Courtesy EcoScapes (http://www.ecoscapes.net)
Last year was my first time attending DVCon. So, that was the first time I got to witness the infamous EDA Troublemakers Panel. Last year Peggy Aycinena channeled her inner John Cooley with a provocative panel discussion entitled “EDA: Dead or Alive”. Of course, the EDA world looked very bleak back then, just months after the financial meltdown, Cadence financial woes, EDA layoffs left and right, VC funds shutting down … a forest fire of bad news sweeping the industry.
But just as the wildflowers bloom after the wildfire, optimism is returning to the EDA industry. (Gosh, that sounds really corny, huh). So it’s not too surprising that two EDA veterans will be at DVCon this year heralding EDA’s return. Fellow EDA blogger Paul McLellan and EDA Hall-of-Famer Jim Hogan have become the Captain and Tennille of EDA. They spoke at ICCAD on the future of chip design. And now they are giving another talk during DVCon entitled “So you want to start up an EDA company? Here’s how…”.
I don’t know what these guys are going to say, but if I were them, here are a few things that I’d point out that make for some optimism for starting up an EDA company now:
- There are lots of good EDA people looking for work, so this is a good time to partner with them or to get them on board for a lower salary than you’d have to pay otherwise.
- Small companies are able to use technology to their benefit to lower their cost of development. Development hardware is cheap and even rent-able through cloud computing providers. Open source software tools abound. The biggest cost will be your time.
- The cost of sales is dropping due to new technology. WebEx. GoToMeeting. Skype. Xuropa. These tools and others enable you to reach out to customers globally while never leaving your office.
- Then again, who needs an office? Working from home has never been easier.
- And who cares where you are located? It’s easy enough to collaborate with your virtual team globally. (Xuropa has people in the Bay Area, the LA Area, and France).
- The lack of VC money can also be a good thing. You retain ownership and control of the company and don’t have a “timetable” to “cash out”.
- The lack of VC funding also forces you to think about getting cash flow positive as quickly as possible. Rather than wasting time and money designing the perfect product, you’re forced to start selling it early which leads to better feedback and a better product.
The idea that the downturn is an opportunity is not new. In fact, Sean Murphy has been spearheading the whole concept of bootstrapping for some time now. Check out his site for some great advice. Also, Dharmesh Shah, founder of Hubspot, writes a great blog on this subject as well.
I’m still not sure if I’ll make it to DVCon this year, but if I do, I will definitely attend this session. If not, I’m sure someone from Xuropa will be there. Just like my EDA SaaS and Cloud Computing Roundtable last year, it’s not part of the regular program. It will be held Tuesday evening Feb 23rd from 6:30 – 7:30 in the Oak Ballroom at the Doubletree Hotel (where DVCon is going on). This will be right after the DVCon reception, so grab a beer or a glass of wine and head on over.
I hope to see you there.
Not every kind of startup can be bootstrapped. For example, between mask costs and EDA tools you can’t bootstrap another ASIC or semiconductor device startup.
It has become extremely difficult to find firms that want to work with EDA startups, in particular to secure meaningful design data and early projects that will use a new tool. Without access to customers who will nurture them and real design data to sharpen their algorithms, EDA startups have found it difficult to thrive.
My sense is that Oasys may be the last successful new EDA startup that has engineering based in Silicon Valley. It’s possible that we are be looking at an extinction event where the total number of EDA suppliers consolidates by a factor of ten over the next three to five years.
Perhaps they will be replaced by a wave of system level or ESL tool providers. Or the structure of the industry may change to one with many fewer startups.
The good news is that the same expertise needed for an EDA startup can be applied to fields like computational chemistry, genomics, proteomics, bio-informatics, MEMS/Micro-Fluidics, and other handmaidens to the biological revolution.