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Mark Gilbert
Mark Gilbert
Mark has been involved in EDA recruiting for over 18 years. He is Founder and President of EDA Careers, but started his career in EDA as executive Vice President at EDA Jobs. Mark was also VP of Marketing and Business Development in the beginning of the Internet revolution and has been a … More »

Two More Long Timers Gone, We Must Build A Stronger Mid-Tier Base, Think WALMART Competition? …DAC Is Back In SF…

May 13th, 2014 by Mark Gilbert

Well, “BYE-BYE BDA” (sung to “Bye Bye Birdie”) and “Jasper”, (sung to “Casper the friendly ghost’) because of how they too have disappeared) and HELLO to “how long before there are no more Start-ups in EDA” sung to (you better not laugh, you better not cry).

So, how does the smaller guy compete or even more importantly, how does EDA build a more sustainable mid-tier bridge to offer reasonable alternatives to the Goliaths.  By “alternatives”, I do not only mean as an exit strategy, but as a reasonable competitive alternative to just going to WALMART, (yes I said WALMART).  Let’s face it folks, the world has shifted and we are in this ever-evolving big- company world environment in virtually every segment of business.  Somehow, small companies need to learn how to better compete with the Big-Boys…in our case the Big 3, no names needed.  Indeed it is difficult, because the current exit strategy (for most start-ups) is to sell out to these Big-Boys and so it happens, the big gobble the small, thus making it very difficult for all the rest to compete.  Using the WALMART analogy…they come to a town and slowly cannibalize most of the businesses in the town.  They do this by offering a really good price (quality does not always matter, nor does service) and making it easier to choose them for a variety of reasons, like one-stop shopping, more things that fit in your cart at one time, etc.  Slowly the smaller mom and pops (now called Start-Ups) have a decision to make.  Either join forces with someone a little bigger or close the doors.   The “little bigger” is our answer.

Here is what I’m trying to say: it is more difficult for the Start-up today than in any time in our EDA history.  The big boy has more items to fill the cart with, more competitive pricing, works with more vendors (fabs in our case), and can ultimately demand and get more loyalty. In the end, this all serves to squeeze out the small guy…the Start-Up.

But it’s even more complicated than that.  On the other side of the coin, the supply side, vendors find it much easier to deal with WALMART.  Even though they must accept smaller margins, they know they will get paid which makes everything well …just easier.  Vendors also know that dealing with these giants’ means bigger sales for their company and more reliable distribution of their products. Smaller sales are ultimately shunned, resulting in these vendors’ decisions to not do business (or make it more difficult) with smaller mom and pops (Start-Ups).  This is yet another step towards making it more difficult for smaller companies to compete or be competitive.

On the other side of the coin, (it is a 3-sided coin), and making it even more difficult, the metaphorical Walmart does not want to buy from a smaller vendor, for multiple reasons, like on-time supply and competitive pricing to name a few. All of this combined is what makes it so difficult to compete with bigger companies.

Now you see how the Walmart-type scenario fits into what we do (somewhat) and more broadly how this fits into the bigger picture of almost every industry in today’s world. Small companies need to find solutions, ways to band together to compete.  Whether it is smaller mergers or better partnerships, EDA must work hard to build a second strong tier of companies that incubate new ideas and maintain a piece of what made EDA so successful in the first place: The Start-Up culture and environment.  Somehow some of these companies need to find alternate solutions similar to what Apache did with Ansys, so they can reasonably compete with the Big 3.  If the mom and pop hardware store (or EDA Start-up) works with four or five other locals and collaborates (like the ACE Hardware model), then they can better compete for customers.  In EDA, if smaller companies joined together or even collaborated more, they could do a better job staying around and competing on a reasonable scale.  There is nothing wrong with being profitable and remaining small(er). EDA still has its share of companies that fit those criteria.  Granted, we will not see a Big 4 but 3-4 mid-tier companies are just what EDA needs right now.

Yup, DAC is back in San Francisco again and I will talk much more about this in my pre-DAC column.  The one thing I will say now is that  many companies look to hire for DAC so they are covered on the floor.  Sales and AE changes are more common pre-DAC, as this is where good Sales and AE guys can grab their friends and associates that they see walking the aisles.  But more on this next month…I need to get my white Sport-coat to the cleaners.

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2 Responses to “Two More Long Timers Gone, We Must Build A Stronger Mid-Tier Base, Think WALMART Competition? …DAC Is Back In SF…”

  1. Gary Dare (@GaryDare) says:

    Hi, Mark! While the BDA and Jasper acquisitions put a dent in Brian Bailey’s thesis that EDA is settling in with a set of stable medium-sized companies, there are others still in that space (Ansys, SpringSoft) and still plenty of startups that can grow up. We have and will continue to see startups to address specialized niches, gaps in Big 3 portfolios or entirely new technologies. Agnisys, DeFacto, Docea, ASTC, Magillem, Carbon, plus many others (add yourselves to this thread!) including our firm, Space Codesign (2nd generation ESL with true HW/SW co-design) will be at DAC, as proof. See you there in a week! 🙂

  2. EDA reader says:

    Gary – Sorry to break it to you, but SpringSoft was acquired by Synopsys in 2012 and Ansys is NOT a medium sized company (ANSS Market Cap $7 Billion vs SNPS Market Cap $6 Billion). FYI.

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