From Academic Entrepreneur to Small-Business Executive

Ansoft chairman Zoltan Cendes chats about how he turned his research on electromagnetic fields into one of the fastest growing small businesses around

PHOTO: Ansoft Corporation

Zoltan Cendes founded Ansoft Corporation in 1984 while he was a professor of electrical and computer engineering at Carnegie Mellon University in Pittsburgh, Pennsylvania. Cendes had been researching new ways to model electromagnetic devices and figured out how to make previously impractical ”finite element methods” work. His original research made possible many of Ansoft’s products, which include programs like Maxwell, Full-Wave SPICE, and HFSS.

Cendes now serves as Ansoft’s chairman and chief technology officer and is responsible for managing the company’s research and development. He was recently elected as an IEEE Fellow. Susan Hassler, editor in chief of IEEE Spectrum, talked to Cendes about what it took to make Ansoft a successful start-up and what his small-business advice is for other would-be entrepreneurs.

IEEE Spectrum: The title of one of your talks is ”Maxwell’s Equations and Entrepreneurship: How I Went to Wall Street to Make a Business Out of Field Theory.” Tell us how you decided to start a business while you were a professor at Carnegie Mellon University.

Zoltan Cendes: When I was at the university, we developed electromagnetic field simulation technology, which was fortunate because Alcoa (the world’s leading producer of aluminum and makers of Reynolds Wrap) wanted software to model electromagnetic  castings. They wanted to use electromagnetic fields to support aluminum before it was cast in molds. I said, ”Put up our research here,” but they said they wanted commercial software. That prompted me to go off and create a company to develop this for them, and we had an initial contract that was very helpful in getting Ansoft going.

Spectrum: How did being a professor influence the start-up process?

Zoltan Cendes: You have many advantages because professors are already kind of entrepreneurial: everyone runs his own little group, an organization that involves fund-raising and knowing a lot of people. There’s also some time available because at CMU we were allowed one day a week to do consulting and other business-related work. When we created it [the business], we had an agreement where we paid royalties to CMU on the initial technology we developed, but that’s no longer the case now.

Professors work very hard—at CMU every professor I know works 60 or more hours a week—so it’s very difficult to find the time to do everything you need to do to be a professor and have a start-up. It’s also kind of a double-edged sword. On the one hand, there’s this level of encouragement because the university likes the idea of company spin-offs, but on the other side, there’s the idea that you really should be working full time on this professor job. I did take a couple of years of sabbatical leave in the early days to get it going. There are difficulties, but it’s probably easier to start as a professor than as someone working at a company who has to just quit cold turkey and start over.

Spectrum: Did you have patent protection for your technology?

Zoltan Cendes: We had this base technology that wasn’t patented. Later, in the 80s, we did apply for patents for our inventions of edge elements and trans finite elements, but the patent office rejected those. Afterwards, I thought maybe we should have appealed, that we might have gotten through. We didn’t really have any patent protection, just the ideas we developed that were proprietary and unique.

Spectrum: What steps did you take to secure financing?

Zoltan Cendes: The interesting thing about Ansoft is that it was kind of bootstrapped up. We had that initial contract, and we ended up getting three or four more in those early years. I provided most of the funding, and we had a small amount of software sales as well. At the initial stage, it was just me and two or three people I hired. I remember going to a venture capitalist in those days and having them say, ”There’s no business there, you can’t market it, you can’t do that…” a very discouraging reply. A little bit later we did get some money from venture capitalists and investors, but that was after we were already going, so our initial stages were really through contracts and selling software. Now we’re up to over 300 employees, so it’s grown nicely.

Spectrum: Who came up with the name Ansoft?

Zoltan Cendes: That’s an interesting story. When we first started, we used a silly name, calling the business Answers Unlimited. After we got four or five people, we all got together with a consultant or a professor at CMU and sat around brainstorming a number of names. I actually proposed Ansoft as an abbreviation of ”analysis software,” but somebody that evening mentioned the name Oracle, which we all thought was a better name until we went out and discovered that somebody already had it.

Spectrum: If you were going to start a new business today, what technologies would be at the top of your list?

Zoltan Cendes: Generally, software is where I’m at—it’s an excellent area to be involved with. One of the advantages in software is that you don’t need a tremendous amount of money to get started: you can just buy a few computers and write some programs. I think there are many areas in technology where you can do things in software and really get going. 

Spectrum: If you were going to be an angel investor or venture capitalist, what technologies would you be looking to support?

Zoltan Cendes: I’d prefer to go and look at things that are new and unexploited. I think there are areas in nanotechnology that have great promise. Nanotechnology is going to be developing more and more. Many of the tools that we have apply to nanotechnology in some way, so we’re looking at it as an area for future growth. So many people have been working on technologies in the wireless area, so it’s harder, but if there were something truly unique, that would also be a good investment. 

Spectrum: What’s the key to actually getting a start-up off the ground?

Zoltan Cendes: Part of it is about having a good plan, having a unique technology or opportunity. The second part is the execution of that plan. The beginning is difficult, when you only have a half-dozen or a dozen people, and things are very chaotic. It’s hard to chart the right course, and you have to be very careful. It’s important in those initial days to set up the proper alliances and not to get sidetracked or stuck with things you don’t want to be doing. 

At Ansoft, we’d created these tools that were fairly simple by today’s standards, but we got a contract with HP to develop software back in 1989. We viewed working with such a world-class company as a very important step in Ansoft’s development. They helped us grow from being a start-up to someone selling a world-class product. But I’d also warn entrepreneurs to be careful. We managed to stay independent and succeed, but that sort of alliance could have worked out with HP just taking us over, and we’d be gone.

Spectrum: What have you learned as an entrepreneur that you would pass on to people trying to start their own businesses today?

Zoltan Cendes: I guess I’m always an optimist, so I always believed in [the business] and thought it would keep going. In that sense, it’s really about persistence: you have this idea and you work on it. There are going to be setbacks, but when you keep pursuing it, things develop.

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