Caution: Comfort Zone!

I had an article published in EE Times last week (see "EDA 3.0 - So you're an EDA startup").  It was one of the most popular articles of the EDA DesignLine publication.  I have received personally over 30 emails not only commenting on the article, but including a number of startup executives (friends, clients, etc.) asking me what they're doing "wrong"!

I won't steal the article's thunder (Read it on your own), but to build on the article, my response to these inquiries has been that it is only fear that we need to be afraid of.  In my opinion, surviving the recession requires conquering your fears and making the right choices.  Unfortunately many business owners won't do either.

In the EDA space, except for Synopsys, Cadence, possibly Mentor Graphics, and a few companies (startup and midsize) who are cash flow positive, all other companies are burning cash and don't have a strong market to see themselves raising future venture rounds.  So, want it or not, fear sets in: the fear of running out of cash and having to close doors.  With fear, most people turn back to their comfort zone.  So EDA companies go back to their comfort zone and focus their efforts on technology development.  And yes, they need to bring in dollars, so they focus the sales team on growing the pipeline.  As a results more features are being developed and more prospect are not happy with the state of the "product" -- in other words, the technology-to-product gap widens, accelerating the burn-rates.  [For difference between "technology" and "product, see the article.]

What's needed is conquering the fears, understanding that the only way to consistently close sales opportunities is to develop "products" (not technology).  To do this, as hard as it seems, startups should stay away from their comfort zone and develop less technology, and focus their investment on the technology-to-product transition, only working with a few key strategic customers.  Only this would provide the fastest possible way to get to a selling product and a movement towards positive cash flow.

Feature-driven product marketing: A sure way to get frog-leaped!

In 199_ (and I'm not mentioning which year) I got my first product marketing job.  It was all I wanted to do after I got my MBA -- I wanted to drive the definition and completion of products.  I was coming in from an applications (sales) engineering position right into product marketing, which I thought would give me a good view on what customers needed and what the product had to look like -- and it did.  I started right away defining a feature list, prioritizing them, cost-analyzing them, getting customer feedback, drive the schedules, etc.  I quickly found out that product marketing is a thankless job: there are too many people to make happy (customers, R&D, sales, executives, partners, etc.) and there's no way to make them all happy; and you're constantly trying to connect all of the dots and pick up the loose ends.

During my first months of product marketing, one of the company's more experienced marketers, pulled me aside, as he was leaving the company, and told me not to sweat the "small stuff" like features, etc. and instead focus my thoughts and work on positioning and the overall vision of how the product is changing the industry.  That "lecture" didn't make any sense at all!  I had a lot of respect for him, so I did take note of what he said, but it really didn't change the way I went about product marketing at the time.

As a few years have passed by and I moved up through the ranks and eventually became a  executive, his comments began to make more and more sense.  In fact, I have come to the conclusion than feature-driven product marketing only sets your product for long-term failure.  It makes you focus on incremental change.  It is very surprising that a lot of my colleagues and consultant, and some that I have the ultimate respect for (example), still predominantly push a feature-driven approach to marketing.  I do realize that pitching a feature-driven approach works much better with less experienced CEOs and it is a better "consulting sell", but I'm not convinced if it's what really creates differentiation for their client companies.  I'd go back to what my old colleague told me -- product marketing provides a lot more value if focused on the overall positioning (i.e. how differently the product is solving the customer problem) and the long term vision of how it's bringing non-incremental value to the customer (technically and financially).

One way to drive this point is to highlight that if someone in the car industry polled customers in 1900's about how a car should look like, the customers would have all said they'd want a carriage with a horse that eats less and craps less.  [Excuse the French!]

EDA & Semi: Time for Marketing 2.0!

The internet used to thought of as "cyberspace".  Being online simply meant being an anonymous consumer of information.  But that was then!  The internet of today is identity-centric and social.  Internet users create blogs, upload their information to social networking sites, share ideas and contents, and they do it from their computers, iPhones, cellphones, etc.  This is what I refer to as "worldwide web" moving to "social web".

There is a generational element to this as well: Web 2.0 (i.e. social web) is still hard to fathom for some baby boomers, but at the same time, there are larger and larger groups of baby boomers starting to post photos, opinions, etc. on the Facebook, for example.  They're beginning to see how social the internet can be.

People in (or using) Web 2.0 have already internalized what doesn't yet seem as a business practice by others.  Unfortunately maturing industries like EDA and semiconductor look at Web 2.0 as "social", and hence constantly raise the question "why do we want to socialize with our customers" or "why would our customers socialize amongst themselves?" -- They take the word "social" quite literally.

It's not necessarily common business wisdom to bring customer experience into aggregators (such as Digg, Yelp, Ning, Xuropa, even Facebook, etc.).  With these aggregators, even though things happen far away from a company's destination site, it's the engine of social discovery that generates astronomically more awareness than the destination site would ever create, and yes, it also generates huge volumes of traffic to the company's destination site.

A simple example: Netflix opened up their database through an API last October.  Through this API other companies (e.g. aggregators) can access titles, ratings, queues, etc. information from Netflix. By "socializing" the Netflix experience, Netflix now gets 20+M film ratings every single day.  Does it really matter where (which website) these titles are rated?!  It all benefits Netflix.

It's time for EDA and semiconductor companies to see how they can benefit from Business 2.0.  EDA and semiconductor technology is the most advanced ones and those industries solve the most difficult challenges on the technical side.  Yet, they have totally missed the boat on what other industries have already accepted as common business wisdom.  They need to "socialize" their user-experience, create awareness, and turn that into revenue.