"I outwork everybody else and set an example as CEO," says Lip-Bu Tan. A workday for him lasts usually for 18 hours. He had arrived last Thursday in Bangalore at 5:30 in the morning, had a swim in the hotel pool, and exercised at the gym before a breakfast meeting at 8:30am. He then delivered the keynote address at the India Electronics and Semiconductor Association (IESA) vision summit, continued his meetings till 11pm - one of them with ET - and flew to Mumbai at 6am the next day, and then to his home in California.
Tan, CEO of Cadence Design Systems, is known to make such quick weekend trips for meetings in other continents, while the rest of his colleagues and associates recovered from the week's stresses, coming back in time for his Monday morning meetings. He is a nuclear engineer, a venture capitalist of some repute, an advisor to the Chinese and Taiwanese governments on semiconductors, and a dosa-loving jet-setter who is keenly watching Indian entrepreneurs with $100 million in his pocket.
Tan had founded a software company over two decades ago and done a short stint at an investment bank - he didn't like the transaction business - before he moved on to VC fund Walden International. "I told my two founders, don't worry about paying my salary, I will create my own existence." Tan set up a $3 million fund which he slowly built up to $2 billion. He invested mostly in semiconductor companies at a time when most VCs shied away from this industry. Among other things, he is credited with helping Taiwan create a thriving semiconductor industry. He made deep connections within the semiconductor and systems industry, becoming friends with CEO of almost every important company.
When he took over as the CEO of Cadence in 2009, industry observers had raised their eyebrows. A venture capitalist as a CEO? Cadence was then tottering at a precipice, its future existence in doubt. "Many of us in Cadence began doubting whether the company can survive," says Jaswinder Ahuja, corporate vice-president at Cadence and a 24-year veteran of the company.
Tan had no previous managerial experience. Neither did he know the Electronic Design Automation (EDA) industry. But he quickly turned the Cadence around. It is now a $1.3-billion company with a net income of $440 million for 2012. "He was grounded and humble," says Ahuja.
After rescuing Cadence, he created a vision for the EDA industry for the next decade. Being an engineer he had an eye for detail, which he used copiously, during every day of his existence. "I ask my sons to get an engineering degree first," says Tan. "It is a good preparation for life's problem-solving. Then you can study whatever you want."
When he took over as CEO, his connections in the semiconductor industry opened the doors for Cadence's salespeople. "We would be struggling to get a foot in the door, and the next day we get a meeting with the vice president," says Ahuja. Of course, it was up to the salespeople to make the best of this opportunity, and many of them did. Tan had been a regular visitor to India over the last decade, but so far he has not invested much in Indian companies.
"I am very selective when my team members are investing," says Tan. "When I invest I also make a commitment for eight to ten years." In fact, only 20% of this investment was in India, one of which was the software company MindTree, which he exited some time ago. Ittiam was another. A few years ago Tan joined the board of Cosmic Circuits, a chip design company in Bangalore.
He had sought out this company and its founder Ganapathy Subramaniam to offer advice, and after a while Subramaniam invited him to join the board. Last week, Cadence acquired Cosmic Circuits for $60 million. "Lip-Bu meets and talks to everybody regardless of position," says Subramaniam. "And he brings his tremendous network to the companies he invests in."
As one of the founders of the venture capital firm Walden International, he is also known to spot interesting companies quickly. "I travel two million miles a month. No other VC is willing to do it. So I bring a unique cross-border experience to the industry ." He dips into the local culture wherever he travels. "I love Indian food, and that is the only way to succeed . If you stick to the US hamburger and try to do business in Asia you are not going to succeed."
He is now intensely looking for people and ideas for investments in India, and has mentally committed $100 million for semiconductor startups in the country. Some of India's initial semiconductor start-ups are maturing now, but a deeply-connected electronics ecosystem is yet to form in the country. "Semiconductor is at the core of a lot of products. If you don't have it, it is hard to be on top of it." India would need a fab soon to make this ecosystem complete. So would many entrepreneurs who are now hoping to access Tan's money and industry network.
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