Why did he lose?
Because he did not get enough votes.
He couldn't win the State Controllers office, what make you or anyone else think he can win the governorship? Even if Arnold was not running and it was a 2 way race between Cruz and Tom, Tom would lose. He has no appeal to cross over voters. Our state has over 44% registered Democrats. That makes it very unlikely that Tom would even have a chance.
Arnold at least has a shot at winning, but like always when we have a chance to win, the Pubbies will shoot themselves in the foot.