Softwar

by Matthew Symonds

  That, of course, is not how Lane sees it. “Safra just arrived. . . . I had no idea who she was, there was no introduction. . . . Safra and Gary started working together and appearing in every meeting. Larry would ask the questions: How much does it cost to do this or that? And she would go out and write in the headline first and then fill in the rest from Larry’s perspective.” All the while, Catz was going to Lane’s people and pumping them for information about old contracts and sales practices that found its way quickly back to Ellison. Lane’s first response was to try to ignore what was happening to his authority. “I just kind of said, ‘Maybe if I just continue to do my job, this thing will pass.’ ”

  However, that illusion didn’t last very long. In February 2000, Lane received an e-mail from Catz informing him that Ellison wanted the European operation (under Pier Carlo Falotti) to report directly to the CEO.

  Remarkably, for the first time, Lane decided to raise the issue of what was happening to their relationship: “I just confronted him direct. I said, ‘I don’t feel good about it. You have moved organizations to Gary. What’s wrong?’ He said, ‘Nothing, nothing—you and I just have to spend more time together and get on the same page. The company is in a state of change now, we’re reengineering business processes and all that. The CEO has to drive that. You and I are public figures, seen by a lot of employees, and we just have to be on the same page and spend time together.’ I said, ‘Okay, great.’ I totally fell into the trap that everybody falls into when you have a meeting with Larry; no matter how depressed you are, you come out happy. It happens over and over again.”

  The next time they actually managed a one-to-one meeting was in Lane’s office three months later, in May. The atmosphere could hardly have been much worse. Ellison had recently moved support from Randy Baker to Gary Bloom, and Lane had had “this awful meeting with Safra.”

  In her hunt for facts, Catz was occasionally finding Lane’s people less than cooperative. Lane claims that when she thought she was being thwarted, she would threaten to have the individual responsible fired.10 “After three or four people had come to me to complain about being threatened, I went to her and said, ‘Safra, this has got to stop. This is no way to behave; I don’t want you in my organization.’ When I got done, she became totally woman. Tears. Emotional, she just blew up. She said, ‘Why are you always criticizing me? Why can’t you and I work together?’ I said, ‘I just came in here to tell you please don’t threaten my people anymore.’ She just came unglued, and I said, ‘What is this based on? I don’t know that we’ve actually spent two minutes together.’ She said, ‘I know what you are telling people around this organization about me.’ I said, ‘Guilty to a point. I have criticized you and the way you’ve worked here, but it’s not something that can’t be rectified.’ We ended the whole thing by hugging each other and I said, ‘If Larry would agree, why don’t you work for both of us. Don’t do the witch-hunts, but work for both of us.’ I probably appeared to be the most naive person in the world to her. She was thinking, ‘He doesn’t understand what’s going on.’ I think she was clearly promoting the thought to Larry: you need to get rid of Ray, he’s not good for you.”

  As for the subsequent meeting with Ellison, it took much the same course as the one in February. Lane says, “He gave me the same thing. We hadn’t spent the time together, I was always traveling.” Lane felt strongly that his absences from Redwood Shores were more than justified by the results they were producing. In November 1999, Oracle had announced a partnership with Ford to build an Internet-based business-to-business exchange that would link the carmaker to the many thousands of companies in its supply chain. Over the following months, a rival exchange planned by GM and the software firm Commerce One had been folded into the Ford/Oracle scheme and other car manufacturers, such as DaimlerChrysler, were also preparing to come on board.

  Under the terms of the deal that Lane had negotiated, rather than simply selling software licenses, Oracle would be a minority partner and provide some of the operational management. Lane estimated that within a few years, Covisint, as it was later named, would handle transactions worth tens of billions of dollars a year, raking off a small commission for each one. The plan was to float Covisint as an independent entity. At a time when the name-your-price airline ticket exchange Priceline.com had a market value greater than the combined worth of the airlines whose seats it sold, the idea that Oracle would be a stakeholder in B2B (as they became known) exchanges across a range of industries had an electrifying effect on its stock price.

  Lane says, “All that stuff was going on in the background at the same time that the Gary/Safra show was undermining me. I personally take credit for the run-up of Oracle stock that happened then.11 As soon as the market realized that we were a real B2B player, our stock took the run-up that we’d always been waiting for—it went from forty dollars to eighty dollars overnight.” Two months later Lane received the call from Ellison that would bring his relationship with Oracle to an end. Soon after that, Safra Catz renegotiated Oracle’s position within the Covisint consortium to that of pure software supplier. She and Ellison had decided that as a risk-sharing partner within an increasingly unwieldy alliance of competitor companies and at a time when the initial euphoria about the prospects of B2B exchanges was fast deflating, there was a very good chance that Oracle would never see a penny from the deal that Lane had been so proud of.

  What should be the final verdict on Ray Lane’s eight years at Oracle? His outstanding achievements made Oracle a company that learned to care about its customers and to preside over the creation of a large, powerful consulting organization. However, even in these areas the record is not unambiguous. While he did a good job cleaning up (though by no means clearing out) the cowboy U.S. sales force, his attempts to overhaul the culturally very different European operation added considerable cost without any obvious gains in effectiveness.

  Perhaps the biggest myth about Lane, which he was happy to propagate, is that he was the disciplined, process-oriented manager who made the trains at Oracle run on time, in contrast to Ellison, the impulsive visionary. The truth is that until Ellison became interested in mastering the nuts and bolts of process, as a precondition to understanding how such things could be automated, neither of them was paying much attention to the things they should have been. Both were essentially doing what they liked best: Ellison kept Oracle at the leading/bleeding edge technologically; Lane worked corporate America and brought home “the big deals.”

  Many of the people I spoke to about Lane were highly critical of the negative way he has spoken about Oracle since leaving, including giving aid and succor to the enemy by appearing as a guest speaker at SAP’s annual Sapphire Convention. It’s undignified, they say, particularly when you consider the billion or so dollars Lane made during his time at Oracle. They have a point, but given the way Ellison treated him during his last two unhappy years and his subsequent trashing of a man whom he had once been prepared to entrust with running the greater part of the company, it’s not really surprising.

  What is more surprising is how little Lane seems to understand the reasons for the deterioration of his relationship with Ellison (a relationship which both men in conversation compared to a marriage, despite the fact that they were never close friends and had few shared interests). When I told Lane how Ellison had reacted to his threat to jump ship to Novell and then how he had interpreted as a kind of putsch the suggestion that Robert Shaw should take over application development and report to him, Lane seemed genuinely shocked. After one of our interviews he e-mailed Ellison thus:

  Larry,

  I think it’s unfortunate you feel the need to continue to trash me with the press. It’s irrelevant to me since your opinion of me is not relevant to my self esteem, but I assume you don’t think I’m credible to criticize your abilities in leading development, the same way I don’t think you’re qualified to criticize my abilities in sales. I guess we can both continue the war of words; the
press loves it.

  I almost picked up a telephone Saturday to have a conversation with you based on insight Matthew Symonds gave me about 1997. Now I know why you started behaving the way you did and ended up firing your most loyal employee. It’s a shame you read it so wrong, but all that’s irrelevant based on what you want to continue to tell the public, which causes me to do the same.

  Seems a more typical divorce every day. . . . unfortunate.

  Ray

  Lane even asked me whether I would broker a meeting between him and Ellison. He suggested that I should act as a marriage guidance counselor, helping the two of them to understand what had gone wrong between them. I’m not sure that Lane was looking for a reconciliation with Ellison, but rather some kind of closure. Despite all the signals he got that he no longer had Ellison’s professional respect and the fact that a full twelve months had passed since Ellison had fired him, his ego was unable to come to terms with what had happened. He also quite clearly wished he had handled Ellison differently. Lane told me, “I regret that I didn’t work on a one-to-one relationship with Larry.”12

  I asked Ellison what he thought of the idea of meeting Lane with me. His response was that he might be more receptive if Lane weren’t supporting an age discrimination lawsuit against Oracle that had been brought by Randy Baker. But even without that obstacle, I don’t think it’s something that Ellison would have wanted to do. Combined with his dislike of emotional confrontations, he really didn’t see much point in seeing Lane again.

  The last word on what passed between Lane and Ellison should go to the scrupulously fair Jeff Henley: “Larry got very excited about the idea of automating all of Oracle—this is big stuff, man, something I can get my teeth into, which was great. But it’s a shame that Ray became the fall guy because I never saw Ray really try to make Larry look bad or work against him. Ray was critical of Larry at times, as I have been, perhaps more critical than me because he had to deal with all those damn customers who were mad at us . . . but he was just trying to make sure the product got better—that was his whole goal. Ray’s a good guy, and he did a lot for Oracle. But Larry was also absolutely right in getting involved and exposing a lot of nutty things. There were some areas like support and education that, to be honest, Ray didn’t spend any time on. Ray was a little thin-skinned about that because the fact of the matter was that some of that stuff was really screwed up and I think Ray was embarrassed.

  “And once Larry got so deep into Ray’s pants, it was clear to everyone that this was not going to last, but it could and should have ended a little better than it did. Ray was actually willing to leave, but he just wanted to do it in his own way. . . . He was a trouper, a team player . . . for many years he and Larry were a real strong team. And then it turned. I believe it was Gary Bloom and some other people who undermined Ray to a large degree. But when Ray says he was surprised by what happened, that’s just bullshit. He said to me that Larry never told him. I said, ‘Ray, you’ve been here a long time, you know how Larry works, you’re a smart guy.’ He said, ‘Yeah, but I just can’t believe he’d do it to me.’ ”

  * * *

  1. LE writes: Very interesting but not true. During our conversation Ray asked me if I wanted him to leave the company, and I said yes. Later on he sent me an e-mail stating, “Now I know why you started behaving the way you did and ended up firing your most loyal employee.”

  2. LE writes: It had nothing to do with an uncontrollable urge to trash Ray. I avoided talking about this subject for as long as I could. But everyone was so interested. There were numerous “Why Ray left Oracle” articles in the press. I was asked about it repeatedly. On a few occasions and only privately did I tell people that I had asked Ray to leave. I had to get permission from the board before I could ask Ray to leave. I did that. And then I asked him to leave.

  3. LE writes: Not a holdup? He said he was going to Novell because of the money. I offered him more money to stay. It was a classic holdup. He stayed.

  4. LE writes: I’ll say it. Don was right and I was wrong. I should have let Ray go to Novell.

  5. LE writes: Ray calling Ron Wohl a “joke” is as unprofessional and unfair as it is factually inaccurate. The applications that Ron Wohl built run nearly fifteen thousand companies around the world, second in success only to SAP.

  6. LE writes: That’s why I wanted to put all our resources on one version—the Internet version. He still doesn’t understand.

  7. LE writes: When Ray was running marketing, they produced our one and only Super Bowl ad. The ad was a series of scenes from a Vietnam-like war. The fighting stopped when the camera focused on a red wooden chair called “the seat of knowledge.” The red wooden chair was supposed to become our new corporate symbol. I didn’t like the chair, but the war scenes were amazing—bombs, flames, even a running elephant. But I’m not sure it was worth a million dollars.

  8. LE writes: It turns out our education business taught several hundred different courses, but ten of them brought in 90 percent of the revenue. It was an easy business to fix. After we got rid of the unprofitable courses, education margins increased continuously until they reached 50 percent a couple of years ago. They have recently fallen back to between 30 percent and 40 percent because of the ongoing tech slowdown.

  9. LE writes: I am not certain that Ray personally approved Energy Center of Excellence expenditure. Ray had a policy of delegating even very large expenditures to his staff.

  10. LW writes: Absurd. I don’t believe it.

  11. LE writes: He takes personal credit for our stock price run-up? Amazing. Oracle rode the Internet wave because our database powered virtually every major Web site on the Net. If you plot the stock price of Cisco, Oracle, and Sun, you will see that all three companies rose and fell together in perfect synchronization as sentiment about the Internet rose and fell.

  12. LE writes: In the beginning we actually did try to build a social relationship, but it didn’t take hold. Ray’s a serious duck hunter. I raise mallards every spring. We couldn’t be more different in personality and pastimes.

  9

  THE LABORATORY

  A couple of days after the announcement of Ray Lane’s departure, I spoke to Larry Ellison for a piece I was writing about Oracle in The Economist. When explaining why Lane’s job had diminished to the point of insignificance, Ellison said, “We’re going to be an e-business. We’re going to use computers to run everything. Okay. I understand computers. I should be good at this. So suddenly I’m competent to be CEO.” How many successful CEOs, I reflected, who had built their company from scratch over more than two decades and at the age of fifty-six would declare themselves in an on-the-record interview to be “suddenly competent”?

  Although Lane may not see it like this, the pressure he put on Ellison to do something about applications may have been his greatest service to the company; from that, a great deal else would follow. Just as Ellison, by his own admission, had “never really wanted to be a CEO, never really wanted to run a company,” for similar reasons he had never had any real interest in applications. As he said, “I thought understanding business processes was dull and automating them even duller.”

  However, with his reputation on the line as the new Mr. Applications, there was nothing halfhearted about the way he threw himself into learning about the business. When Ellison talks about the experience, he does so with something approaching religious fervor: “It really was a crisis situation. I felt my job was at stake. The company would survive, but I might not. Anyway, it was about six months before Release 11.0 was due to come out and everyone was very concerned about fixing bugs and improving product quality, so I started having regular applications quality meetings. The meetings started about two o’clock in the afternoon and ran until to eight or nine o’clock in the evening. We quickly made progress fixing bugs, so I moved on to asking a lot of questions about what our applications actually did. I had no idea. I never used them. Wait a second, I’m the CEO. How come I’ve never
used our applications? Can someone explain that to me, please? I never got a good answer, but I finally figured it out. Oracle, SAP, and the rest of the ERP vendors don’t make applications for CEOs. CEOs just aren’t important enough. ERP applications are built for clerks.1

  “I’ll never forget my early days in applications. This large aerospace company was doing an evaluation to decide whose applications they were going to buy. They had a huge amphitheater filled with clerks—mainly low-level purchasing people. And they were comparing our applications to PeopleSoft’s applications based on keystrokes. Whoever needed fewer keystrokes to enter a purchase request had the best application. It was like a time-and-motion study from the 1930s. If we required twenty-six keystrokes and they required twenty-four keystrokes, they had the better application. I thought they were joking. The most important thing in purchasing is buying things for less. You’ve got to identify your low-quality suppliers so you can throw their ass out and move their volume to the good suppliers. Of course, before you give the good guys the additional volume you beat the crap out of them so you get a better price. Nobody in their right mind is going to spend a fortune putting in a brand-new purchasing system just so they can get rid of a few clerks. That’s fucking nuts.

  “Our purchasing system has to provide the purchasing people with the information they need to weed out low-quality suppliers—guys who deliver late, that kind of stuff—and negotiate the best possible price from the good suppliers. We do that, right? Oh, no. Nobody does that. We automate the process of entering purchasing requests, approving the purchase request, sending the purchase order to the supplier—the entire purchase-to-pay flow. The people who decide what software they want to use to automate the process are the people who will be using the systems. The clerks decide? What does the CEO think about this? I mean, how much you spend buying stuff is a big deal, you’d think the CEO or the CFO would be deep into this. I just can’t believe they’re going to spend all this money on a new purchasing process automation system without making sure that they were getting a great information system to go along with it. But they did. Because ERP vendors don’t make information systems.