Interview with Rajeev Madhavan, CEO of Magma Design Automation

Rajeev Madhavan has founded three companies, ultimately taking Magma Design Automation public. We cover his background and lessons learned as a successful serial entrepreneur.

Interview with Rajeev Madhavan, CEO of Magma Design Automation

Rajeev Madhavan is Chairman and CEO of Magma Design Automation, a public EDA company that’s a broad supplier. Madhavan is a serial entrepreneur, helping to found Logic Vision, Ambit, and Magma in the last 17 years. Ambit in particular was an ambitious startup, Rajeev went head to head with Synopsys and carved out a chunk of the synthesis market. But it was hard to get started, after he came away empty handed on Sand Hill Road he did an angel round with 25 seed investors who four years later were happy to have taken part when Ambit was acquired by Cadence for $260 million. He decided to found Magma in April 1997 after a disagreement with the board of Ambit. At Magma he was even more ambitious, aiming to be a broad line EDA supplier. Although the fund raising was easier, after the 2001 IPO Magma, like many EDA firms, has been faced with a challenging environment.

I was delighted when he agreed to an e-mail interview about his entrepreneurial journey. The words are his but I have added hyperlinks for entrepreneurs outside of EDA who may benefit from some more context to his remarks.

Q: Can you talk a little bit about your background?

I grew up in Southern India. I went to college and earned a B.S. in electronics and communication from KREC (Karnataka Regional Engineering College) in Surathkal. I went on to graduate school at Queen’s University in Ontario, Canada, earning an M.S.E.E. While completing my thesis, I went to work for BNR (Bell North Research), the research arm of Nortel in Ottawa, where I found I needed to create some CAD software applications to help complete chip designs I was involved with. I had no traditional background in EDA or computer science, but while working at BNR, I ended up developing a lot of EDA tools.

By 1991, I was working at Cadence Design Systems in San Jose as a BNR engineer involved in a long-term partnership between the two companies called the Analog Alliance. Jim Solomon was also at Cadence at that time, leading the Analog Division. Jim convinced me to join Cadence as a full-time employee in 1991, and I worked intensely on Cadence’s Spectre HDL for a year and a half.

See below: “For More Info on Rajeev Madhavan” has more on this period from other interviews.

Q: Can you talk a little bit about what led you to found your company, what problem or situation motivated you?

While I was at Cadence, Vinod Agarwal talked to me about licensing BNR’s BIST software since I had worked on it. Ultimately I helped to co-found LV Software with Vinod Agarwal and Michael Howells in July 1992, which became LogicVision in 1996.

While I was at LogicVision, I had an opportunity to integrate LogicVision BIST into Synopsys tools. Having worked on synthesis at BNR and watched the failure of Cadence and Mentor in synthesis, I felt there was room for another synthesis player to compete directly against Synopsys. I looked at Design Compiler, and felt I could do better. So, I left LogicVision and founded Ambit Design Systems in 1994.

After Ambit, I realized that simply building a better synthesis tool wasn’t enough. To truly advance IC design, synthesis and physical design needed to be integrated. We started Magma in 1997 based on that simple idea.

Q: Can you give me a brief overview of where the firm is today?

Magma was founded in 1997 and is my third “official” startup. Magma had a very successful IPO two days before Thanksgiving 2001, at a time when other companies were shelving IPO plans.

Magma is now one of the largest EDA software providers with products used by major semiconductor manufacturers to design the most complex, high-performance analog and digital chips made today. Our revenue for Fiscal Year 2009 was $147 million and we have approximately 730 employees worldwide.

Q: What are two or three key things you have learned?

I’ve learned something from each of the three startups.

• At LogicVision, I learned that creating great technology is not the only key to success. You have to know how to sell the software to the customer. We were woefully bad at licensing.
• After Ambit, I looked at myself to see what I could improve. I went over the mistakes I made and looked at how I could correct them. I had fought with some of the board members at Ambit and found that I had had limited ability to communicate with employees. It was a revelation to realize that I was a bad communicator. I learned that I had to be more extroverted and outgoing. This was a life-changing shift and changed the way I ran Magma. Because of this change, I have been able to build a much tighter community at Magma than at Ambit. And, personally, I am glad that I made the transition. I enjoy being part of the community and find that I’m happier.
• At Magma, the number one thing that I have learned is that, in spite of taking precautions and talking with employees about clean code development, we still had one bad apple. I learned very clearly to trust but to verify more than you think you need to!

Q: How have you changed since you started? What key skill or experience did you lack when you started that has caused you the most problem?

I now try to figure out what a person is all about and use that to help motivate them to do something great for the community. At Ambit, I didn’t. At Magma, I’ve built great relationships. If I disagree with someone, I can agree to disagree without holding a grudge. It’s been a good experience to change in this way.

Q: What are the two or three things that you have been able to accomplish that you take the most pride in or satisfaction from?

First, I’m very proud of creating the first physical synthesis system. Others may now claim to have a similar system, but clearly Magma was the first to deploy one.

Secondly, we survived an unfair litigation. I learned a lot from that experience that I wish I hadn’t had to. And, while I’m happy to say we won one of the key arguments on ownership, we still suffered from the litigation. Early on, I made the painful decision to order the complete rewrite of the Blast Fusion tool. In the end, it wasn’t necessary. The court upheld our position that IBM co-owned the technology and that we could use it because of a cross-licensing agreement we had with them. Given the risks, though, it was the right decision to make at the time.

After the lawsuit ended, we could have continued with Blast Fusion, but we had already launched Talus. I knew that when we had reached a few critical milestones with the new product, our technology lead would be even stronger.

Developing a production worthy version of Talus took some time and meant that we had to support two systems until we could migrate our customers to Talus. The last 18 months have been really tough, but now we’ve migrated our customers to Talus, and reached significant milestones in combining new routing and optimization technology into Talus. This new technology is as innovative as our original physical synthesis was.

Q: What has been the biggest surprise: what was one key assumption you made, perhaps even unconsciously, that has caused the most grief?

One of the biggest surprises in my years in this industry is how short-sighted the large EDA companies are. They shoot themselves in the foot with their licensing models. They literally give away “me too” tools in these “preferred EDA vendor or Flexible Access Model (FAM)” deals. Customers are never going to start paying for tools that they’ve been getting for free. This practice makes it impossible to grow the market. It hurts the large EDA companies, and the smaller companies and it hurts the industry.

It’s amazing that the brilliant technical minds at the large EDA companies continue to make bad business decisions. The good news is that semiconductor companies will always need EDA tools. I believe the EDA industry will transition away from these bad licensing models, but it will be a painful process and everyone will suffer.

What development, event, or new understanding since you started has had the most impact on your original plan? How has your plan changed in response?

For a while, Magma had the intention of becoming a full line supplier, just like the other larger EDA companies. But, I realized that customers won’t buy tools from me that they get free from somebody else –– UNLESS, it’s a truly superior tool. Now, Magma has put its focus back on developing truly differentiated products, rather than “me too” products.

Q: Any other remarks or suggestions for entrepreneurs?

While there’s turbulence in EDA right now, it’s not because we don’t provide critical technology. Once the industry has learned how to properly run a business, EDA will thrive again. So, I would encourage EDA entrepreneurs to hang on!

And for the entrepreneurial community in general, this is actually the perfect time to start a company, if you can get funding. Don’t get dazzled by your technology, make sure you and your team have solid business sense, as well.

For More Info on Rajeev Madhavan

• Peggy Aycinena’s 2003 Profile: Rajeev Madhavan of Magma Design fills in a little more about Madhavan’s entrepreneurial education (hyperlinks added):

I met Lucio Lanza when he was Vice President for Business Development at Cadence and a General Partner at USVP. Lucio gave me several start-ups’ business plans to look over and evaluate. By showing me those business plans, he helped me to understand the venture capital business and how ideas are funded. Specifically, Lucio was instrumental in funding EPIC. Reading their business plan and meeting with some of EPIC management made me realize a few things.

It was interesting to me to learn that you could earn a salary working at a start-up and that you didn’t have to be self-supporting. I wasn’t a rich kid and I had no idea that anyone could work for a start-up if they couldn’t support themselves on family money.

• Peggy Aycinena interviewed Rajeev again in 2004 in “Fathers and Sons: Rhines & Madhavan”
  • also available in the August 2004 EDA Nation.
• Rick Nelson Interview “Voices: Magma Design Automation’s Rajeev Madhavan” in EDN February 3, 2009
• John Cooley has an audio interview (MP3) in “Rajeev vs. the FUD monster” February 27, 2009
• Brian Moyer did an “Executive Profile: Rajeev Madhavan” June 16, 2009 in the IC Verification and Design Journal
• Forbes Profile Rajeev Madhavan