January 28, 2008
Fireside Chat: Rick Lucier & Jim McCanny
Please note that contributed articles, blog entries, and comments posted on EDACafe.com are the views and opinion of the author and do not necessarily represent the views and opinions of the management and staff of Internet Business Systems and its subsidiary web-sites.
There’s one other thing here that comes from my own background in design. When I was a semiconductor engineer in the late 1980’s, we consolidated on Mentor. Then we consolidated on Cadence. Then we consolidated on Synopsys. Then we consolidated on Magma. And that tells you something. You may not actually want to be the preferred provider [for your customer]. The demands of the technology customer [evolve] in a diverse market.
Having said that, the one thing that concerns me is that even though people go in and have this all-you-can-eat deal with their EDA vendor, if a startup can solve the problem, the customer will still go to that vendor. The Big Guy EDA vendor with the all-you-can-eat contract may say, Just give us time to solve that problem for you, and besides the solution is free.’ But, that’s not really the case. The customer will still do the deal with the startup to [get the quicker solution].
[Meanwhile], it’s a challenge for the small startups to stay independent of the flows [from the big EDA vendors]. We’re independent – not biased to a particular flow or tools from a particular player – but in our space, that’s a little less difficult because of the de-facto library formats. However, there’s no standard for statistical models, so we have to work to create that standard – something that can take a lot of time and effort. We’re a part of Si2, and we hope the industry will consolidate to their formats, rather than every tool having its own flavor.
[Ultimately], however, it’s a question of business relationships. We can have a relationship with Company A, and the next thing you know we’re working with Company B. Then [Company A] says, Wait a minute – we though you were our friend!’ It take a little bit of diplomacy and a lot of hard work [on our part] to keep things going.
Question – Does consolidation in the EDA industry make it that much harder for small companies to survive?
Jim McCanny – Small companies need to work closely with their customers and [that costs money]. And your customers need to put up with you as a small company, warts and all.
On the other hand, for the big companies, things are also challenging. There are layers and layers in those organizations – sales, marketing, etc. – which make it hard to react quickly to customer demands. But Big Company or Small Company alike, when the code doesn’t work, the customers bad mouth the EDA vendor and that makes it even tougher to bring innovation to market. Everybody needs to work closely with the customer to get products to the level that can cross the chasm.
[The biggest challenge is always] the innovation. Although, for customers of startups, they [frequently] have a different expectation of the EDA vendor. Maybe those customers are a little gentler [about bugs] than if the tool comes out of one of the big corporate players in EDA. [Problems with tools from big players] always result in comments from the customers like, Those guys really don’t know what they’re doing!’
I’ve seen the big companies try lots of different ways to stimulate innovation, but it’s always a challenge. On the other hand, the ability for a startup to get everyone lined up and focused on what needs to get done, is a process that’s light years faster than at a big company. That’s why the little startups in EDA are so vital to the survival of the industry.
[In the end], we all roll the dice and take a chance, and hope there’s enough distinction between our solution [and the solution from the other vendors] to make ours more responsive, [and to counter the argument from the Big Guys] that if the customer goes with the consolidated deal, they’ll get everything for free.
Question – Same question to you, Rick, should people be concerned about consolidation in the EDA industry? Is the customer served by one-stop shopping?
Rick Lucier – Yes, the EDA industry is maturing a bit. And it does look, at times, like an oligopoly of sorts – an industry undergoing consolidation. You’ve got your Big 3 or Big 4, depending on how you look at it. But, a bigger part of [the question is], how do the EDA companies look at themselves? Do they value market share or market growth?
The big companies look at their market share, and the small companies look at their market growth. So, the question for small companies is, how do you grow your market? The reason I’m so bullish on Carbon is that we’re growing our market by bringing the software content into the design flow and that [translates] to faster time to market for our customers.
Is consolidation bad for the EDA customer? I don’t think so. As a small company, it makes it harder for us in some regards, but in other regards it actually helps. Because, if you’re partnering with the Big Guys in EDA, and not competing with them, you can put together a win-win proposition with them and they’ll help you. And, since there’s not that many of them, if you can leverage that consolidation, you can turn what may look to some as a bad thing, and see it instead as an opportunity for smaller companies to be more nimble. By combining their technology with the big companies, small companies can prove their worth to the big companies and the customers
Question – Rick, I thought I’d get something a little less positive out of you about all of this.
Rick Lucier – [Laughing] I’m seldom accused of being overly positive, but I do believe the situation today [works to the advantage of the small companies in EDA].
Question – Do we want to try to self-fund for as long as possible to prevent the loss of autonomy that comes with VC money?
Jim McCanny – You obviously have to raise money to get started in EDA. Self-funding may be the goal, but the fact is, for only a few companies will that pay off in the long term. I’ve been in big and small EDA companies, and I’ve seen how challenging it is to innovate and bring [those products] to market. Small companies need VCs, because the game changes quickly with each new process technology and you need your tools to track those changes through innovation.
And [again], the industry needs the small companies. I can’t put my finger on any small company in this industry that’s not doing something that’s valuable. And, if they can do something right, someone will pay for their tools and they’ll be successful.
Rick Lucier – That’s actually a double-edged sword: What is the probability of success bootstrapping versus taking money from VCs? There have been some successful companies bootstrapped in EDA, but the majority were venture funded. I’m not looking at any data, but that’s my guess.
If you have big ideas, you need money. You’ve got to go to the VCs and pitch the idea. Yes, angel money, VC money, and so forth, means giving up ownership – but unless you want a lifestyle’ company, you’ve got to look at the probability of success. And you improve that probability with venture funding.
Although you may lose ownership – and it’s often a personal decision of the people who start the company – there’s a difference between losing ownership and losing autonomy. Getting venture funding doesn’t necessarily mean you lose autonomy.
Question – Do you foresee a time anywhere out there where self-assembling systems might provide relief to the design problem?
Jim McCanny – Actually, to some degree that’s what synthesis has been trying to do all along. But as far as completely self-assembling systems is concerned, it would be great if it would work. If you could arbitrarily pick up any logic circuit, create the hardware on the fly, and plug it in – that would be very nice. Certainly, there’s been work going on [in industry and academia] along those lines, but I believe that research has run out of steam somewhat.
Rick Lucier – I think you see the design problem shift more towards the software side as more and more commoditized hardware, third party IP, augments internally developed IP. With the increased use of commoditize hardware you see more and more of the product being differentiated through software. So today, any leading technology product, will include your own IP augmented with third party IP – that doesn’t simplify the design complexity but it may move the bottleneck into the software side.
You can find the full EDACafe event calendar here.
To read more news, click here.
-- Peggy Aycinena, EDACafe.com Contributing Editor.
Be the first to review this article