success factors for value creation in the era of technology convergence serge leef vice president,...

Success factors for value creation in the era of technology convergence

Serge LeefVice President, New VenturesGeneral Manager, System Level Engineering DivisionMentor Graphics Corporation

May 2012

© 2010 Mentor Graphics Corp. Company Confidentialwww.mentor.com

Progression in System Design1970 1980 1990 2000 2010 2020

Microprocessor

DesktopComputer

Packaged IC

Military & Aerospace

Digital SignalProcessing

Communications

MultiprocessingGigabit,

Non-volatile Memory

Consumer

Serge Leef, Information and Communication Technology Research Forum, May 2012

Integrated System Design

EnergyMedical

IndustrialAutomotiveAerospace

4


Domain-specific

Highly heterogeneous

Distributed over networks

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

Attributes of Embedded Systems



Typical System Architecture

PSU / Power Management

Inpu

ts

sign

al

cond

ition

ing Inputs Processing

FPGA or ASIC

CPUControl

Algorithms

Outputs Processing FPGA or ASIC

Out

puts

si

gnal

co

nditi

onin

g

Cockpit commands,

Sensors(e.g. speeds,

pressures,temperature,

valve position)Comms

Solenoids,Valves,Stepper Motors,Sensor

Excitation signals,Comms

Portable Energy Source (Battery + Alternator)

Bypass controls



ECUECUNETWORKNETWORK

PLANTPLANT

System Example: Car

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



System Example: Airplane


3rd network

ServerTerminal

Display Switch

Router

WindowsGalley

Seats………

Lights

Avionics(AFDX + ARINC 429 - CAN) IFECab OpsA/C Ops

IMA

LRU

LRU

SWITCH

LRU

LRU

IMA AFDX

world

CAN node 1

CAN node 2

CAN node n

CAN node 1

CAN node 2

CAN node n

System A

System B

SWITCH

LRU = Line Replaceable Unit IMA = Integrated Modular Avionic (Gateway function)

Supplier xx Supplier yy

8


System Example: Guided MissileIn-flight power management for guidance

Post-impact detonation


9


Medical: Multi-physics interaction and test

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

Pacemaker

Surface ECG

Blood Pressure

TemperatureData Link



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.

— 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



Specifications

How do you design the whole system?

Digital Analog

Mixed - Signal

Sensors & Actuators

Plant / Mechanic

al

Application

Software

Platform Software

Embedded Software

Multi - Physics

SiliconPlatform


DataTraffic Protocols

Network

13


Need to Remove Walls between Disciplines

Mechanical Electrical

ControlsSoftware

ControlCircuits

Electro-Mechanical

Sensors & Actuators &

Space

Digital Control

Micro-controllers

DSP Processing

Thermal Mechanical Fluidic Mass Transfer

Analog, Digital, & Mixed-Signal circuits

Transfer functions

Advanced Algorithms Signal Processing Embedded Control Supervisory GUI & Presentation

PWM

–

+

+

Cmd

Angle

ieqs

ies

w

ks


14


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

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



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:

Education infrastructure Business-friendly climate Risk capital ecosystem Culture of failure



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 If not predictable, established companies do not get involved

Government links Governments are NOT good venture capitalists

o Typical goals are prestige and employmento GREED must be the key driver for capitalist enterprises

Governments can play a role by focusing researcho Select areas of national interesto Facilitate through funding University/Industry partnerships



Educational collaboration examples France: IRT Large scale initiative

Government objective:o Keep the French research competitiveo 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 among

o Universities, Government Research Labs and the Industryo 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



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

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


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

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

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

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


A

B

C

• 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 & execution• Productization and wide

deployment• Outbound marketing programs• Public launch

• Develop working prototype(s)

• Understand the ecosystem• Business model

development• Market definition

21

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 Angels

o 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


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 Develop structures that support “serial entrepreneurs”

Motivation factors driving serial entrepreneurs* Need to prove self Have a lot of energy Heed a lot of stimulation Starting businesses that will make a difference Typically interested in “big ideas”


*Source: Confessions of Serial Entrepreneurs, J. Wang, eterpreneur.com, January 8, 2009


Comparing Success Factors

Success factor US France Japan China India Russi

a

Education infrastructure Yes Yes Yes Yes Yes Yes

Business-friendly climate Yes No Yes No No No

Risk capital ecosystem Yes Some No No No No

Culture of failure Yes No No No Yes Yes


• 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

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


© 2010 Mentor Graphics Corp. Company Confidentialwww.mentor.comSerge Leef, Information and Communication

Technology Research Forum, May 201226

success factors for value creation in the era of technology convergence serge leef vice president,...

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