Synopsys is one of the largest and most veteran software companies in the world that you probably have never heard of. It began as a small startup that its founders established after leaving General Electric in 1986. It now has more than 12,000 employees and 100 offices worldwide, including a development center in Herzliya with 140 employees. Synopsys is a leader in Electronic Design Automation (EDA) for the design of semiconductors. This is not an especially sparkling field, but the company's growth has been impressive: its market cap is currently almost $13 billion, compared with $3 billion ten years ago, and it is ranked 15th among its global software peers.
Aart de Geus, one of Synopsys's two co-founders, has headed the company since it was founded. I first met him ten years ago. When I again sat down with him, I felt as if time had stopped, and maybe even ran backwards: de Geus looks younger, more serene, and relaxed today than ten years ago, possibly because of the jump in the company's share price. The company has passed by $2 billion its main rival Cadence Design Systems, which also has a large development center in Israel. Synopsys reached this position partially through serial acquisitions of companies. "92, or maybe we've acquired the 93rd by the time we've talked," says de Geus in response to a question about how many startups have already been acquired. These companies include the Israeli startup Seeker Security, acquired in 2015, which is the basis for Synopsys's development center in Israel, that focuses on cybersecurity and sales.
De Geus was born in 1964 of Dutch origin, grew up in Switzerland and now lives in Silicon Valley. The company he heads is now positioned at an important crossroads in the semiconductor world, an industry that has become increasingly central because of the importance for the development of technologies of the future in artificial intelligence and the automotive industries. At the start of our conversation, I posed a challenge for him: explain his actions in Israel without using the phrase, "Startup Nation". After a chuckle, and humorously calling us an "Old Hat Nation", he replied that he came to examine Israeli cybersecurity and artificial intelligence startups, although Synopsys declines to mention names and says that, at the moment, there are no contacts about acquisitions. Afterwards, he dismantles the well-worn phrase: "I wouldn’t call Israel the StartUp Nation anymore," Aart de Geus tells Globes. "You are now an industrial powerhouse. Worldwide, if you are told that there is an opportunity to acquire or build something in Israel, people will consider it - and that is something that takes a long time to build. Entrepreneurial experience comes in cycles of at least five years, and you have a country with several entrepreneurs and venture capital funds that have gone through four or five cycles. That's a lot of experience. It's no longer amateur hour at all."
Working on hardware that still does not exist yet
Synopsys started by focusing on semiconductor design software, and later entered the area of software for hardware components, such as memory and USB for smartphones. "We and ARM are the leaders in this sector," says de Geus.
"Over the past five or six years, we've seen more semiconductor companies employing more software engineers, because these processors have become more complex, and quality control and information security needs have arisen. From the outset, we wanted to design the code that was less vulnerable in terms of security, instead of fixing the processors later. This prompted us to enter these two sectors. I consider software and hardware as a single continuum, and that is also true for handling tasks in artificial intelligence. For example, you don't build general hardware that knows how to do everything, but you look at a specific software task."
Globes: How do you intend to benefit from the developments in artificial intelligence? You sell software, not semiconductors.
De Geus: "Take carmakers for example. Traditionally, they were very slow in technology development, because they must know that it will operate well over time. Today, they are under pressure to integrate artificial intelligence software based on powerful processors. To ensure that these systems will work, they must create a computer model to test them. This is where we come into the picture: our technology makes it possible to model these systems and the semiconductors that will be integrated in them, so that it will be possible to test the vehicle software on them before the hardware that runs it has been developed in the real world."
You have to understand technology, not know everything
The keyword, according to de Geus, is collaboration. "In super-modern systems, there are already 100 million lines of code, and this number is projected to double. Software comes from a long list of suppliers. This is a recipe for trouble. Although we don’t do AI ourselves, that is made by specialized companies, such as Mobileye here in Israel, but we are those who can work with you all the way from the processor on one end to safety on the other end. We want to be the leaders in the running of software on hardware that still does not exist yet. That's not just relevant for cars, but for smartphones and AI in general."
Aren't you worried that companies will simply develop their own semiconductors?
"If companies which used to buy semiconductors want to develop them independently, we'll sell the tools to design and support semiconductors development. In the past ten years, there have been many mergers and acquisitions, and people constantly wondered if this was the end of the industry. I argue, no - it's only preparation for the next wave. Engineers are moving to new companies and we're following them. In many cases, we've actually profited from this."
De Geus' long seniority in Silicon Valley, since the 1980s, gives him a broad perspective about the changes he experienced. I share with him my feeling that the current technology changes are too fast for us to understand and adapt to, and he fires back, "Now you sound like your grandfather and grandmother. They felt exactly the same way and they thought that the 20th century was insanely fast. Their grandfather and grandmother felt the same way. I have far less proficiency of Facebook than my children, but who cares? The moment that you understand the principle, you can understand the details without knowing them, say whether the effect will be here or there, and predict how things will work.
"If you understand what is happening with artificial intelligence and machine learning, you can understand why this will dramatically change the world. Take the issue of privacy for example. With facial recognition and cameras everywhere, if you connect the data from all these cameras, you can know the location of a person at any time. But take this a step forward: if we understand exactly how facial muscles represent our feelings, you've invaded privacy, because I know how someone feels and I can influence him in new ways. What happened with the Cambridge Analytica scandal, for example, might have surprised some people, but not those who understand the technology. It's not hard to understand the business model and as long as Facebook doesn’t charge money, it's clear that information about users is sold, distributed, and recycled."
When De Geus is not spending hours in the office, he plays guitar in a band that he set up with friends. As far as he is concerned, the two interests come from the same emotional place. "When you have passion, everything moves, and the only way that I have to create it is to try as many things as possible, give yourself to randomness. When I play in my band, I come with no less passion than to managing Synopsys, even more. One wrong chord in the band is just as bad as a bug from a customer."
Published by Globes [online], Israel business news - www.globes-online.com - on May 3, 2018
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