This is the first in a new series of articles that talk about the lessons learned by entrepreneurs in the course of their success and failure...
It was a great pleasure to talk to Dermott Lynch, VP of Sales and Marketing for Silicon Frontline the other day. He has been involved in several startup companies in the EDA industry over the years and I wanted to tap his brain for some of his experiences. I recently did a similar interview with John Sanguinetti a couple of weeks ago, and that interview will be published shortly over at the sister publication EDN. I hope to make this a series of interview with entrepreneurs in our industry so that anyone thinking about starting up an EDA company can learn from their experiences, and perhaps not make some of the same mistakes that they did, or learn from what worked well for them.
This is just the first part of my conversation with Dermott and contains a couple of what he calls Bumps in the Road. Our conversation started where he was doing his M Sc. at University College Dublin - Ireland. He graduated in 1983 and his work involved automated vehicles, particularly those that would roam around factory floors. After graduation, he went to work for Hyster. This was a natural fit because they made things like fork lifts and they were forming a brand new division in Ireland that would concentrate on automated platforms. While Hyster was certainly no startup, the new division held many attributes of a startup and it would have been a completely new product line and market for the company.
At this point in time, this was a new and emerging market, not just for Hyster, but for the market. The first rule for any startup is that you had better know your market, your competitors, your differentiation and how you are going to sell. If you are charging 3 or 4 times more than your competitors, this may be OK, but why are your customers going to buy it? They hired about 200 engineers to develop these platforms and four years later they shut it down. They fundamentally read the market wrong. If that had been a startup, it would have killed you.
The key take away here is that you must understand your market and the key differentiations.
Following this Dermott started working as a consultant and distributor for EDA products. The consulting was in the area of signal integrity, but the distributorship side was the more interesting angle. He started to distribute OrCAD and a bunch of other EDA tools. He found it interesting to see which companies would make it and which wouldn’t. He talked about one example Minc. This was a company from Colorado Springs that concentrated on synthesis for the programmable devices of the times – namely PLDs. Dermott said that they had tremendous technology that enabled you to describe a design that would go into many PLDs. It would do automatic partitioning and supported a range of devices that would enable you to pick multiple solutions to the problem, based on performance, power and other items. And yet they died. While they understood the PLD market, they did not understand the changing market around them. FPGAs were starting to eat up the PLD market. So a typical design may have used 10 or 20 PLDs, but later that would be replaced by one FPGA and so the need for partitioning went away.
The key takeaway here is that you have to understand the dynamics of the market and what is changing that may affect you.
Editor’s note: EDA startups usually produce technology too early. People see an emerging niche and develop tools to fill it, but there are very few customers who currently see that as a big enough problem to warrant buying something new or changing their flow. It can take a long time before the real market develops enough to support a company.
In the case of Minc, they understood the EDA market, but they did not fully understand what was happening in the chip market, and that plowed them under.
In the next installment, we will look at a company that came out with technology too early.
If you have experiences that you observed or lessons that you learned working for a startup, I would love to hear from you.
Dermott Lynch is currently the VP of Sales and Marketing at Silicon Frontline, a startup with about 15 people. Silicon Frontline has tools that perform fast parasitic extraction and analysis for post layout verification, with a leaning towards power devices. Prior to that he has held positions with Infinisim, Nassda, Sente, Viewlogic and Quad Designs. He holds a BE and MSc from University College Dublin.
Brian Bailey – keeping you covered
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