Costello Chairs Catena

Catena Networks Inc. said Monday that it has named former Cadence Design Systems Inc. CEO Joseph Costello as chairman of its board (see Catena Names Costello Chairman). Costello is an investor in Catena and has been on the company's board since its inception. More importantly, Costello has run a big company before.

Costello replaces Catena founder Jim Hjartarson, who had been its chairman since December 1998. Hjartarson remains on the board and will retain his positions as executive VP of engineering and chief technical officer. Hjartarson, along with Catena's other founders, worked for Costello when he was at the helm of Cadence.

When Catena was in its formative days, the founders approached Costello for funding and guidance. Costello obliged. "Catena has one of the best engineering teams I've ever worked with," he says.

Catena's products concentrate both POTS lines and DSL services in one line card, which allows carriers to upgrade their digital loop carrier (DLC) boxes to deliver both POTS and broadband services in one fell swoop. DLCs are access devices installed primarily in residential areas. Catena's box would make it easier to deploy DSL in areas where it wasn't previously economical.

The company has announced two customers to date -- Frontier Communications (now part of Citizens Communications) and CT Communications Inc.

Catena raised $75 million in a fourth round of financing earlier this year, bringing the total invested capital in the company to $192 million (see Ka-Ching for Catena Networks). It employed about 375 people late last year. That's dropped to around 311 today, according to the company.

Costello says he's invested $3.35 million of his own dollars in the company.

Wall Street and Silicon Valley know Costello for his tenure at Cadence, which he helped become one of the leading companies that supply software to help design semiconductors, computer systems, networking equipment, and other electronic products. Costello left Cadence in late 1997 after spending more than 13 years there and at its predecessor, SDA Systems.

After he left Cadence, Costello spent a few months working with Knowledge Universe, a privately held education venture started by Oracle Corp. (Nasdaq: ORCL) CEO Larry Ellison and the former junk bond peddler, Michael Milken. He also served on Oracle's board for a while in the 90s but stepped away after reportedly feuding with Ellison.

Costello, 48, is now CEO of think3 Inc., a Santa Clara, California-based design software company. He joined that company in January 1998. He also serves as chairman of Barcelona Design, Zamba Corp., and NextNet Wireless, and he's on the boards of BravoBrava!, Reality Fusion, Saba Software, and Simplex Solutions.

Sure, Costello is a busy guy, but he says he's committed to Catena and he's "slowly but surely" cutting back on some responsibilities with other companies. He also freely admits he's no telecom equipment expert. "The kind of guidance I can give is about people and how companies are structured.

"The number one thing a board of directors does is decide whether a company has the right CEO and management team," he says.

Costello holds a bachelor of science degree in mathematics and physics from Harvey Mudd college (whose namesake is very popular on our message boards) and a master's of science degree in physics from Yale University and the University of California, Berkeley.

Catena's biggest challenge now, according to Costello, is selling product and keeping customers happy. "This isn't a situation where there are thousands of customers. You have to give each customer great service after the sale and, by working with them, you'll find out what to do next."

— Phil Harvey, Senior Editor, Light Reading
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