A Modern Day David?


Personal History

Lawrence J. Ellison was born in 1944 and raised on the south side of Chicago in a lower middle class Jewish quarter.8 He was raised by his great-aunt and great-uncle, Lillian and Louis Ellison. His birth mother was their unmarried niece who left the infant Larry in 1945 and went to California.2 That infant grew to be one of the richest men in the world and a force in his industry.

Outside of his notoriety for being a leader in the software world, Ellison has gained somewhat of a reputation. He is known as a charming, well-dressed ladies' man.2

"I like women, no doubt about it," said Ellison.7

He's as proud of his penchant for physical-fitness as of being a gourmet. Unlike his better-known rival, Bill Gates, Ellison is more reserved in public and quieter at work. Sightings of him at work and at Oracle gatherings are so rare that some of his employees say they've "seen Elvis" when they catch sight of him.2 This thrice-divorced father of two considers himself somewhat of a "New Age samurai". Ellison says that he gains inspiration from the 16th century samurai, Miyamoto Musashi, who wrote poems as well as being a celebrated warrior.2 His love of all things Japanese extends to his home in Atherton, Calif. which is built in the Japanese style (yes, with koi ponds) and holds his collection of Japanese weaponry and art.2 He is building a replica of a 16th century Kyoto palace for $40 million outside of San Francisco.2

Ellison, a highly ambitious man, is as devoted to charity as he is to success. Ellison beat a triathlon champion in a bar-dipping contest in order to raise money for a crippled athlete.2 He may be driven and successful at what he does, but Ellison did not always see his future in the field of computer software. Ellison went to the University of Illinois with hopes of becoming a doctor. He was dismissed from school for failing to maintain a C average. Ellison then attended the University of Chicago, only to drop out after a semester. In 1969, he left Chicago and moved to Berkeley, California.2 Here is where he entered the world of computer programming.

Oddly enough, Ellison never took a computer science class in his life. Instead he worked as a programmer and was largely self-taught.8

"I just picked up a book and started programming," said Ellison.8

One of the first jobs he had was for a company named Amdahl Corp. It was working for Amdahl that Ellison received a strong dose of Japanese philosophy which was later to influence his business life.8 Ellison visited Kyoto, Japan while working at Amdahl and came back transformed.

"It was a wonderful experience, and I learned so much from the insights of that culture, insights unavailable, for the most part, to us in the West," said Ellison.8

In 1977, Ellison left Amdahl to start a consulting company, Software Development Laboratories on $1,200.2

History of Oracle

Ellison's establishment of Oracle Corp., the industry leader in relational databases, can be traced back to a paper published by IBM Research in November 1976, called "The System R Project."8 This paper, written by Ted Codd ten years earlier, described relational theory. The IBM prototype relational database was called the System R and the language for accessing the data was called, SQL, pronounced sequel.8 Codd's paper, along with IBM's flegling research inspired Ellison.

"In November of '76 I saw the paper and thought that, on the basis of this research, we could take IBM's research, build the commercial system, and beat IBM to the market place with this technology," said Ellison.8

At the time, there was no commercial demand for relational databases because they were believed to be too slow. Some universities, such as U.C. Berkeley, were interested in building relational databases, but no companies had moved to commercialize the technology.8

"Because conventional wisdom was in error, this gave us a tremendous advantage: We were the only ones trying to do it," said Ellison.8

Ellison launched Oracle with only $2,000 (including $400 from his former boss at Amdahl) and three partners. Very few companies were willing to invest in a software company at the time, leaving Ellison and his partners to operate on a shoestring budget. Nevertheless, the first version of Oracle was sold and installed in November of 1979 to the Advanced Technology Division of Wright-Patterson Air Force Base.8

"Who but the federal government would buy database technology from four guys in California?" said Ellison.

In order to support himself during the two years it took to build Oracle, Ellison and his partners did consulting work for companies such as Amdahl, Tandem and Memorex - even building an IBM-Tandem interface. The work paid off as Oracle became profitable from the onset, producing only one losing quarter in 17 years.8

The M-Cubed Machine

A breakthrough occurred at Oracle in 1987 when Ellison was introduced to an innovative programmer working at Cal Tech named Steve Cully. Cully was working on a project called the M-cubed machine, a massively parallel computer with 1,000 times the power of a PC.8 Massively parallel computers were thought to be useful for a "narrow class of calculation-intnsive scientific applications" but useless when it came to commercial use.8 Ellison took a risk and decided to develop Oracle software that was compatible with massively parallel computers.

A Company in Jeopardy?

Ellison set extraordinary ambitious sales goals at Oracle Corp. and managed to double sales every year until Oracle became a $1 billion company in 1990.2 During this run his main competition in the relational database market, Informix Corp. and Ingres Corp., were run into the ground. With Oracle Corp.'s success in achieving a dominant market share came an enormous pressure to produce. In order to meet Ellison's sales goals, the company's salespeople began counting revenues before their time, even selling products that had not yet been developed. Earnings fell by over $90 million and in 1991 the stock sank by 61 percent.2

"Anyone who had any experience could have seen what happened coming a mile away. I was clearly a completely inexperienced and incompetent CEO," said Ellison.7

Oracle risked defaulting on its bank loans and was close to bankruptcy. To salvage his company, Ellison hired Chief Financial Officer Jeffrey O. Henely and Oracle USA President Raymond J. Lane. Lane set up a system where salespeople were paid only when products were delivered and hired a number of consultants to fix the existing problems.2 Henley took control of finances and managed to steady Oracle's quickly sinking ship.

Interactive TV

Two years after its financial scare, Oracle Corp. received a request from British Telecom to develop software that would run a video server for video "on demand" for a system of interactive TV. The problem was that movies contain an extremely large amount of information (1.5 megabits every second) and with the number of movies required by British Telecom for video on demand, no computer could operate fast enough to process the information.8 Ellison's solution to this problem was to take the massively parallel technology and apply it to the video on demand problem.

"It turns out that all the work we had done in understanding massively parallel technology and working with massively parallel technology could be repurposed to handle the video-on-demand problem, which suddenly became trivial. Because a massively parallel machine's ability to move information was 10 hundred times greater than conventional machines, that problem was not much of a problem," said Ellison.8

With his integration of massively parallel computers and Oracle Corp.'s software, Ellison threw the gauntlet down in the race to develop the information highway. His main opponent? Bill Gates and his Microsoft empire.

Legal Interactions

Ellison's ride to the top was not void of the occasional legal bump. In October 1994, a former Oracle executive and friend of Ellison sued his former boss for wrongful dismissal.2 Terrence Garnett said he was fired after not following Ellison's order to increase nCube's business. No settlement was reached and the case was dismissed.2 Another, more recognized suit came up in 1994 form a female ex-employee who also claimed to be wrongfully dismissed. She said Ellison let her go after she broke-up with him.2 Ellison admits to the relationship, but not to the charges.

The Forbidden Fruit

In another vein of legal components, Ellison looked to buy out Apple Computers as ammunition in his war against Gates. In early 1995, his plan was to split the acquired company into two smaller companies, a hardware and a software one, and take control of the software operations.1 From the software side, Ellison wanted to create Mac clones and eventually use the Mac interface for his interactive TV.2 Meanwhile, the hardware part of the company could be left for others after Ellison picked through his winnings. However in January 1995, Apple's stock rose to 46 percent, turning a sure thing into a very expensive war to be won.1 Ellison might have possible gathered the troops and gone for it had it not been for his Japanese partners nervousness about the situation.2 Eventually, the tables were turned and the very person Ellison planned to use Apple to destroy became an owner of the illustrious fruit - Bill Gates.

Looking Ahead

Although he looks for ways to make Gate pay for his success, Ellison also focuses on ways to use his software for the greater good. He thinks that PCs are too expensive and complicated for people. So, to replace them, Ellison is promoting his NC(network computer) that will allow people to hook up to the web or a network to do all their work instead of storing applications on their hard drives.7 Ellison said the NC will cut the cost of owning a computer down to $300.6 According to Ellison, the people who would benefit from this the most are students.

"I think that technology has a chance to really solve our public school system's biggest problem, which is the fact that kids just get very little individual attention. But you can put an electronic, digital teaching system in every kid's desk and you can drill the most disadvantaged student in the basics that they did not get in the home - the basics of mathematics and langage...With the absence of those basics, it will just frustrate them as they try to learn more advanced and more complicated subjects," said Ellison.8

Ellison appeared on Oprah to discuss these computers and their value in education. He gave each child in an inner-city class their own NC.7 Education is one of Ellison's main causes and an area in which he sees the most potential for improvement. In addition to the Oprah appearance, Ellison and Oracle created a foundation to give money and computers to schools.8

Ellison has his disbelievers. Several critics have laughed at his NC ideas and others think his progress is make-believe.

"Oracle's not doing that much. Larry's hype has expanded to fill his ego," said Gates.2

But Ellison is not discouraged.

"Everyone thinks that Microsoft's dominance is an inevitability," said Ellison. "Of course everyone thought that IBM's dominance was an inevitability, too."7

In spite of his predator-like behavior, Ellison tries to keep his war in perspective. He recalls a conversation with his sister that helps him remember what is important.

"One day she asked me: 'What is more important, to be loved or to be respected?' I said: 'Respected.' She said: 'Wrong.' and left the room. With wealth and fame, you get respect. But 20 years later, I figured out she was right. Ambition is a false god."2

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megank@ufl.edu Megan Katovich
last revised Dec. 3, 1997
Copyright Megan Katovich