Two Commercialization Perspectives: Inside a Startup and From Administration

1. Two Commercialization Perspectives:Inside a Startup and From Administration Jonathan Rose, Professor and Chair The Edward S. Rogers Sr. Department of Electrical & Computer Engineering University of Toronto

2. Startup Company Background/Story • My research field: Semiconductors (“chips”) • Field-Programmable Gate Arrays (FPGA) • Prefabricated chips that are programmable • Programmable hardware • Advantages: • Can build hardware ‘instantly’ (vs. months) • Lower cost in low volume • Disadvantages: • Slower, consume more power • Much more expensive in high volume

3. My Research • Architecture of FPGAs • What do you put on the chip to make it better? • Computer-Aided Design Tools & Algorithms • Needed to transform and optimize a hardware design into the information that configures the FPGA • Covers a wide range of disciplines • transistor-level circuit design, • architecture • software and algorithms

4. Research • Group was among the first in this field of chips and CAD • Produced a number of basic & then advanced results on • FPGA architecture • FPGA CAD Tools • One key contribution: software package, called VPR, • Enabled the exploration of FPGA Architecture • Widely used as the basis for other’s research on CAD algorithms and tools for FPGAs • Available free on web since 1997, and evolved since then

5. The Company Began with Talking • “Wouldn’t it be neat to ….” • Start a company that does this … • Not that different from scientific/engineering innovation • My graduate students and I just began talking about ideas for companies • Kicking ideas around about what company would be • why one would want to do this

6. Our Motivation • Desire to start a company • Having seen this activity in Silicon Valley • In 1997/8 a lot of activity starting in Canada • Real excitement in this field • Broad realization that FPGAs were a key to access “the technology of our time” (microelectronics) • Sense that we had unique advantages: • Knowledge/expertise/understanding • People • Reputation

7. One Day … • I gathered several students into a room and said… • Do we really want to do this? • Are we ready to make a commitment to try a startup? • To do so we each would have to forgo: • Students: job opportunities • Me: other activities • This was a key turning point • We all said ‘yes’ • Helped by my wife’s reverse psychology: • “You’ll never do this” • Realized that I had to give up other activities; • It is difficult for a Professor to face this

8. Two Issues at Germination Time • Gathering students in a room places supervisor in a conflict of interest • Interest of company/self vs. interest of University • Disclosed to students • Should disclose to Chair • As chair I ask to speak with all students working with Prof who is starting a company • Some Professors comprehend conflict of interest, some don’t • Have heard one anecdote of supervisor ‘forcing’ student to work in company at an American University • Had to select those students I wanted to work with

9. The Story • We agreed on a business plan • sevelop & sell software & architecture for FPGAs • to current vendors of FPGA and wannabees • Premise: we could do it better • Gained rights to software from University • Paid small license fee ($10K) to University • Four co-founders • Myself, 2 students graduating, 1 Research Associate • Call ourselves “Right Track CAD” Corporation • I advertised • Talked to my contacts in the industry & at conference

10. Story • Two companies became interested • Cypress Semiconductor: talked at length; slow progress • Altera: came to us; signed contract that brought us into business in two months • First payment was enough to rent space, buy computers, pay salaries and get started • Somewhat unusual “bootstrap” method • Usual funding methods: • pay with own time • Friends & family funding, • Govt funding, • Angel investment -> venture capital

11. Things Went Well • 1st contract with Altera was roaring success • Delivered much better quality software than their own • Met and exceeded all milestones • Contract had bonus: $ = f ( Quality, Execution Time) • CAD Papers compete on these two metrics to gain publication • Here was that same goal motivated instead by Profit • Maxed Bonus – hit maximum exactly • Signed 2nd contract with Cypress also a success • Developing FPGA architecture & tools for Cypress Semiconductor

12. Story • Altera, very happy • Made offer to buy Right Track: Rejected not serious • Instead negotiated new contract with much stronger hand • Began to deliver on second contract • Made second approach to acquire • more serious, agreed to terms • Were acquired • Donated $150K to University from Company • Created the Altera Toronto Technology Centre

13. Altera Toronto Technology Centre Right Track had 12 employees at acquisition Altera Toronto now has ~100 employees, mostly Engineers Responsible for key aspects of Altera’s FPGAs and software Known as a very successful acquisition

14. My Role • Began as Right Track’s President • In first year 1999, work 65% at University 35% at Company • Bad ratio, switched to 20% University, 80% company • Had startup-supportive Chair of Department • Kept research program alive, no teaching • Key to keep funding and graduate student flow; very hard to restart – strongly advise! • After acquisition at Altera • For three years, served as Director of Software Engineering • Oversaw the unit’s growth from 12 to 65 people • Still at 20-80 rate • Returned to University after these 4 years in 2003

15. Time Split is a Crucial Decision • Reason 65-35 split is bad: • It is not clear who master is, too split • 80-20 or 20-80 makes it clear, highly recommend • 20% works out to 1 day/week • Wonderful synergy remains with Altera • Research funding • I provide good recommendations of students to hire • Surprise: they provide excellent recommendations for graduate students who served as co-ops in the company • Have a nice monthly FPGA seminar with Altera Toronto, Xilinx Toronto, and surrounding Universities

16. Other Learnings • Starting a company is really exciting • Can be like a great research enterprise • Allows me to bring some reality into classroom • 5 minute entrepreneurship talks • Perspective on real software engineering • What I look for in a prospective employee • Tons of good, relevant anecdotes • Profit motive is different from Knowledge motive • Takes some getting used to, but it is all common sense • Isn’t fundamentally evil, just a different target

17. Some Necessary Conditions for Success • People involved must really want to do it • There must be an idea that someone will pay money for • vs. the knowledge goal of University – can’t just be “neat” • Need prospect of more money coming than goes out • Aka “Profit motive” • Common Sense • Funding • Need Right mix of people • Right skills, outlook, and trust • As Chair, I discuss these and other issues with Faculty considering doing start ups

18. Learnings • Running company not too different than running a research program • Need ideas, smart people, execution marketing • Some say Profs don’t make good CEOs • True, mostly, but not always; better off as CTOs • Company is more team oriented than University • Everyone is working towards the same goal • Must keep “corporation” alive and healthy • Universities at the largest sense also have common goal, but everyone doesn’t necessarily pull together • Role of Chair/Dean is to remind people of common goal when lose sight of it.

19. Research Funding from Companies • They key to unlocking a lot of matching funding these days • Canadian companies less likely to engage than USA • Too focussed on short term, need to find people with vision and interest & understanding of value • As Director at Altera, I believed it was useful simply to bring academics in to talk to have people think about something different • Folks at Companies are really busy – need to find a way to get message across concisely • They’re just like you – short of time;

20. Administration of Startups at UofT • Has had 8 startups in the past 10 years • Several underway right now • My role: • Support faculty, generally, in these endeavours • Protect faculty/students from Conflict of Interest Issues • Need to beware: • Professors that over-commit & don’t do academic duties well • Professors that stay out too long – seems wrong

21. Finally • Startups are a key way to transfer technology • Our unique methods of developing FPGAs are now embedded as part of a $1.4B company • Startup creates good economic activity • An exciting way to bring knowledge back into University