Daisy Systems

~ the eulogy ~

Daisy Systems filed for Chapter 11 in August 1990, nine years old, owing a hundred and thirteen million dollars to people who had stopped believing it could pay. I was six at the time, in Turkey, and would not get near a modem until the end of that decade.

It had been founded in Mountain View in January 1981 by Aryeh Finegold and David Stamm, with Vinod Khosla, who left the next year to co-found Sun Microsystems. The business was electronic design automation, back when that meant selling the computer as well as the software: a Daisy machine ran Daisy-DNIX, a Unix-like operating system on Intel's 286 and its successors, and on it you drew circuit schematics and simulated the logic before anybody cut metal. Daisy was the D in DMV, the industry's shorthand for itself and the two rivals it spent the decade against, Valid Logic Systems and Mentor Graphics.

What ended it was an acquisition. In 1988 Daisy bought Cadnetix Corporation of Boulder, Colorado for around two hundred million dollars, paid in convertible debentures, and the merged company took the trade name DAZIX. It defaulted on those debentures at the end of 1989. Some of the bondholders filed an involuntary petition against it on 31 May 1990. Its secured lender, Heller Financial, refused to extend the standstill agreement past 25 June, and by mid-July a bankruptcy court in Denver was weighing a motion to wind the company up outright.

~ the dossier ~

~ schematics on a screen ~

The category these companies invented is now so ordinary that it has no name outside the industry. Before DMV, a chip or a board was designed on paper and verified by building it. What Daisy and its two rivals did was put the schematic on a screen and then run the circuit in software, so you found out your design was wrong before a foundry did. In 1983 one of Daisy's engineers, Fred Chow, built DABL, a hardware modeling language that does roughly what VHDL would later do for everybody.

The weakness was in the business model rather than the tools. Daisy sold its software bundled onto hardware, first its own machines and later Sun workstations it bought in and resold. That made every sale a capital purchase and tied the company's cash to somebody else's inventory. By the summer of 1990 it was telling customers to buy the Sun hardware directly and take only the software from Daisy, a change it had already planned to make with the next release.

~ the price of cadnetix ~

One transaction holds the entire ending. Daisy wanted the printed circuit board side of the market and bought it rather than building it, and it paid with paper that came due on a schedule the combined company could not meet. Racal Electronics had already bought part of Cadnetix back off Daisy after the merger, which put cash on the balance sheet and left Daisy holding less of what it had just paid for.

When the credit line from Heller went, Daisy lost the ability to buy the Sun workstations it needed to fill its own orders, and the orders stopped going out with them. It closed every US operation for two weeks on 18 July 1990 and filed for Chapter 11 shortly after, with roughly 800 employees worldwide, 500 of them in the United States, and the stated hope of selling the whole thing as a going concern.

~ where the code ended up ~

No going-concern buyer appeared. By 20 November 1990 the trade press was reporting that no buyer had come forward at all and that Intergraph, of Huntsville, Alabama, had made an eleventh-hour offer of fourteen million dollars for the assets, ten of it in cash and four in shares. The bankruptcy court that examined the bid sat in San Jose rather than Denver, and no source reconciles the two. By 6 January 1991 Intergraph was calling the deal a bargain and had folded its own Huntsville electronics unit into the purchase under the name Dazix.

From there the tools kept moving. Intergraph later spun the EDA business out as VeriBest, Mentor Graphics bought VeriBest at the end of 1999, and the layout product that came with it is still sold today as Mentor Xpedition. Anyone laying out a board in that software is working on the far end of a chain that starts in a Mountain View office in January 1981 and passes through a bankruptcy nobody outside the industry noticed.

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