SolidWorks
Jon Hirshtick, Founding President
John McEleney CEO and President
30D- Baker Avenue
Technology Segment
Interviewed March 2, 2005
Concord Oral History Program
Interviewed by Renee Garrelick
Technological breakthrough. SolidWorks, the world's number one mainstream three-dimensional design software
Company was founded in 1993, Founding-team, in the computer aided software industry saw the need to bring three-dimensional design tools through the Computer aided design industry to provide engineers with Window software.
Arrival in Concord in 1994 initially in the Hanscom Air Force base area in the East Coast Aerotech School buildings on Virginia Road; 1998 to 300 Baker Ave.
Difficulty of attracting venture capital, one of first investors Atlas Ventures, Barry Fidelman of Concord.
A unique product that was difficult to build. Company has more than doubled in three years, employs 520 people worldwide, 350 in Concord and one of Concord's major employers. Reaches 400,000 users globally. In 1997 SolidWorks was acquired by and
formed a partnership with Dassault Systems, a French company in the high end of CAD/CAM marketplace. Cycle of process from R& D to new product release.
Range of product applications from sporting equipment, medical devices, anything that can be made in a. factory can be designed with SolidWorks software as well as the equipment in the factory. The government is one of the company's largest customers-from firing systems to potential weapons.
Importance of corporate culture- voted again as one of the best places to work in the Commonwealth, corporate philanthropy.
SolidWorks is the world's number one mainstream three-dimensional design software company and reflects the technology edge of our computer era today.
Jon Hirshtick -- We founded SolidWorks in 1993 because we each had been in the computer-aided software industry (CAD) for about ten years. We had seen that the marketplace needed a new product that would bring the power of three-dimensional design tools through the CAD to every engineer's desktop with Windows. We felt no other company in the industry was able or willing to do that. With the conviction that that opportunity existed, we set about to build the software and more importantly the company that surrounded it.
The we was a founding team that grew to six people. I started on my own and recruited Bob Zuffante, Scott Harris, Constantine Delcos, Mike Payne and Tom Li. Over the course of a year the six of us came together from the end-of 1993 through the middle of 1994.
I came from MIT's CAD research lab along with Bob Zuffante from the early '80s. Originally, we all worked out of our homes. My home was in Winchester in a townhouse, and we called the company the Winchester Design Systems. But in 1994 we got our first office. We chose the Hanscom Air Force base area in the East Coast Aerotech School buildings on Virginia Road in Concord. I had a friend who had rented some space there. I visited him and they were renting space by the office. It was a jet engine mechanics school and there were classrooms. When you walked in, you went down a hall and there were classrooms on each side and then a series of offices. We rented a few offices. I had my wife read the lease and we got some old furniture. I remember driving over there with my father-in-law in his pickup truck, and one of the file cabinets fell off the truck. That file cabinet was around here for years. Some of that furniture is probably still around here someplace.
So we started that first office and then we all started working out of that office. Bob, Scott and I were really the ones working out of the first office. Then in 1995 we moved from there into offices- at 150 Baker Avenue, and. in the fall of 1998 we moved in here.
We originally picked Concord because it was geographically central to where we all lived. I lived in Winchester at the time just over the Lexington border, Scott Harris lived in Acton, Bob Silvante lived in Newton, so Concord was a reasonable choice. Also the space had good terms, not only was it inexpensive but it was kind of a tenancy at will and we could acquire a new office almost by the yard. You could just say we need another office and start renting it. It was very rare that you could find space on those terms.
When we looked at moving, each time we looked, and we considered other locations, at what would be the best blend over the next few years where our employees were coming from, etc. This turned out to be a good location, especially this particular building. This is a fabulous building which is in the old GenRad location. Today I think we're one of Concord's largest employers. We have about 350 employees here in Concord.
One of our first investors in the company was Barry Fidelman, a Concord resident of Atlas Venture. He was very supportive. It was difficult to attract venture capital at the beginning. We got turned down by many different venture capitalists. Atlas Venture stuck with us and then Northbridge. It was difficult for a while but once Mike Payne joined us that helped us raise money quite a bit. He was a very credible guy to add to the team. It took some time and patience. A lot of people thought it was a really bad idea. It's fun to talk about that now.
I think there was a feeling about us, not that people didn't need this but that the competitors are going to do it. SolidWorks is a story of beating the competition with a fairly obvious product idea though one that is extremely hard to implement well. Ours is a very obvious idea, but very hard to build. There are really two risks -- could we build the product, which you can pretty much sit down and address that risk on paper, but then the question was could we beat the competition? The reason we didn't get venture capital is primarily people felt that we couldn't compete against the competition Parametric Technology Corp. was our biggest competitor. PTC announced it was a Windows product and then they announced it as a low- priced Windows product, so how are we going to compete? Well, the answer is the marketplace sees through the fix. Their heart wasn't in selling low-priced products on Windows. Their heart was in selling high-priced products on anything. So their products didn't really run very well on Windows and weren't really priced affordably, so they didn't do it. Autodesk didn't really have a three-dimensional solid modeling product. You have to really understand the market. You have to be able to feel those issues of the marketplace. When they are just on paper to the untrained eye, you don't appreciate all those differences. But if you get into the market or the field, you feel that our founding team felt it strongly enough to commit our professional lives to it. We all knew that this was going to be a unique product and there was going to be a difference in what we were doing, but the investors didn't see that. They said, "Oh, PTC, they're so strong, unstoppable." I remember one guy saying to me, "I know Steve Walske and he's a very smart guy." I remember saying, "Yes, I'm counting on him being a smart guy," meaning he's not going to ruin his big business to beat us.
Today we're number one in the world in three-dimensional design software. If you look at what is the most popular, what is being used the most, who sold the largest number of copies that are now in use, we're number one. More things get designed using SolidWorks.
I was company president at the time when the company was less than half the size it is today. So John's responsible for more than doubling-the size of the company in three years. You don't notice it looking at growth numbers whatever it is 20 or 30% and you compound that out, and all of a sudden we're a $200 million company not a $100 million company. When John first came, we just started selling SolidWorks, we were a $ 10,000 company.
John McEleney -- The way in which we sell our product is through resellers The business model we have is SolidWorks people around the world, and right now there are about 520 people around the world, supporting local businesses that sell and support SolidWorks locally. Primarily the ones outside corporate tend to be field support people. When you look at the footprint of our business in dollars as well as numbers involved, I can competently say that the business portion is probably in excess of a half billion dollars easily. The size of the number of employees either through our partners or in SolidWorks is- probably in the 4000-4500 people. It's a big enterprise. It is in over 80 industrialized nations. They are reaching 400,000 users across the globe and growing very quickly. We had 150,000 users in the past 18 months So it's growing quite well. There are still a lot of challenges. We're still only a fraction of the way done in our mission, but it's one that gets more exciting every day. A lot of the people on our team are people working in design, working in manufacturing, or engineers, and we talk about what we call the emotional paycheck.
Jon Hirschtick -- That's your term. I talked about the concept but I never used that phrase but it's a great phrase.
John McEleney -- The emotional paycheck is what we see when we go and look at the customer and watch how they use SolidWorks to help make their product. That's what really gets people jazzed around here. When they walk into a store and realize that as they walk down an aisle, any number of products they can point to were designed with SolidWorks. That's something that really makes you feel good. That's what keeps us going. We still realize there's a boatload of more people that aren't using SolidWorks that we need to make sure we touch base with them.
Jon Hirschtick -- In 1997 we met Dassault Systems, a French company, in the context of forming a partnership with them because they were one of the significant companies in the high end of CAD/CAM marketplace. You might think of it as SolidWorks as the Toyota of this market meaning for everybody and we bring it to everyone much like Henry Ford talked about the car, he said everyone's going to have one in their garage. In the same way you might think of Dassault Systems as the Mercedes or Lexus or at the time somewhat like the Rolls Royce. So we make the same thing, but it's really where you market it. We just got together to see if we could partner and then the president of the company Bernard Charles in Paris, a very compelling individual who we had a great relationship with. And, Bernard worked with us on forming an idea that they could acquire us and we could become a leader in all the segments of the business, much like what kind of happens with Toyota and Lexus and Mercedes and Chrysler. One company trying to address more segments of the marketplace. That was the vision. It was a very bold vision. It would have been like IBM buying Microsoft to give you an idea. It was let's be a leader in all segments in our little CAD world. As you know in computers, Microsoft owns the desktop but they never owned the mainframe, and there are still a lot of mainframes out there that are still IBM's game. In our industry that isn't true now. With SolidWorks and Dassault Systems together, we cover more products. So we came together with that vision. They offered us an opportunity to become part of a leader across all the segments of the CAD business and that's what we did. We run fairly independently in our own markets. What's really notable about us is that we're the one that works in our positions. Typically the others fail.
John McEleney -- Think of it, in 1996 we were probably about $7.5 million of business and at the end of 2004 we're at in excess of $200 million. That's a phenomenal growth rate.
Jon Hirshtick -- We found Dassault Systems by being introduced by Wall Street analysts who cover the market. Pete Schlider called and said Bernard's going to be in town for an industry convention, why don't you meet him? And I went downtown and met him.
John McEleney -- Things were moving so quickly then. I joined the company in January 1996. I met Jon at Computervision. We never really worked together but had a couple of interactions. We had met one time late at night at Buzzy's Roast Beef actually and talked about a bunch of things. Anyway in the fall of 1995, I was leaving my former employer and was deciding whether I was going to join a startup or move to Paris ironically to run Worldwide Marketing for a Paris based company, but then decided to go with this company called SolidWorks because it was clearly a vision. To me it was an obvious thing. It was very clear, it's been a great ride.
Jon Hirshtick -- John joined us just about the same day that we had a product to sell. It was about two years from the time we first founded until we had something to sell. John joined us right at day one of selling. He was really instrumental in turning us into a global marketing sales powerhouse. He has all the responsibility for most of the world basically outside the United States.
John McEleney -- We started with one of the principals of the company which is hiring is the most important thing we can do. From the beginning, we've been very fortunate in being able to create a culture that attracts very competent people. We continue to hire some amazing people. There are so many great people walking around this building, who have an incredible sense of urgent feeling that we're doing something special, and therefore it is critical to get things done today not tomorrow. Ten years into it and the urgency is as great as ever. That's what I think has been the fun part. We've created this- culture that is far greater than- any one individual. That's the dynamic. We were selected by the Boston Business Journal as one of the best companies to work for in Massachusetts. Of all the accomplishments last year, that's.one we are most proud of.
The next recognition I would personally like to feel great about is all the employees that make it happen. It really is a great spirit and a great culture- People here are really wonderful. In our business especially the assets are truly the people.
To some mechanical engineers we've become their dream. But we know we still have a lot more work to do to make their hopes and dreams complete. We have an amazing piece of software that we've created, and we do some amazing things for our users, but we still think there's lots of room for improvement and innovation. That's why we spend 20+% of every dollar that comes in on R&D. It's a great product and people love it. We have an incredibly vibrant user base, but we also realize that the good news is we have reason to come in here to work on Monday because there's lots more still to do and there are exciting things to do and lots more innovation out there.
Jon Hirshtick -- We have a very well defined process in how and what we put into our product. We have a product management team and a product definition team. The project managers are typically responsible for deliverable associated products. Everything from the schedules to how we are market and support the product, identify the features, educate the world at large. Then we have a product definition team and they are mechanical engineers who are domain experts that go out and work with some of the existing customers as well as new prospects. They will take some of the direction from the project management team and they will work with the R&D team. They will take these ideas, innovations and problems we're trying to solve and go out and work with customers and show them with mockups what functionality will do and just making sure we're zeroing in on the right areas to develop. Then they will work with the development team and product definition, the software engineering team, and the Quality Assurance team. As a triad they create a specification and a test plan and a coding plan as to what they're going to do to create that product. Then they write the software to match what that specification is and then we go through and do some of our internal testing and two-way processing and then go back out to our customers and validate what they said versus what we deliver and see if there are any gaps related, and then of course redo that segment. Typically, the cycle we're on as we introduce a new product release is basically once every 10-11 months, so there's always a new product that's being worked on.
Certainly, existing customers have their wish list of things they would like fixed or features they would like added to make their lives easier. The interesting thing is that the user base doesn't necessarily know what's possible. They only know they have problems and they can give you insight and say oh, it would be great if we could do this. Then on the development side, which is why we try to hire really bright mechanical people, there's inspiration about what's happening in the world around us within a technology standpoint, what other developments are happening on a technology platform perspective, and they are the ones that can integrate the thought processes of what people are saying they need and what's possible in technology. And, many times we won't get it right. So that's why prototyping and showing people is really a critical step in that process. So we try again and change it. So there's some sort of linear thinking in terms of enhancements and those are very well defined processes where the customers can submit issues and enhancement requests. Then there's the breakthrough functionality, which is exactly where innovation happens, where it's the crossroads of where a person understanding the challenges and what's possible with the technology and then the innovation and the inspiration to make that happen. That usually is done by some of the brilliant technical people we have here compared to just the product enhancement requests.
John McEleney -- There are a few fields that we specialize in. What we try to do from the very beginning is to understand where we can value where we have domain knowledge. In the areas we don't, we leave those to the people who are the experts. So for example, inside of SolidWorks you can define things from a three-dimensional perspective very, very accurately, you can take your tape recorder for example with Cosmos and you can test it and simulate it in the computer. If I dropped it from my waist, would it crack or would it break? Those things we know a lot about and are certainly in our domain. But how to go and machine the mold directly for example to make the part, that's not something we have any particular domain expertise, so what we've done is leave it to the experts that know how to write that software and that know speed rates for machine tools and manufacturing. What we've done is we spend our energy on creating an interface layer making that very robust so they can plug it in directly. So they work on machining their application for example, and we've spent time working on the interface layers to make sure they can get access to the geometry and geographic and all that relevant data. That way customers are getting the best in terms of what the application can be but they're not sacrificing the integration. So we try to keep to our knitting in terms of what we know and what we do. That's always a challenge because customers will pull you in lots of directions.
Jon Hirshtick -- We've just come back from our big exhibit, SolidWorks World in Florida. You can say we're like that old cigarette ad, "You've come a long way, baby." SolidWorks World had 2500 people. We took over all of Coronado Springs. It was a phenomenal event. There was a huge amount of energy and excitement where we of course demonstrated our products to our users. We had our solution partners who build these applications that work with SolidWorks and there was close to 80 of them in our solution partner pavilion. We had 80 members of the media and over half of them were from around the world. We had some exciting keynote speakers.
John McEleney -- What sets our conference apart from just any other conference is not just the size, but the energy and the feeling in the air. The emotional temperature in the air is very positive, high energy. There are three traits that come across very strong - high energy, nice people, and positive views and positive outlooks on things. Those kinds of traits don't always show up. A lot of times you go to these conferences, people are snoring in the lectures and all they want to do is look at their watch and read and go swimming or golfing or go to bars. That's not the case at SolidWorks World. Sometimes you go to other things and people are sitting around and perfectly polite about attending but not high energy. They do to the sessions and do their work. But here it's like people are really big fans. It's like going to Fenway Park versus going to a ballgame in a lesser city. I think there's a difference if you go to a ballgame at Fenway Park versus going to a ballgame at Tampa Bay. Every seat is sold, people are wearing hats, people are cheering, etc. That's the feeling we got at SolidWorks World, and that's really exciting.
We still have a certain special something. When we were in Paris at the satellite projects, I told the people here you know we still have a certain special something, and I think we all understand we have it. I just want you to know I think we still have it and I hope we have it forever.
Jon Hirshtick -- One of our newest customers is a company called Orange County Choppers. They are a part of a TV series called American Choppers which is the highest rated show on the Discovery channel. Paul Tueril and his two sons build these amazing pieces of mechanical art and they're motorcycles. They've done one for the New York Fire Department after 911. They've done a POW/MIA bike. And they're now a SolidWorks user. They started using SolidWorks in their design, and so they were at SolidWorks World. They used Cosmos and SolidWorks and built the motorcycle for SolidWorks, and we'll be using it for trade shows across the country. It will be housed here in Concord in our front hallway. There was a huge reception by our audience for the bike at SolidWorks World. I think I said to the team afterwards, the reaction that our customers, our employees, our partners, our business partners felt with OCC that there was a common thread that deep down inside all of our DNA is this desire to build and create. That desire to build and create is what resonated with a lot of people about Spaceship 1, this idea of pushing boundaries and creating and this motorcycle is all about creating. I think that's why people get excited. That's what we did for sure.
From the beginning, the total number using SolidWorks is something like 60,000 companies. You can imagine the range of products everything from industrial components to fully finished products that machines do, to consumer products to chairs, to TVs, to computers, and everything else. So there are a ton of different products in almost any kind of sector you can see. We have a sampling from a couple around here such as fishing gear to other kinds of sporting equipment. You name it even medical devices. Look around any airport, any country club, any workout facility, you see these heart defibrillators. That's Zoll Medical now in Chelmsford, Massachusetts. They are a big SolidWorks user, and they're able to build these things that now literally save lives. Those are the emotional paychecks that John is helping the company to see. So we only have a sample here. But we did have at SolidWorks World a product showcase and the response by our users to that product showcase was just amazing. People were asking how can they get their product showing next year in Las Vegas. In fact, one of the first guys that came up to us and said how can I get my product shown was talking to Vic Leventhal our former Chief Operating Officer. Vic asked what was his name and what did he make. The guy gave him his card and said I make slot machines. Dick said, "I think we can handle that in Vegas next year."
Anything you can imagine that is made in a factory could be designed with our product along with everything that is inside the factory, all the equipment. I'll bet if you walk into Wal-Mart, that one-third of the stuff in Wal-Mart has our software involved in the product. That's just a wild guess but in one way or another, in the design, in the factory, in the machine, except maybe for fresh produce, but machines that harvest the produce might be involved. The government is one of our largest customers. We do a huge amount of business with them, everything from firing systems to potential weapons down to nuclear medicine production. The range is very big in products.
John McEleney -- I think we always say the journey really has just begun. We take some good stuff from the journey. As we like to do here once in a while is celebrate and count the blessings for the good fortune we've had and give back. Jon's heading up a philanthropy, a community giving program, because we think great companies should give back. It's the right thing to do.
Jon Hirshtick -- Our key concept in the community giving-program is leverage, staking the assets of SolidWorks, our financial assets, our employees, our brand, our community and the leverage we have with this and turn it into good for the community. It's also to motivate our employees. Some employees will choose to want to work for a company that does such things. And, thirdly to advance our business interests because it's good for business too and there's nothing wrong with that. If we raise money with a team in a bike-a-thon to raise money for cancer research, well that's good for cancer research, but it's good that our logo is on the shirts too. So those are the three goals. The key concept really is leverage that we get more out of doing this as a company than we would if we just take our money and give it. One of the tricks is to try to balance across communities where there's some combination of where we do business and a need. Concord scores high on where we do business; it does not score high on need. Where if we're looking to do things in Rwanda,that scores zero on where we do business but high on need. There's a tradeoff.
John McEleney -- We've done some things in the local area. In Fitchburg we helped with a Habitat for Humanity house and we've given turkeys to the local food pantry at Thanksgiving.
Jon Hirshtick -- One of the things we're doing right now is speaking-with the employees and finding out what we've done, what they would like us to do and scanning opportunities. People feel good about these things. It reflects the value of the corporation.
