You never know with CEOs these days. There was a time when there was a certain order to things, a level of formality. CEOs would set themselves apart, and, in emulation of that, so would their teams. Mahogany Row represented the corporate pantheon, and veneration was the expected order of the day. Fallibility would be, if not brushed off outright as beyond possibility, at least not broached. We’ve probably all known some old-school CEOs. The ones you can’t speak to unless spoken to first. The ones that like to keep their execs guessing what it is they want. The ones that are all stick, no carrot. The ones that change the rules frequently and arbitrarily so that no one gets too comfy.
But these days, well, you just never know. Heading into a conversation with Magma’s Rajeev Madhavan, I wasn’t sure what to expect. I had met him only briefly as he prepared for his MUSIC keynote speech a couple months ago. At that time, like anyone, he was preparing to go on stage, and so, while congenial, his mind and style were focused on the upcoming presentation. Not necessarily representative of what his day-to-day style might be.
Rajeev is a founder and CEO of Magma Design Automation. Magma is one of the “big four” EDA companies, although the smallest of them, behind Mentor, Synopsys, and Cadence. As such, while not a behemoth, at just over 700 employees following some recent cutbacks, they’re not a small company either. Rajeev was a founder, but, as the company grew, you might expect that some of the trappings of corporate-dom could have crept in.
Photo courtesy of Magma Design Automation
As he walks casually into the room wearing jeans and a polo shirt, however, any such speculations about stuffiness pretty much melt away. Clearly energetic, he still maintains an easy style and good, direct eye contact. There are a million other things he could be doing, many arguably more valuable than this interview, but, for the moment, he is there, and seems to be all there. No constant checking his watch, and the phone seemed under control. Whatever his motivational style, it doesn’t seem to be one involving simple force of ego if his demeanor at the moment is any indication.
He is the product of the traditional career start, as envisioned by his family, that gradually took on a more individualistic turn, somewhat to his parents’ concern. From the classic big-company beginning at BNR (remember them?), he moved to Cadence and then left to start LogicVision, followed by Ambit, followed by Magma. “My mother thinks I can’t hold a job,” he jokes.
Of his start-ups, Ambit was acquired by Cadence in 1998, and LogicVision was just recently acquired by Mentor, following what appeared to be an unsuccessful hostile bid by Virage. Asked if he’s got any proud-papa feelings about the LogicVision exit, he chuckles because Mentor had actually been presented an opportunity to acquire LogicVision back in the 1992 timeframe. “I flew up there, I spent a lot of time, a whole two days in Wilsonville, we had a lot of discussions, and it’s ironic that it took 16, 17 years.”
The remaining startup is where he still is, and it is clearly an unfinished project in his mind. There have been some notable hiccups along the way, and if you were to figure out which polysyllabic word was most frequently uttered by him during the discussion, I’d put my money on “litigation.” The patent struggle with Synopsys was obviously a formative, painful struggle. “I have a whole book I could probably write,” he comments, visibly frustrated at the fact that he’s had to put so much effort into that instead of running a technology business.
For those that missed the details, the synopsis (sorry) of events is that Rajeev hired a technologist, Dr. Lukas van Ginekken, from Synopsys when starting Magma. Magma developed technology and patented it. Synopsys said that the ideas were developed by van Ginneken while still at Synopsys, so Synopsys should own the patents. They sued van Ginneken as well, who made a declaration – rightly or wrongly (this would be hotly debated, I’m sure) that supported the Synopsys claims, which got his personal lawsuit dropped. Meanwhile, Magma did a deal with IBM that included cross-licensing, and then a judge ruled that IBM would have been co-owner of the patents that Synopsys was claiming based on a relationship between Synopsys and IBM. That being the case, it looked like, regardless of who owned the patent, Magma had rights to use it under its own deal with IBM. Shortly thereafter, the suits were settled and some money changed hands and everyone agreed to play nice and not file any more lawsuits for a while. We can pause here to let your (or at least my) head stop spinning.
Of course, this took a while – opening salvos were fired in September 2004, and the settlement came in March of 2007 – and had a dramatic impact, from a practical standpoint, on Magma’s future. Being cautious about the uncertainties of any legal outcome, they decided to execute a Plan B in case they were enjoined from using the technology they thought they owned. They developed completely new software that avoided the disputed material. That’s a whole new project that had to go through the same maturation curve as the original software.
Madhavan clearly emanates dismay at the cost, both in engineering terms and in pure dollars. He recalls having a cell phone conversation in his car with his head lawyer, complaining that the fees were too high, that they were costing “… ten times the cost of my engineering resources.” His youngest daughter was in the car at the time, and the next day, when asked what she wanted to be when she grew up, she replied, “A lawyer, because my dad says they make ten times more than engineers.” Which is not a vision he shares for her future.
Show me the value
Having put this episode behind them, he is clearly leading a return to focus, trying to transform the company back into a lean, start-up-oriented organization. They’ve gone through a painful period of getting the new software up to par; even though, in retrospect, they didn’t need to jettison the disputed technology, they went forth anyway with the new “clean” approach. He focused on development and spent untold hours with his R&D team to get the tools sturdy and robust. They had to present to him weekly and, if they were late, had to go to his home on Saturday to meet.
And, he says, as of November, they reached the end of that phase, and now he’s about to start heading out into the world of customers again, taking his product managers with him, focusing on marketing and sales, spreading the word. “From June 30, my address is United Airlines,” he quips.
But he articulates a clear vision for the nature of products that Magma should be selling: differentiated. And he’s holding his managers accountable for justifying the unique value that their projects bring. (“Value” is another word he uses a lot.) “I shout at people if they can’t explain … why I should keep your product alive. If they cannot explain in 30 seconds to me, that product should not be kept in the company.”
Which means, of course, that Magma’s more recent retrenchment from the allure of offering a “full flow” is not a tactical retreat, but a strategic change of vision. “We have a tendency in this industry of trying to package everything as ‘I have a flow.’” It’s a kind of “real men have full flows” mentality that he sees as false. Each piece of the offering, he avers, should have differentiated value in its own right, should stand on its own. He points to Cadence’s attempt at synthesis: “The goal was to be as good as Synopsys. It went nowhere.” And to Synopsys’s current foray into analog: “The goal is… to be as good as Cadence. There’s no point.”
In fact, he sees the full-flow approach as being a detriment to the bottom line. He paints it as nothing more than offering a sales kit mixed with high- and low-valued tools. As a result, “you’ve actually trashed your pricing by doing that,” since the lowest-common-denominator value for the kit tends to get assessed, and your “stars” are devalued by your “me-toos.” So he stands strongly behind ensuring that Magma’s products have defensible value that can be sold against a ho-hum incumbent that may have arrived by default as part of someone else’s flow: “What they get for free is worth free.”
He also sees this approach as addressing the oft-raised question about whether EDA has a future. Yes, leading-node mask sets are getting outrageously expensive and will be beyond the reach of all but the richest ten or so companies. But other companies can stay back a couple nodes and add value by integrating complex analog functions with the easier digital circuitry to provide unique products that help humans interact more naturally with machines. This is reflected in their focus on analog/mixed-signal (AMS) technology – clearly foremost in his mind as he envisions who will profit from using Magma’s tools going forward.
Getting their momentum going again appears to have taken a lot of motivation from Rajeev. And in a world where hype can sometimes matter more than reality, he avoids the tendency to paint too rosy a picture of a challenging situation, to be seen as nothing more than a cheerleader, at the cost of credibility. “I say the truth as it is to my employees in employee meetings. I actually do not sugar-coat it.” Having articulated what the problem is, he then explains what the plan is to right things again.
And there’s no doubt that he sees things that need to be righted. He was not happy with the way some of the recent R&D was going and got deeply involved to keep things on track. Having done that, he is now tackling the challenges he sees in sales and marketing. He looks back fondly a the time when they would win seats by finding a customer with a specific problem, solving it, and moving on to the next department or company with a need for their solution. “Somewhere in between my sales guys got a little cocky and sat on the fax machine and got a few orders coming and thought, ‘Hey, I can do this repeatedly.’”
He has taken marketing under his wing to refine and hone the messages, to articulate clear value, to ignore the 25 features that everyone else has and focus in on the one or two that are really different and of high value. For you board-game players, it’s Boggle: the words you think of in common don’t count. Only the unique words count. He tells his team, “I want you to know your competitor’s website better than you know your own website.” They have to know what their customers need. Obvious things, perhaps, but the kinds of things that can get sidetracked when legal matters dominate.
Some of his urgency comes from watching his alma mater Cadence. “When I was at Cadence, we had Joe Costello running the company… [It was a] very outwardly-bound culture.” He sees that in contrast to the current Cadence, where only internal ideas have been promoted, where “not invented here” (NIH) syndrome is too prevalent. “They think they are good in certain areas where they are not at all good.” And he sees Magma showing some similar tendencies. “We drank some of our own Kool-Aid, [and] the Kool-Aid had lost some of its punch” following the litigation. Which inevitably leads to the focus on going back and re-justifying value.
From a personal standpoint, Rajeev has also altered his style dramatically from what it was at Ambit, his prior company. “They would be shocked” to know his current way of dealing with his people. During the early phases of Magma, “I actually knew pretty much everybody’s spouse, and whenever I [went] to a remote R&D… or sales facility, I would spend time with the family.” This worked until the company had somewhere north of 300 people. “I have to re-bring some of that back in over the next six months to change the culture within the company.”
This style isn’t something that came naturally to him; he had to cultivate it, to put personal processes in place for such things as simple as remembering names. (Reassuring words indeed for any of the many other people with a secret weakness when it comes to names.) He certainly doesn’t sugar-coat his own self-assessment. “At… Ambit I was the opposite. Even though I had only ten people, I didn’t know their families. [Sometimes] I couldn’t even remember… their second names, and I did a bad job.” This is the kind of straight talk he appears to use, whether discussing the pros and cons of his own or his team’s efforts.
Of course, hidden below all of this effort to rebuild the culture to reflect small-company values lurks a small-company guy. And, you think, he must be itching to shake all this off and start something new. As a matter of fact, he is very open about that urge: it is there. But try and pin him down on what or when that next thing might be – or, harder yet, just try asking what retirement might look like: you’ll get nowhere.
Rajeev has three major goals with respect to Magma: he wants the product line to reflect a #1 position in anything they do; he wants the employees and shareholders to be in a good position; and he wants the sales processes to be better tuned. When those things are perfect, then he says he’ll consider the next thing. Which is, of course, a very convenient out, since, as he’ll freely admit, he’s never been in a position where those three things are perfect. No matter; any questions beyond Magma get redirected back to these three points. Makes you suspect that someone has asked this line of questioning before.
Of course, there is one possible other solution: there’s been talk on the street of Magma being bought by one of the other big guys (notably Cadence), but that’s all rumor, and not something discussed in official discourse, and certainly not something that he raises as a possibility. If that happens, then presumably Rajeev is freed up to consider options that he’s keeping under wraps for now.
This focused, structured style even rears its head in the one place least likely for it to be required: his one and only pastime, raising roses. A self-styled enthusiast, his rose count has now surpassed 1200, he thinks. It’s an activity for which he considers himself wholly unsuited. “My older sister will tell you that… I used to destroy her garden all the time. I never really liked this stuff.”
And with that has crept in a whiff of chaos: the rose garden has grown somewhat willy-nilly, with plants placed here and there, with a kind of organic evolution of the plot. But rather than this being an outlet for the out-of-control, even this elicits some regrets: he wishes he’d been more organized about structuring the garden and cataloging what he has.
As this is written, Magma has just come off of their latest earnings report. They are now profitable and cash-flow positive, and they beat their guidance. But Wall Street isn’t happy for some reason, having knocked the stock down by about 10% today. Perhaps it’s the bookings and backlog (confounded by a somewhat lower renewal rate as well as shorter renewal periods). Perhaps it’s something else. But it reinforces one unavoidable fact: all the vision, all the talk of value, all the motivation in the world are worthless if the shareholders aren’t happy with current performance or their view of the upcoming short term.
And it reinforces that, perhaps even more than motivating his own internal team, Rajeev has to motivate the investors. That’s covered by one of his key goals, of getting the investors into a good position. Acquisition talks aside, there’s obviously a lot of work to do there, if today’s mood is any indication. Perhaps this validates his sidestepping discussions of anything beyond Magma. While it’s important to distinguish Rajeev Madhavan the man from Magma Design Automation the company, it’s clear that in very crucial ways, they may not be easily separable for a while.