标签: business

Don’t worry: This blog is not about giving you tips to start saving money for your retirement. This post is addressing the difficult subject of how the CEO of a startup might try to balance between saving –– in other words, minimizing the risk of running out of cash –– and spending. That is, investing into building new technology that presumably will propel his or her company to great success.       I’m sure I’m not alone when I confess to having had more than one sleepless night worrying about the company’s cash balance as a startup CEO. The situation we are discussing here is the early stages when the company is not yet break-even and is burning its precious cash resources. During those early stages, one number is omni-present in the CEO’s mind: The “out of cash date.” It is also sometimes measured as the “runway” or length of time to reach the out of cash date. A pretty self-explanatory concept that investors track almost as closely as the CEO and gets reviewed at the board meetings. It also gets scary once the runway drops below six months.   I always found it difficult and struggled with whether to focus on immediate needs (saving) versus investing in the future (spending). For example, if I choose to preserve cash today, I need to do so while looking ahead to the future to keep pace with the industry and customer needs, not an easy balance.   As a startup, the objective is to survive through the release and initial sales of the first product. These days, many startups have bootstrapped themselves or taken small seed funding to get them through this period. The runway is typically one to two years at the start of the product development. At this stage, the “spend or save” dilemma is focused on how many resources to deploy for the product development. Hire one or two more engineers? Buy more licenses of a critical software tool? Get more compute power?   Once the product has been released, the objective moves to selling it and investing in the channel, and here it starts to get trickier with the addition of this new parameter. If the startup is in Silicon Valley, it’s a reasonable assumption that someone in the company knows a project team in need of this kind of technology. Quickly, though, there will be an international pull because of big development clusters in Asia or Europe and the attraction to travel overseas or even open an office in one of those regions becomes irresistible. Often the team finds out that the product is not quite perfect and another round of product improvements is required to meet the customer needs.   The sales channel needs leads to fill the pipeline and that means marketing and promotion, visibility and awareness through the website and content creation, advertising, events and public relations. All valuable activities that should accelerate the revenue ramp.   Costs skyrocket and the company begins to run out of cash. All of a sudden, the ‘out of cash date’ completely overwhelms your kids’ birthdate in your mind!   It’s at this point where I wish I could pull out a magic template to avoid the often-made mistakes of startup founders who squander venture capital investment, but I don’t. Instead, I’ll offer a few observations on sound investment management efforts I’ve witnessed over the years.   As I’ve mentioned in previous posts, startup executives would be well advised to not make those critical decisions in isolation. Board members are the first place to look for help; mentors can also be a great resource. An experienced board member or mentor can serve as a good sounding board because he or she will have a global view of the industry and a wider perspective. Consultants, customers and partners could be sought out as well.   Next up is the budget. Judiciously setting goals and objectives that are tied to measurable results is important for all companies, but especially startups. I would recommend a systematic assessment to determine the outcome of every line item expense in the budget. Cost overruns should not be tolerated.   Working smart is important: Some founding technologists fall in love with technology and insist of building it when it can be outsourced or a “ready-to-use” solution exists. A perfect example of this concept is IP. An entire industry has grown up around supplying design pieces that can be used by other chip companies to shorten the development cycle and conserve cash.   Balancing spend versus save when building a business is a difficult problem and one that that has no easy, pre-packaged answer. While I struggled with this balance as a startup CEO, I also reached out to trusted advisors for help and worked hard at maintaining a reasonable budget that met objectives.   Michel Courtoy is a former design engineer and EDA executive who sits on the board of directors at Breker Verification Systems.

In the past, one of the first things the founding team of a start-up did was write the business plan. The thinking was that the company's business plan was written expressly for venture capitalists and was essential to raise money. However, it has become clear that venture capitalists do not expect — and will not read — a traditional business plan. Does that mean that the business plan is a useless, obsolete document?   I have a different, more pragmatic view of a business plan's value and believe it still is one of the most important documents any company develops. The reasons are varied and considerable, but the most important motivation to invest the time in writing the plan is the absolute need to clarify the corporate goals, objectives and plans of the fledgling startup.       Driven by this goal, the process of writing the business plan becomes more important than the final document itself. During the creation of the plan, the founding team will need to develop in-depth answers to questions about its mission, product direction, market availability and strengths and weaknesses.   Let me briefly cover two examples of key questions that will need to be resolved. The first is the capitalization table (cap table for short): What ownership of the company is awarded to each employee and how the company will be valued when seeking investments are key parameters here. Another critical element is how the company will allocate its scarce resources. For instance, which markets and customers will be chosen for the initial “beachhead” target?  How will the budget be allocated between product development and the sales/marketing efforts?   Coming up with clear answers to those questions will force healthy discussions between the team members and hopefully create an alignment in purpose that will be beneficial.    The plan will become a living document used throughout a company’s existence. And, no one should be surprised if the first business plan looks nothing like one a few years later. It will go through many iterations and could change often.   Of course, writing a business plan is a great exercise because it will service as a vehicle to get funding, though most VCs prefer a short PowerPoint presentation that distills the information from it. During an in-person meeting, the VCs will ask tough, penetrating questions and will expect well-thought-out answers. After a rigorous effort to get a business plan polished and finished, the presenters should be well prepared to answer those probing questions clearly and without hesitation about the corporate philosophy, the product roadmap and the financial plan.   Going through the exercise of developing a 30-page or longer business plan will help the founders get a keen understanding of their business. They will need to drill in on the financials and take apart all assumptions and then justify them –– great training for a VC meeting. Any startup executive presenting in front of a VC will be responding to a host of “what if” scenarios and will be expected to understand all of the business levers. If there is any interest at all from a venture capitalist, financials will become a critical part of the discussion.   Through the process, the founding team may find that the company needs to move to a different market segment. It may point out weak areas within the team, which will spawn conversations about resources. For example, no one may have the savvy to manage the financial aspects of the business or how to market the company and its products.   As the company grows, portions of the business plan can be repurposed as web content or executive commentaries and blog posts or as recruiting tools.   Getting started may seem daunting, but shouldn’t be. After all, the plan begins with open communication within the founding team. Presumably, the members like each other and work well together. Resources are available that offer a series of questions to ask, as well as business plan templates. Business books can be found in brick-and-mortar bookstores, online or a public library. Mentors and other startup executives often are willing to lend a hand.   Technology startup executives who need to keep the company nimble and evolving as needed shouldn’t think that a business plan is for fundraising only. A well-considered business plan can be a multi-purpose document with a variety of uses.   Michel Courtoy is a former design engineer and EDA executive who sits on the board of directors at Breker Verification Systems.

In the article, “Understanding New Power” in HBR Dec 2014 issue, the authors Jeremy Heimans and Henry Timms talk about the shifting of power in the world. While the old power is held by few (and jealously guarded once gained), is closed, inaccessible and leader driven, the new power is made by many, open, participatory and peer driven. It is most powerful when it surges and the goal with new power is to channel it rather than hoard. For businesses to navigate in the coming years, they will need to understand this shift and adapt accordingly. There is an interesting participation scale in the article which depicts power in terms of people’s participation – new power gains its force from people’s growing capacity and desire to go far beyond passive consumption of ideas and goods. It includes 6 levels – Consuming, Sharing, Shaping, Funding, Producing and Co-owning at the zenith Contextualizing this scale with the semiconductor space….. The semiconductor industry has typically been on the consumption scale – which is towards the old power model. Fabless/IDMs companies design and fabs/IDMs produce the chips which are consumed by the end customer who has little or no hand in the design/manufacturing cycle. Also the chip industry is not so visible to the end customer. Share - People sharing reviews of technical features of the products with chips e.g. processor speed in computing devices, resolution and clarity in displays, power and form factors in mobile computing devices etc. Typically done through various online forums. Shape – This is where people participate in the designing of the product. No IP, chip or tools are shaped directly by consumer. Influence yes, but shaped no. However, skewing the context a bit and taking the case of a company as a consumer, a classic example here is the ASIC (Application Specific Integrated Circuit). The customer designs (various levels of handoff are involved – Architecture, RTL, Gate, Layout, COT) and the fab manufactures. However the majority of the chips sold remained Standard Products or Application Specific Standard Products (ASSPs). Going by the NikeiD sharing example in which people design their own shoes (like adding colour fades to your shoes’ uppers, mid soles, customizable prints, tractions, widths etc.), one of the semiconductor analogy is the platform ASICs where client companies customize with various available layers, interconnects and IPs. However the vital difference here is that while in the shoes’ example, the consumer designs to customize his unique shoe, in the platform ASIC case, the client company uses the platform as a faster (and cheaper) mode to implement his design. It wasn’t really an increased participation in the process. However the Google modular cellular phone project Ara could be one. Funding – No. Again putting another perspective I would extend the above ASIC example to funding too. By putting in the NRE (Nonrecurring Expenses), the ASIC customer is putting his money where his mouth is. Though it should be kept in mind that ASICs make/made economic sense only for high volumes and is/was usually favoured by only by the big guys with deep pockets and strong industry and market foresight. Crowdfunding platforms though have yet to see any big chip/Semiconductor IP funding Produce – Participants here go beyond supporting or sharing others’ efforts and contribute their own. While consumers putting in their own chips may not be practical, we do see some examples in the services industry. Consumers making YouTube clips of gadgets/chip teardowns, sharing of short videos/tutorials explaining various semiconductor technical concepts are some examples here. Another example is an online marketplace that can match needs with supplies like Elance which is an online staffing platform. An example of a posting here could be a vendor looking for someone who can design a chip for some particular specs. While earlier these freelancing postings were mostly for programming or IT skillsets, off late one can come across a few postings catering to the semiconductor space. Co-ownership – A good example for me here is Arduino; the open sourced electronics platform based on easy to use hardware and software and intended for anyone making interactive projects is another example fostering increased participation. The IoT space offers a great opportunity for increased participation. Let me take the case of wearables and Intel specifically. Intel’s Curie, a new button sized computer for smart clothes is due to be out later this year.  It includes a Bluetooth radio as well as the company’s Quark line of low power chips. With Curie, people can deliver wearables in a range of forms and sizes – “Rings, bags, bracelets, pendants and yes, even the buttons on our jackets”, as mentioned by Intel’s CEO Brian Krzanich in his CES 2015 keynote. Some of the fabless companies are also providing their own proprietary development platforms (like LinkIt from MediaTek) pushing to get people design wearable and other IoT applications around them. Contests/competitions have been a traditional way used by semiconductor companies to encourage young talent to their industry. Here too we can see the trend moving from traditional academic design competitions towards ones contributing to real chip designs/application e.g. Nixie, the wearable selfie drone was a winner in a wearable computing contest sponsored by Intel. The power shift from “old” to “new” power is happening across all sectors. We in the semiconductor industry who have long been the enabler of technologies need also to actively align our mind set and biz models towards this in order to be better equipped in addressing the challenges ushered in by the new evolving trends. As usual, am keen to hear your opinions on how the semiconductor industry can better leverage the trends in the coming years.

Many years ago, I dated a very successful lady of colorful character who, to my initial puzzlement, saw a shrink once a month. Her reasoning was intriguing. She took her car in for a tune-up from time to time, and had an accountant make sure her business’s books were in order. She applied the logic of being proactive to avoid problems to her emotional health as well. The monthly 50 minute sessions weren’t to fix a problem; they were tune-up sessions where the shrink was an advocatus diaboli, asking the hard questions and questioning assumptions to keep her on track in life. Unfortunately I lost touch with her, though I heard she later married. Does she still keep those sessions? Many of us rely on our spouse to fill that role, though I can see some value in using an independent third party.   In the 80s I started a tools business with $400 in the bank. We expanded quickly, which meant cash was always in short supply. Sometimes really short supply. If you’ve ever had employees, you know that cash is the very grease of business; with money in the bank you have options. Sans bucks nothing works. Previously I had worked for a business that was woefully underfunded. Bob, the president, went through heroics to keep the doors open. The company went public; one auditor told me “I have seen every trick this company has pulled before. But never all by one outfit.” Bob tells of how for 69 weeks in a row there wasn’t enough money the day before payday to make payroll for his 100 or so employees, but something always happened to make the checks good the day they were disbursed. To say he was a creative financier would be a woeful understatement. When things in my tool business would get tough I’d call on Bob. With no notice he’d generously give me a couple of hours to talk out the problems and explore solutions. I have no formal training in finance or business, but got a degree in those subjects from the University of Bob. At 82 he’s still a font of wisdom and a good friend, but, sadly, that generation is failing. Eventually I hired an advisor, a hugely successful and highly recommended person who provided business advice. Paul would come by once a month for a couple of hours and answer questions. Far more importantly, he’d question me. “How could you justify these assumptions?” “You told me you’d do X, Y and Z last month – why didn’t you?” “Why didn’t you meet your projections for the quarter?” At times this was really painful. When there were problems Paul was a cornucopia of ideas. Some were daft. But enough were worthwhile that his check was one I was happy to sign each month. His seminal philosophy was that in business you must make money and have fun. Either alone is inadequate. A couple of decades later I still subscribe to that idea, and I still employ Paul. Even though The Ganssle Group is just a ridiculous two person company, having an outside advisor who questions my thinking is incredibly worthwhile. Sometimes we’ll go for a year or more without getting any bits of brilliance from him. Last month he had an idea that dazzled and justified many months of fees. Another friend also employs him, and we joke that over the decades we’ve earned an MBA from the U of Paul. My wife is an artist with a thought process orthogonal to the engineering mindset. But she keeps me on track. When I develop an “obvious” solution to an issue with, say, one of the kids, she’s quick to show me that, well, there may be relationship or emotional issues that I hadn’t considered. Then there’s Scott, whom I’ve known since the 1950s, literally since we were toddlers. He’s the best embedded guy I know, and a heck of a friend. We brainstorm a lot, about electronics, sailing, and pretty much everything else. You know what a true friend is? During a very low point in life he called one day and said “let’s go to London for the weekend.” We did, had a ton of fun, and that helped pull me out of my funk. He was here last week and we spent an hour scheming ways to get a huge tree off my barn. A dozen whacky ideas morphed into a single plan that worked perfectly.   No one is smart enough to have the answer to all problems. We need others to expand our solution space. And we need someone outside of our own skull to hold us accountable, whether that’s to business or personal goals and beliefs. I’m still a little unsure about my lady friend’s monthly shrink visits, but see the logic.   How about you? Do you have a mentor or advisor for work or life issues? Who has been influential in your career?

I have worked with more than 100 component companies, many developing new innovations in semiconductors and related electronics. Given this, I've experienced many unique situations that have created opportunities and challenges for a successful product launch. Based on many successes (and a few missteps), below are 10 key questions to consider when bringing a new product to market. 1. Who exactly are your customers and what are their decision processes? For many companies, product design may occur in the United States, often in collaboration with Asian manufacturers. But there are often centres of expertise in other geographies, such as Russia or Israel. Your key customers may number only 10 or 20 companies, so you need to understand with almost forensic detail their decision making process. 2. What is your new product's value proposition? Think about whether the new product represents a new capability, adds functionality to an existing product, and/or represents a basic-level, lower-cost model; and think also about positioning versus current and anticipated competitors. 3. Who are your new product's real and perceived competitors? While this seems obvious to you, to your customers and potentially others in a value chain the answer to this question may be more nuanced. Your customers might be looking at other products that include the feature set of your product, or looking at other products that could act as a substitute for yours. 4. What is your product's market potential? Media and analysts will often ask about the product's market potential in terms of current and future revenues. It's often valuable to quantify your estimates with one or more outside observers. 5. Where is your product in the value chain, and will your new product alter that value chain? If your new product disrupts an existing value chain by, for example, eliminating one phase of the chain, you have a greater challenge. You may now compete with existing customers and sell to a new group of customers. 6. When do you plan to launch your product? While your most important customers may attend the large tradeshows, you may be able to get more "quality time" with them at smaller tradeshows, niche conferences, or through one-on-one meetings. Consider announcing your launch at a time different from the tsunami of announcements that take place the first day of a large tradeshow. Resist the temptation and pressure from your board, customers, and others. Don't launch your product prematurely just to time its launch to coincide with a tradeshow—or any other event, for that matter. 7. What's the role of industry analysts? Industry analysts can be an important sounding board for your new product's market positioning and provide an outside, objective perspective. Many will discuss their take on your market opportunities and their view of your new product. 8. What's the role of media? The primary role of media is to report on news and trends. It's important to understand their interests, availability, and how they like to receive information. Your marketing team should focus on building relationships with key editors, not simply contacting them during product launches. 9. What is my announcement chronology? While every launch is different, there are a few key activities that will help ensure success: * Organise briefings under NDA with the most influential analysts and media 5 to 10 days prior to a launch. * Optimise release timing for key market(s); e.g., Asia time if launching at an Asian tradeshow. * Distribute press release on launch day and email release to targeted industry analysts and media. * Share via social media if appropriate, maybe using teasers on social media to get people excited leading up to announcement. * Consider using email blasts to alert key customers/prospects. * Analyse resulting leads and coverage to evaluate quality of message penetration. For example, did the lead flow meet expectations? Did coverage reflect the message communicated in the press release and website? 10. How do I know my launch was a success? It's important to establish metrics prior to the launch process that will allow decision makers to determine the ROI. For many, basic metrics include short-term sales uplift, long-term sales uplift, and contribution to brand building. Product launches are often critical periods in the evolution of a company. Conducting relevant research, creating key messaging, organising core activities well in advance, executing aggressively, and evaluating results versus metrics contribute to ensuring success. Tim Johnson is President of Stearns Johnson Communications, a marketing and PR agency that works with both start-ups and established companies.