The paradox behind Oracle
Times Staff
The software company founder, the world's second-richest man, is the ultimate Silicon Valley entrepreneur and its consummate outsider. He typifies the extremes of the technology industry, its...
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Tampa Bay Times
The software company founder, the world's second-richest man, is 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.

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, 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' fortune (it dusts Allen's $36-billion). But when Ellison receives attention, it often is for reasons irrelevant to his corporate bona fides.

In 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 battle with authorities at San Jose Airport in California 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 sports car reportedly was 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 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 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.

Born to an unwed 19-year-old in Manhattan, N.Y., Lawrence Joseph Ellison was adopted at 9 months by distant relatives in Chicago. His father, 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.

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 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.

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 is "somewhat reassured" that two of the people he most admires, Winston Churchill and Bill Clinton, were and are habitually late.

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, and he hates that he's perceived as mean and 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 3-acre lake? Is that structure over the lake a bridge or a residence?

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.

The chief designer of the 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."

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.

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 and 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."

"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."

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. "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', goes to fund research at the University of California on DHEA, a hormone some people think could retard aging. He also has given substantial sums to cancer research.

"But is it really true?'

Obvious theories abound on what caused Larry Ellison.

"I think the distant and disapproving father created a maverick son," former longtime assistant Jenny Overstreet says. Louis Ellison gave his son "so much fuel, so much anger, perseverance and determination," says Overstreet, who lives in a San Francisco mansion down the street from her former boss. "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 often has spoken about the "projects" and "ghetto" where he grew up 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.

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,' " Ellison 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.

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

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

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 living 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 think 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.

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."

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. 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 Ampex, a computing company in Sunnyvale, Calif., which, like many companies in the early days of Silicon Valley, did contract work for the 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.

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. For example, 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. Ellison's team's goal was to build the first commercially viable relational database. With IBM's paper as a blueprint, he felt 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 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, was priced at $21 and closed at $28, putting Gates' 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.

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."

"I let everyone down'

In 1990, Oracle started paying some sales commissions in gold, the final indulgence of a company that seemed on a perpetual joy ride.

Years of sales discounts, coupled with sloppy accounting methods, led Oracle to record revenues it had not received. The company reported nearly $971-million in sales in 1990 yet had a large proportion of uncollected bills. It was forced to "restate" revenues in September 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 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 $1-billion the previous spring.

When the company laid off 500 employees in 1991, Ellison 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 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, such as 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.

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."

"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 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.

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 a fluid concept today, and plunging stock values 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.

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."

_ Washington Post staff researcher Richard Drezen contributed to this report.