It was great to have the chance to speak at length this week with Vic Kulkarni, CEO of Sequence Design. Vic agreed to talk about a range of topics not specific to his company, but on the larger subjects of globalization and the various trends associated with all of that. We started our conversation by running through Vic's bio, and those comments are posted at the end of this column. The principle portion of our lengthy phone call, however, comes first.
A Conversation with Vic Kulkarni
So, my first question is about globalization. Is it happening too fast? Is it a new concept, or something that's been underway for a long time? Can you even define globalization?
Vic Kulkarni - These are a very interesting set of questions. I was first exposed to globalization in my Compass days, when it was VLSI, because even then 40 percent of our R&D was being done in Sophia Antipolis in France. I learned about working in France, and about remote R&D. I was able to observe the benefits there, and that was 17 years ago. I learned an important tenant - go to where your customers are, and where your talent is. I pursued those ideas for quite some time to further understand what a multinational, multicultural environment means to a company.
Then at Avanti, I experienced true globalization. In 1998, I had to create an R&D group in Shanghai. I remember my first trip there vividly. We had a relationship with Shanghai University, and met with the chairman of the department of engineering on a Friday. On Saturday, the next day, we had 34 Ph.D. and Masters students coming in for interviews. We interviewed students for 14 hours straight, over lunch, over dinner, and into the evening.
We wanted to see if we could transfer some of our R&D into that area. It was an extremely good experience for us, and the group there became very successful. I believe, even today, Synopsys still has some of that group working in Shanghai. For us at Avanti, it was a big boost in our operating model.
In those days, globalization was not being practiced in a true sense - it was mainly outsourcing. However, when I arrived at Sequence, I did a lot of work with Interra Systems, the Indian company. We didn't want to jump into the Indian market without experience. I was from India, but I had no experience at all working in that environment - so our idea was to start by getting our feet wet with learning about R&D management in India through Interra. That experience changed our world from outsourcing to true offshoring.
We learned the most important lesson through that process - you can't motivate remote teams by insulting them with low-level tasks. That's when we went to the concept of Centers of Excellence - working with local talent and the local schools. That is the meaning of true globalization - when you have Centers of Excellence scattered around the world.
Now I two people, experts in timing and algorithmic development, in the U.K. For the team in India, it's pretty much all about RTL, power analysis, and parasitic extraction knowledge. Plus, now we're building some timing knowledge there as well. Then we have a center in Westford, Massachusetts. In fact, our CTO resides there, where he makes all of the decisions about our roadmap.
So, we have learned that the very first thing you have to get rid of in the move to globalization is the concept of headquarters, say, on the ground in Silicon Valley. Today, for Sequence, the headquarters are wherever I am at the time. It is not a big, bureaucratic headquarters centered in Santa Clara. I have to go out and talk with my product teams all over the world. That's true globalization.
So given those things are true, what are the implications then for Silicon Valley?
Vic Kulkarni - For our own workforce over the last 4 years, it has meant that we have moved our U.S. guys into more of the architect roles for the products. These guys are exposed to customers in Silicon Valley, and to the customers' expertise there, that sheer knowledge that is not quite distributed globally as yet.
Then, within the structure of our own operating model, in the U.S. and the U.K., those guys share that knowledge with product managers, project leaders, and experienced people in India and other parts of the world. That's our model, and the model I see reflected in most of our end-customers these days.
And what are the implications for the start-up environment in Silicon Valley?
Vic Kulkarni - When I talk to the CTOs of the Silicon Valley COT start-ups, I hear that any new business plan with hopes of being approved on Sandhill Road - or any new CEO of any new start-up - must show a strategy for establishing distinct Centers of Excellence around the world. Nobody wants to fund a company any more that's purely Silicon-Valley based. You can have your architects here, but you need to have Centers of Excellence in Romania, or Egypt, or China, or Taiwan, or India. Now, I'm hearing that the newest location is Vietnam.
One of our big customers, Renesis, has decided to no longer invest in Bangalore. They're now investing in Ho Chi Minh City. They're using one of our products there, in fact. There's a population in Vietnam with good English skills and a good work ethic. Beyond that, you're going to see even more new markets and new nations emerge as possible locations for Centers of Excellence. You can't afford to deny this trend. [Instead], you must leverage it if you want to be successful.
Speaking about India specifically, what are the implications for India in all of this.
Vic Kulkarni - The situation in India is changing. For quite some time the big customers in Japan, Europe, and North America have all had design centers in India. Eleven of our customers have significant design activity going on in India. For example, the new GMS technology and GPS design for BMW, which used to be in Germany, is now in Delhi. Also, important WiMax work is being done in Bangalore, where 4 different companies are working on designs at 65 nanometers. There are now 130 chip design companies in Bangalore, Hyderabad, and Delhi.
Do you think this has changed more rapidly than anyone could have predicted? Wasn't it just a few years ago that people in North America, and perhaps Europe and Japan, were saying that only the low-level design work was appropriate for India?
Vic Kulkarni - Yes, the situation is changing much more rapidly than anyone could have guessed. Today, there are lots of people going from the U.S. and Germany to live and work in India. One of the senior technologists at Infineon has transferred his work to Bangalore. He and his wife now reside there permanently.
And, many German engineers are going back and forth constantly between Germany and India. In fact, I've heard that all of the flights from Frankfurt to Bangalore are fully booked from now through to the end of the year. Plus, those flights used to cost $800 - now they are up to $1600. Also, now in Bangalore, not only are 100 percent of the hotels booked, but the cost for just a reasonable business hotel in $260 a night, where it used to be $60.
I also understand that several Indian airlines are trying to buy more gates at Frankfort, or are working to find alternative routes to Singapore and Hong Kong. There are no more boundaries today.
So, as Bangalore becomes more expensive, isn't the momentum going to quickly shift to other locations?
Vic Kulkarni - Of course, in India they are recognizing this issue, so they're doing something really clever. They are trying to get away from a Bangalore-centric view. There are now many emerging cities in India - Pune, Indore, and Aurangabad, for instance - where the overall cost and employee mobility is less.