The world’s second-wealthiest man has piloted Oracle to the No. 2 software spot, never fearing to change direction or to speak his mind.
Story first published (in shorter form) as cover story of Business Life, July/Aug 2001 (not online).
Larry Ellison at San Carlos Airport in front of his Marchetti. (Bart Nagel photo)
The sun is heating up the tarmac of San Carlos Airport, a small airport that’s home to almost 500 private planes belonging to Silicon Valley’s busiest and richest. Underneath a black awning erected by the photographer, Larry Ellison looks with amusement at the red velvet armchair awaiting him. Then he notices the mammoth apparatus pointed at the scene: a 20-by-24-inch Polaroid camera, one of only three in the United States and so big it requires its own van for transport.
Seemingly impressed, he settles his six-foot-plus frame into the chair without complaint. Instead of his business uniform of bespoke Italian suits, he is dressed semicasually in a lightweight V-necked jumper and tailored trousers. Fine wrinkles crease the corners of his eyes, beneath his minimal brows, and there are suspiciously fewer gray hairs on his head than in his manicured beard. Directly behind him looms his Italian Marchetti jet, the favorite among his airplane collection; a hundred yards away, Cessna Skyhawks and Piper Warriors seesaw in for unnerving touchdowns on the windy runway.
Waiting for the massive Polaroids to process, the CEO of the software maker Oracle chats about digital photography, Apple’s new Titanium PowerBook, and his collection of Ansel Adams prints. When the allotted 15 minutes have elapsed, Ellison apologizes for being in a rush, then says a quick good-bye. And with that, the world’s second-richest man hops into a silver Acura NSX and drives off alone. No bodyguards, no entourage.
All you can do is all you can do
If Ellison looks a bit tired these days, he’s only human. Oracle’s quarterly earnings, like those of almost every technology company, have fallen short of expectations, and as of late April the stock was trading at under half its September high of $46.47. The day after the shoot, he was due to depart on his more passenger-friendly Gulfstream V jet for Japan, to rejuvenate in his “spiritual homeland.” Fine lines notwithstanding, Ellison still looks a decade younger than 57 years spent mostly in the sun should warrant. He has weathered many things in his life, among them three failed marriages, three near-death experiences, and a much more dire year for Oracle. In 1991, the company hit a rough patch that saw its stock dive to under a dollar, adjusted for splits. Such ups and downs would unnerve any executive, but Ellison identifies more personally with the company he cofounded in 1977. Almost 25 years later, he still owns 24 percent of Oracle, and that means his stock holdings have evaporated from a paper value of close to $50 billion to a mere $26 billion, or slightly more than New Zealand’s annual gross domestic product.
In a phone interview the week before the shoot, Ellison was as upbeat as ever. Asked what advice he had for startups going through their first market downturn, he said, “You can’t worry about it, you can’t panic when you look at the stock market’s decline, or you get frozen like a deer in the headlights. All you can do is all you can do.” Ellison talks at least twice as fast as the average intelligent person, and his sentences tend to pile up, words bumping into each other as they race out of his mouth. “If your cash is about to run out you have to cut your cash flow. CEOs have to make those decisions and live with them however painful they might be. You have to act and act now, and act in the best interests of the company as a whole, even if that means that some people in the company who are your friends have to work somewhere else.”
Ellison is known as a ruthless businessman, firing senior executives days before the last of their stock options is due to mature and, most notably, denigrating Oracle’s chief rival Microsoft at every opportunity. Last June, the U.S. press had a field day when it was discovered that Oracle had paid private investigators to snoop through the trash of a supposedly independent research group it suspected of being funded by Microsoft during the antitrust trial. “It’s absolutely true we set out to expose Microsoft’s covert activities,” he said in a press conference. “I feel very good about what we did. Maybe our investigation organization may have done things unsavory, but it’s not illegal. We got the truth out.”
Spend it if you got it
There is more to Larry Ellison, however, than his one-sided jousting with Microsoft reveals. Born in 1944 to an unmarried teenager, adopted a year later by her aunt and uncle, and without a university degree, he still has managed to grow Oracle from its roots as a database company into the $10 billion-a-year software and services powerhouse it is today. By rights he should be a Horatio Alger poster boy for the media. Except, he won’t play by the unwritten rules of American success: he refuses to act either humble or civic-minded.
Microsoft chairman Bill Gates, with whom Ellison is compared ad nauseam, has gained popularity by donating several billion dollars to his philanthropic foundation and embracing marriage and fatherhood like the most ordinary of Joe Geeks. Ellison is a dedicated father: in conversation, he brags unabashedly about his 18-year-old son David’s aerobatic flying skills and the “unbelievable niceness” of David and his younger sister. [See “Larry Ellison, Unscripted,” the full transcript of the interview.] But thrice divorced and often linked with young blondes, by all accounts he makes a far better ex-husband than spouse.
Before his current steady relationship with a 30-year-old romance novelist, his romantic life was notorious and public in 1996, he even made an appearance on Oprah, in which the queen of U.S. talk show hosts touted him as America’s most eligible bachelor. In his hometown, he is regularly vilified by the San Francisco Chronicle. Among his crimes is building a $100 million third residence in Silicon Valley, where the housing shortage has employers lobbying city governments for action. The 23-acre compound in Woodside, California, will boast 10 hand-crafted Japanese-style buildings, including an imperial villa, built with handcrafted joinery and surrounded by 522 mature Japanese and flowering cherry, ginkgo, and big leaf maple trees. That and his various high-speed toys (the Marchetti, a McLaren F1, the 180-foot Sayonara racing yacht, to name just a few) get far more attention than his considerable humanitarian efforts.
Partly he seems to prefer it that way. Ellison has said on several occasions that he reached where he is today by doing the opposite of what was expected of him. “The most important aspect of my personality, as far as determining my success goes, has been my questioning conventional wisdom, doubting the experts and questioning authority,” he said in 1997. “While that can be very painful in relationships with your parents and teachers, it’s enormously useful in life.”
That attitude is in evidence from the beginning of his career. Back in 1977, when Ellison cofounded Software Development Laboratories, the company that later became Oracle, big corporations and government agencies were wrestling with vast quantities of information stored in hierarchical databases. Ellison and his cofounders Bob Miner and Ed Oates read an IBM research paper about a new type, one that would better organize information for a variety of uses, and immediately recognized the commercial potential. Their relational database was the first of its kind, beating IBM’s to market by several years. Now in its 11th iteration since being released in 1979, Oracle’s database software is the most widely used in the world. It runs the behind-the-scenes businesses of almost every airline, the biggest Web sites, multinational banks, and 98 percent of Fortune 100 companies.
Since going public on the Nasdaq on March 12, 1986, Oracle has had only a single unprofitable year in 1991, when overaggressive, and occasionally fraudulent, sales tactics forced the company to write off millions in bad contracts. Convention would dictate that Oracle have stuck to doing what it does better than anyone else: databases. But Ellison has consistently steered the company into new markets, building on its database core to offer other corporate software as well as support, which accounted for $2.7 billion, or one-fourth of its business, in fiscal 2000.
Ellison deserves most of the credit for the success. But not all. One of his strengths, says Don Lucas, a venture capitalist and Oracle boardmember who has known Ellison since 1979, is that he “delegates almost totally.” A smart move in that direction was hiring Ray Lane, a well-respected, old-school manager, as president and chief operating officer in 1993. Lane’s task was to tame the freewheeling salesforce and rebuild confidence in the company. This he did remarkably well so well that for several years following Lane’s appointment Ellison disengaged from the company’s day-today operations. In mid-1999, when Ellison wanted to announce Oracle’s E-Business Suite of integrated business software, he decided that Oracle’s best advertisement would be itself. He told his lieutenants that he thought they could shave $1 billion of the bottom line by centralizing its 100-plus offices’ business operations on a single, Internet-based Oracle platform. The company met its improbable goal, and the savings meant that Oracle earned more profits as a percentage of revenues in 2000 than any other Fortune 500 corporation.
There were side effects to his regained interest: in June 2000, Lane was forced out. Most accounts portray Lane as resisting Ellison’s insistence that Oracle focus on being an Internet business, and Ellison simply removing various responsibilities from his president until Lane had no dignified choice but to leave. Lane declined to comment for this article, writing that his words “unfortunately are often used out of context or sensationalized.” Whatever the reason, his departure was almost universally seen as the loss of a crucial yin to Ellison’s yang.
A few months later, Oracle executive vice president Gary Bloom, Ellison’s most likely in-house successor, also left the company. Oracle’s stock took a hit. Given that Ellison will turn 57 in August, and has already broken his neck while body surfing, shattered an elbow while mountain biking, and sailed a race in which six participants lost their lives in a storm, one can understand investors’ concern. However, “people don’t give enough credit to our organization!” says Oracle boardmember Lucas. “It’s a pretty effective machine.” When pressed about succession issues, Lucas is not concerned. “I want to exit before Larry, how’s that? He’s laid out Oracle’s vision for the next five or ten years. Being a CEO is not a unique talent. But the vision thing, that’s irreplaceable. As far as execution, we have some very good people.”
The network is still the future
Some of the earlier parts of that vision include Ellison’s way-ahead-of-its-time, 1994 push to make video on demand a reality. With video on demand, viewers can pick a movie or video from a library of hundreds stored in the central office; the film is delivered to the viewer’s TV individually, through a set-top box connected to a network. Oracle conducted a semi-successful trial of the system with British Telecom customers in Ipswich, but the many roadblocks inherent to individualized digital broadcasting have yet to be solved.
Ellison’s belief in the power of the network is the inspiration for what is either his greatest vision or his biggest pratfall to date, depending on whom you ask. The Network Computer, or NC, is basically just a bare-bones terminal, with little or no hard-disk memory, connected to an Internet server that runs its software and stores most of its data. Ellison introduced the idea of the NC back in 1995 with typical slash-and-burn enthusiasm. “The PC is a ridiculous device,” he said by way of explanation, and the computing world was both aghast and intrigued. At the time, most people agreed that personal computers were too complex and, at more than $2,000, too expensive for all but educated, upper-middle-class consumers. By cutting out all the bells and whistles, plus expensive memory, Ellison thought they could be produced for less than $500. All users would have to do would be turn the thing on. Presto the digital divide would be halved, and schools and libraries could afford to buy and maintain all the computers they needed.
The fact that the NC has spawned siblings in today’s “information appliances,” like email pagers, PDAs, and Web tablets, is proof that personal computers have their limitations. However, back then as now his critics saw only an ulterior motive: unseating Microsoft. The NC, you see, would neatly bypass the Windows operating system as well as the need to install software like Microsoft Word and Excel.
Ellison’s rivalry with Bill Gates is well documented. From the moment that Microsoft one-upped Oracle by going public a day afterward and almost tripling its market capitalization, Ellison and Gates have been depicted as in a deathly struggle for the title of world’s richest man. Last year, in fact, the Microsoft trial dragged down Gates’s holdings just enough to put Ellison on top for a few weeks. With Microsoft’s stock now limping along better than most depressed tech stocks, and Oracle’s suffering from missed quarterly earnings, Ellison is firmly back in second place behind Gates’s $46 billion, according to Forbes magazine’s 2000 list of the world’s wealthiest. (There are a few Middle Eastern sheiks who might fit in between, but their holdings are harder to estimate.) No one, it seemed, believed Ellison could be interested in the NC for its social implications. Even the Oracle’s Promise program, through which the company has committed $100 million to provide network computer access to “every child in America,” was called an anti-Microsoft publicity stunt.
True, Ellison does leap at any opportunity to lambast Microsoft. Before the garbage incident, he was one of the rare Silicon Valley CEOs brave enough to testify personally in Microsoft’s antitrust trial. He told the U.S. Senate that “consumers are free to choose a Microsoft PC from Dell, a Microsoft PC from Compaq, a Microsoft PC from Gateway…You get the point. Feels to me a little like a Soviet supermarket.”
There is another way of looking at his Microsoft obsession. All competition, he has said previously, is just as much about self-exploration as it is about winning: “There’s a wonderful saying that’s dead wrong. Why did you climb the mountain?’ I climbed the mountain because it was there.’ That’s utter nonsense You climbed the mountain because you were there, and you were curious if you could do it. You wondered what it would be like.” When I asked him if he would be satisfied to see Microsoft’s possible punishment for its monopolistic crimes by being broken up into separate companies, he sputtered, “Absolutely not! I don’t feel good about Microsoft passing us on the way down. We’d like to pass them on the way up.”
There’s one more arena that Ellison wants to test himself in: biotechnology. At some point, he says, he will probably retire from Oracle and devote himself full time to Quark Biotechnology Inc., a gene-based drug developer focusing on cancer research, whose board he chairs. This is not a whim. Ellison has been interested in the life sciences for years: in addition to a longtime investment in SuperGen, a developer focusing on drugs for cancer and blood cell disorders, he took a two-week holiday to work in the molecular biology lab of his friend Josh Lederberg, a Nobel laureate. Through the $250 million Ellison Medical Foundation he established in 1997, he has already funded numerous studies into age-related diseases and disabilities; last year the EMF added infectious diseases like malaria and tuberculosis to its focus.
Typically, the U.S. media has been cynical about Ellison’s motives for anti-aging research. But “I’ve never gotten the impression that Larry’s interest is in prolonging his own life, rather than in understanding the biological process of aging and improving the world’s quality of life,” says Richard Sprott, the foundation’s
A 20-year veteran of the age-related research at the U.S. government’s National Institutes of Health, Sprott calls his new gig a “dream job.” Asked whether he thinks Ellison could indeed switch fields, he says emphatically, “Without a doubt. This is one of the brightest people I’ve ever met. In the meetings to decide which projects get funded, the questions he asks are always right on target.” To this Ellison’s longtime friend Don Lucas adds, “Larry is interested in biotechnology from the foundation point of view, and he also sees the commercial potential. I can completely envision him founding a major new drug company.” He chuckles: “For his mercenary heart, and his drive to do something important for the world, I’m very enthusiastic for him.”
That is the essence of Larry Ellison, the contradiction that fuels so much of his critics’ ire. When he says that he prefers “strategic” philanthropy, the media look at his total wealth and call him parsimonious. But perhaps it’s just that like most people, whether billionaires or janitors, he prefers not to be told how to spend his money. He is generous to a fault with friends and family, reportedly buying a house for one ex-wife’s ailing parents. When an Acura NSX zooms past you in Silicon Valley, there’s a good chance it was paid for by Ellison; he buys several each year as gifts. His personal pilot drives one of the $100,000 cars.
But his friends have learned to keep quiet. Few were willing for their compliments to be on the record, fearing like Ray Lane that they would be twisted out of context. Even Apple CEO Steve Jobs, who Ellison refers to frequently and touchingly as his “best friend” and “idol,” did not respond to requests for comment.
A clue to Ellison’s complicated worldview can be found in his love for the 1984 movie The Natural, in which a middle-aged baseball player (Robert Redford) comes out of nowhere to take a 1930s team to the championship. “It’s the one movie I watch over and over. It’s an amazing combination of idealism confronted with reality,” he says. That theme can be found in another of his favorite films, the Dian Fossey biopic Gorillas in the Mist. (He is also a longtime boardmember of the Dian Fossey Gorilla Fund.)
Of course, the reality theme has been more readily apparent in Ellison’s life than idealism. Humanitarian interests take a back seat to his lifestyle. On a field trip to his San Francisco pied-à-terre in Pacific Heights the 10,000-square-foot, Modernist two-story building where he stays when he has business or entertainment in the city and doesn’t feel like driving the 30 miles to his Silicon Valley primary residence I was surprised to find tourists taking pictures. An entire taxiful oohed and aahed over the cherry blossom trees in front, cocking their ears to hear the waterfall in the Japanese rock garden just beyond the frosted courtyard wall (it turns transparent when the key is inserted). Given their intense interest in Ellison’s recycling bin put out at the curb, it’s safe to say that they weren’t there to pay homage to his efforts to find a malaria cure.
He might be more flattered by the tourists than annoyed. In spite of his dedication to flouting convention, Ellison admits to at least one universal sentiment. When I jokingly asked him if he would agree with Machiavelli that it is better for a leader to be feared than loved, he answers, “Oh no, it’s much better to be loved than feared. Being feared is terrible. Dentists are feared. Everyone, everyone wants to be loved. We kid ourselves and pretend that we don’t, but we all do.” That can be a problem for a CEO, or, say, a world leader like Bill Clinton, I answered. He laughed: “Well, you can’t be prevented from seeking love, but you can be carried away by that, by wanting to be liked and loved by too many people.”
Ellison, it is safe to say, will never sacrifice who he is mercurial, enthusiastic, risk-taking, and occasionally tyrannical in that pursuit.
Read the transcript of the interview: Why Steven Seagall should play Ellison in a movie, where his old suits go, and more….