The Village View

Monday, July 31, 2006

Larry Ellison in Forbes

Interesting set of articles on Larry Ellison and Oracle in Forbes and on Free registration may be required to access some of these articles. (which is a dumb thing for Forbes to do: fewer page views and ad revenue so they can get better knowledge on their readers... does anyone ever tell the truth on the registration profiles? Just read the log of IP addresses and open your pages up to everyone).

Oracle still revolves around its strong-willed founder. Larry Ellison won't have it any other way.
For 30 years all of Oracle Corp., maker of the database software that drives thousands of big businesses around the world, has revolved around its founder. Larry Ellison owns a 23% stake worth $18 billion, and he rarely sells. He tweaks Oracle's print ads; he fiddles with its press releases; he peppers techies with arcane questions. "I've run engineering since Day One, and I still run engineering," he says. But Ellison is turning 62 on Aug. 17. Isn't it about time he identified a successor? Bill Gates, 11 years younger, managed to do that.
In 1997 Oracle issued a new set of homegrown applications, which flopped. Lane, who a year earlier had risen to president and was seen as Ellison's heir apparent, began advising the boss that only a drastic change in leadership would save the applications business. Ellison responded by naming himself head of apps and slowly stripping Lane of his responsibilities. By June 2000 Ellison all but fired him, taking away Lane's title of president. Lane quit and is now a general partner at venture capital firm Kleiner Perkins Caufield & Byers.

In Lane's wake, 14-year veteran Gary Bloom hoped to become Ellison's number two but was spurned. He quit a few months later to run Veritas, now owned by Symantec. "This is a team, and Larry is the only captain," says the board's Lucas. "If someone wants to pop up and announce they're the star--poof! You're out."

Lunching With Larry
I've run engineering since day one at Oracle, and I still run engineering. I hold meetings every week with the database team, the middleware team, the applications team. I run engineering, and I will do that until the board throws me out of there.
[Ellison:] Google has had one or two good ideas. Searching the Internet, right, and then selling ads. That's a complete list of everything clever they've ever done.
[Forbes:] They're young.

[Ellison:] They're a one-trick pony, but it's a hell of a trick.

Larry's Lieutenants
...Catz and Phillips, tapped from low-profile Wall Street jobs years ago, wield enormous clout in divergent styles. Safra Catz is the alpha of this pair, minding margins and downsizing and constantly e-mailing and phoning the boss...Phillips came in to calm the crowd; coddling customers is what he does. He was a Morgan Stanley analyst and signed on at Oracle in 2003 and hasn't yet moved his wife and son to Silicon Valley from Manhattan. A former Marine Corps captain with business and law degrees from Hampton University and New York Law School, respectively, he spends 60% of his time on the road. He has assigned Oracle brass to chat regularly with 150 customers and jots his personal cell number on the back of every business card. "I'm the human Batphone," he says.

Terry Versus Larry

Silicon Valley is littered with refugees from Oracle Corp., former acolytes who fled for better jobs or were fired after fighting with strongman Larry Ellison. Now half a dozen of them have teamed up to take on their old boss. They have resurrected an aging Oracle foe--Ingres, which uses database technology developed 32 years ago by two Berkeley scientists--to target Oracle's biggest source of profit: the steady, high-margin fees it charges for regular upgrades and support. These fees provide 59% of Oracle's $8.7 billion in annual database sales.The restarted upstart vows to undercut Oracle prices by up to 70% for technology that it claims is every bit as robust. Oracle's handsome pretax profit margin--at 42%, thanks to the ax of Safra Catz--leaves Ingres room for inroads. "I'm happy getting 25% margins. That's pretty good in any industry," says Terence Garnett, Ingres' chairman and the leader of this band of castoffs. He had run marketing at Oracle but clashed with Ellison and quit under pressure in 1994, suing the company and later settling.

Interesting Conflicts

In 1998 he backed an Oracle alum, Evan Goldberg, in launching a Web apps firm: NetSuite. In 1999 he put $2 million into, started by another castoff, Marc Benioff....
NetSuite aims at sites with up to 5,000 seats; Oracle aims as low as 1,000-seat accounts. But Ellison sees no conflict of interest. "Oh, no, we check for that all the time. NetSuite is aimed at much smaller customers." Adds an Oracle outside director, Ray Bingham...
Zachary Nelson, the ex-Oracle chief of NetSuite, insists: "If NetSuite and Oracle are in the same room, one of us doesn't belong there."