His logic went like this: The arrival of the Internet meant we were now living at the beginning of the information age—“it’s the information age, not the fucking operating system age”—and Oracle, it just so happened, was the leading company for helping people to manage their information. Software was the product that made the world go round, and the software business, according to Ellison, is and always has been based on the principle of winner take all. IBM and Microsoft, in their heydays, had demonstrated that. But now the rules of the game had shifted in Oracle’s favor, and it was its turn to become the dominant force in computing. IBM and Microsoft had both bestrode their respective eras—eras that had been defined by the prevailing computer architectures of the day, the mainframe followed by client/server.
Ellison was convinced that Oracle was now poised to claim the mantle that Microsoft had snatched from IBM. But while these two companies’ reigns had been temporary, Ellison reckoned Oracle could be on top for a very long time. He believed that the world was inexorably moving toward “one network [the Internet], one database [from Oracle]. “He says: “I really don’t think there will be another paradigm shift. This is it.”
But the database alone could not bring Oracle the degree of success that Ellison was after. For that, he needed Oracle’s applications to become the enterprising computing equivalent of Microsoft’s ubiquitous Office. In other words, Oracle’s Release 11i, or the E-Business Suite as Ellison preferred to call it, would need to become the standard package of applications for automating the world’s businesses. Release 11i had shipped some six months earlier at the beginning of June and Ellison was convinced it was going to turn the economy of business computing on its head. Engineered for the Internet from scratch, it was one of the biggest and most complex pieces of software ever created. It brought together traditional enterprise resource planning (ERP) applications for running all of a company’s back-office functions with the much newer customer relationship management (CRM) programs, which were designed to deal with every outward-facing task from sales automation to choreographing a sophisticated marketing campaign. It was, Ellison boasted, the only integrated suite that could do everything that most business customers would ever need it to do.
The consequence, Ellison argued, was that it was no longer necessary to hire expensive systems integrators from IBM or Accenture to glue together market-leading applications from different software vendors—the practice known as bringing together best-of-breed. “Building an integrated system out of several different software products that were never designed to work together is a very difficult task. At Oracle, we used to sell and deliver these best-of-breed systems; selling was easy, delivery was hard. IBM has thousands of consultants eager to help you make it work. The more complex the integration project the more likely it will be late and over budget. It may even fail completely. And in the end it’s the customer who assumes the financial risk for the success or failure of these projects. This best-of-breed software product assembly approach is absolutely unique to the computer industry. If Detroit ran like Silicon Valley, nobody would sell cars—just parts. Customers would have to figure out which were the ‘best’ parts—a Honda engine, a Ford transmission, a BMW chassis, GM electrical system—and buy them and try to assemble them into a working car. Good luck. I know it sounds crazy, but that’s how companies put together business systems today.”
But not for much longer, if Ellison had anything to do with it. Ellison was betting that companies with the bitter experience of lengthy software implementations that never fully delivered or returned their investment would be willing to break with the past and buy nearly everything from Oracle. He was also betting that among software vendors only Oracle was big and powerful enough to put together a complete “soup-to-nuts” package of e-business applications, tightly integrated with the database, that would work reliably straight out of the box. And finally, he was betting that the giant systems integration and consulting firms, who recommended to clients what software they should buy, would not turn against Oracle for trying to destroy a large and lucrative part of their business. Ellison leaned back in his chair, grinning: “I feel slightly dizzy when I think about it. We have this one chance to win, and I know that unless we screw up, it’s going to happen.”
Ellison was, in effect, going to war with nearly the whole of the computing business. Mooning Microsoft was one thing, but challenging so much of the industry’s conventional wisdom and vested interests at one time and with few allies seemed unnecessarily foolhardy. I wondered whether Ellison would have the stamina for such a grueling challenge. He was fifty-six years old and, thanks to the 24 percent stake in Oracle that he had clung to through thick and thin since the initial public offering in 1985, he was wealthy beyond even his own understanding.
Although he always talked about technology and Oracle with passion and intensity, he didn’t have the methodical relentlessness that made Bill Gates so formidable and feared. By his own admission, Ellison was not an obsessive grinder like Gates: “I am a sprinter. I rest, I sprint, I rest, I sprint again.” Ellison had a reputation for being easily bored by the process of running a business and often took time off, leaving the shop to senior colleagues. One of the reasons often trotted out for Oracle’s success in the 1990s was Ellison’s decision to hire Ray Lane, a senior executive credited with bringing order and discipline to the business, allowing Ellison just to do the vision thing and bunk off to sail his boats whenever he felt like it. But Lane had left Oracle nearly eighteen months before after falling out with Ellison. Since then, Ellison had taken full control of the company—how likely was it that he would he stay the course?
One reason to be skeptical was that Ellison just seemed to have too many things going on in his life besides Oracle. During the afternoon, we took a break from discussing the future of computing to take a tour of what would be his new home—nearly a decade in the making, and at that time, still nearly three years from completion. In the hills of Woodside, California, framing a five-acre artificial lake, six wooden Japanese houses, perfect replicas of the fifteenth- and sixteenth-century originals in Kyoto, were under construction. The site also contained two full-size ornamental bridges, hundreds of boulders trucked in from the high Sierras and arranged according to Zen principles and an equal number of cherry trees jostling for attention next to towering redwoods. Ellison remarked: “If I’m remembered for anything, it’s more likely to be for this than Oracle.”3
In the evening, I noticed in Ellison’s dining room a scale model of what would become his second home: a graceful-looking 450-foot motor-yacht capable of circumnavigating the globe. Already the owner of two mega-yachts, bought secondhand and extensively modified (the 192-foot Ronin based in Sausalito and the 244-foot Katana, which was kept at Antibes in the South of France), Ellison wanted to create the perfect yacht. The key to achieving this had been his successful courtship of a seventy-two-year-old Englishman, Jon Bannenberg, recognized as the greatest designer of very big, privately-owned yachts. With a budget of $200 million—about the same as that for the Japanese imperial village in Woodside—it would be Bannenberg’s masterpiece. Bannenberg had committed himself to “handing over the keys” to Ellison in time for his summer holiday in 2003.
Then there was Ellison’s flirtation with biotechnology. He had often said to me that when he finally left Oracle (yes, a life after Oracle was something that he contemplated), he would like to work in biotech, even describing it as a new career. He already owned an intellectually formidable Israeli company called Quark Biotech, a pioneer in applied genomics-based drug development, which develops therapeutic products that treat diseases such as cancer and osteoporosis by attacking their causes rather than their symptoms. Ellison’s main philanthropic effort, through the Ellison Medical Foundation, was funding essential research into the diseases of aging. His detractors alleged that he was praying that his foundation would come up with an elixir of youth. It was a good joke given Ellison’s distaste for mortality.<
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If Ellison could devote as much or as little time as he felt able to his two mammoth construction projects, the same could not be said of the America’s Cup. After winning four maxi-class world championships in his 80-foot sloop Sayonara and narrowly escaping death in the lethal 1998 Sydney-to-Hobart race, Ellison had turned his attention to winning yachting’s most prestigious prize. Although the races (in Auckland) to decide who would challenge Team New Zealand for the “auld mug” would not begin until the fall of 2002, in common with the other major syndicates, Ellison’s team, Oracle Racing, was already in training on the water. Would Ellison be happy just to pay the bills—he had agreed to provide a budget for the team of $80 million—or was he planning a more active involvement?
If Ellison decided to take the helm, he would be up against the best professional “drivers” in the world and he already employed one of them: Sayonara veteran Chris Dickson from New Zealand. When I asked him, he looked sheepish: “It depends how fast our boat is. If it’s fast enough, maybe. But I’m not telling anyone yet. I don’t want to have a mutiny on my hands.” I wasn’t sure whether he was talking about the America’s Cup team or his colleagues at Oracle. I was sure, however, that Ellison had no intention of standing in the background obediently signing checks. And if he was planning on driving in some of the races as he had hinted, what sort of commitment in terms of preparation and weeks spent away from Oracle did that imply?
Finally, although I didn’t know then, there was even the possibility that Ellison might start a new family. Although Ellison’s views on monogamy would never make him a standard-bearer for the moral majority, his five-year relationship with Melanie Craft, a writer twenty-five years his junior, had evolved into a deep mutual commitment. After three failed marriages, one other long-term relationship, and a string of less serious girlfriends, Ellison had pretty much convinced himself that being a husband was just something he was not very good at (although he gave himself higher marks as a father to his two teenage children). As his children by his third marriage were reaching young adulthood—David was eighteen and Megan fifteen—the idea of having more was growing on him. It wasn’t something that he talked about, and he was sensitive enough not to want to put any pressure on Melanie, but it was there all the same.
• • •
I had been swept along by Ellison’s arguments and exhilarated by his recklessness and the sheer grandeur of his optimism. As usual, everything he was saying made perfect sense and was intellectually compelling. Part of me thought: “He’s right. If the E-Business Suite is all he says it is, why shouldn’t he succeed with this? And if it does, why shouldn’t Oracle become the most important company on earth.”
However, Oracle’s aggressive and sometimes arrogant style had made it plenty of enemies, and with the launch of the E-Business Suite it seemed that Ellison was intent on making a great many more. Critics had accused Ellison and Oracle of overclaiming and hyping products that sometimes failed to live up to their billing (not exactly a unique crime in the software business, but one that was persistently pinned on Oracle). And although Oracle had the second biggest enterprise applications business in the world, the history of its applications had been, to put it mildly, torrid. If the software didn’t deliver on Ellison’s promise, there would be plenty of people more than happy to see him crash and burn.
Ellison was desperate for Oracle to fulfill what he saw as its true potential, but was he prepared to do what might be required in terms of sheer grinding slog for that to happen? Ellison had become used to having never to do anything he didn’t want to. Was he ready to make the sacrifices that would likely be demanded of him? The progress of this campaign—certainly his most important and possibly his last—would have profound consequences both for Oracle and the reputation of its founder. I very much wanted to know how it would turn out.
* * *
1. LE writes: The arrival of Windows 95 received more media attention than the Middle East peace accords, which were signed that same week. But that wasn’t the only thing I found odd. While everyone applauded Microsoft’s increasingly complex desktop software, I was convinced that every application that could be moved off the PC should be moved off the PC. To me the entire industry was headed in the wrong direction.
2. LE writes: The primary message in Oracle’s Internet computing announcement was that complex application software should move off desktop PCs and be embedded in the network on server computers. Users would then access these applications via an Internet browser. To demonstrate our new approach to computing, we built a simple $500 desktop computer that ran one and only one program: an Internet browser. The easily explained NC captured much more media attention than the more complex concept of an Internet computing architecture. In marketing, simple messages always win. The market itself has a different set of dynamics. PC prices dropped from $2,500 to $500, rendering the NC unnecessary. But at the same time, every other enterprise software company copied the fundamental structure of our Internet computing architecture.
3. LE writes: Gardens last for hundreds of years, companies don’t. That’s because people love and take care of gardens.
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ON THE ROAD
March 2001
It’s a cold, gray dawn, and we’re waiting for Larry Ellison, drinking bad coffee in a bleak “VIP” lounge tucked into a remote corner of Hong Kong’s new Lantau Airport reserved for private jets. The welcoming committee consists of Judy Sim, a tall Chinese American who is Oracle’s senior events manager, George and Rich, the two middle-aged, gun-toting ex-cops who take care of Ellison’s personal security, and me. Two black S-Class Mercedes are ready to whisk Ellison the twenty miles to his suite in the Grand Hyatt Hotel overlooking the harbor. At 7 A.M. prompt, the elegant shape of Ellison’s $35 million Gulfstream V, eleven hours out of San Jose, slips into view and taxis towards the terminal. The cabin door opens, and the two pilots bring out the bags and suit carriers to the waiting cars. But of Ellison there’s no sign.
A good ten minutes later he emerges, looking distracted and worried. Two weeks ago, a year after the dot coms and the telcos first started taking a market hammering, the tech downturn finally caught up with Oracle. Big software deals suddenly evaporated in the few days before the close of Oracle’s third quarter, forcing the world’s biggest business software company to make an embarrassing earnings warning. For Ellison, who only a few weeks earlier had been confidently arguing that Oracle might yet prove immune to the forces wreaking havoc with the stock prices of rival technology firms, it was a dismaying moment, and this trip to China to drum up business for Oracle’s ambitious new software package, the E-Business Suite, has taken on a new urgency.
Before getting into the backseat of the lead car, Judy Sim, who has been out in Hong Kong for several days preparing the ground, hands Ellison a sheaf of briefing papers profiling the customers he will soon be meeting and summarizing the points that the local sales team wants him to focus on. But he’s not looking at them. He stares bleakly out of the car window as the convoy pulls away, his eyes filling with tears. It’s an awkward moment. He takes a big gulp of air and mumbles, “It’s been a horrible weekend.”
In the terminal he had made a cell phone call to Melanie Craft, his thirty-two-year-old fiancée and partner for the last five years, at home in California. He asked her to fly out to Hong Kong later in the day; it’s clear that something terrible has happened. “Maggie just died. Cancer. She was ten years old. Damn, fuck. Sorry. She was my favorite cat. Watching her die—I’ve been a complete basket case for the last three days.” Another prolonged pause, and he seems to pull himself together. “You know, it’s times like this that I wonder about doing deals with the Devil. Sad thing is, even if you’re ready to sell your soul, you usually find that nobody’s buying.” Ellison doesn’t like death. He resents it. How can it be that one moment you’re here and the next moment you’re not? The fate of Maggie, whose rapidly advancing cancer has so distressed him, prompts a story about a time
when he made a donation to the Ronald McDonald House at Stanford. As a result, Ellison was expected to pay visits to children’s oncology wards. It was a nightmare. “Even the nurses and doctors on those wards couldn’t handle the emotional pain,” he says. “After six months, they either left or became numb to the point of losing their ability to feel anything. I just couldn’t go back into those wards.”
Railing against the unfairness of death and confessing to his own emotional squeamishness seems to have made him feel a little better. For the remainder of the ride to the hotel, he rifles through the briefing papers that Sim has given him. He has half an hour before meeting Xiao-Chu Wang, the chairman of China Mobile, the fast-growing wireless operator. Straight after that he is to host a meeting with the bosses of nine local firms.
• • •
The CEO roundtable at the Grand Hyatt is the first that Ellison has held in Asia. The roundtable format has become one of Ellison’s favorite ways of selling Oracle’s vision: self-important CEOs, who would not dream of opening their door to even the most senior Oracle sales executive, are curious to meet Ellison, not least because of his often controversial celebrity.
These events already have an established pattern. Ellison usually starts by describing Oracle’s own experience of “transforming” itself into an e-business and saving a billion dollars’ worth of cost along the way. In particular, he likes to paint a lurid picture of the inefficiency of Oracle’s information systems before the Internet made a different model of computing possible. It’s a riff designed to put the guests at ease—if Oracle, the leading provider of management information systems to most of the world’s biggest companies, couldn’t handle its own data properly, it’s okay for others to admit that they’re having problems. Ellison had told me that in America, the occasion often took on the flavor of a confessional—a kind of CEOs Anonymous—in which the leaders of household name companies would compete with one another to tell horror stories about expensive computer systems that had taken forever to install and never delivered. It didn’t seem to worry Ellison that at least some of these nightmare experiences involved Oracle software and consultants—it was all the fault of the so-called client/server model of computing that Microsoft had helped to foist on the world. “We’re all in the same boat,” he would say, “paying top dollar for systems that tell us almost nothing about our businesses.” Before we go into the room, Derek Williams, Oracle’s top executive in Asia, warns Ellison that, this being the inscrutable East, he may find his audience less responsive than he’s used to.
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