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Simplex

Leadership, My Personal Journey

SPLX IPO 15 Years Later

May 3, 2016 1 Comment
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…)
Leadership

The new self-help book for entrepreneurs “Build Something Great!

February 4, 2016 Leave a comment

Thinking of starting your own company… or you’re already in it? There’s a fun new self-help book out for entrepreneurs called “Build Something Great!: Fifty Best Tips for High-Tech Startups” that is a must read and excellent reference book for anyone wanting to win the first time.

Written by two of the Simplex founders, professors Resve Saleh and David Overhauser, it boils down valuable startup advice into 50 tips on how to build your own successful venture.

And yes, I admit I’m biased since Resve and David hired me to be their CEO. But we learned a lot together as we built a world class team and important technology family into a really fun company and a very successful IPO.

The book is full of useful and easy to consume advice on the steps you’ll take in building your company. As Aki Fujimura, who was on our team and COO at Simplex, says in his foreward:

“There are a thousand ways to fail and only one or two ways to succeed.
Trying to learn what not to do from a failure only makes it 1/1000th
less likely to fail again. We all make plenty of mistakes of our own. We
can learn from failures in real life without reading a book. The only
way to learn from a book is to learn about what leads to success. The 50
tips here will guide you to help make your company more likely to
succeed.”

The book is available on Amazon in both paperback and Kindle formats.

The authors in January 1996 (before we were introduced).
David is on the left, Resve is second from the right.
Leadership

The Best Mistake I Ever Made

October 29, 2014 2 Comments

Asked by a journalist the other day “what is the best mistake you ever made” I had to think for a moment. There are so many – where to begin!

But as I pondered the question, there is one decision I look back on and think “What was I thinking?”

I became CEO of a raw software startup at 36
when my children were 2 and 4 years old. My husband was working long hours
running a small consulting business and I thought I had no limits. I could do
anything, and I wanted to run my own company. I wanted to show that a woman
could run a very technical software company in the semiconductor industry – where
there were no women at the top at all. And I wanted to lead.

Six months in I felt I had made a terrible
mistake. I was totally exhausted every single day. I barely had time to see my
kids in the week and I had bronchitis month after month. I had 2 nannies
working shifts, I gained weight and I would lie in bed awake every night
wondering how I was going to survive, never mind win. I think my marriage only
survived because we had already been married 15 years at that point and my
husband is truly, authentically supportive of my career.

And yet… it was one of the best things I could
have done, and I loved it. I loved being CEO, I loved building a company, a
team and working with customers. I became fast friends with our nannies and my
kids turned out just fine. They are confident, independent and have endless
very funny stories about their crazy mother and the experiences they had
because of my job. They traveled with me all over the world, they went into the
office with me at a young age learning by watching and they have a strong work
ethic as a result of the exposure they had. And we are close, very close.

So was it a mistake? Some days I think I took
a huge risk assuming I could do it all and have it all. But when young women ask me about that decision as they think through their own I’m encouraging. Children are resilient, good men are supportive and while you can’t have it all you can certainly have your fair share.

Image: Alamy

Leadership

How to Unite your Team: Advice from Napoleon

December 31, 2012 Leave a comment
Silicon Valley is littered with small (and large) companies that want to create a revolution. It might be a revolution in commerce – like Square trying to “Architect a revolution,
thoughtfully”, or being the enablers of a revolution like social media was for the Arab Spring, or creating a revolution in music delivery the way Apple did with the iPod.

But what is it that unites a team of people to try to create a revolution in the world of technology?

Napoleon believed that “There are only two forces that unite men — fear and interest” (from Napoleon: In His Own Words 1916) because “all great revolutions originate in fear, for the play of interests does not lead to accomplishment.”

I think he was right, but in reverse order.

In the world of the technology startups the dominant, unifying force is interest. Most people I have ever worked with were a part of the company because of shared interest. They have a common end in mind (to use one of Covey’s 7 habits).

At Simplex (bought by Cadence in 2002) our interest was in the electrical modeling that semiconductor companies needed to make faster, more reliable chip designs – and so sell more chips at lower cost. Everyone in the team was interested in how to get the technology to work (a non-trivial series of math and computer science challenges), and work in the hands of customers at ever decreasing, truly less-than-the-width-of-a-hair, geometry sizes. Chip modeling was a “big data” problem before we talked about big data. Geeky, but very interesting.

The best technology leaders – usually the CEO or founders – unite their employees with a vision for what’s possible. They have a uniting concept that everyone gets interested in – like salesforce.com with their “no software” platform to move CRM to the cloud, or Amazon with a vision that we’d all be buying books, and then everything else too, on line. Both visions were compelling, interesting to work on, and right.

So “the play of interest” does lead to accomplishment when you are building a technology company. I think it’s the only thing. You can’t unite people around money (well not for long anyway) and you can’t unite them with fear in a market when they can walk down the street and find another interesting job.  You have to do it with interest.

The great general was right that fear plays a role too but it’s only at the tactical level, in the moment, or in the sleepless times of the night. Fear of losing a deal, fear of failure, fear of missing a deadline you’ve committed to another team or a customer, fear of being wrong in the path you took to solve a problem. Everyone in a startup feels it. If they say they don’t they’re lying. Everyone experiences The Struggle. But you can’t unite people with fear because, in the end, this is a game. It’s not life and death, it’s not the control of empires or the defense of your homeland. It’s a business, with a dream, but a business.

Napoleon had to unite his men to fight through the mud and risk their
own lives to (almost) bring continental Europe under his command –  he used both fear and interest. You
need to unite them to work grueling hours and take huge personal risk to
try out new ideas – and in technology that means uniting your team with interesting work and a meaningful goal.

Leadership

PR over exposure is a dangerous game

May 24, 2012 Leave a comment
Eric Jackson wrote a painful piece in Forbes this morning comparing Sheryl Sandberg to Kim Polese – and while I don’t agree with his judgement that they are alike (one is wildly successful, one less so) he throws a bright light on one of the risks that can plague female tech executives: over exposure.
The over exposure starts because when you are a fresh new female executive you are rare and a novelty. The press wants to cover you because your opinions are new grist for the mill on everything from technology, to child care, to diversity in the office. Your PR team loves it – it’s an easy way to get the press’ attention and get the ink on the company. When I was a new CEO in 1996 I ended up on the cover of the San Jose Mercury News – amusing but of no value to my company Simplex. The press I got that was useful to Simplex was tech press and then business press around our IPO, not the many panels I did on being a female CEO with two small children.

Over exposure is a deadly trap. In the end you are judged ONLY on your financial performance, and unless you think a great deal of press coverage about you is going to drive your top line results you need to tread very carefully. Kim Polese was extraordinarily over exposed. She was naive, and taken advantage of by her PR firm but she was young, pretty and articulate and so a great product for them to sell. But Marimba did not prove to have legs after the bubble burst and while there is no shame in that per se – that’s life in the Valley – it was a long way to fall for her celebrity, and was not necessary.

I put this observation into practice a few months ago at FirstRain. We were choosing a new PR agency and I had been clear with my team that while I was happy to do panels and talks on technology, or even on public board experience (I am on two public boards RMBS and JDSU), I am not willing to overload on the female tech CEO talking circuit. So imagine my irritation when one of the PR firm leads decided that the whole strategy should be to use my gender to get FirstRain in front of the press and would not shut up about it.

In Sheryl’s case the risk was lower than Kim’s because she was already a proven
executive at Google, and Facebook’s a juggernaut, so she is
also already successful there. Extensively exposing her to the press in the year
before the Facebook IPO made sense – she is then “known” to the
investment community and the retail investor and so could carry the revenue end of the IPO
roadshow. And if she has larger ambitions post Facebook (who knows…) then the positive exposure raises her name recognition at a national level.

It’s a fine balance. You can only be a role model, mentor and adviser to young women if you have a successful track record. And yet the thirst for female tech role models is so great that once you have a high profile position you get given the stage – and it’s tempting. My input to my team is never, ever lose sight of the end-in-mind which is business exposure for FirstRain (or Simplex last time). The “woman CEO” platform comes after that and in service of that purpose only — unless I am doing it on my own time.

Boards

Are LinkedIn’s bankers greedy or stupid… or making a market?

May 25, 2011 3 Comments

A lot has been written about the frothy LinkedIn IPO in the last week and the investment bankers can’t win either way but I believe in the end they are doing their job and making a market.

On one end of the criticism you have Evan Newmark at the WSJ saying that IPO buyers are LinkedIn Stupidity. He wrote that “tonight’s IPO buyers need not worry. Common sense generally has little to do with the IPO market – and absolutely nothing to do with the LinkedIn IPO” and accuses Morgan Stanley of jacking up the price 30% at the last minute because they find they can, because of demand, not because of the intrinsic value of the stock.

On the other end you have Henry Blodget arguing that the bankers are screwing the company our of millions of dollars of gain because “IPO “pops” like LinkedIn’s–which are generally celebrated as a sign of success–are actually bad: They rob the company and its existing shareholders of cash that is rightfully theirs and they steer it into the pockets of favored money management clients who don’t need or deserve it.”

In the end the bankers hold all the cards and have to make a risky, gutsy judgement call on what the market will do to the stock the next morning. I’ve personally been in the situation of negotiating the final price with the bankers – and the allocation to their favorite customers – in the 11th hour. My goal as CEO was to ensure we got the best price we could for the stock we were selling (in our case a 20% uplift to $12 from the original $10) and yet ensure we were not so greedy that we overpriced the stock such that it would drop the next morning – and it was not an easy conversation. (I remember how good the first martini tasted afterwards!)

LinkedIn was the first big, frothy social media company to go public – and it has zero profit in 2011 and slowing growth. It would not be unreasonable to be conservative on the initial pricing, despite the book demand for the shares. Look at what’s happening to Freescale Semiconductor today “shopping its deal to investors at a price range of $18 to $20, instead of its original level of $22 to $24.” Freescale is selling at a price below what it’s private equity buyers paid for it, and lowering the price at the end of it’s IPO roadshow.

There is huge psychology in the pricing of an IPO stock, and the capital markets team at the bank are making a future market. If their best customers make money early on in a new stock they are more likely to listen to the bankers when they come around with their next IPO. It’s a hustle and whisper – “Hey remember how you doubled your money on LinkedIn on the first day – well I’ve got another one, it’s call Twitter, and it’s going to be even hotter. This book is going to be even more oversold.” And a terrific first day price gain also attracts uneducated retail investors who think because it’s hot today it’ll be hot tomorrow.

LinkedIn was probably hot from day one because so many of the potential buyers are also users and experience the value every day. But I had a different experience on the way to having my Simplex stock open at $12 and close at $22 on the first day.

We were half way through the road show – about 10 days of pitching 7-8 times a day at that point and there were no orders in our book. It was May 2001 and there had been no small tech IPOs post dot.com crash so we were breaking new ground and our CSFB bankers and capital markets team were downright skittish.

We were headed to New York and I kept asking the bankers if we had a meeting with Paul Wick at Seligman yet – I knew him and knew he understood our space (EDA) so I was confident he’d “get it” but they could not get him to agree to a meeting. So I called Paul’s office, and left him a message personally asking him to take a meeting.

Paul couldn’t take a one-on-one but took the unusual step (for such a high profile guy) of coming to an open lunch to hear me pitch. With about 50 people in the room he sat right at the front and watched me intently the whole time. I think he asked one question at the end and then left. I had no idea what he thought – good or bad. It was intense.

But according to the CSFB sales team Paul left the room, walked up to the sales guy and said “I’ll take 1 million shares” (this was out of a float of 4 million we were selling). And that set the snowball rolling. The sales guys whispered to their clients “Paul Wick is in” and within a couple of days we were 11X oversold – creating the market for our stock in the days following the opening.

That is the bankers job. Connect the company with institutional shareholders who have the capacity to buy on the IPO and some will flip and some will accumulate in the first few hours of trading. And it’s what Morgan Stanley et al just did for LinkedIn, and more importantly what they just did for the next ten hot new IPOs from Silicon Valley that want to raise money in the public markets this year.


Me with my management team (Luis Buhler and Aki Fujimura) on May 1, 2001… finally relaxed after pricing at $12, and before heading to New York to watch the stock open… and climb to $22 on the first day.