Restless Suits 24x7 Shifting around in their chairs ...
January 31, 2006 Ron Wilson was in fine form 60 days ago on a chilly November evening when he moderated an EDAC panel in Santa Clara on the topic of the business of EDA & IP. True to his signature style, he was modest and self-effacing and able to set the 5 panelists and the 90+ people in the audience at ease straightaway. What Ron Wilson wasn't able to do during his tenure at the podium was to get the problems endemic to the EDA industry—its business models and arcane marketing strategies—set right once again. Although it wasn't for want of trying, both on Ron's part and on the part of the seasoned technology veterans that sat neatly in a row at a table to his right. The panelists—ARM's Mark Templeton, Lanza TechVenture's Lucio Lanza, Telos Venture Partners' Jim Hogan, Aprio's Mike Gianfagna, and RBC Capital Markets' Christian Falk—had lots to say, plenty of criticsms to offer, and a laundry list of suggestions on how the business of EDA and IP ought to be handled if those involved wanted to stay up and running, let alone turn a profit. For those of us in the back, it was kind of a painful thing to watch. Because the longer the panel experts attempted to serve as tutors, the more it was obvious that those who were supposedly there to be tutored were shifting around in their seats. With time, they became a restless crowd, an unsettled crowd even, and eventually, an unruly crowd. There were lots of CEOs in the audience that evening. It's true, none of the Big Wigs were there—those who serve as Captains of Industry for the Gorilla Enterprises in EDA—but there were lots of CEOs nonetheless. And maybe it was just my imagination, but they didn't seem to like what they heard. And what did they hear? Well, EE Times covered the event, so look up the article. You know that EDAC taped the event, so listen to the audio. Then, I'll tell you what I heard and you can see if you agree. I heard a bunch of guys, the VCs and investment banker in particular, sitting up there somewhat smug in their winnings and happy to be singled out, for that evening at least, as among the best and brightest and therefore worthy to sit at the right hand of EE Times. I heard a bunch of suits, the VCs and investment banker in particular, telling the suits in the audience a bunch of stuff they all already knew: ************************** * There is no EDA industry, just a bunch of tools being used to push the semiconductor industry. * Innovate first and then look to your business model. * There is an EDA industry, it's just badly executed. * Innovate first and then look to your business model. * If EDA guys were in the auto industry, they'd be using whips on cars. * Innovate first and then look to your business model. * EDA guys have been competing on price, which is a cacamamie, bumbling business environment. * Innovate first and then look to your business model. * Knowledge assets get larger and larger every year. * Innovate first and then look to your business model. * EDA companies are faced with 2 conflicting requests from customers—better flows and what can you do to help me fix my particular problem. * Innovate first and then look to your business model. * There's buzz in the EDA industry at the top and at the bottom—but nothing in the middle. * Innovate first and then look to your business model. * Bragging about raising more money for your start-up is not bragging at all. It's really saying, "I've failed. I had to sell yet more of my company to stay in business." * Innovate first and then look to your business model. * Building for acquisition is a mistake—build a real company. * Innovate first and then look to your business model. * Nonetheless, the EDA industry is facing consolidation. * Innovate first and then look to your business model. * There are some bright spots in EDA—look at PDF solutions. They've been grinding away at yield for years, building up their assets of IP. * Innovate first and then look to your business model. * Better, faster, cheaper design is not innovation. * Innovate first and then look to your business model. * There's more opportunity in the industry today than there has been for many, many years. * Innovate first and then look to your business model. * There's no doomsday scenario here—just opportunities * Innovate first and then look to your business model. * Decide to build something of worth when you build a company. * But always innovate first, and then look to your business model. ************************** The audience listened, was discomfited, shifted in their chairs, chuckled some, grumbled some, eventually asked questions, challenged the panelists, and then chuckled and grumbled some more. It was obvious from the back what the problem was. The 90+ suits in the audience were discomfited by what they heard from the 5+ suits up front, because they thought the panelists were wrong. The idea that you innovate first in EDA or IP, and then look to your business model is just not the way the suits in the audience run their lives; it's not the way they were going to get up the next day and attack their work. The suits in EDA and IP don't innovate first and then look to their business models. They innovate and look to their business models. Because the people who are drawn to the EDA and IP industries (like moths to the flame?) are there because they consider their innovations in the business models to be a natural extension—a continuum in fact—of their innovations in the technology. There's no separating the two—one drives the other and vice versa. EDA guys, and their kissing cousins in IP, don't want to innovate and then look to their business models. For them that would be like trying to separate the coffee from the cream, the buggy from the horse, the plane from the engine, the suit from the tie. Looking at the business of technology from the front, back and in between is what fascinates and befuddles the EDA and IP industries. It's what keeps them up late at night and gets them up bright and early in the morning. It's what makes them shift around in their chairs. For them, it's what makes the industry exhilarating. And, in the end—it's what makes a few of them princes, many of them paupers, and all of them members of The Club. 24x7 **************************************
Peggy Aycinena owns and operates EDA Confidential. She can be reached at peggy@aycinena.com
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