Founders - #124 Larry Ellison and Oracle

Starting point is 00:00:00 And what of Larry Ellison the man? Although much of my time with him coincided with a period of adversity for Oracle, I never once saw Ellison downcast. His unquenchable optimism and almost messianic self-belief never faltered. It is this aspect of Ellison that many people who either don't know him or know him only a little find most objectionable. For them, he is at best a bombastic showman, and at worst a false prophet and even a self-serving liar. Yet I am more convinced than I was at the

Starting point is 00:00:33 beginning of my journey with him that Ellison is an extraordinary person, quite different from, and infinitely more interesting than the caricature beloved of the media. He's funny and entertaining, but also highly serious, always interested in ideas and eager for new ones. Above all, Ellison is intense. There's a restlessness about him. Much about Ellison is paradoxical, even contradictory. He's enormously vain, intellectually dominating,

Starting point is 00:01:12 and irrepressibly extroverted. But he's also shy, has relatively few close friends, and is in constant need of the emotional reassurance that much of his life had been lacking. He is determinately youthful, but he is never far from thoughts of mortality. He detests vulgarity and yearns for simplicity and naturalness, but he also derives straightforward pleasure from owning hugely expensive material status symbols. He desperately wants his wealth to do some good in the world, but he recoils at the very idea of altruism. He is ultra-confrontational in business, but he goes to almost any lengths to avoid confrontation on a personal level.

Starting point is 00:01:50 He either delegates to the point of detachment or is obsessively controlling down to the last detail. He prides himself on never losing his temper, but he is manifestly driven by overwhelming passions. Ellison is nothing if not complicated. Aren't we all? All right, so that is an excerpt from the book that I'm going to talk to you about today,

Starting point is 00:02:12 which is Soft War, an intimate portrait of Larry Ellison, an oracle, and it was written by Matthew Simmons. So the idea to study Larry Ellison actually came from a misfit. And I found him so interesting that I'm going to do a two-part series him. Now I am still in this, the middle of this multiple part series on the early automobile pioneers. But I'm waiting on two

Starting point is 00:02:34 books to arrive. So in the meantime, I figured, hey, let's let's learn from let's see what Larry Ellison has to teach us. So let me tell you right up front, this, this is not like a typical biography. It's like Larry annotated this book. And so this is what the author has to say. He says, an innovative twist was that Ellison would have the right of reply or commentary within the book, which he could either use to express a counterpoint to any of my conclusions that he disagreed with, or to amplify things that he thought were important. Neither of us would be able to alter the words of the other.

Starting point is 00:03:06 So at the end of every chapter, there's a series of footnotes written directly by Larry Ellison. So I think you're going to enjoy this podcast because the bulk of the highlights come from Larry talking directly to us, which I think is an interesting and unique idea. So I'm going to start with his early life. This is Larry telling us the difference between him and his much older adopted father. Some background for you to know. His father probably didn't want to adopt him. So his name is Lou Ellison. Lou's second wife was Larry's biological mother's aunt. I know that's a little confusing. And we're going to see the

Starting point is 00:03:45 the contrast between him and his adopted father and right from the very beginning we see that larry is a is a misfit for real so it says part of the problem was that larry and lou had very different attitudes towards authority ellison says he believed that our country's officials and authority figures in general were always right and should be obeyed without question. The governor, the mayor, the police, they're in their jobs for a reason, he'd say. They know things you don't. I couldn't accept his blind faith in authority figures. I had the opposite point of view.

Starting point is 00:04:19 I questioned everything. It's like Mark Twain says, what is an expert anyway? Just some guy from out of town. This lack of respect for authority made it just about impossible for me to get along with my father. So I have a theory. Larry, as you'll come to know today, is extremely competitive. And I have an idea where this competitive nature came from. And I think it's because of the abuse that he suffered from his adopted father.

Starting point is 00:04:46 As I was reading the book, I also watched a few documentaries on Larry Ellison. And there's a quote from that documentary. I was taking notes on it. There's a quote from that documentary that I think I should tell you right up front because it's so important to understanding why Larry makes the decisions he makes. So this is a direct quote from Larry talking. He says, the single most important aspect of my personality is my questioning of conventional wisdom, my doubting of experts just because they're experts, my questioning of

Starting point is 00:05:16 authority. Now, this is a very interesting words he's going to use here. While that can be very painful, those are two interesting words, in terms of your relationship with your parents and teachers, it is enormously useful in life. Okay, so that leads me to this theory that this might be the root cause of Larry's extreme competitiveness. And that is not an understatement. It says Lou Ellison concluded early on that Larry's failure to comply with authority would be his undoing. He couldn't, and this is Larry saying, or excuse me, this is the author describing this. He could never resist any opportunity to remind his son that he would amount to nothing. So first of all, what a terrible thing to say to a kid. What kind of monster tells the person they're raising, whether it's their biological son or not,

Starting point is 00:06:10 hey, you're going to be a loser, kid. You're never going to amount to anything. And then the second thing I was thinking, we talked about this idea that Charlie Munger talks about, how knowledge compounds just like money can compound, right? And while I'm reading this book, I'm also watching, when I was a kid, I was a huge Michael Jordan fan. So there's this documentary that's occurring at the time I'm recording this, and it's called The Last Dance, and it's a multiple part series on Michael Jordan. And when you study the life of Michael Jordan, you realize, you know, he's extremely competitive.

Starting point is 00:06:41 He says something, it's something that he cannot, he cannot turn off. In the documentary, he talks about, hey, do you have a gambling problem? He's like, I don't have a gambling problem. I have a competitive problem. And so as I'm watching, I'm reading this book on Larry Ellison, and I'm watching this documentary on Michael Jordan, I realized if Michael Jordan sold enterprise software, he'd be Larry Ellison. There's a lot of similarities that we'll see. And it's interesting. I had that we'll see. And it's interesting. I had that thought multiple times. And towards the end of the book, he makes the comparison to extreme competitiveness of Michael Jordan. He's actually comparing his best friends with

Starting point is 00:07:13 Steve Jobs. And he actually compares that to Steve Jobs. But I think he could also, it definitely also applies to Larry. So let me continue this idea that he has that spread throughout the book. And this is Larry on confusing obedience with intelligence, or another way to put this is why he'd rather be a cat than a dog. So first there's this quote, and he says, I always thought it was interesting how teachers, coaches, and other authority figures value obedience more than knowledge or skill, and effort more than results. They just love being the boss. So in this section, he adds the following footnote, which I thought was very interesting. So I'm going to read that to you. He says, people regularly mistake obedience for

Starting point is 00:07:56 intelligence. He could also be saying my adopted father mistook obedience for intelligence. That's why we think that dogs are more intelligent than cats. We measure intelligence as the speed at which animals learn to do what we want them to do. A dog will fetch a stick every time you throw it. A cat will look at you and wonder, if you wanted the stick, why'd you throw it in the first place? Get it yourself, idiot.

Starting point is 00:08:20 In reality, cats and dogs have similar intelligence levels, but different survival strategies. This is the most important part of this whole section here. The dog is dependent and must please to get regular meals. The cat will mooch off his human roommates, but if the food runs out, the cat can survive on its own. I love golden retrievers, but I don't want to be one. I'd much rather be a cat. So right from the very beginning, we're seeing a huge aspect of his personality.

Starting point is 00:08:48 And this continues. It's going to be applied later on. With Ellison, I would say the majority of the people that we study in the podcast are not fans of formal schooling. If you make them sit down and try to learn something they are not interested in, they will rebel. But if they have the freedom to learn something they're genuinely curious about, then there's no stopping how much time or effort they will dedicate to learning. I think it's very important to separate the idea of formal schooling from your own personal curriculum or your own personal research and development. So we see Ellison in

Starting point is 00:09:23 college saying, hey, he's a college dropout. He says, I didn't like exams. I recall one exam where I just sat there for an hour, unable to begin because I was so angry that I had to spend the next three hours writing answers to questions I cared nothing about. I never had the discipline to do things I didn't like. I had such a short attention span that it was simply impossible for me to finish anything. So I'll continue on this dislike of formal schooling. Ellison's insistent questioning of authority was that his was was the reason that his grades at school were usually poor. So he explains this. I didn't have I didn't respect or like most of my teachers. I didn't think they were very smart. And half the time they didn't seem to know what they were talking about. They constantly made mistakes and I enjoyed pointing them out.

Starting point is 00:10:08 So again, this is a young, brash Ellis and he learns over time. He's extremely smart person. Obviously he learns over time to not do this because he's, he's very interested in getting along with, with, uh, felt his fellow humans, except his enemies. He's like, I'm going to be nice to everybody, but I don't think it, I'm going to be nice to everybody, but I don't think it's smart for me to be nice to my enemies. He says, they didn't like that at all, but I did. When somebody told him, think about how extreme his distaste for this is.

Starting point is 00:10:37 He says, when somebody told him that he would look back on his school days as being the best years of his life, he replied, if that's true, I'm going to kill myself right now. Now, that's dislike of formal schooling. That doesn't mean he's very passionate about, and it's very obvious, like how deep his knowledge is on a broad range of subjects when you hear him speak. So it took trial and error of realizing, hey, there's a bunch of subjects I'm not interested in. And then he found two that he was extremely interested in, and that was physics and programming. So this is on his love of physics. And then his desire, he wanted to be judged on his work, not his education or how long that it took him to do his work. So he says, I was

Starting point is 00:11:16 intrigued by physics because it seemed to answer the most basic questions about our world. Like a lot of young people, I was looking for answers. As part of a physics course, he had to learn basic programming. So now he's talking about how did he learn programming. I just read the book. It was logical and I was good at logic. I started doing contract programming. So this is some of his early jobs and how he was able to feed himself. My short attention span didn't work against me because I could get programs written very quickly.

Starting point is 00:11:44 I ended up making quite a lot of money and I only had to work a few days a week. It was fun and it was easy and nobody cared if you were a PhD or you never finished high school. Either you could do the job or you couldn't. I love that. And now we're going to see more examples of Ellis and the Misfit. I would say as a general rule, he has an extreme repulsion against conformity and extreme desire to be able to live with the results of his own thinking so it says for ellison discovering that he was good at programming was with a validation of his intelligence and liberation from what he regarded as absurd conventions there's a quote from ellison people

Starting point is 00:12:21 teachers coaches bosses he repeats this over and over again throughout the book, by the way, want you to conform to some standard of behavior they deem correct. They measure and reward you for how well you conform. If you arrive on time, you dress appropriately, you exhibit a properly deferential attitude, as opposed to how well you do your job. Programming liberated me from that. I could work in the middle of the night. I could wear jeans and a t-shirt. I could ride my motorcycle to work. And I'd make more money if I could solve the problem faster and better than anyone else. Now, something new about Ellison, there's like two, there's in many different domains, there's two, his life is divided into two parts. And at the beginning,

Starting point is 00:13:05 he's optimizing just for freedom. He doesn't want anybody else to tell him what to do. He wants free time. He wants to work as little as possible, be able to pay his bills. I don't think he was really set out to be rich at that time and just do basically work as he sees fits and spend his time as he desires, right? And then the second half is when he's running Oracle and he realizes it's like a switch that flips where he dedicates almost every waking hour to this extreme competitive goal of his, which is I want to have the number one software company in the world. And we're going to talk a lot about that today.

Starting point is 00:13:44 All right. So in this part of the story, though, we're still in his early jobs. And this is when he's optimizing for freedom. Okay. So he says, basically, programming gave me the freedom to screw around through my 20s. All I knew was I was capable of short bursts of energy. So I found jobs working on the weekends as an IBM systems programmer. Most people didn't want to work weekends, so I had no trouble getting these jobs. Monday through Friday, I'd be hiking or rock climbing in Yosemite, kayaking, or on a long bike trip down the California coast. I was having fun.

Starting point is 00:14:17 Also, he mentioned something, I'm going to go into more detail later, about he's only capable of short bursts of energy. I would want to compare and contrast for a second Ellison's approach to work with the approach that we've seen with most of the people I covered for the early automobile pioneers, I would describe, Ellison describes himself as a sprinter. So he works really hard, and then he rests, takes a break, works really hard, then he rests, takes a break, right? And actually he applies this barbell strategy, this no messy middle strategy, which I'll talk about in a little bit to a lot of different domains. But I would say that's in direct contrast to most of the early automobile pioneers. They're grinders. They wake up in the morning, like we just went over Albert Champion. He wakes

Starting point is 00:14:59 up, he works out, he works till after that, and then he comes home and has dinner, works some more, goes to sleep. So, again, it's just another way that there's no one right way to accomplish what you want to accomplish. It's really has to be tailor fitted to who you are as a person and where you feel you're like, what route is the best for you? OK, so now it's very fascinating that he actually gets married really young, early 20s, and he gets divorced. And his wife leaves him because she kind of describes him as lazy. So it says, the breakup triggered all sorts of feelings of self-doubt in Allison. My father told me that I would never amount to anything, and now he seemed to be right. I knew I could earn a living as a computer programmer, but where was my life going?

Starting point is 00:15:45 And he's in his early to mid-20s when this is happening. I think it's very natural, especially at that age, to question. Assuming that nothing tragic happens to you at that age and stage in your life, you have a lot more life ahead of you than behind you. And so there's a great degree of uncertainty. And I think what he's experiencing is just universal to almost all humans. Like, what is my life going to be? So he said, I wondered if I could ever be disciplined enough to be anything more than a technology peace worker. Now, he starts trying to take work a little more seriously. he gets a formal job. And it's really important what happens at this job, because Ellison comes to the realization, you know, he's raised by a person that says, respect authority, even if his natural inclination is like, no, I'm

Starting point is 00:16:33 not going to do that. But once he gets a real serious job at a quote unquote serious company, he realizes, oh, there's no such thing as adults. No one knows what they're doing. So if no one knows what they're doing, I might as well do what I feel is best. She says, for the first time, Ellison had a title, Vice President of R&D and some seniority. And this is Ellison describing this experience. I'd always believed that at the top of these companies, there must be exceptionally capable people who make the entire technology industry work. Now, here I was working near the top of a tech company and those capable people were nowhere to be found. So let me interrupt my own point here.

Starting point is 00:17:07 Later on, I'm going to tell you many examples where he discovers the same exact thing in his own company, in Oracle. There's a lot of examples in the book. There's just a silliness to the way large corporations and large companies and large anything operate. And to me, I think that's extremely inspiring because it's like, remember that scene from Wizard of Oz where they finally revealed a curtain, like the man behind the curtain? That's everything. You'd be surprised how much stuff

Starting point is 00:17:35 is really just held together with duct tape. But from the outside, you're like, wow, look at these geniuses doing all this stuff. And the more you read biographies, the more you expose yourself to a multitude of experiences in life, like, oh, there's no adults. There's no adults. And he's realizing that right now. So let me go back to this point. The senior managers I saw there were conformist, bureaucratic, and very reluctant to make decisions. I gradually became convinced that

Starting point is 00:17:58 I was better at solving problems and making decisions than they were. Or at the very least, I was willing to make a decision to do something while they seem paralyzed by the endless analysis and fear of making the wrong decision ellison suddenly began to think that maybe he could run a company but he wasn't motivated now this is a crazy sentence because you think about you know today oracle is one of the largest companies in the world it's successfully survived for what 42 40 something over 40 years but he says but he wasn't motivated by either great ambition or the vision to do anything in particular and what's crazy is we're going to learn oracle started out as a side job a side

Starting point is 00:18:36 hustle having his own company would simply allow him to go uh to go on with his life but with more control over it and better rewards. So this is, he's starting to get this idea as he's working at this company. This is like, if I ever started my own company, like I could probably do this. What would I want it to look like? And so his first idea for his own company is like, well, it had to be small, right? I don't want to manage people. I don't, he says over and over again in the book, I never wanted to run a company. He doesn't really like running a company, which is also very, it's a very intriguing person.

Starting point is 00:19:07 This is why I'm going to read another book on him. It's bizarre in a good way. But anyways, his first idea is I'm going to have, it's going to be small. I'm only going to hire smart people and we're only going to work on things that won't take much time, which is really gives us an indication of his preferred method of working. So it says the ideal hard job is the one is generally perceived as being difficult, but can quickly succumb to a bit of cleverness. All we really needed were a few smart people

Starting point is 00:19:30 who could do these so-called hard jobs quickly and we'd make a lot of money while not working all that hard. That had been my favorite approach to work from the beginning. Now, around this time, he hasn't started Oracle. Now, Oracle goes through a series of names. The names aren't important, but this is really the beginning of Oracle.

Starting point is 00:19:49 He's working at this place called Omex. The job at Omex gave him his opportunity. Omex was preparing to put a contract out for writing the software for its mass storage system. So they're releasing this contract, and you could bid on it, right? So he tells the CEO, hey, I know some super programmers who could save the company a lot of time and money. Do you want me to ask them to put together a bid on the contract? The CEO says, sure. The team included him and two of his former colleagues.

Starting point is 00:20:15 The three of them formed a company. So it's called Software Development Laboratories. That's really going to be Oracle, okay? And they won the contract from OMEX. Now, here's what I found was very fascinating. Ellison would stay at Omex to design and oversee the project while Minor and Oates, those are the people he's working with, wrote the software. So in other words, Oracle started out as a side hustle. And now we go over what motivated Ellison to start Oracle. He says, when 34-year-old Larry

Starting point is 00:20:39 Ellison founded a little firm, his ambition was pretty much in line with his thus far fairly modest achievements, namely to avoid having to do unrewarding work for people he didn't respect. What motivated me was the desire to control my environment so I wouldn't have to do things I didn't want to do or spend time with people I didn't enjoy working with. So then for a while, he starts thinking, like he begins thinking about what kind of company do I want Oracle to be? And so he says, I wanted to get out of the consulting business. So that's what they're doing. They're bidding on contracts.

Starting point is 00:21:11 They're doing work for other companies. And he thought this was like, you know, we're super smart. We'll do it really fast and then we'll go hiking or we'll go kayaking. We'll do whatever we want. Right. He realizes, oh, this is the exact opposite. Like I'm spending way, I'm making a lot of money, but I'm spending way too much time. So he says, I wanted to get out of the consulting business. Consulting proved to be much more work than I'd ever imagined. My hard problems, cleverly solved

Starting point is 00:21:33 business model did not scale up beyond a few people, proving I was not nearly as clever as I thought. So I need to stop right there too. Something that makes this book refreshing to read is Larry's constantly saying, yeah, yep. Oh, this happened in the 90s? I was stupid. I didn't know what I was doing. Oh, yep, that's my mistake. Yep, I was an idiot. And he's very honest about his imperfections, which I think is very refreshing to read, as opposed to people that feel like I have to keep this air of perfection about me. So he says, we were making a lot of money, but we were working insanely long hours. The closest I got to Yosemite was the Ansel Adams poster on my office wall.

Starting point is 00:22:14 So we decided to abandon the consulting business and go into the software product business. A software product offered the ultimate leverage. Build it once and sell it over and over again. Now he comes up, the first product of Oracle is going to be this idea of a relational database, which at the time was just written about as theory in research. So they read a paper, they're like, we want to build software, we don't know what the product to build, right? So him and his partners, they start reading like research papers. And there was one guy at IBM at the time, and he was writing like theoretical papers on why relational databases could be commercially viable, right? So they're, but they're only doing the research. And the reason I bring this up is because I think Ellison hits

Starting point is 00:23:00 on a point that is so important that we've talked about over and over again, that he wants his first product. He wants his product in, in the design of his first product. You, the, it reflects Ellison's desire to do something that no one else is doing. And this is very counterintuitive for humans. People say, oh, that's really hard. No one's ever done it before. So let me go do something easier. But the problem is you're not the only one that arrived at a conclusion. So if it's easier, it's going to be very crowded. And then you have a lot of competition. You can't really stand out. Ellison's like, we're going to do something that's extremely hard because no one else is going to do something extremely hard and we'll be the only one doing it. So it says the opportunity was huge. We had a chance to build the world's first commercial relational databases in the 1970s, It says, and highly conservative IBM mainframe market. So we decided to build our database for the mini computer market.

Starting point is 00:24:06 I thought that relational was clearly the way to go. It was a very cool technology and I liked the fact that it was risky. Here's another aspect of his personality. The bigger the apparent risk, the fewer people that will try to go there. We would surely lose if we had to face serious competition. But if we're all alone in our pursuit,

Starting point is 00:24:25 all alone in the pursuit of our goal of building the first commercial relational database system, we had a chance to win. So they wound up succeeding, obviously. I'm going to fast forward. And this is where we see Allison had severe deficiencies

Starting point is 00:24:41 in the early days as the CEO of Oracle. He did not know what he was doing. He talks about it openly. He had to learn. And the process of learning is making a series of mistakes. So he says, Ellison thought that the most important contribution he could make to Oracle's success was to concentrate on making the product better.

Starting point is 00:24:57 He simply didn't regard himself as competent to concern himself with all the other things that a CEO is supposed to be responsible for. And so a huge part of what I'm going to, of understanding Larry Ellison's life is that Oracle had a near death experience. It almost went out of business in the early nineties and it was a direct result of the incompetence of his, of, of his abilities as a CEO, which makes it so fascinating that he had to learn to survive. And then that going through that hard experience allows him to build a company that is stronger on the other side of that. Before I get there, I want to pause and talk to you about his, there's a lot of quotes and anecdotes throughout the book about his personality. And I think knowing that before we get into not only the hard times

Starting point is 00:25:47 Oracle has, but then all of his, the end here is essentially just Larry telling us all the ideas he has that he learned through multiple decades of ups and downs building Oracle. All right, so here's his personality, the sprinter, not grinder I mentioned earlier. Although he always talks about technology and Oracle with passion and intensity, he didn't have the methodical restlessness that made Bill Gates so formidable and feared. By his own admission, Ellison was not an obsessive grinder like Gates. I am a sprinter. I rest. I sprint. I rest. I sprint again. Ellison had a reputation for being easily bored by the process of running

Starting point is 00:26:27 a business and often took time off leaving the shop to senior colleagues. Ellison is also his own harshest and most unrelenting critic. More about his personality. share them. I've begun to think that selling software is a secondary objective for Ellison. What is more important to him is to recruit believers. This is Ellison talking about his preferred desire to go after high risk situations. It is my nature to go for the high risk, high reward option. That's my cross to bear. When you're reading this book, you realize, hey, he's a little nutty. Definitely a little nutty. So he says, when Larry Ellison says that he honestly thinks Oracle has within its graphs to become the most important company in the world, he believes it. It's as if he knows that he shouldn't say such things.

Starting point is 00:27:40 But keeping something so exciting and so wonderful to himself would be unbearable. Yet when Ellison makes these statements, it confirms the opinion of many people in their belief that he's slightly crazy. Someone who has become so addicted to hyperbole that he inhabits an alternate reality. More about his personality, I think it's really important to understand why he does the things he does. Larry has to have an enemy. Larry's the most focused individual I have ever seen when he has something to beat. So that's why I tell you, he reminds you of Jordan, Michael Jordan, watching his documentaries on Larry Ellison. And he says, like, you know, most people say, hey, you know, the company goals to build the best products in the world. He says,

Starting point is 00:28:24 the company goals to be the number one company in the world. Right now, at the time of the documentary, he was the number two. And he's like, it's my job to become the number one. That's my sole focus. That's what I'm trying to do. And so he definitely looks at it as this almost zero-sum competition. Now, his second marriage also fails. He's been married, I don't know, like four times, something like that. But Ellison's reflecting on why his second marriage fails,

Starting point is 00:28:53 or why it didn't work out. And it tells us a lot about his personality. And again, this is just refreshing to say, hey, I was self-absorbed. He says, self-absorption will crush a young marriage. And I was completely absorbed by my own ambition. So he's running his own business at the time. I was totally immersed in making the business succeed. I neglected everything else. I'd arrive home around midnight most evenings. Nancy eventually tired of this routine and left.

Starting point is 00:29:21 She was the second wife I managed to drive away. The first left because I refused to work enough. The first left because I refused to work enough. The second left because I worked too much. Both cases were caused by my self-indulgent without compromise mode of living. That's a really interesting sentence. My self-indulgent without compromise mode of living. At least he's honest. My personal life had fallen apart

Starting point is 00:29:44 and work was the only thing left that mattered. So I worked even more until the hours of the day ran out. Another description of his personality, Larry Ellison is relentlessly optimistic, calculated contrarian, and shamelessly devoted to hyperbole. There's an employee describing Larry.

Starting point is 00:30:01 Larry was a lunatic, but a lunatic with a vision. But the note I like myself as, this is more Jordan-like personality. Jordan says in the documentary, The Last Dance, that he has a competition problem. He's addicted to it.

Starting point is 00:30:14 He says, Larry, Larry says, I just can't accept defeat until I've been carried dead from the field. More about his nutty personality. He says, I like to be doubted, but if people say you're nutty, you just might be nutty. So he says, I always feel good when everybody says I'm nuts, because it's a sign that we're doing something innovative, something truly new and different. On the other hand, when people say you're nuts, you just might be nuts. You got to constantly

Starting point is 00:30:42 guard against that possibility. You don't want people saying you're nuts too often. Once every three or four years is good. Any more than that and you should be worried because no one's smart enough to have a good idea more than once every three or four years. Personality. He reads history voraciously and tries to learn from it. There's a lot in the way Larry speaks that I think reminds me of Ben Franklin, his autobiography. Ben talks about that he had a lot of opportunities in life that opened up for him because his mind and conversation had been improved by reading. So there's a lot, Ellison has this habit of

Starting point is 00:31:15 supplementing his point with historical references, which I find very amusing. And it's also a good way to sell like the point you're trying to make, so let me let me give you an example of that um i'm going to read a section from the book but i'm going to tell you then and then i'm going to read his larry's footnote about this and you'll see an example of how he is constantly supplementing his points with historical references so first the author says a common criticism criticism of ellison is that everyone is wrong except him and then ellison responded, he says, sure, if you're the first to say something or do something that conflicts with popular conventional wisdom, then what you're saying is in effect, I'm right and everyone else is wrong. That's what

Starting point is 00:31:54 innovation means, being first. People never forgive you for being right too early. So that's in the book. Now this is his footnote that he adds to this section. So he says, if you speak out in support of small, unimportant innovations that fly in the face of widely held belief, I do it all the time, you are likely to be dismissed as stupid or arrogant, and that's pretty much the end of it. However, if you defend a really big idea that challenges widely held beliefs, you're likely to generate a mass of hatred, and you just might pay for it with your life. When Galileo defended Copernicus,

Starting point is 00:32:25 he was ridiculed, imprisoned, and then threatened with death unless he recanted. Charles Darwin cautiously postponed publishing On the Origin of Species and the Descent of Man for more than 20 years, but that judicious delay did not save him from vicious personal attacks coming from all ranks of contemporary society.

Starting point is 00:32:41 So obviously I'm a huge fan of history. I found this one of the most appealing aspects of reading the words of Larry Ellison. I thought it was very interesting. I think that's the right way to do it. Learn from history and compare and contrast to what's going on in your own life now. It adds a depth that I think is lacking with most people.

Starting point is 00:33:01 And I already said this, but this is the last section of the personality. And then we'll get into the early days of Oracle and Oracle's near-death experience. Ellison, by his own admission, had never really wanted to be a CEO. He never really wanted to run a company. So once Oracle gets up and going, his goals in life change. Remember, the original idea of Oracle was being a vehicle to provide him with a nice life, a reasonable amount of money, and plenty of time to goof off whenever he felt whenever he felt like that had quickly evaporated in his early 40s ellison was willing to say and do what was necessary to defeat oracle's rivals so there's a lot of back and forth because a lot of

Starting point is 00:33:38 people that went through this this near-death experience of oracle larry winds up firing so everybody has different opinions about what happened. I'm going to talk about the stuff that everybody agrees on. Okay, so Oracle almost runs out of cash. As far as we can tell, that's due to rising costs and late-paying or non-paying customers. So there's a lot. In this section, I want you to think about what we learned about Billy Durant

Starting point is 00:34:02 and why he was eventually removed from GM. So this is Oracle had a serious cash crisis, an ultra fast growing company that suddenly hit a wall. And this turned to a painful reverse that's that a painful reverse into something almost terminal. I'm just going to list off some of the things that were occurring inside the company that people seem to agree about. There was accounting irregularities as a consequence of rapid growth. Some believe it's because he promoted a CFO that had never been a CFO, didn't know what he was doing. Lack of central control. All the things I'm listing, think about this is GM under Billy Durant. This is history repeating itself. Or I guess you say human nature repeating itself. So accounting irregularities is a consequence of rapid growth lack of central control a far-flung empire of somewhat autonomous organizations

Starting point is 00:34:53 if the company had adequate cash at the time it would have been nothing more than a blip what made it a near-death experience was a lack of cash so that i think every single one of those characteristics was also present under gm uh excuse me gm under durant and we're also going to see allison makes the same mistakes that durant is so it says for allison a personal as well as professional disaster was unfolding he had borrowed heavily against his shares that had slumped to a point where he had faced the equivalent of a margin call and a great many people were only too happy to see him getting his comeuppance. His marriage to Barbara had broken up.

Starting point is 00:35:28 So this is the third wife now. And Bob Minor, this is his co-founder, who should have been his closest friend, wanted out. It was personal in another way for Ellison. His adoptive father had always told him that he would never amount to anything. I think this is the third time I've told you this. This is over and over again in the book.

Starting point is 00:35:44 It's clearly very important understanding what is driving this like psychopathic intensity that Larry Ellison has. His adopted father had always told him he would never amount to anything. My father said I would never succeed. He seemed that he might be right after all. But this is the most important point about this whole section. The reason I included it with you or for you rather, although he was clearly shaken and depressed, it didn't occur to him to give up. Yes, let's go.

Starting point is 00:36:15 All right. Ellison's elaborating more on this time. And again, this is what's refreshing. He says, what kind of CEO lets salespeople write their own contracts? I just didn't know better. So why would that be a problem? Well, he's like, I was an idiot. I ignored sales, just worked on product, right?

Starting point is 00:36:30 He says, sales is now responsible for oversight of its own deals, reviewing contracts and booking revenue without any interference from the corporate center. The consequences were myriad. This is so bizarre. Huge discounts were offered to induce customers to buy software they wouldn't need for years risks were taken in selling to companies that didn't have the money to pay their bills so they'd book it the accounting thinks oh look look we're doing so well but there's no money coming in exotic this this is insane listen to this exotic barter deals were entered into in one oracle was given a couple of jets by an Israeli aircraft company in exchange for software.

Starting point is 00:37:05 The hell are they going to do with the jets? And Allison commenting, going back, looking back, like more mistakes that he made. I was interested in technology. I wasn't interested in sales or accounting or legal. If I wasn't interested in something, I simply ignored it. He continues, I just wasn't paying proper attention to my job. I was doing only the things that interested in me. It was the same problem I had in school. But this happened in my 40s. I wasn't a kid anymore. The truth is that Ellison found almost everything about running a company

Starting point is 00:37:41 other than creating a vision of what Oracle's technology could do and driving product development to achieve it boring. Now, this is the results of surviving a near-death experience. Ellison's claim that he was incompetent is only half true. He combined arrogance and recklessness. So he's incompetent, arrogant, and reckless. To a degree that was very nearly lethal for Oracle. But there's an important part. He learned.

Starting point is 00:38:06 He's extremely intelligent. Now, there's two sentences that are extremely important. Let me read you the first one, and then we'll get to the second one. But against that, he built something so inherently resilient and valuable that both he and Oracle would have a chance to reinvent themselves.

Starting point is 00:38:20 He had to go through this, and as a result, anything that doesn't kill you only makes you stronger. It made him stronger. Now, here's the second most important part. How is he able to make through this and as a result anything that doesn't kill you only makes you stronger it made him stronger now here's the second most important part how is he able to make the company stronger he learned if you take a brilliant compulsive personality and you subject them to a learning experience they learn brilliantly and compulsively it's also gave him more confidence going through and surviving oracle's near-death experience made him stronger. It made him more confident that he could deal with challenging and uncomfortable situations in the future, which of course there was going to be more of these kind of situations in the future, as it says.

Starting point is 00:38:53 After Oracle's crisis, looking into the abyss and surviving, I felt emotionally strong enough to take a more realistic look at myself. This is what I meant about dividing his life in two parts. I was tired of striving to be the person I thought I should be. If I was to have any chance at happiness, I had to understand and accept who I really was. That required me to ask some questions about my past and live with answers regardless of what it turned out to be. I can divide my life into two phases. The first, where I was desperately trying to be the person I thought I should be. And the second, where I finally accepted the person

Starting point is 00:39:30 that I really am. The second phase has been much happier than the first. And this is the author's explanation of this section. In other words, to be capable of accepting the love of others, you have to first love yourself. Okay, so this part i would describe as oracle ad after almost death or ad i guess um and really in this section i'm going to be highlighting just larry's business philosophy this is uh the book is written in the early 2000s i think they were together from like 2001 to 2003 there about and this is where ellison is forced to reorganize oracle again and he realizes like the internet is where he's he's he's burning the boats which is something that he recommends we do constantly he's burning the boats and he's reorganizing oracle around the internet he

Starting point is 00:40:18 thinks that uh he has an insight that you know at the time people think oh the internet's gonna be great we're gonna be able you know maybe at the time people think, oh, the Internet's going to be great. We're going to be able to maybe watch some videos, maybe go shopping. And so Ellison's like, no, no, no. The Internet's going to exponentially increase the importance of databases. And that's exactly the main product of Oracle, right? And what I would say is his edge here is that he was knowing what could be true before anybody else. So let's go to the book for that. What happened was that Ellison had understood better than anyone the potential impact of the internet on the enterprise computing

Starting point is 00:40:49 in general and on Oracle in particular. While the technology analysts confidently predicted the maturing of the database market, meaning, oh, it's saturated, right? Ellison, Ellison's like, no, you're out of your mind. The market's going to be 10x larger than it even is now. Maybe 100x, whatever the number is ellison realized that the internet would exponentially increase both the number of

Starting point is 00:41:08 database transactions and the number of people who would interact with oracle's databases that would mean more license growth than the analysts had ever dreamed of this is a way of thinking about his goal for oracle at the time and why he why he went all in on the internet his rationale was simple oracle could never be hoped to be the number one in enterprise applications as long as client server prevailed it was always fated to play set faded to play second fiddle to sap which is a larger competitor at the time by getting to the internet first ellison would force oracle competitors to become followers so he winds up this is we live in the world that Ellison's predicting. He's like, the software's not going to run on your computer.

Starting point is 00:41:48 It's going to run in the cloud. And so SAP, you're installing it on your computer, but what happens is companies have thousands, maybe tens of thousands of computers. He's like, this is stupid. It's clearly better to put all that complexity hidden from customer's view and let us manage it. So he winds up being correct, but at the time it was extremely controversial and so he's gonna and he gets a lot of pushback on this but then we see ellison ellison tells us

Starting point is 00:42:14 his core business philosophy and he says you can't get rich by being like everyone else so he says larry ellison says he's he's happy only when he's when everyone else thinks he's wrong the core of his business philosophy is that you can't get rich by doing the same thing as everyone else thinks he's wrong. The core of his business philosophy is that you can't get rich by doing the same thing as everyone else. In 1977, everyone said it was nuts when I said we were going to build the first commercial relational database. In 1995, everybody said it was nuts when I said the PC was a ridiculous device that was continuously increasing in complexity when it needs to become easier to use and less expensive. So there's a lot of overlap between Ellison and his best friend, Steve Jobs, including Ellison picks a huge fight with

Starting point is 00:42:50 Microsoft. So he's really big on that you need to pick a fight. There needs to be a you have to have a clear point of view. And you have to compare and contrast that view with with, yeah, in his case, in his opinion, like the biggest and baddest bully you can find. We'll get there. I'm going to tell you more about that in a second. But first, why, like, how did he arrive at this decision? Right now, again, this we're 15 years, we're living 15, 20 years later after, you know, after this happened, it's obvious that he was right to us. But at the time, it wasn't. So he explains this. And again, he does so in a very interesting way so his belief at this time this is in 2001 when he's saying this that the internet is the final the final

Starting point is 00:43:31 form of computing so he says the internet model is the last model of computing this is it what distinguished ellison's take on the internet was that he saw not just as a great way to get information and go shopping but as a platform for a completely different and infinitely superior kind of computing right from the outset he believed that the internet really did change everything. This is what he says. Internet computing is the last architecture. There will be no new architecture for computing, not in a thousand years, not ever. I know it sounds crazy, but with the internet, computing has adopted the same architecture as all other major networks. So this is, again, him pulling from history.

Starting point is 00:44:10 He's going to compare the architecture of the Internet now to the 100, he says, the 100-year-old telephone and electric power networks and the 2,000-year-old aqueduct network. network internet computing centralizes data storage and huge databases and processing on large servers while distributing information on demand across a global network internet computing hides complexity provides economies of scale and delivers information faster so that was his idea that's what he built his entire his strategy around. And he's pulled into a meeting, and his employees are mad. They're like, you're ruining, you're pivoting almost 180 degrees away from how we've been making money.

Starting point is 00:44:57 You're going to put the company in danger. And so in this section I'm about to read to you, this is Larry, I'm not making the mistake. Don't mistake the present for the future. Okay, so it says, can you guys tell Larry that what he's doing is crazy? He's putting the entire company in danger. This is Larry's response in this meeting. I had heard it all before.

Starting point is 00:45:15 Relational databases will never be commercially viable. The customers want client server. Blah, blah, blah, blah. They were mistaking the present for the future. It's the worst mistake a tech company can make. Client server was dead and the people in the room would figure that out at the funeral. But by then it would be too late for Oracle to change course. We had to change to the internet applications now before the rest figured it out. So he's also

Starting point is 00:45:43 eliminating huge parts of his company because it conflicts with his new belief, right? And what's going to happen here is really something that I've never forgotten by studying and reading all these books about Steve Jobs. Steve Jobs would tell you that the further you get away from one, the more complexity you are inviting in. And so Ellison, just like Jobs, had a extreme distaste for complexity. It infuriated him. So it says, in shifting the emphasis away from client-server to the internet was controversial within Oracle. The issue reached boiling point with Ellison's decision to halt all further work on client-server in early 1998.

Starting point is 00:46:23 So it's like, listen, we're all in on the internet. We're not going to keep servicing. they're running multiple versions of the same application so let me let me tell you this is how it relates to getting further away from one it says one of the problems was that oracle was now trying to support three different versions of its application suite ellison says we were the only vendor supporting three different modes of operation, terminal, client server, and internet. Life isn't hard enough that we had to have three fucking versions. It was unnecessarily complex and I wanted to dump it.

Starting point is 00:46:51 So he wants the entire company oriented around and focused on one. We're not doing terminal. We're not doing client server. I don't care if you disagree. We're doing the internet. If you're staying at Oracle, you're going to focus on the internet.

Starting point is 00:47:04 You don't like it, leave. That's my interpretation of what Larry is saying right there. And then this is Larry on change. He says, it has been my experience that people reflexively resist change. Change requires people to rethink the way they work and the way they are organized. When people write down their current processes and the reason why those processes cannot be simplified. So that's interesting. That's actually really smart for all of us to do. Like write down what you're doing and why you're doing it. So he's saying it forces them to carefully and methodically rethink their business.

Starting point is 00:47:35 In many cases, and I'm not immune to this by any means, we do things without thinking them through. Thinking is laborious and we can't do it for every single thing that we're doing in life, but the important thing is you really should write them down. Like this is why, this is what I'm doing and this is why. And you're going to expose a lot of things. And I'm going to get into like how Oracle was operating. They weren't even thinking through a lot of things that we're doing. So he says, this usually results in business processes being changed as opposed to our software. Simplified modernized business processes are at least as important as good business software in delivering efficiencies to the enterprise. So to that point, Ellison doesn't see what he the problem he's trying to solve as a it's a human problem.

Starting point is 00:48:16 It's not a software problem. Right. So he says people are willing to automate their current processes, but not change them. And here's the main message here. They think they're already doing it the right way. You cannot strive for constant self-improvement if you think you're already right. You just can't. Big companies have to standardize their processes

Starting point is 00:48:37 across all different locations if they want to automate efficiently. That requires a lot of change. And a lot of resistance to that change is inevitable. Okay. So this also applies to oracle and this is i think like a like a cheat code of life if you just ask why repeatedly it's a great way to quickly identify things that are poorly thought out either in others or in yourself and so ellison's seeing this in his own company because he's got not only is he changing what the company's focused on he's realizing like we can't solve problems for other companies if we haven't solved it for ourselves so he says wherever ellison looked he seemed to find glaring examples of

Starting point is 00:49:13 inefficiencies wastefulness and intellectual sloppiness a prime example was something called the energy center for excellence this was intended as a place to showcase oracle software for the energy industry ellison says that he uncovered plans to spend millions of dollars a year to run this center. So this is Ellison. I asked how much energy software are we planning to sell next year? The answer was about $10 million. So I said, does it bother anybody here that we're forecasting sales of $10 million and we're spending $5 million to run an energy center of excellence?

Starting point is 00:49:45 Does that strike anyone as strange you have you know dozens whatever the number is really smart people working there and never no one ever thought to question like is there are we actually getting a return on this investment and so ellison's solution to this he's like i'm going to use the company as a laboratory so he says i decided we're going to test our new applications inside oracle i'm going to use the company as a laboratory. So he says, I decided we're going to test our new applications inside Oracle. I'm going to turn our entire company into a laboratory. If our applications are any good, then they should save us money. And for the first time, I'll actually know and be able to control what's going on inside the company. So he talks about one of the main problems that his software is fixing is that there's data, data, there's data in all kinds of companies everywhere.

Starting point is 00:50:23 But there's no information. There's no actual useful information that's coming out of that data this is really dumb like we should we should be providing we should not be saying hey we're going to store your data we're going to be saying hey give us your data and in return you're going to get insights that help you run your business better right and so he realizes that there's there's so much duplication of effort and he thinks that's a massive problem inside companies because all this data is siloed. And he's like, well, how much is this duplication of effort costing people? So he realizes how much it's costing Oracle.

Starting point is 00:50:56 And he uses the story in sales presentations. And I think the story is really interesting. So it says, Allison's favorite example of the way this system operated was the work of the supposedly powerful pricing committee. Now, this is Ellison's story that tells you how you could be telling his customers how they could be wasting money. His whole thing is like you should have one central database and all applications should run on top of that database. Stop having 15 different databases that are not talking to each other. The pricing committee was responsible for deciding how much we should charge for our products.

Starting point is 00:51:27 So we do some competitive analysis. What's IBM charging? What's Microsoft charging? How does our product compare? What are the market dynamics? And then we make a decision and we'd say, OK, we're going to charge $10,000 per processor. We then introduce an updated price list and send it across the hall to our global sales headquarters. Unfortunately, our global sales headquarters. Unfortunately, our

Starting point is 00:51:45 global sales team had their own pricing people who felt they weren't doing their jobs unless they did their own analysis. They'd say, Larry's an engineer. What does he know about setting prices? We're salespeople. We know pricing. So they'd reset the price to $20,000 per processor, and they'd send out a pricing memo to our European headquarters in Geneva. Of course, we had another pricing team in Geneva that redid that analysis and reset the price once more. They'd say, what do Americans know about selling software in Europe? We're Europeans. We live in Europe. So the team in Geneva decides that the right price for Europe is $15,000 per processor. And they'd send that price out to Paris, Munich, and London. The same thing happens all over again.

Starting point is 00:52:29 The guys in Germany ask, what do French people in Geneva know about selling software in Germany? The right price in Germany is $25,000 per processor. Every country had a different price. It was crazy. We had about 200 people around the world involved in analyzing and reanalyzing and setting and resetting prices. It cost us a fortune it was funny too because he's talking about one day he's talking to a uh there's a story in the book one day he's talking to one of his american clients and they're like uh they just casually mentioned he's like yeah i just bought all of the oracle software through oracle

Starting point is 00:52:58 brazil and he's like why he's like because they gave us a better price he's like wait what do you mean he's like well you guys are competing with yourselves. The price in America and Europe and Brazil are different. So we just communicate with Brazil because they'll give us a better price. This is ridiculous. All right, there's a quote that I always think about, that I think about a lot. And I learned from Charlie Munger. And he's very explicit.

Starting point is 00:53:21 If you read his books, listen to his speeches, he always talks about the power of incentives. And he specifically says, never, ever think about something else when you should be thinking about the power of incentives. It's a hell of a statement from somebody as smart as Charlie Munger, right? This is an example of that. One of the worst ideas I can remember was when Ray decided we didn't do enough selling through partners. The sales force convinced him the way to fix this was to pay more money to the sales force if it went through a partner than if the deal came directly to Oracle. For example, if you sold a million dollar deal directly, Oracle would get a million dollars and you'd get $100,000 commission. But if you sold a million dollar deal to a partner, Oracle would get $600,000 and you'd get a $120,000 commission. So what do you think is going to happen? Needless to say, our sales force pushed as many deals as possible through partners that year.

Starting point is 00:54:11 So the partners were happy. The sales force got higher payments. So they were happy. And the only loser was Oracle. So this goes back to the idea that everything is basically held together by duct tape. Don't idolize humans or companies or anything else. We're all imperfect. Larry has a lot of ideas.

Starting point is 00:54:33 He mentions it over and over again that people underestimate how important the name of your product. So he gives an example. Network computing architecture got absolutely no traction in the marketplace. So we announced a successor to the product called Internet Computer Architecture and sales took off. The big difference between the two? The name. It never ceases to amaze me how the product name can be the difference between success and failure in the technology industry. So something to know about Ellison, he's criticized for having, for opposing traits. He gets criticized for both of these. It's really interesting.

Starting point is 00:55:06 Yeah, I mean, you just, you have to kind of be guided by your own internal compass because he's, let me give you an example. People are mad for two different things. They're mad because he's excessively dominant role in business or because he's semi-detachment from the business. So it was very interesting how he, well, he doesn't characterize this. This is my interpretation. There's no messy, he's like, Ellison would tell you that he could be on

Starting point is 00:55:34 or he could be off, but there's no messy middle for him. So it says, Ellison had told me that he's unable to strike a balance between an extreme form of laissez-faire delegation and an equally extreme obsession with influencing every aspect of the business. He could either be semi-detached from day-to-day management oracle, as he had been

Starting point is 00:55:50 during the mid-1990s, right before the near-death experience, or furiously involved as he was now. He also has a really good idea. We talk about the idea that knowledge compounds. So he would tell you that you do not want turnover on your core product team. The knowledge that's compounding is way too valuable. So don't interrupt the compounding. This is what the book says. While many parts of the business actually need staff turnover to stay fresh and vigorous, Ellison believes that keeping the elite kernel group together has been vital the process of building a software product teaches a programmer what to do and what to avoid this accumulated knowledge and experience within the 40 or 50 strong group comes from

Starting point is 00:56:37 continuous work on improving the core code rather than from some extension of the product that will make a flashy new release. This is Ellison describing the traits of what he feels is the best employees. This one guy named Derry. Derry combined brilliance with discipline and endurance. It's a rare combination. I thought this idea was interesting. Larry on the difference between hunting and farming.

Starting point is 00:57:07 The salespeople we hired in Europe were very professional and service oriented. The European management team's strategy was to build long term relationships with our customers and do business with them on a regular basis. This European farming strategy was in stark contrast to the U.S. sales organization hunting strategy. U.S. salespeople try to sell the largest possible transaction to a given customer and then move on to the next customer in the next deal. It took me until 1991 to figure out that the U.S. hunting strategy was both short-sighted and unsustainable. It took another decade to change the culture of the U.S. sales force from hunters to farmers. This is Ellison's strategy is one, pick a fight, and then two, burn the boats. Once I'm finally certain of the right direction, I pick a fight as I did with Bill Gates. It helps me make my point and it helps and it makes it impossible to do an about face and go back. Once a course has been plotted, I sail a long way off and burn

Starting point is 00:58:08 the boats. It's win or die. And he keeps on this idea of like being focused on the competition. So this, this again, I have notes all over this book. It's like, this sounds like Michael Jordan. I highly recommend watching that documentary, The Last Dance. But not only that, a listener recommended this book. And I don't think I'm going to do an episode on it because it's so far outside of our scope. But if you're interested in the mindset. So let me tell you what it is. I think I'm almost done with it. I'm listening to the audiobook.

Starting point is 00:58:40 I might have like, it's a short audiobook. Maybe like two or three chapters left. But it's by Tim Grover it's called relentless and tim grover it was or is was um michael jordan's and kobe bryant's trainer and so this book is all about the kind of mindset that those two individuals and other of his clients have. And what he learned from, I think he was Jordan's trainer for almost 20 years, maybe 15 years, something like that. And so I think there's probably a lot,

Starting point is 00:59:11 there's probably a huge overlap with people that listen to this podcast that would also enjoy that book. So if you feel like you're motivated by those kinds of people, it's extremely competitive, relentless people. And a lot of the people we cover in the podcast, you describe as relentless. Jeff Bezos was going to call Amazon, go to

Starting point is 00:59:29 relentless.com. It forwards to amazon.com. Like he almost called Amazon relentless. So that gives you an idea of what's important to him. So I would say Larry Ellison is the same way. So the reason I say this sounds like Michael Jordan is because Ellison says that this is why Oracle exists. And that's to beat the competition and to be number one. So he says, he strongly believes that Oracle is always at its best when it has an identifiable enemy to go after. We pick our enemies very carefully. It helps us focus. We can't explain what we do unless we compare it to someone else who does it differently.

Starting point is 01:00:02 We don't know if we're gaining or losing unless we constantly compare ourselves to the competition. So then he starts, he does, this book is full of digs on Microsoft. And this is one of them. He says, Microsoft can't innovate, they can only copy. And he says, listen, that wasn't even me speaking. He says, I was quoting Steve Jobs. He, meaning Steve, said that the thing that really bothers him about Microsoft

Starting point is 01:00:27 is not how successful they are or how much money they have. It's the tasteless mediocrity of their software. I totally agree with Steve. They never, ever innovate, but they're pretty good copiers. This is Ellison on Microsoft copying continued. Even Bill's strategy is just a copy of Standard Oil's strategy back in the 1870s but when Rockefeller used his monopoly

Starting point is 01:00:50 to crush his competitors it wasn't illegal there were no antitrust laws back then so he talks about Microsoft destroys these two companies and I the way he described it I chuckled when I read this obviously it's not funny that you destroy somebody's life's work but I'm saying the way he described it. I chuckled when I read this. Obviously, it's not funny that you destroy somebody's life's work,

Starting point is 01:01:07 but I'm saying the way he describes Microsoft. He's just very good. Like, he's a master salesman. Larry is a master salesman. He says, Microsoft killed both companies like a rogue rhinoceros trampling a couple of disoriented field mice. This is Ellison on Bill Gates. He says, Bill and I used to be friends insofar as Bill has friends.

Starting point is 01:01:26 Back in the 80s and early 90s, all the people in the PC software industry hated Bill because they feared Bill. But Oracle didn't compete with Microsoft very much back then, so we got on pretty well. As I got to know Bill, I developed a great respect for his thoroughness of his thinking and his relentless, there's that word again,

Starting point is 01:01:43 relentless, remorseless pursuit of industry domination. I found spending time with Bill intellectually interesting, but emotionally exhausting. He has absolutely no sense of humor. I think he finds humor an utter waste of time, an unnecessary distraction from the business at hand. I don't have anything like that kind of focus or single-mindedness.

Starting point is 01:02:07 So he talks about, this is why he picked Microsoft as an enemy. In the background here, he's on the phone with Bill, and they're having a friendly debate. And they hang up the phone, and five hours pass, and Bill calls him back. And he's like, you know, I think you're right. And Allison's like, have you been thinking about this the whole time? Because Allison goes around on his day. He's running his company, working out, doing whatever, you know, the stuff that he does. And so around on his day. He's like running his company, working out, doing whatever, you know, the stuff that he does.

Starting point is 01:02:26 And so this is his response. He's like, I was stunned. He had taken the time and effort to think it all through and had decided I was right and he was wrong. Now, most people hate to admit they're wrong, but it didn't bother Bill one bit. All he cared was that,

Starting point is 01:02:38 all he cared was what was right, not who was right. That's what makes Bill very, very dangerous. Most people are so in love with their own ideas that it confines their thinking. It creates boundaries and limits their ability to solve problems. Bill has this ability to manage his intellectual vanity and take ideas, regardless of where they come from, and put them to work in Microsoft. The terrifying thing about Bill is that he's smart enough to understand what ideas are good,

Starting point is 01:03:04 what's worth replicating, and he has the discipline and resources to get on with it and make it just a little bit better. Add to that Bill's ruthless perseverance and the fact that Microsoft has more money than God, and you get a most formidable foe, the ultimate foe, the perfect enemy. We decided to pick a fight with the biggest biggest most dangerous bully in the schoolyard there's no way to avoid this fight so let's start it so this gives you real good insights onto how larry thinks and um and how he you i'm gonna get to in a minute because there's a i'm reading this book i'm like why why you have more money like you don't really want to run a company you have more money you could ever spend.

Starting point is 01:03:45 Why are you doing this? And I realized he hacks himself. He does these little games so he can be focused. He makes it into a competition. And therefore, it's not about money. It's about winning. And that keeps him driven. He's like, I'm not focused.

Starting point is 01:03:59 And I can't grind like Bill Gates. I'm not like this. It's actually really, really intelligent. He's like, I have to find the best way. I'm not like this. So he has to fight. It's actually really, really intelligent. He's like, I have to find the best way to trick myself into doing this. So this is more on why he focuses so much on competition. If you're a fighter, the only way up is through the top fighters in your division. So we pick fights with IBM and Microsoft because they're the ones who we had to beat to reach the top. By constantly measuring ourselves against the two top heavyweights, We constantly improve the competitiveness of our products and services. So he always talks about like,

Starting point is 01:04:28 I'm interested. I'm using competition as a vehicle to test myself. I think that's a very interesting way to think about that. What's also interesting when I read this book is like, he has a great respect for Thomas Watson and IBM under his leadership. So I did, if you haven't listened to the podcast, did on Thomas Watson, I think it's on the book called The Maverick and the Machine. It's founders number 87. But he's like, listen, they did great work there. They did a bunch of research and development.

Starting point is 01:04:54 It's not the IBM of today. The IBM of today I don't respect at all. So he says, I don't dream of an Oracle that's like Bill's Microsoft or IBM version two, meaning the current IBM, the one that's not run by Watson. Our role model is Tom Watson's magnificent creation, the technically brilliant and innovative IBM of old. That's who we want to be when we grow up. So now this is the author saying,

Starting point is 01:05:22 like, you know, this is what I was just mentioning. Like, why? Like I'm left wondering why, why, what, what are we doing here? Why are we doing this Larry? Right. So it says early on, I had wondered just how committed Ellison really was to making Oracle as great as IBM in its heyday. I thought that given his age, the range of his interests, his unimaginable wealth, and his own self-confessed dislike of much of the routine and drudgery that's involved in running any business, it was almost inconceivable that he would have the necessary stamina and hunger. So he says that. And then a little while later, I found the paragraph that may be the best explanation of why Larry does what he does. This might be the best explanation in the entire book, right? Like a lot of people,

Starting point is 01:05:59 I still find it hard to understand how someone with as many choices as Ellison, who for the most of the last 15 years has had more money than he could spend and who clearly has a low boredom threshold, can bring himself to keep doing the same thing. This is Ellison saying, my sister told me that whenever I got too close to a goal, I'd raise the bar for fear of actually clearing it. We're endlessly curious about our own limits. The process of self-discovery is one of testing and retesting yourself. So now he talks about how he applied this to, he's very famous for like doing these like huge sailboat races. So he says, I won the Sydney to Harvard. That's one race. Can I win the America's cup? I guess I'll have to find out. The software business

Starting point is 01:06:39 is a much more difficult test. It's a much higher stakes game there are probably more people playing that game and it's a lot more interesting game it's a lot more exciting if i wasn't doing this i'm not sure what else i'd be doing with my life so there this is why i keep bringing up the compare and contrast to jordan i think larry is addicted to competition um oh this is this is really interesting this is larry's response he's most response. His most frequent criticism is that he's a liar, that he's either hyperbolic or just a pathological liar. And this is his response to that. Being optimistic and exaggerating is another matter altogether.

Starting point is 01:07:15 The entire history of the IT industry has been one of over-promising and under-delivering. Software executives routinely say that a product is going to be ready by a certain date, and then it turns out to be literally years late. It happened at Microsoft. It happened at Oracle. Software development is notoriously unpredictable. Maybe the only honest schedule is the one Michelangelo gave the Pope when he was painting the Sistine Chapel. It'll be done when it's done. Anything else is a guess, and sometimes we guess wrong.

Starting point is 01:07:43 Now, an extension of this is, you know, maybe he could say, yeah, I think it's going to be, like, maybe he could be a bit more wishy-washy in his communication. Okay, it's going to be done in a year. Maybe it's a one to two years. He wants to speak. Even if his, I would say even if his statements are more definitive than they should be, he feels that, that's it's better like who what kind of leader are you going to follow and he has a great story to illustrate his opinion on leadership so it says another aspect of ellison's bravado style is equally calculated his leadership you cannot lead now this is him you cannot lead if you're filled with uncertainty imagine two

Starting point is 01:08:24 officers each leading a company of Marines up a hill. The first one says, Men, we're going to go up this hill and we're going to kill every fucking enemy soldier on our way to the top. I'm going first and you're all going to make it to the top with me. I haven't lost one of you yet. Follow me. Cool, competent, and confident. I'm ready to follow that guy.

Starting point is 01:08:44 The second guy says, men, we're going to try to take this hill. I have to admit that I don't know how many enemy soldiers on the hill, and I've never really done anything like this before, but I'm willing to go first if you're willing to follow me. We might make it, we might not. There's no way to know for certain. Even if we make it to the top, it's highly likely that some of us will be killed. Follow me. And this is Allison's's interpretation this well the second guy is impressively honest about his fears and uncertainties maybe he should become a psychotherapist but there's no way anyone is following that guy anywhere um and finally i

Starting point is 01:09:18 finally got to the part where again i told you the whole time reading this book like this is michael jordan larry finally makes the mj comparison that was obvious if you read this book. And he's talking about Steve Jobs. He says the Apple board replaced Steve Jobs with John Scully, didn't it? How stupid was that? Brilliant, disciplined, intensely goal-oriented leaders routinely alienate the people they work with because they push too hard. They make the mistake of thinking everyone else on the team wants to win as much as they do. Michael Jordan was not popular with many of his teammates

Starting point is 01:09:49 because he'd get in their face for not playing hard enough. And so, again, I know I'm repeating myself, but if you really want to understand why Larry is the way he is or why, more importantly, he makes the decision he makes, he's obsessed with winning, obsessed with competition. He feels, and I'm about to describe his opinion to you right now, that winning is a habit. And so he says, winning is a habit. So is losing. Competing and winning at sailing has made me more confident, intense, and determined to win at Oracle. Winning breeds winning. The more you win, the more you want to win. The more you win, the more you think you can win.

Starting point is 01:10:26 And finally, there's some philosophical aspects to Ellison that I find really interesting. And so he's going to talk about here. He's going to talk about time, why we do what we do in life, and how you can tell if you're on the right path. Life is the only miracle. I don't waste a lot of time. I work intensely on things that I care about and I spend my time with people that I care about. I do what I want with my time because I know there's not much of it left. Maybe it's just vanity that motivates me. You can never really be certain of anyone's motives, including your own. You are better off measuring people on what they do. I don't know, can't know, and don't care what motivated Jonas Salk to try to make a polio vaccine. I'm just glad he did. What we want to

Starting point is 01:11:19 do with our lives is the most important question we all have to answer. I think even if I found out I was dying and I had a year left to live, I wouldn't change my life very much. That's 124 books done, 1,000 to go. If you buy the book using the link that's in your show notes, you'll be supporting the podcast at the same time, and I'll talk to you again soon.

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Founders - #124 Larry Ellison and Oracle

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