Spinout Doctors: How New Venture Partners Saved Freescale’s Magnetic Memory and Other Stranded Technologies
Magnetoresistive Random Access Memory, or MRAM, promises to change everything about how our computing devices work. It’s as fast as classical static RAM at the core of today’s microprocessors, but it doesn’t wear out, and it also holds data permanently, even when the power is off, like today’s flash memory. It could enable true “instant-on” information devices and speed up many types of computation.
Freescale Semiconductor, the former chipmaking division of Motorola, poured a lot of effort and money into making MRAM practical in the mid-2000s. But the technology almost wound up homeless, because Freescale is a microprocessor manufacturer, and wasn’t equipped to sell storage devices. The company had developed the technology without ever really intending to get into the fiercely competitive memory business.
Which is where New Venture Partners entered the picture. The San Mateo, CA-based venture firm purports to be one of the only venture firms in the world that specializes in finding promising but under-supported technologies inside corporate R&D labs and spinning them out as independent startups. Yesterday we published the first part of a conversation with David Tennenhouse, a former Amazon and Intel research executive who’s now a partner at the firm. In 2008, Tennenhouse and New Venture Partners helped to spin out the MRAM business from Freescale in the form of Everspin Technologies, which is now one of the world’s leading suppliers of MRAM for industrial, aerospace, and military applications. The details of the Everspin case, which illustrated many of the nuances and challenges of the spinout process, are among the highlights of Part 2 of our conversation, transcribed below.
During this part of our talk, Tennenhouse also described how the firm identifies teams and technologies that can be spun out profitably, what types of companies are likely to house potential spinoffs, why Google doesn’t do spinoffs but Microsoft does, and the roles that NVP’s partners must sometimes take on—including career counselor.
X: Can you walk me through a couple of your favorite examples of companies you’ve helped to spin out?
DT: One of my favorites is Everspin, where we spun out all the MRAM magnetic memory technology from Freescale. That’s an area where Motorola [which spun out Freescale in 2004] invested for many years and Freescale invested for many years. It’s the only group shipping real, working MRAM. It’s a great example, because one of the things you need is leadership in the team that is really headstrong and committed. Here you’re talking about a new semiconductor; a new material. They managed to get this all the way into customers’ hands. This was a hell of a dedicated team and they really wanted to foist this thing on the world.
Another critical ingredient is that the CTO at Freescale, Lisa Su, really wanted to see this thing happen also. But Freescale looked at the situation and said, ‘We don’t really want to be in the merchant memory business.’ If you could replace on-chip Flash memory with MRAM, that would be very interesting to Freescale, but first you would have to … Next Page »