Mentor CEO: a Shout-out to Marketing

If you ask Wally Rhines, CEO at Mentor Graphics, about concerns that there has been too little disruptive change and, therefore, too little high-profile investment in the EDA industry over the last several years, he says: “It true that startups always like to see a spike up in growth.

“However, the biggest companies would like to see something closer to steady growth. Volatility is not as good for the bigger companies as it is for the smaller companies.”

If you ask: “But how viable is a high-tech industry when there’s no increase expected in VC funding for the foreseeable future?”

Rhines replies: “Yes, it’s true. VC funding in EDA has declined over the last 10 years, with the money often going instead into social networking. There is still ongoing investment today in EDA, however, but it’s angel funding, not VC funding.”

Which precipitates the question: “And angels always need to be very hush, hush about their investments?”

And Rhines’ answer: “In general, VCs don’t invest until there’s a product, but angel investors do. And angles needs for information, prior to product release, to be kept [proprietary].”

Prompting another question: “If pre-product innovation these days comes out of angel-funded enterprises, do the big companies ever push the innovation envelope?”

Given his years serving in a leadership role at EDAC, Rhines answers predictably: “There’s a healthy symbiosis between the big and small companies in EDA. But also today, the [exit] for startups is about acquisitions, not about going public.

“The fact is that the big companies will say they’re investing in new technology, and that is certainly the case. But the big companies in the industry today have about 75 percent of the market, plus or minus 7 percent, so they [can afford to] access to new technology through acquisition – a situation that fosters a pretty good co-existence between the big and small companies.

“The small companies in EDA are like a feeder farm club that [awards] entrepreneurs for things they have done well. Yes, sometimes there’s conflict, but it is far better for everyone when they cooperate because it’s of mutual benefit to all of the companies.”

Moving beyond that received wisdom, the next question: “Isn’t the biggest problem for EDA vendors, big or small, the incredible inertia among the EDA tool customers? The challenge of getting established tool users to migrate to the next generation of tools?”

Generates candor from Rhines: “I contend that the easiest tool to use is the one you’re already using. So even the simplest of new tools will not be used with confidence by established users, because they cannot know for sure the new tool will produce good results.”

Which begs the question: “Then how do you ever get new tools into the hands of established designers?”

And Rhines’ definitive answer: “It’s natural for designers to be skeptical about tools, but sooner or later they have to move to something new. The growing complexity and demands for better designs means there’s a demand for newer tools. True, the designers go as long as they can without transitioning to new tools, but eventually they have no choice.”

Yet another question: “Does all of that require the EDA sales force to find a user/evangelist within the customer organization to advocate for adoption of a new tool?”

Allows Rhines to say: “Yes, it usually needs an evangelists, but you also need for the problem to be so insurmountable the designers have no choice. Certainly, we’re seeing that level of complexity in today’s SoC designs.”

And the final question: “So it’s Marketing’s job to reach out to the designers inside the customer’s organization and find out how their needs are evolving, and how fast?”

Gives Rhines the last word: “It certainly requires excellent marketing capabilities on the part of an EDA tool vendor to find out what the current challenges are for the designers. And then Marketing must turn around and convince their own organization to develop the tools needed by the customers.

“Marketing knows what the customers need by way of new tools, but Marketing also knows the customers need the tools to work reliably and will hold out as long as possible before upgrading to the next generation tool – it is just too risky to do otherwise.

“Ultimately it comes down to: How do we get our new tools into the hands of the people who can use them, how can we convince them to make the change?

“Marketing holds the key. They drive innovation within their own EDA organization, and then drive adoption by the customers with compelling arguments that sway [reticent] designers to make the change.

“Again, the easiest tool to use is the one the designer is already using. We count on Marketing to foster the development of newer tools that actually meet the needs of the designer so well, enthusiastic adoption will follow immediately.”

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Tags: EDAC, Mentor Graphics, Wally Rhines

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