Hello, I'm Anirudh Devgan. I'm CEO of Cadence. For those who don't know what Cadence is, we are based right here. We are leading provider of software to design chips—semiconductor chips and electronic systems. So, as you know, these days age of AI, semiconductors become even more critical—is probably the most complex things humans have ever built and they are all designed by help of software. They're too complicated to be designed by hand and we have privilege with working with all the leading tech companies. And also it's great to be here for me and we are glad to sponsor this phenomenal event. And these two gentlemen are great friends and mentors of mine, and people are very familiar with of course our space. So John was chairman of Cadence for most of the time I've been at Cadence, and Cadence and I really benefited from his leadership and advice and Lip-bu is my predecessor as CEO of Cadence and he hired me. I worked very closely with him for 10 years and I learned so much from Lip-bu. So, it's a real honor to be here and I really look forward to hearing from John and Lip-bu. Thank you.
Okay. Well, I have some notes, but I'm not going to look at 'em. So we'll see how this goes. I have known Lip-bu for more than 22 years and I'm going to keep this introduction short because the conversation is the main thing. But Lip-bu was born and raised in Malaysia. He was a physics major as an undergraduate, still in Malaysia. At age 19, he immigrated to the United States, enrolled at M.I.T. in nuclear engineering. He got a master's degree at M.I.T. and then he moved to the Bay Area and he had a couple of jobs in engineering. He was—one job I think in venture capital—he got a MBA at the University of San Francisco. Maybe that was at night. And, but at age 27, he founded Walden International. And Walden International specialized in semiconductor and software startups. Those were not particularly the most popular area in venture capital at the time, so he was a bit of a contrarian investor. But Walden was a huge success. Over the years it supported hundreds of American companies, creating 50,000 jobs in the U.S.—$400 billion dollars of capital (market capitalization). So it's a big success, but actually it was also investing all over the world, particularly in Asia. We met in 2004. I'd been on the Cadence board for about a dozen years already. And one year later, in 2005, I became chairman. Three years later, suddenly Lip-bu and I were co-interim CEOs of Cadence. It was kind of sudden. Cadence was struggling; we parted ways with the CEO and there was a third person in what was called the office of the CEO—Kevin Palatnik, he was the CFO. But suddenly we're supposed to be running the company until we found a permanent CEO we hired a search firm and well, so we were, I saw him up close. Immediately he poured himself into this interim job—so much so that in two weeks I thought, well maybe we have the permanent CEO right in front of us. And first I told the search firm: Put him in the pool that you're looking at, and then two weeks later I said, forget the pool; he's our guy. And it was an amazing turnaround he accomplished. For instance, the stock price, those of you who know the rule of 72: The stock doubled six times in his 13 years as CEO. So, that was incredible. So, that was that. Now, he joined Intel about a year ago, almost exactly a year ago, and he's trying to move the … another great turnaround and that's what we're going to talk about in the conversation. I should say that SIEPR and Intel actually go back aways. Gordon Moore, the co-founder of Intel, was on the SIEPR advisory board for many years. So, I'll just conclude with one little story. In 2004, we met; he joined the Cadence board. And I found myself standing with him at some reception and maybe we were standing in line for lunch—I can't remember, I was just trying to make conversation. So, I said, "Boy, I don't think I've ever met anybody named Lip-bu before." And he paused and he said, "Neither have I." So now that you know that he's one of a kind, I think you'll conclude that even stronger after our conversation. So that's it.
Okay. Thank you, John. Thank you. So, like I say, we're friends and we've known each other a long while. So the first thing I would ask him about will be related to Cadence and whether the same playbook is working at Intel. So when he got to Cadence as CEO that was January of 2009, he visited all of our major customers multiple times. He was everywhere. He was in Korea. He was in China. He was in Japan. In Austin, Texas—all over the place. And he asked them—actually he listened to them, which was new, and he asked them to grade Cadence as a supplier and the grades were not pretty. But Lip-bu listened and he made pledges that we're gonna deliver and so forth, but over the first year he changed the nature of the customer relationship. It changed from Cadence being a supplier to Cadence being a partner and that was hugely helpful in the turnaround. So my question is: Are you doing that again at Intel?
Well, first of all, delighted to be back to SIEPR and you know when John asked me to do this fireside, I cannot say no. I say yes. So I'm delighted to be here. I meet a lot of old friends here and I'm delighted to be here. So I think couple of things. So first of all, I thought that after Cadence I pretty much—going back to my venture capital investment, starting to make a lot of investment—then I was asked to step in you know as a board member and then later on I stepped down and then they didn't let me go and then asked me to become the CEO and many friends told me that: Lip-bu, you shouldn't do it. With your success at Cadence, success with so many IPO, people only remember the last one, and so that's one me that don't make a mistake. And then a couple of friends said that, well, before you retire it would be great to save this iconic company and it's so important to United States. And so most important, I need to convince my wife and so I have the permission after 44 years anniversary Ysa said, "Oh, just do it." And so with that, I decided to step on it. So answer your question, so I think, you know, and many people know me, humility is my personality and so you know: Get on the job at Intel, the first thing I want to spend—actually the first day, my biggest customer request for dinner together, so [at] the dinner he have a long list of problem. So I say, okay, let me take down the notes and said we are so delighted you're the CEO and in the past you don't want—your guy don't even want to listen and even lecture us—now we are so delighted to have you, you are so humble, you take notes and then I follow up, we meet and clarify all the issue and then we are delighted; right now we have a big partnership with them. And so I think the most important—you just have to understand what is real problem and being a good engineer you try to figure out how to solve it—and then initially try to know how bad the product is. The key point is you just have to build a trust with the customer and then our competitors at that time—very good friend of mine—is that finally we find out your secret: My vendors treat us as a vendor. They treat you as a partner and they share with you next 5-year, 10-years road map, that we don't have that benefit. So that's kind of being humble, show the vulnerability, and actually you show strength—and it's not, you don't need to tell them how smart you are, but you build the trust that they count on you to deliver and get the best team to deliver and solve the problem. I think that's kind of the secret of success I think.
So the answer is yes: He's following the same playbook. [Laughter] Also, if you're 21 and getting into a graduate school at M.I.T., you haven't had a lot of Fs and D's before. Okay, one other thing about Cadence the early days, some of his direct reports would come to him and tell him what great things are happening in that part of the business, whatever the direct report was responsible for. And Cadence was struggling, just like Intel was struggling when he took over, and so Lip-bu said why don't we start off with the low lights instead of the highlights; why don't you tell me what's not working?
Yep, I think the kind of similar and, a couple of thing is very consistent. #1, they all want to tell you good news and so I usually tell them that I only interested in bad news. And being an engineer I like to see the problem and then actually I learned from the mistake and so something similar at Intel—people tell you all the good news and then, so I said that, well, there's a philosophy if you tell me the bad news that mean that is our problem; if you don't tell me, then this is your problem. And if I hear it from the customer, you're in deep trouble. And so that's kind of the philosophy still apply.
I came up with a theory that there were two speeds of light in a big company. There's the speed of light with which good news reaches the CEO and the much slower pace that bad news reaches the CEO. And he fought that and so that was good. Now to move more to the present, I listened to the Intel earnings call most recently and I heard that Intel has more of a supply problem than a demand problem.
So good news is that demand is strong and then in term of supply I think all of you know, is a huge concern. If anything slow down the AI factory or AI growth, memory is a big problem. The supply chain is a huge constraint. Finally, I tell my team, the culture had to change. The new Intel, we got to be humble. We have to be more open and transparent and we're still moving, we are still changing it.
Now let's get to the question that you guys want to know: Question is, how did you turn around Trump from saying you should be fired to being one of your biggest fans? How did that go?
