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Tackling EDA’s Broken Business Model: Blaze DFM CEO Jacob Jacobsson (Part 1)

Posted on Thursday, Jul 3rd 2008

There is a common phrase, ‘don’t bite the hand that feeds you’. Business, high tech business in particular, has a series of interdependencies which have evolved into an ecosystem. This is particularly apparent in EDA, where Intel and AMD rely on the tools provided by EDA vendors to design a chip.

However, by playing EDA vendors against each other, these large semiconductor companies are forcing margins to unsustainable lows, a lose-lose situation. EDA vendors are struggling to survive when they should be engaged innovation. Innovation, including business model innovation, is beginning to emerge on the fringes of EDA. Here I talk with Blaze DFM CEO Jacob Jacobsson about the EDA environment and how a small company you may have never heard of, is slowly changing the game.

SM: Jacob, tell me about yourself before we get into your companies. Where do you come from, what is your history?

JJ: I come from Sweden, the oldest of four kids. My family has a long academic background but not much of a business background. It was academia for the sake of academia. There was no plan for me to come to Silicon Valley. I would probably have done the same thing except a couple things happened which changed my path.

The first was that everyone in Sweden was conscripted for military duty. I got accepted for what is the Swedish Defense Language Institute as an interrogator in Russian. Russian was the language in the Cold War to the extent that if you could find an elite school in Sweden, this was it. I had a schoolmate who became the personal advisor for Boris Yeltzin. The ‘who’s who’ of Sweden went there. Everyone who came there had been best in their class. Suddenly I was confronted with a hundred other people who had also been the best. They would whittle down a class of the 100 best high school graduates to about 25 who would graduate. I was one of those who graduated, and that is where I learned I can be really, really good if I work really, really hard.

I went to engineering school because it was the hardest thing you could do. I started out with EE and then did Computer Science. I had two masters and started on my PhD, which I never finished because I wanted to work. This was in 1978 and the semiconductor industry was small, especially in Sweden where we had just two companies. I joined one and later the other.

At the time we would design with pencil and paper, so I got the opportunity to develop a schematic entry system. I developed that for the company and felt really good about it. I then read about two companies in the US, Daisy Systems and Mentor Graphics, who offered the same type of product commercially. My first reaction was that my product was much better and could do much more. I wrote a letter to Daisy Systems and was invited for an interview. They offered me a job to run automated place and route tools.

I developed, by trial and error, a place setter and then a routing system. I suppose they were reasonably good but they had all the mistakes expected in software of that age. I was lucky enough that when I joined that they had an IPO. It was eye opening for me that not only did I have the opportunity to work with bright people but I could actually get some financial reward from that as well.

SM: Which is not permitted in socialism!

JJ: Well, I can discuss that! Where I come from the mentality of academia has its own reward. Financial reward was not one of the things high on our priority list. I did stay beyond the peak of the stock.

I had semiconductor background, so I got to go out and work with our customers directly. One of the things that struck me was that we would sell a product for only $100,000 or $200,000. We were so strapped for cash that every purchasing cycle seemed to come right before the quarter ended and we would lower our prices quite a bit. Before, when I had sold hardware bundled with software, there was a limit as to how low we could go. Here there was no limit.

There was an enormous gap between the value we could open up for our customers and what we got back for it, which I started to notice this in 1985. We somehow did not convince our customers that it would be far more expensive for them if we just walked away. Maybe we needed the money too much.

This segment is part 1 in the series : Tackling EDA’s Broken Business Model: Blaze DFM CEO Jacob Jacobsson
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