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Volume Number: 12
Issue Number: 3
Column Tag: From The Factory Floor
From the Factory Floor 
A monthly column of assorted news, interviews, and technical
information from Metrowerks.
By Dave Mark
This month we’ll meet Metrowerks’ colorful Chairman of the Board, Jean Belanger.
Jean hails from Ottawa, Canada, but now calls Austin, Texas home. He got a BComm.
from the University of Ottawa and an M.S. in Finance from the London School of
Economics, and is also a Canadian CPA. Prior to Metrowerks, Jean was a venture
capitalist and an investment banker.
Dave: When did you first meet Greg Galanos?
Jean: I first met Greg in 1989 when he was looking for capital for his company,
Metropolis Computer Networks, Inc. At the time, Greg was selling Modula-2 for
Macintosh and I was running a C$9 million technology start-up fund. Greg was
utterly relentless and finally I invested C$100,000 in his company so he would
leave me alone [laughter]. It was the last deal the fund undertook as we were
fully vested.
Dave: What was your role in the company?
Jean: In 1989, I became Chairman and we started re-making Metropolis into a
company which could get to the next level. We changed the name of the company
to Metrowerks Inc. (for trademark reasons), and we went about finding new
business opportunities. In late 1989, Metrowerks developed under contract a
Modula-2 front-end for the MIPS RISC-based microprocessor. This gave the
company an early view into RISC-based computing. Subsequently, the company
developed Pascal for Macintosh and started a project to develop Pascal/Modula
front-ends and code generators for Sun Microsystems’ SPARC microprocessor.
In 1990, I decided to leave the venture fund to help re-structure a mainframe
software company. In May, 1991, Greg asked me to come in and help him decide
what he should do with Metrowerks. Our first job was to look at Metrowerks’
business from a strategic point of view. It became apparent very early on in our
strategic review that Metrowerks would have to jump into the core
C/C++/Pascal tools market if it ever hoped to become a self-sustaining business.
We thought Metrowerks could make the transition, for three reasons:
1. Metrowerks had its own IDE, while most of the other programming tools
vendors except Symantec relied on MPW. These other vendors did not control
their own destiny. The Metrowerks IDE was not great, but it was a major
achievement for such a small company.
2. The shift to PowerPC would force everyone in 1994 to buy new tools.
Therefore, we guessed there would be a 12-month window of opportunity.
3. We would be building a new RISC-based product from the ground up. We
did not inherit a lot of legacy code which needed to be bolted into a RISC product.
We had very few customers at the time and we could ignore what was going on
around us and focus 150% on CodeWarrior.
So in July, 1991, we decided to attack the mainstream Macintosh tools market
for C/C++/Pascal. It took a little under a year to put the preliminary product
plans in place and for the first fund-raising to be completed. In July, 1992, we
stopped all development on all existing Metrowerks products to focus 100% of
our technical and financial resources on CodeWarrior and its product launch
which was penciled in for early 1994. It was full steam ahead.
Dave: What was your original goal as a company?
Jean: We had two major strategic goals and everything we have done since 1991
is based on them:
1. We would build the world’s best programming tool no matter what it cost.
I committed early on to raise whatever capital Greg needed to make CodeWarrior
number one in the market. So far that has meant raising over US$8 million.
2. We would change the “agenda”. What I mean by this is that we really
worked hard to figure out what Mac programmers needed. Among the major
decisions we made were:
• Multiple front-ends - We decided from day one that we would do a native
PPC Pascal. Everyone was abandoning Pascal and we thought this was a dumb
thing to do.
• Common front-ends - We decided early on to have our 68K and PPC code
generators host the same language front-ends. This was one of the keys to making
porting to PPC easier: move existing 68K code to CodeWarrior 68K, and then to
CodeWarrior PPC. This is also the key for us getting Java to market.
• Other Processors - Our common front-ends give us huge technological
leverage to attack other processors, as they reduce the amount of work required
to support a new processor code generator by at least 50%. Our front-end
tokenizes and compiles source code into a processor-independent, intermediate
representation. The back-end code generators take this processor-independent
representation and turn it into object code. The front-end cares about things like
the difference between a while and a for loop, while the back end cares about
things like PPC instruction pipelining. The point is, when we add support for a
new processor, we only have to rewrite the back end. The front end just gets
recompiled (with a little retooling, if necessary), since it is
processor-independent.
Our view is that the more platforms we support, the more valuable the skills of
Mac programmers become. In other words, if one IDE can build Mac apps,
Windows apps, PDA apps, etc., the greater the demand would be for Mac-based
programming skills.
• Core Tools - We decided, after very heated internal discussion over a
two-year period, that we would not get into the database front-end application
development business in a big way. This meant we would not try to build a
cross-platform framework. This allowed us to really push PowerPlant to be
Mac-specific and the most advanced framework available on any platform.
Dave: Was Metrowerks always a Macintosh company?
Jean: Metrowerks was a Macintosh company from the get-go and this has not
changed. We recently announced that we would host our IDE on Windows, but we
are doing this via the Altura porting libraries. What this means is that all IDE
work at Metrowerks is first done on Macintosh and then ported over to
Windows95. While we are very much a “Mac” company, our hope is that we will
become the tools vendor of choice for all Mac development and for all embedded
systems development. By embedded systems we mean all non-Mac and
non-Windows development. While everyone in the business seems to have
Windows on the brain, we would be happy to have the rest of the business
[laughter]. Why can’t the Mac be the number one platform of choice for
developing embedded systems applications?
Dave: Did Apple welcome you with open arms? Did they see you as saviours?
Did they see the value in your creating a PowerPC native development
environment? Did they believe in you?
Jean: No large vendor, Apple, IBM etc., likes depending on a small vendor. In
January, 1994, when we launched CodeWarrior DR/1, a lot of Apple people
thought we would be a short-term fix. We got a lot of help from Jordan Mattson
early on. He basically risked his career several times by “directing” to
Metrowerks Power Macintosh prototypes at critical times, etc. Jordan was in a
difficult position as he works in the Apple Developer Tools Group, which is
funding development of Symantec C++ and MrC. On the engineering side, Apple
engineers were fantastic and really helped us by running their code through our
compilers.
So in the beginning, we were a temporary “fix” to the problem until more
“substantial” players came along. This was never our view. Developing
CodeWarrior was a brutal three-year grind and we have no intention of giving
way to any vendor. Currently, we have over 45 engineers working on
CodeWarrior, not including technical support. This constitutes one of the largest
developer teams in the world working on a single Mac product. We have
completed eight releases in 24 months. We are now the number one selling
programming tool in the world for Macintosh development. We have over
30,000 registered users. We now have over 75 employees and are based in
Austin, Texas. We believe we have earned our place in the Macintosh developer
community. We have come a long way in a relatively short period of time.
Dave: A lot of our readers are interested in the start-up process. Can you
describe the process you went through to fund the company?
Jean: Most people do not understand the money business. The first thing anyone
raising money needs to understand is that money is a commodity. Money flows to
those uses which generate the highest rates of return given the risk profile of the
“holder” of the funds.
What this means is that you have to do three things when raising money:
1. You need to convince the holder of the cash that you will generate “x%” rate
of return.
2. You need to convince the holder of cash what the risk profile of your venture
is.
3. Never leave yourself only one “type” of funding source.
Before you waste your time trying to convince someone to give you money, you
need to figure out what their risk/reward profile is. Don’t waste your time
trying to convince my grandmother to invest in your software project; she is not
interested. She holds “blue chip” stocks for dividend purposes because this
represents the biggest portion of her “personal income”, which she needs to live
on. She will never risk her “personal income”, no matter how great the
potential reward is.
Too often, entrepreneurs think they have all the answers. The only answer that
counts is if you win. There is no prize for second place. If you don’t get the
money, your business dies. So don’t waste your time trying to sell someone who
is not buying. If you find players who are willing to undertake the level of
“risk” you are selling, then focus all your energies on these people. I wrote
seven business plans for Metrowerks in 24 months. Each one was tailored to the
audience I was addressing - which leads to that third point. Never ever leave
yourself open to one type of funding killing your dreams.
In other words, don’t just go after venture capital, or supplier financing, etc.
Make sure you have a lot of avenues open and that you are really working them
hard. One of the most important pieces of our funding in 1992 came from a book
publisher! Another came from a friend, Stephen Lockyer, in Halifax.
Metrowerks was funded by private placements, R&D tax credits, friends, you
name it, we tried it. We were not too proud to take anyone’s money because we
might have thought that it was not the right “flavor”. Remember, it’s all
“green”.
In almost all cases no one wants to be first in a financing. If you have multiple
sources going at one time then you can leverage them. The book publisher who
gave us a small amount of money to do a Pascal higher education product was used
as evidence that we could market our products, which led to an R&D loan, which
we repaid from our IPO, etc., etc.
Raising money for a capital-intensive software project like CodeWarrior is a
full-time job. Greg was spending the money on CodeWarrior as fast as I could
raise it. We both went several months without pay to keep R&D fully funded and
on track. I trusted Greg to deliver the product. He had to trust me to deliver the
money. It was pretty hairy at times but we had the necessary skills in-house to
get this done. We did not depend on consultants etc. to get us the funding. Greg and
I each owned 45% of Metrowerks when we did the first round of CodeWarrior
financing, so we could both speak to our respective constituencies with authority.
Raising money is a nightmare. If you can’t live with months of bad dreams then
don’t start a software company, which requires a lot of capital. The upside is that
there is a lot of money available. The problem is that you have to go find it. The
second problem is that there are no excuses: you either get it or you don’t. This
makes it tough.
Dave: Where do you see Metrowerks going from here?
Jean: We have a simple frame of reference. We want to double revenue every
year. This is the view from twenty thousand feet. In the fiscal year ended July,
1995, we did US$5 million in revenue. This means for the fiscal year ended
July, 1996, we would need to do US$10 million, and so on. I am not saying we
will do it, but this helps guide us as to where we are going.
Revenue drives share prices and in software you need to keep increasing your
share price. Why? Because if you don’t you will lose all your key technical
people to competitors who can hold out the promise of higher prices and valuable
options. That is not to say that all engineers look to is options. But you are crazy
if you think engineers can’t count and keep score. So if you keep making
“financial” progress, you keep your people. A simple rule but it works.
We look at markets 24-36 months out and figure out how much revenue potential
there is so we can double every revenue when we get there. We try and make
sure we have a lot of overlap so we can lose on some and still make our target.
For instance, we are getting ready to launch Java products in May of 1996 for
Macintosh and for Win95 in the last half of 1996. How is this going to impact
our sales? What is the overlap?
We see our growth coming from the following markets:
Our Core Mac Business - This continues to grow. The notion that Mac
developers are leaving the platform just doesn’t hold up when we look at our
numbers. There seems to be growth right across the board from where we
thought we would be at this time. I can’t believe all the bad press the Macintosh
market gets when we look at the cool things our customers are doing developing
apps for the Web, the internet in general, multimedia authoring, technical
subjects, etc.
Java/JavaScript - Java and the internet are great for us, because the success
of the Web is going to make the world more C-intensive than ever before, and
Web content authoring is going to include more programming “resources”.
Java was derived from C++, and C++ is an extension of C. It is really hard to
“stuff” a big, fat 4GL binary down a small thin “network” pipe. What everyone
forgets is that the programming tools market is only so big. If a potential
customer chooses to use a 4GL or other related tool, we lose revenue. The
internet is changing the needs of users. If every company on the planet ends up
with a Web site, there will be a lot of content written in Java (or related
languages) and a lot of CGIs written, etc. These can’t be done with traditional
tools. This is great for Mac programmers, given that recent surveys show that
Web content is most often authored on the Mac. Web content providers will have
to increase their budgets for programming resources to get all that cool Java
stuff up and running. Where will these budgets come from? Traditional
advertising budgets, you name it. No one wants to miss the internet action.
Embedded Systems - We are pushing real hard to open up this market for
desktop programmers. For instance, we would love to support all of the major
games vendors. Wouldn’t it be great if you could use CodeWarrior to program for
all the games platforms, all from the same IDE and on the same platform? This is
just one example of the synergy of generating code for several processors in one
product.
We are breaking new ground in the embedded market, as this has traditionally
been a very Unix-centric market. We believe that CodeWarrior at US$400 per
copy running on a PPC604 Mac is a killer development platform. We have been
selling this concept for the past three years to the big systems and
microprocessor vendors. This is where the big push came from for us to host
CodeWarrior on Windows. All of the big embedded players want to offer their
prospective ISVs a choice of using either the Mac or Windows to program their
“systems”.
In summary, I see Metrowerks growing for quite some time to come. I really
believe we have one of the best R&D teams on the Mac and as a result we have a
killer product. The wild card for us in all of this is if Apple increases its market
share in the markets we are interested in. While it seems everyone is negative
on Apple right now, I think things will turn around. I don’t think the world is
ready for only one desktop API.
Dave: What’s next for you?
Jean: We have hired a great CFO in David Perkins, so I am spending almost all of
my time on revenue generation and marketing. In 1996, I will be spending a lot
of time on Java/internet-related issues given our R&D relationship with Sun
Microsystems.