When A.G. Karunakaran “AGK” took that red eye flight to Boston in November 1996, little did he know what he was in for. It wasn’t long before he was in a room full of lawyers throwing one question after another at him. But AGK being the entrepreneur, engineer, and leader answered one question at a time and he soon prevailed. By sunset, he’d won the deal and boarded his flight back to San Jose with a long-term contract for electronic product development.

What would you do in such a scenario? Be happy and complacent? Or charge forth and quietly build a strong business?
AGK and his core founding team members chose the latter. And, GDA Technologies began to grow.

Based on an idea the founding team hit upon during one of their weekly Saturday brainstorming sessions about GDA, the company name originated from the idea to be Global, Designing electronic products in an Automated way. Today, GDA has grown from four people in one room to 300 employees across Asia and North America. Touting a solid $18 million revenue and a proven business model with six design centers across the U.S. and India, GDA now develops silicon and system solutions for world’s leading semiconductor and system companies.

Simply put, GDA helps enable electronic product development, be it chip design, board design, or the embedded software that goes along with it. Over the past nine years or so, they have focused completely on their core competency and created a segment to reckon with: Electronic Design Services.

Of course, the big boys like Cadence once made an aborted attempt to create the EDS segment through their subsidiary Tality. Yet there are still no publicly traded companies in this space. Allowing GDA room to thrive and grow. But can they take advantage of all this opportunity?

“Absolutely,” says AGK emphatically. “There is a clear opportunity in being a technology provider—both in terms of intellectual property and outsource product development.” AGK co-founded the company in 1996 along with his peers Ravi Thummarukudy, with IC design and Electronic Design Automation expertise, Gopakunar Periyadan, who brought global system level engineering expertise, and Prakash Bare, with solid silicon design background. The teamwork and complementing skill sets took them rapidly from $100,000 to $1million and beyond.

“Ideation still takes place in the U.S., but the body of the development engine is moving to offshore destinations like India. Deep industry expertise is key to their success in a landscape where it is leading to a high mix/low volume than low mix high volume devices,” says Arun Kumar, Managing Director and Sr. Semiconductor Analyst at Raymond James, vouching for GDA’s concept and vision.

Kumar admits, “Companies like GDA are at the sweet part of the cycle. The boundaries of this segment are now getting blurred as foundry and EDA companies begin offering complete solutions. This trend is nothing but a validation of the market opportunity that GDA went after, nine years ago.”

Early employees of GDA like Unni Empranthiri, Amit Saxena, and Arun Ramanathan (who moved overseas to head Chennai, India operations) received their formal black blazers during the company’s anniversary celebrations. This black jacket recognizes their service to the company for over five years. The jackets, inspired by the green jacket of the Masters Golf Tournament, signify loyalty, persistence, and passion to remain in the black—for GDA Technologies has been profitable since their founding year.
GDA is, in fact, a rare breed among companies in the Valley. Having bootstrapped since inception the company has always been profitable. In 2002, INC. Magazine, named GDA in the INC. 500 private companies on a fast track list.

Life was not always green at GDA, however. During the dot-com crash, the company’s revenue slipped from $11 million in 2001 to $8 million in 2002. The teamwork kicked in and with many pay cuts and smart spending, the company came back to $11 million in 2003, increasing to $15 million in 2004 and hopes to exceed $18 million by 2005 year end.
“We were creative with money,” quips AGK, who does believe that effective cash management and being smart with money is key to bootstrapping a company. “Re-investing profit back into the business to grow the company is the success mantra at GDA.”

That mantra has served the company well over the years too. With a keen eye for the market and customer needs, GDA survived the boom and bust periods with a clear focus on investment and planning. While companies were giving out pink slips in 2002, GDA unleashed its sales troops out in the streets to drum up business. While companies struggled with their personnel, GDA established and invested heavily in offshore centers in India. “It was smart spending,” says AGK, “that helped the company survive. We moved into a new office premise too. It was 2002, and we got a sweet deal.”

The company grabbed every opportunity that came their way, in fact, irrespective of the size or scope of the deal. When the dust finally settled, GDA was making every dollar count while their competitors slowly disappeared. Tality and Intrinsix, which were on a path to IPO, scaled down significantly while another competitor Spike Technology was sold. Not only did GDA survive the downturn but also became the leader in the EDS sector.

In its first few PowerPoint presentations, GDA had a slide that talked about outsourcing. AGK envisioned having 10 people in India for every one person hired in the U.S. The early stage venture capitalists and prospect customers laughed at this. “Are you going to do electronic design in India?” they all asked incredulously. GDA kept quiet and did the smart thing.

“We just removed that slide and never talked about it,” AGK explains with more than a trace of satisfaction.

Of course, the same VCs today consider offshore centers as a must for their company’s portfolio. GDA has accordingly put that slide back to where it belongs; the company now has two engineers in India for every one person in the US, and their goal is to take it to a 5:1 ratio. To make this happen, GDA has launched their third design center in Cochin, Kerala recently. “We will have 50 people in the next 6 to 12 months focusing on complex board design and embedded software,” explains Gopa Periyadan, co-founder and General Manager who heads the system and business unit at GDA.

With the emergence of outsourcing, many companies have now chosen to move towards the East to leverage cost, but GDA has chosen to remain closer to the customers. “The customer must be able to walk into our design centers and have a reasonable interaction. That’s very important for us,” notes AGK. As a result of this commitment, the company has invested in state-of-the-art labs and design centers in San Jose, Sacramento and Boston.

Over the years, GDA diversified its offerings, and is now well known for its capability in designing chips, boards, and embedded software. GDA typically focuses on three verticals: computing, communication, and consumer electronics. With high profile customers like Cray, Panta Systems, and large CPU chip companies, the company is well established in the computing sector. In communications, GDA pulls out an impressive line of customers including IP Unity and Apertho Networks, to whom they supply subsystems. On the consumer side, GDA helps companies design chips and systems that go into a video delivery box. In fact, GDA has designed set-top boxes for the Indian cable market as well.

Established players such as Sasken have already leveraged IP and infrastructure and have successfully completed an IPO in India. AGK acknowledges the leadership of Sasken in India but believes they are primarily oriented towards software development, while GDA is focused on the hardware. This leaves GDA’s India outsourcing advantage intact.
It was during the survival days, that the company started investing in Intellectual Property and offered IP services, which significantly reduce time to design/market for customers and allowed for their current level of diversification. GDA’s IP offerings for the hyper transport allow its customers to connect AMD CPU to other chips in a compatible manner guaranteeing interoperability.

“IPs has allowed us to get engaged with the customer early on, and that subsequently turns into services engagements,” says Ravi Thummarukudy, co-founder and Vice President of IC solutions business unit. For example, he points to Arkados, a startup in New Jersey that recently rolled out its powerline-networking chip. GDA came up with the System on a Chip architecture, then implemented, tested, and validated the product, making sure the chip was fully functional in record time.

“The level of depth of their expertise…that especially allowed us to get the design from start to finish at working operation foundry in one shot,” says Oleg Logvinov, President and CEO of Arkados, about the value of working with GDA Technologies. Wanting now to move more into design manufacturing services, the company does not want to stop with designing but hopes to expand services to manufacturing as well. “We want to supply the total solution for the customer,” explains the upbeat AGK. “We will develop the product, manage the manufacturing logistics and ship the product. And this is going to give us a disproportionate growth.”

With healthy growth over the last five years, GDA is also looking to diversify and scale their services business. “We want to be the electronic services design segment leader and we have altered our business model to meet our customers demand specially for offshore design (India) centers,” adds AGK. Accordingly, the company is expanding their Chennai design center and hopes to add 300 more employees.

“We will continue to invest in our IP portfolio by spending 8 to 12 percent of our revenue in R&D. We have taken some profit hits for that, but we are building a company here and are looking at the long-term gains,” says AGK confidently.

“Services will give us stable growth, IP will give us the market penetration with early customer engagements, and Design Manufacturing Services will give us tremendous scale,” AGK concludes.

With that growth, GDA is now hoping to scale the company to $50 million in revenue and is also considering an IPO in three years. This could be driven by organic or inorganic growth via acquisitions supported by significant investments from growth capital providers. All of this from an idea that came from brainstorming sessions held around a folding table on Saturday afternoons.