Editor's Letter
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"To give you an idea of how
hard it was, in the first six months we had no sales." --Sohaib Abbasi, senior vice president, Oracle
There probably is no more controversial chief
executive in the high-tech industry than Oracle Corp.'s Larry Ellison.
In fact, demographers could probably evenly divide Silicon Valley into Ellison
haters and Ellison lovers. The haters cite his arrogance, erratic behavior,
wildly overblown rhetoric or his personal lifestyle. But there is something
interesting about the Ellison haters. They show up at his public appearances.
HOW LONG AT
COMPANY: 1977-present
BORN:
Aug. 17, 1944
EDUCATION: Attended University of Illinois
ACCOMPLISHMENT
Brought relational databases into the
mainstream and into corporate America
Even his detractors are provoked by him. And everyone gets a guilty secret
pleasure out of his antics. Ellison probably would not be too displeased by the
reaction. Causing a stir is what he does best. At times, it seems he has
perfected it into an art.
Last year, at a carefully crafted all-day Oracle press event, a succession of
Oracle executives blandly laid out strategic road maps and product plans.
Executive after executive maddeningly tiptoed around Sedona, Redwood Shores,
Calif.-based Oracle's embarrassingly late object development product.
Finally Ellison, breezing in late, wearing a black turtleneck and jeans, told
the real story. "I don't know when it is going to ship. I will not release a
product that doesn't have the support of our own application development team,"
he said, effectively killing the product.
Ellison's honesty sent Oracle PR and product VPs into a frenzy of backpedaling.
But the truth would have come out anyway, and it at least relieved them of
months of speculative stories about Sedona.
Ellison's boldness, which looked foolhardy at the moment, proved to be a sober
business decision in hindsight.
Whether it is attempting to buy a Mig jet fighter, building a $40- million house
modeled on a medieval Japanese village or turning the industry on its head with
his latest idea, Ellison is the antithesis of the gray-suited execs or
antiseptic yuppies that seem to proliferate in Silicon Valley. What better man
to start the database industry? Or the relational database industry, to be
exact.
There always have been databases, of course. But they were unwieldy,
hierarchical, flat-file-based creatures that depended on a team of programmers
to extract meaningful information.
Ted Codd, an IBM Corp. researcher, had published a seminal paper in 1970
describing a "relational database" whereby data was separated out from
applications and arranged in tables and columns and could be queried and joined
though a variety of dimensions. The new database described would, for example,
allow queries into sales of a product by region sorted by month, without having
to write a separate program.
Codd's paper, heavy on algebraic formulas, did not exactly set the industry on
fire. It was six years before IBM and a team at Berkeley decided to start
building a relational database.
It may have been six years before a product was available if not for Ellison and
a company he started called Relational Software Inc. (RSI).
Ellison's life before RSI was one of false starts and high hopes.
Raised in a lower-middle-class neighborhood in Chicago, Ellison dropped out of
the University of Illinois, Chicago, and moved to California.
Parlaying some programming skills, Ellison jumped around in different IS
departments and high-tech companies in the early 1970s. But Ellison was really a
businessman at heart, and in 1976 he got the idea to form a company that would
build this radical new database.
With partners Bob Miner and Ed Oates, RSI secured its first client: the CIA.
Miner and Oates did most of the programming, while Ellison charted the company's
future. Ellison's company was out in the market, learning the hard way how to
build a relational database that people wanted to buy.
"There were a lot of people that believed in the technology early on and were
willing to overlook shortcomings, and believe me there were some, that was true
of all the relational databases," said Ken Jacobs, now director of server
marketing at Oracle, who joined the company in 1981.
In 1981, RSI released version 2 of what was then called the Oracle database.
Sales began growing, but it was still a tough sell to get corporate America to
sign on. "To give you an idea of how hard it was, in the first six months we had
no sales," said Sohaib Abbasi, one of two salespeople who started the Midwest
office and who is now senior vice president at Oracle.
Abbasi got the idea to build prototypes for different companies they were
pitching. "For example, for McDonnell Douglas we put a defective part in the
database, then did a query about what other parts would be affected by the
defective part," he said.
To win over clients, Abbasi then did something unheard of. On sales calls he
asked potential customers what kind of information they wanted out of the
database and executed a query on the spot. At conferences, he would even ask
audience members to come up with questions and he would translate them into
queries. This was startling, considering it would take a programmer days or
weeks to solve the problem with a conventional database.
During this time, Ellison's role was as an evangelist and the chief salesperson.
But, more importantly, Ellison mapped out the strategy for the emerging company,
which was renamed Oracle in 1982.
"He has more chutzpa than I've ever seen. He desired to be a success, and he
wanted it more than anyone," said Oates in an interview with CRN last
year.
Ellison's major innovation was to port its new database to as many different
platforms as possible. But it was on minicomputers, particularly the DEC VAX,
where Oracle found its greatest success. As the VAX grew in popularity, so did
Oracle, and by 1984 its sales were a respectable $24 million a year.
After 1984, Oracle pulled away from the rest of the pack. Part of the reason was
that Oracle bet on the SQL standard for accessing its database, a standard IBM
decided to support in 1984.
Oracle kept doubling in size through the go-go 1980s to become a $970 million
company by 1990. Then the company hit a bump in the road or, more accurately, a
mountain range.
Sloppy accounting and sales practices and a general plateau in database sales
caused a series of revenue shortfalls and an embarrassing financial restatement.
Within the course of the year, Oracle's market capitalization dropped to $700-
million from $3.8 billion.
The crisis showed Ellison's resilience, said friends. While he neither cared nor
was knowledgeable about accounting, he fired several people and brought in
managers who knew how to run a billion-dollar business, including Chief
Financial Officer Jeff Henley.
He hired Ray Lane, the kind of chief operating officer whose day-to-day
organizational skills brought confidence back to Wall Street.
Ellison also expanded Oracle into the lucrative consulting business and the
application business in the early 1990s. Sales once again flourished and
continued at a healthy pace, despite another slowdown in the database
industry.
And while Oracle's management became more sober and businesslike, Ellison did
not. As his billions accumulated, Ellison continued provoking the industry with
controversial ideas, such as the network computer. Now the enemy is not other
database companies, but Microsoft Corp.
The latest chapter in Oracle's success story is its desire to move beyond its
traditional Fortune 500 accounts and its direct-sales force. A full-court press
to recruit a channel to sell to midmarket accounts began in 1996. And while
conventional wisdom has it that Oracle is no match for Microsoft's aggressive
sales, marketing and development skills, many are not laying their bets just
yet.
Oracle, after all, is an unconventional company, and Ellison, love him or hate
him, is an unconventional man.
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