Larry Ellison: Billionaire Samurai Warrior of Silicon Valley

he's the samurai warrior of Silicon Valley Larry's attitude is if you want to compete against me then be prepared to be crushed Larry Ellison started Oracle software over 30 years ago and it has made him the highest-paid executive over the last decade with a total compensation of one point eight four billion dollars there was nobody better than Larry at making a customer believe that he could change that person's business life with his product he sees around the corner well before many of us get to the end of the street he'll do whatever it takes to win in the office ASAP the german's software firm was ordered to pay Oracle 1.3 billion dollars or on the ocean there is absolutely no doubt that he hates to lose his company's technology has become the backbone of the world's information systems from government to online commerce the brazen billionaire is an ambitious provocateur with a singular management style I have a theory that Larry's succession plan for Oracle is he is trying to figure out a way that when he's six feet under in a grave he can still run Oracle loud and clear okay if you know anything about Oracle's Larry Ellison it probably goes something like this I've got a Bugatti the fastest car this home cost 200 million dollars the fastest sailboat that's everything go I'm addicted to winning the more you win the more you learn he's a high-flying adrenaline junkie and an unapologetic collector of expensive toys and real estate he spent four hundred million dollars to bring the 2010 America's Cup the oldest active trophy in sports back to America for the first time in 15 years but his success comes from something far less flashy some of the world's most essential software tools you use every day but probably don't realize that it's his company making them work almost everybody in the world uses Oracle they just don't know it if you do any kind of government transaction with almost any government in the world any business transaction with almost any internet business in the world or any traditional business if you have a credit card if you have a cell phone if you have any of the the modern things in life if you live today I think you probably use Oracle Larry Ellison arguably created the most important computer software you never heard of he was a man behind the curtain for a tremendous change in the way we all live Ellison remained behind that curtain when we tried to reach him to participate in this program born in the Bronx in 1944 Ellison grew up in Chicago when he was 12 his father bluntly gave him some surprising news my dad just said right before dinner oh by the way you were adopted and we're having meatloaf tonight it was so shocking I just put it away and thought about it for years without really you know confronting all and realizing all of the implications he dropped out of college twice Ellison was a mediocre student and disliked formal education Mike Wilson is an editor for the st. Petersburg Times and interviewed Ellison extensively for his biography Larry was not interested in following the rules at school in the family or anywhere else Larry needed to get out from underneath the shadow of Lewis Ellison and prove to his father that he could make something of himself his flair for the fast lane was obvious early Larry went out and bought himself a turquoise blue Thunderbird he was a stylish guy he wanted to impress people he got in that car and he drove it to California Larry Ellison was a young man with a great deal of potential his trip to California it was critical to we would become Ellison settled in Berkeley and set out to make a living writing code in 1973 he worked at the computer electronics maker am Dom there he met Stuart Fagan they've remained friends for over 35 years I went into my cubicle the first day I worked there and across the hall were a couple guys who never seemed to do any work they just talked all the time and one of them did nothing but talk about himself how smart he was how stupid everyone else was and how he really ought to be running everything and that was Larry Ellison Ellison was a talented but impatient programmer desperate to find something of his own to control to say he he had the attention span of a tumbleweed is to overestimate it I would say more the attention span of a lightning bolt but his attention focused when he landed a job at a company called Ampex Ampex was struggling with a project funded by of all places the information driven CIA the project was codenamed Oracle the CIA needed a system to store and retrieve vast amounts of foreign intelligence concerned with its various sensitive operations and missions for Ellison it was the job of a lifetime and would plant the seeds for his future in the 1970s information storage meant putting data on reel-to-reel tape which was just too slow and inconsistent for the CIA and too slow for Ellison he left Ampex and later started his own company with his friend and programming genius Bob miner Bob and Larry were a perfect odd couple for Silicon Valley Bob had all of the engineering smarts the technical ability Larry on the other hand had the sales ability the visionary ability the the ability to go to a customer and explain here's how your business can change with this original handwritten sign and $1,200 they started software development laboratories or SDL Ellison recruited friends at oats and Stewart Fagan to help program he did want me to join him and he's gonna start some kind of company and I thought that was the stupidest idea I'd ever heard because Larry wasn't famous for finishing things I used to say he's a total flaking he'll never amount to anything and I was half right Alison's new company needed a product and after reading an obscure IBM research paper he thought he had it a method of sorting information that was vastly superior to anything that had come before it was called a relational database according to Gary Blum who worked with Ellison for 14 years it was a complex name but a simple idea relational Davis would you know what did what is it it's a collection of data and information that's very simply put into a format that makes it very easy to search and find that information it's nothing more complicated than that IBM didn't see the potential of what they had Ellison did I said oh my god we can beat IBM to markets because IBM doesn't believe in their own idea Ellison believed and asked programmer Bruce Scott to start writing code for me it's just cool technology and kind of fun but for Larry you know he saw a company out of it he saw a market out of it we weren't sure Larry was right but B needed the jobs and it was a struggle all the time Larry was was under a lot of pressure to get some money in somehow you in 1977 at age 34 Larry Ellison start-up software company was busy creating a smart database they thought would revolutionize how companies retrieve manage and analyze data three rooms and a little Lobby area there were four of us who are writing programs Larry was mostly involved in finding customers and that was a bizarre idea because we had no software though all the things that you would read in books of somebody being a leader he wasn't but he was tenacious he would never give up on anything Ellison chased and cajoled customers becoming the company's chief evangelist there was nobody better than Larry at making a business person making a customer believe that he could change that person's business life with his product knowing they still needed a smarter solution for the monumental task of managing worldwide intelligence Ellison sold his database to the CIA his first customer he called the new software Oracle version 2 there was no version 1 because everyone thought well no one buys version 1 it's buggy so we started with version 2 our version 2 is at least as buggy as anyone's version 1 and I described those early versions as the roach motel of databases the data went end but it didn't come out in 1982 Ellison also took the name Oracle for his company he targeted government agencies and major corporations in his own unique way I remember him telling me very distinctly one time Bruce we can't be successful as we lie to customers for some reason Larry told the Bank of America I think he told us there were 15 of us when in fact there were five of us I'm not sure why the Bank of America would think differently of you if you're 5 or 15 but Larry had given them a number which was a little larger than reality Allison also was sharpening a sales philosophy rooted in a trip he had taken to Japan in the early 1970s I was in Japan and I was talking to a Japanese business executive and he told me uh you know that the problem with America is that we just have no stomach for competition in Japan we believe our competitors are stealing the rice out of the mouths of art you know of our children in Japan we think anything less than hundred percent market share is not enough his take-no-prisoners approach became known as the Oracle way the Oracle way in the early to mid 80s was just to win almost by any means necessary Larry's attitude as if you want to compete against me then you better be prepared to be crushed or don't compete against me his product the Oracle database took off like a jet fighter in one of his ads and in 1986 Oracle went public his 39 percent stake in the company was worth a stunning 93 million dollars the IPO was a huge it but was overshadowed the very next day by Microsoft's public offering which made Bill Gates steak worth a whopping three hundred and fifty million dollars in 1989 Ellison moved Oracle to this mammoth campus in Redwood Shores California which became known as the Emerald City a reference to the Wizard of Oz or as one newspaper described it Larry land and everyone knew who was the wizard when I ordered a Ferrari 348 and I was going to get the first 348 in California Larry ordered one from somewhere in the East Coast and got it shipped in before I got mine he didn't want to be the second one he wanted me the first one his obsession to be first took its toll Oracle hit a wall the these aggressive sales practices started to cause serious problems Oracle's aggressive sales practices in the 80s turn the company into an accountants nightmare the sales force was so aggressive so willing to close a deal and there were so few business controls over the make up of those deals then we started having the problem of we certainly signed some bad contracts they were also selling products that hadn't yet been created Oracle was selling a lot of futures so you're taking a lot of money and a lot of revenue in for future deliverables well then the question comes when you finally have those Liberals now who do you sell them to you already sold it to everybody you sold it to him three years before you had it it didn't help the company's prospects that their latest product was a dud Oracle version six was riddled with bugs customers were frustrated and sales plummeted it's sometimes characterized as the near-death experience of Oracle in the early 90s and it was we weren't cutting fat we're cutting into muscle and you might even say we're in a couple cases were kind of a couple limbs off with Oracle's stock price and freefall so was Ellison's personal fortune by November 1st 1990 he had lost 790 million dollars his company was nearly a billion dollar operation and it was failing Larry was trying to achieve this greatness he was building towards that all the time and now he was in a sense of laughingstock it was devastating for him we're all a bunch of kids that grew up with the business and we weren't kids anymore and the business wasn't a little business anymore was big business and we had to replace virtually all of senior management and it was a very painful process he convinced well-known management and sales consultant Ray Layne to join the company and what he brought was what I characterize as operational discipline and a maturity around this is how a big business runs it was chaotic it was painful nobody wanted to go through that again and so the culture was kind of reset but the company's real Savior came in the form of a new product Zack Nelson was Oracle's youngest marketing executive Oracle 7 was a spectacular product the future was incredibly bright and I think everybody within Oracle at that time certainly knew it in consents that it wasn't just incrementally better his orders a magnitude better Ellison's company had dodged its near death experience in 1994 Oracle revenues passed the two billion dollar mark and his stock as a result was worth nearly 3 billion dollars for Ellison that wasn't nearly enough to become software sole heavyweight Ellison knew he had to pick a fight with the reigning champion Bill Gates he seemed to be personally disappointed he wasn't wealthier than Bill Gates it's the scorecard and if you weren't number one if you weren't richest you weren't on the top you weren't the best it was the scorecard and he was losing I think that Larry thought he was in tremendous competition with Bill Gates and and maybe Gates didn't think so so much Larry wanted to be recognized as the greatest innovator salesman evangelist in the world of software and he had a steep battle going up against the guy who would put his software in every single personal computer practically in the world Ellison was fixated on gates he would later admit publicly to hiring private detectives to dig up dirt on him Gates's new product Windows 95 had the entire tech world buzzing including Ellison himself in this appearance on the Charlie Rose show this Windows 95 is an enormous ly complicated piece of software and the idea of the people can install this in their households and manage these things their household to me is hilarious and it's time for something that's easier to think this is clearly part of our strategy to did thrown Microsoft but the way you determine Microsoft is not something that you throw darts at Bill Gates and hate and envy Bill Gates you have to think of think about products and create products that are better than their products that Microsoft is selling Ellison made a move into the consumer device market he called it the network computer or NC he launched the network computer with great fanfare the computers we currently make personal computers are rather expensive right very very complex so we've introduced this new class that computer for normal human beings that very much pretty very low cost very much weight now every person can use a computer because you're low cost and very easy to use you can surf the net you can do email on and he said and it could be $500 kind of an Internet appliance so to speak no different than your toaster I can remember having a discussion with him saying you know the Internet makes it possible to imagine a world without Microsoft's operating system on every desktop and that was really you know the birth of the MC Ellison went on a campaign to promote the power of his new baby on the web while mocking the popular PC I hate the PC with a passion put the stuff on the net its bits don't put bits in cardboard cardboard in trucks trucks to stores meat yeah me go to the store you know pick this stuff out it's insane I love the internet but falling PC prices meant the NC was destined to fail I don't think there's anything wrong with the idea actually just think was premature five years later would have won the world and the only difference is all the PC manufacturers Dell HP everybody else gateway what did they do they create a $500 PC that surfs the web really well and it does email really well and that shut down Ellison's venture into the consumer market his NC was too far ahead of its time but his vision of the internet was still right on target Oracle's database became the underpinnings of all of these internet services that we take for granted today Expedia Amazon eBay go down the list of applications all those are storing all that information proving that information delivering that information doing those transactions through the Oracle database what people thought Larry was crazy now he's a genius and it solved the biggest IT problem history you by mm Larry Ellison's company Oracle was among the elite tech companies in the world but internal struggles would soon force out the company's president and chief operating officer ray Lane who had risen to second-in-command and heir apparent he described the culture at the company he left wasn't good enough for a Salesman to make their quota they had to make 200 percent of their quota it was you know the top 10 percent get rewarded Millions and everybody else you know falls by the webs they're weak soldiers shoot him a departing Lane said he didn't fit into Oracle's system and that the only person making decisions at Oracle is Larry lots of people that transition them out of Oracle got confused who was in charge and that's a pretty volatile that's like a galactic collision yeah where two stars hit and it's a pretty violent explosion Oracle the company was on a roll but was lagging behind in one key area we're still fighting to be relevant in the applications world where the number two application provider in the world and we're number two an ERP behind sa P boy this number two is getting old number two number on we're number two we're number two in CRM behind Siebel but we're growing faster than sa P and we're growing faster than Siebel and were determined to become number one in applications as like we're number one in database to get to number one Ellison needed to do something his company had long avoided buying new technology through acquisitions when he came to that conclusion he opened his wallet and bet bitten far bigger than anyone else did and in fact he did it far faster than anyone else did Ellison wanted to bundle new application software with Oracle's successful product line in 2003 he targeted the company PeopleSoft and hostile takeover attempt the Department of Justice sued Oracle on antitrust grounds charging the takeover would empower the company to illegally raise rates and impair innovation after a year to half long battle the court sided with Oracle Ellison finally acquired PeopleSoft for ten point three billion dollars it's very rare that someone gets sued by the government and they actually win you know I mean it's just another testament to this guy's tenacity most guys would have maybe walked away from that instead Ellison stepped it up over the next five years he would spend close to thirty four billion dollars acquiring fifty-two companies Heather Bellini is senior managing director of the technology research team at International Strategy and investment group she is covered Oracle since 2003 she started looking out and seeing how the landscape was was changing and how the carnage that was done to some of his competitors was going to give him an opportunity to go make some acquisitions and buy some technology where he was behind and he really was the one that started the whole ma trend within the technology industry ellison's appetite for acquisitions accelerated in 2009 with his seven point four billion dollar trophy purchase of the prominent hardware company Sun Microsystems but in 2010 his eyes were on another trophy a decade-long four hundred million dollar obsession BMW Oracle Racing was launched in 2004 Ellison's run at the America's Cup it may be the oldest active prize in international sport but what Ellison created was entirely new the boat is a trimaran it often appears to be nearly flying with only one of its three holes actually in contact with the water the oceans have never seen anything like it there is absolutely no doubt that he hates to lose there's no doubt about at all grant Dalton has competed against Ellison on the America's Cup circuit my recollection and racing against time and we will race against him in the future this is a man that's very determined to work on Valentine's Day 2010 Ellison brought the America's Cup back to the United States for the first time in 15 years he celebrated with his now ex-wife romance novelist Melanie craft it was his fourth marriage the old samurai warrior reemerged when his friend mark heard resigned as CEO and hewlett-packard amid allegations of sexual harassment and expense account irregularities Ellison was outraged he attacks the HP Board of Directors he said quote HP board just made the worst personnel decision since the idiot on the Apple board fired Steve Jobs many years ago exactly one month later Allison stunned the business world when he turned around and hired the ousted executive the Silicon Valley soap opera continued when HP named Leo Apotheker as its chief executive his former company s AP is Oracle's biggest rival in business software s ap and Oracle had been locked in a nasty three-year copyright infringement case that ended in November 2010 s ap the German software firm was ordered to pay Oracle 1.3 billion dollars it was the biggest settlement ever for software piracy Larry Ellison's brawl had drawn new blood on the information technology battlefield and as always he is more determined than ever to win Larry Ellison is pretty similar to the New York Yankees they're the team you love to hate and as a competitor to Larry Ellison I'm sure that he's the person that people love to hate just given how successful he's been well those visionaries you think are sort of just talking off their hat and saying oh this is how the world can be you know Larry sees how the world can be and then he actually tries to make it that he started with a $1,200 stake in a little company and by sheer force of will and persuasion he built it into one of the giant software companies of the world

Channel: Bloomberg

Views: 2,324,409

Rating: 4.7525463 out of 5

Keywords: Bloomberg, Larry Ellison (Billionaire), bloomberg game changers, chicago, silicon valley, technology, oracle

Id: mB2V0BXH608

Length: 25min 6sec (1506 seconds)

Published: Tue Jun 03 2014

Reddit Comments

[u/bolanrox]

and Mystery Science Theater 3000 got the name because 2000 was too close of a year to use.

[u/lightfive]

SuSE Linux's first version was 4.2, alluding to the number 42. Their current consumer OS openSUSE is currently on version 42.1

[u/henrysmith78730]

Oracle has just bought 27 acres and a new 300 apartment complex in downtown Austin. They plan but build a 550k sq.ft. office complex. I hope all their employees have brought some water and a parking space with them.

[u/Lilbrownie4]

Brilliant

[u/doctechnical]

Ashton-Tate beat them "two" it when they named their new database product dBase II