If you are a firm in EDA industry and not a member of the Big Three club, sooner or later you will have to compete against them. Unless of course, you carve out a niche so small, that it will not hold any interest for the Big Three. In the end user community you have to compete not only for budget dollar but also for mind share, attention and resources. It takes resources for an EDA end user just to evaluate new products, much less to fold such products into their existing design flow.
The competitive struggle is not a fair one. A new player has to fight simply to get noticed, while the Big Three already have a global market presence. Any target prospect is likely to be a current user of products from one or more of the Big Three firms, even if it is a different department or different division. Their relationship may be one of long standing.
There are varying approaches for how to compete against dominate players in a given market. You can adopt the Yogi Berra philosophy of successful batting which is to “hit it where they ain’t”. You could develop a niche product in an area outside the scope of the Big Three offerings. Such innovation is challenging as is getting anyone’s attention once you have the unique product. You could also target different geographies or different end user industries. Another approach is to offer products that are complementary or add-ons to offerings from the Big Three. This approach is vulnerable to an expansion or broadening of offerings from the Big Three. The third approach is to offer a product which overlaps offerings from the Big Three but one that possesses some combination of a) superior technology as measured by some objective criterion such as speed or capacity, b) lower price point, c) lower cost of ownership, or d) easier to use. The best approach would be a combination of all of the above. A small technical or economic advantage is easily overcome by any of the Big Three. They point to the obvious risks of going with a small firm. They suggest that their own products will soon catch up or leapfrog the new kid on the block. This approach requires a significant and sustainable advantage for end users to commit. As they say in the VC community “What is your lasting competitive advantage?”
Competing on price only is difficult because the true cost of individual products from the Big Three are buried in complex all-you-can eat and product swaps arrangements.
One company that has adopted the lower price point, easier to use and technically superior approach is EVE, an emulation vendor that has been growing steadily for many years now. I had an opportunity recently to interview Lauro Rizzatti, VP of Marketing and GM of EVE-USA.
How are you this morning?
Actually I lost my voice. I was in Paris. It snowed and I did not have winter clothing and here are the results. There were three snow storms which is very, very unusual. The weather here is more wet and rainy than snow. They told me that it was a record year for them.
Would you give us a brief biography?
In a nutshell I graduated with a Doctorate in Electronic Engineering in Italy from the University of Trieste. Then I started to work in the telecommunication industry for a number of years; first in Italy and then in Germany. Then I moved into ATE (Automated Test Equipment). Teradyne was the company I worked for. I spent more than 10 years with them. My role up to that point had been either as a hardware designer in telecom or as an application engineer at Teradyne. Then Teradyne moved into the EDA space. They made an attempt in the eighties, which was not successful. They tried to move outside the ATE space. That experiment did not succeed. I was already in EDA at Teradyne during those years. I understood that there was no future for them there. I ran into Mentor Graphics in 1985. T the time Mentor was emerging as the leader of the then big three, Daisy, Mentor and Valid. I received an offer from Mentor, left Teradyne and joined Mentor as an application engineer. I moved location from Boston, Massachusetts to Portland, Oregon. I spent the next 11 years at Mentor. At Mentor I moved outside the traditional application engineer work more into technical marketing and then into product marketing. Finally, in the past, I would say, 9 years I have been working for startups; first Get2Chip and then EVE, getting into more executive roles, especially at EVE. For EVE I opened up the US operations. EVE is essentially a French company, created in Paris by ex-Mentor engineers, scientists. They worked previously in the emulation division of Mentor Graphics. I was associated with them back in the nineties, so there was a connection. I opened the office in San Jose. Since then the company has grown from one employee to about thirty people today in the US. Overall, the company has 110 people. That’s it in a nutshell.
So, you were not a founder of EVE.
I was not a founder of EVE. I started with EVE in the early, early days. I believe that I was employee number seven, the first in America. The company was founded by four engineers, French engineers that left Mentor.
Were the founders employed by Mentor in France or in the US?
Always in France. They were part of a small company called Meta Systems that Mentor acquired in the nineties when the decision was made by management to get into the emulation business. It was actually part of due diligence for Mentor. They were looking for existing emulation companies that Mentor could acquire. One was QuickTurn but that was already a well established company and very expansive to think of purchasing. Meta Systems was a tiny company with 15 employees. They had very advanced emulation technology at the time. Mentor made the move and acquired them. That’s the history behind EVE.
Where did the founders get funding?
They started by providing consulting services in the emulation business for end users of emulation systems. In particular, they worked as consultants for Broadcom, Ericsson and STMicrosystems, who were users of Mentor (IKOS) and other emulation systems. These consulting services generated the initial cash flow to begin the development of what later became EVE ZeBu emulation systems. For three years from the inception of the company, which was in 2000, the company was self funded, with of course minimum salaries and all of that. Indeed, when I joined the company, we did not have funding yet. So I worked for the company for five months without any salary. Essentially, I had stock as a way to compensate in those days. The first round was closed in 2003 at 3M euros. We had a second and a third round, two years apart for a total of 13M euros. Now, for three years we have been sustaining growth with our own revenue. We have not had any further funding since 2006.
You have been growing at 30% to 45% per year.
Until 2007 the compound growth rate was 100%, one year higher, one year lower. The average from 2003 to 2007 was 100%. Now we are down to 30%. It would be impossible to sustain 100% growth. In 2008 we grew 30%.
Can you tell me what was the revenue is dollars or euros?
Sure, approaching $30 million, below $30 million but in that ballpark.
The company name EVE stands for?
It stands for Emulation Verification Engineering.
You web site is EVE-team.com
That is the website and email address notation. The actual company is EVE. In France it would be EVE SA. In the America we are EVE-US Inc. We also have subsidiaries in Japan (Nihon EVE KK), in Korea (EVE Korea, Inc), in Taiwan (EVE –Taiwan) and in India (EVE-DA Ltd). The Japanese office is fairly well established and large. We have thirteen to fifteen people there. The other offices I mentioned are small office with two employees, a salesman and an application engineer.
Most EDA companies are US based with offices and/or distributors overseas. EVE’s situation is the reverse with a headquarters in Paris and a sub in the US.