Success factors for value creation in
the era of technology convergence
Serge LeefVice President, New Ventures
General Manager, System Level Engineering DivisionGeneral Manager, System Level Engineering Division
Mentor Graphics Corporation
May 2012
Serge Leef background
Arizona State University: BSEE (1983), MSCS (1985)
Intel: 4 years — Software Engineer � Senior CAD Development Engineer
� Switch & RTL Simulation, Synthesis, APR
Microchip: 2 years — Manager, CAD/CAE
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— Manager, CAD/CAE � RTL Simulation, APR, Floorplanning
Silicon Graphics: 3 years— Director, Corporate Design Automation
� Cycle Simulation, Logic Synthesis, Co-verification
Mentor Graphics: 21 years— Engineering Manager � Engineering Director � GM � VP
� GM, System Level Engineering Division� VP, New Ventures
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SYSTEM DESIGN CHALLENGE
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SYSTEM DESIGN CHALLENGE
Serge Leef, Information and Communication Technology Research Forum, May 2012
Progression in System Design
1970 1980 1990 2000 2010 2020
Digital SignalProcessing
MultiprocessingGigabit,
Non-volatileMemory
Integrated System Design
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Microprocessor
DesktopComputer
Packaged IC
Military & Aerospace
Communications
Consumer
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EnergyMedical
IndustrialAutomotiveAerospace
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� Domain-specific
� Highly heterogeneous
� Distributed over networks
Highly interactive with physical world
Attributes of Embedded Systems
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� Highly interactive with physical world
� Require multiple disciplines to implement
� Validated mainly through physical prototyping
� System integration and test organizations are pivotal
� Subject to rigorous quality, certification, qualification rules
Serge Leef, Information and Communication Technology Research Forum, May 20125
Typical System Architecture
PSU / Power ManagementPSU / Power ManagementIn
puts
sig
nal
Inpu
ts s
igna
l co
nditi
onin
gco
nditi
onin
g
Inputs Processing Inputs Processing FPGA or ASICFPGA or ASIC
CPUCPUControl Control
AlgorithmsAlgorithms
Outputs Processing Outputs Processing FPGA or ASICFPGA or ASIC
Out
puts
sig
nal
Out
puts
sig
nal
cond
ition
ing
cond
ition
ing
Cockpit commands,
Sensors(e.g. speeds, pressures,
temperature,
Solenoids,Valves,Stepper Motors,Sensor
Excitation
Portable Energy Source (Battery + Alternator)
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Inpu
ts s
igna
l In
puts
sig
nal
cond
ition
ing
cond
ition
ing
AlgorithmsAlgorithms
Out
puts
sig
nal
Out
puts
sig
nal
cond
ition
ing
cond
ition
ing
temperature,valve position)
Comms
Excitation signals,Comms
Bypass controlsBypass controls
Serge Leef, Information and Communication Technology Research Forum, May 20126
ECUNETWORK
PLANT
System Example: Car
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� Hundreds of PLANTs
� 40-80 ECUs (4-32 bit CPUs)
� Up to 10 NETWORKS of 4+ distinct types
Modern vehicle is a complex, distributed compute and control system
Serge Leef, Information and Communication Technology Research Forum, May 20127
System Example: Airplane
3rd network
ServerTerminal
Display Switch
Router
WindowsGalley
Seats………
Lights
Avionics(AFDX + ARINC 429 - CAN) IFECab OpsA/C Ops
S ystem A S upplier xx Su pp lier yy
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IM A
LR U
LR U
S W ITC H
LR U
LR U
IM A A FDX
w orld
C A N node 1
C A N node 2
C A N node n
C AN n od e 1
C AN node 2
CA N node n
System B
SW ITC H
L R U = Line Re place able U nit IM A = In teg rated M o dular A vion ic (G a te w ay function)
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System Example: Guided Missile
In-flight power management for guidance �
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Post-impact detonation �
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Medical: Multi-physics interaction and test
Hospital-based
Pacemaker
Surface ECG
Blood Pressure
TemperatureData Link
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� Multi-domain, multi-physics medical system� Human body physiological sources
� Electrical sensors and actuators
� Ultra-compact low-level embedded software /
digital control
� High performance GUI and medical monitor
embedded software
Hospital-basedremote heart monitor
Blood Pressure
Serge Leef, Information and Communication Technology Research Forum, May 201210
INNOVATION OPPROTUNITIES
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INNOVATION OPPROTUNITIES
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System Design Challenges
� Design requirements are becoming more complex
� Lower cost, lower power, lower weight
� Increased performance, reliability, or safety
� Convergence of multiple disciplines
� Everything has to work together: Digital, Analog, Software, Mechanical, etc.
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Digital, Analog, Software, Mechanical, etc.
� Multi-company, distributed supply chains
� Complicated communication via a number of domain-specific file formats, tools, and protocols
� Design optimization
� More than just getting a design to ship, a successful project relies on predictable schedules, and optimization of Reliability, Performance, Manufacturing Cost, and Life-cycle Cost
Serge Leef, Information and Communication Technology Research Forum, May 201212
SpecificationsSpecificationsSpecificationsSpecifications
How do you design the whole system?
Embedded Embedded Embedded Embedded SiliconSiliconSiliconSilicon
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DigitalDigitalDigitalDigital AnalogAnalogAnalogAnalog
Mixed Mixed -- SignalSignalMixed Mixed -- SignalSignal
Sensors & Sensors & ActuatorsActuatorsSensors & Sensors & ActuatorsActuators
Plant / Plant / MechanicalMechanical
Plant / Plant / MechanicalMechanical
Application Application SoftwareSoftware
Application Application SoftwareSoftware
Platform Platform SoftwareSoftwarePlatform Platform SoftwareSoftware
Embedded Embedded SoftwareSoftwareEmbedded Embedded SoftwareSoftware
MultiMulti --PhysicsPhysicsMultiMulti --PhysicsPhysics
SiliconSiliconPlatformPlatformSiliconSilicon
PlatformPlatform
Serge Leef, Information and Communication Technology Research Forum, May 2012
DataDataTrafficTrafficDataData
TrafficTrafficProtocolsProtocolsProtocolsProtocols
NetworkNetworkNetworkNetwork
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Need to Remove Walls between Disciplines
MechanicalMechanical ElectricalElectrical
ElectroElectro--MechanicalMechanical
Sensors & Sensors & Actuators &Actuators &
�� ThermalThermal�� Mechanical Mechanical �� FluidicFluidic�� Mass TransferMass Transfer
Analog, Digital, & Analog, Digital, & MixedMixed--Signal circuitsSignal circuits
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ControlsControlsSoftwareSoftware
ControlControlCircuitsCircuits
Actuators &Actuators &SpaceSpace
Digital Digital ControlControlMicroMicro--
controllerscontrollers
DSP DSP ProcessingProcessing
Transfer Transfer functionsfunctions
�� Advanced AlgorithmsAdvanced Algorithms�� Signal Processing Signal Processing �� Embedded ControlEmbedded Control�� SupervisorySupervisory�� GUI & PresentationGUI & Presentation
––
++
++
CmdCmd
AngleAngle
ieqsieqs
iesies
ww
kkss
Serge Leef, Information and Communication Technology Research Forum, May 201214
How to Pursue Innovation in System Design?
� Big companies rarely succeed in innovating� Stagnant organizations resistant to change (IBM PC example)
� Risk/reward ration is all wrong ($10M exit event)
� Cycle: dissatisfied employees to entrepreneurs � Purchase model: front and buyout
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� Solution� Accept a combination of organic and external
� Looking at 100 opportunities per year
� Closely examined 20
� Bought 7 - ranging from $2m to $70m
� Each GM seeks related or augmenting startups
� I looked at 10 last year: Sweden, Germany, Hungary, US, France
Serge Leef, Information and Communication Technology Research Forum, May 201215
INNOVATION SUCCESS FACTORS
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INNOVATION SUCCESS FACTORS
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What makes a good environment for
technology ideas and start-ups?
� Location, public policy and culture play key roles
� Creativity is only one factor leading to possible success
� Elements essential for successful innovation ecosystems:
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� Education infrastructure
� Business-friendly climate
� Risk capital ecosystem
� Culture of failure
Serge Leef, Information and Communication Technology Research Forum, May 201217
Education Infrastructure
� University research� Mechanisms for funding relevant programs
� Relationships with professors who recommend best students
� Entrepreneurial professors drive commercialization of inventions
� Technology transfer� Rights should be transferrable or licensable at predictable cost
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� Rights should be transferrable or licensable at predictable cost
� If not predictable, established companies do not get involved
� Government links� Governments are NOT good venture capitalists
o Typical goals are prestige and employment
o GREED must be the key driver for capitalist enterprises
� Governments can play a role by focusing researcho Select areas of national interest
o Facilitate through funding University/Industry partnerships
Serge Leef, Information and Communication Technology Research Forum, May 201218
Educational collaboration examples� France: IRT ���� Large scale initiative
� Government objective:o Keep the French research competitive
o Strengthen the link between research and industry
� Allocated millions of € to improve GDP growth via tech sector
� 5 centers of excellence: biotech, nuclear, semi, aero, systems…
� Establishes locations for each; facilities free to participants
� Each center is driven by 3-way partnership amongo Universities, Government Research Labs and the Industry
o 50% to 90% of personnel costs are subsidized
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o 50% to 90% of personnel costs are subsidized
� USA: CHREC ���� Small scale initiative� NSF (National Science Foundation) driven consortium
� Focus on “Domain-specific Computing” via reconfigurable hardware
� 4 University research teams: UF, VT, BYU, GWU
� 10-20 industrial sponsors providing funding and direction
� Technology transfer options available to the sponsors and can be
licensed to other companies within NSF-inspired framework
� Great source of future hires for the industrial sponsors
Serge Leef, Information and Communication Technology Research Forum, May 201219
Business Friendly Climate
� Corporate registration� 2-5 days in US, Canada, Australia, New Zealand
� 152 days & 50 steps in Brazil
� Legal system� Strong protection of intellectual property
� Means to enforce contracts
� Rapid adjudication of disputes
� Bankruptcy laws mitigate downside risks to
Most and least friendly countries to small biz
Rank CountryFSB
Score
1 New Zealand 2.03
2 United States 2.01
3 Canada 1.99
4 Australia 1.93
5 Singapore 1.88
6 Hong Kong 1.86
7 United Kingdom 1.85
8 Ireland 1.85
9 Denmark 1.75
Most and least friendly countries to small biz
Rank CountryFSB
Score
27 South Africa 1.32
28 Malaysia 1.31
29 Colombia 1.29
30 Russia 1.29
31 Austria 1.28
32 Mexico 1.26
33 Turkey 1.26
34 Korea 1.25
35 Czech Republic 1.24
36 Italy 1.2
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� Bankruptcy laws mitigate downside risks to
investors
� Tax policies� There should not be any business taxes while
the startup is in the investment mode and has
revenue below certain threshold
� Employment regulations� Need to be able to rapidly adjust to funding and
business conditions
� Labor costs must scales smoothly and
predictably
Serge Leef, Information and Communication Technology Research Forum, May 201220
9 Denmark 1.75
10 Iceland 1.75
11 Norway 1.7
12 Sweden 1.64
13 Japan 1.64
14 Finland 1.6
15 Thailand 1.6
16 Chile 1.59
17 Israel 1.59
18 Latvia 1.57
19 Switzerland 1.57
20 France 1.5
21 Jamaica 1.49
22 Netherlands 1.45
23 Belgium 1.45
24 Germany 1.37
25 Portugal 1.36
26 Peru 1.33
36 Italy 1.2
37 Taiwan, China 1.15
38 Spain 1.11
39 Hungary 1.11
40 Slovenia 1.1
41 Uganda 1.05
42 China 1.05
43 Argentina 1.04
44 Poland 1.02
45 Croatia 0.95
46 India 0.94
47 Jordan 0.94
48 Uruguay 0.92
49 Ecuador 0.92
50 Brazil 0.92
51 Philippines 0.9
52 Greece 0.76
53 Indonesia 0.61
Source: Who in the world is entrepreneurial? CNN-Money, Geoff Lewis, June 1, 2007
Risk Capital Ecosystem
• Refine prototype(s) into product• Engage with teaching customers• Pricing, packaging, marketing strategies• Market development
• Achieve product differentiation• Win business against competition• Build repeatable success methodology
•• Sales organization & executionSales organization & execution•• ProductizationProductization and wide deploymentand wide deployment•• Outbound marketing programsOutbound marketing programs•• Public launchPublic launch
• Develop working prototype(s)• Understand the ecosystem• Business model development• Market definition
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• Market definition
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� Phases and Milestones*� Series A funding - $1M to $3M
� Series B funding - $5M to $8M
� Series C funding - $8M to $15M
� Red zone – latest exit point for outside investors
Red zone
*Based on observations of a typical fabless semiconductor startup company, 2006-2009
Risk Capital Ecosystem
� Before Series A� Friends and family
� Angelso Former entrepreneurs - series A or earlier if familiar with space
o Less demanding than real VCs
o More proactive in looking for investments
� State governments invest in early rounds of subjects of
interest - motivation to develop new business segments
� Universities – in California: Stanford, UCB, UCLA, USC,
CalTech provide facilities and access to professors
� Normally nurturing behavior
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� Normally nurturing behavior
Serge Leef, Information and Communication Technology Research Forum, May 201222
Source: Interviews with ex-head of Investment Banking of a major Wall Street Company, March, 2012
� Venture Capitalists� VCs have specialization; some specialize in A or B rounds; $23.2 billion invested in 2010; $28.4 in 2011*
� There are companies that specialize in mezzanine financing including investment banks and pension funds
� After Series B… � Private equity players can participate instead of VCs, focus on on-going revenue producing companies
� IPOs – most desirable successful exit for the investors, but should not be done until absolutely necessary
� Sub IPOs - create public shell company and merge startups into it.. If the venture is too small for a real IPO,
then use penny stock market to raise capital (many shady players in this space)
� Selling the venture can also be viewed as a success
� Most startups fail
Illusions of Entrepreneurship: The Costly Myths that Entrepreneurs, Investors,
and Policy Makers Live By, Scott Shane, Yale University Press (January 28, 2008)
Culture of Failure
“Failure, something we all fear, provides the greatest moment for us to learn. How we
manage or better put how we are honed to manage the process of failure provides not
only the basis for but is the best indicator of future success” - Entrepreneurship: Cultural Views on
Failure A Good Indicator Of Chances Of Success, Ainsley Brown, Commercial Law International, Dec 2011
� Failure carries a huge stigma in some cultures� Can be cross-generational
� Need to find ways to cushion social damage
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� Need to find ways to cushion social damage
� Develop structures that support “serial entrepreneurs”
� Motivation factors driving serial entrepreneurs*� Need to prove self
� Have a lot of energy
� Need a lot of stimulation
� Starting businesses that will make a difference
� Typically interested in “big ideas”
Serge Leef, Information and Communication Technology Research Forum, May 201223
*Source: Confessions of Serial Entrepreneurs, J. Wang, eterpreneur.com, January 8, 2009
Comparing Success Factors
Success factor US France Japan China India Russia
Education infrastructure Yes Yes Yes Yes Yes Yes
Business-friendly climate Yes No Yes No No No
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Risk capital ecosystem Yes Some No No No No
Culture of failure Yes No No No Yes Yes
Serge Leef, Information and Communication Technology Research Forum, May 2012
• Educated work force alone is not sufficient for success
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Summary
� Convergence of innovations in computing, sensors, mobility,
and networking are driving exciting prospects for advances in
automotive, aerospace, medical and consumer markets
� Capitalizing on these opportunities is a challenge for inventors,
entrepreneurs, academics, businesses and governments
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entrepreneurs, academics, businesses and governments
� Each has a role to play in driving value creation
� Proactive public policy should focus on ALL success factors:� Education infrastructure
� Business-friendly climate
� Risk capital ecosystem
� Culture of failure
Serge Leef, Information and Communication Technology Research Forum, May 201225
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