Leadership-401 CASE for Paula Hog

The Outsider, His Business and His Billions Series: THE NEW IMPERIALISTS: Larry Ellison, Oracle Unto Himself; occ. Leibovich, Mark . The Washington Post ; Washington, D.C. [Washington, D.C]30 Oct 2000: A.01.

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ABSTRACT (ABSTRACT) Still, there are legions of Ellison lateness tales to suggest an edgier character. At an Oracle-sponsored

demonstration for Defense Department clients in Herndon, a group of high-level Pentagon officials waited 45

minutes until Ellison pulled up in a limousine. He kept Philippines President Fidel Ramos waiting more than an

hour in his San Francisco mansion. When Ellison arrived, Ramos waited another 15 minutes while Ellison changed

clothes.

Starting from his birth, on Aug. 17, 1944, Ellison's biography has been steeped in uncertainty. Errol Getner, his next

door neighbor in adolescence, says Ellison always told him that his father worked for the FBI. Over the years,

Ellison has often spoken about the "projects" and "ghetto" he grew up in, and the gunfire. "He used to tell me that

the two toughest kids from his neighborhood were Cassius Clay and Sonny Liston," says Gary Kennedy, a former

top executive at Oracle. The future Muhammad Ali grew up in Louisville, Liston in Arkansas and St. Louis. Both

spent time in Chicago later in their lives, miles from where Ellison lived.

The relational database market was in a land-grab period, analogous to what Internet commerce is undergoing

now. Several sources recall Ellison exaggerating what his software could do and when it would be ready. "Were

there things we promised in our early years that we couldn't do?" Ellison says. "I'm sure there were." When Ellison

promised a customer something, he believed it at that moment, says Gary Kennedy, who oversaw Oracle's sales

operation in the late 1980s. [Marc Benioff] recalls, "[Larry Ellison] always said, 'I have a little problem with tenses.' " FULL TEXT Larry Ellison, the world's second-richest man, was entertaining friends aboard his 243-foot yacht off Capri when

another yacht caught his attention. A mere 200-foot yacht. Belonging to Microsoft co- founder Paul Allen.

The world's third-richest man.

As Allen's yacht set out on a twilight cruise to the village of Positano, Ellison instructed his captain to rev his boat's

three engines to full speed. Within minutes, his craft overtook Allen's at 40 mph, leaving a huge and sudden wake

that sent Allen and his passengers staggering across the deck. Ellison's yacht then returned to its anchorage with

him and his friends belly-laughing.

A spokesman for Allen declines to comment on the episode, which occurred at the end of August. "It was an

adolescent prank," says Ellison, who is 56. "I highly recommend it."

This is the sort of thing that makes Silicon Valley's most successful entrepreneur such an easy caricature. He is

the founder and chief executive of Oracle Corp., the world's second-biggest software company and--as businesses

shift their functions online-- one formidably positioned to profit from the Internet boom. His net worth is $58 billion,

according to the October issue of Forbes magazine, and tied closely to the performance of Oracle stock. At times

this year, that sum has surpassed Bill Gates's fortune (it dusts Allen's $36 billion). But when Ellison receives

attention, it's often for reasons irrelevant to his corporate bona fides.

Last June, he admitted that Oracle had hired a private investigator to snoop on a pro-Microsoft Corp. trade group in

Washington. A few days later his longtime deputy, Ray Lane, left in a public spat. Ellison continued a long-running

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battle with authorities at San Jose Airport for the right to violate its 11 p.m. curfew with his Gulfstream V jet. A

Florida man alleged in a lawsuit that Ellison stiffed him out of a $700,000 commission when he bought a $10

million yacht. A former housekeeper was accused of stealing his Rolex.His McLaren F1 sportscar was reportedly

issued a fake smog certificate. That was just last summer.

Yet Ellison wonders why his sweeping impact on the world has been so obscured. Oracle's database software

automates the taken-for- granted functions of modern commerce: It provides unseen tools that track data in

automated teller machines, that ease credit card transactions, that underpin online commerce. Few people know

how to use Oracle's software, but many encounter it indirectly every day.

Ellison, who founded Oracle 23 years ago, is both the ultimate Silicon Valley entrepreneur and its consummate

outsider. He typifies the extremes of the technology industry, its wealth, brilliance and speed as well as its ego,

hype and ruthlessness. But he did not emerge from the privileged suburban environment that nourished so many

New Economy ambitions--the Honolulu cul-de-sac that produced America Online's Steve Case, the elite schools

that trained Amazon.com's Jeff Bezos, the old-money lineage of Bill Gates. "William Gates the Third," corrects

Ellison, deriding the only man richer than he.

Born to an unwed 19-year-old in Manhattan, Lawrence Joseph Ellison was adopted at 9 months by distant relatives

in Chicago. Louis Ellison was a Russian Jew who had changed his long surname to commemorate his passage

through Ellis Island, a newcomer seeking acceptance and self-renewal. These themes he conveyed to his adopted

son by assuring him he would always fail.

Beyond his outward refinement--his Armani suits, his Beverly Hills nose job--Larry Ellison's approach to business

betrays a raw desperation. "I can't imagine anything worse than failing," he says. This, too, sets him apart. "For as

competitive as it is in Silicon Valley, there's this idea that everyone should be playing like it's all a friendly chess

match," says Marc Benioff, a former Oracle executive. "Larry doesn't think this for a second. He thinks of himself as

a samurai warrior."

Last year Benioff left Oracle after 13 years to start Salesforce.com, an online software service for sales operations.

Ellison gave his blessing, plus a $2 million investment. He joined the board.

Three months ago, Benioff learned that Oracle had launched a competing business. He demanded that Ellison

resign his board seat. Ellison refused.

"It would sound a lot cooler if you kicked me off," Ellison said, according to Benioff. "It would be a better story to tell

my friends."

Ellison's version: "I said, 'Marc, I'm surprised you don't want to throw me off. It would get you more publicity, and

that's what you've been using me for all along.' "

Both agree that Ellison, while resigning, quibbled over the Salesforce.com stock options he felt entitled to.

'The Fog of Deceit'

Ellison places two fingers on his tongue and makes like he's gagging.

The topic: high-tech leaders who trumpet their enterprises as Crusades for Good--as if they had nothing to do with

riches and victory. His rapid-fire speech slows to a cadence of disdainful sarcasm:

"Oh, well, the reason we're doing software here at Oracle is because someday children will use this software, and

we wouldn't want to leave a single child behind. If I could just make the world a better place, what I really care

about is making the world a better place, and that's why I'm doing this. And all my money's going to go to medical

research so we can help people who are sick."

At which point he gags himself again.

"People say this and get away with it," he says, patting his temples with the tips of his long and manicured fingers.

"I can't deal with the fog of deceit."

Deceit is a complicated notion with Ellison. He's been accused of practicing it in many forms--exaggerating the

capabilities of Oracle products, embellishing the meanness of his boyhood neighborhood and misleading people

about which academic degrees he has earned.

At the same time, the rough transparency of Ellison's bravado flouts the PR obsession of his industry. He is asked

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when he knew the Internet would be big. A soft, fat question.

It was in the early 1990s, he says. He was visiting his daughter's kindergarten class, and he saw all the 5-year-olds

using it. The public relations woman monitoring the interview nods reassuringly.

By the way, his daughter's teacher was "an incredibly pretty single young lady," says Ellison, who has been thrice

divorced. "Really, I never saw a kindergarten teacher look like that before." The image of toddlers in cyberspace is

lost. The PR woman's smile is frozen.

Ellison is sitting in his 11th-floor office at Oracle, a bright, large and obsessively cleaned place decorated with

Japanese paintings and ceramics. His face is both ugly and handsome, with cheeks worn red from sailing and

busy brown eyes that turn soft when he smiles, squinty when he talks. His repaired nose sits in triangular

symmetry with his long and bearded jaw.

No fan of tech-casual dress, Ellison wears a charcoal gray sports jacket over a black turtleneck. He rests his size

12 feet on a glass table. He is 6 feet 1, trim and somewhat body-obsessed. If he misses a workout, he is prone to

vocal fits of self-loathing.

"To Larry, so much of his power comes from physical fitness," says Jenny Overstreet, his longtime assistant until

she retired at age 35 in 1996. He talks about how his body feels and looks, Overstreet says- -"like a woman saying,

'My thighs are fat today.' "

Ellison greets visitors with a soft but firm handshake and a courtly bow. He breaches no rule of decorum except

that he is unfailingly late. Unapologetically late. And not a little bit late.

"Every time we'd go to lunch, he'd be 30, 60, 90 minutes late," says Stuart Feigin, Oracle's fifth employee, who calls

his former boss "the late Larry Ellison." Ellison was 90 minutes late for this interview. He did not apologize, he only

explained: He was in a meeting. He has a hard time getting out of meetings. He is "somewhat reassured" that two

of the people he most admires, Winston Churchill and Bill Clinton, were and are habitually late.

Still, there are legions of Ellison lateness tales to suggest an edgier character. At an Oracle-sponsored

demonstration for Defense Department clients in Herndon, a group of high-level Pentagon officials waited 45

minutes until Ellison pulled up in a limousine. He kept Philippines President Fidel Ramos waiting more than an

hour in his San Francisco mansion. When Ellison arrived, Ramos waited another 15 minutes while Ellison changed

clothes.

As a general rule, Ellison's scheduling commitments come with an eleventh-hour proviso: Larry Permitting. He has

a 5-year-old's attention span when he's bored and an ability to delve deep if he cares to. It makes him suited to

running a company on Internet time: His mind can pinball from topic to topic and focus when necessary. And he

tends to say whatever is on his mind.

"Some people who like me would say there's a high degree of integrity," he says. "Other people would see it as

incredibly self- destructive. Then the third group would say, 'I can't believe he's saying that, he's just an [epithet].' "

He says the first two groups would be right.

Rest assured, he wants to be loved, more and more as he gets older. "The reason you want to be loved," he says "is

because you want to love yourself and feel self-esteem." Does he feel sufficiently loved?

"No, of course not." He's learned this over time and struggle (therapy? "None, nada; I tried marriage counseling

once"), and he hates that he's perceived as mean, ruthless. "I don't think mean and ruthless people are loved." He

has tried to improve, he says earnestly, almost plaintively; he is improving.

'Our Primeval Environment'

"It's the ambiguity between inside and out," Ellison says. He's leading a tour of the compound he is building in the

hills of Woodside, 30 miles south of San Francisco. At the moment, he's pointing to a rock that is both inside and

outside a shower, but he returns repeatedly to the theme of planned ambiguity.

Guests will be kept guessing. Are the trees growing out of the main residence? Is the koi pond a discrete body or

connected to the three-acre lake? Is that structure over the lake a bridge or a residence? Ellison points to a

bathroom that opens out onto the woods. "It will be like taking a bath in a redwood forest," he says.

Inside or out? Where do you stand?

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Six years in the making and much-anticipated in architectural circles, Ellison's 23-acre compound will be what

Kubla Khan would have built if he'd had a Japan fetish and a budget that could reach $100 million. It will serve the

tidy purpose of outdoing Gates's $50 million home on Lake Washington, the mention of which prompts Ellison to

wince. He quotes his friend, Apple chief executive Steve Jobs: "I don't begrudge Microsoft their success. It's just

that they have no taste."

The chief designer of Ellison's project is a Zen monk; it will replicate a 16th-century Japanese village. Expert

craftsmen are building pieces of it in Japan, disassembling them, and shipping them to California for reassembly

on-site. Ellison calls it "the most important Japanese project to be built in the last 200 years."

He's wearing dark shades and a black tank top accentuating thick arms, and his black hair is tousled after a

workout. His silver Mercedes-Benz S600 is parked in back, a hairbrush lying on the passenger seat.

Ellison has agreed to give a tour on one condition: no photographs on the grounds. He is a gracious and eloquent

host, romping around the property as if leading an inspection of his idealized soul.

On a visit to Japan in the mid-1970s, Ellison says, he entered a garden and never felt more at home. This

compound is intended to re- create that feeling.

At present, it is a large construction site: Tractors zigzag across bare dirt, half-finished structures stand draped in

plastic. But by late 2001, it will comprise an 8,000-square-foot main house, five guest residences and an

underground network of basements and tunnels, a forest of cherry trees, streams, waterfalls, ponds and a lake with

boulders doubling as hot tubs; a tea house, boathouse, natural amphitheater, indoor basketball court and

recreation center; a horse stable, three garages for Ellison's 14 cars and a sprawling garden to be maintained by a

staff of 20.

The lake will be filled with purified drinking water.

When the project is finished, Ellison will sell his $30 million, Japanese-style home in nearby Atherton. He will keep

the $25 million mansion in San Francisco for entertaining. He will live here with his fiancee, Melanie Craft, a 30-

year-old writer, an Icelandic pony and two cats, Big Daddy and Maggie. His teenage son and daughter from his

third marriage will have their pick of residences within the compound. He plans an influx of friends, artists,

dignitaries. They will select meals with a mouse click, and food will be delivered by boat.

Overlooking the soon-to-be garden from a second-floor library, Ellison notes that the great Western structures--

Notre Dame, Versailles--were designed to humble man before God and king. But the goal of Japanese architecture

is to create a serene and familiar place. "By familiar, I mean natural," he says. "We just moved to cities a few

thousand years ago. Before that, we were forest dwellers." The place is meant to integrate the most sublime

creations of God and man.

"You can smell the oils of the cedar and the pine, and that's a very reassuring smell," he says. "That's our primeval

environment," in contrast to the ambience of his boyhood home, which he distills to "plaster and glass and

gunshots."

The tour lasts two hours, inadequate for seeing the home's exquisite nuances--"like speed-reading poetry," Ellison

says. Every time he enters a room, workers do a double-take, as if expecting a command. Now, he's pointing to a

boathouse roof. "You can see how it comes together like the feathers of a bird." He smiles and giggles. "It's simply

astonishing!" he says. "The sensuality is incredible."

Upon his death, Ellison will leave the compound to Stanford University, on the condition that "they don't touch

anything." Ellison is terrified of dying. He doesn't get it; it mocks his rational bent and need for control. "I don't

understand how someone can be here, then not be here," he says. "It's incomprehensible." He's more terrified of

getting old. A portion of his charitable giving--which overall pales in comparison to Gates's--goes to fund research

at the University of California on DHEA, a hormone that some people believe could retard aging. He has also given

substantial sums to cancer research.

For now, he'll bid for immortality with this compound. "Sometimes it bothers me," he says. "I think it will outlive

Oracle."

He walks into a bathroom next to a hand-carved wooden bridge connecting two residences. "This wood is much

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too complex for me," he says, pointing to the basin of a sink. Fir and pine might work here, but not elm. Beautiful,

but too grainy. "Get rid of it," he says to no one in particular.

"I have driven the poor people crazy," Ellison says, laughing. "They have suffered mightily."

'But Is It Really True?'

Obvious theories abound on what caused Larry Ellison.

"I think the distant and disapproving father created a maverick son," Jenny Overstreet says. Louis Ellison gave his

son "so much fuel, so much anger, perseverance and determination," says Overstreet, who now lives in a San

Francisco mansion down the street from her former boss's. "It was great for all of us."

The trauma of abandonment? "So my biological mother abandoned me, and my mother who raised me abandoned

me when she died of cancer," Ellison says. "I've thought of all this. It's one of those things that just sounds so

good, the reasons are all there." He takes a deep and melodramatic breath.

"But is it really true?"

Starting from his birth, on Aug. 17, 1944, Ellison's biography has been steeped in uncertainty. Errol Getner, his next

door neighbor in adolescence, says Ellison always told him that his father worked for the FBI. Over the years,

Ellison has often spoken about the "projects" and "ghetto" he grew up in, and the gunfire. "He used to tell me that

the two toughest kids from his neighborhood were Cassius Clay and Sonny Liston," says Gary Kennedy, a former

top executive at Oracle. The future Muhammad Ali grew up in Louisville, Liston in Arkansas and St. Louis. Both

spent time in Chicago later in their lives, miles from where Ellison lived.

People from Ellison's South Side neighborhood describe a cozy, lower-middle-class and predominantly Jewish

enclave. "If you took the TV shows 'Happy Days' and 'Brooklyn Bridge' and averaged them, we would be somewhere

in the middle," says Chuck Weiss, a childhood friend who now works at Oracle. "We weren't quite as suburban as

'Happy Days,' not quite as urban or ethnic as 'Brooklyn Bridge.' "

Lillian and Louis Ellison lived in a two-bedroom apartment on Clyde Avenue. She was a bookkeeper, he was an

auditor, and they survive in their son's memory as opposites: Larry describes her as a loving and committed

mother, him as quiet and scornful. Louis, he says, had "an automatic and unthinking deference to authority figures

and rules;" he was a "true believer." One thing he believed--or said a lot--was that his son would never amount to

anything. "That was his form of greeting, as opposed to, 'Hi' or, 'Good morning,' " Larry says.

Louis had a daughter from a previous marriage, Doris, who was 19 years older than Larry. She and her husband,

Chicago judge David Linn, lived next door, and they were alternative mentors to Larry. He would bring friends over

to view David's closet of fine suits.

Larry defied his parents' wishes that he have a bar mitzvah-- signaling a lifelong indifference to Jewish customs.

Hebrew school conflicted with his Little League practice.

His companions recall a child of outsized dreams. "Whatever he was doing, he was always projecting it bigger and

better," says Jimmy Linn, Doris and David's son, five years younger than his uncle. Ellison was "extremely bright,

but a little unbridled."

At South Shore High School, he was avidly curious, and he read voraciously. But he skipped classes, received

frequent detention and earned mixed grades. Once his biology teacher, Mrs. Coleman, threatened to flunk him for

cutting class. "If I get the highest grade on the final, would you still flunk me?" Ellison said. Yes, she said, and 40

years later, he re-creates their argument with a taunting edge. "If I know more about biology than anyone else in

class, you're gonna flunk me?" he says, waving his hands, smirking. It is as if Mrs. Coleman, who died in 1975, were

sitting next to him.

He has a harder time remembering when he learned that he was adopted. He was about 12, and Louis told him in

mid-conversation. Or maybe mid-argument. "My short-term memory was erased," Ellison says.

He didn't tell his friends. They were all male, athletic and happy to indulge Ellison's gift for banter and pontification.

One friend, Dennis Coleman, son of the biology teacher, recalls one of Ellison's oft-repeated manifestoes: "There's

no such thing as pleasure. There's only tension and the release of tension."

Ellison joined a Jewish fraternity, the Tommies, in high school, and played a lot of basketball and football. His

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formative teenage relationship was with Karen Rutzky, his girlfriend from age 15. Rutzky's parents did not like him,

and "Larry was devastated by that," Doris Linn says.

But Ellison and Rutzky attended three proms and owned three matching shirts. Lillian gave her son money and he

would take Rutzky out, buy her gifts. He gave her a Mary Poppins book. The inscription: "To Karen, a

supercalifragilisticexpialidocious date and a truly tolerant person. Love always, Larry."

Their relationship continued after she left for the University of Michigan. He told her he planned to go to medical

school, asked her to quit school to support him. In their five years together, she refused two marriage proposals

from him, she says. Ellison remembers just one.

And as with many relationships from his past, Ellison's memory differs starkly from the other person's. The details

are long ago and unimportant. In sum: "I cared deeply about Larry," says Karen Rutzky Back, now of Los Angeles.

But he lied to her serially, she says. "I got tired of being a detective about everything he said."

Ellison says the notion that he lied to her is "really breathtaking." He adds: "The fact that I stayed with Karen Rutzky

for five years is one of the worst things anyone can say about me," he says. "Forget about always being late."

Ellison rooted against University of Michigan sports teams for 25 years.

Over several hours of interviews, no subject animates Ellison more than Rutzky. For all his success, her rejection--

and her parents' dislike--seems a lingering embodiment of all that made him feel unworthy. It also serves as a

ready benchmark for his life's piece- by-piece reconstruction.

"You know, I was named one of Playboy's top 10 best-dressed people recently," he says. "I think my journey from

those stupid matching shirts with Karen Rutzky to Playboy's best-dressed list is a more heroic journey than going

from the south side of Chicago to running Oracle."

In 1962, Ellison graduated from South Shore High School and enrolled at the University of Illinois in Urbana-

Champaign. At the end of his sophomore year, Lillian Ellison died of kidney cancer. Crushed, Larry left school.

In the summer of 1964, he and Chuck Weiss visited Northern California. It seemed wild and freewheeling, perfect

for escaping cohabitation with Louis. But he enrolled at the University of Chicago, where he spent one semester.

He told friends that he had gotten into medical school. He even produced an acceptance letter. "The letter didn't

look legit," says Dennis Coleman, noting that it was from the University of Southern California. "It was very short

and had typos." Rutzky Back also recalls him showing an acceptance letter.

Ellison never applied to medical school, he says now. He didn't graduate from college, or come close. What about

the acceptance letter? "It just couldn't be," he says.

Even his closest living relatives, Doris and Jimmy Linn, still believe he had been accepted to medical school. They

recall David Linn's dismay when Ellison said he wouldn't be going: "You'll be the first man in 5,000 years of the

Jewish religion who was accepted to medical school but refused to go," he said.

Instead, Ellison bought himself a turquoise 1964 Thunderbird and drove West. He had no idea how he would

support himself, but in an undergraduate physics class he had shown some aptitude in computer programming.

'Amounting to Something'

Toting a programming manual, Ellison moved from technical job to technical job--at banks, insurance companies

and small businesses. He made enough money to live on, and he loved the notion that he was "amounting to

something" on his own.

In 1967, he met Adda Quinn at a San Jose employment agency, and they married after a few months, both at 23.

No one from Chicago attended the wedding, except for Weiss, who was living in San Francisco.

Ellison seemed determined to break clean from his past--although Quinn says he often mentioned Karen Rutzky.

He got his nose fixed, smoothing out the lumps from long-ago basketball games. He enrolled in graduate classes

at Berkeley, but would never finish. "He told me that he graduated from an obscure college in Sheffield, England,"

Quinn says. "He told me these big, whopping lies, and he stuck to them. He can follow these lies for years."

"I've never been to Sheffield, England," Ellison says. "So that's very peculiar." Yet in their seven years together, he

never told his own wife that he lacked a bachelor's degree. They met at an employment agency, he explains, and he

told people he had a degree in order to get jobs. And he could never come clean to his wife. "I lied," he says. "It's a

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bad thing. I'm embarrassed."

Quinn calls Ellison the most charming, brilliant and non-boring man she has ever known. He also gave her an ulcer,

she says, with his deceptions, his transient interests in jobs and classes, and his explosive temper. She says she

feared for her safety as their marriage was ending: The couple kept guns in the house--they lived in a rough part of

Oakland--and she thought Ellison was becoming increasingly erratic.

"I don't know how she could have feared for her safety," Ellison says, and calls himself a nonviolent person. "The

fact that she ever thought I could shoot her is a little bizarre."

In 1971, Ellison invited his aging father to live with him. It was a kind and unexpected gesture, Quinn says, but their

strain lingered. Louis was not disapproving, she observed; she never heard him criticize his son. But neither was he

supportive, and Larry took that as disapproval.

"Louis would kind of look down, with this expression," Quinn says. "It would drive Larry absolutely crazy." Louis

stayed until 1974, when he entered a nursing home, and died soon afterward.

The same year, Ellison's marriage to Quinn ended. He didn't want it to. They tried counseling. "I remember asking,

how does this work?" Ellison says, "and I got this amazing gibberish answer. I'm like, okay, great, thanks. Uh, no." In

one session, Quinn says, he vowed that he would make a million dollars. It was the first time she had heard him

speak of becoming rich.

Years later, Ellison bought Quinn a car. He paid the mortgage on her parents' house. And when Quinn's second

husband battled cancer, Ellison gave him a lucrative job. He is on good terms with all three of his former wives, he

says.

Despite his scattershot job history, Ellison was becoming a good computer programmer. In the mid-1970s, he

landed at a computing firm in Sunnyvale, Ampex, which, like many companies in the early days of Silicon Valley,

did contract work for the federal government. Ellison contributed to a database project for the CIA. Code name:

Oracle.

At the time, databases were usually "hierarchical:" They organized data according to a "hierarchy" of information. If

Pan American Airlines wanted to keep track of its flights--what are their flight numbers? where are they going?--the

information would flow downward from a master heading marked "flights." Users would start at the top of a chart

and work their way down to find the information they wanted.

But database technology was nearing a breakthrough. In 1970, International Business Machines Corp. researcher

Ted Codd published a plan for a "relational" database, which could discern fluid connections between bits of data.

With a relational database, a Pan American employee could tell, say, how many passengers on Flight 209 had

ordered vegetarian meals. Chrysler could see which models were selling best, and who was selling most.

Codd's paper prompted a race to create the best relational database. The key players were a group from IBM,

called System R, and another from Berkeley, Ingres. In 1976, the IBM scientists completed their plan--and

published it. That would be unthinkable today, but in the 1970s, software was a largely academic pursuit. "Our

feeling was, the rising tide lifts all ships," says Michael Blasgen of the IBM team. "Since IBM was the biggest ship,

we stood to benefit most."

No one benefited more than Larry Ellison.

'Elvis Sightings'

"We can do this," Ellison thought as he read the IBM paper.

In 1977, at 32, he had started a software development consultancy with two former colleagues, Bob Miner and Ed

Oates. That same year, Bill Gates and Paul Allen started Microsoft. While Microsoft would transform computing for

individuals, Ellison's team focused on businesses. Their goal was to build the first commercially viable relational

database. With IBM's paper as a blueprint, Ellison felt that they could develop a better product and sell it first.

Ellison did nothing to hide his reliance on the IBM team. Blasgen recalls getting a letter from Ellison: "He basically

said, give me a few details, I'll copy them, and that way our systems will be the same," Blasgen says. The request

was ignored.

Ellison, Miner and Oates had limited resources; venture capital did not flow as it does today, and besides, Ellison

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had no interest in diluting his ownership. They began as a bootstrap operation: sign clients, do work, get money,

develop their database product. They named the product Oracle, and put the first version on the market in 1979--

three years ahead of IBM. Within five years, the company that would become known as Oracle Corp. was

generating $12.7 million a year in sales.

On March 12, 1986, Oracle held an initial public offering. Shares debuted at $15, and closed that day at $20.75.

Ellison's 34 percent stake was worth $93 million. Microsoft, which held its offering the next day, priced at $21 and

closed at $28--putting Gates's stake at $300 million.

As Oracle grew, so did Ellison's craving for dominance, a notion fostered on frequent visits to the Far East. He once

met a Japanese businessman who mocked his American counterparts for voicing "great respect" for their rivals.

"In Japan, we believe our competitors are stealing rice out of the mouths of our children," the businessman said.

"We must destroy our competition." Ellison returned to Oracle and invoked that conversation repeatedly.

While much of Oracle's success was a triumph of strategic and technical skill, it also stemmed from one of the

most aggressive sales forces in computing history. The company's sales reps were pushed hard and paid well--

Marc Benioff, at 25, was making $300,000 a year in 1986; top-flight sellers were making seven figures. "The

management theory was simple," Benioff says. "Go out and don't come back before you have a signed contract."

The relational database market was in a land-grab period, analogous to what Internet commerce is undergoing

now. Several sources recall Ellison exaggerating what his software could do and when it would be ready. "Were

there things we promised in our early years that we couldn't do?" Ellison says. "I'm sure there were." When Ellison

promised a customer something, he believed it at that moment, says Gary Kennedy, who oversaw Oracle's sales

operation in the late 1980s. Benioff recalls, "Larry always said, 'I have a little problem with tenses.' "

Ellison during this period could be inspiring or abusive. "You would spend a lot of time anticipating what Larry

would do next," says Unang Gupta, Oracle's 17th employee and a longtime executive. His hiring and firing patterns

were unpredictable. Ellison viewed business relationships as transient, a phenomenon that extended to wives, two

more of whom came and went before 1986.

In 1989, with more than 4,000 employees, Oracle moved to a verdant sprawl of ponds and glass towers 25 miles

south of San Francisco. In a valley dominated by beige office parks, the lush campus became known as "the

Emerald City" (also "Larryland"), with Mercedes- Benzes, Jaguars, even Rolls-Royces lining the parking lots. Ellison,

who drove a red Ferrari to work, began boasting about the hours of tennis he played on company time. He dated a

procession of women, sometimes his employees. His rare appearances at headquarters were dubbed "Elvis

sightings."

The good times came at a price. "Larry Ellison has created more millionaires than anyone in Silicon Valley," says

Igor Sill, an executive search consultant who did work for Oracle from 1984 to 1990. "And most of them wind up

hating him."

This is perhaps overstated, and it ignores the ambiguity of feeling that Ellison incites. Many who have fallen out

with him speak generously in retrospect. "The people who dislike Larry, of which they are legion, tend to

underestimate his brilliance," says Gary Kennedy, who left, on bad terms, in 1990.

Ending life at Larry Speed can be disorienting. "When you're doing anything so passionately, so emotionally, ending

it is hard," Jenny Overstreet says. "I left in the most positive way possible, and it took me six months to come to

grips with not being there."

Ellison feels profound loss when relationships end, no matter how. "Larry takes anyone leaving as a personal

betrayal," says John Luongo, a longtime Oracle executive who left on good terms, but at a point where the

company was about to implode from its excesses.

Ellison speaks well of Luongo, and says he did not feel betrayed: "I felt, if anything, abandoned."

'I Let Everyone Down'

In 1990, Oracle started paying some sales commissions in gold. It would be the final indulgence of a company that

seemed to be on a perpetual joyride.

Years of sales discounts, coupled with sloppy accounting methods, led Oracle to record revenues it had not

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received. The company reported nearly $971 million in sales in 1990--and yet had a large proportion of uncollected

bills. It was forced to "restate" revenues in September of 1990, and after more than a decade of doubled sales each

year, Oracle posted a loss of $12.4 million in 1991. Several executives and top managers fled. Ellison fired others.

The company's stock value plummeted from $3.8 billion to $700 million. In November of 1990, shares of Oracle

reached their all-time low, $4.88. Ellison's stake in the company was then worth $164 million, down from nearly a

billion the previous spring.

When the company laid off 500 employees in 1991, he couldn't even leave his house. "I was too depressed, " he

says. "I let everyone down."

What had happened was easy, though unpleasant, to discern: Ellison had spent most of his mental energy on

technology issues, neglecting such business fundamentals as finance and day-to-day operations.

After a period of soul-searching, Ellison resolved to run Oracle like an "adult" business. This meant his renewed

engagement. It also meant bringing in seasoned executives, like Ray Lane, whom he hired in 1992 to shore up

Oracle's operations. Lane, and new financial chief Jeff Henley, spearheaded Oracle's return to health in 1992. The

company earned $61.5 million that year, on sales of $1.2 billion. Ellison survived what he calls "my near-corporate

death," emerging more focused and, he says, humbled.

"I used to practice what I jokingly referred to as 'management by ridicule,' " he says. "People would be terrified to

come into meetings." Ellison vowed to be more gracious, which coincided with another turning point in his life.

After years of curiosity, he hired a private investigator to locate his biological mother, Florence Spellman of New

Haven, Conn. He called her; they spoke briefly. She had no idea what her son had become. Ellison bought her a

house in California. He paid her daughter's college tuition. They kept in contact until she died in 1999.

And yet, "it was very clear after meeting my real mother that she wasn't my real mother," he says. "My real mother

was the woman who raised me, my real family were the people who raised me. . . . I felt completion in that I knew

exactly who my family was."

Each year, Ellison invites Doris and Jimmy Linn for summer and winter yacht trips on the Mediterranean and

Caribbean. Doris never flies commercial. In the years before he died, in 1996, David Linn rode to his judge's

chambers in an Ellison-sponsored limousine.

"Everything that Larry has accomplished has had two psychic purposes," says one longtime friend. "To say thank

you to people who believed in him. And to say [expletive] you to the people who didn't."

'It's the World, the Planet'

Nothing holds more potential for Ellison's corporate immortality than the Internet. In 1995, he began insisting that

Oracle gear everything to the emerging online world. Before there was an information age, Oracle dealt in

information, and today, as companies produce oceans of data--whether it's Amazon tracking its customers or Ford

processing bids from suppliers--Oracle has never been so central to the economy. The company owns 42.4 percent

of the database software market, more than double the share of its closest competitor, IBM.

Ellison has never been more engrossed. He has overseen the development of new software products that are

transforming Oracle from a pure database company to a provider of "software services." The centerpiece is an "e-

business suite," a single product that Oracle sells to businesses that lets them manage all data-related operations

online.

When he speaks of the Internet, Ellison sounds almost messianic. He's making a sales pitch to some degree, but

he also betrays a kind of soulful fear. Failing gets harder with age, he says. "There are only so many at-bats you

get."

The Internet offers a chance to subvert Louis Ellison's prediction for his son in the most extreme way. Only Bill

Gates has amounted to more. Or has he?

Net worth is of course a fluid concept today, and in recent weeks, plunging stock values--including shares of Oracle

and Microsoft-- have complicated comparisons. But in early October, shortly after the Forbes survey was

published, Ellison was skeptical that he was No. 2.

"Forbes spots Bill as many billions as he needs," Ellison says, sighing, resigned to the injustice.

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There's just something surreal about being the richest, Ellison often says. "And it's not just the wealthiest guy in

the United States. It's the world, the planet." He pauses to weigh the notion, as if it had never occurred to him

before.

"I'm the wealthiest guy on the planet," he says. "That's very peculiar."

Staff researcher Richard Drezen contributed to this report.

About This Series

The Industrial Age produced an American business archetype--the self-made entrepreneur who was driven to

amass wealth by memories of growing up poor. But the new economy, driven by computing power and the opening

of international markets, has given rise to a new sort of corporate titan--the child of middle-class values who

nonetheless came to dream of global dominance. In this series The Post is examining the experiences that shaped

the new economy's boldest leaders.

Part 1 of the series traced Steve Case's competitive drive from his roots in the suburbs of Honolulu to his

leadership of America Online Inc.

Part 2 examined Jeff Bezos's journey through Princeton University and Wall Street to his founding of Amazon.com.

DETAILS

Subject: Chief executive officers; Entrepreneurs

People: Ellison, Larry

Company / organization: Name: Oracle Corp; Ticker: ORCL; NAICS: 511210; DUNS: 08-995-8862

Publication title: The Washington Post; Washington, D.C.

Pages: A.01

Number of pages: 0

Publication year: 2000

Publication date: Oct 30, 2000

Section: A SECTION

Publisher: WP Company LLC d/b/a The Washington Post

Place of publication: Washington, D.C.

Country of publication: United States

Publication subject: General Interest Periodicals--United States

ISSN: 01908286

Source type: Newspapers

Language of publication: English

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Copyright: Copyright The Washington Post Company Oct 30, 2000

Last updated: 2010-08-20

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