A venture capitalist offered the advice, “Startup investors are attracted by good people making a good product for a growing market.” That wisdom, as much as any served as the foundation for the company Mentor Graphics would become.
Founders outside of G-7. Clockwise from top left: Charlie Sorgie, Dave Moffenbeier, Steve Swerling,Tom Bruggere, Jack Bennett Seated from left: Gerry Langeler, Rick Samco, Ken Willett, John Stedman
How it Started – Capital Ideas
The founding engineers, whose backgrounds were in software development, ruled out designing and manufacturing proprietary computers to run their software applications because they felt that hardware was going to become a commodity owned by big computer companies. Instead they would select an existing computer system as the hardware platform for the CAE programs they would build.
The business plan presented to the financiers revealed that the team had found a market of rich potential and all the other necessary ingredients for success. “The Computer Aided Engineering (CAE) business is a superset of the CAD/CAM industry,” the document began. “We can define computer aided engineering products as equipment and software which enable an engineer to improve … productivity, work quality and consistency.” The plan noted “rapid growth” in CAD/CAM “and to an even greater degree in the emerging special purpose workstation environment.” Driving forces in the field were identified as “a shortage of both engineers and trained technicians, and the push for productivity and quality in basic manufacturing industries.”
The first round of money, $1 million, came from three of the most prestigious venture capital firms in the country: Sutter Hill of Palo Alto, Greylock of Boston and Venrock Associates of New York. These firms had financed such giants of high technology as Apple and Intel. The combined power of their participation produced another $2 million from Hambrecht & Quist, L.F. Rothschild, Unterberg and Towbin, and Lamereaux and Glynn by the summer of 1982. In April 1983, the original investors and nine new ones put another $7 million into Mentor Graphics. Thus, Mentor Graphics became the first company to attract world-class venture capital to Oregon.
The Hardware Choice
Choosing the best hardware on which to base the software was the next big step to take. While there were a range of options available, from Apple to “would-be” Apples, Apollo computer seemed to be the best choice.
Based in Chelmsford, Massachusetts, Apollo was less than a year old and had only announced itself to the public a few weeks before the founders of Mentor Graphics began their initial meetings.
At that time, Apollo’s product only consisted of specifications on paper. But the team knew of the Apollo founders and knew they had a proven track record in computer design. From what they read, the Apollo computer would be
unlike anything in the marketplace. It would combine the time-sharing capabilities of a mainframe computer with
the raw processing power of a dedicated minicomputer. Each Apollo computer could stand alone as a powerful 32-bit general purpose workstation. Alternatively, a theoretically unlimited number of Apollos could be linked together to share information directly, avoiding the potential bottleneck of passing data through a mainframe. Apollo called this concept the Domain network.
In March, 1981, Apollo was only a promise, both as a product and as a company. Would the company deliver? Would it deliver on time? Would it back what it built? Would it be around tomorrow? Wouldn’t it make more sense to go with an established and respected computer company like Hewlett-Packard or Digital Equipment Corporation?
It would have been very difficult to put a start-of-the-art CAE product on any other workstation. So Mentor Graphics went with Apollo.
The Birth of CAE
The Mentor Graphics team had arrived at the product it would manufacture by surveying engineers across the country as to their most significant needs. That was how they made the decision to go into CAE and, specifically to wed software for engineering design functions to a workstation. Mentor Graphics then continued to survey engineers for information about the most desirable features of CAE capability. This was to be a critical advantage Mentor Graphics would enjoy in the competition against the companies that developed as its main rivals – Daisy Systems and Valid Logic.
When Mentor entered the CAE market the company had two technical differentiators: The first was that Daisy and Valid Logic had “productized” software packages originally designed for other purposes. Valid Logic employed SCALD, a program developed at Lawrence Livermore Labs. Daisy’s engineers had “front-ended” – that is, added steps to- a computer-aided design package. The difference between CAD and CAE were sufficiently distinct that prospective buyers saw Daisy’s software as a hybrid and Valid Logic’s as useful but not completely responsive to users’ needs. Mentor, on the other hand, had designed its software from scratch, listening closely to what potential buyers told them about the special requirements of CAE. Engineers were impressed with the responsiveness of the software.
Mentor’s second advantage stemmed from the decision to use Apollo hardware as its platform. The state-of-the-art in CAE, such as it was, was based on the use of mainframe, timeshare CAD systems. There were severe weaknesses in this method. They were cumbersome and time-consuming to use. The graphics were not of the best quality. The Mentor Graphics simulator ran on a workstation instead of a mainframe, and was “interactive” so that, for the first time, an engineer could control the simulation as it ran.
Targeting DAC 1982 for the product announcement, the company had less than a year from the time the engineers started in July 1981 to demonstrate capabilities no one else had been able to produce. Specifying the software tools began in the fall, after an initial period of learning the new Apollo computers that had arrived in August. What should happen was a matter of dispute when it came to product specs. The dispute boiled down to “technical excellence” versus “what customers need.” Engineering argued for technically superior products, while marketing argued for products that customers needed and would buy. The synthesis produced something much better than would have been produced otherwise. The end result was a product that was technically formidable and also marketable.
Conceiving a product was one thing, designing it another. Then there was building it. When 1982 rolled around, it was “put up or shut up”. DAC was less than six months away, and as it turned out, literally every minute was needed for the company to produce software to demonstrate in Las Vegas. Hours and hours of work would lie ahead for the engineers. Thousands of lines of software code had to be written, programs had to be tested, and bugs had to be detected and fixed.
Everybody at Mentor was performing heroically to set the stage for the company’s first big public test. The product Mentor wanted to unveil, the system that came to be known as the IDEA 1000, was unprecedented. The Mentor Graphics team was trying to conceptualize, design and build a computer to build other computers. There was extant software for designing and simulating electronic circuitry, but the idea of integrating these two functions in a single database so that an engineer could sit at a single station and design both elements on one computer using one program was revolutionary. Before this development, schematics had been drawn by hand or “captured” on a computer. To simulate the design information the engineer had to use a mainframe. The idea of using a workstation in the Mentor Graphics configuration, the carefully selected Apollo machine, was a true innovation, one that promised great freedom and savings of time and money for engineering staff.
As important as DAC is for Mentor Graphics today, it was practically of life-and-death magnitude in 1982. The company had a goal of shipping products by the fall of that year; to wait longer would be to risk jeopardizing an invaluable opportunity to blaze the trail in this new CAE market.
The Mentor Graphics team crafted an unusual strategy for DAC, partly from necessity, partly out of shrewdness. The engineers were working overtime to turn the software into a single integrated system. All they had as the conference neared were pieces of a puzzle. They weren’t sure the completed product would be ready by the date of the conference. A decision was made not to buy space on the convention hall floor, but to visit with participants in a hotel suite and give small demonstrations there.
It wasn’t until early June that the engineers began the task of integrating all the various software pieces into a single system and actually testing the applications. Leading up to DAC, the engineers were keeping track of problems on wrapping paper that extended from the ceiling to the floor in their conference room. As a bug was fixed, it was scratched off the list. There were new versions of the system being generated almost hourly. Every person who got on a plane for DAC carried floppy disks with the latest software.
Parlaying a May 27, Electronic Design cover story on Mentor Graphics into a marketing tool, the team went to work. Around 4 a.m. on the Monday morning before DAC officially opened, the magazine article reprints, along with an invitation to the Mentor Graphics suite, were being slipped under hotel room doors at Caesar’s Palace. Unable to determine which rooms the DAC attendees were staying in, the invitations were passed out indiscriminately. Vacationers and conference-goers alike were invited.
Attendees began to trickle into the suite Monday morning for demonstrations. After the first presentations, word spread quickly through the exhibition floor that were was a company showing something never seen before – interactive simulation – in a hotel suite. By the close of DAC nearly a third to half of the 1,200 attendees had visited the suite and many were so impressed they wanted to buy a Mentor Graphics workstation immediately.
Mentor Graphics was on its way to being an industry leader in the new market of CAE.
Growth Through Innovation
Since the early days, Mentor has expanded into a broad range of electronic design automation (EDA) product areas, including system level design, functional verification, emulation, IC physical design, PCB design and manufacturing, design-for-test and thermal analysis and design. In addition, Mentor has expanded into vertical EDA segments such as transportation systems design, as well as adjacent non-EDA segments such as embedded systems (realtime operating system, embedded middleware and user interface design).
Besides expanding its scope into all aspects of technology design, Mentor has also innovated to keep up with new levels of complexity as integrated circuits went from a few thousand transistors to over a billion transistors in the latest microprocessors, graphics chips and SOCs (systems-on-chip). Mentor’s tools have kept up with the new demands by taking advantage of the latest multicore and distributed computing architectures, allowing graphically decentralized teams to work collaboratively over networks, and enabling designers to model and validate entire systems before committing to implementation and to create and test software in parallel with hardware development.
As the fabless-foundry model took over the eletronics industry, Mentor has worked ever closer with the IC foundries to ensure that fabless designers have a complete enabling tool flow that ensure successful designs that yield well even at the most advanced process nodes of 28nm and below.
Still Going Strong
In 2011 Mentor Graphics will celebrate its 30th anniversary, a major milestone for any company in the high tech industry, but especially significant with our years of growth as the surviving pioneer of an entirely new industry. Few high tech companies survive so long, let alone thrive.
In 1981, three visionary managers and six engineers left another local entrepreneurial pioneer, Tektronix, to found not only a company, but a new industry. At the time, analysts categorized Mentor Graphics as a niche within the “computer aided design” market. In reality, the company was pioneering a new industry, the automation of electronic design, today known by its unique moniker “Electronic Design Automation”.
Over 30 years, Mentor Graphics has grown from a startup employing less than 100 in leased facilities in Beaverton, to a multinational company employing over 4,000. We occupy 300,000 square feet of office space on the Wilsonville campus with another 30 engineering sites and 70 sales offices around the world. The industry we pioneered is now $4 billion in size with MGC accounting for over $800M in sales.
Mentor products have grown from relatively simple tools to some of the most sophisticated and complex commercial software applications that exist anywhere. Mentor software, combined with advances in hardware, has helped create the electronic revolution that has fueled the fires of innovation in countless industries.