The view was spectacular – the Golden Gate Bridge gleamed on the left and was about to make its celebrated transition from evening to twilight. In the strait holding the bridge, there were tourists spending the last allowed hour on speed boats and yachts. As my eyes panned right, I saw the skyscrapers of San Francisco, the city that has seeded so many brilliant ideas and technological wonders, most of which has changed the world we live in. This was the view from the balcony of Larry Ellison, the Co-Founder, Chairman, and CTO of Oracle Corporation. Enterprise software companies are the humbler lot – they don’t get spoken about in the media as much as their consumer counterparts (particularly, their “social” counterparts). The millennials and Gen-Z do not care much about Oracle or SAP or Salesforce as much as they care about the new photo editing feature on Instagram.
But these are software giants, and as an enterprise software entrepreneur myself (before Disprz, my present start-up in the enterprise learning space, I co-founded one on ERP and one on ed-tech, all of which were b2b), I know it takes a lot of sweat, blood and luck to make the cut, survive and finally thrive. You can’t just show users engaging with the product, and hope that after several rounds of funding, you will “figure out” your revenue model. You need to ensure from day one, that people pay for your software and further prove that if you were to take it away from them, they would protest like a 21st century child deprived of his / her daily YouTube dose.
We were 40 or so founders from the Americas, Europe, and Asia, spending an hour absorbing the view and the reality that we were about to get within 20 feet of Larry. We were pampered by a delightful collection of “hors d’oeuvres” (a word that I am still struggling to pronounce) by waiters and waitresses, who also ensured our glasses that held our welcome drinks of white wine, red wine and champagne, never got below the half-way mark (as the only teetotaller in the group, I asked for coffee and I was surprisingly met not with a stare but a smile, and the cuppa arrived shortly).
Little did I realize then (Larry Ellison hadn’t arrived yet) that the short peek into his brilliant mind was going to be equally spectacular. His views on technology, governance, anthropology, and humanity, were as wide and panoramic as the view outside his balcony.
The more understated industry visionary, who built the first relational database which we take for granted today (on top of which businesses from banks to manufacturing giants to even corner-side coffee shops moved from manual systems to computerized systems over the past 4 decades), had a charming sense of humour and great humility.
Here are excerpts from what he had to say across various topics, rearranged temporally.
Larry Ellison’s early struggles as an entrepreneur
If you thought Larry Ellison had early venture capitalists of the 1970s and 80s queuing up at his office for investment, you are wrong. Larry categorically said, “I couldn’t even get them to say no because nobody even met me!”, adding rather casually that he was often admonished by the front office receptionists of investors after hours of wait at their offices in vain for trying to stealthily pocket the latest version of magazines. I realized that venture capital as we know it today, may not even have existed when Larry started.
He shared several touching stories with us which will inspire every struggling entrepreneur – there were times when he could not even pay his electricity and gas bills. Can you even imagine that one of the wealthiest in the world today at one point in his lifetime had to negotiate with the energy companies to pay 10% upfront to keep the power in his house?
The way he saw the importance of power had a bigger story to tell – “Without electricity, my computer wouldn’t work.” His biggest worry was not that there would no air-conditioner or television (or the radio at that time), but that he would be deprived of his garage computer that housed his inventions. These are moments when lesser individuals would crack, but what was incredible with Larry was his insane focus on building a great product in the face of the most trying existential adversity.
Larry Ellison’s Eureka moment, when he knew he was on to something really big
It was clear from my interaction that Larry had a very strong foundation in Mathematics – this was confirmed by his references to “partial differential equations” and “tautologies”, terminologies which only mathematicians will use in a gathering of entrepreneurs. I have a belief that the best software engineers share this in common. They marry their proficiency in everything Math with a very intuitive understanding of how computer programs work – and Larry was no exception. The exception was that he was a great software engineer who also knew how businesses could be built.
In his early years, Larry Ellison was fascinated by Mathematical papers published on relational data models coming out of IBM’s stable – particularly the ones on storing data in the form of tables. But storing data in rows and columns on the storage systems of the 1970s was very inefficient. And this was the seed of Larry’s empire – using traditional storage systems to create a tabular data interface, and a language to view that data with complex operations such as joins. This interface, called Relational Database, and the language, now called Structured Query Language, are both basic chapters in any software engineering course today. Both of these are the arteries of almost all the information systems today, having created careers for millions of software professionals right from the 1980s.
It was when he ran his first benchmarks that proved that this tabular data could be retrieved 10% faster than the standard file I/O of that time (with the power of relational data models) that he really knew he had built something for posterity. He then thought this company was worth “100 million dollars” – well, it is worth 180 billion today!
Oracle’s early backers were actually not VCs but CIA, for whom his team built one of the early versions of the relational database. Oracle, before it was even called that, had a consulting business to support product development. It was only after product revenue became steady did Larry eventually abandon the consulting business.
Andy Grove from Intel, his mentor
It is always interesting to know who the fathers of the information technology industry would find as role models – they built an industry that didn’t exist before. To Larry, it was Andy Grove, former CEO of Intel, who is known to have pioneered the OKR (Objectives and Key Results) framework. Larry Ellison considers Andy’s book “High Output Management” his bible when it comes to management concepts. “When you want to improve something, measure it, and make sure you measure the right thing” – he summarised the book in one sentence.
Larry also shared another hilarious anecdote about how he and his friend Steve Jobs (both of them admired Andy greatly) were brainstorming on what to say to Andy during one of his birthday events (this I guess was after all of them had made it big). Steve and Larry wrote speeches that essentially said “I would love to get a chance to work under you”, to which Andy supposedly said, “Steve and Larry, both of you would be lousy employees and I would never hire any of you!”
As with biopics and biographies of famous personalities, what I learnt that day was a bit about his early days and a bit about his recent thinking. Things between are a blur – maybe I will get another opportunity to talk to him about his first big customer, his IPO, his first acquisition, his first lawsuit, his first big mistake and so on.
About Oracle’s entry into the cloud space
Coming to the Oracle of 2018, this was a question lingering in my mind for a long time. How will Oracle Cloud, over which AWS and Azure have a substantial head start in the cloud computing space, ever catch up?
Larry had an interesting answer, rooted in the concept of “backward integration”. Oracle has the highest (or the near-highest) market share in enterprise software – ERP, CRM, HCM – and when these run on the Oracle Cloud, they have an unprecedented ability to talk to each other, leverage the specialized cloud services on Oracle Cloud (like a slew of them that were announced at the Oracle OpenWorld last week) and create business impact that none of its cloud computing competitors can.
Salesforce does not have their own cloud platform. Nor does Workday. In his keynote address at Oracle OpenWorld 2018, Larry has already demonstrated Oracle Cloud’s capabilities – it runs 10 times faster than the AWS database, and fascinatingly, thanks to the auto-tuning capabilities of the newly unveiled Oracle Autonomous Database, Oracle Database on Oracle Cloud runs thrice as fast as Oracle Database on Amazon Cloud.
He also gently reminded us that it was Oracle that built the world’s first cloud company – NetSuite. Back in the 1980s and the 1990s, it was Larry who asked his best programmers to do “accounting on the internet” as a shared software model. If Oracle was the pioneer of Software-as-a-Service, why can’t they be market leaders in IaaS and PaaS? Didn’t Microsoft catch up with Netscape, which was the pioneer of the browser in the 1990s?
Well, I guess he had a point. He was committing billions of dollars on Oracle’s Cloud Computing technology. One could see the reflection of that at Oracle OpenWorld this year – where there was a kiosk for each Cloud Service, each had 1-2 product managers and I would imagine, a team of at least 15-20 engineers on each. (My heart did briefly swell up in envy on realising the resources at the disposal of large enterprise software companies but looking at how he built all of it brick-by-brick, this feeling vanished).
“There will be just one dominant Enterprise Software Company”
And that would be Oracle – that was a bold declaration he made. Larry Ellison argued that just as Google dominates search, Facebook dominates social, there would be network effects in the enterprise software space, culminating in 1-2 dominant players. He saw a world where two ERP systems need not make two contra entries for a sales and purchase transaction. If these two companies used Oracle Cloud (for both the infrastructure and the software), only one of them needed to make the transaction. I guess distributed ledger technologies like Blockchain (another technology Oracle Cloud is betting on, as evidenced by several sessions and kiosks at Oracle OpenWorld) would be front and centre in this world.
Network effects for enterprise software, huh? I have attended strategy classes from excellent professors at ISB, and the example we were always given was Skype or Facebook or WhatsApp – if you are in it, it makes sense for those in your network (friends, family, etc.) to be in it and the network effects become so large that these industries become “winner-takes-all”, monopoly industries. I never thought it would be a phenomenon for enterprise software industries. Larry’s reasoning was very convincing. He also went on to say that in monopoly industries, there is bound to be regulations and emphatically declared “Oracle is prepared to be regulated”.
However, my counterpoint is that systems are becoming more open and data exchange between different systems has never been so omniscient as it is today – there is a start-up called Zapier that has built 1000+ integrations between hundreds of different software systems – Google Sheets and MailChimp, HubSpot and Gmail, and so on.
But Larry’s point has a lot of weight – these integrations are a pain, and enterprises are often characterized by a mind-bogglingly complex array of systems that talk to each other. If being on the same underlying stack (Oracle Cloud) eases this pain, there could be a strong case for enterprises to gravitate towards only one or two enterprise software companies that owned the “whole thing”.
Cloud will change every aspect of life
The top-tier entrepreneurs have one thing that our leaders who occupy the highest echelons of political offices lack – a vision for how the future will pan out. It was obvious that Larry had a keen interest in anthropology – what drives human behavior and human society, and he uses that to predicate his thoughts on how the world will evolve in the next few decades.
Larry Ellison firmly believes that cloud computing will change every aspect of our lives – he was particularly excited about its possibilities in agriculture and transportation, two of humankind’s foundational industries.
Larry Ellison shared his experience about a hydroponic farm in Hawaii, one of several regions of the globe which was not fertile. But powered by cloud technology and hydroponic farming, you could eventually grow what you wanted, from tomatoes to greens to strawberries, and a remote operator from Israel could decide what needs to be harvested at the click of a button, and the harvest, right down till packaging, would be automated, thanks to the computing power on the cloud. Larry summed it up with a simple sentence “it gets plucked at 5 am and is in stores by 11 am”. And on people’s plates by 7 pm I guess.
The other industry that was waiting for disruption is transportation. Larry is not a fan of throwing away tens of billions of dollars to build a railway network connecting cities like LA and SFO (or Mumbai and Ahmedabad). Instead, “you could put your child to sleep at 10 pm in SFO and hop on to a driverless electric car powered by the Cloud which will have comfy beds, and you will find yourself waking up at LA the next morning.” Before you could ask about the environment, Larry immediately jumped, “We should leverage the existing road infrastructure for transport than build a new transportation network that costs $100 billion”, implicitly also saying that the 100 billion could be used to fund other green technologies to reduce emissions.
“I don’t carry a mobile phone – I never will”
Larry Ellison is not one of those with the “everything digital is great” viewpoint. He believes that digital addiction is no different to drugs. He is not fascinated by the new VR-world where everybody would be interacting with their superhuman digital avatars and lose their true self to technology.
His views fully resonate with mine – I believe some of the best minds in the world, who are trying to invent an alternative digital world (if you want to know what I mean, look at this company called Magic Leap, which has raised over $2 billion), should instead leverage technology to solve humanity’s basic problems and save our planet from imminent threats like climate change. Consider this – the San Francisco Bay Area, which is home to a trillion dollar corporation and another which will get there soon, has thousands of people lying homeless on the streets.
I am passionate about technology too but sometimes we go too far away from the real world. Here is where tech billionaires like Larry Ellison and Bill Gates are different. Larry, along with Bill and 182 other billionaires, have pledged over half of their wealth to philanthropy (this is called the Giving Pledge). It would be so easy for them to invest their wealth in creating the Oracle or Microsoft conglomerate – I doff my hat off to them for setting an example in giving back.
It was a breezy 1-hour session with a select few asking questions to Larry – I raised my hands several times and Larry didn’t choose me. I was going to ask him “After all that you have achieved, what drives you to go to work every morning?”, and as I reflect on that evening, he had answered already this question, when he said “I have a 22-month-old and a 5-month-old. Seeing them play and spending time with them gives me immense happiness. And this is the happiest I have ever been.”
Entrepreneurs like us need to create a world where we use technology to make our planet more habitable and enrich people not merely through digital pixels but real human values of love, trust, and empathy. In billionaires (not just by financial wealth) like Larry Ellison, I have hope.