKLY: The worldwide economy by then was in terrible shape.
Of course. The economy tanked. Strike three. In 2009, our overall sales dropped for the first time in our history, we went into the red, and we had to lay off more than 10 people. While a drop in the bucket, perhaps, compared to what was happening globally, it was, nonetheless, a big layoff for a company of our size. That means significantly fewer resources for execution, and it’s a bunch of real people that will no longer have an income. That’s when reality hits home. Fun and games are over, folks. Welcome to the real world.
EDA WEEKLY: But EVE airplane didn’t crash and burn. You recovered!
In retrospect, yes. But when you’re in the middle of a crisis, you have no idea when, how or if it will abate. This has been especially true of the current economic meltdown, since it hit hard at some of the very foundations of how things work in our world. When huge amounts of wealth vanish, when money stops flowing, when it seems like the whole world has suddenly realized it has overdrawn its checking account, it becomes very unclear as to what will emerge at the end.
For us, two of the plagues hitting us were of our doing or under our control: the ZeBu-Server pre-announcement and the sales team over-growth. The economy was, of course, completely out of our hands. So there we were, stalled out at the top of our climb, and we were pulling every lever and pushing every button we could to right things and make sure that we stayed aloft, understanding that we were also flying in turbulent air, and there was nothing we could do about that.
EDA WEEKLY: So you focused only on what you could change.
Exactly. We solved what we could. ZeBu-Server was finally finished and made available for purchase, and the sales flow picked up again. We went back to a smaller sales team, only this time we focused hard on making sure they had the training and resources they needed to be successful. We will undoubtedly need to grow this sales team, but now we know how to do it.
Meanwhile the economy has been inching back, and the world is gaining some renewed confidence that, even if some of the past practices weren’t a good idea, at least the entire system hasn’t been scuttled. This reinvigorates investment, and, as a result, 2010 gave us the 50% year-to-year sales boost after a sobering 2009. While perhaps more modest than 100%, it’s a validation that our fundamentals are sound, and that we are now on a firmer footing than we were before the crisis.
EDA WEEKLY: So, for now, the turbulence is at least manageable?
From this point, our roadmap is clear. We have been successful riding the Virtex wave, and, as before, the upcoming rounds of Virtex will enable yet higher capacity and speed. We have a real opportunity to take ownership of a significant piece of the emulation pie.
EDA WEEKLY: But at the moment, the press is full of news about legal issues.
Yes. Success comes with its own challenges. You can fly under the radar with impunity, but once you get high enough, you attract attention. And not all attention is good. Large companies have lots of resources, both for technology development and for legal teams. Twice now we’ve run into legal challenges. The first was back in 2006; we made a tough decision to settle, even though we felt we could have won on the merits of our case. But that would have taken a lot of money and would have distracted from running the business, so we let discretion be the better part of valor and settled.