The CAD Insider

The Shape of Things to Come

Stephen Hooper, Vice President & General Manager, Design & Manufacturing Cloud Solutions at Autodesk, is about to reveal what is coming up in generative design. He is at a Q&A session at Accelerate 2022 conference. He is not making an official announcement as the technology is still in R&D. If it were up to the PR watchdogs in the room, he would go no further. But Hooper’s enthusiasm is not to be bridled.

“We’re going to use ML [machine language] to look for similar shapes,” he says about the next generation of Autodesk’s generative design, which will, no doubt, be manifest itself in Fusion 360, the company’s do-all design and manufacturing platform.

We will be able to create a 3D map of your shape and match it with another existing shape, he states. Engineers reinvent the wheel all the time, he implies.

We asked if the generative design of this future could not only look for similar parts, but look for similar elemental or primitive shapes, such as I-beams or round tubes, the shapes engineers rely on.

Yes, says Hooper. It certainly will.

Hooper, whose youthful figure belies decades of CAD experience, tells of his initial introduction to CAD with Unigraphics. His conversion to Autodesk came when he realized that, despite Unigraphics superiority in CAD, its expense was a hindrance.

“For what we paid for a few UG seats, we could outfit a hundred engineers with Fusion 360 today,” says Hooper.

He invokes a Moneyball reference, the movie with Billy Beane (played by Brad Pitt) creates a pennant winning major league franchise (the Oakland A’s) by recruiting underrated (and therefore underpaid) players and creating an overall better team when tradition was to win with one or two (very expensive) superstars. While this could be considered an admission of PC-based AutoCAD’s inferiority to the workstation-based CAD, the point Hooper is making is consistent with Autodesk’s humble approach to democratizing design, simulation and manufacturing software.

Only 3% of Us Want to Work from Home? Can this be Right?

Only 3% of employees want to work from home 100% of the time, says Kim Dabbs, Global VP, ESG + Social Innovation at Steelcase, citing her company’s survey at Autodesk’s Accelerate 2022 conference currently taking place in New Orleans. Can this be right? Most employees we hear from are fine where they are, mostly working from home except for going to the office “as needed.” That’s code for “as little as possible.”

Consider the source. Steelcase exists to make office furniture and fixtures and a permanent and complete change to a work at home status for workers in their markets is an existential problem. Steelcase is asking the question and presenting the result in a manner that is to their advantage. The same question to a US market increases the figure of employees wanting to work from home 100% of the time by 40% (5%). Asking the same demographic whether they want to work at home most of the time may yield a result much higher, more in keeping with the common perception – and less advantageous to a manufacturer of office furniture.

Autodesk CIO Drives Forward On Digital Transformation

All about Autodesk. Autodesk CIO Prakash Kota attends Autodesk University in style.

The 38-year-old native of Madras, India, shows up at Autodesk University in a very modern patterned jacket, expected more for a nicely-dressed American rocker than for a chief information officer (CIO).

A CIO’s Progression

Prakash started at Autodesk with a consulting gig. After a succession of promotions, he now heads all things IT at Autodesk, responsible for Autodesk’s technology infrastructure, including providing a highly available, resilient environment for customers, as well as computers, mobile devices, and at-work digital tools for more than 9,000 employees.

While some CIOs may reminisce about the days when mainframes filled the room, in Prakash’s world, mainframe power fills pockets and supercomputers live on the cloud.

Prakash moved to the Bay Area for love to be with his then fiancée, now wife, after getting an advanced electrical engineering degree from Oklahoma State and working in Texas and Florida.

Hired on the strength of his Java certification, Autodesk was quick to recognize his talent, and his career shot upward. The consulting gig turned into a permanent job, and then it was one promotion after another, all in IT-related operations, eventually leading Prakash to the top of the IT ladder.

So, why can’t you hold down a job?

A joke is always a risk at any interview, but Prakash cracks up.

A software company could use the cobblers-children-go-barefoot excuse for having less than optimal software for its own use. That’s not happening at Autodesk under Prakash’s watch.

Autodesk Accomplishments

“We help automate the design process for our customers, and automate technology for employees much in the same way,” said Prakash. Autodesk IT is transforming, and embracing a value-mindset to enhance the employee experience. Prakash’s digital transformation strategy introduced frictionless, mobile self-service tools for employees.

After inheriting a help system that issued tickets for employees’ IT and HR requests, Autodesk modernized it to integrate with Slack, the popular corporate chat app. Employees can simply ask Slack a question—forgot my password, need an app installed, how many vacation days do I have left, etc.—and an artificial intelligence-based  chatbot, called HelpBot, returns an answer in less than one minute.

Autodesk IT also built a productivity portal, Help Hub, for employees. Both tools were rolled out to employees worldwide.

“Help Hub lets employees learn about and use any enterprise IT service,” said Prakash. “The idea is a seamless, intuitive experience. Automating interactions and putting workers at the center of process simplifies how things get done.”

I caught up with Prakash at AU Las Vegas during the CIO Exchange Breakfast he put on for Autodesk customer CIOs. An article about him was featured in CIO magazine just six months into his CIO position at Autodesk, and he’s boldly and freely sharing what he has done with other Fortune 500s at Autodesk events and beyond.

Prakash’s objective? Help drive Autodesk’s transformation as a digital innovator and customer-centric company.

“We will continue to work to provide value first, and a simplified experience for employees and customers that is available anytime, anywhere,” said Prakash.

Autodesk Pops Into Profitability. Does Anyone Care?

Last Thursday, at the end of the trading day, came the announcement of Autodesk's FY2019 Q4 earnings. Late in the day is when you announce things you don't want people to notice. Or during a distraction. If President Trump would admit to global warming or collusion, it would be announced during the Super Bowl.

Finally. Autodesk posts a $65m profit in Q4 of  FY2019. (Picture courtesy of TenLinks)

We had been anticipation the Autodesk news. Autodesk had been approaching a breakthrough. For almost two years, it's revenue had been increasing. Last quarter, it almost made a profit. Then Thursday, the big news came. For the last quarter in FY2018, Autodesk posts a $65 million profit. It finished the year with record revenue of $2.6 billion. It is still in the red for the year, but only by about $85 million or so.

Five  years after radically changing their business model, from software ownership (perpetual licensing) to rental (term-licensing), you would think Andrew Anagnost would be doing cartwheels up and down executive row. After all, he was the architect of the term licensing model, its vocal champion and maybe the main reason the board of directors appointed him CEO.

Yet, Andrew was rather subdued, even a bit gloomy. In the Q&A that followed, profit is mentioned twice. Net income, as financial types call it, a couple more. Both are late in the conversation. The financial analysts don’t dwell on it. It's like "Yeah, we knew it was going to happen. What's the big deal?"

In a CNBC interview, more time is spent discussing the upcoming recession. The consensus among economists is every boom (we're in one) is followed with a bust. Andrew contends that Autodesk is immune and may benefit from a recession.

I have the numbers to prove it, he says. In the last recession, Autodesk business grew. Companies invested in their digital infrastructure to they could be profitable.

But for someone who has taken Accounting 101 and run their own company, the ways of finances of big companies are an enduring mystery. How can it not be about the bottom line? About cash in the bank?

It's complicated, I hear. They try to explain it, as if to child. About ARR, deferred revenue…

Maybe they're right. I think I'll stick to subjects I have hope of understanding.

I’m already looking forward to my next book about quantum mechanics.

Conferences in Las Vegas. Let’s Stop the Madness.

Every year, hundreds of Autodeskers leave San Francisco, the most beautiful city in America, for a big party in Las Vegas, the urban sprawl in the middle of the desert. They are joined by over 10,000 users and hundreds of vendors, making Autodesk University the largest CAD gathering in the world. AU has been held in Las Vegas every year since 2000.

Outside The Venetian hotel and casino in Las Vegas. The Las Vegas rendition of Venice may be drier, cleaner than the real thing, but it’s still fugazzi.

It is my second Las Vegas conference in two weeks, having just come back from Trimble’s Dimensions conference. It was also on the Strip, as Las Vegas Boulevard is called—also in the Sands Convention Center, in fact. It’s the third time in Las Vegas this year. I realize I may have visited Las Vegas a hundred times and always for business.

Outside of the conventions, the businesses of Las Vegas are ones that are illegal, banned or controlled everywhere else. The city is best known for vice. Gambling is pervasive. Slot machines greet you as you get off the plane. The convention center where AU is held sits between the Palazzo and Venetian, both massive casino hotels. The half-mile walk between my room and the conference is through an acre of black jack tables, craps, bars and slot machines. In the early morning, most of the tables have only a croupier, but some of the slots have some action—if you can call it that. Almost lifeless old people, dejected as if their machines haven’t paid out all night but hopeful that morning brings the jackpot, still wearily push the button. Slot machines haven’t had handles for years, an energy saving move, no doubt.

Their cigarettes burn unattended in ash trays. The smoke reminds me of the fires back home. It seems like all of California is on fire. One fire has burned down the town of Paradise, and the smoke has engulfed the San Francisco bay area. Stores have run out of masks, but my family was lucky enough to get some. Is Las Vegas the last place in the U.S. you can smoke indoors?

The seedy and snazz, the shoeboys and the satins,

like a throne made of gilt that too many johns have sat in.

-Alice by Mott the Hoople
(about Manhattan, but in my head going down the Strip in Las Vegas)

I escape later and get outside. I see other conventioneers, some still wearing their AU badges. Some are posing with close-to-naked show girls who seem to have popped up on every corner of the Strip this year. In between are gauntlets of card snappers, men and women try to get you to accept cards with a picture of a naked girl who will come to your room.

Drinking in Las Vegas may be the law. By evening, most everyone seems to have a drink in hand. Some have glasses as long as their arms. I’m feeling out of place.

On one end of the Strip is the last big casino, the Mandalay Bay. A year ago, a gunman using bump-stocks opened rapid fire on a country music concert across the street. There were 58 dead and over 500 wounded. It was the most destruction by guns in America ever, unless you include the Civil War. The city held a candle light vigil Oct. 1.

Why Las Vegas?

They say it’s cheap. The city has indeed made it appealing for conventioneers and travelers with low upfront costs. Airfare from San Francisco can be under a hundred dollars. Five-star hotels are under $200, a third of the cost of rooms in San Francisco and New York. My rooms at the Palazzo and the Venetian were suites with a sunken living rooms. I hear the conference booking costs are also low. Casinos may be giving convention away in the hopes of emptying the pockets of conventioneers at the gaming tables, restaurants and shops. Every other shop in the Grand Canal of Shops seems to be a restaurant. The Strip may have more high-end steakhouses than anywhere else. A steak can cost over $70. Don’t even think of opening the wine menu.

View from the top. The High Roller, Las Vegas' answer to the London Eye, includes an open bar in some of the gondolas.

“Could you just keep AU in San Francisco?” I ask one and all. It’s a selfish request, I admit. It’s my home. I could drive over. It is also home for Autodesk. The company would save a million dollars in airfare and hotels by holding the conference on its home turf. Before it was branded Autodesk University, the annual user meeting was called CAD Camp and held next to the company’s headquarters on the grounds of the Marin Civic Center in San Rafael. An early AU was held in the Moscone Center in downtown San Francisco.

Many Autodeskers live in San Francisco or its environs. Many of them are young. Who could blame them for the chance to get out and away to Las Vegas, the quintessential party city? It may be their one fling a year. This year AU’s party may have the biggest and best. It included free rides on the High Roller, a 550-foot tall Ferris wheel with “passenger cabins” and open bars.

May I Suggest San Francisco?

Sitting on the dock of the Bay. San Francisco, the No.1 draw for tourists in the United States, a natural venue for future Autodesk Universities.

AU has grown, they say. “There’s no place big enough to hold a conference this size,” is Autodesk’s pat answer when asked, “Las Vegas?” It is a good answer and speaks well of the public relations staff who have to hear me whining year about coming to Las Vegas year after year. PR is all about putting a positive spin on unfortunate circumstances. Las Vegas is a test for them, but the answer needs fact checking.

Many other cities hold much larger conventions than AU. Over 20,000 architects convene for AIA conventions in New York, Orlando and Philadelphia. A 175,000 sales people came to San Francisco for the SalesForce.com convention. IMTS is attended by 130,000 in Chicago. The biggest industrial fair of all in Hannover, Germany, and draws over 200,000 people.

The word around AU is Las Vegas had a 10-year contract, and we are nearing its end. One can only hope that is true.

If Autodesk is Not Careful, It Could Make a Profit Next Quarter

Following quickly on the heels of an interview with Autodesk CEO (soon to appear in engineering.com), we read about Autodesk most recent quarter. Though Andrew Anagnost and I spoke for an hour, he did reveal any mention of what may be the company’s most hopeful result in recent memory. The company lost even less than usual, only $39 million, the least loss in over 2 years. While the profit is still negative, in the last two quarters, the company has lopped $135 million off its losses. The trajectory is clearly shooting towards positive!

Come to think of it, Andrew was in a pretty good mood.

(Picture courtesy of TenLinks)

Like peace, profits are always good. But the revenue curve looks even more consistent in its climb, now with 6 straight quarters of revenue growth.

 (Picture courtesy of TenLinks)

Maybe the new CEO, with his new math and talk of ARR*, all meant to convince us that it was just a matter of time before deferred revenues would make up for what used to be collected at the onset of a software sale, like it did with old, perpetual license model… maybe there was something to all that.

From where we sit, there’s been no exodus of users away from Autodesk. So we should not be surprised. Maybe it is working exactly as promised, that the profit would again be come. It all depended on the users staying in the flock, all remaining would eventually see the light of term licensing and sign up, then we'd wait until that revenue, though coming in smaller chunks, would be realized.

A few did leave the flock but it was too few to matter. Many more have been vocal about their loss of perpetual license, the heart rending cries of users who thought their relationship would last forever, and then found out they had to pay forever, instead. But most of the flock has stayed intact.

How do we know the flock stayed intact? Any competition (all other CAD companies) would have touted those that joined. That never happened. No trumpet blowing, no doubling of user bases, no big architecture or construction firm announcing they were done with Autodesk and moving to another software platform. Even when other design software vendors held out perpetual license as a lure, an option they still had for their software. Their users still had a choice, they said, not like big, bad Autodesk. The lure was not taken. Not often enough. Certainly nothing to crow about.

You can’t blame them for trying.

_________________

*Accelerated annualized recurring revenue, if you must know.

Déjà Vu - Scott Borduin Back as CTO of Autodesk, Filling Vacancy Left by Jeff Kowalski

Scott Borduin, CTO of Autodesk once again. (Picture courtesy of Autodesk)

Scott Borduin, acting CTO of Autodesk, after the departure of Jeff Kowalski, was told yesterday (August 21, 2018) that the position is his for keeps. Scott was previously CTO of Autodesk until 2005, under Carol Bartz. Jeff took over the role of CTO in 2006, according to his corporate bio.

Scott is based in Autodesk’s Portland office. More to come about Scott in his new old position after our interview (soon).

From Autodesk:

Scott has an MS in mechanical engineering and has worked in the CAD/CAM industry since 1984. Scott joined Autodesk in 1993 as part of the Woodbourne, Inc acquisition, and was subsequently chief architect on Inventor. Scott became Autodesk CTO in 1999 and held that position until 2005 when he left to join the non-profit world. He returned to Autodesk in 2012 and has held several senior technology leadership positions since then.

Jeff Kowalski, CTO of Autodesk, 2006 to 2018. (Picture courtesy of Autodesk)

Autodesk Loses Less This Quarter Than Any Quarter in Previous 2 Years

Autodesk was once the world’s biggest CAD company. It was the first to make more than a billion dollars in revenue. That was in 2004. Behind Autodesk were Siemens PLM and Dassault Systèmes. After the addition of CAM and CAE companies galore, Autodesk was positioned to become the biggest CAD, CAM and CAE company. Instead, it has slowed down and been passed by the competition.

Siemens PLM finds itself in the top position with estimated annual revenue of $4.5 billion. In second place, Dassault Systèmes made $3.8 billion. Autodesk is in third place with $2.1 billion.

Not helping Autodesk at all was a fractious board of directors, changes in executives, a bitter battle between contenders for the CEO spot, and 12 consecutive quarters of losses after a business model change (shifting from perpetual to term licensing for all of its products).

After all that, losing only $83 million sounds pretty good. It could have been worse, but Autodesk held back on its hiring needs.

Last Thursday, May 24, Autodesk announced its Q1 FY19 results. Here are a few highlights.

Figure 1.Three full years of losses for Autodesk now, but at least the direction is up. (Image courtesy of TenLinks.)

 

Figure 2. The company’s stock price went down 5% almost immediately following the announcement of a weak earnings outlook for the current quarter. (Image courtesy of Google.)

Autodesk says the new fiscal year is off to a good start and credits the increased ARR, which is defined as the annualized value of its average monthly recurring revenue for the preceding three months. Subscription plan ARR was $1.40 billion, an increase of 103 percent over the same quarter last year. Total ARR was $2.13 billion, an increase of 22 percent over the first quarter last year.

Revenue in Asia-Pacific region (APAC) was $106 million, an increase of 23 percent over the same quarter last year, the biggest increase of all regions. Emerging economies (which may have been previously called the Third World) was even better off, with a growth of 28 percent(from $65 million).

Current assets dropped from $1.878 billion to $1.698 billion, a loss of $180 million. The biggest contributor was accounts receivable, which dropped by $232 million. At this rate, Autodesk would deplete its current assets in less than 2.5 years. Alarm bells continue to be silent on its depleting assets.

AEC revenue growth was higher than Manufacturing. The company seemed to visibly shift toward AEC in last year’s rhetoric at its annual user meeting, Autodesk University. However, CEO Andrew Anagnost still chose to single out Fusion 360 and generative design as its best hopes for the Manufacturing division in his Q&A following the earnings call, an indication that Autodesk is far from done with product design.

Surprisingly, the biggest product uptick (with an increase of 21 percent to $156 million) was AutoCAD and AutoCAD LT, the unsung and oldest workhorses in the company’s stable.

Bombs Drop in San Francisco: Carl Bass Disses Onshape

Carl Bass, who retired from his CEO post at Autodesk early in 2017, was lured away from his Berkeley workshops to speak at TEC Talk. It meant time away from racing his go-cart with an onboard neural network, an electrified Shelby GT, and a host of other projects. He would only do it if he didn’t have to prepare. It helped that Ron Fritz, CEO of Tech Soft 3D, the company that holds the event, was an old friend (Fritz took over the HOOPS Summit after Bass left for Autodesk) and that this year’s TEK Talk was taking place nearby, on the San Francisco waterfront.

Carl Bass, former CEO of Autodesk (left), and Ron Fritz, CEO of Tech Soft 3D, at TEK Talk in San Francisco. The bombs are about to drop.

The event is usually held in Boston because "that's where our customers are," said Fritz. To be sure, East Coast players are largely absent from the West Coast event. TEC Talk is held before the HOOPS Summit. They should have come because not doing so meant that everyone could talk about them. And they did. Onshape, in particular, took it on the chin.

 

And Here’s Carl…

The headline event, Carl Bass’s talk, was well received. Without Hirschtick, Heppelemann, Bernard, Bassi or a Bentley brother, Bass was the only member of CAD royalty in attendance. Retired but still on the Autodesk board of directors, Bass is freer to talk about his time at the company. It was hard to be a CEO of such a big, sprawling organization, he said. People expected you to be omniscient. “My Australia team could not show up for work for two weeks, and I'd never know about it.”

Bass was critical of the CAD industry for not having done much of anything new in 25 years—though he had led the CAD market leader for 11 of those years. He talked about asking a group of designers what CAD software they use and remarked that their CAD applications were "older than they are. "According to Bass, the last interesting thing that happened to CAD was SOLIDWORKS—and that was 25 years ago.

Could Bass have possibly forgotten about Onshape—and Autodesk's own Fusion 360—both of which are more recent cloud-based CAD applications?

"What about Onshape?" I have to ask.

Big mistake. I shouldn’t provoke Bass. To do so is to risk becoming the story rather than reporting on one. A journalistic no-no.

Basss swings without hesitation. Onshape, according to Bass, is a "half-assed imitation of SOLIDWORKS that happens to run on the cloud and is a classic example of the CAD industry worrying about technical problems rather than the needs of their users. It doesn’t solve a single problem for any customer,” he continued "and therefore, they have had no traction in what...five years?"

Bass has a lot of respect for what the founders (including Hirschtick) did with SOLIDWORKS, offering a big chunk of what Pro/ENGINEER could do at the price of AutoCAD, which ran on $3,000 computers. That mattered. This [Onshape] doesn’t matter.

Bass wants to talk about more interesting things, like machine learning,and said, "Onshape is not one of them."

It was another bombshell from the ever-spontaneous Bass. It was not the first time he has taken on the competition publicly. Perhaps most famous was his anti-PLM rap delivered in 2007 (only to announce Autodesk 360 for PLM four years later). His non scripted remarks and avuncular attitude made him popular with the media, which is accustomed to carefully prepared remarks and marketing-heavy messages. No target is too large for Bass. He has even slammed President Trump on Twitter.

 

Comments from the Industry

Although someone jumps in to defends Onshape, outing himself as a paying customer, other attendees will later fall in line with Bass’s assessment of Onshape’s lack of traction. They don’t think it’s catching on—at least not fast enough. Hats off to the great Jon Hirschtick for trying, though.

Reached for comment was Autodesk present CEO, Andrew Anagnost, who, while choosing not to comment specifically on what Bass had said, seemed to agree in principle. SOLIDWORKS CEO Gian Paulo Bassi, ever the gentleman, declined to comment on the competition. It was a chance for Jon Hirschtick to reveal the actual numbers of paid customers, but Hirschtick chose to say only that he had "thousands of customers."

Well, maybe Hirschtick is waiting for a million customers before Onshape makes the announcement.

 

Patience…

Despite competition and the media’s impatience, Hirschtick gives little sign that he is in any hurry. Perhaps he is biding his time, knowing that in time Onshape will gather up paid users and is using that time. No doubt he is using this time to make Onshape more robust, increase the company’s partners, and make Onshape the easy-to-get/easy-to-use CAD program for every engineer unencumbered by—or bogged down by—traditional CAD systems. It's the same let's-change-habits, profit-can-wait approach used with great success by Jeff Bezos of Amazon. Amazon endured losses for many years, but managed to make itself so convenient, so habit-forming that traditional shopping establishments now all seem at risk.

Autodesk Losing $174 Million Not as Bad as it Looks

For those who are keeping track, yesterday’s news about Autodesk’s quarter marked the 11th quarter in a row of losses for the CAD, CAM and CAE software giant. However, this includes a $94 million in restructuring costs. Last quarter, Autodesk announced its biggest layoffs ever (13% of its total work force, or 1,150 people). Most of that $94 million may be severance pay.

While it looks like profit fell off the cliff again, a look at the quarterly report reveals most of the loss was due to a one-time restructuring fee.  (Picture courtesy of TenLinks.com)

Take away the $94 million this quarter and the loss would drop to $80 million. Still nothing to brag about.. but if you squint, you can see the trend (from the last 4 quarters) shows diminishing losses.

On the plus side, revenue grew 7.6%, the biggest gain in the last 4 quarters of increasing revenue. A sign that the long-awaited revenue from term licensing is being realized.

Restructuring costs from the layoffs are expected to continue in the next quarter but should be much less.

Understandably bullish on Autodesk’s prospects, CEO Anagnost led the call to investors with “We finished the year with better than expected performance on many of the traditional financial metrics, such as revenue, deferred revenue, EPS and cash flow.”

He goes on to emphasize Autodesk is starting to reap revenue long deferred, accounting practices that make sense to accountants, with dropping “ARR” and “ARPS” enough times to indicate  that he knows more about these matters than the typical engineer. ARR, or accounting rate of return, is mentioned 45 times in the transcript. It all seems to play along with the transition from perpetual to term licensing, his plan.

The cloud is pointed at as “having its biggest quarter” “fueled by several large wins.” Could this be a surprise source of profit, similar to Microsoft, riding the cloud with its Azure platform?

While Q4 of FY2018 had a $174 million loss, with one-time restructuring costs, will FY2019  be a whole lot better? Maybe not. Autodesk is moving its European operational center from Neufchatel, Switzerland to Dublin, Ireland, which is expected to cost the company $135 million.