The Art of Company Building: Ambarella
A Rollercoaster Ride to Success
Ambarella uses AI to make cameras smarter by extracting valuable data from high resolution video streams. Founded in 2004, the company had a successful public offering eight years later in 2012. Lip-Bu Tan was one of the Ambarella’s very first investors, helping guide the company through its many ups and downs. Ambarella co-founder and CEO Fermi Wang talks about the marathon journey from startup to public company and the critical coaching provided by Lip-Bu along the way. Fermi is not just the CEO of a portfolio company, he’s also an investor in Walden Catalyst Partners.
Why did you decide to work with Lip-Bu?
Fermi: When we founded Ambarella in 2004, the first VC firm we talked to was Benchmark. They were ready to back us, but they wanted a second investor in the syndicate. I told them I wanted an investor that not only has a great technology background, but who also has a deep understanding of the Asian and Chinese markets. Benchmark said there’s only one investor I need to talk to, and that was Lip-Bu. Lip-Bu was instrumental in introducing us to the right partners and organizing meeting with potential suppliers and customers across Asia. His connections in Asia are better than any other VC in Silicon Valley, and that has been hugely valuable for us.
How did Lip-Bu help you solve important business
Lip-Bu played a critical role in the board room during some of our most difficult times. Before our IPO, there was a company that tried to acquire us. My co-founders and I didn’t think it was a great match, but there were some board members who were eager to do the deal. Lip-Bu was the voice of reason. He talked to me many times during that period, listening to my concerns and helping to convey my reasoning to the other investors. In the end, we didn’t take the offer. That turned out to be a great decision because that offer was one tenth our current valuation! Lip-Bu’s support was very special to me because, a few years earlier, I was forced to sell my previous company before I was ready. It was so refreshing to see that Lip-Bu had Ambarella’s best interest at heart, and not just the interest of the investors.
What makes Lip-Bu unique?
People often ask what it’s like to work with Lip-Bu. I tell them, based on how fast he responds to my emails, I’m convinced there are actually three Li-Bu’s working around the clock on three different shifts. He is one of the most responsive and thoughtful people I know.
Can you tell us about a key moment with Lip-Bu when
he helped you through a difficult time?
In 2010, we were preparing to go public. At that time, we were the major silicon supplier for the Flip, a popular mini camcorder that was acquired by Cisco. We did great with that product line and with other similar products. But, on the day of our first meeting with the investment bankers, Cisco announced they were shutting down the Flip product line. Overnight, we were stuck with 1.2 million units of inventory and millions of dollars in lost revenue. The timing could not have been worse. Other investors would have panicked, but Lip-Bu remained incredibly calm and thought through our situation from every angle. Instead of trying sell the same solution to the same market, he told us we need to find other markets that can use our technology. Of course, that is something we wanted to do as well. But it was great that we had a board member who could support us as we made that transition, instead of just looking for a short-term solution and pushing us through an IPO prematurely. We delayed the IPO for two years, and by that time we had successfully transitioned the business from the mini camcorder market to security cameras.
What value did Lip-Bu add to your company?
After the IPO, Lip-Bu became an independent director. I became the chairman of a public company and Lip-Bu taught me how to prepare for every boar d meeting. Even after the IPO, Ambarella went through several ups and downs. GoPro was our biggest customer and one day they announced they were going to start building their own chips. That’s when we decided we needed to invest in AI and rethink our business. Lip-Bu’s assistance during that transition period was instrumental, and today those efforts are coming to fruition.
Can you describe Lip-Bu team in three words?
Caring, sincere and trustworthy.
Why did you personally become an investor in Walden
When I heard about the new fund, I signed up immediately. This team has an amazing track record and really know what they are doing, especially when it comes to deep tech. Five years ago, there were very few people who wanted to invest in semiconductors. But this team has stayed true to deep-tech investments for decades.