Ellison, Larry

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Larry Ellison

Founder and Chief Executive Officer of Oracle Corporation

Born Lawrence Joseph Ellison, August 17, 1944, in New York, NY; son of Florence Spellman; adopted at nine months by Florence's aunt, Lillian Ellison, and her husband, Louis; married Adda Quinn, 1967 (divorced, 1974); married Nancy Wheeler, 1976 (divorced, 1978); married Barbara Boothe, 1983 (divorced, 1987); married Melanie Craft (a romance novelist), 2003; children: David, Margaret (with Boothe). Education: Attended University of Illinois, Champaign, IL, 1962–64, and University of Chicago, 1966.

Addresses:

Office—Oracle Corp., 500 Oracle Pkwy., Redwood City, CA 94065.

Career

Worked as a programmer in California for various companies, late 1960s; became vice president, Precision Instruments Co., 1976; founded Software Development Laboratories, with Robert Miner and Edward Oates, 1977; took company public (as Oracle Corp.), 1986; ceded some executive responsibility to new president and chief financial officer, 1991, following accounting scandal; deposed president Ray Lane and assumed sole control of Oracle, 2000; resigned as chairman but remained CEO of Oracle, 2004.

Sidelights

Larry Ellison founded a software company that makes little–noticed but ubiquitous database programs that are indispensable to modern commerce. His Oracle Corporation began with three employees in 1977 and now employs more than 40,000, with annual sales of $9.5 billion. Ellison, who owns 26 percent of Oracle's stock, is the richest man in California, and ranks in the top ten of the Forbes 400 list of the world's wealthiest individuals. His personal fortune is estimated at $21.9 billion. Ellison started the firm with two partners, and was always the chief salesman and architect of Oracle's growth. Oracle has a reputation for ruthless competitiveness, which stems at least in part from the electric personality of its chief executive. Ellison was born in 1944 in Manhattan to a 19–year–old woman. His mother found it impossible to raise the child alone, and after the baby suffered a severe bout of pneumonia at nine months, she gave him up to her aunt, Lillian Ellison, and Lillian's husband, Louis. Louis Ellison had emigrated from Russia in 1905 and arrived in New York virtually empty–handed. He moved to Chicago, Illinois, where he married and became an accountant and possibly the owner of apartment buildings. Louis Ellison married Lillian, his second wife, during the Great Depression, and their adopted son was their only child. They did not tell Larry he was adopted until he was 12 years old, and then kept from him the fact that his biological mother was the niece of his adoptive mother. Ellison never learned anything about his biological father. The family lived on the North Side of Chicago for most of Ellison's youth, then moved to the South Shore, on the other side of town, when he was in high school. Ellison was prone to describe his background as rough, though a biographer, Mike Wilson, claimed the South Shore of that era was a comfortable, middle–class neighborhood. Ellison graduated from South Shore High School in 1962 and enrolled at the University of Illinois at Urbana–Champaign. His aim was to become a doctor. Ellison's academic career was undistinguished, and he dropped out of college after two years, after his adoptive mother died of cancer. He enrolled for one semester at the University of Chicago, but never graduated.

Ellison moved to Berkeley, California, in 1966. He worked at various jobs, mostly related to computers. He worked mainly night and weekend shifts backing up data and doing routine maintenance work. It was neither highly skilled nor challenging work, but the future entrepreneur was at that point not very ambitious. He married Adda Quinn in 1967, shortly after meeting her at a Berkeley employment agency. They lived in a one–room apartment for three years, until buying a house in Oakland in 1970. Neither made much money, and Ellison often took a pay cut when he changed jobs. His passions were bike riding and boating, and he borrowed money to buy a 34–foot sailboat before he had finished paying off a smaller vessel. His wife divorced him in 1974, apparently worn out by his aimlessness and his debts. According to Wilson's The Difference Between God and Larry Ellison, it was at a session with a marriage counselor while he and Adda were breaking up that Ellison decided to become a millionaire. He had never talked about money or any concrete success before this. Quinn advised him to go make his million for his own sake; she was leaving anyway.

Ellison continued to work with computers, eventually learning a lot about programming IBM machines. While working at a small company called Ampex, Ellison met Robert Miner and Edward Oates, who became his partners in Oracle. At Ampex the three worked on writing a database program for the Central Intelligence Agency (CIA). In those days, computers could store lots of information, but managing it and recalling it were complicated and inefficient processes. Ampex was working on a way to maintain a database of information on videotape as opposed to traditional magnetic tape. The Ampex machine could search and rewind videotape at high speed. Miner, Oates, and Ellison wrote the program for the Ampex video database, which was called Oracle. Ellison left Ampex for a sales and marketing position at another company, but he remained friends with Oates and Miner, and the three met often for lunch, chess, or tennis. Ellison ended up vice president of a small firm called Precision Instruments Co. Precision Instruments was working on a project similar to Ampex's, trying to find a way to store and retrieve masses of data, this time on microfilm. Precision Instruments needed to hire a contract company to program its software. Ellison convinced Miner and Oates to go into business with him, and the three formed Software Development Laboratories in 1977. The new company existed at that point solely to write programs for Precision Instruments, and its offices were inside the Precision Instruments building. Ellison, who had instigated the venture, took 60 percent of the shares, with Oates and Miner each taking 20 percent.

While the three young men were busy writing Precision Instruments software, they discovered something else. Programmers at IBM had been working on what was called a relational database. This was a database that could be queried, or asked to retrieve certain pieces of information. The databases that existed up until then were good at holding information, such as lists of employees and how much money they made. But to find out how many employees, for instance, made more than a certain figure, the user had to go in and look at the data. The relational database, however, could tell the user who made how much money, and even go in and give selected employees a raise. This was what everybody wanted, and IBM programmers figured out how to do this using a simple computer language that could be typed on a keyboard. When a paper on the relational database program appeared in a trade journal, Ellison and his partners got very interested. They realized their new company could finish its contract work for Precision Instruments and then drum up similar work for other companies. But the better alternative was to find a really good software product and sell that to whoever wanted it. Using the IBM paper, the three figured out how to write their own relational database software. They named their program Oracle, after the CIA project they had worked on earlier.

Ellison met his second wife, Nancy Wheeler, in 1976, and they married about six months before the founding of Software Development Laboratories. In 1978, the couple divorced. Wheeler gave up any claim on her husband's company for $500. The company moved into new quarters and changed its name to Relational Software Inc. (RSI). Its first customer outside of Precision Instruments was the CIA. RSI also sold a copy of its new database program to the Navy. Even with only two customers, the company had to write its software to work on three different types of computer. This prompted Ellison to develop a marketing strategy that eventually led Oracle to dominate the database market. His idea was to make the Oracle program truly portable, that is, it would work on any kind of computer. The CIA used IBM computers as well as other brands, and so did many large corporations. Ellison promised that Oracle would work with whatever equipment a company used.

Ellison became a relentless marketer, demonstrating Oracle at trade shows and training corporate technical staff in its use. By 1982, the company employed only several dozen people, and had sales of $2.4 million, but it was on a steep upward trajectory. It managed to double or nearly double sales year by year, and Oracle surpassed its competitors. Ellison married for the third time in 1983. Barbara Boothe, a former receptionist at RSI, had borne him a son, David, and pressed Ellison to marry her before the baby turned one. The couple had a second child, Margaret, in 1986. That year, RSI became a public company, taking the name of its software, Oracle. It debuted on Wall Street one day before Microsoft. While Microsoft's programs soon became part of a majority of American households, Oracle's growth was more behind the scenes. Its database program made possible such things as computerized hotel and airline reservation systems, inventory tracking for chain stores, and management of supplier and client databases for large manufacturers. Oracle aggressively outsold its competitors, and by the late 1980s it was still doubling sales yearly, making it by far the largest company in the database market. By the time Ellison and Barbara Boothe filed for divorce in 1986, he was a millionaire several times over, as were many of the top people at Oracle. Oracle's revenue that year was more than $55 million, and Ellison's stake in the company was valued at $90 million.

Ellison had urged his sales team to push Oracle hard, and there were few traditional corporate controls at the rapidly growing company. Ellison was an entrepreneur with a genius for marketing and the savvy to make the most of an opportunity. But he had no experience running a multimillion dollar corporation. So perhaps not surprisingly, Oracle began to rocket out of control. The sales team routinely cut corners, turning in contracts on April 2 but recording them as March sales, for example. The company also booked sales to companies that had only a dubious ability to pay. Even though the company was showing tremendous sales figures, it was not actually collecting all the money that was due it. Ellison cultivated a bad–boy image, racing cars and yachts, building a home for himself that was a reproduction of a Japanese medieval villa, investing in a Hollywood magazine and flying fighter jets. He was also well–known for coming late to meetings, whether of his own board or with Washington dignitaries. Meanwhile the company instituted a sales incentive program called "Go for the Gold," where employees who met or exceeded sales goals were paid in actual gold coins. Ellison's flamboyant style had extended through the whole company, leading it to flout Securities and Exchange Commission rules. Finally, Oracle's financial auditors demanded that the company restate its earnings to reflect accurate sales. In 1990 Oracle was forced to restate $15 million in earnings for the previous quarter, meaning it had to announce that that $15 million had never existed in the first place. As a result, its stock price sank, and angry investors sued the company. Oracle's board considered replacing Ellison, but he stayed on, determined to keep his mind on the business. He also hired an experienced president and chief financial officer. The company righted itself after the disaster, and progressed at a more moderate pace through the 1990s. Oracle added $1 billion in sales annually between 1992 and 1998.

In 1997, Ellison took a new tack, pushing Oracle to get more involved in so–called applications software. Applications run on top of existing programs, doing things like billing. While the market for database programs was shrinking, the applications market was expected to continue to grow well into the 2000s. In 1998, Ellison sailed his yacht, the "Sayonara," in a disastrous 725–mile ocean race. A storm sank six of his competitors, four men died, and Ellison was unable to control his boat in the immense waves. This near–death experience apparently shook Ellison into devoting more time to his company. He began to take back power he had assigned to his president and chief financial officer. Oracle's president, Raymond Lane, resigned in 2000, and many other top executives also moved on to other companies. Oracle's new applications software, 11i, debuted in 2000 but was full of problems. The company's stock price fell, and 2001 also turned out to be a poor year for Oracle.

However, by 2003 Oracle's revenue had risen to $9 billion, and the company was still profitable despite an overall downturn in the technology industry. Ellison's love live was looking better, too. At the end of 2003, he married romance novelist Melanie Craft. The couple had met while leaving a San Francisco, California, restaurant in 1996. Business–wise, Ellison's new mantra was the NC, a small, cheap computer that ran off software stored on the Internet. He repeatedly predicted that the personal computer was dead, and that the NC would surpass it. He seemed determined to keep Oracle growing, and in 2003 he launched a hostile bid to take over a rival company called PeopleSoft. PeopleSoft was run by a former Oracle executive, Craig Conway. Ellison and Conway displayed a lot of personal animosity over the deal. Oracle's offer was being reviewed by government regulators at the close of 2003. Ellison was sure the deal would go through, while Conway was convinced of the opposite. Whatever the result, Ellison's maverick style clearly still dominated Oracle.

Ellison resigned as chairman of Oracle effective January 19, 2004, but remained CEO of the company. On February 26, 2004, the Justice department ruled that Oracle's attempt to take over rival PeopleSoft would be bad for competition, effectively blocking Ellison's hopes of acquiring the competing firm. On March 18, 2004, Ellison bought and sold one million shares of Oracle Corp. for a profit and gave another 911,744 shares to his wife. He still owned more than 1.3 billion shares in the company.