Presentation of the 2004 Phil Kaufman Award to Joe Costello
A. Richard Newton
Ladies and gentlemen, it is again an honor for me to present the eleventh annual Phil Kaufman Award to a major and truly unique contributor to our industry, Joe Costello. Insightful, strategic, controversial, passionate, charismatic, and a born leader, for a dozen years Joe led Cadence as it developed from annual revenues of around $10M to over $1B—the first company in our industry to achieve that milestone. While Joe would tell you there must have been some luck involved, he was certainly also doing something right for Cadence and right for our industry!
Where to start? Joe’s youth is somewhat murky, and I won’t even dare to take you back to some of the stories his younger brother Tim Costello told me — about the M80 firecracker and the dead gopher, or the birthday party where Joe and his pirate buddies scared the daylights out of the birthday boy and his young guests.
Joe’s career in electronics started while he was still a young physics student at Berkeley. He spent a stint at National Semiconductor and that was when he caught Jim Solomon’s eye. “He was the most unusual guy I had ever met,” Jim says. “He assimilated knowledge and figured out what to do with it faster than anyone I have ever known. In my career, I have met thousands of very smart technical people, but never have I met anyone who could move as fast as Joe. I brought him into the company and gave him more and more responsibility, and he always figured it out as quickly as I could give it to him.”
When Jim left National to found SDA Systems, National Semiconductor invested in the company and wished Jim well, but National CEO Charlie Sporck insisted that Jim not take a single employee with him. A year later, Jim went back to National and recruited just two people from his old team—the ‘two Joes’: Joe Costello and Joe Santos.
Joe joined SDA Systems in 1984 as a Director of Marketing, but in those early days he would take on whatever was necessary to make the company successful. “Joe started out in the documentation group,” recalls Alan Naumann, CEO of CoWare. “Here’s a guy with two masters degrees and almost a Ph.D. and he’s doing documentation.” I remember when I first met Joe; my PhD student and Cadence co-founder Ken Keller had developed our layout editor but no one wanted to use it. Having talked to customers, Joe decided the issue was the unnatural look and feel of the editor’s menus and I remember he personally worked through the weekend redesigning the menus for the entire system.
It wasn’t too long before Joe stepped up to help Jim Solomon as president of the company. As Don Lucas, SDA Systems founding investor, chairman of the board, and silicon valley icon said, “When we made Joe president, we were short of business so we told him to go to Japan and come back with at least two big deals or his next trip would be to Timbuktu! He came back even more successful than we expected. Joe is a great leader and a great motivator. I was certainly sorry to see him leave us.”
Remember now, SDA Systems—now Cadence—was founded in 1983, around the same time as Sun and Adobe. That year, Microsoft released MS DOS1.1 and reported revenues of under $30M. Compaq delivered the first PC clone and Time Magazine announced the computer as its “machine of the year.”
Back then, Joe was one of the first in our industry to understand that it was actually all about software—that a software platform, with a core set of value-added applications and the ability to extend and adapt the system—was what the customers needed and wanted. During his tenure at SDA and Cadence, we developed and refined the Skill extension language and the industrial version of the C-based integration platform. He could see that his customers wanted solutions, not just tools and technology.
But many of Joe’s most important contributions to our industry were non-technical. During his watch at Cadence, the company introduced subscription licenses to the industry and expanded our view of who we were by pushing into IP and services—“A strong, creative move to make, one that was perhaps ahead of its time, but one that nonetheless grew the pie for everyone.” according to Patrick Scaglia, now a Vice President at HP. Joe wanted to build a bigger and more substantial industry and he was willing to take big risks to do it. He could see where his customers were headed and he wanted to be there, one step ahead of them. “Get as close as you can to your customers,” is something Joe believes is a key to success in any business. On Joe’s watch, the company also broke new ground by using major and successful mergers and acquisitions as a strategy for growth and meeting customers’ evolving needs. “At the time, I thought ‘I wish I was in the telecom industry right now.’ They had the resources I needed.” says Joe. It was years later when CISCO finally led that industry with its very successful M&A strategy. Oh, and I should also mention that Joe was instrumental in helping found EDAC and in insisting that the Design Automation Conference fund the organization, and so I suppose we should thank him, at least in part, for tonight’s wonderful event as well!
Cadence’s Executive Chairman Ray Bingham told me, “Joe is absolutely unique in his ability to marry technology with business insight, and then turn the combination into something that delivers real business value.”
Now many of the insights I’ve credited Joe with driving might seem ‘obvious’ today, but that is the nature of these kinds of really big ideas. The window-based user interface, the internet and the web, the walkman and its derivatives, all seem obvious today. People will argue and fight with you at the time, explaining how you don’t get it. No only did Joe get it at the outset, he created much of our industry’s vision, he attracted great people to join him, he had the dogged persistence to go there, and was very happy to have your company on the journey if you shared his vision. And now, of course, much of what he and his team accomplished is ‘obvious.’ But the bottom line is that we are all benefiting today from being able to play on a larger field, seeing the industry as a lot more than it was back in those early days.
“Joe is able to recognize a good idea when he sees one and to develop it, refine it, and push it,” said Patrick Scaglia. “I was attracted to Cadence somewhat by accident, but I was attracted to the vision of the company—to be something bigger, different.” Many people who came to Cadence and went on to establish their own reputations as leaders in EDA or other industries told me that same story—they were attracted to Cadence by the vision.
Personally, I believe one of Joe’s greatest legacies to EDA and to industry at large are the people he attracted to Cadence and that rubbed shoulders with him for a while. I cannot think of another company that has been the source of such high-impact executive talent. Jim Behrens, Jim Douglas, Aki Fujimura, Jack Harding, Charlie Janac, Izadore Katz, Jeff Miller, K.C. Murphy, Alan Naumann, John Olsen, Joe Prang, Shane Robison, Patrick Scaglia, Bob Wiederhold and Tony Zingale, just to name a few.
I also remember when Joe attempted to combine Cadence, Synopsys, and Gateway Design Automation. So does former Synopsys Chairman and CEO Harvey Jones. “We were in Las Vegas when Joe invited Prabhu [Goel] and me down to the table, ostensibly to teach us craps.” Harvey went on to add, “In those early days of Synopsys, many people viewed Cadence and Synopsys as competitors and believed Joe and I were arch rivals. In fact, I have always had the highest level of respect for Joe. His consolidation of the physical design space was critical to the success of Synopsys—it was the platform upon which we built our company.”
Aart De Geus, founder and now Chairman and CEO of Synopsys, puts it well when he says: “Joe always understood the real importance of our industry to semiconductors and electronics. He was constantly driving for a greater future and a broader horizon for EDA. Coupled with an uncanny ability to formulate and express his vision, and then to convince his audience, Joe was an outstanding spokesperson for our industry throughout his tenure.”
No doubt Joe has an uncanny ability to formulate and make a convincing argument. In fact, at times he has been accused of taking on both sides of the same argument. Joe’s brother Tim explained, “Joe was on the high school debating team and he was very good at it. But he didn’t have a lot of patience. In fact, if he felt you were not up to the intellectual task of debating with him, he would start making your arguments for you—arguing both sides of the issue. Occasionally he would even win for you.”
As Jim Douglas, now CEO of ReShape adds, “Along with his public persona as a vocal, charismatic, convincing, arm-waving guy, internally Joe was a real leader—he was always driven by strategy. Joe didn’t always have a notion of a predefined path, but he was very clear about the destination, and even though things seems a bit chaotic at times we always made progress towards that destination. Joe gave people the opportunity to do their own thing, to take risks, to try new things.”
From the outset, Joe demonstrated his ability to take in a broad collection of ideas, from a wide range of sources, synthesize them into a vision—a true strategy—and once he was convinced it was the right vision, move forward relentlessly with an unwavering focus on the outcome he and his team sought. In fact, it seems Joe learned his strategic approach to life at a young age. His younger brother Tim also told me that Joe and his high school buddies used to think long and hard about strategic plans for getting girlfriends. “As far as I could tell, they were never able to execute on any of them!” Tim reported. Of course, he was a younger brother.
One nickname Joe has accumulated over the years is “Eagle Eyes.” He can see things a mile away very clearly, but sometimes he has a hard time with things a foot in front of his face. “But that was our job.” said Jim Douglas, “Joe surrounded himself with strong people whose job it was to take on the details and make sure things got done. Joe is at his best seeing things others can’t and leading them there.” Another former executive recalls, “Sure, he made some mistakes and, frankly, we made quite a few for him as well, but he gave us the chance to set our own course. Provided we agreed with him on the destination, and when we needed to get there, that was all that really mattered. That meant a lot to me.”
But this notion of taking risks—sometimes big risks—is an important element in Joe’s career. As one former Cadence executive told me, “Joe emphasized the idea of trusting ones instincts on an issue—whether it was hiring, sales, strategy, or an acquisition. In that, he gave many of us the confidence we needed to trust our own instincts. The industry is making kind of linear progress right now—more of us need to trust our instincts again and go for it.”
Of course, this is balanced by the strong sense of responsibility and commitment he has demonstrated time and time again, not only to causes like the importance of ethical behavior in the industry, but especially to the people who have worked for him. As Joe’s wife Michele Costello puts it, “Joe has a huge sense of responsibility, and once he commits himself to something—once he signs others up to the vision—he will see it through. He is brutally honest with other people, but also with himself. He regularly looks in the mirror.”
Alberto Sangiovanni Vincentelli, SDA co-founder, Kaufman award winner and Cadence board member says “Joe always had lots of supporters in the ‘troops’—he really cared deeply for everyone who worked for him.” And I saw that side too. In fact, I still recall to this day when my house burned down in the Oakland firestorm in October, 1991. Joe was one of the first to call me and ask if there was anything he could do. Knowing how worried my elderly mother must have been, Joe and Cadence offered me an airline ticket to bring my mother to California for a visit. Alberto went on to say, “It didn’t matter whether Joe was talking to a janitor or the CEO of a major corporation, Joe was able to relate personally to everyone, with a sincerity and a sense of fun that lifted you up.” Corporate culture at Cadence was important for Joe and the costumes he wore to the company’s annual Halloween party were infamous. “One year Joe and his wife came as Beauty and the Beast,” said one former executive. “Of course Joe came as the Beast and we joked with him that it didn’t seem like much of a costume! We had occasionally seen that side of him too.” But more than anything, many who worked with Joe described him with words like down to earth, realistic, and caring. One told me, “Once he asked the Cadence employees to tell him what their biggest issues were. At the top of the list was that the copy machines kept breaking down—so he made that the top of his list and worked on it until the problems were corrected.”
Another thing about Joe, he brings out the passion in both his friends and supporters, as well as his rivals. No one can ignore Joe, no matter how much they try. Joe can see the potential in things—just about anything—and is disappointed when others don’t share his vision or his insight. Couple that with another thing we all know about Joe, that he is not shy, and if you ask him a question he will give you an answer! His answer. And sometimes it’s an answer you don’t necessarily want to hear. Joe was recently quoted as saying “It doesn’t feel like there’s much of a vision technologically, or a business model or a real value proposition for EDA today. It feels like the contribution of EDA in the overall electronics industry isn’t fully valued.” I tell you what, I’m with Joe on this one too! As an industry, I certainly agree that we are all struggling to find the next break-out strategy and to be fairly credited for the value we bring to microelectronics. There’s no doubt about that one!
Tony Zingale, former Cadence executive who went on to become CEO of Clarify, recalls that at Clarify Joe gave him an important piece of advice he didn’t really want to hear either. “Joe was on my board. When I came to Clarify, the stock was at $4 and we had taken it to $50, everything was going right and everyone was very happy. One day, Joe took me aside and said ‘Tony, you’re in big trouble.’ I was flabbergasted—how could he say that? He told me that my major competitor was growing and was pulling ahead of me and unless I achieved more critical mass and soon I was doomed! Once I thought about it, I could see he was right and we took steps along the lines he had recommended. To this day, every day I ask myself at least once ‘How would Joe handle this?’” Another former colleague told me “When people leave a meeting with Joe they are often heard to say, ‘I never thought of it that way’.”
In the various people I spoke to about Joe, the words ‘leadership,’ ‘passion’ and ‘charisma’ were used most often. That is certainly what he brought to EDA during what some refer to as ‘the Costello era’ of the industry. In fact, Alan Naumann recalls that when SDA was about to announce their acquisition of Gateway Design Automation, a somewhat nervous Gateway executive took him aside and said “It is really important that your CEO is enthusiastic when he announces this merger to our employees. Do you think he can do that?” Alan was astonished that anyone could ever be concerned about Joe conveying excitement about anything he does!
As we know, Joe left the helm of Cadence in late 1997 with the goal of using technology to totally transform education. Joe believes to this day that technology is poised to transform fields like education and healthcare. As Joe puts it, “If we have moved from world of agriculture and manufacture to a knowledge-based economy (and I believe we have), then ‘education’ is the ‘oil’—the most important commodity—of this new world. It defines the ‘haves’ and the ‘have nots.’ With the technologies we have available to us today, the cost of providing education can drop to almost ‘free’ and can go anywhere, and this can be the foundation we need for the efficient, low-cost widespread deployment of knowledge.”
No wonder then, that when Michael Milken approached him to join Knowledge Universe and play an important role in fulfilling that vision, Joe jumped at the chance.
One of the areas Joe is most concerned about is that growing gap between the ‘haves’ and the ‘have nots.’ “That gap has been the end of almost all great societies,” Joe points out. “It will be the end of ours too, and education is a key to reducing that gap.” After a short stint at Knowledge Universe, Joe left to become CEO of what is now Think3. But his passion for education continues through his role in Bravo Brava. That company has already spun out two educational technology companies—Soliloquy Learning and ORB networks—and Joe tells me a third, called SpeakESL, is on the way.
Of course he didn’t entirely leave EDA back then. He’s been involved with Barcelona, as well as Altius and Snaketech that were acquired by Simplex, that was acquired by Cadence! Just to name a few.
Finally, I’d like to briefly dispel a few rumors about Joe. First, it has been said he never sleeps. Michele assures me that he does. Perhaps not as much as some of us, but Joe needs his sleep like we all do. Second, even Joe says he is not very athletic. Well, he once mentioned to Michele that he always wanted to run a marathon, so this year she signed him up for the New York marathon and he ran it. No, he didn’t have time to train for it. And yes, he actually finished the event, albeit with a couple of injuries! But the rumor that Joe does have an encyclopedic knowledge of ‘facts’ has been verified—as one person told me “I would never want to take him on at Trivial Pursuit!”
In summary, Joe Costello has a unique ability to inspire and lead large numbers of people. He is passionate about, and committed to, anything he takes on. And if he does take it on, you know he will throw his whole heart into it. Whether it is helping his children Ty, Brett, Brooke or Austin with their homework—which he always does when he is in town—he makes anything he’s a part of more interesting, larger than it was and that many ever imagined it could be and, of course, fun. And that’s a lot of what Joe brought to EDA. “He could be a great waiter,” said Michele, “Hell, he could be a great President of the United States!”
Ladies and gentlemen, the 2004 Kaufmann Award Winner, Joseph B. Costello!