VaST Systems Technology Crossing the Chasm


Geoffrey Moore published a book entitled “Crossing the Chasm” in 1999. He divides people or firms into 5 categories (Innovators, Early Adopters, Early Majority, Late Majority and Laggards) as to how quickly they adopt a new technology. If one graphs the numbers of users as a function of the time to adopt, one gets a normal distribution curve. Moore goes on to describe the characteristics of each group and the selling techniques need to successfully target each group. Start up companies introducing new technologies as opposed to offering cheaper versions of existing products will be targeting the first two categories. To build very successful companies one must eventually successful sell to the Early Majority and Late Majority segments that comprise the bulk of the available market. The tagline Crossing the Chasm deals with the difficulty of moving from selling to technology enthusiasts and visionaries (Innovators and Early Adopters) to pragmatists (Early Majority).

A firm that seems to speak from the pages of this book is VaST Systems Technology Corporation. VaST is also a company that has undergone considerable change in the last 6 months or so. They closed a $12M in round C funding in May 2005. Recent personnel changes include
Alain Labat - CEO as of Jan 10, 2005
Robert Bedicheck - VP Engineering as of May 2005
Linda Prowse Fosler - VP Marketing & Business Development - Nov 2004
Erin Marshall - Sales Director US Central Region June 2005
John Faase - Sales Director US West
Graham Hellestrand - Founder moves from CEO to CTO
I had the opportunity to speak to the first three people on this list recently.

Prior to joining VaST Alain Labat was CEO of Tera Systems and founder, president and CEO of Sequence Design. He was previously with Synopsys Inc. as senior vice president of worldwide sales and marketing. Labat holds an MBA from INSEEC, France, and an MBA from Thunderbird, The Garvin School of International Management in Glendale, Arizona. Mr. Labat serves on the board of Jasper Design Automation and is a founder and member of the board of the French American School of Silicon Valley.

I assume you had a variety of opportunities. What attracted you to VaST?
Alain: Couple of things. One I started my career back in 1986. At that time Bill Davidow (Founding Partner of Morh Davidow Ventures who led B funding round at VaST) was probably the most influential person and mentor for me in business and marketing when he was on the board of investors at Valid Logic Systems which later on became part of Cadence. Over the last 19 to 20 years Bill has been someone I respected and one with whom I talked about companies, strategies and so forth. He has been talking to me for many months before I took this job. I felt that it was a very compelling company. I felt that any investment done by Bill is a smart investment and the other things is - our corporate joke - that VaST was one of the best kept secrets in the industry because Graham who had made a great commitment to the R&DD effort had a stellar group of companies in the wireless communication and automotive arenas over the last few years. Frankly very few people were aware of that except possibly the investors and the customers themselves.

When you look at the company's financials at the end of 2004, this was a company that was in a breakeven position with great customers and great technology but frankly with very under funded investment in sales and marketing which is typically the reverse in our business. If you look at that, it was very compelling to me. The more I was talking to the investors, the more I felt that it was a fantastic opportunity to use my skill set in developing the business more on the marketing, strategy and sales side. Linda had joined in the fall right before I did. For the last few months we have been building the R&D infrastructure and more importantly the management around Graham who obviously stays as CTO and Patricia Hughes who0 is managing the Australian operation.

The latest round of investment came four months after you joined. Was this largely in the bag when you joined?
When I was thinking about the opportunity there were several companies, namely Foundation Capital, that was very interested and had done a lot of investment in that space: embedded systems with WindRiver and lots of EDA and silicon connected companies. I personally was thinking about a set of new investors that had a lot of added value, knowledge and expertise in that field and strong interest and guidance for all of us here. I was thinking about them. We put on an effort but we were also pleased that the investment was finalized in a matter of a few weeks as opposed to taking many months as it sometimes does.

The latest investment round was led by Foundation Capital. As a result Mike Schuh joined your board of directors. He is also on the boards of Jasper and CoWare. DO you see these firms as complementary or competitive?
Alain:I am actually a co-investor with him at Jasper. In fact I brought Mike into Jasper as an investor. This is highly complementary, RTL formal verification. Mike is not on the board of CoWare but is an investor in CoWare. I think he views that as the first generation of ESL technology. We have very different complementary technical set with companies like CoWare.
Linda: When Alain came on board we really repositioned the company to be focused on embedded systems and design automation and within that primarily on the wireless, consumer and automotive market segments. In order to be successful in these segments with that type of an objective for Virtual System Prototyping you really need to have very high speed, close to the real hardware speed plus timing accuracy at something close to 100% cycle accurate. Because we are very focused with these two markets specifically, we actually never run into CoWare. They supply an ESL solution that satisfies a different range of needs.

When you came on board, you took over from the Graham Hellerstrand, the company founder and CEO. How has that transition gone?
Alain: I can tell you that Graham is very much a part of the management team here in his new role as CTO. Unfortunately he is visiting customers today. He is very committed and excited about being part of the new team. He would tell you that if you talked with him directly. His skill set has been tremendous in the early inception of the technology but as you know to be able to scale the company to over $10 million, a different skill set is needed. This is what the management team brings with Linda, Rob and the recent appointments to US sales management announced this week.

I view my role here as sort of a facilitator to bring together the right synergy and right skill sets between all of the people in different functions. I remember the same thing occurred at Synopsys when Aart was the founder of the company and Harry James came to bring more strategy, marketing and sales. Maybe the reverse happened in that case, the founder took over after the IPO. I think you will execute well if you establish a culture and values such that you allow your people to best do what their skill set is for. I think you build a great extended team with an incredibly powerful team. I would say that Graham, no question, is the best CTO with that skill set that you could find. I would challenge Aart or Fister at Cadence to say that. We feel fortunate to have Graham here. He was the founder of the team. Rob coming to the team as VP of R&D brings a different skill. Graham is very much a part of the team. I feel very fortunate to have him.

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