First of all, how are you and your family doing in these COVID-19 times?
Hal Barbour: We are extremely lucky. Both my wife and I are working from home, and the only nuisance is that, when we go out, we need to wear masks and occasionally we get take-out.
Tell us about you, your career, how you founded CAST.
Hal Barbour: All 5 founders were electrical engineers that worked for a company here in NJ that went public, got sold and then our NJ based business was closed. So, being out of work, we were faced with a decision, what to do next? None of us was keen on relocating to Silicon Valley or the Boston area where many engineering companies were located. Nothing wrong with those areas, but we quite liked the NY/NJ area, and we were reluctant to move. Our main assets were a deep understanding of semiconductor chip design technology and a few relationships with outside companies that initially gave us contracts to put bread on the table. We were also opposed to getting any outside investment in the company. We had personally seen many excellent engineering teams decimated by unrealistic expectations of investors. We wanted the freedom to control our destiny without the burden of meeting short term goals. And it has worked well for us. Don’t get me wrong; it was tough in the beginning. None of us was wealthy, but we shared a commitment to quality and customer success, and that is still a guiding force, 28 years later.
How does CAST innovate?
Hal Barbour: We try to understand where there will be emerging new technologies and then provide common elements that many chip designers will need. Designing chips is like designing buildings; there are many common elements like bricks and mortar that designers choose to acquire rather than build themselves. It’s just that semiconductors are a lot more sophisticated and our “bricks and mortar” are abstract rather than physical. Our products are software modules that are delivered over the internet. We are also careful not to tackle requirements that are beyond our base of understanding. We also leverage partnerships with small teams, mostly in former Soviet bloc countries. We have developed an excellent global sales and support network that would be difficult for our partners to duplicate on their own.
How the coronavirus pandemic affects your business, and how are you coping?
Hal Barbour: It’s interesting that it really hasn’t had a negative effect on us at all. In fact, this will be the best year in our 28 year history. Being a self-funded company, we started by working from offices in our homes and, as we grew, we never found it would be advantageous to change that model. So when most of our customers started working from homes, we were already there and had been doing that successfully for years.
Did you have to make difficult choices, and what are the lessons learned?
Hal Barbour: Our initial focus was to provide simulation model libraries, but within a few years we could see opportunities to expand on our first products to provide a more complete range of solutions and those products become known as IP cores. So we soon realized that developing these cores would require a lot more engineering bandwidth than we could afford using US engineers. So initially, we discovered a small company in Poland that wanted to develop what we needed but had no access to global markets. So we made a deal that we would do the selling, licensing and support and we would share the revenues. It was a good deal for the partners and us. At that time, we could get 7 engineers in Poland for the cost of 1 engineer here in the States. It was so successful that we later acquired a small team in the Czech Republic and partnered with others in Greece, Germany, Slovenia and Australia.
How do you deal with stress and anxiety? How do you project yourself and CAST in the future?
Hal Barbour: Stress has not been an issue for us. In 28 years, we have lost only one employee. People appreciate the freedom of working at home. We have been open to the idea of allowing people to live and work from wherever they wish. All that was required was high-speed access to the internet and a willingness to travel when necessary. For example, one of our founders moved his office back to his native Brazil for 10 years (he’s now back in San Diego). And others have relocated from New Jersey to Colorado where they can enjoy the outdoor lifestyle. We also have very competitive HR programs such as excellent health coverage for all employees and their dependents. In addition, we have company-sponsored 401k and Flexible spending programs. People appreciate the freedom and low-stress environment. As far as protection is concerned, we remain internally owned, have zero debt, are well insured, and not a single customer contributes as much as 5% to our total annual revenue.
None of our owners has expressed a desire to be acquired at one other point. In 2010, Nikos Zervas, a CEO of a CAST partner company in Greece, decided to leave his company. As soon as he informed me, I asked what he was going to do next, and said he was not yet sure. So I said, “Let’s talk” and Nikos joined in Oct 2010 as VP of Engineering and Marketing. After 5 years in that role, he was ready to take on greater responsibility, and CAST needed someone at the helm that was closer to the latest technology. So Nikos was promoted to CEO, and I became Chairman.
Who are your competitors? And how do you plan to stay in the game?
Hal Barbour: We compete with some very large companies like Arm, Synopsys and Cadence along with a plethora of other smaller companies. We are successful by sticking to what we do well. We outsource most non-technical functions. So we remain lean, provide a great business proposition to our customers and provide exceptional support. Another BIG advantage for us is that the Semiconductor IP industry requires thousands of different kinds of IP products. So there are always new products that are needed.
Your final thoughts?
Hal Barbour: I realize that this sounds a bit idealistic, but all I can say is that it works for us. We enjoy what we do, and we do it as well as anyone in the Semiconductor Business.