Archive for October, 2009

Quotes for Entrepreneurs – October 2009

Written by Sean Murphy. Posted in Quotes, skmurphy

These quotes for entrepreneurs Added as I find them on and then collected into a post at the end of the month. Enter your E-mail if you would like Feedburner to deliver new blog posts to your inbox.

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“Some mornings in the shower I remind myself ‘This is the life that I have chosen’ because it’s never easy and it’s never dull.”
Sean Murphy

This was inspired by

“Entrepreneurs start businesses because..they have no choice. Passion and energy drive them on good days and sustain them on bad days.”
Barry Moltz in “You Need to Be a Little Crazy

Full Quote:

“I even remind myself of this from time to time. Some mornings when I am in the shower and contemplating the day ahead, I will remind myself that “This is the life that I have chosen” because it’s never easy and it’s never dull.”
Sean Murphy

Mentioned in two blog posts:

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“The recognition and understanding of the need was the primary condition of the creative act.”
Charles Eames

More context:

“The recognition and understanding of the need was the primary condition of the creative act. When people feel they had to express themselves for originality for its own sake, that tends not to be creativity. Only when you get into the problem and the problem becomes clear, can creativity take over.”
Charles Eames

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“One of the great mistakes is to judge policies and programs by their intentions rather than their results.”
Milton Friedman

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“A ‘window dressing’ advisory board is often as phony as an undersized glass eye that spins randomly with every blink.”
George Grellas in Hacker News reposted with permission in “George Grellas on ‘Insightful’ vs. ‘Window Dressing’ Advisory Boards

More context:

The “window dressing” variety of advisory board is often as phony as an undersized glass eye that spins randomly with every blink. This often involves the so-called industry luminaries used to make the startup look much more impressive than it really is. In essence, such advisors hire out their names…

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“Forget past mistakes. Forget failures. Forget everything except for what you’re going to do right now and do it.”
William Durant

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“Capital is not wealth pure and simple, but wealth considered from the point of view of future as opposed to present use.”
Sir Alfred Zimmern

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“Use your intuition to ask questions, not to answer them.”
John Ousterhout in “Favorite Sayings

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“It’s not even a jobless recovery; it’s a recovery with more job losses.”
Lee Ohanian


“It’s not even a jobless recovery; it’s a recovery with more job losses,” said UCLA economist Lee Ohanian. “The idea of having essentially no net job creation after a remarkably severe recession is a real pathology for the U.S. economy.” in “Experts See Rebounding Economy Shedding Jobs

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“Our life always expresses the result of our dominant thoughts.”
Soren Kierkegaard

Originally quoted in “Kierkegaard on the Art of Helping Others to Understand

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“There is no such thing as bad weather, only bad clothing.”
Norwegian Proverb

And perhaps there is no such thing as a bad economy, only entrepreneurs who are unprepared to look hard for emerging opportunities. At least that’s what I tell myself, that I need to look for where the opportunities are not where they used to be.

Amazon High Memory Instances Will Enable More EDA Apps to Move to the Cloud

Written by Sean Murphy. Posted in EDA, skmurphy

Sometimes paradigms do shift. Amazon announced today that its Elastic Cloud Computing now supports high memory instances:

High-Memory Instances

Instances of this family offer large memory sizes for high throughput applications, including database and memory caching applications.

  • High-Memory Double Extra Large Instance 34.2 GB of memory, 13 EC2 Compute Units (4 virtual cores with 3.25 EC2 Compute Units each), 850 GB of instance storage, 64-bit platform
  • High-Memory Quadruple Extra Large Instance 68.4 GB of memory, 26 EC2 Compute Units (8 virtual cores with 3.25 EC2 Compute Units each), 1690 GB of instance storage, 64-bit platform

From Amazon Elastic Compute Cloud overview of instances:

High-Memory On-Demand Instances Linux/UNIX Usage Windows Usage
Double Extra Large $1.20 per hour $1.44 per hour
Quadruple Extra Large $2.40 per hour $2.88 per hour

These 34.2GB and 68.4GB virtual machines should enable a number of new job types that required more memory than was available from standard instances:

  • Small Instance (Default) 1.7 GB of memory
  • Large Instance 7.5 GB of memory
  • Extra Large Instance 15 GB of memory

In particular for Electronic Design Automation applications this makes the cloud much more viable as a fourth generation computing paradigm:

  1. Turnkey / Custom Hardware / Minicomputer
  2. Engineering Workstations
  3. X86 architecture PC
  4. Virtual Machines / Cloud Computing

Sometimes paradigms do shift.

Update Nov-23: The Amazon Web Services Blog announced “The New AWS Simple Monthly Calculator” available at

Feedback from Sat-Oct-24 “Getting More Customers”

Written by Sean Murphy. Posted in Events, skmurphy

We had a good “Getting More Customers” workshop today, here is the feedback that we gathered and a heads-up on some plans for 2010. We added three numeric ratings to our feedback form this time (which shrank the space for comments).
Numeric Ratings (1 Poor to 5 Excellent)

  • Importance of Topic: 4.75
  • Content: 4.75
  • Quality of Speaker: 4.75

Comments (here are comments from Mar-31-2009 workshop)

  • “Too much text–overwhelming.”
  • “A bit fast, exercises and group discussion held us accountable, which is good.”
  • “It’s very direct and to the point with an action plan to follow, keeping it simple.”
  • “Nice wake up call.”
  • “I picked up a number of ideas I can employ. I was impressed.”

We announced at the end of the workshop that we will be offering a new format next year, a small group format that meets for 90 minutes a week for six sessions. Our plan is to provide support in both an individual and small group setting for focused execution of half of the one page plan that entrepreneurs develop at a workshop. For early stage startups we think having peer entrepreneurs in a small group will act like “workout buddies” to help them to follow through on the plans that they have made for improving their businesses.

We had a couple of folks who had conflicts and we are considering scheduling another “Getting More Customers” class before the end of 2009. If that would be of interest to you, or this new six week small group program sounds like a good fit, please contact us or sign-up to be notified of upcoming events.

4 Steps to Prepare for a Startup While You are Still Employed

Written by Sean Murphy. Posted in skmurphy, Startup CEO: Question of the Day

Someone with the label selfemploy posted the following question (note the fact that he is in Bangalore appears later in the thread, I have included it in the body of the question) on Hacker News earlier this month. As the recession continues to affect not only in Silicon Valley but  many engineers around the world may remain concerned over this same set of issues and potential missed opportunity:

Background: I am a hacker/developer in Bangalore with over 10 years of experience working with cutting-edge software consulting company. Clients list includes fortune 500 companies many of them banks and some product companies. Skill set includes technology and project execution but not marketing and people management.I am married with kids.

Problem: Always wanted to be an entrepreneur, right from the college days but never got myself to do anything about it. Now it seems time is running out.

Is it too late to get into startup mode?

My answer was four suggestions and an observation:

  1. Save your money.
  2. Adjust your lifestyle to allow you to live on a lower spending rate.
  3. Make sure your spouse is supportive of starting something.
  4. Take your time and find at least one co-founder. If you don’t know them well do some smaller projects together first.

Older entrepreneurs bring social capital, commitment, and an ability to focus and persist.

Administrivia Revisited

Written by Sean Murphy. Posted in Rules of Thumb, skmurphy

A blog post from October 2006 “Administrivia in Startups” made the following points

I had lunch with Sylvia Nessan, a veteran of Synopsys, CoWare, and several high tech startups and she made an observation that I thought was worth writing down: the founding team, and CEO in particular, don’t pay enough attention to how much time they waste on administrivia. Hiring an admin or other outside service providers to take care of the four to eight hours a week of work that they really don’t need to do–basic e-mail networking, taxes, finances, office management / operational issues–reduces the number of different balls they have to juggle at once and increases your effectiveness by 25-40% when you take into account that, although it’s an important set of tasks that must be done, the founders don’t have to do it.

If anything, more folks are interested in part time work now than in 2006. Last year I concluded “Odd Jobs with an Even Temper” with

I think every startup above a certain size needs someone who can do “odd jobs” with an even temper. Especially as things get tougher in Silicon Valley, don’t underestimate the value of small kindnesses, a sense of humor, and cultivating calmness.

Expert, Editor, Diplomat, Vandal Hunter

Written by Sean Murphy. Posted in Events, skmurphy

I attended an interesting talk by Marc Smith on August 4 “New Metrics for New Media.” Sponsored by Bay Area CIO IT Execs it was a thought provoking talk. I had heard Marc Smith speak at the 2003 O’Reilly Emerging Technology Conference and was curious what he was up to at Telligent. The video and slides are available on the CIO IT Execs Blog.

He made some remarks about unpublished research, I believe based on work by Howard Welser that built on “Visualizing the Signatures of Social Roles in On-line Discussion Groups” but addressed the four different roles that every successful Wikipedia article requires. One but of background, every  article has a “talk page” where the different contributors may discuss changes to the article itself, this allows a discussion to take place backstage without affecting the content of the article by embedding the discussion points in the article itself.

  • Domain Experts provide the key or core content for the article, and who often contribute to the talk page. They will make large changes, typically adding blocks of text, to a small set of articles.
    Value: core content for a page
  • Diplomats mediate disagreements among domain experts, most of their edits are to the talk pages.
  • Editors makes small changes, typically these are copyedits (e.g. fixing typos, punctuation, grammatical errors).  They correct small errors and improve the look and professionalism. They will make small edits over a large number of articles.
  • Vandal Hunters perform rapid reversions or undos to the article, normally in response to spam or other harmful edits. They have a very short time between last edit and their edit, and they have high percentage of actions that replace a page with an older version. They increase the chances of additional contributions by lowering the chance that a potential contributor reads a page that has been defaced, and then worries that their own contribution would be defaced.

I thought that there were some interesting parallels to how change happens, or is snuffed out, in a corporation.

I also think that most groups trying to reach a working consensus on a document, especially against a deadline, end up creating both document pages and discussion pages for the group to be able to hash out the final content and managed any issues or disagreements that need to be resolved. Archiving the talk pages is a quick way to make post mortems or after actions more useful, as they should contain a decision record for why certain decisions were reached and what options and/or issues were discussed and considered.

8 Tips for Evaluating Funding Alternatives

Written by Sean Murphy. Posted in 1 Idea Stage, Funding, Rules of Thumb, skmurphy

Invest3Many entrepreneurs planning their first software startup get stuck on funding and ownership issues. Here are some simple rules of thumb that may help you reframe an issue:

  1. Revenue, especially break even revenue, is never dilutive of your ownership.
  2. The right co-founders, while dilutive, substantially increase your chances of success: they give you a smaller piece of a much more valuable pie.
  3. Paying customers are real proof that there is demand for your product. Getting funded is proof that an investor thinks there will be demand for your product.
  4. A software startup in 2009 normally doesn’t need more than 10-25K to get started, if the founding team can provide the bulk of the labor to develop and market the first version of the product.
  5. If the founding team cannot provide the bulk of the labor to develop and market the first product, think about adding co-founders not seeking funding.
  6. If you need a salary from day one of your software startup don’t seek investment. Instead keep working at your day job, save your money, lower your burn rate, and work on your startup part time. This is hard.
  7. Your most important investors are your spouse, friends, and family who will provide you with emotional support on the entrepreneurial roller coaster.
  8. Professional investors don’t want control of your business, they want a return on their investment.

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Growing the Pie in EDA, Part 3: Add MATLAB

Written by Sean Murphy. Posted in EDA, skmurphy

With Synopsys announcing Synphony, a high-level design compiler that reads in MATLAB M code and generates RTL and some other useful outputs, and Mathworks listed in Gary Smith’s ESL 2009 Wallchart, I wonder if it doesn’t make sense to define MATLAB as an ESL language and Mathworks as an EDA player. Harry Gries provides a good overview in “Synopsys Synphony Synopsis” (say that three time fast)

Basically, Synopsys is introducing a high level synthesis (aka behavioral synthesis) product that takes as its input Matlab M-Code and produces RTL Code, a cycle accurate C-model, and a testbench for simulation.

Ron Wilson offers this assessment in “Synopsys introduces Matlab-to-RTL synthesis path for datapaths

On the whole, it appears that Synphony is not intended to be a direct competitor to the other high-level synthesis tools in the industry, such as those from Cadence, Forte, or Mentor. Rather, it is an IP-library-based tool for converting M-files into fixed-precision models for Simulink, coupled to a synthesis engine to convert these fixed-point models into RTL datapath designs for input into Synplify or Design Compiler. It is a rather specialized tool, but a sorely needed bridge between the worlds of Matlab algorithm exploration and RTL development.

Mathworks has been attending DAC for many years, although it is not a member of EDAC [see below]. The Matlab language was also a supported input by AccelChip (now part of Xilinx) and Agility (now part of Mentor, although the tools for going from Matlab to C were sold to the Mathworks).  These were some of the reasons that I had included the Mathworks blogs in my July 11 “EDA Bloggers 2009” list.

It would be interesting to see the Synopsys Interoperability Forum address Matlab interoperability at some point, they clearly have a significant stake in it with the Synphony announcement.

Sanjay Srivastava, the CEO of Denali, offered some excellent advice to startups in his Jul-23 “Can We Afford for Startups to Wind Down” (although he now is blogging on “A Conversation on Innovation” ) outlining two areas where startups have prospered in the last few years and one where they have not:

  • New platform creation. Typically, this happens at the edges of an existing platform (at least in EDA). One of the mistakes we can make is in under-funding the creation of platforms because you are asking the customers to move to a whole new methodology, but they are only going to do it if the platform is complete. Leaving big gaps like “availability of models/libraries” can often render a promising platform useless. […]
  • Provide components to a significantly growing platform. This is where lots of EDA startups have flourished since the last big disruption of synthesis. They provided point tools. The platform owners were growing and could afford to pay big premiums to improve parts of the flow or add to them. […]
  • Improve components for mature platforms. This is the trap startups have been in for the last few years. […]

At first blush Matlab looks like a growing platform, at least in terms of the opportunities for full integration into established EDA flows. It’s not clear where all of the opportunities might lie, but a few come to mind:

  • Timing analysis across Matlab, RTL, and gate
  • Register management across Matlab, RTL, C, and design documentation
  • Power management across Matlab, RTL, and gate
  • Functional Partitioning into Chips / Floorplanning for Chips for Matlab, RTL, and gate
  • High level synthesis tools: certainly Synphony offers a “proof by example” for Oasys and other next generation synthesis tools.

This is part of an ongoing series on “Growing the Pie in EDA”

  1. Getting Back to “Growing the Pie in EDA”
  2. Growing the Pie in EDA Part 2: As Revenue Shrinks So Does Analyst Interest

Update Mon Oct-19: Daniel Payne points out that Mathworks has historically been a member of EDAC even if they are not currently listed as a member. They are listed as a member on slide 29 of the January 14, 2009 presentation by Bob Gardner at the CEO Forecast and Industry Vision meeting.  I will seek clarification from Mathworks and EDAC.

C. Kent Wright’s “Nectar in a Nutshell” Has Some Great Quotes

Written by Sean Murphy. Posted in Quotes, skmurphy

I saw a quote by C. Kent Wright “To sway an audience, you must watch them as you speak” and decided to purchase one of his quote collections “Nectar in a Nutshell.” It was first published in October of 1944 and my copy is the “fifth impression” from 1945. In his introduction he explains that he has been collecting quotes for years in different note-books:

This little anthology owes its existence to the casual application of Captain Cuttle’s famous maxim: “When found, make a note of.” I acquired the habit of jotting down odd quotations during my schooldays, and it has now developed into something akin to a vice. In some ways it is a tiresome habit, because it often means the interruption in the reading of an enjoyable and exciting passage.

This really resonated with me, although my own habit of collecting quotes didn’t start until my thirties. One quote from W.E. Henley in his introduction is such a funny image that I had to share it here: “As for So-And-So collecting his thoughts, as he threatens, a cat might as well collect the sparks from it’s back when it’s fur is stroked in frosty weather.”

He included two quotes that I have seen attributed to many folks who were not alive in 1945–or at least not adults–I include them here just for accurate sourcing:

  • “The world is divided into people who do things and people who get the credit. Try, if you can, to belong to the first class. There’s far less competition.”
    Dwight Morrow
  • “I divide the world into three classes: the few who make things happen, the many who watch things happen, and the overwhelming majority who have not idea of what happens.”
    Nicholas Murray Butler

We are in the midst of preparations for our workshop next Saturday and I found these two particularly useful advice:

  • “I became increasingly convinced that it is not knowledge, but the means of gaining knowledge, which I have to teach.” Arnold of Rugby
  • “The general principles of any study you may learn by books at home; but the detail, the color, the air, the life which makes it live in us–you must catch all those from those in whom it lives already.” Cardinal Newman

A number of entrepreneurs have a certain amount of issues with attention deficit (I normally follow Hallowell‘s advice from “Driven to Distraction” work with teammates who are afflicted with Attention Surplus Disorder so that between us we average out). What’s interesting is that conflict and stress normally allow people with ADD to focus much more effectively. I thought these two quotes about “the English” were also applicable to many effective entrepreneurs (see also “Cultivating Calmness in a Crisis“)

I have written about the value of jotting your thoughts on 3×5 cards, but here is more encouragement:

  • “Take notes on the spot; a note is worth a cartload of recollection.”
    Ralph Waldo Emerson

One of our clients is starting to wrestle with growth and the need to formalize policies and procedures. I found this quote a nice summary of the challenge inherent in writing a good guideline (e.g. for expense reimbursement, allocating sales compensation, or compensatory time off for exempt employees).

  • “It is a very easy thing to devise good laws; the difficulty is to make them effective.”
    Viscount Bolingbroke (1678-1751)

It’s a funny thing about money and happiness. I have written about entrepreneurial motivation and affluenza as well as the fact that we don’t encourage individuals to found a startup. I found the following very relevant to discussions of money and happiness.

  • “There is a taint about money earned by honest work. By the time one has earned enough of it one has got into such a habit of work that one does not know how to idle.” Robert Lynd
  • “It costs a lot of money to die comfortably.” Samuel Butler
  • “Happiness consists of intense activity in congenial surroundings”
    Harold Nicolson
  • “Happiness, I have discovered, is nearly always a rebound from hard work.”
    David Grayson (pen name for Ray Stannard Baker)
  • “The cause of most discontents is rust: rusty hands, rusty minds. Make what you can, be it symphonies or pullovers, epics or mince pies–and sweet content will be yours.” Francis Brett Young

I have blogged about the value of partners and how successful entrepreneurship is an ongoing self-improvement program. I found this quote very appropriate for entrepreneurs.

  • “The young have aspirations that never come to pass, the old have reminiscences of what never happened. It is only the middle-aged who are really conscious of their limitations.”
    Saki (pen name for Hector Henry Munro)

Time is the Limiting Resource for Bootstrappers, Not Money

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, skmurphy

I think a bootstrapper’s true scarce resource is time. Determining how to be most effective with how you spend your time is more important than spending too many cycles on trying to save nickels. As a side effect of cutting out ineffective activities you will tend to cut unnecessary expenses.

“Lost wealth may be replaced by industry,
lost knowledge by study,
lost health by temperance or medicine,
but lost time is gone forever.”
Samuel Smiles

Last Day for Early Bird Rates for Oct-24 Getting More Customers

Written by Sean Murphy. Posted in Events, skmurphy

Just a quick reminder that today is the last day for early bird rates on our “Getting More Customers – A 90 Day Plan” workshop that is Saturday October 24 8:15 AM – 1:00 PM (Lunch Included) at the Pacific Business Center 1250 Oakmead Pkwy Suite 210 Sunnyvale, CA 94085 (408) 501-8800

Click here to Register:

We will cover a variety of proven marketing techniques for growing your business: attendees will select one or two that fit their style and develop a plan to implement them in their business in the next 90 days. As a part of your workshop registration, we will also follow up via e-mail and brief phone calls at two weeks, four weeks, 8 weeks, and 13 weeks to help you track your progress. You will leave with a one page action plan, a workbook, and 90 days of access to a private workspace with the workshop materials to enable you to execute one or two marketing strategies to bring your business more customers.

Cost (Lunch Included):

  • Early registration: $76
  • After Oct 15 $98 and free online workspace
  • After Oct 22 $145 and online workspace $28

For more details see “Getting More Customers – A 90 Day Plan

Update Tue-Oct-20: we are sold out, no walk-ins accepted.

Eleven Work Weeks–Or Less–Left in 2009

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, Legal Issues, skmurphy

I blogged about end of year issues last November in “6 Work Weeks or Less in 2008” and I thought I would issue the “Warning Dates in Calendar are Closer Than They Appear” a little earlier this year because a lot of new businesses need to take action in the next few weeks to get ready for 2010. Depending upon how you count it there are only about seven real work weeks left in the year.

  1. Oct-19: normal work week, but what the heck, take a weekday off and join us Sat-Oct-24 for “Getting More Customers.” [Full Week]
  2. Oct-26: it’s still possible to make sales calls that will lead to revenue this year. [Full Week]
  3. Nov-2: accountants are not that busy–compared to say next March when business taxes are due–if you don’t have one, schedule some appointments. [Full Week]
  4. Nov-9: If you have not incorporated, now is the time to get your paperwork in order. [Full Week]
  5. Nov-16: the last full week before Thanksgiving, if you are trying to close business it can get much harder between Thanksgiving and New Years Day [Full Week]
  6. Nov-23: a half week at best. We will have a Bootstrapper Breakfast Friday morning after Thanksgiving. [Half-Week]
  7. Nov-30: normally a good week, if you are not chasing opportunities this can be a good week to look back at 2009 and extract some lessons learned. [Full Week]
  8. Dec-7: normally a good week, if you have taken a look back at 2009 this can be a good week to look forward to 2010 and do some planning before the holiday spirit gathers full force. [Full Week]
  9. Dec-14: unless you are chasing end of year budget this is can be a very slow. But there will be at least one Bootstrapper Breakfast this week (Tuesday in Sunnyvale, and perhaps Friday in SF). [Slow Week]
  10. Dec-21: normally a good time to reconnect with friends and family; we will not hold a  Bootstrapper Breakfast on Christmas Morning. [Full Week only for hermits]
  11. Dec-28: last chance to file paperwork with a 2000 deadline; and surprisingly we will not hold a Bootstrapper Breakfast on New Years Day. [Full Week only for hermits]

Some logistics issues you should take care of now instead of playing catch up in early 2010:

  • If this is your first year in business get your accounting system (in most cases in the US this will be QuickBooks) in order now, schedule a meeting with your accountant (or interview candidates and select one) before December 11. If you are based in Silicon Valley we are huge fans of Ogden Lilly.
  • Take some time to do both a recap of 2009 and a look forward for 2010, assessing what are appropriate goals in light of continued economic difficulties in most industries.
  • If you’ve been working on a startup but haven’t incorporated yet, you may want to get all of your paperwork in order but postpone filing until the first week in January, in some states this will save you paying 2009 annual fees for a few weeks of operation in December and then 2010 annual fees. We like to see teams incorporate sooner rather than later if only because it gives you a vehicle to do business with that’s better than a collection of sole proprietorships.

Lean Startups Panel at SVASE Oct 29 in SF

Written by Sean Murphy. Posted in Customer Development, Events, skmurphy

I will be taking part in an SVASE panel on “Lean Startups–Do They Really Work” on Thursday October 29 at Cooley Godward in San Francisco. It’s a great panel:

The panel will address these questions and others:

  • What are the characteristics of a lean startup?
  • Will a lean startup business model lead to significantly greater returns for the investor?
  • What is a minimum viable product?
  • How do you define your market?

LOCATION: Cooley Godward Kronish LLP, 101 California Street, 5th Floor, San Francisco, CA 94111

  • 6:00 – 7:00 pm: Networking and hors d’oeuvres
  • 7:00 – 8:15 pm: Panel Discussion and Q&A
  • 8:15 – 8:10 pm: Additional Networking

Rate: Members – $20; Affiliates – $29; General Public – $49; Walk-ins add $10

Nanette Collins: Startup Culture is Critical

Written by Sean Murphy. Posted in 3 Early Customer Stage, EDA, skmurphy, Startups

I am happy to be able to offer another guest blog by Nanette Collins, her first was on “Volunteering, Lessons Learned from the Trenches.”  Nanette is an entrepreneur in her own right, she is the principal at Nanette V. Collins Marketing and PR with offices in Boston and San Francisco and one the web at

It’s All About Corporate Culture by Nanette Collins

In the 15 years that I have owned a marketing consulting business, my focus has been on working with entrepreneurs and startups in the EDA and semiconductor area. This has given me a ringside seat to grand successes, gut-wrenching failures and plenty of case study material. I have seen a lot and learned a few things in the process.

If an entrepreneur were to approach me for advice on the first steps to starting a business, I’d recommend thinking carefully about the kind of culture he or she wants to create. This effort will set the tone and help lay a foundation for success. A corporate culture based on a strong value system and an implicit understanding of ethical business practices will engender loyalty from the team, customers and various other stakeholders.

Corporate culture is much more than Six Sigma, the business management strategy du jour, or Quality Circles implemented by many large companies in the 1980s. It’s also more than the detailed corporate identity list of must haves –– name, logo, tag line, website and so on.

Instead, it’s a careful assessment by a company’s management on how it should operate and be perceived, based on a standard set of ideals that reflect its goals and objectives. The corporate culture should be fluid enough to be able to integrate attitudes, behavior, experiences and personal and cultural values.

A great example is a long-gone EDA startup called Viewlogic that hired the Boston Public Relations firm where I worked as an account executive in the mid 1980s. What quickly became apparent was the thoughtfulness and care the five founders –– Sal Carcia, Alain Hanover, Will Herman, Ron Maxwell and K.S. (Sri) Sriram –– had placed on building the company’s corporate culture. Maybe it was instinct. It may have been good management skills. More likely, it was the experience that they gained from working for a large corporation before going off on their own.

Whatever the motivation, it was the right thing to do, but it took a year’s worth of meticulous planning before they launched themselves. This company taught me many things, but the most valuable insight was the need to pay attention to corporate culture.

As a regular visitor to this company long acquired by a larger vendor, it was clear to me that the focus on corporate culture instilled a set of shared values with employees. The entire team seemed to have a set of customs and traditions that was this company’s and none other, which made it a terrific client and business partner.

Employees were dedicated, focused and all had a sense of purpose. That’s because they understood where they fit within the culture and knew what was considered appropriate behavior. During new employee orientation, Will Herman proudly carried into the session a three-ring binder with the presentation on the company’s corporate culture. This emphasis helped the company navigate through tough times and encouraged the team to keep going. After all, even with a well-conceived corporate culture, it wasn’t immune to the vagaries of a new business.

As the company grew in size and got more successful, a plaque was hung in the reception area outlining its five-point value system, underscoring the corporate culture. Many of the specific points seem to have been forgotten over time, but there are a few that stand out:

  • The first is an emphasis on professionalism and personal integrity that started with the founders who set the example for all.
  • A focus on ensuring a return to all stakeholders –– investors, employees, customers and partners –– may seem obvious, but well worth articulating to the entire team.
  • Providing value to customers may seem obvious as well, but who hasn’t experience lousy quality support from a formerly valued vendor? In recent years, many a large consumer company has been resoundingly criticized for their lack of customer service. A corporate culture focused on successful customers has to be a winning strategy.

I have worked with more than 30 startups and see too few founders give enough consideration to the culture of the firm that they are building, an unfortunate miscalculation. Too many entrepreneurs seem to think this is trite, quaintly old fashioned or don’t consider it at all. And yet, the benefits are numerous, from employee recruiting and retention to loyal customers and repeat business. With a strong corporate culture, there will be no ambiguity about behavior or ethics or what a company stands for.

Just as every startup has a product strategy and roadmap, it should also develop a set of corporate guidelines. It may be the blueprint for success.

I have included a 1985 article on Viewlogic for some background for readers who may be unfamiliar. The company was a pioneer in EDA but does not have a Wikipedia page or definitive history on-line that I could find. It’s from “D&T Scene,” IEEE Design and Test of Computers, vol. 2, no. 3, pp. 10-15, May/June 1985, doi:10.1109/MDT.1985.294730

Viewlogic unveils first CAE product at show Viewlogic Systems, a start-up company formed in October 1984, will show its first product, a desktop CAE system based on the IBM PC, at this year’s Design Automation Conference. The company also announced it has received $1.5 million in first-round financing, provided by company founders and venture-capital firms.

Viewlogic was founded by Alain Hanover, Salvatore Carcia, Ronald Maxwell, Sri Sriram, and William Herman, all from Digital Equipment Corporation. The company claims that its software addresses key elements of a design engineer’s desktop needs, providing facilities for design, documentation, and communication.

An open architecture approach gives users access to a reliable electronic design automation system that fits into existing CAE environments.

Sriram, Viewlogic’s director of marketing, says that the key benefit of the system is that it is priced at a level that allows each design engineer to have a system at his desk, where it is always accessible. The PC-based system is powerful enough for many applications, but the software, written in C, is also available in a version that runs on a DEC VAX operating under VMS for more demanding applications.

The software is currently being evaluated at five beta sites.

Do Not Pay to Pitch Investors

Written by Sean Murphy. Posted in 5 Scaling Up Stage, Funding, skmurphy

Jason Calacanis has gone a little bit off the dial on “why startups shouldn’t have to pay to pitch angel investors” but he is nonetheless correct that you should not pay large fees to potential investors for consideration or the right to present.

Our focus is helping bootstrapping technology startups but we do get startups at the Bootstrappers Breakfast who ask whether they should “pay to play” as well as those that have. I have yet to meet anyone in a startup who was happy with the outcome after paying a large fee to present. And by large I mean more than $100. There are a number of pitch preparation groups in Silicon Valley (e.g. VC Task Force, SDForum VC Funding SIG, SVB Competition, Under the Radar, Launch Silicon Valley) that are worth exploring before you write a large check to an Angel group in hopes of getting a larger check back.

The Angel Capital Association issued some guidelines in 2008 you should bear in mind (bolding added to body of text):

ACA Guidelines on Charging Entrepreneurs Fees for Applications and Presentations

In 2008, ACA recommends that angel groups charge entrepreneurs no more than nominal fees for applying for and/or making presentations for angel capital and that all fees are fully disclosed, ideally appearing on the group’s Web site. The fees should be no more than a few hundred dollars for applications and no more than $500 for presentations. Transparency to entrepreneurs is of utmost importance, so full information about fee amounts and what the fees are for should be included on the group’s home page and/or other prominent portions of the site and other important promotional materials. Angel groups should also provide a consistent program of high quality coaching, preparation and feedback to entrepreneurs participating in screening and presentation activities.

These guidelines match the practices of the great majority of ACA member groups, based on a 2008 survey. About two-thirds of responding members charge no application or presentation fees, and the other third mostly charged nominal fees. […]

ACA is an inclusive association that welcomes membership from any angel organization meeting the application criteria, but it does not endorse the practices of any group that levies large fees and/or does not forthrightly explain its potential fees to the entrepreneurial community.

Let me give an example from a Silicon Valley Angel group that I am familiar with: The Angels’ Forum. Here is what they say on their FAQ page for how they are different (bold added):

  • We are a small, stable and committed investor group with long history of investing together and low turnover. TAF only has 1-2 openings per year for new angels members.
  • All of our deals are reviewed and the due diligence is carried out by the angel investors, not by consultants looking for business opportunities.
  • Investments are always made via a single investing LLC.  This not only simplifies the entrepreneurs’ process but also protects our investing members’ privacy. The aforementioned TAF LLC will often lead the A round and be instrumental in bringing in venture coinvestors.
  • Entrepreneurs are not charged any fees to present, we don’t have “success” fees or any other fees for that matter.
  • TAF only invests in Northern California headquartered companies in order to devote sufficient attention and resources to the management and encourage their success.

Sometimes engineers feel that it would be more efficient just to get all of the possible investors in one room, make a single presentation, and get an answer right away. It’s somewhat similar to the challenge of finding early customers, the presentations are entirely different and the negotiation dynamics are different, but the process of improving your presentation is very similar. In fact someone asked this question on a mailing list I am on:

Ask yourself which is better:
Scenario A): Spend 2 weeks preparing biz plan/ppt/talk and $3,000 to present to 40-50 angels
Scenario B): Spend 20 weeks and $1,000 (coffee/lunch/gas/printing) and talk 1:1 with 20-30 angels

If you get feedback from each (or most) of the 20-30 angels on an individual basis that you use to improve your plan and your presentation then the 20 weeks is well spent. It’s not clear from your hypothetical situation whether you are able to make progress on your business in the absence of funding, but assuming that you can taking a retail approach (selling one by one vs. “wholesale” trying to sell all of them at once) allows you to improve your presentation and increases your odds for success substantially.

Look at it another way, let’s say that there were still two or three things missing/wrong from your presentation to the group of 40 Angels, what are your chances of being able to approach them again once they have heard you once. What are the odds that you will get feedback from more than a handful of them in a group setting? Talking to 40 at once seems more efficient of your time but it has a much lower chance of success than 20 or 30 sequential presentations–providing you take the time to get feedback and improve your presentation as you go, if you give the same presentation to the 20th as you gave the first you are wasting your time and the time of your potential investors.

Update Mon-Oct-12: following up on a comment left by Benjamin Kuo on an earlier post by Jason I came across two good posts by Joe Platnick of the Pasadena Angels, (I have highlighted some key quotes from each).

  • Angel Investors – Do They Charge Fees?
    • The best Angels make money the old fashioned way—working with entrepreneurs to generate investment returns upon exit
    • “Some reputable Angel organizations charge a nominal fee (~$50-100) to submit a funding application. The intent here is not to use this as a money making opportunity, but to provide a filter or sincerity test for the entrepreneur and to reduce the number of poor and incomplete business plans (aka junk) that get submitted.”
  • Friday Random Ramblings
    • “These pay-for-play scams remind me of the “modeling agencies” that charge people for representation, acting lessons and to have their headshots done.”
    • “Beware of for-profit angel groups based on a franchise model–as those are typically the ones that charge companies. If they don’t make money the old fashioned way and exclusively through investment returns, then they aren’t worth talking to.

Brad Feld, a VC with the Foundry Group, weighed in on this topic August 24, 2009 with “An Angel Investor Group Move That Makes Me Vomit” offering some key points to consider”

  • “I’ve personally made around 75 angel investments during two periods of time – 1994 – 1997 and 2006 – 2007.” [For details read the full post].
  • “I give you this background so that my statement below has some credibility.  I think it is grotesque that an organized angel investor group would charge an entrepreneur to present to their members.
  • And many of the members of organized angel groups aren’t actually angel investors.  I’d like to suggest that to “qualify” as an angel investor, you have to have made at least one equity investment of at least $25,000 in the past 12 months.  If you haven’t done this, you can’t call yourself an angel investor.

Update Tue-Oct-13: Jason Calacanis has posted a follow-up in “and now for some smoking guns (or part two of angels that charge)” that has a number of sourced comments on the problem. Worth reading, it’s written in a more temperate voice.

Update Tue-Oct-20: Bob Crimmins  left some very insightful comments on a Keiretsu Forum member’s website; here are some key excerpts but the whole set of his comments are worth reading:

“While I don’t fully understand the inner workings of Keiretsu, what I think I have learned thus far is 40%- 50% (huge numbers) of the startups that pay significant fees to Keiretsu get no funding.”

“In fact, I believe that Keiretsu’s incentives would be more properly aligned if they did have a stake in the outcome of the startups they represent. As it is, they have no incentive to ensure that every startup they put in front of their cadre of investors has a better chance than a coin flip of getting funded. [..] For example, Keiretsu could only take fees from startups who actually get funding, i.e., a success fee.”

“I would support a pay for performance model where the angel aggregator group only gets paid if they are successful in making a good match between their investors and the companies they charge fees to–no funding, no fees. Charging, say, a 2% – 4% success fee is utterly reasonable and in this scenario, the angel group has it’s incentives aligned with the startups and the investors, i.e., to make successful matches between entrepreneurs and investors.”

Update Tue-Oct-20 (more): Deborah Gage at PE Hub reports that “Keiretsu Forum to Drop Fees For Early Stage Startups” part of their Keiretsu Forum Thread.

Williams said the change is not a response to the recent attacks on the fees launched by investor Jason Calacanis […] but have been in the works for several months. Keiretsu also has no plans to drop fees for other entrepreneurs.

Tip For Finding Typos

Written by Sean Murphy. Posted in Rules of Thumb, skmurphy

If you want to find any typos, misspellings, grammatical errors, or sentences with missing words we have found the quickest way is to take a final look at the copy after the hard copy is back from the printers. Errors that eluded your notice (and those of the client, independent proof reader, and the rest of the team) are obvious under casual inspection.

This appears to be a variant of Murphy’s Law (though not the Muphry’s Law variation “if you write anything criticizing editing or proofreading, there will be a fault of some kind in what you have written”) that would go “typographical errors in your content that have eluded multiple layers of focused checking will be obvious upon casual inspection by the first uninvolved reader.”

So here’s the tip, when you ask someone to proofread something, give them a version that looks as close to the final printed form as possible (for example if it’s not fancy card stock tell them that they are looking at a Xerox copy of the final piece) and tell them “We just printed a thousand of these for next week’s event, what do you think?”

Growing The Pie in EDA, Part 2: As Revenue Shrinks So Does Analyst Interest

Written by Sean Murphy. Posted in EDA, skmurphy

Ed Lee and I have continued our conversation about the changing media landscape for EDA and addressed some issues that are relevant to getting back to growing the pie in EDA. What follows is an excerpts from Ed’s blog “What’s PR Got To Do With It?” with some hyperlinks added to provide more context, the original post was “Startups, Stories, and Press Releases

Sean: In EDA in particular, how many reporters, editors, market researchers, and financial analysts are there compared to 5 or 10 years ago?

Ed: Well, 5 or 10 years ago, we’d have two dozen or so key targets in the U.S., Japan and other parts of Asia and western Europe.

Sean: Targets? You mean more than editors?

Ed: Yep. Maybe a dozen reporters and editors, several market researchers, maybe half a dozen financial analysts, all of whom had audiences that affected the well being of EDA companies and of the industry as a whole. Today? Geez…can I count the number or reporters or editors on one hand? YES! There’s one market researcher: Gary Smith. The financial analysts are more or less not watching EDA any longer, and they don’t exist as entities working for investment houses.

Sean: In a technologically dynamic landscape, financial analysts would want to be aware of emerging startups, wouldn’t they?

Ed: They would. Today, these analysts cover some of the big guys, and rarely, and in essence, no one follows the space. Of course, there was Jim Cramer recommending Cadence. Now whether or not he’s a business analyst is another question.

I did count of the number of analysts covering EDA for a blog post in December 2006 “Coffee Break With Gary Smith” which marked Dataquest’s exit from analyzing EDA as an inflection point in the industry. Here it is:

EDAC lists 11 public companies

  1. ANSTAnsoft5 analysts
  2. ARMHYARM Holdings4 analysts
  3. CDNSCadence11 analysts
  4. LAVAMagma Design Automation7 analysts
  5. LVGNLogic VisionNo analyst coverage
  6. MENTMentor Graphics7 analysts
  7. MIPSMIPS Technologies4 analysts
  8. PDFSPDF Solutions6 analysts
  9. SNPSSynopsys11 analysts
  10. SYNPSynplicity Inc.3 analysts
  11. VIRLVirage Logic5 analysts

There is a fair amount of overlap in coverage but it looks like there are perhaps 16-18 analysts covering at least one company in the industry and a core of about a dozen covering at least three. As a contrast, Xilinx has 27 analysts covering it and Altera has 30. These two FPGA players probably invest as much in CAD tools as many if not most of the companies listed above.

Updating that for today yields the following changes

  • Ansoft was acquired by Ansys and is no longer a member of EDAC or an exhibitor at DAC.
  • ARM Holdings is not a member of EDAC or an exhibitor at DAC
  • LogicVision was acquired by Mentor
  • Synplicity was acquired by Synopsys

And a comparable table:

  1. CDNSCadence6 analysts (down from 11)
  2. LAVAMagma Design Automation2 analysts (down from 7)
  3. MENTMentor Graphics4 analysts (down from 7)
  4. MIPSMIPS Technologies3 analysts (down from 4)
  5. PDFSPDF Solutions3 analysts (down from 6)
  6. SNPSSynopsys6 analysts  (down from 11)
  7. VIRLVirage Logic1 analyst (down from 5)

Xilinx has 20 analysts (down from 27) and Altera has 22 analysts (down from 30). This this time I am listing the analysts and which companies they cover (except that I am only listing where an “EDA analyst” also covers Xilinx or Altera, not the others who cover the two FPGA firms but none of the EDA firms).

  1. Canaccord Adams – Bobby Burleson: Magma, Mentor, PDF Solutions, Xilinx, Altera
  2. Craig-Hallum – Tony Stoss: MIPS
  3. Cowen & Co. – Raj Seth: Cadence, Synopsys, Xilinx, Altera
  4. DA Davidson – Matt Petkun: Cadence, Mentor, PDF Solutions, Synopsys
  5. Deutsche Bank – Tim Fox: Cadence, Synopsys, Xilinx
  6. JPMorgan – Sterling Auty: Cadence, Mentor, Synopsys, Xilinx, Altera
  7. Kaufman Brothers – Suji De Silva: MIPS
  8. Needham & Co. – Rich Valera: Cadence, Magma, Mentor, Synopsys, Virage
  9. Noble Financial – Gary Mobley: MIPS
  10. RBC Capital – Mahesh Sanganeria: Cadence, PDF Solutions, Synopsys, Xilinx, Altera

The three analysts for MIPS don’t cover anyone else in the industry so the more accurate figure may be 7: Ed’s answer checks out. Also at this time MIPS and PDF Solutions are not listed as exhibitors for DAC 47.

There is an interaction between poor financial performance and lack of analyst coverage, but in three years the number of analysts covering EDA has effectively been cut in half. There have been no new IPO’s and a number of notable VC-backed firms that simply ceased operations without being acquired: Athena Design, Golden Gate Technology, Liga, Silicon Design Systems, and Tera to name a few. Reshape raised $31M and sold assets to Magma but no employees were hired. Daniel Payne blogged about this last December as “Merry Mergers.”

Net net for startups: there are a number of factors that will make it hard to attract investment including six quarters of year of over year declines of total industry revenue and a loss of about half of the analyst community. The fact that investment will be harder to attract means that customers will be more concerned about long term viability and will be even harder to close than they have been historically. The “all you can eat” deals offered by the majors also make it harder to find a foothold unless you are well differentiated. The industry needs to re-think how it will cooperate and how it will compete so that we can start growing the pie again.

The last revolution in EDA was in the 1988-1994 timeframe. Vendors transitioned from selling turnkey systems (e.g. CALMA, Applicon) to workstations (e.g. Mentor, Daisy, Valid) to software (Cadence, Synopsys, Mentor). Customers transitioned from gate level design to RTL based design (e.g. widespread adoption of Verilog, VHDL, and RTL Synthesis).

The last revolution in EDA was led by startups: e.g. SDA, Gateway, Synopsys, Viewlogic. It’s time for another one.

Getting Back to “Growing the Pie” in EDA

Written by Sean Murphy. Posted in EDA, skmurphy

From the EDAC website “EDA Consortium News” page the last six quarters of EDA Industry Revenue announcements (all numbers in millions):

  • Jul-3-08: Q1/08 declined 1.2% to 1350.7 vs. $1366.8 in Q1/07.
  • Oct-9-08: Q2/08 declined 3.7% to $1357.4 vs. $1408.8 in Q2/07
  • Jan-12-09: Q3/08 declined 10.9% to $1258.6 vs. $1412.1 in Q3/07.
  • Apr-7-09: Q4/08 declined 17.7% to $1318.7 vs. $1602.7 in Q4/07.
  • Jul-15-09:  Q1/09 declined 10.7% to $1192.1 vs. $1334.2 in Q1/08
  • Sep-30-09: Q2/09 declined 15.8% to $1,125.5 vs. $1,335.9 in Q2/08.

Note that restatements mean that numbers announced for earlier quarters don’t match those in newer announcements and understate the amount of decline in Q1 & Q2 of 2008.

So where does this leave startups in EDA? In February of 2007 Rick Carlson, VP of Sales at Verific, wrote an Editorial in Electronic Business entitled “EDA Industry Needs Revitalizing.” Here are some excerpts:

It wasn’t long ago that the electronic design automation (EDA) industry was filled with boundless enthusiasm and excitement; the possibilities seemed endless. We were at the top of the world, attracting the best of the best and enabling great things, because EDA was—and continues to be—where electronics begins. Many, if not all, of the electronics industry breakthroughs over the last several decades would not have been possible without the software and hardware developed by EDA vendors.

Sadly, somewhere along the way, the EDA community lost its optimism and sense of mission, and it’s shocking. The poor reputation and industry-wide low self-esteem are totally undeserved, and it’s time that we climb back to the top. […]

Let’s cull some nuggets of wisdom from [Einstein] for inspiration.

  • “We can’t solve problems by using the same kind of thinking we used when we created them.”
  • “Imagination is more important than knowledge.”

[…] Let’s use our collective imagination to revitalize EDA and move the industry into the next phase of its success. After all, it wasn’t all that long ago that we thought we were changing the world … and we did!

Mr. Carlson’s words, written in 2007, are even more urgent almost three years later with the last six quarters showing revenue declines in the EDA industry as a whole. Who is Rick Carlson? On the Wikipedia page for Daisy Systems you can learn that

Dave Millman and Rick Carlson founded EDAC, the industry organization for Electronic Design Automation vendors.

But if you read to the bottom of the “EDA Consortium Background” Page you see this:

1989: Electronic Design Automation Consortium (EDAC) is formed. First officers are elected.

with neither Rick Carlson nor Dave Millman‘s name mentioned anywhere on the site. I think it’s a good time to recognize their contribution and take some of Rick’s advice to start growing the pie again in EDA.

Update Oct-9: This series continues in “Growing the Pie in EDA Part 2: As Revenue Shrinks So Does Analyst Interest.

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