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updated: 8/20/2014 8:00 AM

Apple, Google CEO contender seeking second act in Silicon Valley

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Bloomberg News

Joe Costello was once a contender for the top jobs at Apple Inc., Google Inc. and Yahoo! Inc. Then, he all but vanished from Silicon Valley's elite circles.

Now, the technology veteran is back, though in a smaller role. The 60-year-old recently became chief executive officer of Enlighted Inc., which develops products that help businesses cut their energy bills by monitoring building occupancy. The Sunnyvale, California-based company said today it's raised $20 million from investors including Intel Capital and Kleiner Perkins Caufield & Byers.

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"Joe was a rock star," said Satjiv Chahil, a former executive at Apple and Hewlett-Packard Co. "Unfortunately, people in Silicon Valley think like a computer. You're either a one or a zero."

Costello's rise and fall from the top echelons of technology is a cautionary tale about an industry that waits for no one, according to those who know him. Technically, Costello wasn't out of the game -- he said his mistake was stubbornly sticking with two failed startups long after they slipped into obscurity. Costello personally invested about $20 million in the companies -- one of them a computer-aided design company called Think3 Inc., and Orb Networks Inc., an early developer of technology that let people access video and music from their computers on any device.

"I've asked myself the question many times: What the hell happened in the last 10 years?" Costello said. "I can see now that the biggest mistake is I just didn't stay in the mix enough. I stuck on my own for too long."

Vagabond Executive

John Doerr, a Silicon Valley luminary and Kleiner Perkins partner, was instrumental in bringing in Costello to Enlighted. Doerr is betting that companies seeking to cut facilities costs will flock to Enlighted's products and will be able to fund purchases from their initial savings on energy bills.

"It's like Nest for companies," said Doerr, comparing Enlighted to Nest Labs Inc., the smart thermostat maker -- also backed by Kleiner Perkins -- that Google acquired for $3.2 billion in February.

With Enlighted, Costello said he's aiming to "get back in the game." Costello still has street cred with Silicon Valley veterans for running computer-aided design software maker Cadence Design Systems Inc. A math and physics major, Costello acquired more than a dozen companies as CEO from 1987 to 1997, turning the software maker into a leading supplier in the $6.7 billion industry, according to Summit Research.

Costello was known as much for his big personality as his operational chops. A gangly 6 feet, 6 inches (2 meters), he was known for incessant joking and eternal optimism. When the market crash of 1987 dashed Cadence's plans for an initial public offering, Costello dressed as a vagabond and wandered the halls tossing unneeded copies of the prospectus from a shopping cart.

Saving Apple

When Costello left Cadence in 1997, Steve Jobs, who was Apple's acting CEO at the time, called him to see if he might be interested in leading the computer maker so that Jobs could focus on his full-time job as CEO of Pixar, the animation studio. They spent hours walking around Palo Alto, California, talking about what it would take to save Apple.

After pointing out that nobody but Jobs himself had the perfect set of skills to lead Apple, Costello remembers telling him: "Steve, the biggest problem here is that you don't know if you want to take the job or not!" Jobs took a long pause, smiled, and said, "You're right, Joe. That is the problem," Costello recalled.

From there, a series of stumbles began to derail a promising post-Cadence career. Costello joined Knowledge Universe Inc., an education startup created by former junk bond king Michael Milken and Oracle Corp. CEO Larry Ellison, only to leave after three months when Milken ignored Costello's veto power to pursue an acquisition he opposed, according to Costello.

Geoffrey Moore, a spokesman for Knowledge Universe, declined make Milken available for comment.

Google, Yahoo

Then, Costello agreed to become chairman of Think3, which was created by a former Cadence colleague. He later became CEO of the startup when investors threatened to push out management.

That's when Doerr, an early funder of Google, asked Costello if he'd be interested in becoming CEO of the fast- growing search company. Costello said he met with Sergey Brin and Larry Page in 2000. Costello wanted the job, yet decided that he couldn't abandon Think3's investors. Doerr declined to comment on Costello's candidacy for the Google job, which ultimately went to Eric Schmidt.

Costello then got another chance to run a big technology company, when he met with Yahoo co-founder Jerry Yang and Sequoia Capital's Mike Moritz, one of the Web portal's original investors. While Costello doesn't know if he was a finalist for Yahoo's CEO, he had the sense he would have gotten the job had the board opted to continue its technology-focused strategy. The job went instead to former Warner Bros. Entertainment executive Terry Semel.

Extra Stress

The offers trailed off after that. A brief effort to get into education software failed to materialize. In 2006, Costello focused his attention Orb Networks. By 2008, Apple had largely accomplished Orb's goal of delivering Web content to mobile device, while Google and others were investing billions. When Orb's backers decided to liquidate the company and cut their losses, Costello put together a group to buy it instead.

Orb never made much of a mark and Costello sold it to Qualcomm Inc. in October for an undisclosed sum, though it wasn't enough to get back the $17 million he'd personally invested.

Second Act

Soon after, he called venture capitalists including Doerr, who pitched him on Enlighted. The company's wireless network of sensors tracks motion, light and temperature to determine when people are working in offices. Enlighted had about 100 paying customers, including AT&T Inc. and Google, yet lacked the sales or operations scale to maintain its momentum, according to Trae Vassallo, a Kleiner Perkins partner who sits on Enlighted's board. Total funding to date is $55 million, including today's investment.

Costello's efforts to boost Enlighted's sales are already paying off, according to Vassallo. The company is landing bigger deals and has come up with a new payment option that lets facilities buy Enlighted's networks for no money down, paying instead with savings from their power bills.

Enlighted's founder, Tanuj Mohan, said Costello came in and saved a partnership with a large lighting-controls maker.

"We were not negotiating with them the right way, and it left a really bad taste in their mouth," Mohan said. "Joe apologized profusely, and the way he handled people at every level of the company was brilliant."

Costello is optimistic about his comeback attempt: "People assume I'm kicking myself, but I'm not that kind of personality. There's always another chance in life, and something else exciting to do."

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