Every few days I post a quotation on www.twitter.com/skmurphy that I think will be useful or thought provoking for entrepreneurs. On the last day of the month I collect these quotes for entrepreneurs into a blog post and add some context. For a list of all my blog posts that are related to quotations see http://www.skmurphy.com/blog/category/quotes/ Here is the roundup for June. Enter your E-mail if you would like Feedburner to deliver new blog posts to your inbox.
Archive for June, 2009
“Build a better mousetrap and the world will beat a path to your door”
This suggestion, mis-attributed to Emerson, has destroyed more startups than any other I can think of. It suggests to a lone inventor his product will be instantly in demand. Michael Schrage, who has been studying innovation for more than two decades, outlines a very different approach to successful innovation in three interviews. Schrage stresses the need for collaboration both within the startup (or new product team) and between the startup and its early customers.
Julie Anixter interviewed Michael Schrage on Nov-16-1999 for Tom Peters blog and asked “What or who prepared you for the work you currently do?” (emphasis and links added)
All of this work can really be traced back to when I was the first technology reporter for the Washington Post from l983-l987. I was covering Silicon Valley and Route 128, and doing the standard story about the entrepreneur with the great idea that launched the business.
Then I realized that the basic story pattern was, well, wrong.
I’ve always been interested in innovation…But what I saw—company after company—was that the innovation wasn’t just about creative individuals, but about creative relationships—and particularly collaborative relationships.
And collaborative relationships need shared space (any collaborative medium—cocktail napkin to computer modeling that serves as communication space that two or more people share). After my first book came out, “Shared Minds”, I realized that I had to focus on this … if we care about the future of collaboration we have to care about the future of shared space … there’s a real ecology there. Then prototypes became a fabulous vehicle for interacting within the process of innovation, within a shared space.
When I was a new reporter I was concerned with getting good quotes. Now, when I work with teams and consult, the gap between what people say and what they do is far more interesting. I became much more concerned about behaviors around prototyping, whether it’s designers around the screen or marketers around models; design behaviors take a big shift around prototypes.
Behavior changes matters more than technological change.
When I say “investing in innovation” I mean investing in models, prototypes, and simulations that become platforms for innovating with the invention — the idea itself — and innovating with the actual users and customers for such inventions. It’s not enough to come up with a great idea, you really have to focus on how that idea diffuses throughout the community.
Innovation is not what innovators do but what customers adopt.
For more on this concept see also My Customer, My Co-Innovator
When I wrote “Shared Minds,” my original book on collaboration, I was fascinated by the role that technology can play as a medium for collaboration. I looked at all of these great collaborations and the role that tools and models and prototypes played in managing their creative collaborative interaction. But what I learned after doing that book and being brought in to do advisory work promoting collaboration within large organizations is that, as important as collaborative tools, techniques and technologies are, you have to have an environment where there are incentives to collaborate.
You have to have an internal economy where there are appropriate rewards and incentives for collaborating, and appropriate disincentives for not collaborating.
Related Blog Posts
We invest a lot of effort in finding partners and maintaining partner relationships. We do this for a variety of reasons.
One of the advantages to working in a large firm is that there are normally resources and expertise you can call on when confronted with a challenge. There are typically other specialists who have your same job you can compare notes with; there are other managers who can offer perspective on management challenges.
As a solo entrepreneur or member of a small team the limits of your perspective and capabilities can keep you from excellence in ways that may not even realize. I tell people that when I was at Cisco I was held back by the people around me, now I am held back by my own limitations. If only–I used to think to myself–I could be in my own company I wouldn’t have all of these bureaucratic hold ups and delays.
We value our partners because they bring perspective, skills, and expertise that we lack. We can’t do everything, and in fact it’s taken a while to realize that there is an important difference between tasks that you can comprehend and those that you can execute with distinction. You have to pick a few domains that you can excel in and be careful to avoid wandering into other areas.
Defining and managing the line of demarcation is the key to long term viability in a relationship. We strive to for clarity on what their areas of focus are and where there is overlap we talk about how we will manage it. We don’t expect them to sell our services, but we are always delighted when we get a referral. And we are always happy to recommend them when it’s appropriate.
“Bootstrappers Breakfast” was registered June 23, 2009 as a trademark of SKMurphy, Inc. “For education services, namely providing live and on-line seminars, workshops, and mentoring sessions in the field of entrepreneurship.”
No claim is made to the exclusive right to use “breakfast” apart from “Bootstrappers Breakfast.”
Details as they unfold: we will do six breakfasts a month starting in July.
Update Jul-1-09: we wanted to thank Athol Foden of Brighter Naming for his advice on trademark strategy and assistance in navigating the registration process. We were pleased to retain him and would encourage other startups to do likewise. We filed our application November 7, 2008.
Rajeev Madhavan is Chairman and CEO of Magma Design Automation, a public EDA company that’s a broad supplier. Madhavan is a serial entrepreneur, helping to found Logic Vision, Ambit, and Magma in the last 17 years. Ambit in particular was an ambitious startup, Rajeev went head to head with Synopsys and carved out a chunk of the synthesis market. But it was hard to get started, after he came away empty handed on Sand Hill Road he did an angel round with 25 seed investors who four years later were happy to have taken part when Ambit was acquired by Cadence for $260 million. He decided to found Magma in April 1997 after a disagreement with the board of Ambit. At Magma he was even more ambitious, aiming to be a broad line EDA supplier. Although the fund raising was easier, after the 2001 IPO Magma, like many EDA firms, has been faced with a challenging environment.
I was delighted when he agreed to an e-mail interview about his entrepreneurial journey. The words are his but I have added hyperlinks for entrepreneurs outside of EDA who may benefit from some more context to his remarks.
Q: Can you talk a little bit about your background?
Madhavan: I grew up in Southern India. I went to college and earned a B.S. in electronics and communication from KREC (Karnataka Regional Engineering College) in Surathkal. I went on to graduate school at Queen’s University in Ontario, Canada, earning an M.S.E.E. While completing my thesis, I went to work for BNR (Bell North Research), the research arm of Nortel in Ottawa, where I found I needed to create some CAD software applications to help complete chip designs I was involved with. I had no traditional background in EDA or computer science, but while working at BNR, I ended up developing a lot of EDA tools.
By 1991, I was working at Cadence Design Systems in San Jose as a BNR engineer involved in a long-term partnership between the two companies called the Analog Alliance. Jim Solomon was also at Cadence at that time, leading the Analog Division. Jim convinced me to join Cadence as a full-time employee in 1991, and I worked intensely on Cadence’s Spectre HDL for a year and a half.
See below: “For More Info on Rajeev Madhavan” has more on this period from other interviews.
Q: Can you talk a little bit about what led you to found your company, what problem or situation motivated you?
Madhavan: While I was at Cadence, Vinod Agarwal talked to me about licensing BNR’s BIST software since I had worked on it. Ultimately I helped to co-found LV Software with Vinod Agarwal and Michael Howells in July 1992, which became LogicVision in 1996.
While I was at LogicVision, I had an opportunity to integrate LogicVision BIST into Synopsys tools. Having worked on synthesis at BNR and watched the failure of Cadence and Mentor in synthesis, I felt there was room for another synthesis player to compete directly against Synopsys. I looked at Design Compiler, and felt I could do better. So, I left LogicVision and founded Ambit Design Systems in 1994.
After Ambit, I realized that simply building a better synthesis tool wasn’t enough. To truly advance IC design, synthesis and physical design needed to be integrated. We started Magma in 1997 based on that simple idea.
Q: Can you give me a brief overview of where the firm is today?
Magma was founded in 1997 and is my third “official” startup. Magma had a very successful IPO two days before Thanksgiving 2001, at a time when other companies were shelving IPO plans.
Magma is now one of the largest EDA software providers with products used by major semiconductor manufacturers to design the most complex, high-performance analog and digital chips made today. Our revenue for Fiscal Year 2009 was $147 million and we have approximately 730 employees worldwide.
Q: What are two or three key things you have learned?
I’ve learned something from each of the three startups.
- At LogicVision, I learned that creating great technology is not the only key to success. You have to know how to sell the software to the customer. We were woefully bad at licensing.
- After Ambit, I looked at myself to see what I could improve. I went over the mistakes I made and looked at how I could correct them. I had fought with some of the board members at Ambit and found that I had had limited ability to communicate with employees. It was a revelation to realize that I was a bad communicator. I learned that I had to be more extroverted and outgoing. This was a life-changing shift and changed the way I ran Magma. Because of this change, I have been able to build a much tighter community at Magma than at Ambit. And, personally, I am glad that I made the transition. I enjoy being part of the community and find that I’m happier.
- At Magma, the number one thing that I have learned is that, in spite of taking precautions and talking with employees about clean code development, we still had one bad apple. I learned very clearly to trust but to verify more than you think you need to!
Q: How have you changed since you started? What key skill or experience did you lack when you started that has caused you the most problem?
I now try to figure out what a person is all about and use that to help motivate them to do something great for the community. At Ambit, I didn’t. At Magma, I’ve built great relationships. If I disagree with someone, I can agree to disagree without holding a grudge. It’s been a good experience to change in this way.
Q: What are the two or three things that you have been able to accomplish that you take the most pride in or satisfaction from?
First, I’m very proud of creating the first physical synthesis system. Others may now claim to have a similar system, but clearly Magma was the first to deploy one.
Secondly, we survived an unfair litigation. I learned a lot from that experience that I wish I hadn’t had to. And, while I’m happy to say we won one of the key arguments on ownership, we still suffered from the litigation. Early on, I made the painful decision to order the complete rewrite of the Blast Fusion tool. In the end, it wasn’t necessary. The court upheld our position that IBM co-owned the technology and that we could use it because of a cross-licensing agreement we had with them. Given the risks, though, it was the right decision to make at the time.
After the lawsuit ended, we could have continued with Blast Fusion, but we had already launched Talus. I knew that when we had reached a few critical milestones with the new product, our technology lead would be even stronger.
Developing a production worthy version of Talus took some time and meant that we had to support two systems until we could migrate our customers to Talus. The last 18 months have been really tough, but now we’ve migrated our customers to Talus, and reached significant milestones in combining new routing and optimization technology into Talus. This new technology is as innovative as our original physical synthesis was.
Q: What has been the biggest surprise: what was one key assumption you made, perhaps even unconsciously, that has caused the most grief?
One of the biggest surprises in my years in this industry is how short-sighted the large EDA companies are. They shoot themselves in the foot with their licensing models. They literally give away “me too” tools in these “preferred EDA vendor or Flexible Access Model (FAM)” deals. Customers are never going to start paying for tools that they’ve been getting for free. This practice makes it impossible to grow the market. It hurts the large EDA companies, and the smaller companies and it hurts the industry.
It’s amazing that the brilliant technical minds at the large EDA companies continue to make bad business decisions. The good news is that semiconductor companies will always need EDA tools. I believe the EDA industry will transition away from these bad licensing models, but it will be a painful process and everyone will suffer.
What development, event, or new understanding since you started has had the most impact on your original plan? How has your plan changed in response?
For a while, Magma had the intention of becoming a full line supplier, just like the other larger EDA companies. But, I realized that customers won’t buy tools from me that they get free from somebody else –– UNLESS, it’s a truly superior tool. Now, Magma has put its focus back on developing truly differentiated products, rather than “me too” products.
Q: Any other remarks or suggestions for entrepreneurs?
While there’s turbulence in EDA right now, it’s not because we don’t provide critical technology. Once the industry has learned how to properly run a business, EDA will thrive again. So, I would encourage EDA entrepreneurs to hang on!
And for the entrepreneurial community in general, this is actually the perfect time to start a company, if you can get funding. Don’t get dazzled by your technology, make sure you and your team have solid business sense, as well.
Q: Thanks very much for your time.
For More Info on Rajeev Madhavan
- Peggy Aycinena’s 2003 Profile: Rajeev Madhavan of Magma Design fills in a little more about Madhavan’s entrepreneurial education (hyperlinks added):
I met Lucio Lanza when he was Vice President for Business Development at Cadence and a General Partner at USVP. Lucio gave me several start-ups’ business plans to look over and evaluate. By showing me those business plans, he helped me to understand the venture capital business and how ideas are funded. Specifically, Lucio was instrumental in funding EPIC. Reading their business plan and meeting with some of EPIC management made me realize a few things.
It was interesting to me to learn that you could earn a salary working at a start-up and that you didn’t have to be self-supporting. I wasn’t a rich kid and I had no idea that anyone could work for a start-up if they couldn’t support themselves on family money.
- Peggy Aycinena interviewed Rajeev again in 2004 in “Fathers and Sons: Rhines & Madhavan“
- also available in the August 2004 EDA Nation.
- Rick Nelson Interview “Voices: Magma Design Automation’s Rajeev Madhavan” in EDN February 3, 2009
- John Cooley has an audio interview (MP3) in “Rajeev vs. the FUD monster” February 27, 2009
- Brian Moyer did an “Executive Profile: Rajeev Madhavan” June 16, 2009 in the IC Verification and Design Journal
- Forbes Profile Rajeev Madhavan
Craig Shirley, VP of Sales at Apache Design Solutions has attended a couple of Bootstrapper Breakfasts™ in 2009 and always gives very practical advice on sales and negotiation issues. No surprise, he has more than two decades of experience in sales and sales management and has negotiated more than 100 deals with key accounts. He is joining Tuesday June 16 in for the Sunnyvale breakfast to talk about his experiences, some lessons learned, and an answer any questions on deal and negotiation situations attendees may be contemplating or in the midst of.
I sat down with him earlier this week and got a preview of coming attractions. He advises startup teams that preparation is essential and the negotiation with a key account begins with the very first meeting. Craig will outline an approach to negotiating with major accounts that focuses on maximizing both revenue and profit over the lifetime of the relationship, something that bootstrappers need to manage very carefully. His focus will be less on tactics and more on how to differentiate your product on features other than price.
He believes that a startup should strive for two goals in negotiations with early customers:
- Maximize near term Average Selling Price / Unit Price
- Maximize long-term Annual Contract Value
Craig outlined three key requirements for success:
- You have to target mission critical problems that the prospect is facing, preferably on more than one mission critical project or initiative.
- You need to be clear on what aspects of you product provide them with compelling value, value that they are not able to gain from alternatives/competitors (don’t forget that the status quo can frequently be a competitor in its own right).
- You need to align your engagement and sales efforts with the customer’s buying process, typically by identifying a compelling event or upcoming unavoidable deadline (e.g. taxes are due, industry transition, new project starting).
We are running five breakfasts a month now, if this Tuesday isn’t convenient or gets full, consider another:
- First Friday of the Month: 7:30am-9am at Hobee’s in Palo Alto
- Second Friday: 7:30am-9am at Omega in Milpitas
- Third Tuesday: 7:30am-9am at Coco’s in Sunnyvale
- Third Friday: 7am-9am at Boudin Bakery at 4 Embarcadero Center in San Francisco
- Fourth Friday: 9am-10:30am at Red Rock Coffee in Mountain View
Update July 2: Craig’s slides are available here
Slide is copyright Craig Shirley 2009
- ASP = Average Selling Price
- ACV = Annual Contract Value
I spent today at the Hadoop Summit 2009 (hadoopsummit09). Although I paid my $100 registration fee in advance I made the mistake of getting there a few minutes after 9am with the first keynote underway and joined a thick knot of hangers on in one of the doorways to the ballroom (don’t tell the fire marshal). Finally at 10:30 they broke the wall down that separated the adjacent salon and expanded the ballroom.
The first keynote I listened to was a long sales pitch from Sun. I don’t know why you would give a room full of hundreds of engineers and scientists a basic sales pitch for cloud computing, but it was a waste of time for both Sun and the audience.
Enough whining, the rest of the conference was very thought provoking, some quick impressions:
- If Moore’s Law has delivered roughly a million fold improvement in computing performance in the last 40 years, Hadoop, Zookeeper, and similar orchestration layers allow another thousand fold improvement for suitable problems.
- Amdahl’s Law trumps Moore in many situations but some of the problems now being solved were intractable, at least for a reasonable budget, if not unthinkable five or ten years ago.
- To put a million fold increase in perspective, that’s a lifetime of calculation (40 hours a week, 50 weeks a year, 40 years working lifetime) compressed into 288 seconds, 12 seconds shy of five minutes.
- The ability to orchestrate a thousand to ten thousand machines on a problem (admittedly you need a suitable problem) means we are looking at project CPU budgets measured not in CPU years but CPU millennia.
- This is not entirely new: certainly there were DoD and NSA projects working at that level with specialized hardware two and perhaps three decades ago. Pixar announced in 2006 that their movie Cars took 23 CPU millennia to produce, again with specialized hardware.
- But Amazon EC2 uses commodity hardware and makes CPU hours available for a dime with a credit card. Admittedly a CPU millennium will set you back roughly $876,000 at current prices.
- Several requests or comments on the need for fractional hour billing, which I took as at least anecdotal evidence for good parallelization of a lot of the tasks.
- Amazon reminded us that they are quite skilled at accepting (and shipping back) physical media containing data sets for their Elastic Compute Cloud.
- “Never underestimate the bandwidth of a station wagon full of tapes hurtling down the highway.” Andrew Tanenbaum
- The show reminded me a lot of INTEROP 88, the year that Interop transitioned from workshop to trade show with a few dozen vendors at the Santa Clara Convention Center. The vendor ecosystem for Hadoop is not yet as diverse, but the focus was clearly on system administration and technology, with the applications discussed in highly technical language. The crowd seemed to be researchers and system programmers for the most part, but the potential business impacts are starting to become a lot clearer.
Postscript June 14: Jinesh Varia made a remark during his keynote about “please check out our security whitepaper, some firms are building HIPAA complaint applications” so I did and found this paragraph which clearly telegraphs their strategic intent to move to the heart of enterprise applications:
Certifications and Accreditations
To provide customers with assurance of the security measures implemented, AWS is working with a public accounting firm to ensure continued Sarbanes Oxley (SOX) compliance, and attain certifications and unbiased Audit Statements such as recurring Statement on Auditing Standards No. 70: Service Organizations, Type II (SAS70 Type II). AWS will continue efforts to obtain the strictest of industry certifications in order to verify its commitment to provide a secure, world-class cloud computing environment. The flexibility and customer control that the AWS platform provides permits the deployment of solutions that meet industry-specific certification requirements. For instance, customers have built HIPAA-compliant healthcare applications on AWS.
I don’t know how I overlooked Andrew Chen’s “Your Ad-Supported Web 2.0 Site is Actually a B2B Enterprise in Disguise” He succinctly outlines some hard facts that many founders spend a year of their life to learn:
- Unless you are a ridiculously huge consumer internet site, you have to build up your revenues through brand advertising sales. It’s very hard to just use ad networks like Google AdSense to sustain yourself: just do the math using 10 to 25 cent CPMs and you’ll quickly see why.
- The users of your website are not really your customers. Your actual customers are the ad agencies and advertisers. Your Web 2.0 consumer startup is actually a B2B that sells inventory to brand advertisers.
- How to avoid this: directly monetize your users by coming up with something so compelling people will pay for it through subscriptions, virtual goods, or other E-commerce models.
Too many media startup founders think that their audience is their customer, when it’s their advertisers (or the firms who want to advertise to reach the audience that they have assembled). As Patrick McKenzie commented on Hacker News: “I’m terminally old-fashioned in a lot of ways. I hold open doors for ladies, take off my hat before entering buildings, and define customer as “someone who pays money for a good or service”.
Brant Cooper and I are doing another conference call for entrepreneurs actively engaged in customer development. We facilitated one on June 3 and have another planned for 1pm Thursday June 18. To participate, you must:
- be actively engaged in practicing customer development principles;
- clearly articulate one or two issues that you would like to discuss;
- have a Skype address to be able to take part in a parallel text chat to the conference call.
We are facilitating another website peer review Thursday June 11 at PATCA. At our April 17 website peer review, we were asked by Jerry Rice to produce a similar event for PATCA and were happy to oblige. Theresa is a member of PATCA and regularly attends their events. She blogged about “Three Reasons to Attend a Website Peer Review” in April and her points are still valid:
We have done three other events like this in conjunction with sponsoring organizations like Innovation Denmark, SDForum, or Startup Epicenter. Participants have told us that they had three benefits.
- In reviewing another firm’s website and providing concrete feedback, they developed new perspectives on how prospects and other visitors might assess their own site.
- There are always so many things that can be done to improve a website it can be an endless sinkhole of time. Helping a peer with their site helped them identify the most important improvements to make next. Also some of the feedback provided by fellow CEOs were directly applicable to their own.
- They learned about a number of free and low cost tools and resources that are available for website design and analysis.
Details about the event:
- Date: June 11, 2009, 6:00-9:00pm
- Pre-registration Cost: $20 for PATCA members, $25 for non-members, $20 guest(s) of members, and $20 for first-time attendee
- Register here : advance Registration by June 8 strongly encouraged; register online by 5:00 pm June 8 to guarantee a meal. You can also call or email the PATCA office for reservations: 800-747-2822 or email@example.com.
- Dinner included:Oven roasted tri tip with cabernet demi glace OR Sauteed Portobello mushroom and sun-dried tomato risotto in a Parmesan cream sauce
- Location: Pruneyard Plaza Hotel, 1995 South Bascom Avenue, Campbell, CA 95008
We have been invited to join the “EE Times Trusted Sources” list of blogs. At the discretion of EE Times editors a blog post may be selected from one recently published and a capsule summary placed in their “Trusted Sources” area. EET has characterized the section as follows.
This section features posts from around the Web by authors with passion, integrity, authority, and community support in our industry. Our Trusted Sources are not only prominent industry bloggers specifically identified by EE Times — but also influencers who have earned the trust of our community. With Trusted Sources our goal is to provide the platform to activate and engage in dialogue, and nurture conversations for all participants–beyond just our own voices
A link to the full blog post will be appended. They have selected the recent “Interview With John Sanguinetti” post for our first appearance there.
Robert Dang, partner and attorney at Fortis General Counsel, http://www.fortisgc.com returns to our Bootstrapper Breakfast™ this Friday, June 5 at Hobee’s Palo Alto (4224 El Camino Real) at 7:30 am. Robert will answer questions and discuss the legal issues facing entrepreneurs in today’s economy. Fortis is a startup friendly firm and endorsed by attendees.
Rob’s practice focuses on providing general counsel services to technology startups, with an emphasis on corporate finance, mergers and acquisitions, technology licensing, corporate governance and general business counseling. Rob currently serves on the Executive Committee of the MIT/Stanford Venture Lab (VLAB). Have your questions ready for a great discussion.
Join Other Entrepreneurs Who Eat Problems For Breakfast. RSVP now – this location fills up.