July 23rd, 2008 05:36pm
Sean Murphy
I researched an opinion piece for SCDSource about three weeks ago that is up on the site today at “How Cadence’s Mentor buy would impact EDA startups.” I start from the following premise:
I believe that the merger will be consummated, but that Cadence will not remain as one of the top three players in the industry within two to four years. I have three reasons:
- EDA is an R&D intensive business and it will be hard to retain talent in a hostile takeover. Moreover, there is considerable overlap in a number of product areas, which means that many Cadence employees will also be concerned for their continued employment, injecting uncertainty and slowing work on both sides of the merged company.
- Cadence is taking on significant debt and will have to focus on near term revenue at a time when design methodologies, development practices, and computing paradigms are all undergoing significant shifts. Their ability to nurture the new products they will need in two to four years will be limited.
- New customers are coming into the market as electronic systems incorporate more software at all levels of integration. Cadence’s ability to market and sell beyond the hardware engineering groups, and to invest ahead of revenue from relevant software teams, will be limited.
By coincidence today was the Cadence Q2 earnings call, available at http://biz.yahoo.com/cc/7/94067.html (and transcript here: http://seekingalpha.com/article/86645-cadence-design-systems-inc-q2-2008-earnings-call-transcript?source=yahoo&page=-1) for the next week and then on the Cadence site. They have revised revenue downward for the year from $1.5 Billion to $1.12 Billion, with minimal profitability. One thing I had overlooked in the earlier analysis was that they have spent about $500 million buying back their own stock from the middle of last year through March of this year: stock that is worth perhaps 35-50% less now, and money that might have been used to offset the $1.1 Billion in borrowing they need to consummate the merger with Mentor.
As of today’s call they were still full speed ahead on merger plans, as of July 11 they have acquired 4.7 million share of Mentor (about 4.3% of the outstanding shares). With that possibility still very real, I want to highlight two key strategies that I also covered in the article:
- Think longer term. Because Cadence/Mentor will be focused even more ruthlessly on near term revenue, now is the time to focus on long term opportunities and relationships.
- Focus on revenue opportunities where turmoil at Cadence/Mentor will cloud the future of many products, and slow if not inhibit a competitive response until they determine who is in charge. You will more likely be able to snatch emerging technology areas where revenue opportunities are smaller from a Cadence/Mentor perspective but still very attractive for a startup.
July 22nd, 2008 04:01pm
Sean Murphy
I just added Cadence to the list of companies with blogs on my May 28 post “Bloggers Covering Design Automation.” I didn’t see any announcement but they appear to have re-designed their website in the last three or four weeks and now highlight a community of bloggers on their home page.
My simple projection is that within three years every EDA company, large or small, will have at least one blog, and EDA consulting firms of all sizes will add a blog to their website. So that says we are on track to grow from 70 to over 500. I base this in part on the speed on adoption of the web by EDA firms and what’s already happened for web startups and many other emerging technology spaces: entrepreneurs consider a blog a core component of their corporate identity.
Making sense of 500 feeds will be no easier than surfing across 500 television channels to find something new and worth reading. I mentioned David Lin’s experimental Netvibes page in my “Primer on Blogs for EDA Start-Ups” and it certainly represents a good start. But I think an opportunity exists for community lens approach similar to what Hacker News provides web entrepreneurs (which is different in some important but subtle ways from digg and reddit that allow it to avoid the death of the lowest common denominator topics migrating to the home page). Other models are certainly viable as well, based on forums, wikis, and new forms both emerging and yet to be invented.
Paul Saffo’s 1994 Wired article “It’s the Context Stupid” (also available on www.saffo.com/essays/contextstupid.php) makes the point that the value is as much in providing context as the raw content.
“It’s the content, stupid.” This catchy apothegm [is] now the mantra of an infant new media industry. […] As compelling as this phrase may be, it is also dead wrong. It is not content but context that will matter most a decade or so from now. The scarce resource will not be stuff, but point of view.
[…]
The future belongs to neither the conduit or content players, but those who control the filtering, searching, and sense-making tools we will rely on to navigate through the expanses of cyberspace.
One example of a hybrid model of journalism is what John Byler is doing at Chip Design magazine in adding 8 blogs to complement his print publication. I was particularly impressed by a recent post by Grant Martin on “Leibson’s Law in Action? Cadence returns to ESL with new synthesis tool” because he did something that is natural for a blogger and highly unusual for an article in an on-line paper or magazine: he links to whoever has the best information on the topic, even it’s a competitor to Chip Design. It’s not only a very useful summary that places several recent ESL announcements in context, but Martin links to the source material on-line, regardless of where it came from: EE Times, SCDSource, EDN, and Chip Design Mag. And he has comments from a number of key players ESL.
I was talking to a well respected EDA PR professional recently who was waiting for the EDA blogging ecosystem to sort itself out and pick a dozen “A” blogs so that it would resemble the good old days of print (and EDA PR could “return to normal”). I said I didn’t think that would happen because blogging uses links for context in a way that print didn’t (and can’t). On any given topic there may only be a dozen well respected bloggers, but there would be a lot of topics with different sets for each. It’s different when you have knowledgeable practitioners writing directly on the web.
I believe Grant Martin’s post is a harbinger for a very different kind of “sense-making mechanism” than both traditional EDA print journalism and the press release aggregation model that’s practiced on a number of websites. Not necessarily better (or worse) but different.
We have time to get ready, and since we are all steering we may end up somewhere else. But I think 500 blogs (plus or minus 250) is likely by 2011 because it they don’t depend upon a business model transition: blogs are like weeds, they don’t require cultivation to thrive. I think they create a substrate that complements and potentially displaces the press release with the RSS/Atom feed as the quantum unit of information distribution for (social) media.
July 21st, 2008 02:16pm
Sean Murphy
I spent most of Saturday July 19 at “Cloud Computing-the New Face of Computing-Promises and Challenges” which I have already blogged about on last Thursday. There was a large turnout for a Saturday morning in July: Cubberley holds about 400 and it was between half and three-quarters full. There were a number of excellent presentations from practitioners in both industry, commercial research labs, and academia. Many of them are now up on http://www.ewh.ieee.org/r6/scv/computer/
The slides from the keynote by Dr. Hamid Pirahesh, an IBM Fellow in their Almaden Research Center, on the “Impact of Cloud Computing on Emerging Software System Architecture and Solutions” are not up yet, which is a shame because it was an excellent overview of cloud computing. One thought to take away: Dr. Pirahesh postulated breakpoints in computing architectures and methodologies at 20, 300, 2,000 and 10,000 processors. Certainly the first, and possibly the second are amenable to multi-core techniques, but the last two are going to rely manycore approaches.
This isn’t Web 3.0, this is something else. Mano Marks, the Google Developer Advocate who talked about the Google App engine made an offhand remark that brought me up short: “ten years ago was the late 90’s.” We’ve moved beyond the web boom (and bust) and fiber build out and are getting a glimpse of a new kind of application that I believe will be as transformational as the initial rollout of the Web was. But it will be used to solve different problems.
Several of the speakers talked about using cloud computing models for processing log files of all sorts, in particular web site clickstream logs and system error logs. The Hadoop project is one example of a ground up re-examination of how to leverage a low cost computing infrastructure composed of fast but unreliable (because they are low cost) processing units. Ashish Thusoo’s presentation on how Facebook is using it to track user activity recorded in web logs is a representative example of this new approach to computing.
My challenge is moving beyond my mental map of existing computing paradigms. I blogged last August about Robert Pirsig’s afterword to the 10th anniversay edition of Zen and the Art of Motorcyle Maintenance where he describes the Ancient Greek perception of time. Time carries you on the back of an oxcart, facing the road you have already travelled:
They saw the future as something that came upon them from behind their backs with the past receding away before their eyes. When you think about it, that’s a more accurate metaphor than our present one. Who really can face the future? All you can do is project from the past, even when the past shows that such projections are often wrong. And who really can forget the past? What else is there to know?
It’s difficult navigating by an outdated mental map of a landscape that is undergoing radical transformation. It’s hard to believe but Salesforce is also a decade old. I was disappointed that Jim Rivera, VP of Product Management at Salesforce.com, misjudged his audience and spent an unfortunate 30 minutes giving a sales pitch that stood in contrast to the rest of the speakers on Saturday. He managed to mention “multi-tenant hosting” so many times that I thought I had taken a wrong turn after the coffee break and ended up at a different event. It’s unfortunate when a company misses an opportunity to engage a technical audience as effectively as the other speakers did.
If you missed the event the presentations are quite detailed and worth a look.
July 18th, 2008 10:41pm
Sean Murphy
We have our fall workshop schedule up:
Thursday August 21, 2008 8:15-1:00pm Getting More Customers
Description: We will cover a variety of proven marketing techniques for growing your business: attendees will select two or three that fit their style and develop a plan to implement them in their business in the next 90 days. As a part of your workshop registration, we will also follow up via e-mail and brief phone calls at two weeks, four weeks, 8 weeks, and 13 weeks to help you track your progress. You will leave with a one page action plan, a workbook, and 90 days of access to a private workspace with the workshop materials to enable you to execute one or two marketing strategies to bring your business more customers.
Saturday Sept 13, 2008 8:15-1:00pm Great Demo
Description: This is an interactive workshop with Peter Cohan geared especially for startup entrepreneur. Bring a copy of your demo and be prepared to present it. As a part of your workshop registration, we will also follow up via e-mail and brief phone calls to track your progress.
Tuesday October 14, 2008 8:15-1:00pm Engineering Your Sales Process
Description: Building a repeatable sales process is key to a sustainable business, understanding how to scale your sales process is key to revenue growth. Learn how to synchronize your sales process with your customer buying process. We will look at ways to shorten your sales cycle. This highly interactive session allows you to analyze and debug your sales cycle.
December “Idea to Revenue” still finalizing date/location
If you would like to be notified of upcoming workshops you can sign up here. If these times/locations don’t work for you but you are interested in attending please give us feedback to help us picking better times/locations for workshops.
July 17th, 2008 05:18pm
Sean Murphy
I have become convinced that “software above the level of the device” whether it’s called Grid, Farm, Cluster, Multi-Core, ManyCore, or Cloud Computing represents a significant opportunity for application development by start-ups. The IEEE Stanford (Student Chapter), IEEE Computer Society (Santa Clara Valley Chapter), and NATEA are jointly sponsoring an event this Saturday that offers an excellent set of speakers on various aspects of cloud computing. The announcement is here http://www.ewh.ieee.org/r6/scv/computer/ it’s 8:30 to 3:45 at Cubberly Audiotorium on the Stanford Campus.
Speakers include:
- Hamid Pirahesh, IBM Almaden Research, “Impact of Cloud Computing on Software System Architecture”
- Jimmy Lin, University of Maryland at College Park, “Scalable Text Processing with MapReduce”
- Jim Rivera, Salesforce.com, “Platform as a Service: Changing the Economics of Innovation”
- Joydeep Sen Sarma and Ashish Thusoo, Facebook, “Hive: Datawarehousing and Analytics on Hadoop”
- Hairong Kuang, Yahoo, “Take an internal look at Hadoop”
- Mano Marks, Google, “App Engine: Building a Scalable Web Application on Google’s infrastructure“
- Kevin Beyer, IBM Almaden Research,“Jaql: Querying JSON data on Hadoop”
- Mihai Budiu, Microsoft Research, “DryadLINQ - a language for data-parallel computation on clusters”
- Jinesh Varia, Evangelist, Amazon Web Services, “Cloud Architectures”
This looks to be a very good overview on various aspects of Cloud Computing.
It’s only $65 ($60 for IEEE and NATEA members, $30 for students) sign-up at the NATEA registration page.
July 16th, 2008 11:00pm
Theresa Shafer
What is an advisory board?
An advisory board is a formal or informal group of advisors who give advise, contacts, and feedback. Unlike the board of directors they do not have a fiduciary responsibility but are critical for start-ups. Also see Forming an advisory board.
How can they help me?
There are three broad ways that an advisory board can help you. The first is domain or technology knowledge. Secondly, industry knowledge advisors will understand the real ins and outs of how your market works and what the market needs are, they may also be able to open doors. Domain or technology folks maybe able to open door to potential partners and suppliers, but market knowledge folks maybe able to bring in the prospects or at least have you talk to people that prevent strategic misfires as you go into the market. And thirdly, if neither of the other two groups have been in a start-up before, it’s good to have at least one person either on your team or as an advisor who has rapid growth. So, if you are fortunate and you start to really takeoff, you have some somebody that helps you make decisions in a timely way and understands what to look out for and how to scale the company.
What do I give them?
Normally advisors which add credibility to your firm in a variety of ways, will trade expertise or services for equity.You typically are going to give them founders’ equity stock which is coming out of your pocket. It is frankly a negotiation, how much time they give you or how much equity they get, and that brings anywhere from 0.1% or 1%, in some very rare cases perhaps 2%, that’s the negotiation. Usually there is some kind of vesting schedule maybe on a 2-year or 3-year schedule with a 3 month or 6 month cliff. Because you want to make sure that things are working out, you don’t have a values’ conflict or getting value, you normally have a 3 or 6 month cliff. If things do not work out, then they walk away, they don’t get anything. During those early months
How do I use them?
You want to actually bring them together as appropriate to do at least a quarterly meeting, might be a phone call, might be a nice dinner. This time you can brief them on your business, dry run your demo, and get feedback on your plans. you would like to be to able get some introductions. They are a great source for contacts for employees, partners, prospects, or investment partners.
What do I ask of them?
- You are looking typically for 2 hours a month, 4 hours a quarter. Schedule either monthly, or twice a quarter, once a quarter formal meeting where you present a briefing for them. These become a proxy for your real board meetings until you have a real board of directors, this is a board of advisors.
- You want to be able to call them when urgent things come up. They are busy people, so you only want call for urgent things, but when urgent things come up, you want to be able to reach out to them.
- You want to negotiate use their name. You would like to announce in a press release that they have joined you, would like to be able to use their name on your website, you would like to be able to have folks call them to get their opinion of you, it might be investors or it might be a major prospect you are talking to.
Normally about two-thirds of that value is the advice they give you and one-third is the doors they open and the value that their reputation sheds on your company. VentureHacks has three relevant posts that are more focused on VC related issues than bootstrapping but still worth reviewing:
July 15th, 2008 04:42pm
Sean Murphy
Two from “Knots” by R.D. Laing
“What Jacks says about Jill,
Says more about Jack,
Than it does about Jill.”
If I don’t know I don’t know, I think I know
If I don’t know I know, I think I don’t know
Three that I have not been able to source:
“Listen for what isn’t being said.”
“Most communication is indirect.”
The primary barrier to communication is the belief that it’s occurred.
July 14th, 2008 04:03pm
Sean Murphy
I have netted out a couple of key suggestions I made to the three presenting companies at Monday’s SDForum Marketing SIG “Marketing Lab” so that they are more generally applicable. I was impressed: all three start-ups were well prepared, they managed their presentations to the time limits and were serious about their businesses.
It was a good format: my only change, given how well everyone managed their time, would be to allow 5 minutes of audience questions after each pitch as well. It was a very enjoyable event.
July 14th, 2008 10:20am
Sean Murphy
I first met Debra Willrett, founder of Expert Software Consulting, at an IEEE Consultants Network for Silicon Valley (CNSV) when she gave a great talk on the new CNSV website in February of 2006. Later I learned that she was the inventor of the Macintosh application MacProject, an application that has defined a paradigm for interactive graphical project management tools for the last 25 years, and we asked her for an interview for our Founder Story series that we posted in April of this year.
She is coming to tomorrow’s Bootstrappers Breakfast, please RSVP as we have limited space. She has prepared a couple of remarks and then, like all Bootstrapper Breakfasts, it will be a serious discussion on growing a business based on internal cashflow. I hope to see you tomorrow at 7:30AM in the back room at Coco’s in Sunnyvale on the corner of Lawrence and Oakmead in Sunnyvale (1206 Oakmead Parkway, Sunnyvale, CA 94086).
July 13th, 2008 08:49pm
Sean Murphy
I am always surprised by how unprepared CEO’s and founders were to meet the time limits, typically five or six minutes, that they had been given at various conferences to get their point across: Office 2.0, Under The Radar, and Struct08 to name a few that come most readily to mind.
This is not an artificial limit.
Peter Cohan, in his Great Demo! methodology, stresses the need to get through a basic demo in six minutes. Get the audience’s attention with a glimpse of what’s possible that can help them satisfy a real business need.
On a trade show floor you have perhaps a minute to a minute and a half to capture prospect’s attention, after you’ve gotten them to stop and listen to that much.
When you meet someone at a networking event and are asked “what do you do” you have perhaps 30 to 45 seconds to trigger a conversation. This is typically referred to as the “elevator pitch.” Entrepreneurs should bear in mind that most buildings in Silicon Valley are two to four stories, it’s a very short ride.
Even if you come have arranged a meeting in someone’s office for 30 minutes, the first five or six minutes set the tone for the balance of the time. Jill Konrath’s third story in her “3 Hard Earned Lessons from the School of Hard Knocks” post recounts an actual situation:
“Sit down,” he said gruffly. “You’ve got 5 minutes. Talk.”
“If you’re busy, I’ll come,” I said, trying to be gracious.
“Nope,” he stated. ” 5 minutes. Tell me why I should buy your product. Your 5 minutes is starting now.”
I mumbled. I stumbled. I tried to engage him in conversation. I tried to explain that I needed more time. He wasn’t one bit interested. After 5 minutes, he arose and said, “Your time is up. You can leave now.”
[…] I couldn’t concisely state why he should listen to me.
I wanted to build a relationship and warm up the call. That made me feel better. He was a busy man who chose to use his time judiciously. I didn’t respect his needs.
There is really only one way to achieve this. Practice.
“It’s not the will to win, but the will to prepare to win that makes the difference.” Bear Bryant
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