Altair’s Jim Scapa on the Convergence of Simulation, HPC, and AI | Future Says

Thank you.

I think honestly that Altair has been talking about these things much longer than many others in industry and many other companies. And I really think we came at it in a very evolutionary way, not a revolutionary way. So if you know Altair's history, we came into the market really as a very small player in the Detroit automotive market essentially, doing consulting work in the mechanical simulation area. And we really entered with a first product which took advantage of a lot of new technology, much larger memory machines, really bringing all of the models into memory and being able to have very high performance graphics. And that was really the first innovation that Altair brought to market. After that, we've brought several other innovations, but many of them, in fact most of them, seem to relate to these inflections with computing. So we started with simulation, and along the way we began to see that everything we were doing was driven by parametric studies, optimization, this sort of thing. And we were always very in touch with computing, the hardware computing and how it related to the software that we were building. And we recognized that this move was being made in HPC from very specialized hardware to basically these commodity clusters. And at that moment we recognized it's going to be extremely important to manage the scheduling of jobs running on there, especially if you want to run a thousand parametric studies or do a design of experiments or a response surface-based analysis. So we began looking at the technology for that, ultimately spinning a team out of NASA. So now we were sort of deep into HPC and simulation, we were really understanding all of the nuances around that, staying very close as GPUs were coming on stream, as different technologies for networking were coming on stream, and managing all of that. And along the way we were going to these supercomputing conferences every year, one in Europe and one in the States. And what I noticed was this transition from it was all simulation and a lot of universities attending these conferences, to now analytics, AI, machine learning. That whole area of technology just started to take off, and you really saw it firsthand at these conferences. So I began to realize that there's something happening here. We had simulation and HPC clearly very connected, but now you had data as well. And just began thinking about that. In late 2008, I acquired a little company out of Italy that was doing basically business intelligence software. It was sort of my first little baby step, and it really is the way Altair has grown. We're a learning culture, I think, and my personal culture is very learning. So with that acquisition, which was quite a failure by the way in most regards, financially was kind of a failure, we had a lot of challenges with people, but we learned a tremendous amount. And that is how you learn. So there again, we began to evolve that idea that there's more and more data coming, more and more sensors are coming into the market, and also the ability to create our own data. So we really saw that vision. And I think as the market now is embracing that more broadly and everyone is talking about digital twins, digital twinness, digital twin, I mean digital twins are essentially what Altair has been immersed in for 35, 36 years. We're building simulation models which really capture the physics of whatever it is that you're modeling. And now with data analytics and machine learning, reduced order models and neural nets, you're actually building these reduced order simulations as well. And it's bringing all of that together, and of course enabled by HPC. That is the future that we see and envision and that we think is really becoming explosive. So I see Altair really at the center of the future and just really excited about our ability to continue to evolve that. So it's evolutionary to me, not revolutionary. So I think that's one of the unique differentiators of Altair from most other people within this market, is that we have this simulation background.

The history for the company obviously is in the manufacturing sector. We started in automotive in Detroit, we evolved out of that to be very international automotive, we went all around the world very quickly. And then aerospace has become a very big market for us, heavy equipment, everything manufacturing, consumer products, consumer electronics. Through the years we've grown from mechanical to a lot of electronics, electromagnetics, all of that. So that's our core business. And then with the acquisition of Datawatch, we really suddenly opened a world to ourselves that was all about financial services, banking, healthcare, to a large extent. And of course HPC had already brought us into markets like energy, life science, most of the pharmaceutical companies are our customers. Also many government agencies that do fingerprint matching and other secret stuff are using high performance computing.

I think it's all about listening and respecting people, understanding where they come from, caring about them. And as a leader, one of the things I often teach to others that I think are leading is vulnerability. And that may sound surprising, but I think it is really important that you make yourself vulnerable. Most people want to hide all their weaknesses and pretend that they are... sometimes that's important, but I think it's important to show your vulnerability when you're dealing with the people that report to you, that work for you, because they trust you and they want to have a sense that you put them actually first. And that is something that just comes very natural to me. So I think first and foremost it's about that. And I think that as I've acquired companies, most of the companies that I've acquired have been built by founders, and I relate to the other founders. And those founders, I know, have a very hard time to give up their babies. And very often I'm competing with a larger company or whatever, but I think many of those founders trust me more, and they should by the way, because I really do have respect for what they've built, for the people, for their customers, all the way around. And I do think that my team that has grown up with me, not just the very top leaders in the company but throughout the world as we built this company and spread the DNA of the company, everyone understands this idea of respecting people. I always talk about when we acquire another company, we wrap our arms around the people and hug them. And we really try and understand the skills of everybody that's coming in. We don't just want to put our thumbs on those people and dominate them. Oftentimes they're enormously talented individuals that we want to integrate throughout the enterprise. So I don't know if I'm answering your question completely, but culture is really about listening and respecting people and having integrity with customers and with one another. One thing I will say though, is I was listening to some of the previous talks, and one of the things that I love, even though I'm 64 at this point, I started the company in my 20s, I love youth and the power of youth. And if you notice the things I'm doing inside the company, I'm trying to transform the company, make it even more diverse and make it more youthful, because I want this business to go for the next hundred years. And I think in order to do that, you really have to sort of tear it down and rebuild it all the time, and you have to embrace youth in all that. On the other hand, I will say that a lot of the business culture today, which is a very youthful culture, and partially it's even more youthful with technology today because of remote work, because of this decentralized thing, you lose hierarchy. And the good thing about losing hierarchy is it trends towards more pure meritocracy. And I've always been a big believer in meritocracy. I used to promote somebody who was very young and less experienced way up, and people would say, 'Oh my god, why did you do that?' Because you need to do that. You really need to have a meritocracy and people need to respect that. So today I think what's happening in the world is sort of tearing down hierarchy a little bit and moving towards this pure meritocracy. The problem with it, and I haven't thought deeply about this recently, is that you have this sort of Facebooky thing where you move fast and break things. So I do think that this idea of risk and doing anything with wild abandon, the risks suddenly become maybe untenable in some cases to the company itself. But you can do harm to yourself if you go crazy, but you can do harm to society as well, to others. And to some extent, there's not sufficient controls if everybody's doing whatever they want. And it's really challenging for the systems that are in place in society and in some companies as well to control all that. So it's a very dynamic moment. I wish I was 20 years younger because I still have the same energy I had 20 years ago, but people tell me I shouldn't, so I try to rein it in. But with all that risk comes a lot of interesting challenges.

I mean, different challenges. I've been reading a book about wartime CEOs versus peacetime CEOs, and it's hard. Very few people are capable of doing both. And I've certainly been a wartime CEO, I think I've been a peacetime CEO, but there aren't that many moments that I feel that way, so I'm probably closer to a wartime CEO. And certainly the last two years have brought a different set of challenges. I think Altair was particularly well set for this because I always believed in this idea of allowing people to work pretty much where they wanted to. So if you noticed, we've had development going on in 20 or 25 different locations, whereas a lot of companies, when they would acquire another company, would force everyone to one of three development centers. I have never believed in that. I believed in this idea of you go where the ideas were, where the intelligence is, where the talent is. So we were really well set for remote work. I think we were also very well set because we had developed this technology for managing the licenses on our own servers. And actually a lot of customers and a lot of our own sales guys had not embraced this even though I had been pushing this idea, because I think it's much better for both, especially as we move to the cloud and you want to be able to use the licenses wherever. But the sales guys had been slower to embrace it. But as soon as COVID came in, it was clearly a fantastic solution because you didn't need to have all the VPNs out there. So it was just a great solution. Our customers could get up and running very quickly, and the customers fully appreciated that. And that transition, that transformation, finally was accelerated. So I think because we were used to working remotely, we really got on that program pretty quickly. But I do feel, and some of this is my empathy for the people, I had a relatively great period. I went to California where I have a home where all my kids and grandkids are, I saw them frequently, so I had a very nice social life. But I really was feeling, especially for the young single people who were holed up in apartments in Barcelona or in Paris, I was truly worried about the mental side of it.

We have these four values in our culture, and they've been around for over 30 years. I espoused them right at the very beginning, and diversity was right in there. And that might surprise people because today diversity and inclusion is more the mode. But for me, I grew up in a European home in New York. My parents were immigrants from Greece, they spoke a lot of languages, they were Holocaust survivors, so we were Jewish and we had some of those issues going on. Dad worked seven days a week. If I wanted to see him, I wanted to work with him actually. He had a little store in this Puerto Rican neighborhood. So for me, I really believe that great ideas are coming from everywhere around the world, and I have a lot of respect for people. Because my dad spoke seven languages, was pretty educated, but because he spoke pidgin English, he was not well respected. I saw that as a kid, how other people were treating him because he had an accent. So for me, I just come with this mentality that there are great ideas, there's great universities, there's original ideas and technology coming from everywhere, and great thinking. So diversity has been a mantra for me personally. And now I have four daughters, and two of them are engineers, one is a lab animal vet who works with primates, has been at Harvard and Caltech. And they're all very good in math and science, and of course I raised them that way. But I'm a huge proponent of women in tech. Women should be having a much larger position. And I know from my own experience, my one daughter who was taking all the advanced classes in high school math and science and programming, she came home crying one day from school because there were no girls in her classes, and actually most of the kids were foreign born as well. And she didn't want to take these classes anymore because the other girls were making fun of her because she was in these classes. And it really makes you realize, and this is the same for African-American kids, unless you have role models, unless you are seeing people like you that you're striving to be like, you sort of have to build the system. And I've been on the board of visitors at Columbia University where the dean, who's also on my board of directors, Mary Boyce, really has been a great leader from the point of view of bringing women professors in. It's 51% of the incoming classes the last several years are girls with amazing scores, brilliant young women. More and more of the professors are women at the university. So she's built a culture from the top down and the bottom up where you get this diversity of thinking. Because they're all coming from a different place with a different point of view. And so now you have diversity of cultures, diversity of cultures because women and men sometimes are from Venus and Mars. And you want diversity of skin color and religion and all of that. You want different ideas clashing together. That's the power, in my opinion. It's one of the powers of the United States in comparison with many other countries that are much more homogeneous, because you do have this clashing of cultures. So yeah, I'm a huge proponent of diversity and inclusion.

As I said at the very beginning, I'm really excited about the future. I think the company is sort of standing on the precipice of a huge opportunity. We have the breadth of technology and the kinds of technology that we have absorbed and integrated into our organization. The culture that we have of experimentation and developing in the direction of where the market is going, envisioning where the market is going a bit, and just carrying ourselves there. I just think we're in a great moment. As far as what I see technology wise, I see this next revolution or evolution of computing hardware. You see quantum computing being heavily worked on, photonics, lots of new interesting processing technology coming on stream, 3D IC chips that give you more and more performance. You see Apple coming out with its latest M1 technology, Apple working on autonomous and its own, God knows what they're working on, but that's exciting. So I think there's a next jump in computing that's going to create the opportunity for software. And I think we have to spend a lot of time paying attention to that so that we can catch that wave and make sure that we're taking advantage of where it is going. At the same time, I think we're just at the beginning with the SmartWorks technology, which is this cloud native. We're trying to bring together all the technologies that came from Datawatch that were mostly desktop technologies for data prep and data science, and we've added all this auto ML and explainable AI technology, and we're adding DevOps into the code, and we have all of the capabilities to do IoT, to create applications for IoT and to collect the data to do the analytics on the data. So I think we're right at the beginning of this next revolution. And bringing together all of the expertise that we have in simulation together with all this IoT and machine learning and AI technology is really this idea of simulating, if you will, or creating these digital twins for almost everything that we work with or work on in society.

I think we need to be responsible. When we're implementing technology and working with customers implementing technology, we do want to think about things from a common sense point of view and try and be responsible about it. And there is a whole learning that needs to go on there. We don't always anticipate the harm that may be done, and maybe it's very subtle. And I just think we have to behave in a very responsible way, in a very careful way, and step somewhat carefully. But we do have to continue to take risks. And so we may step a little bit the wrong direction, but when we do see that, I think we have to have the courage not to just think about the financial gain but actually step back and make the adjustments. It's always that trade-off. If all you care about is money and growth, in the end I think you're not going to be successful. I really do believe the good companies win in the long run, and I think Altair is an example of that.

Altair very early on got involved in this area that we call topology optimization. And the whole concept is all around light weighting. When you were designing components historically, you were over designing, and very often they were being designed in the way they were designed in the past. And with topology optimization, you really start with a blank geometry where you know what you're trying to accomplish with this design, where it's held, what the forces are, and it carves out these very efficient topologies. And it really lent itself to light weighting because you end up with very efficient organic structures, very similar to how the world has evolved. Trees grow very organically so they hold their structure in a very efficient way. Humans and all things in nature have really grown in that way, but it's been millions of years to evolve these very lightweight organic structures. So when we're designing components, that was the same idea. So we really push this idea of light weighting. We created an award for it that has become a very prestigious award. The technology that we released in the market, OptiStruct and later the Inspire technology, we've made some attempts at estimating the savings. You can find it on our ESG site. But it's been a massive impact on weight savings and therefore CO2 emission savings. And it's real, it's not just talking. That is real stuff. And I think the same is going to hold true for the other optimization technology that we push. It has a similar impact on gaining efficiencies across the spectrum. And I think most of the data analytics technology that we're bringing forward is going to have very similar impact. I look at our lighting company. We have a lighting company that we have 150 patents for solid state lighting, and now we have smart lighting products, and we're using our SmartWorks technology underneath it to build out the apps and to do all the data analytics. And their goal is to be able to say, 'This is how much power I'm willing to use, and I want to manage cost and I want to manage power consumption.' And now the algorithms can go out and if you're at that peak already and somebody goes into the bathroom to turn a light on, but you're at your capacity, it can go across the building and take down tiny bits of light across the right. You won't even notice it because the eye doesn't perceive it, and now you have sufficient power to turn the light on or to run your HVAC system. So bringing this kind of optimization into society is super exciting. And oh by the way, it should make us a lot of money. So we're very excited that we can do good and grow our business sort of in concert.

Brilliant, brilliant.

No, I just, first of all, I appreciate all of our customers. I appreciate all the people like you, Sean. I mean everyone in the company, including you, I see them embracing what they do with a kind of passion that I just love to see. So thanks for all you do, and thanks to our customers that are listening. And I hope we get a chance to meet each other live soon. So thank you.