Simplex Solutions

Leadership, My Personal Journey

SPLX IPO 15 Years Later

15 years is a milestone I think. Short enough that I still remember, long enough that is seems far in the past.We took Simplex public 15 years ago today. May 3, 2001. It was the culmination of a wild ride, and the beginning of another. Going public is a rite of passage. It’s not a birth (founding a company), it’s not a marriage (M&A), it’s not a death (shutting down) so maybe it’s like a bar mitzvah or confirmation – a rite of passage into adulthood. You take a company public when you are large enough that you want to fund the company into the next phase of growth on the public markets, and you want to provide liquidity to your investors. In 2001 that meant revenue of about $50M was needed, profitability, and steady, predictable growth which we had. We loved our company, and we were proud of our technology and our customer relationships.

With the Simplex IPO we threaded the needle between two significant market crises. In April 2000 the dot com bubble burst. We were not a dot com, we were a real company in the semiconductor space selling very nerdy software to chip designers. We filed our first S1 on September 11, 2000. Yes, 9/11 but a year earlier. (Actually we sent the docs to the SEC on Friday Sept 8 but we missed the cutoff so the filing date was 9/11).

Even by Sept 2000 there was little appetite on Wall St for a tech IPO because everyone had been burned by tech valuations based on a faddish bubble. But by late March 2001 we still needed cash to keep growing (we were opening international offices and hiring people behind our growth). I met with Larry Sonsini and Frank Quattrone (both kings of the Valley at the time) and we all believed we could price the deal. So we went on the road.

One of the most intense experiences of my life. 3 weeks of meetings 7-8 meetings every day. Paris, The Hague, London, New York, San Francisco, New York, Chicago, Minneapolis, Dallas and finally Houston. I drank too much vodka and took smoking back up for the 3 weeks (I did quit again at the end thank goodness). I lost 12 lbs in 15 days because I was not eating much. It seemed as if I was always presenting over breakfast and lunch so when was I going to eat?

And then, on May 2, in the late afternoon in Houston, we priced the deal, sold 4 million shares to CSFB, brought in $44M in proceeds for Simplex and hopped on the private jet to New York to be there for the market opening the next day. I slept on the plane, but not much when I got to New York.

May 3 was a round of interviews. Radio, Bloomberg TV, CNN’s finance network at Nasdaq, and time on the floor with the CSFB trader who was making the initial market in SPLX stock. We opened at $12 and closed over $21. The book was 11X over subscribed and we were one of the very first tech deals to get done successfully in 2001, opening up the market for many more that had been waiting. Maybe we priced too low, maybe not, there was no way to know because the market was so skittish.

But, of course, we were only public for 4 months before September 11, 2001 hit. The market collapsed, our customers delayed orders and our stock dropped to $8. A violent roller coaster is too gentle a term for what this felt like. The gripping stress of how to make sure the company, our employees and our customers were OK. When Cadence approached us to buy us in January 2002, a deal we eventually closed on June 2, 2002 for $300M, it was the right outcome for the company. As one of my board members told me “there’s a war coming, you are too small to survive it”.

Paris – walking around jet lagged the first evening


Walking around Paris on Sunday, relaxing before the whirlwind starts (with Luis Buhler, CFO)


Agent Herscher, on a helicopter very early one morning headed to
New Jersey from Manhattan for a presentation



The view of Manhattan from the helicopter



 Showing Melanie and Sebastian the private jet at SFO



How I often spent my time on the jet – not so glamorous!
Our typical ride around New York


 How Aki (Aki Fujimura COO) and Luis would often spend their time in the limo
Getting used to the cycle of meetings and flying – don’t we look smart!


My classic pose, talking to our lawyer (Bob at WSGR) or the bankers. I loved that flip phone.
Signing the docs to sell the shares to the bankers
Hugging out the tension with Aki once it was done
The team including Richard and David from CSFB


Headed to NY to watch the market open and celebrate


Watching the SPLX stock start to trade


The stock hits $20
Doing a TV interview back in Sunnyvale in my office –
the success of the IPO was Silicon Valley  news – maybe the market hadn’t died (yet…)

Will must be stronger than Skill

With all the coverage of the get-rich-quick startups of Silicon Valley at the moment it’s important to remember that most of the time building a company is a marathon, not a sprint.

Yes you need a good idea. Yes you need a strong, growing market. Yes you need smart people. But even with all of that, s**t happens, you get surprised, some things take longer than you expect, markets change and it can be a long, hard slog up the hill to build long term value. Especially in a time of global recession.

Eric Jackson wrote a terrific article in Forbes last week — titled The Most Under-rated Key to Long-Term Career Success: Staying Power — in which he admires people who just keep churning out great work. They have the will power to just keep going, keep reinventing themselves and live his first key “Never Give Up”. U2, Henry Blodget,  Magic Johnson. Vastly different but similarly committed – they determinedly persist.

When you are building a company you want to find a team of people who, like you, have willpower and simply won’t give up. You know you are going to ask a lot of them. You know you are sometimes going to push them past their limits, and then ask for more, and forget to ask for forgiveness later. At times you are going to appear insane, a bitch and heartless. But you won’t give up. Winning may be quick, it may be lucky, but most of the time it comes with determination, persistence and hard work. When Yahoo recovers under Marissa Mayer (as I certainly hope it does) it will be because a team of people in Yahoo decide not to give up, they decide to fight to climb back out with great products.

When I was running Simplex we discovered that our product wasn’t a must-have until the customers were designing for 0.18u semiconductor technology – which came 18 months later than we had planned. We had to cut back, hold expenses down, keep developing leading edge customers and persist until 0.18u ramped up for the big customers. Then a couple of years later as we grew and needed cash we filed our S-1 to go public in Sept 2000 but it took another 7 months of a rotten, volatile equity market to finally get public in May 2001. It would have been easier to bail out and sell instead at either of these points, and I’d have been a nicer person, but we were stubborn and determined, and tough.

It’s not easy to never give up, especially in the face of The Struggle (as eloquently described by Ben Horowitz), which most leaders experience at some time or another. In the end it just takes sheer willpower. I love Muhammad Ali’s quote, which is as much about building companies as it is about boxing: “Champions aren’t made in gyms. Champions are made from something they have deep inside them. A desire, a dream, a vision. They have to have stamina, they have to be a little faster, they have to have the skill and the will. But the will must be stronger than the skill.” Something we don’t talk about enough in the flashy, celebrity-CEO style of today’s tech industry.