This article was originally published in September 2002.
Larry Ellison, the fifth-richest man in the world and chief executive officer of Oracle, the second-largest software company after Microsoft, is in the news again. He is ranting on Chris Matthews’ Hardball show on MSNBC. Things have changed since the days of Thomas Jefferson, Ellison says, especially after September 11. The nation needs a voluntary national ID card, and Oracle will donate the database software to run such a system. “Privacy is an illusion,” he insists.
Ellison later makes local headlines when he moves his Gulfstream V jet from San Jose International Airport, despite his court victory overturning what he called the airport’s “wacky” curfew laws, which he routinely ignored. He maintained that his jet’s BMW Rolls Royce BR 710 turbofan engines were quieter than those of many smaller jets with no such curfew, but he moved the jet to another airport nonetheless.
When Ellison addresses a crowded room of Wall Street analysts at Oracle’s headquarters in Redwood Shores, California, it does not take long to see that he has his own agenda. He disses competitors’ products (IBM’s new database is “a real piece of crap,” he says) and lambastes his archnemesis, Bill Gates (a “convicted monopolist”). Ellison even attacks the analysts themselves. Referring to a list of companies that took off during the dot-com craze but are now in or near bankruptcy, Ellison says, “You guys recommended their stocks, and you think I’m stupid?”
It’s all business as usual for Larry Ellison, who is famous for excess and not known for his modesty. (A biography about him is titled The Difference Between God and Larry Ellison. The answer: God doesn’t think he’s Larry Ellison.)
For a few days in 2000, when Oracle’s stock, a bellwether on the Nasdaq, was racing, Ellison was the richest man in the world. This year, after the crash, he is only number five, according to Forbes’ annual tally. His stash is less than those of two Microsoft billionaires (Gates and Paul Allen) but more than the wealth of Kirk Kerkorian, George Soros, Michael Bloomberg and Ross Perot combined.
An impressive sum by any standards, the money is actually one of the least interesting things about Ellison. He has built a formidable company from scratch. He is both loved and loathed by those who work or have worked for him. He is a jet-setter who actually flies his own jet and has the ear of presidents. Like Ted Turner before him, he is determined to win the America’s Cup race, and he plans to spend $161 million to do it. Ellison, who Steve Jobs has called “the outrageous CEO poster child,” is nearing completion of a $40 million mansion built in the style of a 16th century imperial Japanese residence.
Ellison, 58, founded Oracle in 1977 after working for a number of California technology companies. He read a white paper from IBM that presented what was then a new concept, a relational database. Database technology was already ubiquitous, but whereas a database stores volumes of information in one place, a relational database links many libraries of data. It allows, for example, customer orders to be coupled to inventory and factory output, and a personnel department’s hiring records to 401(k) balances. It sounds obvious now, but it was a radical idea at the time and IBM had rejected it. Ellison, along with two partners, left their jobs to found a company based on the idea. Earlier, Ellison had created a database for the CIA code-named Oracle, and he borrowed that as the name for his start-up.
His long-shot bet paid off. Now most companies rely on relational databases, and almost all of those are made by Oracle. In 1986 the company went public, days before Microsoft. Since then, Oracle’s stock has shot up 41,000 percent. Even though Microsoft’s main product lines are for personal computers and Oracle’s are for companies, Ellison has said he will not be content until Oracle replaces Microsoft as the world’s largest software company. (Analysis say that’s not likely to happen anytime soon.) Ellison’s attacks on Microsoft escalated when the Justice Department began its investigation of Gates’ company. When Ellison discovered that the Redmond giant was trying to influence public opinion by funding pro-Microsoft “consumer groups,” he hired private investigators to go after the firm. Searching through Microsoft’s garbage, they found evidence that Microsoft made payments to the supposedly independent groups.
In the Nineties, Oracle had its own accounting scandal, which almost destroyed the company. “Oracle is run by adolescents, and that includes me,” Ellison said at the time. Oracle recovered and grew steadily through 1997, when it branched out beyond databases into the $20 billion applications software market.
While Oracle is still unchallenged as the database leader, it suffered in the technology crash of 2001 and has been slower to recover than other companies. There is mounting competition in the crowded applications business, and Oracle has had a series of bad quarters this year. Oracle has also been in the news recently because the California state’s attorney general is investigating a donation the company made to Governor Gray Davis around the same time Oracle won a large contract from the state. Both the company and the governor have denied wrongdoing. Oracle, meanwhile, remains a powerhouse. At the peak of the dot-com bubble, the company had billboards boasting that 93 percent of dot-coms ran on Oracle software. Its database is still used by almost every large company, from American Airlines to Sara Lee to Pacific Bell. With Ellison firmly at Oracle’s helm, its income tops $10 billion a year.
According to his biographers, Ellison’s obsessive nature may be an attempt to prove his worth to the man who raised him. Ellison never knew his real father and his unwed mother gave him to an aunt and uncle. (The family name was given to them when they arrived at Ellis Island from Europe.) His adoptive father, an auditor, once told Ellison, “You’ll never amount to anything.”
Ellison learned computer programming in high school and enrolled at, and dropped out of, the University of Illinois and then the University of Chicago. In the early Seventies he moved to California to work for PC companies such as Ampex. After he founded Oracle, Ellison’s notoriety grew along with the company and his personal fortune. Part of it was his conspicuous consumption and his personal adventures. He tried to buy a Russian MiG fighter for $20 million. He broke his arm in 28 places in a biking accident. He nearly died surfing. He also nearly died in a December 1998 boat race. With a crew of 23, he sailed his 80-foot yacht, Sayonara, in a 630-mile race from Australia to Tasmania. En route, the boats ran into a hurricane that generated 50-foot waves. Six sailors drowned. But Ellison is going back for more. He plans to win the America’s Cup by sailing two boats outfitted with top-secret technology. Hundreds of monitors on the boats will send data to a central system every second. The numbers will be crunched by computers and the boats’ captains will be advised how to proceed.
Ellison’s personal life has been stormy, too. He’s been married three times, and Fortune has called him the “playboy of the wired world.” There are websites by women obsessed with him. He fought back against an Oracle employee who accused him of threatening her job if she wouldn’t have sex with him. She was convicted of perjury and falsifying evidence. Ellison recently announced his plans to marry novelist Melanie Craft.
Ellison is more private about his sizable charitable efforts. He gives away hundreds of millions of dollars to charities and smaller amounts to political candidates. His main interest is in biotechnology, and he donates about $100 million a year to the pursuit, largely through Quark, his biotech company, and the Ellison Medical Foundation, which has contributed $250 million to fight infectious diseases in Africa.
When Playboy decided to interview Ellison, we tapped Contributing Editor David Sheff for the assignment. Sheff, whose past subjects have included technology leaders Steve Jobs and Jeff Bezos, met with Ellison at Oracle’s corporate headquarters. Here’s his report:
“Ellison has a decidedly varied reputation as a manager. While he can rally his troops with passion and uncommon leadership practices—he once awarded gold ingots to employees—he is said to have a brutal side, too. He is ‘infamous for cavalier firings,’ according to Forbes, having ‘burned through 10 top lieutenants.’ Some of them have gone on to found competing companies. Thomas Siebel of Siebel Systems has said, ‘Ellison has a knack for taking the best and brightest and then he tries to destroy them,’ Craig Conway, chief executive of Peoplesoft, refers to him this way: ‘When you alienate everybody, you become someone no one wants to play with.’
“The press might see Ellison as a flamboyant-raconteur-daredevil-heartless-playboy boss, but I found him to be sincere, thoughtful and fiercely bright, with strong and complex opinions on issues as diverse as health care, education and Japanese gardens. Most surprising, he was warm and self-effacing. The interview began just as the nation’s economy was showing signs of life after dipping into a recession. It seemed like the logical time to begin an interview with one of America’s most important business leaders.”
Playboy: After the tech crash and recession, what is your prognosis for the economy?
Ellison: I’m wildly optimistic.
Playboy: Even after the recent corrections we’ve seen?
Ellison: Yes. I’ve seen the madness before. I knew that the dot-com thing was madness.
Playboy: Oracle did well by it, though.
Ellison: We enjoyed that wave on the way up, and I admit that it has been less fun on the way down. But dot-coms represented 18 percent of our business. Most of our companies are not ephemeral. General Electric, Deutsche Bank, Sony—they aren’t disappearing. I knew that many of the dot-coms would. A little less than a couple years ago, a tiny company called Ariba, which enabled you to log on to your personal computer and issue a purchase request, was worth more than all of Daimler-Chrysler. A company that brought groceries to your house was worth more than the largest supermarket chain in the United States. When I was a kid, someone delivered milk, eggs and sour cream to our house, but that service couldn’t compete with supermarkets; it’s expensive to load the milk into the truck and hand deliver it. So what’s changed? You still need trucks. You still need delivery people. Instead of filling out a sheet of paper to place your order, you type it into a computer, which is actually more expensive. It’s bizarre. A company that delivered Kitty Litter was considered an idea so grand that there were many such companies. In retrospect, it all looks absurd. But everyone believed it while it was happening. At the height of the craze, with a couple friends I started a website called HeyIdiot.com. We sold only one product: HeyIdiot.com stock. The plan was to auction it off. You had to bid higher than the previous price, so everyone would become wildly wealthy. The scheme was explained at the HeyIdiot.com website. The horrifying thing was that we got messages from people: “This site doesn’t work. We’re trying to buy the stock and it’s not working.” We got a call from a guy who wanted to buy our website name. He thought that in itself was worth hundreds of thousands of dollars. More madness.
Playboy: Was the hype surrounding the Internet itself a form of madness?
Ellison: Any new technology brings a certain euphoria. I asked Michael Dell how many PC companies there were in the U.S. at the height of that craze. I said, “There must have been at least 50.” He said, “Fifty? There were 500.” Now there are Compaq and HP, which have merged, Dell, Gateway, Apple and IBM—five or six. A couple of them, including IBM, aren’t even making money with PCs. The number will probably decline further. Every new technology inspires hundreds of companies that will manage to survive. In the case of the Internet, it was thousands.
Playboy: But the Internet was pitched as a force that would change life as we know it. Was that hype, too?
Ellison: No. The Internet is the most important new technology since the telephone. Just because companies have failed doesn’t mean the Internet will fail. The Internet is more popular and more broadly used than ever.
Playboy: What is the most important change heralded by the Net?
Ellison: Unbelievably cheap global communication. I can send any form of data from here to Beijing for next to nothing. Data can be anything: numbers, words, pictures, movies, music, live communication. The implications of that are far more profound than any one of us can fathom. At a certain point, we bet Oracle’s future on the Internet, switching our products from ones that were based on client servers [high-end stand-alone computers] to ones based on the Net. It was a risk, but now every technology company I know of has given up on the old model. Even Microsoft has come aboard, though they call it Net, their own version of the Internet. They gave it its own name and are trying to make it proprietary, which is what they always do.
Playboy: Might they succeed?
Ellison: They have no chance whatsoever. Almost every company is building applications on Internet standards as opposed to Microsoft standards. Microsoft is late to the party. That doesn’t mean they won’t keep making a lot of money selling Office and Windows, but they are having a difficult time co-opting the Internet and converting it into the Microsoft version of the Internet. Microsoft, if they could, would co-opt English. We would be speaking to each other in MS English—Bill’s English. Bill would explain why MS English is better than English and he’d make it available to everyone at a very low cost. By the time he finished talking, a dollar for Microsoft per conversation would seem reasonable. To have this conversation, we’d have to send Bill a dollar.
Playboy: Is it dangerous to underestimate Gates?
Ellison: Microsoft is the most ruthless company around. And they are talented. I would never underestimate them. However, it will be difficult for them to own the Internet. They own the PC because they invented it. Well, Apple really invented it, but Microsoft created its own version. It may have been called the IBM PC, but it was owned by Microsoft and Intel. In one of the most gracious acts in the history of business, IBM decided to be the marketer of the first Microsoft Intel PC. What a gift to those two companies. Microsoft’s and Intel’s market values suggest it was a gift of a trillion dollars in market valuation. Those two companies should certainly send IBM cards during the holidays. It was the biggest mistake in the history of commerce.
Playboy: Will Microsoft and Intel retain their lock on PCs?
Ellison: Yes, though PCs will become less important, at least in terms of connecting to the Internet. There will be many devices attached to the Net. Your car will be a two-way transmission device to the Internet. You’ll send and receive messages on your telephone. According to some, the next big thing will be cameras built into telephones. Japan may start sending pictures over the phone, but most other people won’t. I do believe we’ll be sending messages, automatically receiving changes in our calendars and the like.
Playboy: For a while it looked as if the Justice Department might break up or otherwise punish Microsoft. Now it seems less likely. What’s your view?
Ellison: The fallout remains to be seen. The court found that Microsoft routinely broke antitrust laws. The company was found guilty, even after it appealed the original ruling. The only thing that remains for the government to do is decide how to penalize Microsoft. The latest idea is that rather than penalize them, they should be rewarded.
Playboy: How does the proposal reward Microsoft?
Ellison: One of the few markets that Microsoft doesn’t yet have is the education market. The government is now saying, “Microsoft broke the law but didn’t get all of the money. They dropped a bag or two on the way out of the bank. If we give them all the money, they will have no reason to rob banks anymore and the problem will be solved.”
Playboy: You’re referring to the remedy that would have Microsoft give free software to schools.
Ellison: Yes, and thereby make Microsoft a standard in America’s schools, too—the one place Apple has beaten them. Why not just wipe Apple off the face of the earth? But it’s not the end of the story. Now that Microsoft has been found guilty by the court, the company is subject to a bunch of civil lawsuits. Microsoft erased Netscape—as good as destroyed the most innovative company in the Silicon Valley of the Nineties. As a result, Netscape is suing Microsoft in civil court. I believe Netscape, now owned by AOL, will win tens of billions of dollars in damages—and Netscape won’t be the only one.
Playboy: Can you pinpoint when your battle with Microsoft become personal between you and Bill Gates?
Ellison: Actually, Bill and I used to be friends.
Playboy: So what changed?
Ellison: I began to intensely dislike him when I learned about his behavior toward Netscape. Here was this incredibly innovative small company, and the largest, most powerful technology company in the world—arguably. Gates wasn’t satisfied until he wiped them out. And he did so by breaking the law. He tried to force Compaq not to ship Netscape. He threatened people not to do business with Netscape. He destroyed Netscape, and consumers are paying the price.
Playboy: How are we paying?
Ellison: We pay the price in the lack of alternative products. Remember there used to be a PC software industry? There were companies like Lotus, Harvard Graphics, Ashton Tate. No longer. If you want PC software, you wait until Microsoft builds it and you pay whatever they demand. Microsoft products are mediocre and don’t need to be anything more—we have no choice. What other word processor can you use? What other spreadsheet? What other presentation graphics application? What other operating system? It’s like the good old days of the Soviet Union. Without competition, there were high prices and terrible products. Our public schools are disasters for the same reason: There’s no competition. If there’s no competition for your word processor, there’s really no reason to make a better or cheaper word processor.
Playboy: Your own tactics in going after Microsoft have been called into question, particularly when you hired private detectives who went through the company’s garbage.
Ellison: I began hearing about certain groups that support Microsoft. One was called the Independent Institute. Its line was, “Anything that hurts Microsoft hurts America. Microsoft is a national asset. You wouldn’t want to damage Microsoft, because they’re a big exporter and a national treasure. Please, God, don’t hurt Microsoft and America.” Well I’m an American. I don’t want to do anything against America. My God, I may have to rethink my position! But who are these people at the Independent Institute? I’m curious. How about Americans for Competitive Technology, another pro-Microsoft group? I’m an American. I think that we should have competitive technology. I wanted to know who these people were.
Playboy: How did you find out?
Ellison: We found out, but the question was, how could we prove it? That’s why we hired private investigators. I didn’t know they were going to go through Bill’s garbage, but that doesn’t bother me at all. I wouldn’t want to go through garbage personally, because I’m wearing a very expensive suit. But we wanted to disclose the truth. Going through Microsoft’s garbage, the investigators found evidence linking Microsoft to the Independent Institute. We then turned those documents over to the media. We thought the American people should know. It’s totally legal to go through people’s garbage, by the way. If Microsoft wanted to deceive the American people and not get caught, they should have bought a few more shredders.
Playboy: Is there a moral lesson about Bill Gates’ success? Does crime, if not ruthlessness, pay?
Ellison: The story’s not over. Microsoft could have beaten Netscape without breaking the law, and Microsoft would be a more powerful company today if they had engaged in competition with Netscape that was legal. They almost were broken up. If Thomas Penfield Jackson, the original judge in the case, had not made a few statements to the press, Microsoft would be two or three or even four companies right now.
Playboy: Is a lot of your view sour grapes?
Ellison: No. Is AOL’s suit against Microsoft sour grapes? We will aggressively compete with any company. We have aggressive competition with IBM. But IBM, to the best of our knowledge, operates entirely within the law. So do we. When we compete with Microsoft, however, it’s gloves off because of the way that they have operated.
Playboy: How do you think Gates would respond to you?
Ellison: Gates believes he’s done nothing wrong. He thinks the rules don’t apply to him. Like Milo Minderbinder in Catch-22, he really believes what’s good for Microsoft is good for America.
Playboy: Is it true that you love a fight?
Ellison: I love to compete, whether racing a sailboat or selling a piece of software. The selling part isn’t so interesting, but building a faster sailboat, a better database, better applications, is. If you build better products, most of the time you win, but not always. Apple found that out from Microsoft. Though I feel a special glee when it comes to beating Microsoft, I really don’t think about our competitors. When we have trouble, it’s usually self-inflicted. We have had some product problems—products late for the market, bugs. We are an engineering company. We live or die by the quality of our products. There’s no way we could compete with a company like Microsoft or IBM if their database was better than our database. So we have to engineer better products.
Playboy: Can size wind up hurting you, though? Technology companies have to be nimble, fast-moving.
Ellison: Really? How has it turned out? The smaller companies—Commerce One, Ariba—are not going to survive. Look at our database competitors. Ingress? Gone. Informix is gone. Sybase doesn’t matter. Technology is going the same way as the car industry. People don’t believe it, but there is going to be a handful of large technology competitors. The idea that the software and computer industries are going to be forever young is fanciful. One of the reasons our database is so good is that we’ve had long-term competitions with Sybase, Informix, Ingress and now IBM and Microsoft. We’ve always been an extremely competitive market. If that doesn’t keep you alert, nothing will. We’re also in a very competitive market in the enterprise software business. We just entered the e-mail business, a brand-new business for us, and it’s dominated by Microsoft. The problem with Microsoft’s e-mail is its fragility. Our e-mail does not break. Microsoft’s does. Microsoft’s e-mail server is really a virus exchange. Microsoft’s idea of how you handle viruses is: “You know that e-mail you got yesterday? Don’t open it. It has a virus in it.” When we discover a virus we simply delete it from the server so you can’t get to it. Post-September 11, people are much more sensitive about security and terrorism, whether physical or cyber. We have the answers built in.
Playboy: Since September 11 you have also been the chief proponent of a national ID card to help combat terrorism. What led to that idea?
Ellison: There’s a global database to keep track of how much you earn, where you work, how much your car payment is, what magazines you subscribe to, what your bank balance is, what your last raise was, whether you’re married, not married, divorced, how much you pay in alimony. But there’s nothing that reveals whether you might be a suspected terrorist. It’s a no-brainer.
Playboy: But the price is even less privacy than we have now.
Ellison: Which isn’t much. You’ve given it all up already. In exchange for what? A credit card. You have given up your personal privacy to make it easier when you go to the mall. Should we give up a little more privacy to save the lives of our families? Should the government create one of these databases to keep all of this information about us? Can we trust our government? You trust Bank of America, but do you trust your government?
Playboy: But you participate in the decision to trust Bank of America.
Ellison: I’m not for mandatory IDs. I want a national standard for IDs, but they should not be required for most people. If you decide to drive, you need an ID. All I’ve come out for is a standard for existing driver’s licenses, pilot’s licenses, voter registration cards, social security cards and the like. I want to make them much more difficult to forge and duplicate so people can’t go around stealing our identities. My pilot’s license is much easier to duplicate than an American Express card. Anyone with a color laser printer can copy it. If you want a pilot’s license, before you leave here today, I’ll make you one. No problem. The point is that we take credit much more seriously than national security. I want to use credit card technology and a single merged database. The FBI would probably be the best place to keep that information. If the states and FBI had had a linked database, we probably would have caught half of the terrorists boarding those airliners. They were wanted. They were in the country illegally, overstayed their visas, had an outstanding arrest warrant or something else. The airlines had no way of knowing they had sold tickets to terrorists.
Playboy: The counterargument is that by giving away our freedom or privacy, the terrorists have in some ways won.
Ellison: [Exaggerated] “Surely they will have won!” You have to be kidding. Are you more interested in stopping a little credit card fraud or saving lives? Now who’s won? Civil libertarians are off-base here. It’s mind-boggling how much we don’t trust our government. Everyone is quoting Ben Franklin: “They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.” Remember that Franklin lived in this country 200 years ago, when the world was dominated by aristocrats and kings. The big risk to folks like you and me were that these aristocrats and kings were going to take away our rights. I don’t know the last time I saw an aristocratic king running around the U.S., threatening to take away our house or dog. The risks today are from terrorists who get their hands on nuclear weapons and vaporize a million or 2 million people. Should we sacrifice some of our privacy to make that more difficult? A handful of people are so concerned about protecting themselves from the government they’ve made it impossible for the government to protect the rest of us. I’m quite a bit more worried about Al Qaeda than I am the Republicans. And I’m a Democrat. The fact is, we live in a dangerous world, and we can’t pay enough for good information. Think about the calamities around the turn of the millennium that were prevented by intelligence agencies. Can such intelligence be abused? Absolutely. Everything can be. The cave person who invented fire went around saying it would keep caves warm and cook food, but someone was out there worrying about arson. Technology is agnostic. Information is agnostic. It can be used inappropriately, but by and large, our government has a damn good record of using information and behaving well in its 200 years. I would rather trust our government to protect us than rely on blind luck. Otherwise we can hope that the Michigan Militia protects us against Al Qaeda. I think we’d be better off relying on the Marines.
Playboy: Which politicians understand technology? Who doesn’t?
Ellison: I was a big fan of Bill Clinton’s and I’m happy with the current administration. I’m a lifelong Democrat, but I was not a supporter of Al Gore.
Playboy: Do you know President Bush?
Ellison: I met him when I was deciding who I would support. I had about an hour with him. I’d heard all of these people say, “George Bush isn’t very smart,” but he is bright, determined and focused, certainly every bit as much as Al Gore. I didn’t find huge differences in their intellects. Bill Clinton, on the other hand, is an extraordinary human being. People talk a lot about his flaws, but he is truly gifted. Very few people have Bill Clinton’s intellect.
Playboy: Did you get to know Clinton personally?
Ellison: Absolutely. I went nightclubbing with him recently in New Orleans. There is no better person. If you were able to pick a president in the past 50 years to hang out with, he’s the one.
Playboy: How successful was his presidency in your view?
Ellison: It’s appalling to me that the Democrats, supposedly the champions of Latinos, were against Nafta. Clinton pushed it through, and it’s behind the economic miracle that’s occurring south of the Rio Grande. He can be proud of that. He contributed enormously to solving the 500-year-old problem in Northern Ireland. It may lead to a successful resolution. The 2,000-year-old problem in the Middle East seems to have exceeded even his enormous talent.
Playboy: What’s your take on Senator Clinton?
Ellison: I know Hillary, but not well. She’s incredibly bright but an extremely different personality from Bill.
Playboy: Would you support her for president?
Ellison: It depends who she were running against. If she were running against Colin Powell, I would support him.
Playboy: We know what you think of Bill Gates. On the other side, who are the business leaders you most respect?
Ellison: What Jack Welch did with General Electric was astonishing. Andy Grove at Intel. Steve Jobs. Steve reached out with one strong arm and kept Apple from falling into the abyss. People ask how much difference one person can make. Steve Jobs answers that question. Apple under Gil Amelio, with many of the same people underneath him, was a disaster. Winston Churchill once referred to the British army as “lions led by donkeys.” You can have lions throughout your organization, but it’s a disaster if donkeys are on the top. No leader by himself can completely make a company, but a leader can destroy it.
Playboy: You’ve been accused of being cavalier in firing people, bullying them.
Ellison: The opposite is true. When Oracle ran into trouble in 1991, we’d had people in place for too long. We should have changed management long before we did. Until 1991, I was reluctant to fire anybody. It was painful. I don’t know anybody who likes to fire people.
Playboy: But you have and do.
Ellison: One of the most horrible things I’ve ever done was lay off 500 people at Oracle in 1991. I couldn’t come to work. It was traumatic. Because of mistakes I had made or was complicit in, 500 people were losing their jobs. I don’t know anyone who likes to lay off or fire people, and I can’t imagine being cavalier about it. However, if by removing one person you can keep from laying off a thousand the following year, you have to do it. When we’re paying people tens of millions of dollars in a combination of stock, salary and bonus—sometimes hundreds of millions of dollars—and they’re doing their jobs badly, they are putting the company at risk. It could lead to a situation where we have to lay off thousands of people. I’d much rather get rid of one executive vice president.
Playboy: Where does your tyrannical image come from?
Ellison: From a handful of people we fired. Sometimes they sue, sometimes they say bad things.
Playboy: Do you admit you sometimes rule by bullying?
Ellison: No. You can’t rule a successful company by bullying. For the 25 years I have been at Oracle, the only group I have consistently run is engineering. You can’t bully those guys. If I try to bully those guys, they’ll giggle, get up and leave and get a job that pays 20 percent more in half an hour.
Playboy: What would you say—one CEO to a former CEO—to Ken Lay of Enron?
Ellison: Enron is an interesting problem. Enron didn’t get into trouble because of its energy-trading business, but because it tried to go into all these different businesses—power plants in India, broadband and many other things. Since they were successful in energy trading, they naturally assumed they’d be successful at everything. I know that disease—had it once myself. “My God, I’m one of those gifted people who’s good at everything.” No, the only thing you’ve proved is that you’re good at one thing. The problem was initially that they thought they had the Midas touch. Then when problems began appearing, they thought if they could conceal them, everything would get better. There was probably never any criminal intent. I don’t know for sure, but Enron smells much more like managerial delusion than criminal behavior. The real sad casualty is Arthur Andersen, which is a great firm. The greatest loss of wealth was among the executives at Enron.
Playboy: Tell that to the employees who lost their retirement and savings invested in company stock.
Ellison: There are many lessons. The biggest is that you shouldn’t be able to have all your retirement money in your company stock, even if you do it voluntarily. Yeah, Ken Lay lost a lot more money than everybody else, but Ken Lay had a lot of money to lose. A lot of people lost a little bit of money, but that was the money they were depending on for their retirement. That should not be allowed. We have an employee stock purchase plan, but retirement money should be separate and it should be in much less risky vehicles than company stock.
Playboy: In 2000, you were, for a while, the richest man in the world.
Ellison: Yeah, for a few weeks.
Playboy: What did that mean to you?
Ellison: It’s kind of irrelevant. I have joked that I wished I’d passed Bill Gates on the way up rather than having him pass me on his way down. But what really means a lot to me is Oracle passing Microsoft. If we can accomplish that, it will be huge. It’s not about who wins the batting title; it’s about who wins the World Series. I want Oracle to become the largest and most valuable software company. It’s hard to go from number two to number one. It’s like heavyweight championship boxing. People get better and better as you move up the ranks.
Playboy: Steve Jobs once said you were the poster child for the outrageous CEO. Is that something you take pride in?
Ellison: It might be safer and easier saying what’s safe and expected. I’d rather speak my mind and do what I want to do. I know some people are offended by the fact that I’m spending a lot of money trying to win the America’s Cup. I could have given all that money to charity. Well, I do give hundreds of millions of dollars—lots and lots—away. Once I was thinking of buying a second car and I was in a moral dilemma. Should anyone have a second car when there are people who are hungry? If I didn’t buy the second car, I could have taken the $5,000 or $10,000, whatever it was, and given it to people to save their lives. If you have a second car, it’s OK for me to have a boat. All of us who live in this country consume much more than we need, but it’s OK. We’ve earned it.
Playboy: What does it say about someone, whether it’s you, Ted Turner or Richard Branson, when he becomes obsessed with winning the America’s Cup or being first to sail a balloon around the world?
Ellison: We just enjoy the competition. We’re endlessly curious about each other and ourselves. We’re curious about our limits. Can I win the Pulitzer prize? Can I finish that novel? I’m satisfying my curiosity to find out if we can engineer a boat and sail that boat well enough, better than anyone else in the world. I think I can, but I don’t know.
Playboy: How important is the risk?
Ellison: I have done things that are high risk. I sailed Sayonara in the Sydney-Hobart race in 1998 in a hurricane. Many boats were sunk and many sailors died. No one enjoyed being in that race. Everyone wished there were a magic button we could push to get out of that hurricane.
Playboy: Did the experience make you more cautious?
Ellison: Absolutely. I was asked if I was going to race in that event again. I said, “I’m not going to do this race again if I live to be 1,000.” Then I thought about it and said, “No, if I live to be 1,000, I’ll do the race again.” I’ve surfed in storms in Hawaii. I’ve broken my neck surfing in storms, which was really stupid. I was out with a couple of Hawaiian kids surfing on a huge wave, which was just dumb. While bike racing I broke my arm in 28 places.
Playboy: Is there a corollary between the ability to succeed in business and being drawn toward risk?
Ellison: No. I would say it’s curiosity. George Mallory was wrong. When he was asked why he climbed the mountain, he said, “Because it’s there.” It was because he wondered if he could be the first.
Playboy: What upsets you?
Ellison: I was upset when a young lady accused me of doing things I didn’t do. People assumed she was telling the truth.
Playboy: You are referring to the case of the former Oracle employee who alleged you tried to force her to have sex.
Ellison: Yes, who later went to jail for a year for perjury and for falsifying evidence.
Playboy: What happened?
Ellison: We were dating and she said in a claim that I forced her to have sex with me. Then she immediately changed her statement to say that she actually refused to have sex with me and that’s why I caused her to be fired. I was absolutely horrified by the first statement. I never forced her to have sex, and I never caused her to be fired. It was a scam. She was caught sending a false e-mail note. It was premeditated.
Playboy: Is this an example of the downside of your fame and wealth?
Ellison: Yeah. No one thinks of me as a victim. But I was. I’ll never forget riding up the elevator at Oracle alone with a woman—the way she looked at me. That was the worst thing that’s happened other than nearly dying in that stupid hurricane. No, the accusation was worse.
Playboy: As a result, are you cautious about who you’ll spend time with?
Ellison: No. Again, it’s “Surely the terrorists will have won.” Maybe I should be more cautious than I am, but I’m pretty good at detecting people’s motives. How can you believe me after I went out with that woman? I knew I was getting myself into trouble with her. I knew she was different. She was evil.
Playboy: Was it that you didn’t trust your instincts?
Ellison: I’d never met anyone like that before. I’ve run into people who are selfish, self-serving, calculating—all of those things—but rarely do you run into a person who is genuinely evil. I found her intriguing. I knew something was off, but, boy, I didn’t detect it. I can detect when there’s a quid pro quo expected. But this was something I had no experience with.
Playboy: Have you run into evil people in business?
Ellison: Absolutely not. Tough business people but not evil.
Playboy: Is winning in business like winning in a game?
Ellison: Two analogies are always used to describe business. One is military—that it’s a war—and the other is sports. Neither works. It’s much more important than a game. It’s much less important than a war. Of the three things I’m working on now, cancer research is vital; business is important but not vital, and the America’s Cup is just fun.
Playboy: You were once asked how much of your wealth you would pay for your biotech company to successfully beat cancer.
Ellison: All of it. It’s a simple calculation. Which would you rather have as an outcome of your life: Be the richest person on earth or be the guy who cured cancer?
Playboy: You’ve also said that part of the motivation has been to prove your adoptive father, who criticized and doubted you, wrong. Is that accurate?
Ellison: When you don’t have a close relationship with your parents, it forever colors your personality. In theory, parents grant their children unconditional love. Other love has to be earned. If you don’t get unconditional love early on, you have a great void in your life. Depending on how you adapt, you can get very good at trying to earn the love of others. Bill Clinton is like me in that regard. He had a difficult relationship with his father. Another is Winston Churchill, who had virtually no relationship with his parents. Without love from your parents, the love of others becomes a large part of your life. You either learn how to get it or you try to get it through your achievements.
Playboy: Does it work? Do the achievements fill the void?
Ellison: Yes and no. My sister is a psychologist. Once she asked me an interesting question. “What’s more important to you: to be loved or to be respected?” I was in my midteens. I said it was easy to answer. To be respected. She said I was wrong. I got really annoyed with her. But then I paused for a second. I thought, Ahh. I just think it’s more important to be respected. I’m concealing the fact that it’s really more important to be loved. Of course she’s right. We’ve got to find that someplace in our lives. It’s why my extended family is very important. And my relationship with my children is especially important to me.
Playboy: Are there successful people who had happy childhoods?
Ellison: There’s a great line in Tim Rice’s Chess about Evita: She had all of the disadvantages she needed to succeed. If it doesn’t kill you, it makes you stronger. Unfortunately, it kills an awful lot of people.
Playboy: How important was it to learn about your birth parents?
Ellison: For a long time I would rather not have known. Then I got curious enough and strong enough. I was willing to take the emotional risk of finding out about my biological origins. The interesting thing about discovering my biological family was the realization that I didn’t belong to them. I belonged to the family that raised me. It eliminated all ambiguity.
Playboy: Was it in some ways disappointing to complete the search?
Ellison: No. And it was not nearly as emotional as I expected.
Playboy: Did the parents who raised you live to see your success?
Ellison: My father saw some of it and he was pretty surprised.
Playboy: When you look back on it, do you feel it was just a matter of lucky choices that led you to found Oracle?
Ellison: I’m sure there’s a huge portion of luck. Without being in California, without being in the United States—this would not have happened in Russia.
Playboy: Did you go to California specifically to work in technology?
Ellison: No, because it was the Sixties.
Playboy: Did you wear flowers in your hair?
Ellison: I didn’t wear flowers in my hair and I never wore beads.
Playboy: Beads or not, were you affected by the Sixties counterculture?
Ellison: I loved the music, but I thought the make-love-not-war thing was an unusual theory; that the best way to stop the Vietnam War was to have sex. I thought the clothes were kind of odd. I had sideburns, but I’m not very good at being a conformist. In the Silicon Valley, where everyone wore jeans and T-shirts, I wore suits. People thought I was crazy, but I think suits look better. If the majority is listening to Creedence, I probably won’t. If you’re really different, like Galileo, and you say, “No, I don’t think the Earth is the center of the universe,” you get yourself into a lot of trouble. We hate people who are different. We hate innovation. We hate new ideas. It worked badly for me in school and it worked badly in my peer groups. The teachers said that things were true that I didn’t think were true, and I would argue with them. Everyone was wearing their hair long and I was wearing mine short. Not conforming caused terrible problems for me at school, but it was magic in business.
Playboy: How so?
Ellison: The only way you can succeed in business big-time is to find places where conventional wisdom is wrong—to find errors in the fashion. You cannot innovate by copying. You can’t innovate by wearing your hair the same as everybody else.
Playboy: What’s an example in your business life?
Ellison: We were the first company to decide to base all of our software on the Internet, not this Microsoft client server or anything like that. Everyone said we were crazy. There even was a revolution inside the company; half of the senior executives wanted me to lose my job because I was putting the company at risk at a time when the customers were demanding client server systems. Someone always has to be first. The first is always saying, “I’m right, and everyone else in the world is wrong,” and we call that arrogance of the highest order. But unless you’re willing to diverge from conventional wisdom, you won’t do anything new. Thinking outside the box is tough because the box has very strong walls, floor and ceiling. But it’s the only way to win big.
Playboy: At a start-up, new thinking is much less risky. But at a company the size of Oracle, there are lots of jobs, never mind investors’ cash, at stake.
Ellison: Yeah, the stakes are much higher, but once every five years you have to find some error in conventional wisdom and do it differently. We were founded on that type of risk. We were the first company that thought a relational database could be commercialized. I read the IBM white paper about this and saw no reason why the idea wouldn’t work. I thought, We can beat IBM to the market with their own idea.
Playboy: How did you explain to a lay audience how a relational database was different from the databases that had preceded it?
Ellison: With a relational database, you can ask any kind of question of the data you have compiled. Which department has the highest average salary? Which department had the highest average salary six months ago? Any question you can think of. Before that, you often couldn’t ask those questions. You’d have to write a complex computer program to do it, but often you couldn’t answer the question even if you took the time to write the program. The existing databases could never run a bank, insurance company or an intelligence agency; they were too slow. We figured out ways to make it work and run faster than the then-popular commercial databases. The relational database is now the standard. Now no one would dream of building a database that wasn’t a relational database.
Playboy: What’s your next move that people will say is crazy?
Ellison: We’re in the middle of it. We have what we call an applications suite. In the past, you would rely on different companies for different applications: Siebel for sales force automation, Epiphany for marketing, SAP for accounting, 12 for supply chain. The idea was that you should buy all these different applications and stitch them together. The stitching together is what interested us. We think it’s a nonsensical idea. It’s as nonsensical as trying to build a car out of a transmission from a Cadillac, an engine block from a Porsche, pistons from a BMW. It makes no sense. We think all these parts—your marketing system, your sales system, your support system, your accounting system, your supply chain system, your HR system—should be engineered to fit together. It’s a radical idea. We call it the E-Business Suite, and we’re the first to talk about it. Everybody—IBM, SAP, Siebel—says we’re crazy. They say customers don’t want to depend on one company. They can give a million reasons why we’re crazy. They told us we were crazy for moving everything to the Internet, too. They told us we were crazy when we built the first commercial relational database. There are two possibilities when people say you’re crazy: You’re first with a really wonderful idea that’s going to make your company is possibility one. Possibility two? You’re crazy. [laughs] Unless you hear you’re crazy every once in a while, you’re doing something wrong.
Playboy: At what point do you know an innovation is going to work?
Ellison: When everyone else comes onboard. Microsoft goes through four stages of stealing someone else’s idea. First they say that what you’re doing is the stupidest thing they ever heard of. Stage two: “Well, there are some interesting pieces in it, but the idea as a whole isn’t very good.” Stage three is: “We have exactly the same thing, but ours is better.” Stage four: “It was our idea in the first place.” We saw it with relational databases and Internet computing, and we’re watching it again now in E-Business Suite.
Playboy: Have you been wrong?
Ellison: Not at a time when we bet the entire company on a new idea. However, I’ll never forget one of the worst mistakes I ever made. We had an Oracle server that ran on top of MS-DOS. We decided not to release it because OS2 was coming out. As it turned out, OS2 came out and was kind of irrelevant. We lost a lot of the server business to Novell at the time. We had followed the conventional wisdom. Everyone waited for OS2 since Microsoft and IBM told us to wait for it. We got creamed by following conventional wisdom.
Playboy: Another mistake was in 1991 when the company crashed. According to reports, you were out sailing instead of minding the store.
Ellison: I just wasn’t very good at minding the store. I wasn’t a very good CEO. This naive, inexperienced management team led by yours truly did a terrible job. I didn’t even own a boat 10 years ago. As a result I got much more involved in the business. I learned.
Playboy: How do you explain all your success?
Ellison: It’s based on our products, but that’s not enough. Still, most of the people who buy our database are people who already have our database. What can the salesmen say to somebody to get them to buy a product that they use every day if they don’t like it? We live and die on our products. Maybe 99 percent of Fortune 500 companies use our database. IBM. Microsoft. Virtually everybody.
Playboy: Bill Gates?
Ellison: We do MSN’s billing system.
Playboy: You said once you would stay at Oracle four more years. That was five years ago.
Ellison: There are days when I feel like I’ll leave now, thank you. But no. It’s very hard for me to walk away from Oracle without knowing how the story is going to end. We’re in the middle of the greatest consolidation of the technology industry ever. People are arranging themselves at the table; it’s not obvious who is going to sit at the head. I want to know what’s going to happen. I feel as if we’re only halfway through a novel.
Playboy: Is there an ending to the novel?
Ellison: Absolutely. Life is short and there are lots of interesting things to do. Unlike Gates, I have lots of other interests. I own a cancer research company [Quark] in Israel. I have a pretty good time. The best thing about being a minor celebrity is that I get to meet all sorts of interesting people.
Playboy: Have you thought of running for office?
Ellison: If I thought I could improve education in California, it would be immoral for me not to. But God knows I don’t want to be in Sacramento, and I am pretty sure I wouldn’t be elected, so it works out well.
Playboy: Instead, you’re getting married—again.
Ellison: I’m engaged, and I have two children, a 19-year-old son and a 16-year-old daughter. More? That’s up to my fiancée. So will you please set the record straight: I am engaged to Melanie Craft. The New York Post said that she doesn’t exist. They wouldn’t have had to do a lot of research to find out she exists. She’s been seen by a lot of people. She is a writer and they said that I wrote the book that she published. They said that it was designed to keep women away—like I have this huge problem.
Playboy: As a veteran of three marriages, do you feel you can do it better this time?
Ellison: There’s no question I can do it better. Can I do it worse? I don’t think so. Impossible.
Playboy: What have you learned?
Ellison: Some people may think their partner is really an extension of themselves. I had an irrational standard of behavior for myself. If she didn’t conform to the same standard, I would become annoyed. I’ve got to keep in mind that she is she and I am me. I shouldn’t seek to control her anymore than I would want her to control me.
Playboy: How about as a parent—are you better than your parents?
Ellison: My kids will tell you I torment them with attention.
Playboy: According to your story, they won’t be great business leaders.
Ellison: But they will be happy people. And that’s much, much nicer.