![Business Breakdowns - Cadence: Software Behind Semiconductor Design - [Business Breakdowns, EP. 49]](https://storage.googleapis.com/goodpods-images-bucket/episode_images/2383f7b01baa3c4e0a1968e123bd12530789295a007be1b1fd1920a7a164db7b.avif)
Cadence: Software Behind Semiconductor Design - [Business Breakdowns, EP. 49]
03/02/22 • 60 min
1 Listener
This is Matt Reustle and today we are breaking down Cadence Design Systems. Cadence operates in the semiconductor ecosystem where they offer electronic design automation software - also known as EDA software - which is used for chip design. Putting that in much simpler terms - our phones now carry an entire 1980s Radio Shack inside them, and Cadence makes that possible with software to design smaller and more powerful chips.
To break down Cadence, I'm joined by two well-known tech investors and experts in the semiconductor space, Brinton Johns and Jon Bathgate of NZS Capital. We cover the value chain of semiconductors, the evolution of Cadence and the EDA market, and how Cadence reduced it's cyclical exposure over the last decade. I think some of the most interesting lessons come from businesses that face adversity and truly re-invent themselves with a micro-strategic change. Cadence is a prime example. Please enjoy this breakdown of Cadence.
For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.
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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.
Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.
Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss
Show Notes
[00:03:15] - [First question] - Everyday products that Cadence helps bring to life
[00:07:28] - The rise of Cadence and the origins of the semiconductor industry
[00:10:26] - Major players in the semiconductor space back in the 80s
[00:12:13] - Going from plan, to chip, to production
[00:16:58] - The life cycle of a chip and the cost to design one
[00:19:19] - Differences between software design and embedded software
[00:21:25] - The history of Cadence and the size and scope of their business today
[00:28:05] - Existing customer base and how diversified they are
[00:30:55] - What a contract actually looks like between Cadence and a customer
[00:35:05] - Protection, off-the-shelf IP blocks and custom IP
[00:35:53] - Cadence’s revenue growth, important metrics, and their KPIs
[00:37:03] - How correlated their revenue is to semiconductor cycles
[00:39:30] - Unit economics and the margin profile of the business
[00:42:13] - Contributing factors to growth and thoughts on pricing
[00:45:46] - Benefits of scale and what they like to see as investors from their R&D spend
[00:48:12] - Risks and competitors that may threaten Cadence’s success
[00:50:22] - Potential scenarios where the ecosystem becomes more vertically integrated
[00:52:56] - What would drive a 10x growth for Cadence in next five years
[00:54:58] - Things that would affect their growth in the next five years
[00:57:38] - Lessons for investors when studying Cadence
[00:59:15] - How they navigated the pandemic and how it impacted their business
This is Matt Reustle and today we are breaking down Cadence Design Systems. Cadence operates in the semiconductor ecosystem where they offer electronic design automation software - also known as EDA software - which is used for chip design. Putting that in much simpler terms - our phones now carry an entire 1980s Radio Shack inside them, and Cadence makes that possible with software to design smaller and more powerful chips.
To break down Cadence, I'm joined by two well-known tech investors and experts in the semiconductor space, Brinton Johns and Jon Bathgate of NZS Capital. We cover the value chain of semiconductors, the evolution of Cadence and the EDA market, and how Cadence reduced it's cyclical exposure over the last decade. I think some of the most interesting lessons come from businesses that face adversity and truly re-invent themselves with a micro-strategic change. Cadence is a prime example. Please enjoy this breakdown of Cadence.
For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.
-----
Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.
Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.
Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss
Show Notes
[00:03:15] - [First question] - Everyday products that Cadence helps bring to life
[00:07:28] - The rise of Cadence and the origins of the semiconductor industry
[00:10:26] - Major players in the semiconductor space back in the 80s
[00:12:13] - Going from plan, to chip, to production
[00:16:58] - The life cycle of a chip and the cost to design one
[00:19:19] - Differences between software design and embedded software
[00:21:25] - The history of Cadence and the size and scope of their business today
[00:28:05] - Existing customer base and how diversified they are
[00:30:55] - What a contract actually looks like between Cadence and a customer
[00:35:05] - Protection, off-the-shelf IP blocks and custom IP
[00:35:53] - Cadence’s revenue growth, important metrics, and their KPIs
[00:37:03] - How correlated their revenue is to semiconductor cycles
[00:39:30] - Unit economics and the margin profile of the business
[00:42:13] - Contributing factors to growth and thoughts on pricing
[00:45:46] - Benefits of scale and what they like to see as investors from their R&D spend
[00:48:12] - Risks and competitors that may threaten Cadence’s success
[00:50:22] - Potential scenarios where the ecosystem becomes more vertically integrated
[00:52:56] - What would drive a 10x growth for Cadence in next five years
[00:54:58] - Things that would affect their growth in the next five years
[00:57:38] - Lessons for investors when studying Cadence
[00:59:15] - How they navigated the pandemic and how it impacted their business
Previous Episode
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The New York Times: The Empire Strikes Back - [Business Breakdowns, EP. 48]
This is Jesse Pujji and today we’re breaking down The New York Times. Since its founding in 1851, The New York Times has become known as the national “newspaper of record” through its focus on truth seeking and quality journalism. To underline that status, it has won 132 Pulitzer Prizes, almost double its nearest competitor. However, the business behind the Times hasn’t always been easy and it has faced several existential threats over its history, most recent of which has come from the internet and digital mediums.
To break down The New York Times, I’m joined by Morning Brew co-founder and host of Founder’s Journal and Imposters podcasts, Alex Lieberman. It’s particularly interesting to hear a new media operator dissect the heritage and evolution of one of the most storied brands in his industry. Please enjoy this breakdown of The New York Times.
For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.
-----
Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.
Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.
Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss
Show Notes
[00:02:55] - [First question] - What The New York Times is as a business
[00:04:35] - Snapshot of the scale of The New York Times and it’s readership
[00:08:06] - The origin story of The New York Times and becoming a national news source
[00:11:40] - How the business is distinctive being family-run for five generations
[00:15:00] - Unpacking the shift from physical to digital and how it impacted their numbers
[00:20:00] - Course correcting after the first few years of their digital strategy not succeeding as anticipated
[00:23:43] - The cost of sales and the margins of the business and growth levers
[00:27:47] - Revenue differences between advertising and subscriptions
[00:29:37] - What does their non-digital advertising business look like
[00:31:43] - The biggest levers for growing the topline and bottomline of the business
[00:35:18] - Acquiring Wirecutter & historical M&A performance
[00:37:57] - Other categories and businesses that help build a bigger audience
[00:42:00] - Differences between the Netflix and New York Times subscription models
[00:44:37] - Leaning into world events and politics
[00:48:22] - Macro factors and specific things that would lead to reaching their subscriber goal in the future
[00:51:10] - Mistakes and threats that could negatively impact their goals
[00:55:43] - Biggest lessons for builders, entrepreneurs, executives and investors
[00:58:30] - Learn more about the New York Times; Peter Kafka, Rich Greenfield, Lightshed Partners
Next Episode
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Adyen: A First Principles Payment Platform - [Business Breakdowns, EP. 50]
This is Zack Fuss and today we’re breaking down European-based payment business, Adyen. Adyen was founded in Amsterdam in 2006 by a group of payments entrepreneurs who had already built and sold a business in this space. Adyen was their chance to start afresh and build a modern solution to displace the patchwork legacy system that merchants were being forced to use.
To break down the business, I’m joined by Michael Willar, a portfolio manager at Stenham Asset Management. Our discussion covers Adyen’s single platform solution in detail, the driving force behind their track record of profitable growth, and why payments isn’t a winner take all market. Please enjoy this breakdown of Adyen.
For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.
-----
Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.
Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.
Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss
Show Notes
[00:02:55] - [First question] What Adyen is and what they do
[00:05:54] - General overview of how payment processing works
[00:07:29] - Flow of a transaction and how they manifest
[00:09:52] - How the business generates revenue and their revenue model
[00:11:25] - Where Adyen sits in the industry and the size of it today
[00:13:37] - The reality of processing 50-60% of their addressable market
[00:16:19] - What about their culture and founding story makes them so nimble
[00:21:18] - The competitive strengths of the business and their innovative solutions
[00:24:07] - Key revenue drivers for Adyen
[00:26:01] - What is it about Adyen’s business structure that enables them to grow so rapidly while still being profitable
[00:29:34] - Key growth drivers
[00:32:44] - What gives Adyen its competitive advantage over other payment providers
[00:35:56] - Having one platform is beneficial but why isn’t it a more popular approach?
[00:37:42] - The secret sauce behind their successful growth trajectory
[00:39:25] - The essence of Adyen’s culture and how it manifests in their day-to-day work
[00:42:04] - What Adyen plans to do with all of the cash they produce
[00:43:35] - What keeps him up at night and potential threats to the business
[00:47:54] - Is there a chance anyone could build a platform comparable to Adyen?
[00:50:06] - Key differences between Stripe and Adyen
[00:56:23] - Lessons learned from studying Adyen and what payment service builders can learn from them
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