The Next CAD Revolution, Part 2—Autodesk

Marketing, not technology, makes Autodesk a billion dollar company.

The short history of CAD on Earth has been defined by these revolutions. In the
first part of this series, we wondered what would be the next one. In this part, we take a close look at the company that caused the second CAD revolution with AutoCAD. 

  1. CAD, started in 1969
  2. AutoCAD, 1982
  3. Pro/ENGINEER, 1988
  4. SolidWorks, 1995
Autodesk’s founders. From left to right: Rudolf Künzli, Mike Ford, Dan Drake, Mauri Laitinen, Greg Lutz, David Kalish, Lars Moureau, Richard Handyside, Kern Sibbald, Hal Royaltey, Duff Kurland, John Walker, and Keith Marcelius. (Image courtesy of Shaan Hurley.)

Autodesk’s founders. From left to right: Rudolf Künzli, Mike Ford, Dan Drake, Mauri Laitinen, Greg Lutz, David Kalish, Lars Moureau, Richard Handyside, Kern Sibbald, Hal Royaltey, Duff Kurland, John Walker, and Keith Marcelius. (Image courtesy of Shaan Hurley.)

The first revolution was CAD itself, with pixels on the screen replacing lead on vellum in the late 1960s. The first CAD was very exclusive and remained in the hands of nobility, reaching few in the working class. Its cost, if you added up the cost of the software and hardware, was a king’s ransom—or more accurately, an engineer’s salary. Only the most progressive engineer, the ambitious designer or the most senior partner at the firm would warrant that sort of expenditure.

The Rise of Autodesk

It was not until after Autodesk started the next CAD revolution, launching AutoCAD in December 1982, that CAD became popular. Economics played a large part in the revolution, as AutoCAD ran on the newly introduced IBM PC, a far cheaper alternative to IBM mainframes, DEC’s (Digital Equipment Corporation’s) minicomputers and workstation that could easily cost $25,000.  But the economic advantage of less expensive hardware would be wasted if PC-based software couldn’t do the job. But Autodesk had a strategy. It was not going to try to match every function of big CAD—just the ones used most often. That approach and the battle cry “80% of the functionality at 20% of the cost” proved effective.

First-mover advantage gave Autodesk an envious share in the ensuing PC-based CAD market. The company’s technology, once just capable enough, became the gold standard for 2D design. By AutoCAD R10, released in 1988, the software was able to do everything on the screen that was previously done on the board. It was fully capable of satisfying the dimensioning and tolerancing standards of the day—ANSI Y14.5, for example. The programmers were quite justifiably proud. The company had a hit on their hands. It was only fitting that the developers at Autodesk enjoyed an exalted status and privilege. They were rumored to play frisbee outside their Sausalito offices when the San Francisco fog gave way to the sun, then program into the night. They were not to be held to a schedule or a dress code. They were allowed to bring dogs to work.

Financial performance of Autodesk under Carol Bartz and Carl Bass. (Original chart made by L. Stephen Wolfe for GraphicSpeak.)

Financial performance of Autodesk under Carol Bartz and Carl Bass. (Original chart made by L. Stephen Wolfe for GraphicSpeak.)

The First Billion Is the Hardest

But by the ’90s, there was a growing consensus that there was only so much you could put in the AutoCAD box. Programmers were running out of ways to construct a circle. The technology engine that had carried 2D PC-based CAD into the revolution and out the other side appeared to be just coasting along. By the turn of the century, it had become hard for users to justify the annual revenue updates as the company introduced less increasing functionality. Its annual revenue curve flattened, as did its net income.

By 2003, Autodesk would have several years in a row of revenue, a maddening reoccurrence to investors who demand growth. Carol Bartz, now Autodesk’s CEO for more than 10 years, had just acquired Revit, a 3D solution for architecture, to expand the company’s stable beyond its one-trick pony, AutoCAD. Industry vertical product lines were created with higher prices and better profit margins. And, perhaps most importantly, the company had changed its image.

Marketing on Top

I spent the summer of 1996 at Autodesk on a working sabbatical as a professor from a Pennsylvania college in the heart of steel and coal production country, where I taught engineering and CAD. By that time, Autodesk had moved its headquarters 30 miles North to a grand, gleaming third-story building in San Rafael near the grounds of the Frank Lloyd Wright-designed Marin Right Civic Center. It was too easy to fall in love with Marin County, after seeing deer grazing on the hillsides as the fog receded, swallows nesting under the roof and geese by the lake. I was there at the invitation of then-VP of Manufacturing Dominic Gallello and sought to advise on the next generation of a 3D mechanical design application. From inside Autodesk, I was able to observe the result of a company transformation.

Embedded with the mechanical product marketing group, I saw little of the free spirit, the developer hero from the era of Autodesk’s origin. No one wore sandals or played Frisbee, even though there was plenty of room for it. In fact, no one seemed to leave their desks except for meetings. A trip to the Compass Café on the first floor seemed sneaky. Lunchtime seemed too valuable for eating lunch. Laid-back it was not. After two weeks of not seeing either the real Autodesk or the real California, I forced myself on one marketer to go out for lunch, which he did guiltily after a few days.

What were these marketers busy with? They seemed to be excellent at producing and answering emails. So adept were they in this relatively new form of communication (remember this is 1996) that they would use it on each other, even if the other was sitting in the next cubicle. It seemed borderline rude to pay a personal visit, I was to gather—but not before realizing that never was anyone’s screen sullied by CAD software.

Surely, someone must be using or programming AutoCAD, or Mechanical Desktop (Autodesk’s short-lived attempt at 3D MCAD). Aren’t programmers the beating heart of Autodesk? If not playing Frisbee, they must be somewhere inside. But no one I saw fit the part. They all wore business casual—light blue shirts, khakis and sensible shoes. No plaid, no long hair, no jeans, and definitely no sandals. Out of desperation, I had to ask where the programmers were being kept, imagining they had been offshored or thrown in a dungeon—fed only after generating a specific quota of code as instructed by their masters in the Marketing department.

“Oh, they are in the other building,” was the usual and rather unconvincing answer. I insisted on a proof-of-life demonstration, and in my last few days at Autodesk, I was granted a meeting with one.

Was product definition now too important to be left to developers? Would they busy themselves with trivial pursuit, with enhancements that satisfy them intellectually but which are of little use to the market? A modern CAD company, if it was to become as big as Autodesk clearly intended to be, was going to have to treat programmers as a controlled resource. They were no longer free to add yet another method of geometry modification, edit code for the sake of elegance, fix a bug or add a feature upon request from a user, or take the lead in any other major initiative. Instead, they were to march to a product specification strategically crafted by the Marketing Manager.

And as the programmers were demoted to the lower floors, Marketing took control from the top.

Marketing Flexes Its Muscles

In the ’80s and ’90s, trade magazines were the way for the well-read CAD user to keep their skills sharp and stay informed, and Autodesk was in firm control of this media. Autodesk was the dominant advertiser in the two leading CAD magazines of the day, Cadalyst and CADENCE, spending millions of dollars per year on ads. Both publications were dedicated to AutoCAD users for readership and depended mightily on Autodesk for their revenue. [Full disclosure: The author was editor in chief of CADENCE magazine.]

Marketing was also instrumental in creating the mega-CAD user event, taking CAD Camp, a riotous party of resellers (and a few users) in the company’s backyard and turning it into Autodesk University, an international conference with hundreds of classes. The 2014 Autodesk University in Las Vegas boasted over ten thousand attendees. Autodesk never publicly released the cost of the event, but more than one Autodesker would not deny that $1 million was in the right ballpark. Autodesk did not seem overly worried about recovering the cost from the admission price it charged users. Profit from the show never seemed to be the intention. It was far more important to present the company and its products in the best possible manner.

Monthly user group meetings—once user-to-user, local, drive-to affairs—were initially supported by CAD vendors with just enough budget from the mother ship for pizza and sodas. They used to lead with talks by power users on tips and tricks, workarounds, even advice on which releases to avoid. Under Marketing’s control, the events became slicker and more commercial—more of an opportunity for Autodesk resellers. They now featured reasons why the new release had must-try features or how the vertical product or suite would be a great return on investment. The annual user meetings, the event all users lusted to attend but few were allowed to, came loaded with upgrade and upsell messaging and more classes by Autodesk resellers and employees. The Autodesk CEO and senior executives took to the stage and showed dazzling videos of movies scenes (Autodesk 3D Studio used by moviemakers). Marketing was dead set on getting something for what it was spending.

With the demise of print publications and the advent of blogs in the ’90s, Autodesk somehow managed to get Marketing to convince many of its own employees to create blogs—on top of their day jobs. The company also supported blogs by users and independent journalists, although not by direct payment for content (as far as we know). Shaan Hurley’s Between the Lines may have been the first CAD blog. Ralph Grabowski’s WorldCAD Access was the first CAD blog written by a journalist or user. At the height of blogging, there were as many as 200 blogs about Autodesk software. The company also has its own website on which it publishes articles about business and design—at first called Line//Shape//Space then changed to RedShift—which competes with independent online publications, such as the one you are reading now. All told, Autodesk has transitioned its gigantic presence from old media to new and enjoys a print to the giant footprint on the Internet.

How Important It Is to Look Big

Autodesk’s initial market success was driven by its favorable value (80% of the capability at 20% of the cost). Individuals and small firms were compelled to save money and couldn’t get Autodesk fast enough. But established enterprises tend to be more conservative. The Boeings and Bechtels of the world were not about to disrupt their business to save a few dollars on software. Big companies liked to do business with big suppliers—those with whom they have history and confidence, those who could handle their complicated designs and immense models—and who would be around to read their design files for the foreseeable future and would guard their intellectual property. Here were companies like IBM with their mainframes and Dassault Systèmes with CATIA. They could be counted on to make Boeing’s planes fly just as the solid, granite block bank on Main Street could be counted on to keep your money safe. Would you, CEO of Big Manufacturing, Inc., trust your precious designs to a bunch of California hippies?

More than any of her predecessors, including the legendary John Walker, Carol Bartz understood the importance of image to the future—the image that would help Autodesk reach the next level, the next billion dollar mark.  By the ’90s, Autodesk had saturated small firms with an unprecedented reseller network that covered the U.S. and had made good progress on the rest of the industrialized world. It now had to sell directly to big businesses.

Taking pages from the enterprise CAD playbook, Autodesk executives would wear suits and shoes and make visits to big companies. Big companies appreciated visits from heads of companies. They would not be shopping at trade shows or bother with pesky, low-level salespeople. A visit by the head of a company reflected how important your company was in their eyes, how much it mattered to them. When the CEO of a CAD company flies in, flanked by her VP of Manufacturing, it shows proper respect to a Fortune 500 CEO.

Once in an executive boardroom, the CAD CEO can unfurl the presentation. Here is a company already so universally accepted, already the standard, using the language in which CAD is spoken outside the walnut paneled walls. It is everywhere you look down the street and there’s a good chance that your competition is looking at it, too. You see everyone is talking about it. All those bloggers can’t be wrong. Your own people have mentioned the company when they return from the trade shows or read about it in in every industry magazine. While you were watching your stock prices, a revolution had occurred.

All is not lost, however. The revolution’s generals come in peace and are offering you a solution.

History of CAD Revolution, Part 3
. SolidWorks pretends to be big — and it