Tuesday, January 26, 2016

Altair at the Altar with Sony

This morning it was announced that Sony Semiconductor has agreed to acquire Altair Semiconductor for $212M, the first acquisition for the Japanese company in Israel. Altair was founded in 2005 to develop fourth generation mobile silicon and I had the pleasure of working with the team ever since the $12M Series A financing. Altair began at a time when there was no clear path for 4G cellular and competing standards jockeying for mindshare. The market for the next generation of mobile would be much larger than 3G because it would encompass broadband services far beyond cellular phones and penetrate emerging and developed markets in parallel. 

To remind you, this was a time when Intel was investing billions of dollars in WiMax in emerging markets, when Nokia was an iconic consumer brand and when Europe’s early adoption of technology standards would dictate the direction of the global market. Altair had developed a low-power, software-defined radio platform, which would allow it to easily develop a chip for any wireless standard using a common architecture, and even a single chip that could support multiple standards simultaneously. The name "Altair" could have been a reference to one of the first micro computers,the Altair 8800, but in Hebrew “le’altair” is to improvise, an apt description of any startup experience, but very relevant for a uniquely flexible hardware product like a chip. 

Looking at the news today, many of the words I read describing the acquisition were not even part of our lexicon ten years ago. Back then IOT was merely a typo and “wearables” could be confused with mundane fashion accessories like belts, cuff links and scarfs.  The LTE standard was far from being crowned,and at the time was pushed by Ericsson and hindered by that company from San Diego. Except for Qualcomm, the landscape of competitors and acquirers of a baseband semiconductor company like Altair completely changed, with Broadcom ignobly exiting after pouring billions of dollars into acquisitions and R&D, and Infineon, ST Micro, Renasas and others merging at the behest of government just to preserve jobs at home. As of yesterday, Altair was one of only two companies to remain independent through this dynamic period, a testament to the longevity of their underlying technology and the consistent execution of a little company from Hod Hasharon.

How does a company navigate such a complex landscape over a decade? Foremost, is with an incredibly scrappy and persevering founding team of three (Oded, Yigal and Eran) and key members of management (Nohik, Eli, Chee and Shlomit) who stayed together and committed throughout. Altair also has more than 200 incredible employees responsible for developing, selling and shipping millions of chips to customers around the globe. Amazingly, despite the changes in the market, product and customer set, Altair experienced what is arguably one of the lowest employee turnover rates in the history of startups. Literally no one ever left willingly. And believe me that Apple, Intel and others tried. 

However, as everyone knows leadership starts at the top and only then trickles down to the lower levels of the organization. Oded Melamed is an incredible entrepreneur, leader and friend. As an entrepreneur, he was focused, confident, tireless, innovative and diligent. He led through example and gave customers and investors alike the confidence that he would deliver on time, on budget and on spec. And he did it time and time again. But the only way an investor can work with an entrepreneur more than a decade is for there to be a great person underneath that scrappy, entrepreneur garb. As a person, Oded is a humble, practical, selfless mensch. One more concerned with the well being of his co-founders, employees and shareholders than his own pocket or ego. So I take liberty now in lauding one of my favorite entrepreneurs. 

The hardest part of selling a company is the abrupt halt to the regular conversation and strategizing that was so engaging and stimulating. After speaking to Oded every week for more than 10 years I will miss working with him. On the flip side, we can now grab a beer and not let work dominate the conversation. I look forward to the next opportunity to work with Oded and team, but in the meantime good luck with Sony and sharing with them the secrets of entrepreneurial leadership and improvisation.