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September 25, 2006
The Age of Enlightenment
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.
Peggy Aycinena - Contributing Editor

by Peggy Aycinena - Contributing Editor
Posted anew every four weeks or so, the EDA WEEKLY delivers to its readers information concerning the latest happenings in the EDA industry, covering vendors, products, finances and new developments. Frequently, feature articles on selected public or private EDA companies are presented. Brought to you by EDACafe.com. If we miss a story or subject that you feel deserves to be included, or you just want to suggest a future topic, please contact us! Questions? Feedback? Click here. Thank you!

It was great to have the chance to speak at length this week with Vic Kulkarni, CEO of Sequence Design. Vic agreed to talk about a range of topics not specific to his company, but on the larger subjects of globalization and the various trends associated with all of that. We started our conversation by running through Vic's bio, and those comments are posted at the end of this column. The principle portion of our lengthy phone call, however, comes first.


A Conversation with Vic Kulkarni …

So, my first question is about globalization. Is it happening too fast? Is it a new concept, or something that's been underway for a long time? Can you even define globalization?

Vic Kulkarni - These are a very interesting set of questions. I was first exposed to globalization in my Compass days, when it was VLSI, because even then 40 percent of our R&D was being done in Sophia Antipolis in France. I learned about working in France, and about remote R&D. I was able to observe the benefits there, and that was 17 years ago. I learned an important tenant - go to where your customers are, and where your talent is. I pursued those ideas for quite some time to further understand what a multinational, multicultural environment means to a company.

Then at Avanti, I experienced true globalization. In 1998, I had to create an R&D group in Shanghai. I remember my first trip there vividly. We had a relationship with Shanghai University, and met with the chairman of the department of engineering on a Friday. On Saturday, the next day, we had 34 Ph.D. and Masters students coming in for interviews. We interviewed students for 14 hours straight, over lunch, over dinner, and into the evening.

We wanted to see if we could transfer some of our R&D into that area. It was an extremely good experience for us, and the group there became very successful. I believe, even today, Synopsys still has some of that group working in Shanghai. For us at Avanti, it was a big boost in our operating model.

In those days, globalization was not being practiced in a true sense - it was mainly outsourcing. However, when I arrived at Sequence, I did a lot of work with Interra Systems, the Indian company. We didn't want to jump into the Indian market without experience. I was from India, but I had no experience at all working in that environment - so our idea was to start by getting our feet wet with learning about R&D management in India through Interra. That experience changed our world from outsourcing to true offshoring.

We learned the most important lesson through that process - you can't motivate remote teams by insulting them with low-level tasks. That's when we went to the concept of Centers of Excellence - working with local talent and the local schools. That is the meaning of true globalization - when you have Centers of Excellence scattered around the world.

Now I two people, experts in timing and algorithmic development, in the U.K. For the team in India, it's pretty much all about RTL, power analysis, and parasitic extraction knowledge. Plus, now we're building some timing knowledge there as well. Then we have a center in Westford, Massachusetts. In fact, our CTO resides there, where he makes all of the decisions about our roadmap.

So, we have learned that the very first thing you have to get rid of in the move to globalization is the concept of headquarters, say, on the ground in Silicon Valley. Today, for Sequence, the headquarters are wherever I am at the time. It is not a big, bureaucratic headquarters centered in Santa Clara. I have to go out and talk with my product teams all over the world. That's true globalization.

So given those things are true, what are the implications then for Silicon Valley?

Vic Kulkarni - For our own workforce over the last 4 years, it has meant that we have moved our U.S. guys into more of the architect roles for the products. These guys are exposed to customers in Silicon Valley, and to the customers' expertise there, that sheer knowledge that is not quite distributed globally as yet.

Then, within the structure of our own operating model, in the U.S. and the U.K., those guys share that knowledge with product managers, project leaders, and experienced people in India and other parts of the world. That's our model, and the model I see reflected in most of our end-customers these days.

And what are the implications for the start-up environment in Silicon Valley?

Vic Kulkarni - When I talk to the CTOs of the Silicon Valley COT start-ups, I hear that any new business plan with hopes of being approved on Sandhill Road - or any new CEO of any new start-up - must show a strategy for establishing distinct Centers of Excellence around the world. Nobody wants to fund a company any more that's purely Silicon-Valley based. You can have your architects here, but you need to have Centers of Excellence in Romania, or Egypt, or China, or Taiwan, or India. Now, I'm hearing that the newest location is Vietnam.

One of our big customers, Renesis, has decided to no longer invest in Bangalore. They're now investing in Ho Chi Minh City. They're using one of our products there, in fact. There's a population in Vietnam with good English skills and a good work ethic. Beyond that, you're going to see even more new markets and new nations emerge as possible locations for Centers of Excellence. You can't afford to deny this trend. [Instead], you must leverage it if you want to be successful.

Speaking about India specifically, what are the implications for India in all of this.

Vic Kulkarni - The situation in India is changing. For quite some time the big customers in Japan, Europe, and North America have all had design centers in India. Eleven of our customers have significant design activity going on in India. For example, the new GMS technology and GPS design for BMW, which used to be in Germany, is now in Delhi. Also, important WiMax work is being done in Bangalore, where 4 different companies are working on designs at 65 nanometers. There are now 130 chip design companies in Bangalore, Hyderabad, and Delhi.

Do you think this has changed more rapidly than anyone could have predicted? Wasn't it just a few years ago that people in North America, and perhaps Europe and Japan, were saying that only the low-level design work was appropriate for India?

Vic Kulkarni - Yes, the situation is changing much more rapidly than anyone could have guessed. Today, there are lots of people going from the U.S. and Germany to live and work in India. One of the senior technologists at Infineon has transferred his work to Bangalore. He and his wife now reside there permanently.

And, many German engineers are going back and forth constantly between Germany and India. In fact, I've heard that all of the flights from Frankfurt to Bangalore are fully booked from now through to the end of the year. Plus, those flights used to cost $800 - now they are up to $1600. Also, now in Bangalore, not only are 100 percent of the hotels booked, but the cost for just a reasonable business hotel in $260 a night, where it used to be $60.

I also understand that several Indian airlines are trying to buy more gates at Frankfort, or are working to find alternative routes to Singapore and Hong Kong. There are no more boundaries today.

So, as Bangalore becomes more expensive, isn't the momentum going to quickly shift to other locations?

Vic Kulkarni - Of course, in India they are recognizing this issue, so they're doing something really clever. They are trying to get away from a Bangalore-centric view. There are now many emerging cities in India - Pune, Indore, and Aurangabad, for instance - where the overall cost and employee mobility is less.

But isn't it costly to try to reach these more regional locations within the country?

Vic Kulkarni - Not really. There are 5 domestic airlines in India, and everyone is clamoring to get to these satellite cities. Plus, everybody knows that the semiconductor design chain is not capital intensive. You don't need a lot of capital equipment, just a few Sun workstations. In fact, now with Linux, the workstations are even less expensive. But even with all of this, there is some movement away from India as I mentioned. The place I hear more and more about, again, is Vietnam.

Is there a university and teaching base in Vietnam to provide the intellectual capital for the industry there?

Vic Kulkarni - The local universities are getting pretty sophisticated. Plus many of the big-name universities in North America - schools like CMU - are partnering with local governments to set up educational facilities. I was at a panel recently hosted by Dr. Avul Kalam, President of India, and he made the point that education is no longer limited by location. President Kalam said that now with the Internet and wireless access being so good - with big screens, and video capability - the things that made location so important are no longer as crucial in education.

He threw out the challenge to take 750 villages, to select 50 professors, and to have them give video lectures to everybody in those villages - real-time classrooms, completely wired, with large screens. He said you could have 1000 students attending each lecture. [It's a very clear model] that many countries will follow.

From a business perspective, how do you deal with differences in local cultural and business practices in a globalized company?

Vic Kulkarni - In our own little world, we deal with it by creating a network of partners to avoid cultural issues. Interra really helped me learn a lot about this when we started our design center in Delhi.

However, speaking anecdotally, recently we had a situation where one of the managers in a U.S. office has had the habit of saying "great job" to the team frequently. Here in the U.S., saying "great job" means the you are referencing a particular, [immediate] accomplishment. But for a manager in India who receives that praise, it means that an entire year's worth of work is being praised. So, then when the annual review came out with recommendations for improvement, the manager in India was very disappointed because that person thought they had received unqualified praise for an entire year. It's a simple situation, but it caught us by surprise because we thought we were experts with all of
this by now.

Doesn't managing a global team require a great deal of travel to get face time between team members?

Vic Kulkarni - This is a commitment that companies have to make. It means continuous travel. If you walk into my secretary's office today, you will see a schedule posted there that shows when our U.S. people will be traveling to India, and when our India people will be traveling to the U.S.

There is nothing like face-to-face interaction for people to succeed in working together. Also, we have an internal sponsor program where people in the U.S. take responsibility for some non-office hosting of the India employees when they're here. This weekend, my wife and I are taking some senior guys, here from India, to Sausalito. It's important to have people connect with each other in an informal setting.

But yes, it still takes a large commitment of travel dollars. For the U.S. guys, it has been important, however, as they have slowly learned to appreciate the value that the other teams bring to the company - that those teams are more than just satellite operations, but are true Centers of Excellence.

Initially, we had found that there was some tension across the whole supply chain - this issue of globalization. Of course, initially for the industry it was just about giving manufacturing, for instance, to Taiwan, and then to Singapore or Malaysia. Broadcomm has been doing this for many years, but still many people only considered these places to be remote sites.

Now when I go to talk to some of the chip-design start-ups, their whole supply chain and manufacturing is worldwide. Different parts of a product are being designed and manufactured across a huge range of locations. As a result, for people in Silicon Valley, they are getting much better at operations research, supply chain management, and learning to use FedEx to keep the whole thing going. The value-add for the people in our company is at the system level. And, this [trend] is creating a whole new set of jobs and opportunities.

Do you think that globalization may be a factor in helping to ease international tensions? In a related question, do you think the events of 9/11 had any material impact on the pace of change towards globalization?

Vic Kulkarni - Well, there has definitely been an acceleration of events, and 9/11 did have a deep impact on the economy at the time. It taught us to do things in a better way within the context of a new world - in our economy here in the U.S. and elsewhere. But it was the dot.com boom, which was already underway, and which was [significantly overfunded], that really did the job to prepare us for today. There was so much fiber optic cable laid down at that time that now we have superb communications for video, audio and [all types] of data. There is a very low price for connectivity and this is having a very large impact today.

How does Silicon Valley maintain its position of leadership or pre-eminence in the world? Or is that actually no longer the case?

Vic Kulkarni - Silicon Valley, in my mind, is still thriving - even if not completely across the board. But the Googles, Yahoos, and Apples of the world continue to keep Silicon Valley absolutely on the top of the world for innovation, creativity, and opening. Just look at Google Earth!

When Dr. Kalam was making his presentation, he asked the audience to compare themselves to Silicon Valley: "Where is your IP? Where is the next Excel spreadsheet? What have you done lately that is innovative?"

The innovation is still happening in North America. People everywhere are still looking to America for the ingenuity. It's still quite unique. And there continues to be a fascination with how we do things here in Silicon Valley. It's still impossible to recreate a Steve Jobs anywhere else in the world. It's true, that may happen with time - definitely that will happen with time - but what the time frame or horizon is for that, who can tell.

Richard Newton at U.C. Berkeley talks about the fusion of technologies. It's the fusion of electrical engineering, computer science, bioengineering, and medicine that Dr. Newton says will produce a whole brand new set of ideas. Yes, someday there may be Silicon Valley's in other parts of the world, but it hasn't happened yet.

Right now, for instance, Bangalore may be creating the best WiMax in the world. The need is so strong to take advantage of the technology for low-cost communications in that part of the world. If you can create a telephone conversation that is as cheap as a postage stamp, so the cost of an hour-long phone call is the same as a stamp, that would mean tremendous innovation for that area of the world.

But in my opinion, here in Silicon Valley - with the influence of Stanford, Berkeley, UCSF, and all of the U.C. system, for that matter - there is still no other place like it in the world.

You talk about wireless connectivity, so why aren't we actually moving to a virtual Silicon Valley?

Vic Kulkarni - Yes, it's possible - globalization is the first step towards that [type of reality]. You have a global work force that is [increasingly] independent of location. It may come from China, or India, or Egypt. Right now, for instance, Mentor Graphics is looking at Egypt for a significant portion of its RTL work. And, as you have said, there are lots of people looking at South America. If we can become sufficiently connected, a virtual Silicon Valley is a possibility.

Listening to all of this, there does seem to be a contradiction. People need to travel for that all-important, team-building face time, yet we also all embrace distributed, always connected, remote teams working together in a virtual network from their Centers of Excellence. How can we have it both ways? Is there some kind of optimization algorithm to calculate the exact, necessary, and sufficient number of face-to-face meetings needed to maximize cooperation and productivity across centers?

Vic Kulkarni - We actually do have a kind of an optimization algorithm for this. In my own case, I have looked closely at how many time I need to go to India personally, and how many times different levels of managers need to meet with their teams.

We have determined that at the CEO level, I need to meet with the teams once a quarter. Product teams need to meet once a month. It's once a week for directors to be meeting with their direct reports. And, on a daily basis, everyone must stay connected by e-mail.

The truth is that once you meet someone in person - and then, even if you only see them in person every 2 months or so - you establish and then re-establish the trust that's important for success. The two guys who my wife and I are taking out on Saturday - I feel they need to see me every several months. It's important.

We've looked a video conferencing, and know that can be useful. But it's not really the same as sitting across a table from someone. Skype also has made it easier to stay connected, but the truth is, if an engineer is sitting in a production meeting that's a [virtual] conference, it's possible to put the phone on mute and do your own thing while the meeting is progressing. However, when people attend a physical meeting, their minds can't wander. They can also learn something from the body language of the other people in the room.

One of our top guys at Sequence is Tom Miller, who is general manager of our front-end unit. He is physically located in Seattle in a one-person office there. I don't see him in person at all. Recently I bought a Skype camera so I could see him sometimes and tease him during meetings. But, in fact, the level of trust between us is so high - he starts at 6 AM like I do, he comes to Santa Clara every 3 weeks to see me, and the sales force and various customers - I never have to worry where Tom is. And, he's not just some black box in Seattle. When I talk to him, I can actually picture his face because I know him so well.

And actually, right now, one of the most remote people in the company for me is someone who sits about 20 feet away from me. I interact with some people in India more often than that person who sits so nearby here in Santa Clara.

Okay, so given all of these complex realities, how do we go about fully educating the next generation?

Vic Kulkarni - I think the most important thing is for them to understand the concept of team - that knowledge must be shared. That has to be a really strong message for the next generation. However, in some ways, I think cyberspace has really already taught them a lot about knowledge sharing. Their interpersonal skills may not be as good, but when they spend time sharing video games - playing a match against someone, say, in Denmark - the younger generation may already be very comfortable with the idea of knowledge sharing. They definitely know how to use all of the new technology to achieve a [sense of] community.

Do you ever think that this overwhelming environment of electronic gadgetry and electronic noise that we live within today is a threat to our overall quality of life?

Vic Kulkarni - That's actually an interesting question. I was recently visiting with a senior technologist at a company in Korea. He was telling me that despite all of the functionality that they are currently putting into their cell phone product - video, online access, music - that one small company in Taiwan is actually beating them in the market. The product out of Taiwan is just a cell phone with a number pad. There's no additional wireless capability, no movie downloads, no MP3 player, no nothing. Just a phone with a number pad.

We need to start to forget all of the garbage that we are [layering] on products. That's how Sony lost against Apple. Sony actually had a better MP3 player, but the [simplicity of the] iPod won in the end.

Do you yourself ever get away from all of the electronic noise pollution?

Vic Kulkarni - Yes I do, and I thank my wife for that. This past weekend, we went to see the Monet exhibit at the Legion of Honor in San Francisco. It's the kind of thing we force ourselves to do to get away from it all.

What do you see for the EDA industry over the next 5 or 10 years?

Vic Kulkarni - I can't speak to 10 years, but I can speak to 3 to 5 years. There's going to be a great opportunity for all of us in the EDA world to add to that vertical market idea. There's nothing new there, but we haven't done a very good job of it. Thanks to [Cadence CEO] Mike Fister, we are beginning to think along those lines more effectively.

In the EDA world, we are beginning to think about our customers' customers - and the solutions are a combination of IP, EDA tools, and focused customer consulting. People ask us, for instance, "Vic, can you help us design a low-power cell phone?"

Well, we can't do it alone, but if we have certain IP - wireless or high-speed MAAP, for instance - and if we had knowledge from 2 or 3 of our partners coming together, it would be feasible to produce the solution the customer needs. That is the future model for EDA.

How does that vision dovetail with recent 'messaging' from several of the large EDA players that they would like to dominate the market as sole providers?

Vic Kulkarni - I think the answer here is standardization. The end customers, companies like ATI or ARM or Philips, are asking for standardization. And, this is one reason we are excited to have announced our support for the CPF, the Common Power Format. The end result will be to produce design intent in such a way that, frankly, no single company will have a monopoly.

From ESL, to RTL, gates, and final signoff, design intent will be captured in this Common Power Format. This will allow smaller companies to compete more effectively. Working with the IEEE to establish the standard - whoever wins, IEEE will be the key. It will allow all companies to add value, and people won't be worrying about just one company controlling everything.

If the end users weren't 'there' for this standardization, it would be one thing - but I hear that companies like NEC and Freescale are supporting it. And not just the marketing guys from those companies, but the Ph.D's in the companies, the tech folks, are talking about. It's a sincere effort on the part of many to bring this standard together.

So finally, how have all of the events and trends of recent years impacted the EDA industry in particular?

Vic Kulkarni - I think we've learned one lesson over these last several years - it has helped all companies in the EDA industry to be much more conscious of their operating model. It's not just rah, rah any more - we've had to learn to be far more effective over time. The managers in EDA, and the VCs alike, are paying closer attention to operating expenses.

And it has made the process of creating a business in EDA far more interesting. It's no longer just about creating some technology and getting sold to Cadence. Now it's about building up a skillset within the company. Now we all know for sure - what doesn't kill you, makes you stronger.

I really love this industry. Maybe I'm smoking EDA drugs or something, but this industry is the source of my happiness.


First things second …

I'd be happy if you would run through your bio for me:

Vic Kulkarni - Well, this is my 29th year in the semiconductor and EDA industries together. I did my bachelors in technology at IIT in Bombay in 1974, and finished my masters in sold-state electronics at the University of Cincinnati in 1976.

Did you think you would stay on and work in the U.S. at that time?

Vic Kulkarni - Yes, I always intended to stay. Solid-state electronics was fascinating, and it was [in those years] that the semiconductor industry was just starting. National Semiconductor had on-site campus recruiting in 1976 at the University of Cincinnati. They talked me out of continuing on for my Ph.D., and brought me here to the Valley instead. I never looked back.

I started as a design and production engineer, and quickly was on the fast track at National in terms of the senior engineering and management tracks. I got very involved at National in their biggest project to date at that time - a chip computer. We got the Motorola processor, and worked on an 8-bit A to D converter - all aspects of manufacturing and yield improvement. The company generated $125 million work of revenue on that one product. I was lucky to part of that.

How long were you at National?

Vic Kulkarni - After 6 years, I went to Fairchild to head up their CMOS gate-array program as director of engineering. At that time, gate arrays were brand new. For instance, LSI Logic and VLSI were bipolar country only. Because CMOS was relatively new, they hired me because of my background and we created 6-micron gate arrays, 6-micron channel length devices. I built up that product division for Schlumberger, who had bought the division from National, and took it from $0 to $65 million. It took about 5 and a half years. Then the division was bought back by National. [The experience] gave me my start with the start-up spirit, where I learned all of the tricks [involved in that

At that time, the company found they needed tools for developing gate-array designs. My boss at the time convinced me to take on the product marketing. That's how I got exposed to the concepts of product marketing and customer product definition. It was a very enjoyable experience.

So when did you leave National?

Vic Kulkarni - I did product marketing for them for almost 10 years. Then, I decided to join VLSI Technology and learned a great deal there from Doug Fairbairn. It was there I learned about the concepts of customer support, and management delivering on its promise to the customers. Those are ideas that I have always cherished.

What role did you play at VLSI?

Vic Kulkarni - Under Doug Fairbairn, I was vice president of product marketing at VLSI. It was a $150 million unit under the ASIC group at VLSI. We did quite a bit of work with Philips and Hitachi, who were our main technology partners. Although we were a relatively small ASIC and cell-based design house, we were the lynchpins for these two giants who created ASIC and gate-array standard cells. It was there that we launched the 2-micron gate array - we were the first to do it.

Doug was quite a visionary. He used [layout] technology from Caltech when productivity was becoming very important in design. VLSI was actually one of the first synthesis companies - even before Synopsys has received its funding - although we didn't call it a synthesizer at the time. We called it a state-machine compiler. All that came from Doug Fairbairn and others working at the genius engineer level. They were all very knowledgeable engineering folks who were really breaking new ground in the technology. I was exposed to all of that, which increased my enthusiasm even further. When I left VLSI, I joined Crosscheck.

So, although you had been in start-up like divisions in larger companies, this was your first start-up?

Vic Kulkarni - Yes, I really wanted to experience a start-up for 2 or 3 years. Crosscheck put me in charge of all worldwide marketing for their embedded test circuitry.

Were you in competition with LogicVision?

Vic Kulkarni - Logic Vision was fairly new. We had some innovative test structures that allowed 100-percent visibility into the circuit. It was a great experience for me learning about large licensing agreement, and technology-transfer agreements. Sony, Toshiba, LSI Logic were all our customers - I spent 5 and a half years there, and promoted quite a bit of that technology at ITC and other conferences.

And next?

Vic Kulkarni - Then I joined MetasSoftware. I was there for one and a half years. We took MetaSoftware public and achieved a $165 million valuation. Then we were purchased by Avanti for $182 million. I was at Avanti for 4 years [following the acquisition]. It was an extremely good exposure for me to the financial world, and the world of operations.

At Avanti, I learned about the mergers and acquisitions side of the business. I was vice president of product marketing, and completed two acquisitions - Compass, purchased from VLSI, and TMA. That really showed me the details of a well-oiled machine in terms of operations. I became general manager of the worldwide unit with about 150 people working under me.

In December 1999, I came to this place, which after the quick acquisitions of Npower and Sente, became Sequence. It's clear, I have never been bored ever over the course of my career!


Editor's Note: Thanks to Vic Kulkarni for his time, and to Jim Lochmiller for setting up this interview.


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