Start-Up: the book

Two pieces of news caught recently my attention. One is entitled Frank Quattrone, Star Banker of Technology Ventures, Talks Wistfully of the Good Old Days—Before Netscape’s IPO.

The other one is less nostalgic because of the web site name, which I quite like: You’re in Deep Chip Now.

Here is the full text captured from the site:

I will not comment this but let me come back on Quattrone. Quattrone was a star of the IPO world as you may read from this Xconomy blog. What is striking is that in the last 8 years, following the Internet bubble, there has been less venture capital, fewer IPOs. The reasons are many. But the key question remains: are we facing a major innovation crisis? After the transistor in the 60’s, the computer in the 70’s and the PC in the 80’s, the Internet and mobile communications in the 90’s, what have the 00’s given us? And what about the 10’s… I do not have any answer. What about you?

Here is my fourth contribution to Créateurs, the Geneva newsletter, where I have been asked to write short articles about famous success stories. After women and high-tech entrepreneurship, Adobe and Genentech, here is Aart de Geus, founder of Synopsys.

Aart de Geus was born in the Netherlands in 1954. At the age of 4, he moved with his parents to french-speaking Switzerland and in 1978, he graduated from EPFL, the Swiss Institute of technology in Lausanne (where I currently work). He then moved again to the USA and got his PhD from the Southern Methodist University in Texas. After a few years with General Electric (GE), he founded Synopsys in 1986, raised $15M of venture-capital before Synopsys went public (in 1994). In 2008, Synopsys had 5′600 employees, $1.3B in sales and a $3B market capilalization.

According to him, « Everybody from Europe who comes to the U.S. or Canada is looking to discover something ». In his case, when he arrived to the USA, he was lucky in being assigned as a graduate student to Ron Rohrer “He took a liking to me. […] Rohrer essentially gave me the freedom to do whatever I wanted within the graduate school research facilities”. Rohrer became his mentor. He learnt how to manage a team, a know-how he changed in a management style. “everybody counts on the team and there’s always a role for everybody, which produces an ecosystem that manages itself.” He recognizes it is as much luck as destiny.

He also shows how difficult it is to predict anything: “In fact, I’ll tell you a story. In 1978 or ‘79, I attended a conference in Switzerland of leaders in the field of electronics, or microelectronics. They all agreed on 2 things. Number 1, electronics was going to be a big deal and would move forward for many years to come. Number 2, one micron was the hardest barrier that we would never move across. And [laughing again], those same people who made the predictions are the ones who made 22 nanometers happen!” and he adds: “The lesson here: whenever one predicts the end of something in high tech, there’s always a twist or new perspective that makes a new breakthrough possible.”

Aart de Geus, a born entrepreneur?

The art of metamorphosis…

Aart appreciates complexity and metamorphosis. Everything is important and everything changes. In the early days of a start-up, ideas and people matter. When you have an idea, what do you do? “First, you write a business plan. Then, you ask, is it ethical? Is it okay to do that? How do you go about planning the business so as not to go up against GE?” Well, according to Aart, “there’s a simple answer. You write a business plan and propose it to GE. After all, it was clearly their IP. Period.” GE not only backed the idea but invested in it. Money and values are essential at that stage.

But the baby has to grow. The teenager will have to develop the products, sell them to customers. This may be a tough crisis. Does Aart feel lucky to have survived? “Luck favors the well prepared,” and added that a fortuitous combination of management, graduate students, geographic location, viable business plan, and marketing expertise were augmented by having the “right technology at the right time.”

Back to EFPL in 2007.

… with the risk of becoming a dinosaur !

The adult age means processes, experienced managers so you need to survive the tornadoes that Geoffrey Moore describes so well. Aart summarizes these permanent metamorphoses through a parallel management of teams, customers, investors, products and their cycles, but also managers, leaders, implementation. All these things are interdependant and it is often underestimated. In a talk he gave to EPFL in 2007, he showed the history of Synopsys acquisitions in the form of the animal below! His sense of humour was certainly very useful. This sense of humour hides the humbleness of the individual who succeeded without giving any lesson. If there is one lesson in all this, is that you must try, be curious and flexible. Success may come.

As usual, I finish with my beloved capitalization table and charts.

Sources :
-Aart de Geus at l’EPFL (vpiv.epfl.ch)
-Peggy Aycinena (www.eetimes.com)
The Aart of Analogy is alive and well at Synopsys -2001
The Aart of Analogy Revisited -2009

Next article: A Swiss in Silicon Valley

I recently talked about EDA here. Aart de Geus, a European, a Dutch native who studied at EPFL in Lausanne, was just awarded Kaufman Award, the Nobel prize in EDA. One of the articles has been published by EDN News

Aart de Geus is one the Silicon Valley’s icons. He came to EPFL in 2007 where he made a superb presentation about Synopsys history. >

When, in another interview, he was asked about why the USA, he said Europeans are on a quest as if they could not find in Europe what they are looking for…

Concerning EDA, there is a full chapter in my book where I tried to show that EDA is the perfect illustration of Silicon Valley dynamics, of its ups and downs.

Penny Aycinena asked me to write a short article in EDA confidential, which summarizes my concerns and hopes about innovation and start-ups. It is published today (June 30, 2008).

Let me add more here:

The chapter of “Start-Up” which has been the least noticed is Chapter 6. It is one of my favourites though. It is about EDA, which stands for Electronic Design Automation. Today, no architect would design a complex building without software, nor would an automobile engineer. It is exactly the same with digital circuits.

Twenty five years ago, EDA was nearly non-existent. Forty years ago, chips were designed internally (and manually) at IBM, Motorola… and little by little, some new players emerged, tiny start-ups became big and an industry was born. It was more than $5B in revenues in 2007. The typical ebb and flow of start-up creation and acquisition went on for two decades. But since 2001, not much has happened: no IPO, small M&A deals and a few days ago, Cadence, the biggest EDA vendor, announced a hostile acquisition bid against Mentor, the number 3 player. Both companies were founded in the 80s.

EDA is a good illustration of what Silicon Valley is: a rich network of individuals, academics, entrepreneurs, investors. What is interesting about EDA is that its center is probably Berkeley (rather than Stanford or Sand Hill Road) as the picture below shows. Let me quote again two legends of the EDA field, two recipients of the Kaufman award, the Nobel Prize of EDA:

- “Risk taking in EDA is gone.” Joe Costello

- “If there is a single point I wish to make here today, it is that as a discipline, both in industry and in academia, we are just not taking enough risks today.” Richard Newton

It could be that the maturity of EDA and of Silicon Valley is not such a good sign.