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.

When the truth becomes self-evident

There have been many ground-breaking ideas in business that have taken a long time, and a great deal of resistance before they eventually prevailed.  It's really hard to predict them or know early on which idea would end up as the one standing last.

I personally have the pleasure (or the scars) of being involved with two of these fundamental changes.  One of them was at a company called Numerical Technologies which was changing the nature of semiconductor manufacturing and adding a strong element of software to the existing ecosystem.  The need for this change was due to a fundamental shift that was taking place in the center of silicon lithography - which of course then everyone opposed.   What Numerical introduced is now the standard in semiconductor manufacturing.

The other fundamental change I was involved with was OpenAccess, and I was leading the effort at Cadence.  OpenAccess was an industrywide initiative whereby Cadence opened up it design database to the entire industry (even its competitors) to integrate onto.  It was a bold strategic move to bridge the gap with its main competition, Synopsys, whose database, while proprietary and closed, had a market share lead over Cadence.  Today, OpenAccess is the standard database for EDA companies and EDA users.  Even Synopsys is using (and publicly promoting) OpenAccess.

At the very time of my involvement in those changes, I had no idea they would be such success - I just had a feeling that they were the right thing .... and was betting on that the "truth" would eventually prevail.

That takes me to a quote by the nineteenth century German philosopher, Arthur Schopenhauer, who said "All truth passes through three stages.  First, it is ridiculed.  Second, it is violently opposed.  Third, it is accepted as being self-evident."

Going back to my own experiences, we (and I personally, in the case of OpenAccess) was ridiculed at first.  Then we faced very strong opposition, not only by competitors, but also by customers and users (yes, change is always hard).  And then, all of the sudden, pieces fell into place, and in both cases, the change was just accepted.

What does that teach us?  Should we just get behind any idea that is being ridiculed?  Probably not.  But I think what Schopenhauer says - especially how he says it - is quite relevant.  My experience combined with Schopenhauer's quote tells me to look for ideas that are being ridiculed while are also being violently opposed.  I am not interested in ridiculous ideas that just face some opposition - there's a lot of those.  But I'll look for those that are under duress.  To me that's the sign where I start to smell someone or something is really being threatened -- and that's what tells me the change or idea might be real - eventually.

After all, love and hate are radically related emotions.