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Editor's Note: When this article was published in mid-2004, Alain Labat was CEO at TeraSystems. In January 2005, Labat left TeraSystems to became President & CEO of VaST Systems Technology.

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Some years ago, Alain Labat left heaven and settled in paradise instead. He threw over the mystical beauties of Southwest France to embrace the mythic potential of Silicon Valley - and for the most part, he has never looked back.

Except, of course, on a contemplative occasion now and then. It was in one of those rare moments that I had a chance to converse with Alain Labat. I had enjoyed his hospitality at a lovely dinner at the end of DAC in June - a dinner at the Prado Restaurant in Balboa Park hosted by Labat’s company, TeraSystems Inc., as well as the executive teams from Sagantec and Sonics Inc.

For many of us, the highlight of the evening was the luscious bottle of French wine that Labat broke out and managed to share with the 50 people at the dinner. It was one of those loaves-and-fishes miracles that could only come from someone deeply imbued with the magic of the French countryside. Labat may be a citizen of the world, but to those who speak with him at length, he’s clearly a philosophical Frenchman to the core of his soul.

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"I was born in the small village of Saint Jean du Bouzet in Southwestern France, in the region of Gascony. In my village when I was a boy, half of my friends were Basque and the other half were Italian. The village in those days was a huge melting pot of Spanish, Italian, Poles - families who had left their own countries in the 1930s when the Spanish Civil War and Third Reich were threatening. Today, there’s a [whole new wave of immigrants] from England settling there because of the weather and the beauty of the place."

"I left my village when I was 10 years old to go to boarding school [elsewhere in France]. Looking back at that experience - when you’re 10 years old, it’s very challenging to be away from home. But even then, I felt that I was not meant to stay put in the place where I was originally from."

"Most people in the small rural communities in France stay put and end up working within a 50-mile radius of their birthplace. Now that I look back, the fact that I actually left there at the age of 10 is definitely what gave me the impression, even then, that I had to do things on my own. I also realized that I had to learn to speak English."

"For many years as I was growing up, I would go and spend my summers in England. Through my boarding school in France, it was arranged that I was able to stay with a family in Kent. The man of the household was a retired Cambridge professor, and he and his family gave me my first experiences living in an English-speaking household. Each year, they would host 15 or 20 students from around the world. The summers in Kent gave me my first vision of a world that was bigger than my village in France - or Europe for that matter."

"From that experience, I had the idea that I wanted to go work and study in the United States. Those experiences became the milestones in my life and gave me the single driving force to [accomplish] what I have done."

"I went to high school outside of Toulouse, France. From Toulouse, I attended INSEEC, the Institut des Hautes Etudes Economiques et Commerciales, and graduated with my degree, which then was my platform for coming to work in the States."

"I had a professor at INSEEC who was acting as an advisor to GM Europe [General Motors Europe}, and he invited me to work with Midland International. I accepted the position and worked for Midland for a year. The president of the company then was Patrick O’Sullivan, who had attended Thunderbird University - the international business school in Arizona. Patrick told me that if I wanted to work in the U.S., I should consider earning an MBA in international management. So, I took his advice and enrolled at Thunderbird."

"While I was on the campus in Arizona, I had several offers to go back and work with international companies in Europe or the Midwest. But in the 1980s, you could sense the energy level in Silicon Valley was very high, especially compared to what I could see in Europe - particularly in France."

"At that time in France for instance, Thomson - which is now STMicroelectronics - was a large organization developing technology for the defense industry. At the extreme opposite, there was Silicon Valley, which was as different as you can imagine at the time. I looked at the two extremes, and decided to spend my career in Silicon Valley."

"I was recruited to Valid Logic Systems by Ken Fine. He had just joined the company as President, having come from Intel where he had been head of the Microprocessor Group. Valid was really part of the first generation of CAE companies in the 1980s. I ended up spending 5 years at Valid before Harvey Jones recruited me to join Synopsys. I was at Synopsys for almost 7 years, starting as Vice President of International Operations, then Senior Vice President of Worldwide Sales and Marketing."

"So, that is the fast-forward version of my journey from the village in France to my life in Silicon Valley up until the late 1990s."

"I will mention here, however, helping to found the French American School of Silicon Valley in 1992. When we settled in the U.S., we wanted our daughter to be bilingual and bicultural. Our very good friend was the French Consul in Silicon Valley, so together we founded the French American School."

"The school just celebrated its 10-year anniversary and today has more than 130 students from pre-schoolers through to the fifth grade. When the school administers the little [standardized] tests in the fifth grade, we always feel very good when the results of those tests are in the 95th percentile.

"I’ve always felt very privileged to have been able to go to my school in France, to have the opportunity to come to this county, and to go to Thunderbird - which is a fantastic school. That is why my wife and I together have always felt we wanted to give something back to [educational institutions] in general. For us, helping to found the French American School has been our way of giving back a little to what I was privileged to experience in my life, which brings me back to my vision of why one comes to Silicon Valley."

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The Village in Northern California

"If you’re in Silicon Valley, at some point you should take advantage of the opportunity to become an entrepreneur. My first experience with the venture capital business was when Valid had [as investors] some of the top VCs in the world - DuBose Montgomery, founder of Menlo Venture Capital, who helped found LSI logic; Donald Valentine who helped found Apple and Cisco; and Bill Davidow who helped found RAMBUS after making major contributions at Intel."

"I had the privilege of attending board meetings at Valid and to be personally involved interacting with these types of people. At the time, I did not know how important they were, but if you look back at their combined track record in the Valley - these people have had such a tremendous impact!"

"As much as I enjoyed my years at both Valid and at Synopsys, and the chance I had to help build those businesses, what I really wanted to do was to take what I had learned at Valid and Synopsys and go back and become an entrepreneur. So, I became an entrepreneur partner at Menlo Ventures."

"It was from there, that I became involved with Frequency as the company as it acquired Sapphire Design Automation and, in combination with Sente, became Sequence Design. I quickly discovered that being on the board of directors of an EDA company is a truly fascinating experience, one that includes the excitement of assembling an inspired group of people and building a business based on an idea."

"[Eventually], I joined TeraSystems through my Menlo Ventures involvement on their board of directors. I stepped in as CEO of the company a year and a half ago. I’ve always enjoyed being an executive, but [in this last period], I have thoroughly enjoyed being the CEO. I think it’s terribly exciting to drive the ship and demonstrate leadership to implement change."

"There’s really no other place in the world like Silicon Valley where you can achieve things like this - bringing people and their IP together to build a business and drive change. It’s truly the most exciting thing you can be involved in."

"To bring change, to re-invent a technology in the face of resistance - that’s what it’s all about here in Silicon Valley. And that's what we have achieved at TeraSystems - we’ve brought a fundamental change to how things are done in EDA. I believe that what we are doing today here at the company is making an authentic contribution to the industry."

"I agree with the book by Clayton Christensen - The Innovator's Dilemma [When New Technologies Cause Great Firms to Fail, 1997]. Clayton claims that if you look at the span of an industry over 20 or 25 years - if you look at the companies in an industry that allow themselves to be driven by Wall Street by optimizing their total market - those companies are not really trying to capture the needs of their customers. Instead, they end up being in great danger of servicing a handful of large customers with very high prices, and with a high interdependence on those customers. Those companies end up not catering to the needs of smaller customers and suffer as a result."

"I also recently read an excellent article by Mark LePedus (in Silicon Strategies) who commented that companies can’t resist the change being driven by the physics of semiconductors and Moore’s Law. Those changes are incredible and you must respond [if you plan to survive as a company]."

"I believe both Clayton and Mark are correct. And, it’s a very fascinating process to observe, especially in EDA - because these are exactly the problems that a lot of people in our industry are facing today. Like other software industries, we in EDA live or die by Moore’s Law, and we must change in response [to the evolution]. There’s no other way around that. It’s the underlying element that drives change in EDA."

"That is why I relate strongly to what Gary Smith said in his remarks at the Dataquest event at DAC in San Diego. Daisy-Mentor-Valid - none of these companies were able to re-invent themselves [in time to save themselves]. For those companies, it was all about clean walls and frameworks and protecting their own turf. It wasn’t about paying attention to their customers and what the technology really needed at the time. I would agree very much with Gary’s premise - you can try to maintain the status quo, but you’ll regret it in the long run."

"[In fact], when you think about the software [in use today] that was designed for 0.25 or 0.35-micron processes, and that now we’re talking about architectures at 90 nanometers, or even 65 nanometers - what companies like IBM are saying is that at these smaller geometries, synthesis is almost irrelevant. Not are only some tools [in use today] irrelevant, but they’re really even dangerous to the outcome of a project. New tools and methodologies must emerge for the new technologies."

"TeraSystems has been in a close partnership with IBM for a year and a half now examining the challenges at 90 and 65 nanometers. IBM is the number one ASIC company in the world and they truly [know how to] work in a great partnership. We’ve built a solution together to allow their customers to go faster for cheaper. We're building a road together with IBM that is allowing us to start with a ‘brand new piece of paper’ and see what’s really important for the new process technologies. Only a few months ago, we released [the results] of that work. Now, what we’re delivering with these new tools is a road to faster, cheaper design with a higher level of predictability."

"This effort has required a huge amount of investment, especially for a small EDA start-up like TeraSystems. But, if you look at waves of technology in EDA and how companies scale their businesses - the ASIC houses have always done lots and lots of work with the companies in EDA. If you can get the number one ASIC company in the world to say to their customers this is the way to produce silicon, then they’re telling those customers to embed your tools in their flow."

"And, that’s our recipe for success. It’s our strategy for building our business in a scalable way. I know from my 20 years’ experience in EDA, if you don’t have the influential ASIC companies in the world [endorsing you] and if you don’t have something very, very competitive to offer, it’s very, very hard to succeed. We believe we have what it takes to succeed."

"[Of course], if you’re in EDA, partnering with the bigger companies in EDA is important, as well. You have to partner with them to make sure that your flow works, but you also have to always be thinking about who’s going to be using your tools and services. When you’re in the process of building a strategy, you must partner with your customers more than you should be partnering with the bigger EDA companies. And that is our focus at TeraSystems."

"We intend to grow larger [as the industry embraces our technology], and we are aware that it is a challenge for a company to stay innovative as it grows larger. Sometimes [that can be accomplished] by creating a new division. A spin-off can, in fact, provide a next generation of tools that overtakes the main business from a revenue point of few. Some companies have done that successfully, although for EDA companies it’s a lot trickier."

"Again, we’re always tied to Moore’s Law, which is driving this incredible need for higher performance and bigger complexity. But I believe that over the last 30 years, there’s been a new way [of technology] every 10 years or so. [And of course] the debate continues as to what and how to do that. Clayton Christensen says that some companies have done that successfully, while others have not. When you’re driven by Wall Street to show that you’re producing on a quarterly basis, it becomes very, very tough. Quarterly reports are a way for shareholders to drive the company, [which is not always ideal]."

"I like to think about Apple and even Sony, who in my mind have shown the ability to innovate even as they have grown larger because - although obviously they’re all driven by financial considerations - they depend less on quarterly reports and more on innovation as a true stimulus for business. At TeraSystems, we’re dedicated to our R&D effort. We’re not going to allow ourselves to be constantly driven by the condition of our shares on a quarterly basis."

"We do consider some business practices to be useful, however. Clearly, mergers and acquisitions are often important strategies in EDA, as well as personal relationships. I’ve developed many personal relationships over the last 20 years in doing business with friends in Japan and North America. I have friends at Sony or NEC who were designers 20 years ago, and are now general managers of big business units. Growing up in Europe, I learned to pay a lot of attention to the personal side of business relationships."

"Fundamentally in any environment, I rely on commitments from my partners and friends. True business partnerships are born of sitting down and committing to something together, something that we all jointly see as being needed over the next several years. Partnerships are about agreeing on a long-term vision, and year after year bringing a reality to that vision."

"At TeraSystems, our goal is to work closely with our partner customers. We know we can build new roads together - and we’re only in the early stages of having a lot of cars on those new roads. Just as Gary Smith says, we think we’ll be able to deliver true RTL hand-off, RTL sign-off. We want to work to the higher levels of abstraction that everyone knows are important for the smaller geometries. We don’t believe you have to have so many iterations between the front end and the back end in design. We believe the process should be a fluid one, where everything can be agreed to conceptually by the RTL and IP designers. There should be a smooth flow from ESL design to fabrication."

"Our vision is that a system designer will be able to have his or her ideas captured in the RTL, and then that netlist will be given to the foundry to produce silicon. We want to be the first company to allow for that RTL hand-off. Of course, there are more things on the verification side that need to be done to that netlist, but even Synopsys is now moving above the gate level to higher levels of design."

"We want to be able to reach the new wave of designers that can not afford the high costs, the unpredictability, or time associated with traditional design today. Time to market, predictability, and cost are the three key elements that everyone pays attention to, and we think that going to RTL hand-off is the only way to deliver on the promise to address all three of those elements. I believe we have the opportunity here at TeraSystems to contribute to that promise - an opportunity that we will capitalize on here in Silicon Valley. We’re only at the beginning of a whole new age here in the Valley and in EDA."

[Editor’s Note: Please enjoy Alain Labat’s Lapin du Sud West in the Recipes section.]

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Bastille Day, 2004

Peggy Aycinena owns and operates EDA Confidential. She can be reached at peggy@aycinena.com

Copyright (c) 2004, Peggy Aycinena. All rights reserved.