Fundamentally we've learned that it is better to be in a place where we have full control over our destiny — specifically when it comes to funding. Having been with several startups and seeing first hand the havoc venture capital can reap, we knew that selecting our future partners was one of the key decisions we would make.

Some venture capitalists who contacted us have insisted on raising profits at a very fast rate, quarter after quarter. Since we are living in the world of continuous innovation, we were not willing to commit to growth at an escalating rate or even the same rate. If we had gone the route of the VCs, we might have grown faster, but being on our own we learned financial discipline that helped us to go through all the recessions without layoffs. We also have had a lot of fun because we had complete freedom.

Investing in academia has also been key to our success by building a future base of employees. Although we've found that great talent can be found everywhere, the most important thing is to help students increase their knowledge and experience year-after-year and become gifted designers. We now have over 100 engineers and most of them started with us during their third year in college.

We have continued to be successful in the academic community because we invest not only money, but time with the colleges and universities and work with the students on valuable extra-curriculum exercises throughout the school year. In addition, during the summer months we provide eight-week long internships to approximately 40 students per year. We also provide our partner universities with free software licenses and, when needed, we purchase complimentary and competitive products so that the students have broad exposure to a variety of EDA tools.

One of the biggest challenges every startup will face is being able to move successfully from the innovation phase to one of big volume with high quality. One of the problems that tends to occur is that engineers everywhere seem to have one thing in common — they think that a product is done when they say it is done. But in reality, a product is done only when the customer says it's done.

We have made the mistake of releasing products too early, only to learn through that painful mistake that it's much better to wait and have it be more solid before the customers receive the production version. We have made sure to pass that important business lesson to the younger generations of employees.

We were able to make the transition from an engineering company to a software manufacturing company by setting up a strict quality control environment and indoctrinating employees about the importance of customer satisfaction and product quality. Software products can be created almost anywhere and by anyone, but quality software products can only be manufactured by companies with a history of quality traditions and practices. A company can't be driven solely by quarterly profits, or it will lose site of what makes it truly successful — a commitment to customer satisfaction.

We also have learned a great deal from some of the trends we've seen making waves throughout the industry. In the late 1980's many EDA companies felt compelled to pre-announce products with the goal of buying some time and getting customers to stop buying competitive products while they finalized their own products.

Unfortunately this trend continued into the 1990s with some significant side effects. These product pre-announcements were called "vaporware" and the associated marketing activities were coined "smoke and mirrors." Despite the fact that most customers were very skeptical about the pre-announcements, the purchasing of productivity tools that could benefit them slowed visibly.

Thankfully the situation has vastly improved in the last few years with the introduction of the Internet. Today everyone wants to "see the goods now." The Internet has brought reality into the marketplace with its checks and balances, and it has made a positive impact on EDA companies as well as the growth of the entire electronics industry.

Over the past 20 years we have witnessed a tremendous amount of merger and acquisition activity as well — both good and bad. We have seen poorly construed mergers wiping out companies that would have thrived if they'd just been left alone. There have also been some acquisitions where the acquiring company did nothing with the acquired technology and it simply became stagnant. On the other hand, the top EDA companies grew through many good acquisitions. These companies took a good technology and, for the most part, made it available to a much broader market segment than the smaller startups could ever have imagined.

Being part of the U.S. electronics industry for 38 years (18 years before I founded Aldec), I have seen many trends, derived primarily from the economic conditions of the day. At times many CEOs were merely accountants. At other times companies were led by marketing gurus. There were also times when CEOs were primarily technologists or even "spiritual" leaders.

However, most of the companies under such leadership bounced from one rock to another and never got into an open sea where they could sail with a specific direction in mind. I learned from those experiences that consistency of leadership was the most important issue. It is thus a pleasure to watch the growth of a company such as Synopsys and where it is taking the entire EDA industry. We at Aldec believe in personal growth of management and employees through continuous education and limitless innovation.

Based on what I've witnessed over the years in EDA, I believe there are certain factors needed for the industry to see renewed growth and success. Today, for example, design verification has become so cumbersome that it consumes more than twice as much time as the design itself. Product testing is becoming prohibitively expensive as well.

These growing restrictions should stimulate EDA and the electronics industry to come up with new approaches to designing and manufacturing electronic devices. Most likely we will do away with gates and flip-flops when new technology arrives. Feature for feature, new memory-based reprogrammable devices could cost only 1/10th of the current prices and their testing will be done in about 5% of the time needed by the current technologies. Shortly, the EDA industry may again prospect for gold.

The key is to push research, development and innovation. The motto I have continued to apply in Aldec's 20 years is that "Failure is not defeat. Defeat would be not having tried or not pursuing a dream vigorously enough."

Stanley M. Hyduke is President and CEO of Aldec, Inc.