A successful entrepreneur explains his startup philosophy.
Looking back, there have been many people and things that contributed to our success, but having a simple, three-pronged philosophy�a startup mentality, communications, and an open mind�has played a key role.
I didn�t always have a startup mentality. After college, I joined BRN. Back then, I was just a lazy guy. One day, my manager told me, �If you go on at this rate, you�re not going to amount to much.� I started working harder after that.
I developed a passion for startups after working with Jim Solomon, the founder of SDA and Cadence, and hearing about his early experiences. His success inspired me.
When I asked him what mistakes he had made, he told me he wished he had developed the Analog Division at Cadence as a startup. This gave me the idea of becoming an entrepreneur. Jim did not specifically urge me to create startups. In fact, when I decided to leave Cadence, he tried to tell me that startups are difficult. But his earlier comments already had left their mark.
Cadence�s then vice president of business development also was a general partner at a noted venture capital firm. He gave me several startup business plans to evaluate. By showing me those business plans, he helped me understand the venture capital business and how ideas are funded.
It was particularly interesting to learn that you could actually earn a salary working at a startup, that you didn�t have to be self-supporting. I wasn�t a rich kid, and I had no idea that anyone could work for a startup if they couldn�t support themselves on family money.
I still like to use the word startup to describe Magma. I try to keep employees focused on delivering innovation, being competitive, and willing to take risks. I believe the intensity in small companies fosters innovation.
Of our 90 R&D employees, 34 have Ph.Ds. This team is passionate about our products, about making the products and getting them out the door. In fact, every time our competitors say our system doesn�t work, it makes it even easier to motivate our engineers.
As a result, everyone strives to perform at their highest level and has confidence in their ability to deliver. Attrition has been small because our people feel that what they do here is more than just a job. This has allowed us to continually improve our software and deliver on our goal to make the chip development quicker and cheaper.
This startup mentality also means we�re a company with very small carpets. It�s not easy to sweep things under the rug here. We work hard to retain open communications. However, it�s always a problem to keep people candid as a company grows.
Last year, we divided the company into four business units. I think of the structure as four startups within a startup. Now the onus is on the head of each group to make sure they understand the customer requirements in their area. This flattening out of the internal hierarchy also makes it easier to be honest and speak openly with senior management.
All of this is important for scaling the company, both in terms of technology development and business management. We haven�t reached the point where people are afraid to share the truth with management.
My job today is to set the vision for the company. I like to talk to everyone, to walk around and learn what the issues are. At one time, I knew everyone�s name, but with more than 600 employees worldwide, that�s getting to be impossible. But I am accessible to all employees. I don�t try to fix problems, but I point out issues and ask how they can be solved. I don�t want to be dictating policy.
And I�m happy to hear criticism. Life is all about the steps of correction that you take. Everyone at Magma should have the freedom to talk to me. If I were to stifle that feedback, it would be a mistake.
Keeping an open mind to criticism and alternative ideas is key to our success. We�re a company of technologists; as a result, we can get caught up in what we can do rather than what we should do. Luckily, we have extremely close relationships with our customers who produce cutting-edge designs. They keep us focused on what we need to deliver.
In the old days, innovation was driven by entrepreneurial hunches. Today, business is propelled by customers� needs.
Sometimes, it�s not our customers who have the best ideas about what next-generation technology we should develop. Sometimes it�s other startup companies.
Again, as technologists, we have a tendency to adopt a not-invented-here attitude. But we�ve learned that we need to keep an open mind about technology developed elsewhere. If an entrepreneurial company comes to us with something 10� faster than existing technology, we are interested. We�re game to attack each and every opportunity in the various markets.
We foster three types of acquisitions:
� Acquisition aimed at basic raw technology where we�re not buying the company for the source code but for its experience. We then implement the talent into our flow development team.
� Infrastructure.
� World-shattering or revolutionary technology.
We�ve completed acquisitions in each area, though only one in the last category. This type of acquisition is the most forward-looking. It is not so much driven by customer demands as by an incredible technology.
Early in my career, I wasn�t the most focused worker, but a manager jump-started my business spirit. This taught me how to manage and grow a company: keep a startup mentality, keep communicating, keep an open mind.
About the Author
Rajeev Madhavan has served as CEO, president, and chairman of the board of directors since he co-founded Magma Design Automation in 1997. Prior to that, Mr. Madhavan co-founded and was president and CEO of Ambit Design Systems and co-founded and served as director of engineering at LogicVision. Mr. Madhavan received a bachelor�s degree in electronics and communications from KREC in India and a master�s degree in electrical engineering from Queen�s University, Ontario. Magma Design Automation, 5460 Bayfront Plaza, Santa Clara, CA 95054-3600, 408-565-7500
November 2005
