Larry Ellison: Why it pays to be a jerk

The success of Larry Ellison, and what it says about leadership.

(Justin Sullivan/Getty)

“What makes Ellison so successful, even though he’s a narcissist visionary and really not very good at working with people, is that he understands himself.” (Justin Sullivan/Getty)

On the battlefield of Silicon Valley, it takes a lot to distinguish oneself as more bloodthirsty than the rest. But in recent months, Oracle CEO and founder Larry Ellison reminded observers why, even in an industry dominated by barbarians, he has earned a reputation as a first-class SOB.

In early August, Ellison launched a public attack on Hewlett-Packard, throwing what had for decades been an amicable business relationship into jeopardy with a few choice words. Following the ousting of CEO Mark Hurd, who was forced to step down after a sexual harassment inquiry, Ellison lashed out at HP in an e-mail to The New York Times. “The HP board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago,” he wrote, invoking one of the most infamous board blunders in tech industry lore. Ellison argued that the company’s decision to make public the sexual harassment claims, which had been proven “utterly false,” constituted “cowardly corporate political correctness.” And if there’s one thing Ellison can’t abide, it’s pansy-picking ninnies interfering with genius at work.

His assault on HP continued through September, when he hired Hurd, a close personal friend, as co-president of Oracle (a title he’ll share with Safra Catz, who has been Ellison’s second-in-command since 2004.) The move prompted HP to launch a lawsuit over concerns about the protection of its trade secrets. The legal dispute was quickly resolved, with both firms pledging to mend fences, but it wasn’t long before Ellison went about tearing them down again. When HP tapped L?o Apotheker, the former CEO of SAP, Oracle’s archrival in business-application programs, as its new commander-in-chief, Ellison charged HP with “[picking] a guy who was recently fired because he did such a bad job of running SAP,” and called for the board’s immediate, “en masse” resignation. All of which, onlookers agree, is classic Ellison. Bloomberg Businessweek described the outbursts as a return to his “old strategy of ridiculing the competition”; the Associated Press, meanwhile, noted that he “thrives on … insulting rivals in public.”

Since co-founding the Redwood Shores, Calif.-based Oracle in 1977, Ellison’s antics, which have included everything from hiring a private investigator to snoop through Microsoft’s garbage to unceremoniously punting a series of would-be successors to his throne, have earned him the distinction of Silicon Valley’s consummate meanie. “Ellison,” observes Karen Southwick in her unauthorized 2003 biography Everyone Else Must Fail, “is like a modern-day Genghis Khan who has elevated ruthlessness in business to a carefully cultivated art form. His weapons are not the marauding hordes but his company’s possession of a key technology platform, his willingness to exploit it, and his disdain for anyone who gets in his way.”

The incredible success that he has enjoyed is a marvel to anyone familiar with the accepted literature on what it takes to make a great leader, qualities like empathy, mediation skills and humility. By all accounts, he is a bad listener and a big talker, whose brash, take-no-prisoners approach tends to alienate employees and customers alike. Yet, in the past 35 years, the jet-flying, sailboat-racing renegade has built Oracle into one of the most important tech firms on the planet, with annual revenues of $27 billion — about a billion dollars shy of his personal fortune. (All figures are in U.S. dollars.) While many of his contemporaries have moved to arms-length positions or other projects, Ellison remains the driving force behind the computing juggernaut, continuing to fashion it according to his own design. After acquiring more than 65 tech firms in the past five years, the mercurial CEO announced in September that he would be “buying chip companies,” suggesting that Oracle is positioning itself for what Bill Tatham, head of Toronto-based enterprise software firm NexJ Systems, describes as “another level of world domination.”

But while it may be tempting to single out Ellison as the ruthless villain of high technology, “none of these guys are nice,” says Jeffrey Pfeffer, a business professor at Stanford University and author of Power: Why Some People Have It—And Others Don’t. Before his ousting from Apple, Steve Jobs is said to have become increasingly difficult to work with, refusing to acknowledge that sales were tumbling; since his return, he has often been criticized for his obsessive secrecy, and ruling the company with an iron fist. Meanwhile, it was Bill Gates’s attempt to snuff out the competition that led to antitrust allegations — and sent Ellison rooting through Microsoft’s trash. “It’s very unpopular to say in today’s world, where we have these Kumbaya theories of leadership,” says Pfeffer, “but it actually doesn’t work well.” If anything, Ellison is merely the poster boy for what it takes to thrive in an increasingly ruthless environment. His rare combination of hubris and self-awareness enables him to skid recklessly to the edge, stopping just short of the cliff. And his stunning trajectory offers a valuable lesson: in the cutthroat arena of big business, sometimes it pays to be a jerk.

When asked to explain why he is the way he is, Ellison, who declined our request for an interview, has been known to scoff at obvious theories. “So my biological mother abandoned me, and my mother who raised me abandoned me when she died of cancer,” he told The Washington Post in 2000. “I’ve thought of all those things, and that just sounds so good, the reasons are all there. But is it really true?” But whatever caused his infamous bravado, the evidence suggests it took root early on.

Born in Manhattan in 1944, Ellison’s unwed, teenage mother sent him to live with her aunt and uncle on Chicago’s south side when he was nine months old. Even as a teenager, Ellison had a propensity to pump up the facts. “When reality was not interesting enough for him, he simply made up delightful and often plausible details as he went along,” writes Mike Wilson in his 1997 biography The Difference Between God And Larry Ellison (God Doesn’t Think He’s Larry Ellison). “His stories all had certain things in common: They were funny, they glorified Larry Ellison, and unless you had the authority to issue subpoenas, they were damned near impossible to disprove.” The alleged fabrications often centred on his education. Though he never graduated from college — he dropped out of the University of Illinois and the University of Chicago — he regularly suggested otherwise, says first wife Adda Quinn. “He told me these big, whopping lies, and stuck to them,” she told The Washington Post. Indeed, The New York Times identified Ellison in 1988 as holding “B.S. and M.S. degrees in physics from the University of Chicago.”

And while his tendency to embellish may have wreaked havoc on his personal life (he is currently on his fourth marriage), it proved a tremendous asset in Silicon Valley, enabling him to seem like a competitor long before he actually was one. After bouncing between different computer programming jobs (he discovered his bent for programming at college, and reportedly carried a manual around with him), he secured a gig at Ampex, a firm that did contracts for the U.S. government, in the mid-1970s. There, he got his first taste of database software while working on a project for the CIA with the code name “Oracle.” Around the same time, he read a paper published by IBM, which outlined a way to make it easier to store and retrieve data — a prototype for the first relational database. “I saw the paper, and thought that, on the basis of this research, we could build a commercial system,” Ellison, who solicited the assistance of fellow programmers Bob Miner and Ed Oates, recalled in a 1995 interview. “If we were clever, we could take IBM’s research … and beat IBM to the marketplace with this technology. Because we thought we could move faster than they could.” He was right. By 1984, the company he founded with Miner and Oates, originally called Software Development Laboratories, was logging nearly $13 million in annual sales. (Miner died in 1994; Oates retired in 1996.)

Though Oracle’s critics have complained over the years about Ellison’s tendency to promise a product prematurely, or sacrifice quality for early delivery, he clearly understands the benefit of first-mover advantage. “Once Ellison anticipates something … to him it’s done,” writes Southwick. “Ellison is serene in his conviction. It’s a quality that has enabled much of his success as well as his difficulties with the rest of the world.”

As Oracle’s influence has grown, so has Ellison’s bluster. By the mid-1990s, when Oracle had effectively neutered its competition, Ellison had begun making a sport of taking pot shots at Microsoft and its founder Bill Gates, though both were, by most measures, entirely out of his league. Ellison went so far as to declare in 1995 that the era of personal computing was over. But the fact that Ellison consistently bit off more than he could chew — Oracle has never outpaced Microsoft’s revenue, and the personal computing era lives on — is largely beside the point. “If Larry could make the world think there was a contest between him and Bill Gates,” Wilson told Canadian Business, “that was good for Larry and bad for Bill.” Pfeffer concurs: “A lot of this is posturing, but it works.” Ellison’s knack for intimidation appears to have been cultivated with a clear sense of its effect. “He knows he has a reputation for popping off and being provocative,” says Wilson, “and he likes that very much.” This fierce reputation is beneficial. “It intimidates. It scares people off,” says Pfeffer. “If he can get the competition to engage in peremptory surrender, all the better.”

From the outset, Ellison’s oversized ego has made him shameless about highlighting the significance of his personal contribution to his company’s success. The sixth-richest person in the world, his net worth is currently estimated at $28 billion. In explaining why Ellison had majority ownership from the get-go (he initially purchased 60% of the company’s shares, while his partners split the rest), Oates told Wilson, “There was no question about the fact that Larry was pushing this idea a lot harder than either Bob or I would have pushed it. He had more chutzpah than the two of us combined.” Geoff Squire, who ran various divisions of Oracle’s world operations from 1984 to 1993, told Canadian Business that Ellison sketched out his plan to start with database software and move into tools and applications “years before any code was written on those areas …. Call it passion, call it vision — the confidence was definitely there.”

On more than one occasion, Ellison has said that “everyone wants to be loved,” including him — a peculiar statement considering the callousness with which he has been known to treat employees. He has no regard for anyone’s schedule but his own; even early in his career his tendency to show up at meetings 60 or 90 minutes behind schedule prompted employee Stuart Feigin to begin referring to him as “the late Larry Ellison.” Yet more damning than his lateness is his habit of casting off previously trusted executives, oftentimes shortly before their stock options are due to vest. Accounts of former Oracle employees paint a picture of a boss with an infectious energy, and a propensity to elevate his charges to incredible heights only to dump them later. As one journalist put it, “He’s like a juicer, he squeezes people dry and then discards them.” Employees are often tossed when they emerge as possible successors. Observers have suggested that Ray Lane, whose leadership was instrumental in pulling Oracle out of the red, was ousted because he was beginning to outshine his boss.

But Squire has a different take. Describing the manner in which Ellison selected new programmers and salespeople as “clinical,” Squire attributes Oracle’s success largely to the premium he has always placed on choosing the right candidates. “He really did hire very, very good people,” says Squire. Though Squire acknowledges that Ellison could quickly turn on his charges — as he puts it, “He backs people until he doesn’t” — he sees Ellison’s willingness to constantly refresh the talent pool as a strength. “People who do a great job don’t just get to stick around in companies forever,” says Squire, who is currently the non-executive chairman of Kognito, a U.K.-based data management firm. Despite the fact that he was cut loose shortly before the last of his stock options would have vested, Squire harbours no ill will, insisting that the fortune and experience he amassed at Oracle “set me up for life.” Squire’s trajectory is not unique: Oracle is often credited with creating the most millionaires in Silicon Valley; many of those ousted by Ellison went on to head tech firms that competed in the same high-profile realm. (Incidentally, in the midst of the Hurd debacle, Lane was named non-executive chairman of HP.)

According to psychoanalyst Michael Maccoby, author of Narcissistic Leaders: The Incredible Pros, The Inevitable Cons, “What makes Ellison so successful, even though he’s a narcissist visionary and really not very good at working with people, is that he understands himself, and he understands who he needs to work with.” His self-awareness became particularly apparent in the early 1990s, when poor accounting practices led the company, which went public in 1986, to over-report revenues. In 1991, Oracle posted a loss of $12.4 million; its stock value, meanwhile, dropped from $3.8 billion to $700 million. Ellison, who before the crash, was known to brag about playing tennis on company time, and was so seldom at the office that, when he was spotted, employees joked about “Elvis sightings,” was shaken to the core. “I was too depressed [to leave the house],” he told The Washington Post, “I let everyone down.” But rather than let Oracle die, he swallowed his pride and “went out and got some better managers to run the company,” says Wilson.

Ellison acknowledges that he needs a foil. Leaving the traditional management duties to trusted associates, says Maccoby, has enabled him to focus on thinking big — a crucial element for success in today’s tech world. “It allows him to be the visionary, the guy who determines what companies he’s going to buy and where he’s going to go,” he says. “He’s the strategic leader.”

The aggressive way in which Oracle pursues expansion has prompted many to compare Ellison to a warlord. Of all the acquisitions the company has made over the years, none is more emblematic of his unapologetically conquering spirit than the hostile takeover of PeopleSoft he mounted in 2003. When Oracle announced it was gunning for the software firm with an unwelcome $5.1-billion offer, observers were stunned at the audacity of the move, which came as PeopleSoft was in the midst of inking its own $1.8 billion deal to acquire smaller software firm J.D. Edwards & Co. Adding to the drama was the fact that the man leading PeopleSoft’s defence was CEO Craig Conway, a disgruntled former Oracle employee. In 1999, Conway urged Siebel Systems founder and CEO Tom Siebel, another one-time Oracle associate embroiled in a public spat with Ellison, not to let his old boss get his goat, telling Forbes, “Larry picks a fight, and since everyone loves a fight, they come to watch.”

Come watch they did. In the months that followed, Conway described Ellison as everything from a schoolyard bully to a sociopath. Ellison, for his part, remained clear in his intention: in acquiring PeopleSoft, he would abandon its product and most of its employees; what he was after, he said, was its customer base. When Conway compared his former boss’s plot to “me asking if I could buy your dog so I can go out back and shoot it,” Ellison was quick to issue a cutting retort. “I love animals,” he said. “If Craigy and [his dog] were standing next to each other and I only had one bullet, trust me, it wouldn’t be for the dog.” Ruthless though it may have seemed, none denied the brilliance of Ellison’s power play, and in the end, he emerged victorious. In 2004, PeopleSoft’s board fired Conway, and sold the farm to Ellison for $11 billion. (Oracle acquired Siebel Systems the following year.)

As Oracle increasingly dominated in database software and began to move to applications and, most recently, hardware, experts agree that Ellison’s willingness to buy out the competition has been essential to sustaining growth. “This is an industry in which basically growth has slowed to a crawl. The only way … you as a company can make progress is by acquisitions,” says Stanford’s Pfeffer, who points out that HP and Microsoft have also made careers of gobbling up the little guys. “[Ellison] sees the software world as consolidating, and he wants to be the consolidator rather than consolidatee.” Ellison’s perceived ruthlessness stems, in part, from a few juicy quotes that have been frequently repeated in the press. But Ellison often argues his words were twisted. In 1988, The New York Times reported that he identified his ideal vice-president as Genghis Khan, paraphrasing the Mongol leader’s famous mantra: “It is not sufficient that I succeed — all others must fail.” (Hence the title of Southwick’s book.) Ten years later, in an interview with Forbes, Ellison maintained that the quote had been taken out of context, arguing that he had merely been relaying a conversation he’d had with a Fujitsu executive during one of his many trips to Japan. But in reiterating what the businessman had told him, he wound up adding more fuel to the fire. “We in Japan think that our competitors are taking rice out of our children’s mouths,” he repeated, adding another phrase to the lexicon of inflammatory statements regularly attributed to him.

That Ellison’s $70-million mansion in Woodside, Calif., is modelled after a medieval shogun compound, and his office is plastered with Japanese art, certainly compounds his image as a wannabe Mongol warlord. But the main reason it is so tempting to use snippets like these to explain his strategy is that they fit so well. In the early days of Oracle, Ellison is said to have been “obsessed with the 100% [growth] figure,” rewarding those who exceeded their sales targets with gold coins. If he’s seen as prizing victory above all else, it’s because, well, he does.

When the Hollywood version of the Marvel comic Iron Man was released in 2008, observers were quick to note the similarity between Tony Stark, the hero’s alter ego, and Oracle’s leading man. Everything from Ellison’s manicured goatee to his Audi R8 seemed to suggest that the real-life billionaire had inspired the fictional one. It was a comparison that the CEO didn’t appear to mind: Ellison even made a cameo appearance in the sequel. But there is a lesson in the dizzying speed with which Stark tumbles when, overcome by ego, he makes a few very bad calls. According to Charles O’Reilly, an expert in organizational leadership at Stanford, a cocksure attitude can have dramatic consequences. “When they’re right, everybody loves them,” he says of leaders like Ellison. “But it only takes one major mistake and you can destroy the company.”

As for Ellison’s recent decisions, however, they appear to be spot on. Following the news that he had hired Hurd, a veteran executive, Oracle’s stock rose 5.5%; HP’s shares, meanwhile, slipped by 1%. Though it remains to be seen how long Hurd will keep his post — Pfeffer, for one, wonders if there won’t be “too much ego per square inch” — there is no indication that Ellison is preparing to turn over the reins anytime soon. “I think he honestly believes that he’s doing a better job than anyone else could do,” says Squire, “and I think he’s probably right.”