How did Touchstone come about?

The idea for this company has been floating around with me for many years, actually since I left Maxim in early 2000. Back then was not the right time to start a company like Touchstone. At the time, the funding was going toward businesses that were one-product, one-customer type models. VCs could make an investment and it could quickly turn into money. We were trying to build a real company. When I left Micrel in 2005 I started to think about what I wanted to do. I was fortunate enough to know some people in venture capital. Crosslink Capital, a VC firm in San Francisco, asked me to be an Entrepreneur in Residence (EIR), which is a pretty cool job. You essentially are given a salary, an office, and a business card. You get to sit in on their meetings and see the inner workings of how a venture capital firm works. They will help you look at companies in your space, and, if you want to start a company, they will help you do that. The real genesis of Touchstone started there. I started to work on finding a team of people, flushing out the business plan more, making contacts, and all those types of things. When I left Crosslink in early 2008, Touchstone was formed, and I started raising money in earnest.

What was the most challenging aspect of starting Touchstone?

The most challenging thing was raising the money. It took us two years to raise our funding. We started in early 2008 and found the first investor, Opus Capital, within a month. Most people say if you can find one investor, you will find another one easily. In our particular case, because of the economic environment of 2008, combined with the environment of semiconductor investments (which continued to worsen throughout the year), we saw that it was unlikely we would close our funding in 2008. After 2008, we really had to regroup. Opus stood with us. In summer of 2009, the economic environment was getting better; VCs were starting to put money to work. We started to raise money in earnest again. In early fall, we found Khosla Ventures as our second investor. I am thrilled at how it worked out; we found two really good investors who know our space. Opus’ Managing Partner, Gill Cogan, was actually an original investor in Maxim, and when you look at our business model, we knew he would be a fantastic resource. Pierre Lamond led the deal for Khosla Ventures. Pierre is a co-founder of National Semiconductor and was involved with Linear Technology and many other successful semiconductor companies. He was very familiar with what we were doing, and was looking for a company like ours to invest in. Our funding (money in the bank) came on March 8, 2010, and since that time it has been a relatively straightforward ride for the company. I am not saying there have not been bumps along the way, because indeed there are always unforeseen things.

Can you tell us about the Founders of Touchstone Semiconductor, Inc.?

All of us either come from Maxim, Linear, or Analog Devices. Most of the team has worked together in one way, shape, or form.

I have my BSEE from the University of California, San Diego, and my MBA from the University of Southern California. In 1989 I joined Maxim, and before that I was a designer for about five years. When I joined Maxim, it was a roughly $40 million company, and when I left in 2000, they were making over a billion dollars in revenue. I was very fortunate—right place, right time, and right set of skills. I ended up setting the strategic direction for most areas of the company. After Maxim I worked at a start-up for about nine months. Then I went to Micrel for about four years and ran the high bandwidth division. I ended up turning that around from being the least profitable division of the company to the most profitable when I left. From there I went to Crosslink Capital for about a year, and then started working full time on Touchstone.

Jeroen Fonderie, the Vice President of Engineering, has a PhD from Delft University in the Netherlands. That is one of the best engineering schools for analog designers in Europe. When he was there he wrote a book on op amp design. He has written over 20 scientific publications, and he holds seven patents. Beyond that, he is a fantastic manager, and a very good business man. In the Analog world, that is a very rare combination. When you put all three of those factors together, you have a great VP of Engineering for a company like Touchstone.

Adolfo Garcia, our VP of Marketing and Applications, started out also as a designer. He went from being in the design world to joining Analog Devices, and worked there for several years before moving on to Linear Technology and continuing in applications for several more years. He then worked at Micrel, which is where we crossed paths. He was running part of that business on the analog side. He then worked at a couple of other analog companies, and when I was looking to start Touchstone, he was the ideal guy to run marketing and applications. You want someone who is technically very strong and who can cover a lot of different products.

The design team is mostly from Maxim, Linear, Analog Devices, National, or MPS. All of the designers in the company have worked together in some way, shape, or form. Some of the designers and I go back 20 years; they all average about 20 years of experience and about 10 patents per designer. So this is a group that can hit the ground running, can work independently, and will be able to get things done in a reasonable time period. We also wanted people that fit in our company culture. You want people that work well together. It does not mean that everyone has to be best friends or see eye to eye on every issue, but they have to be able to work well together and understand the focus of the company. Everyone here believes in our model and is moving forward to implement our strategy.

How do you choose the products to manufacture?

We have two strategies we are working in parallel. The primary focus at the beginning was alternative source products. We did this because it solves a big problem that our customers face today. Most of the parts in the High Performance Analog segment are sole-sourced. That means that there is one source, and, if a customer has a problem obtaining a product from the primary source, they are out of luck. We provide an alternative source, and an assurance of supply they cannot have using only Maxim. In parallel with that, we are working on proprietary parts, which is the long-term future of the company. We want customers to think of us as a very different company. We want to develop things that are really different, unique, and cool to solve problems that are not being solved today. That is our basic product choosing methodology.

Our philosophy follows the words of Hall of Fame baseball player Willie Keeler which is “Hit ‘em where they ain’t.” To us, this means don’t create the obvious products because customers will naturally gravitate toward the big companies. We are pursuing a niche strategy where we focus on markets that are big enough for us to make money but not so big that the larger companies would be interested in pursuing them.

What industry sectors are you looking at?

We are pretty flexible in terms of what we do. The initial focus of the company is toward industrial types of companies. We have naturally evolved to low power applications. We are combining those two things together and it seems to be working.

As you target single-source applications components, is there any concern with IP as you design this part?

We are designing in a different technology from the primary source, so almost by definition we have to use different architectures. We look at patents before we start. We do not want to infringe on someone else’s patents. We do not want to cause any unneeded issues.

Can you tell us more about the manufacturing and testing?

We are using TSMC as our primary foundry. They are a great partner and have been very supportive along the way. We do most of our development in their 0.18µ technology but we are not limited to just that. We can use any technology that they have. That is the nice thing about our business model; we are flexible. We are able to pick the right technology for the product.

We are old school with regard to testing. We test everything that we develop. If we are guaranteeing our specifications over temperature, we test and make sure that it will perform exactly what we say it will.

How do you keep up with inventory?

That is one of the big advantages for us. Because everything we are developing is on 8-inch wafers and we hold a lot of stuff in die banks, it does not cost us a huge amount of money to manufacture. If someone comes in with a huge order, we are able to manufacture, test, and ship it pretty fast.

Can you tell us about your low power op amp?

Customers seem to love the TS1001 600nA, 0.8V Op Amp. Even customers who cannot use it seem to love it, which is really nice for us. It has been a great door opener for the company. Where we are seeing a lot of use for this part is in low-power applications. If someone needs bandwidth less than a kilohertz, and you want to reduce power consumption, it is perfect. Customers are getting really excited about it in those specific types of applications.

What can we expect to see from Touchstone in the future?

We have a couple of different product families coming out at the end of September and October. I am a little bit hesitant to say anything until they come out because the scary thing in our business is until you see it and know it works, it’s not a sure thing.

The thing that we really want customers to think about Touchstone is that the company is doing cool and unique things. Hopefully, as time goes on, we will achieve that reputation, and customers will look to us for those types of cool and unique products. We want to fill niches in the marketplace, build our business up, and show engineers that we can solve problems that have not been solved before.

How many products would you like to see Touchstone having in five years?

Our minimum goal is 200, and it looks like we will easily be able to achieve that. We will continue expanding our support staff around those products. Right now we have 25 people in the company, and we are always looking for good designers. We have a very high bar regarding who we hire. We have an extremely talented and cohesive team, so it is an elite group that people will be joining.