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
Our product is a superset of theirs. Within each tool class you might find one of their tools is better than ours but in many areas we out perform them. I could not characterize it that we are unilaterally better in every single aspect. But we have a broader range of products than they do.
Are you the same size in terms of number of employees, customers and revenue?
No! We have about a 20% to 25% market share.
Jim: That means that we have plenty of growth left, just taking away business.
We have over 350 logos, around 700 or 800 actual installations with thousands of licenses out there that have been used.
We have seen very good growth. We have entire companies that depend completely on our product. Some companies mix and match, they use some of our tools and some of their tools. We have been able to penetrate almost all of the customers and are getting more adoption within those companies.
Jim: Once designers use AWR they love it for a lot of reasons, mostly ease with which the flow works. It’s the flow. The competition is not that clean. Ours is newer.
Even beyond ease of use, I think it’s the completeness. The way we go from concept all the way to the finished product and don’t have gaps in the flow is something that an engineer who is working every day really appreciates. He doesn’t have to figure out how he is going to fill in those gaps in our product. That’s a huge advantage for us.
We have a mix of direct and indirect sales. In many different countries now we have been going direct. That has worked very successfully for us. There are some internationally locations where we are still going through resellers. There is a 50/50 split between domestic and international sales. That goes back almost to the founding of the company, we have found it important to have an international presence, to have that geographic mix so that as one market might be down, the other could make up for it. It has allowed us to grow consistently. That balance has given us financial strength.
The thing we focus on is creating an innovative product, not trying to copy other products. We have taken the design task itself, analyzed it and figuring out the right products to do that. This is very different from what we see a lot of other companies doing where they are trying to catch up or trying to imitate a successful product. We never felt that imitating anyone was the way to be successful. In order to replace a product that exists now, you have to be so much superior. It is not a factor of 2. It is a factor of 10 and you can not do that through imitation. We have always focused on innovating, coming up with a different way of doing it. It started in the early days when we created a unified data model which was completely different from what everyone else uses. We continue to develop and refine that model. Because we have a different design representation, we have been able to add unique capabilities that no one else can add. In some cases it is just the ability to have multiple technologies and take the same environment to design IC and design boards all within one environment and to simulate the effects going from chips off boards through modules. Things like that are all because of the unique approach we have taken to the problem. In the beginning when we did that, it didn’t seem as important. People were more willing to use one tool for designing ICs and another tool for designing boards. We are seeing, especially with wireless designs, that when they use disparate tools, designs don’t work when they put them together. All of a sudden the fact that we have always had this one unifying tool that does both and allows you to simulate the effects of putting designs together really became a competitive advantage in the last year or so as more and more designs are failing because of those effects.
In order to do a complete product, you need many different aspects to have the complete flow. In a small company we have never had the luxury of being a closed system and develop all of the technology you need to get your design done. When you are a small player, you have to pick where you expertise is and realize that you are going to have to work with other companies and have good interfaces for installing technologies from other partners in order to be able to present that unified flow to the designer. From very early on we focused not only on designing our capabilities but figuring out good solid ways to interface to other companies. So in the case of simulation or in the case of layout or extraction, we’ve worked through these open interfaces we’ve created to bolt in a large number of tools. We bolt in HSPICE from Synopsys and actually OEM it. We bolt in SPECTRE from Cadence. We work with Mentor and many smaller firms. Probably a dozen companies where in some way we have been able to take their technologies whether through partnerships or through independent, kind of hands-off, relationships to present one unified flow to the designers so that they can access all that technology through our tool. I would say that outside of Cadence no one else is actually attempting to do that.
Jim: OpenAccess is making or will make that kind of stuff possible
OpenAccess takes into account the design aspects but it does not provide sockets for the simulation aspect or some of the other parts of the environment. We’ve tended to look at it over a much boarder focus. Of course we very much benefit from OpenAccess.
Jim: We are open with low pain. If you have an em simulator, we have a pretty nice interface that works with most em simulators. The user can try and switch them around.
Our interfaces tend to be tool specific but it became clear to us very early on that things like OpenAccess and these interoperable PCells, anything like that allows a broad range of companies to work together is very much aligned with the philosophy we’ve always had which is figuring out how to get more technology in front of the designers so that they can use the best tools available to get the design done. In the past we had to create all of these sockets ourselves. Now we are able to leverage a lot of work other people are doing. That is accelerating how much of this we can do. We are very excited about that because we don’t feel we are at the level to try to do this. Because we have a little RF niche, it still allows us to maintain all of our competitive advantages. We are still the cockpit the designer uses even though a lot more technology is available. It really benefits our end customers that we still own that. We have been very successful and we do not have to be worried about what is happening in that space.
The approach is we try to handle everything. Everywhere we can we are trying to bring the best technology to our customers. For example for physical verification we are using Calibre on the verification IC side. In the case of board level verification we’ve created our own technology because we can not find the third party tool that actually solves the problem. When it comes to high frequency simulation, we have a lot of expertise with the outside simulator that we have acquired. We have world class capability and knowledge in how certain circuits should be modeled and simulated. We are more likely to try and find a partner in areas where we have less expertise like digital IC verification. But we always are focused on the idea of how much time is it costing the customer, how much is this hurting his ability, and where can we accelerate the design?
We just went into production with our new version of our tool set last week. As people started putting chips on the board and looking at the entire module in the wireless space and seeing that as they do these things they are not working the way they intended. In working with our customers in trying to understand why that was not working, we found that there are effects that must be simulated much earlier in the design cycle and being able to understand the effects of putting the chip on the board, how is it going to get routed and what the finished board is going to look like. In doing that we found that there is a big gap in the extraction technology that was necessary to analyze the problems.
Conceptually when you have to model them, if the designer was starting at the beginning and just modeling it going forward but the ability to take a design and analyze it automatically and generate the models needed to simulate was not anywhere in the marketplace. This was the type if thing we wanted to create. We call it ACE for automated circuit extraction technology. What it does is look at the circuit the way the designer laid it out and try to figure out how to decompose that into a set of simulation models that can be used very early in the design process long before the whole design is committed to being finished and tell you what the probability is that it is going to work later. Without ACE what people have traditionally done is to wait until they are completely done, then they can take the entire circuit to an electromagnetic simulator like HFSS or Momentum and run a very large em simulation that could takes hours or even days. Then get a go/no-go. When it comes to making circuits work, these kinds of go/no-go answers are not really the best. Having a way to do it much sooner, long before you are done, and to be able to do it interactively so that you can actually move things around, seeing what the effects are, learning how the circuit really works and what you can do to compensate for all those parasitic effects is very important. So we are really excited coming out with ACE because it moves much sooner in the process the ability to find out whether your board is going to work.
On the RFIC flow we run into the same sort of thing. The extraction tools today for parasitic extraction on silicon design, RFCA designs really wait until you are completely finished the design. Then you go and analyze the parasitics. There is a company in Greece called Helic who started working on some simulation tools to look at RF chips and extract them in a much more RF centric way, looking at spiral inductors and specialized components that are used in radios and creating the kind of technology to be able to model these kinds of things. The problem they always have had in deploying the tool, the thing that makes them much less valuable in the Cadence flow is that in order to use them, you almost have to be completely done with your design. Again you have that verification problem where it will give you a go/no-go about whether the circuit works but it gives you it so late that the cost of going back and fixing those problems and redoing the layout just is not practical and it costs too much design time. What we are able to do because architecturally our system is very different, is to use that same extraction technology but much earlier in the design process. You can start running it when you are 2% or 10% complete with your design instead of waiting until you are 95% complete. Being able to get those effects much sooner in your design process, allows you to use it a design aid rather than a verification aid.
So far we have talked about the implementation side of design, taking concepts that people have and actually designing hardware with it. As you get more and more wireless devices, a lot of the design is just conceptually architecting what the radio should do. Someone designs a new mode of communication. One of the great ones I saw was a little transmitter that could change a PowerPoint slide. That doesn’t use Wifi to communicate to the projector. They created their own protocol for sending bits back and forth to tell it what to do. A lot of that work had been done in tools like MathLab and spreadsheets or just on paper trying to decide just what these protocols should be. Up until we came out with VSS (Visual System Simulator) there wasn’t any tool specifically geared towards communication systems to allow you to create new architectures, to decide what your block diagram should be long before you get to the implementation side, actually figuring out how you should be creating these systems. We released VSS 5 or 6 years ago. It has been evolving but there has always been the next step from having a block diagram to actually doing an implementation of selecting your frequencies, selecting which bands of operation you want to use and how many different wireless devices in conjunction would interfere with each other, We’ve added capability to VSS that helps you perform more experiments about how different things would interfere with each other and what the frequencies going through your radio would look like to see what type of interference you could expect if you design the radio a certain way, how much it will be isolated from interference from other things. That’s a new capability we released that is pretty exciting to a person who has to look at six or seven different wireless things coming in and how they are going to impact each other and what can I do to my block diagram to isolate myself from all those other things in the system.
In summary we have been focused on designing a system that is truly geared toward wireless EDA and creating wireless systems and because of that focus we have been able to create some unique innovations, a unique way of creating systems that you just can not do with traditional EDA tools. A lot of it comes from being able to have a different platform architecture, having the experience in the design community, having been designers to know exactly what to do, being willing to work with people but having the best technology so we can help our designers with any problem they have, having the complete flow, and having the cockpit so that they can do all of the design work simultaneously.
Sherry, you have been quiet.
I just joined the company.
Where did you come from?
I’m from CebaTech, a startup that specializes in ESL and telecommunication IP. They ran out of cash. Before that I spent many years at Ansoft.
What attracted you to AWR?
I was always attracted to them but at a distance. Having met the team and their focus on the customer and doing what is right and productivity, I think they have a winning cooperation. It was an easy decision to make.
Jim: She has been her three weeks.
Sherry: A month.
Jim: Are you excited?
Sherry: Very excited. I feel guilty, I am so excited. You should not have so much fun going to work everyday.
Jim: She has dug in and started learning about what the team has got.
Sherry: It is really a team. When the show ends, we are actually all together to 2AM.
Other than EEsof is there anyone else in this market place that overlaps AWR?
Jim: Cadence dabbles. They are coming up from low frequency towards RF. They have a lot of tools to help you assemble a final chip but they have done it largely by partnering. They partnered with Agilent. That has cooled for some reason. I have no idea why. It is a weak partnership now. I don’t know who was doing the selling. It was probably Agilent. There is no other significant player. These are the only guys keeping the whole thing honest. There is only one big guy. That is not a good thing.
Unless you are that guy
You can only go down.
The growth of this company is somewhat limited by the constant battle with Agilent. One issue for us is that customers of wither company are testing their designs with Agilent equipment. So they are in our accounts with hardware.
Jim: The big companies in EDA tend to move very slowly. The little guys tend to do the innovation
This is true because?
Jim: People get very comfortable in the big companies. They have a lot of legacy code. So to go to a new generation they have to worry about that. These guys started clean, later in the game. It is a third generation. Their architecture is superb from an engineering software point of view. It is really a unified data base. They are the only analog flow where the electrical and physical stiff connects through the data base nicely. With OpenAccess this will probably happen eventually in the analog world. In fairness it is easier to do analog because the blocks are smaller. You can do more fancy stuff. These systems are very nice. They do a lot of handholding.
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