January 17, 2005
Conversation with Ken McElvain, Synplicity CTO
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Jack Horgan - Contributing Editor

by Jack Horgan - Contributing Editor
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Biography of Ken McElvain

Ken McElvain is a co-founder of Synplicity, which he started with Alisa Yaffa in 1994. Mr. McElvain is responsible for new product strategy, developing innovative technologies and algorithms, and contributing to key development projects.

Mr. McElvain is the inventor and chief developer of many of the company's successful products and technologies, including the company's flagship product, Synplify. He is also a key architect for Synplicity's other products including ASIC synthesis and physical synthesis, verification and physical implementation products.

Prior to starting Synplicity, Mr. McElvain worked as the principal architect of the AutoLogic ASIC synthesis tool at Mentor Graphics Corporation, which he began developing at Silicon Compilers, Inc. before it was acquired by Mentor Graphics. Before Silicon Compilers, Mr. McElvain worked as a CPU designer at Hewlett-Packard Company. Mr. McElvain holds 7 patents.

Mr. McElvain holds a BA in Mathematics and a BS in Computer Science from Washington State University

How would you describe the role of a Chief Technical Officer (CTO)?

Let me describe it from the point of view of what I do which may not be exactly what a CTO at another company does. Probably the most important thing is trying to predict the future. Trying to predict what's going to be economically important to our customers in the future and then translating that back into what seed technology we need to start. For example, a few years ago we started making investments in DSP on FPGA. Now it's becoming a bigger deal. The idea from a competitive point of view is to predict these trends early so that you can make efficient investments so that you can be there when your customers need the product. It's really technical strategy contribution to the
business. In a way its almost more business oriented than technology oriented because you take the business opportunity first and work backwards to what technology you need as opposed to saying “I have this great technology, how can you use it?” I don't know if that makes sense (Editor: Yes)

The other thing that is good for CTOs to do is sponsor or maybe lead some project to demonstrate that certain things are doable, are executable. Build a momentum for the company to go after them.

Another important thing. This is interesting aspect of transitioning from a small to a big company. When you are small, you visit all the time with people and keep them in touch with respect to a product philosophy. Consistency across products is important. For example, we have a business philosophy of making the product very highly automated so that in the field we have more efficiency. But it is difficult for new engineers that we hire. They don't necessarily understand that. They are looking to do some neat bit of technology and they don't mind having a lot of complexity. So I have to get across that philosophy of the product to the engineers. During the early days we sat in
their cubicles or office and nudged them in the right direction. Eventually you need to get to education. Teaching engineering people why this is economically the best thing for the company, so that engineers are making decisions aligned with our business philosophy.

That's pretty much what I do as CTO.

You were co-founder of Synplicity. What was your role in the early days of the company?

When the company was small I was CEO until Bernie Aronson came in. We were fairly small, up to the low thirties when we made that transition. Being CEO took a lot of time. I was always aware that I was more valuable on the technical business side of things rather than attempting to run the company. As founder you have to make the decision which way you are going to go, unless it is force upon you.

It depends on how you started your company. We were self funded in the early days, so we had choices rather than having them imposed upon us. We choose to bring in good experienced management as opposed to having it forced upon us.

How were you self-funded?

I was at a company called Silicon Compilers that was acquired by Mentor Graphics and thus stock options. I had money from that and my wife had a similar amount set aside. We used that to set up the company. That cash lasted about 2 years.

What do you think about the new rules on stock options (see last week's editorial)?

Philosophically, if they cost something, they should be expensed. Since I am on the board of Synplicity, I have seen the plans for how much expense to take and how it is calculated. It is not very satisfying, the way it is done.

This reminds me of the way we went public. We were going public in the beginning of the downturn. We had picked a stock price range somewhere between $10 and $12. Since the Market was shifting, we had to reduce the range. But the SEC (Security Exchange Commission) position was once you told them a range that determined the fair market value of the stock. We have spent years burning off this fictitious expense of pre-IPO stock. That made very little sense to me. There is no correction for events coming out differently later. I don't think there's going to be any correcting now because they want to lock in an expense amount at the beginning. If you have a general stock market
retreat, there will be no forgiveness. What they should have done is picked a more reasonable expense model. If you give some one an option, you could think of it as an interest free loan. There are different ways to decompose the value if a stock option. You can decompose into some pretty well understood components and some not so well understood components. Maybe you expense the well understood components. I think of an option as giving someone an interest free load that is collateralized by the stock. If the stock is above the strike price, you just give it back. You could go out and get a financial model for an interest free loan and expense just that piece.
The other aspects of stock options are very speculative. Mixing that stuff into earnings is not going to help anyone.

Options have been good for hiring and retention but they do have cost and we should recognize that.

How would you describe the relationship between the CTO and CEO?

Mainly strategic input.

We have been setting up relationships with major partners and that's an area where I get involved. We have partners in structured ASIC domain (LSI, NEC and Fujitsu) and we have partnerships with Xilinx, Aetera, Lattice and so on. Assisting in those relationships that are based upon supplying technology to partners and their customers. Where should we be making our technology investment and how much?

What does this entail?

Some of it is picking them. There are a lot of companies to be partners with. We have to pick the ones we think have the best chance for success. Then we have to convince them that we have something to offer. In one case for example we decided to do a little pilot project targeting their structured ASIC. I led that project to make sure we delivered convincing evidence that they would get a good tool from us. That kinds gets the ball rolling. A lot of times that's what you do: get the ball rolling.
Some business relationships don't rely on new technology. Then I wouldn't be involved but if the business relationship is going to rely on new technology that I probably would be involved.

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-- Jack Horgan, EDACafe.com Contributing Editor.


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