Applied Wave Research, Inc. (AWR) is a leader in high-frequency EDA software for wireless, high-speed wireline and electro-optical applications. AWR's solutions address the physical implementation of ICs, multi-chip modules and PCBs within a single consistent environment. AWR was founded in 1994 with a small amount of capital from angel investors and successfully "bootstrapped" itself. It landed its second round of funding in August 2002 from Synopsys and CMEA Ventures. Third round of investment $6.4 million in Feb 2006 was led by Synopsys and Intel Capital. The firm’s website is http://www.appwave.com/ having lost awr.com to an accounting firm.
In April AWR announced that Dane Collins, former executive vice president, took over as CEO. On May 14th AWR named Sherry Hess as VP of Marketing. At DAC I had an opportunity to interview them along with board member Jim Solomon, founder of Cadence, who kibitzed throughout the conversation.
Would you provide us a brief biography?
I have been with the company for a while.
Jim: He is one of the 3 key guys in the company
I showed up when the product very first showed up, almost at the very first sale kind of adding to a core of people that were incredibly strong in development and understanding sales and marketing but who had never worked for a small company. I come from a background of being at EEsof and at the analog division under Jim at Cadence and going to HLD (High Level Design Systems). I had a lot of experience starting as the 5th or 6th employee and getting to 100 or 200 people. One of those things is that you go through so many challenges in growing a company that it helps to have seen it before. I was a good balance to the people that were there in starting things up. We went from having no revenue, no investment, starting from scratch and going against a huge entrenched competitor (HP at the time) slowly started deploying software and gaining market momentum. Now we have grown for 10 years in a row. Every year the revenue picks up.
Given that we are in a space that is primary wireless and high frequency design, we had a big market catastrophe in 2001 to 2002 but we still managed to grow through those times. We find great adoption amongst customers that are looking for faster time to market. We have a lot of innovations in our software and we are really geared looking towards how our customers get product out the door and what they are getting stuck on and how we can change their process and provide tools that get their products in much less time than they can with competitive tools.
Jim: They are one of the few companies that have a complete front to back flow, electrical to physical so in that sense they compete with the big guys.
Before you became CEO at AWR what was your position?
I was many things. I originally started doing all the technical support and adding a little bit of organizational process to R&D. Technically I was VP of R&D in the beginning. Then I became chief operating officer and focused internally on the company, how it ran, how it dealt with customers and how it released products. My background is in product development and operations. I have always been focused on the process. I was also responsible for all the finance.
Jim: He started running Finance which was very different for an engineer. He was pretty good at it but then he noticed that he got too busy. So to slow him down we made him CEO. What could we do? He was already familiar with running the company.
No good deed goes unpunished.
I think when I started I asked the guys “Are we making money?” They said we think so. Something didn’t sound right about that answer. It seemed like an important piece of information. My family has a financial background. My wife is an incredibly solid accountant and she taught me what I needed to know.
Jim: He picked it up very well. Plus, he was doing all the deal making. He got exposed to all the right stuff. His only problem was that he wasn’t sure he wanted to run the company. We made him do it. It will be good for him. Make him a stronger person.
Tell me about AWR.
One of the things we focus on is having a complete toolset but in a smaller segment of the market. Rather than trying to do everything for all people we’ve picked a specific subset of the industry where we have a lot of unique expertise coming from high frequency background and coming from having an actual design background. When you look at all of the management outside of finance, the people have actually designed circuits for a living. We have a strong appreciation for what it is to get product out the door from a circuit designer’s perspective. Most of that experience comes in high frequency design. What we have done is try to figure out how to put a flow together and what you could do differently from what the traditional toolsets do that were designed for a much broader audience but are willing to make sacrifices for breadth. If you wanted to make those sacrifices fresh, how would you really do things so that designers doing wireless products could really out designing people who were using generalized tools. That is what we have been focusing on for over 10 years. We have stayed true to that mission. To a certain extent we have benefited from the fact that more and more wireless devices are getting done.
Back 10 years ago it wasn’t that big of a deal. It was a little deal but it is what we knew and what we have stuck with. We have been lucky that the market has really come to us.
We are headquartered in El Segundo (south of LA). We have offices in Glendale and in Silicon Valley. We have offices internationally in quite a few countries. It keeps growing. We acquired a company in Finland in 2005 called APLAC Solutions who had a lot of technology in simulation and analysis software for analog and RF design.
Jim: They were a major supplier to Nokia. They still are. They turned out to be great guys.
They are in Finland. With European culture and being a small company at the time, we were a little unsure whether we were grown up enough to acquire an international company and become an international presence. It has been so easy because they are such good guys. It is amazing that when you get good engineers, software developers that really believe in helping customers that is a lot of commonality regardless of what nationality they are.
Jim: Culturally a great fit. Same kind of culture.
We have been growing every year, continuing to win customers. Our primary competition is Agilent EESof, a division of Agilent that itself was spun out of HP.
Jim: Hard to keep track of this stuff.
EEsof being acquired by HP, being spun out as Agilent. We have had very good success over the last 10 years replacing their seats. At least for me it was very different because coming from HDL or even from the Analog Artist, we were going almost into virgin territory. People didn’t have solutions and you are creating new products. All the players did that in the early days of EDA. You were just selling solutions to problems that existed for which there had been no solutions. This is the first time I have been part of a company where every single customer had a solution and you were trying to replace that solution. We have learned an awful lot about what it takes to make that happen.
AWR has about 90 people. What is the revenue?
We do not give out that figure. I would say that we are profitable. So you can take an average loading and get close. We are privately held and keep that number quiet, especially since we are competing against someone who is fairly aggressive. We have found that anytime more information gets out the harder it becomes.
Does your competition have a presence in markets, not necessarily geographic, where you don’t.
Jim: No! We map very well on top of each other. The tool flows are very different