April 30, 2018 • 37 mins
Oracle co-founder Larry Ellison has earned himself a flamboyant reputation among the tech elite. How did a self-taught programmer help start the second-biggest software company in the world?
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Speaker 1 (00:04):
Get in touch with technology with tech Stuff from how
stuff works dot com. Hey there, and welcome to tech Stuff.
I'm your host, Jonathan Strickland. I'm an executive producer at
how Stuff Works and I love all things tech. And
today we're gonna talk about the Oracle story. Oracles a big,
big company, and this is inspired by my recent trip
(00:27):
to Sweet World eighteen. I flew out to Las Vegas,
Nevada and was part of that conference. I am back
in the Atlanta studio as I record this, So if
you're listening to this and you're thinking us sounds like
the normal type of episode, that's why. Also I want
to let you guys know we're going to step up
the production schedule for Tech Stuff, so you're gonna start
(00:49):
getting new episodes pretty much on a daily basis, at
least four new episodes a week and a rerun on Saturday's,
maybe more than that, depending up on how our scheduling goes.
But we're experimenting with a new format to see how
well it works, and I'm curious to hear what you
guys think about it. But I'm really excited about this
because it means I get to do the thing I
(01:11):
love to do more often, which is awesome. All right,
let's talk about Oracle. It's a huge name in the
tech space. It's a software company that frequently ranks right
behind Microsoft in the largest of such companies in the world.
So in the world of software, Microsoft's number one and
Oracles right behind it number two. And while most of
(01:32):
Oracles products aren't the kind the average person accesses on
a regular basis. You know, you think of Microsoft and
you think of things like Windows, and you think of
their suite of productivity software, things like Word and Excel.
Oracles business isn't really about the average customer, like the
average person is being a customer. Instead, it tends to
(01:54):
be a business that sells products to other businesses. Um.
It's history and its founders have very interesting stories. So
to begin with, let's start with the most famous of
oracles co founders, a man who has an incredible reputation
for being uh flamboyant, and he speaks his mind and
(02:19):
he can be incendiary in some cases. We're talking about
Larry Ellison. Now, Ellison's story is the stuff of legend
or maybe a fairy tale in some ways, because he
rose from poverty to become one of the richest people
in the world, and he has a reputation for being headstrong, unconventional,
(02:40):
and at times in his life living like a rock star.
Biography about his life has the title The Difference between
God and Larry Ellison, which is a setup to the
punchline God doesn't think he's Larry Ellison. I could do
a full episode just on him and his anti but
I'm gonna try and limit that a little bit and
(03:03):
focus mostly on his behavior directly tied to Oracle, though
expect some of Ellison's actions to creep in now and
again because they had an impact on the company that
he co founded. He was born in nineteen forty four
to nineteen year old Florence Spellman. Spellman was unwed and
Ellison never met his biological father. His mother handed Ellison
(03:27):
over to her sister, Lillian and her sister's husband, Louis
Louis Ellison. Larry's aunt and uncle adopted him, and according
to Ellison, the family took their last name from Ellis
Island after the father or the his uncle really Louis
(03:48):
or Louis after his family immigrated to America from Eastern Europe. Now,
according to Ellison himself, his childhood was pretty rough. His
adopted father undermined Ellison's self worth and confidence. Apparently, he
would say frequently that Larry Ellison was good for nothing.
Ellison had trouble in school. He was described as intelligent,
(04:11):
but he didn't do well with authority figures. He wasn't
really crazy about being told what to do and win.
But he was very smart, and when he graduated high school,
he first enrolled in the University of Illinois, but after
a while he dropped out, and then he enrolled in
the University of Chicago, but after a while he dropped
out of that as well, and at least the first one.
(04:34):
He dropped out for good reason and that his adopted
mother had passed away and he wanted to leave school
to be back with his his family and to pay
his respects. He made the decision in the mid nineteen
sixties to head to California and try to make a
living out there, and at first he did odd jobs.
(04:54):
He also bought a book on programming and began to
teach himself how to do it. According to an account
he gave to the Smithsonian, he never once took a
class in computer programming. He was completely self taught and
in nineteen seventy three got hired on at the Ampex Corporation.
Ampex is an electronics company. It started out making electric
(05:14):
motors and generators in the nineteen forties. By the nineteen seventies,
when Ellison had joined, the company had diversified and started
making various types of recorders like magnetic tape recorders such
as eight track or sixteen or twenty four track recorders.
Larry Ellison's supervisor at Ampex was a guy named Robert
Bob Nimrod Minor. Bob Minor was a first generation American
(05:38):
born in nineteen forty one. His parents came from Iran
to live in the US in the nineteen twenties. Minor
had attended the University of Illinois at Urbana Champaign and
graduated with a degree in mathematics. Bob Minor had a
deep understanding of computers and would end up being the
lead engineer for Oracle during those early days. The third
(06:00):
co founder of Oracle was another Ampex employee named Ed Oates.
He was born in nineteen forty six and graduated with
a BA in mathematics from San Jose University in nineteen
sixty eight. Together with Minor and Ellison, he would found
what would become Oracle. Now, alright, I should say that
at the very beginning here that there are a lot
(06:22):
of conflicting reports about the actual order of events that
I'm going to describe next. But based upon my research,
this is how I think things unfolded. Now. I say think,
because again, if you research this stuff, you're gonna find
a lot of different versions of this story. Some suggest
(06:44):
that Ellison joined the fledgling company a few months after
Oates and Minor founded it. Others say that Ellison was
the central role of founder in this company. I think
the truth is probably somewhere in the middle. First, Ellison
left Ampex in nineteen seventy six and joined another company
(07:04):
called Precision Instruments to take the position of vice president
of research and development over at Ampex. Bob Minor and
Ed Oates decided they wanted to form their own business,
so they left Ampex and they create They contacted Ellison.
They asked him if maybe he wanted to join their venture,
and Ellison agreed. So while he had joined Precision Instruments,
(07:26):
he was not there for very long. He left to
go and found this company and the brand new company
was not called Oracle, at least not yet. Instead, this
brand new company was called Software Development Laboratories or s
d L, and their business model was to become software
(07:48):
engineers for hire, so companies would contract with them to
build out software packages that those companies needed on a
per job basis. They would be contract workers. You need
a platform of programs developed, call us, we'll do it.
They rented out a an office out of Santa Clara, California,
with nine square feet of office space and all they
(08:11):
needed at that point, we're customers. So while they started
looking for business, ed Oates was looking around and he
came across a paper that was written back in n
seventy by a computer scientist in the UK named Edgar F. Cod.
Cod proposed using a model for information that would allow
(08:31):
a database to organize data by its relationship with other data.
And you would do this by organizing all the information
into tables with columns and rows, and each row would
have a unique identifier attached to it, and the rows
will be called records or sometimes called tuples. Columns would
(08:53):
represent attributes, so you would have a column that describes
some sort of feature that could apply to the various
records the various rows in this table, and each column
would be a different feature. So let's say that you're
talking about a physical product. One column might indicate the
location where that physical product is. Another column might be
(09:16):
the price of that product, or another one might be
the color of that product or whatever that might be.
And using this kind of approach, you could build a
really useful database that could allow you to look at
data in many different ways by structuring queries. So let
me give you a simple example so that I can,
(09:36):
you know, explain what this means. Let's say that you
are a huge roller skate tycoon, which means you you
sell roller skates and you're incredibly successful, not that you
sell really big roller skates or that you are in
fact a giant who wears roller skates. Now, in your business,
(09:57):
you decide you want to see which lines of roller
skates are selling best in your stores in San Francisco.
So you run a query and you've got this big
table of data and you're saying, well, I want to
see the skates that are being sold in our San
Francisco stores. I want them ranked by most popular to
(10:17):
least popular, and then I can get a quick look
at my business and see which ones are doing well.
Maybe I need to order more of those, Maybe I
need to order fewer of the models that are not
doing really well. And so you look at this information
and you see that the skates that have really good
breaks on them are the ones they're doing really well,
which makes sense in San Francisco, because otherwise you're just
(10:39):
gonna take off down that hill, hurtling to your destiny
until you just end up in the middle of the
Pacific Ocean, so you would never be seen again. It
makes sense that the roller skates would break, so the
ones that are doing really well. Now this is not
revolutionary these days, right. We are used to being able
to create ables in this way where we can create
(11:03):
different categories of features and then we can sort by that,
or we can filter by that, so that we're only
looking at the data that actually interests us, and everything
else gets hidden away so that it's not distracting. That's
not revolutionary today, But back then it was. This relational
database idea was a huge, huge notion, and at that point,
(11:26):
while cod was suggesting this particular model of handling information,
no one had yet found a way to implement it.
In an elegant way. All the different attempts were still
very much in the early phases. But Oates, having read
this paper, thought this sounds really really interesting to me.
I think that we can make a business out of
(11:48):
this because other businesses are going to want to be
able to sort their data in various ways. So if
we can figure out a way to build a software
platform where we can create eate database software for these companies,
that might be our entry point into the market. Maybe
that's how we actually start making our money. So the
(12:10):
databases in commercial use became known as relational database management systems,
also known as r D B M s S S so
are for relational dB for database, M for management, and
S for systems. And that would really transform data analysis.
(12:30):
But that's only part of the picture. So another part
was thanks to the computer scientists over at IBM. There
was a guy named Donald D. Chamberlain and another one
named Raymond F. Boyce. They had also read Cod's paper,
and they decided to create a type of programming language
that could manifest those ideas make them actually work. They
(12:51):
wanted to create a programming language that would end up
allowing you to create these kind of relational databases. So
they set to work and doing it, and there first
such a town was originally called Square, but Square proved
to be pretty clunky and inelegant. It had a lot
of limitations to it, so they decided to go back
to the drawing board and try again. Their second effort
(13:11):
they called sequel s q L, or sometimes they actually
would spell it out s e q L, and s
q L stands for structured Query Language. S e q
L was supposed to be structured English query language, and uh,
it was kind of a cheeky reference to also being
the second attempt to create such a language to make
(13:33):
these r D B M s is. So the sequel
language would in fact lend itself well to building this
kind of database. Now what came next, Well, I'll tell you,
but first let's take a quick break to thank our sponsor.
(13:57):
All Right, So we have this concept of relational databases
that cod had proposed. We've got the sequel language that
was developed by the scientists over at IBM, and the
three co founders decided they didn't want to challenge IBM
directly by creating database systems for mainframe computers. IBMS clients
(14:18):
tended to be really big companies, like really big ones,
and they were mostly using these large mainframe computer systems
that trace their origins back to the nineteen fifties. So instead,
the co founder said, what we should do is build
out a database system that can work on many computers.
(14:39):
Many computers are still pretty big, right they're not. They're
bigger than what a personal computer would have been. Like,
especially the many computers back in the nineteen seventies. They
were still large. Uh, they were less expensive than mainframes,
but they were also less powerful and they were more
frequently used by mid sized companies. It just made more
sense to go with many computers than may frames. Now,
(15:00):
the personal computers, those we would call micro computers, they're
even a size smaller. So the co founder said, well,
IBM is probably not going to go for that market.
They tend to concentrate on large companies, not mid sized companies.
So if we tailor a business for mid size companies,
there's probably a lot of opportunity there, and we don't
(15:23):
have to worry about IBM wanting to compete directly against
us or acquire us. We can do business our way.
And so ed Oates convinced his partners that building out
databases using the sequel language was the way to go,
and so the team got to work building their very
first software product, which was called Oracle. But there's a
(15:45):
bit more to it than that, because it was called
Oracle for specific reasons. So the software gots name from
a project that was being run by the first customer
SDL ever had. Remember STL stood for Software Element Laboratories. Well,
that customer was the little US agency called the c
(16:08):
i A, that is, the Central Intelligence Agency. That was
the first s d L customer, and the CIA had
a special project they were looking to complete called Oracle.
So what was the project about? Why did they need
a relational database? Well, who's to say it's classified? It's
(16:32):
probably cloak and dagger stuff. I do not have the
proper clearance to find out what exactly was going on.
It was all redacted. But STL took the project and
they had two years to complete the work and create
a relational database for the c i A. Bob Minor
did most of the work and creating the architecture for
the database, and they were able to turn in their
(16:53):
project a year ahead of schedule. They spent the following
year adapting this database approach so that they could create
a commercial product that they could sell to other companies.
So essentially, they said, well, we did this for the CIA,
let's just adapt it so that we can sell it
to anyone, really, any organization or a company that's out there.
(17:13):
So they decided to stick with the name the project
name the CIA project, which was called Oracle, and use
that to name their product, their software, their database software
thus became known as Oracle. By the way, there is
an allegation out there that Oracle actually started out as
a Russian software product that the c i A lifted
(17:36):
as in stall, and then handed over to SDL. I've
seen no confirmation of that allegation anywhere, and I'm inclined
to consider it outright false, as it really serves as
a huge injustice to the people like Bob Minor who
actually worked really hard to build out this database software.
But I just wanted to acknowledge the fact that there
(17:58):
is a rumor out there. I just don't think it
has any real credence. Also, the version that Ellison, Bob
Minor and Oates made commercially available wasn't just Oracle. It
was actually called Oracle Version two. So why was the
first version ever offered in the consumer market, known as
(18:18):
Version two. Well, it's because Larry Ellison thought no company
or organization would want to buy Version one of any
kind of software platform. They would worry about it being unproven,
and so he said, well, why don't we just call
this version two? Will bypass the problem. It was still
the first version of the Oracle software, it just had
(18:40):
the name Version two, which is sort of like forming
a brand new musical band and then calling your first
album your greatest Hits album, which is funny. There's a
lot of hutzpa there. In fact, hutzba is one of
those words that often gets used to describe Ellison. But
that's why the first version of Oracle was called Version two,
(19:04):
even though it was technically the first one. The company's
first hired to help them build out this software was
a programmer named Bruce Scott, and he started so early
with the others that he's frequently referred to as the
fourth co founder, but technically speaking, he was the company's
first hire. Scott worked on the first several versions of
(19:26):
the Oracle database software. Now, it took a couple of
years to get Oracle ready for commercial deployment from the
founding of the company. So again STL was founded in
nineteen seventy seven, but by nineteen seventy nine, Oracle was
ready to go, and the company formerly known as Software
Development Laboratories, had undergone a name change, but it still
(19:48):
wasn't called Oracle yet. Instead it became known as Relational Software, Incorporated.
And one wonders if they ever got contacted by people
who were compute dating enthusiasts, because Relational Software suggests to
me that maybe you can hook me up with miswrite.
I don't need that. By the way, I'm happily married.
(20:09):
The company's Oracle product soon became the go to for
lots of big companies and organizations, including other U. S.
Government and military clients. So in addition to the c
i A, there was the Air Force and the Navy.
In fact, depending upon whose account you read, the first
customer for the company wasn't the CIA, but instead was
(20:30):
the Air Force. Either way, the military and intelligence communities
were hot for relational databases, and it makes sense considering
how much information those organizations have to handle, So one
of their earliest non government contracts would be with Bell Labs,
another company that has a huge amount of information to
deal with, so it made sense that they wanted a
(20:51):
database software program where they could structure that data in
a way that was more useful. By the model for
business computing had shifted toward mini computers and the Unix
operating system for things like database management, So people were
moving away from having that enormous centralized computer that mainframe
inside their business. They were now starting to rely on
these relatively smaller mini computer workstations and the Unix operating
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system so that they could actually do their work instead
of having this proprietary massive computer in their building. That
played right into this young company's strengths and admit, their
decision to focus on many computers was a big success,
and sales steadily began to climb. Now it wasn't a
runaway success right out of the gate, but they were
(21:40):
making regular sales. In one the company lured away former
IBM employee Umang Gupta to join as the seventeenth employee
of Relational Software. I'll be talking about some of the
other early employees in part two of this episode, because,
as it turns out, some people that were hired early
on stuck around with Oracle for quite some time. But
(22:03):
over that time they began to form some very strong
opinions about Larry Ellison and his managerial style. Anyway, back
to Gupta, his main priority was developing a business plan
for the company. Because you had these three guys who
had founded the company and they knew how to make
and market a product. Everyone said that Ellison was kind
(22:26):
of the marketing guy. He was the one who would
go out and sell the product, and Bob Minor was
the architect and at Oates was a developer. But they
weren't business guys in the sense that they weren't the
ones ready to run an enormous company um and so
doing things like developing a business plan was not exactly
(22:46):
in their strong suit. That wasn't one of their uh
there uh features. So Gupta came in and he created
a business plan for the company, and he was also
the vice president of the company's microcomputer products division. Now,
remember this was a time when personal computers, also known
as micro computers, were really starting to become a big success.
(23:08):
In the early nineteen eighties. The proliferation of computer systems
and businesses and homes created the opportunity for software companies
to go after new markets, and after a relatively short
stint at the company, Gupta would end up leaving along
with the first employee hire of Oracle's history, Bruce Scott,
and they would found Gupta Technologies, which later became cinur
(23:32):
A Software. Also in nineteen eighty one, the company began
to work on features that would expand Oracles, such as
the Interactive Application Facility. This was a tool that could
handle transaction processing forms, which doesn't sound exciting, but it
was an important development in the company changed names again,
(23:53):
except this time they finally became the Oracle we know today.
At that time, the company was enjoying two and a
half million dollars in annual revenue. To grow further, the
company leaders decided to invest a quarter of their revenues
back into research and development. So how did that pan out? Well,
I'll tell you, but first let's take another quick break
(24:16):
to thank our sponsor. As it turns out, this two
and a half million and annual revenue and then the
reinvestment into research and development paid off in a big way.
So the next big jump Oracle took was in three
(24:36):
when the company offered up a version of relational database
management software that could work on any sort of computer platform,
which included mainframes, workstations, and personal computers. This expansion doubled
company revenues for that year, which is pretty good validation
for your decision. This was Oracle version three, which really
(25:00):
means it was version two, because again they started with two,
not one. So you know what, when I tell you
version names, just mentally subtract one from the number, because
that's what it really was. Now. Version three was such
a big success that the company decided to push version
four out the following year, in nineteen eighty four. This
(25:22):
version included the ability to generate a report based on queries,
which again seems like a no brainer these days, but
it was a real innovation at the time by Oracle
was selling more than twenty million dollars a year in
software deals, and the company was getting into a very
young field, which was the Internet. In the Internet was
(25:46):
extremely young, not a lot of people knew about it,
but in fact, of course, that was a decade before
the Web would really become a thing, So this was
a pretty bold move. Um. Version five of our software
supported the ability for a machine running Oracle to log
into a database server, so you didn't have to rely
(26:07):
on computer systems that were co located anymore. With a
connection to the Internet, you could have computers in offices
around the world log into the same database. The version
also included an auditing feature that tracked all the times
someone accessed the database, which was a security and quality
control feature. So it didn't necessarily immediately tell you who
(26:29):
had accessed the database, but I would tell you the
location of that person or the person's computer and the time,
like what time did they access the database. So if
you go into the database and you think, well, that's weird,
three whole columns are missing. Someone accidentally deleted them. I
wonder who did that. You could actually go through the
audit list and find out who had last accessed that
(26:50):
particular database, and then you could go and pay them
a little visit and maybe ask them why they don't
like their kneecaps anymore. I'm assuming you're using the database
in the mafia. But the point being that this was
a new feature that allowed for greater tighter control not
just of the information but access to it. And they
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hit fifty five million dollars in revenue. That's not profit,
that's in revenue, but still fifty five million is a
huge amount of money, and it was incredible growth for
the software company. That was also the year Oracle held
its initial public offering or i p O. That's when
a private company turns into a publicly traded one. The
initial price for a share of Oracle stock was fifteen dollars.
(27:37):
An Oracle created two point one million shares and made
them available. So you multiply those two numbers together and
you get the market value of the company, which was
thirty one and a half million dollars. So again you
just look at how much is it per share, how
many shares are out there. Multiply those two numbers together,
and that tells you the market value for a company.
(27:59):
By the way, if you want to know how much
a share of Oracle stock you bought back in the
days when it went public, how much would that be
worth today? You actually have to do a little bit
of math. The day I'm doing this research, So the
day I actually researched this information, Oracle stock came in
at forty six dollars per share or so, which means
(28:21):
it's about three times more than the initial offering at
fifteen dollars, which means you would triple your money. Right,
not so fast, because it gets way better than that.
If you just thought, oh, the stock prices three times
what it used to be, I make three times as
much money. Here's the thing. Oracle has split its stock
(28:41):
a few times. So splitting stock increases the number of
shares a company has out on the market, and it
also has the effect of lowering the price per share.
But you end up with twice as many shares if
you're doing a two for one split, and the overall
market valuation of the company will remain the same of
the moment. So, in other words, the market valuation has
(29:03):
to remain constant. You don't magically make the company more valuable. Right,
So if you already have your company valued at thirty
million dollars and you've got two million UH shares out there,
and you go to four million shares, your company is
still going to be worth thirty million dollars. It's just
that each share is going to be worth half as
(29:24):
much as it was before. So I have I do
it too. For one split, I double the number of
shares in my company. I also have the value of
the individual shares, because again, the value of my company
does not magically change. So I'm gonna give you a
full example here, Let's say that my company is worth
fifty million dollars and I've got two million shares out there,
(29:44):
which means each shares worth twenty five bucks before I split.
Then I split the stock two for one. Now there
are four million shares of my company out on the market,
which makes the price of each share go down to
twelve dollars and fifty cents. So when you split a stock,
if someone already owns stock, they get the benefit of
(30:04):
that split. Right. So if it's a two for one
split and I own ten shares of the company, now
I own twenty shares of the company. Each share is
half as expensive as it used to be, but I've
got twice as many. So why would I Why would
I bother splitting if the value of the company remains
the same. What's the point? Well, there's some psychological effects
(30:27):
when you split stock. If you were to take humans
out of the equation entirely, if you took human emotion out,
then it wouldn't really matter if you split the stock
or not. It wouldn't really have a big effect on
the company's performance. But we are human, we're the ones investing,
so it does matter. By splitting the stocks and reducing
(30:47):
the cost on a per share basis, you can improve
the liquidity of shares. People are more likely to trade
because they don't feel they don't feel frozen either by
holding onto stocks that are incredibly expensive, and therefore they
have the the the reputation of being valuable. And you
(31:10):
don't avoid investing because the entry price is too high. Right,
You've lowered the entry fee to buy stock by making
the stocks half as expensive. So you might have small
investors out there who would jump on shares of Oracle,
but if it's too expensive, they're like, I just I
can't buy a forty dollar stock that drops down to
(31:32):
twenty Oh, I can buy that. Then you get more investors,
So that's one of the reasons you might do it.
You might do it to try and encourage more trading,
to encourage more small investors, and you're also doing it
in an attempt to continue growing. So while you initially
reduce the price of those shares by half, they can
(31:52):
still climb up as the company does well. So uh,
that means the stock price can increase over time. So
over the course of Oracle's history, it is actually split
its stock ten times. Six of those were two for
one stocks, which meant if you held stocks an Oracle,
the number of shares would double each time it has
(32:12):
a two for one split, but four of the splits
we're three for two stock splits, meaning that for every
two shares you held, you would get a third one,
or if you prefer, for each share you got one
and a half shares. Right, So if you bought one
share of Oracle in nine six for fifteen dollars, after
(32:35):
all the stock splits, you would actually end up with
three hundred twenty four shares of Oracle, right, because of
each of the times they split, your number of shares
would increase. So if you add up all the different
ten splits, that one share turns into three four shares.
And it's not three four shares at fifteen dollars, which
(32:56):
is what you bought it at. It's three four shares
of Oracle at forty six dollars, which means your fifteen
dollar investment would turn into fourteen thousand, nine hundred four dollars.
Not bad, not bad to go from fifteen to fourteen
thousand bucks now almost fifteen thousand bucks now. Oracle clients
(33:18):
were pretty huge, which makes sense. Not a lot of
smaller organizations had real need for the robust databases Oracle
had to offer. Instead, Oracles products were appealing to bigger
organizations and companies industries like pharmaceutical companies, aerospace companies, tech firms,
automotive corporations. Those were among oracles top clients. In Oracle
(33:44):
launched a new division in the company. It was called
the Applications Division, and it initially had just seven employees
working in it. Their job was to put together application
software to integrate various functions with the database software to
make it easier to run routine tasks for large organizations. Essentially,
the thought was that the database software gave organizations a
(34:07):
lot of power to analyze their data, but they still
had to develop their own tools to put that data
to use. So Oracle was getting into the business of
developing applications that would do that for these companies. Oracle
didn't just rely on in house teams to do this.
The company also acquired a company called t c I
that built project management applications. The in house team got
(34:29):
to work building on an accounting module that could integrate
with Oracle databases, and this was the beginning of Oracle
creating a suite of software applications that could work closely together.
Branching out from being a purely database focused company, Oracle
also launched a consulting service to offer support to clients,
(34:49):
helping them best understand how to leverage Oracle software. So
now not only could the company sell its products to customers,
it could keep earning money from those same kind customers
by explaining to them how to use their own products,
which is pretty much genius. In fact, this was a
top revenue generator for Oracle, was not just selling the product,
(35:10):
but selling ongoing support for the product. In the company
was outgrowing its home base, and so it relocated to
Redwood Shores, California. It launched a subsidiary company called Oracle
Data Publishing that was all about getting hold of data
and then distributing it electronically, and the company sought out
new industries and branches of computing to expand into, including supercomputers.
(35:34):
The following year would end up being a tumultuous one
for Oracle, which had to make for a pretty ugly
admission for a company all about crunching numbers, because the
company turns out it had misrepresented revenues, whether on purpose
or by accident. It was not a pretty picture. And
that's how we're gonna start our next episode of the
(35:55):
Oracle Story talking about this massive controversy that the company
and countered early in its history and what it had
to do in order to climb back out again. In fact,
it was so bad that there was a real danger
of Oracle going away and not surviving. Now, as it
turns out, Oracle still around today, so you kind of
(36:16):
know things work out, but back then people weren't so sure. Now,
if you have suggestions for future episodes of tech Stuff,
I welcome you to write me and let me know
what they are. The email address for this show is
tech Stuff at how stuff works dot com, or you
can drop me a line on Twitter or Facebook. The
handle for both of those is tech Stuff hs W.
(36:37):
Remember we have an Instagram account. You can go and
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stuff and some other interesting things. Also, remember I broadcast
my recording sessions live on twitch dot tv slash tech Stuff.
Just go there. You'll see when I tend to stream.
It's on Wednesdays and Fridays, but there's a schedule up there,
(36:58):
so go there. You can jump into the chat room
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talk to you again. Really sick for more on this
and thousands of other topics. Is it how stuff works
dot com
Get in touch with technology with tech Stuff from how
stuff works dot com. Hey there, and welcome to tech Stuff.
I'm your host, Jonathan Strickland. I'm an executive producer at
how Stuff Works and I love all things tech. And
today we're gonna talk about the Oracle story. Oracles a big,
big company, and this is inspired by my recent trip
(00:27):
to Sweet World eighteen. I flew out to Las Vegas,
Nevada and was part of that conference. I am back
in the Atlanta studio as I record this, So if
you're listening to this and you're thinking us sounds like
the normal type of episode, that's why. Also I want
to let you guys know we're going to step up
the production schedule for Tech Stuff, so you're gonna start
(00:49):
getting new episodes pretty much on a daily basis, at
least four new episodes a week and a rerun on Saturday's,
maybe more than that, depending up on how our scheduling goes.
But we're experimenting with a new format to see how
well it works, and I'm curious to hear what you
guys think about it. But I'm really excited about this
because it means I get to do the thing I
(01:11):
love to do more often, which is awesome. All right,
let's talk about Oracle. It's a huge name in the
tech space. It's a software company that frequently ranks right
behind Microsoft in the largest of such companies in the world.
So in the world of software, Microsoft's number one and
Oracles right behind it number two. And while most of
(01:32):
Oracles products aren't the kind the average person accesses on
a regular basis. You know, you think of Microsoft and
you think of things like Windows, and you think of
their suite of productivity software, things like Word and Excel.
Oracles business isn't really about the average customer, like the
average person is being a customer. Instead, it tends to
(01:54):
be a business that sells products to other businesses. Um.
It's history and its founders have very interesting stories. So
to begin with, let's start with the most famous of
oracles co founders, a man who has an incredible reputation
for being uh flamboyant, and he speaks his mind and
(02:19):
he can be incendiary in some cases. We're talking about
Larry Ellison. Now, Ellison's story is the stuff of legend
or maybe a fairy tale in some ways, because he
rose from poverty to become one of the richest people
in the world, and he has a reputation for being headstrong, unconventional,
(02:40):
and at times in his life living like a rock star.
Biography about his life has the title The Difference between
God and Larry Ellison, which is a setup to the
punchline God doesn't think he's Larry Ellison. I could do
a full episode just on him and his anti but
I'm gonna try and limit that a little bit and
(03:03):
focus mostly on his behavior directly tied to Oracle, though
expect some of Ellison's actions to creep in now and
again because they had an impact on the company that
he co founded. He was born in nineteen forty four
to nineteen year old Florence Spellman. Spellman was unwed and
Ellison never met his biological father. His mother handed Ellison
(03:27):
over to her sister, Lillian and her sister's husband, Louis
Louis Ellison. Larry's aunt and uncle adopted him, and according
to Ellison, the family took their last name from Ellis
Island after the father or the his uncle really Louis
(03:48):
or Louis after his family immigrated to America from Eastern Europe. Now,
according to Ellison himself, his childhood was pretty rough. His
adopted father undermined Ellison's self worth and confidence. Apparently, he
would say frequently that Larry Ellison was good for nothing.
Ellison had trouble in school. He was described as intelligent,
(04:11):
but he didn't do well with authority figures. He wasn't
really crazy about being told what to do and win.
But he was very smart, and when he graduated high school,
he first enrolled in the University of Illinois, but after
a while he dropped out, and then he enrolled in
the University of Chicago, but after a while he dropped
out of that as well, and at least the first one.
(04:34):
He dropped out for good reason and that his adopted
mother had passed away and he wanted to leave school
to be back with his his family and to pay
his respects. He made the decision in the mid nineteen
sixties to head to California and try to make a
living out there, and at first he did odd jobs.
(04:54):
He also bought a book on programming and began to
teach himself how to do it. According to an account
he gave to the Smithsonian, he never once took a
class in computer programming. He was completely self taught and
in nineteen seventy three got hired on at the Ampex Corporation.
Ampex is an electronics company. It started out making electric
(05:14):
motors and generators in the nineteen forties. By the nineteen seventies,
when Ellison had joined, the company had diversified and started
making various types of recorders like magnetic tape recorders such
as eight track or sixteen or twenty four track recorders.
Larry Ellison's supervisor at Ampex was a guy named Robert
Bob Nimrod Minor. Bob Minor was a first generation American
(05:38):
born in nineteen forty one. His parents came from Iran
to live in the US in the nineteen twenties. Minor
had attended the University of Illinois at Urbana Champaign and
graduated with a degree in mathematics. Bob Minor had a
deep understanding of computers and would end up being the
lead engineer for Oracle during those early days. The third
(06:00):
co founder of Oracle was another Ampex employee named Ed Oates.
He was born in nineteen forty six and graduated with
a BA in mathematics from San Jose University in nineteen
sixty eight. Together with Minor and Ellison, he would found
what would become Oracle. Now, alright, I should say that
at the very beginning here that there are a lot
(06:22):
of conflicting reports about the actual order of events that
I'm going to describe next. But based upon my research,
this is how I think things unfolded. Now. I say think,
because again, if you research this stuff, you're gonna find
a lot of different versions of this story. Some suggest
(06:44):
that Ellison joined the fledgling company a few months after
Oates and Minor founded it. Others say that Ellison was
the central role of founder in this company. I think
the truth is probably somewhere in the middle. First, Ellison
left Ampex in nineteen seventy six and joined another company
(07:04):
called Precision Instruments to take the position of vice president
of research and development over at Ampex. Bob Minor and
Ed Oates decided they wanted to form their own business,
so they left Ampex and they create They contacted Ellison.
They asked him if maybe he wanted to join their venture,
and Ellison agreed. So while he had joined Precision Instruments,
(07:26):
he was not there for very long. He left to
go and found this company and the brand new company
was not called Oracle, at least not yet. Instead, this
brand new company was called Software Development Laboratories or s
d L, and their business model was to become software
(07:48):
engineers for hire, so companies would contract with them to
build out software packages that those companies needed on a
per job basis. They would be contract workers. You need
a platform of programs developed, call us, we'll do it.
They rented out a an office out of Santa Clara, California,
with nine square feet of office space and all they
(08:11):
needed at that point, we're customers. So while they started
looking for business, ed Oates was looking around and he
came across a paper that was written back in n
seventy by a computer scientist in the UK named Edgar F. Cod.
Cod proposed using a model for information that would allow
(08:31):
a database to organize data by its relationship with other data.
And you would do this by organizing all the information
into tables with columns and rows, and each row would
have a unique identifier attached to it, and the rows
will be called records or sometimes called tuples. Columns would
(08:53):
represent attributes, so you would have a column that describes
some sort of feature that could apply to the various
records the various rows in this table, and each column
would be a different feature. So let's say that you're
talking about a physical product. One column might indicate the
location where that physical product is. Another column might be
(09:16):
the price of that product, or another one might be
the color of that product or whatever that might be.
And using this kind of approach, you could build a
really useful database that could allow you to look at
data in many different ways by structuring queries. So let
me give you a simple example so that I can,
(09:36):
you know, explain what this means. Let's say that you
are a huge roller skate tycoon, which means you you
sell roller skates and you're incredibly successful, not that you
sell really big roller skates or that you are in
fact a giant who wears roller skates. Now, in your business,
(09:57):
you decide you want to see which lines of roller
skates are selling best in your stores in San Francisco.
So you run a query and you've got this big
table of data and you're saying, well, I want to
see the skates that are being sold in our San
Francisco stores. I want them ranked by most popular to
(10:17):
least popular, and then I can get a quick look
at my business and see which ones are doing well.
Maybe I need to order more of those, Maybe I
need to order fewer of the models that are not
doing really well. And so you look at this information
and you see that the skates that have really good
breaks on them are the ones they're doing really well,
which makes sense in San Francisco, because otherwise you're just
(10:39):
gonna take off down that hill, hurtling to your destiny
until you just end up in the middle of the
Pacific Ocean, so you would never be seen again. It
makes sense that the roller skates would break, so the
ones that are doing really well. Now this is not
revolutionary these days, right. We are used to being able
to create ables in this way where we can create
(11:03):
different categories of features and then we can sort by that,
or we can filter by that, so that we're only
looking at the data that actually interests us, and everything
else gets hidden away so that it's not distracting. That's
not revolutionary today, But back then it was. This relational
database idea was a huge, huge notion, and at that point,
(11:26):
while cod was suggesting this particular model of handling information,
no one had yet found a way to implement it.
In an elegant way. All the different attempts were still
very much in the early phases. But Oates, having read
this paper, thought this sounds really really interesting to me.
I think that we can make a business out of
(11:48):
this because other businesses are going to want to be
able to sort their data in various ways. So if
we can figure out a way to build a software
platform where we can create eate database software for these companies,
that might be our entry point into the market. Maybe
that's how we actually start making our money. So the
(12:10):
databases in commercial use became known as relational database management systems,
also known as r D B M s S S so
are for relational dB for database, M for management, and
S for systems. And that would really transform data analysis.
(12:30):
But that's only part of the picture. So another part
was thanks to the computer scientists over at IBM. There
was a guy named Donald D. Chamberlain and another one
named Raymond F. Boyce. They had also read Cod's paper,
and they decided to create a type of programming language
that could manifest those ideas make them actually work. They
(12:51):
wanted to create a programming language that would end up
allowing you to create these kind of relational databases. So
they set to work and doing it, and there first
such a town was originally called Square, but Square proved
to be pretty clunky and inelegant. It had a lot
of limitations to it, so they decided to go back
to the drawing board and try again. Their second effort
(13:11):
they called sequel s q L, or sometimes they actually
would spell it out s e q L, and s
q L stands for structured Query Language. S e q
L was supposed to be structured English query language, and uh,
it was kind of a cheeky reference to also being
the second attempt to create such a language to make
(13:33):
these r D B M s is. So the sequel
language would in fact lend itself well to building this
kind of database. Now what came next, Well, I'll tell you,
but first let's take a quick break to thank our sponsor.
(13:57):
All Right, So we have this concept of relational databases
that cod had proposed. We've got the sequel language that
was developed by the scientists over at IBM, and the
three co founders decided they didn't want to challenge IBM
directly by creating database systems for mainframe computers. IBMS clients
(14:18):
tended to be really big companies, like really big ones,
and they were mostly using these large mainframe computer systems
that trace their origins back to the nineteen fifties. So instead,
the co founder said, what we should do is build
out a database system that can work on many computers.
(14:39):
Many computers are still pretty big, right they're not. They're
bigger than what a personal computer would have been. Like,
especially the many computers back in the nineteen seventies. They
were still large. Uh, they were less expensive than mainframes,
but they were also less powerful and they were more
frequently used by mid sized companies. It just made more
sense to go with many computers than may frames. Now,
(15:00):
the personal computers, those we would call micro computers, they're
even a size smaller. So the co founder said, well,
IBM is probably not going to go for that market.
They tend to concentrate on large companies, not mid sized companies.
So if we tailor a business for mid size companies,
there's probably a lot of opportunity there, and we don't
(15:23):
have to worry about IBM wanting to compete directly against
us or acquire us. We can do business our way.
And so ed Oates convinced his partners that building out
databases using the sequel language was the way to go,
and so the team got to work building their very
first software product, which was called Oracle. But there's a
(15:45):
bit more to it than that, because it was called
Oracle for specific reasons. So the software gots name from
a project that was being run by the first customer
SDL ever had. Remember STL stood for Software Element Laboratories. Well,
that customer was the little US agency called the c
(16:08):
i A, that is, the Central Intelligence Agency. That was
the first s d L customer, and the CIA had
a special project they were looking to complete called Oracle.
So what was the project about? Why did they need
a relational database? Well, who's to say it's classified? It's
(16:32):
probably cloak and dagger stuff. I do not have the
proper clearance to find out what exactly was going on.
It was all redacted. But STL took the project and
they had two years to complete the work and create
a relational database for the c i A. Bob Minor
did most of the work and creating the architecture for
the database, and they were able to turn in their
(16:53):
project a year ahead of schedule. They spent the following
year adapting this database approach so that they could create
a commercial product that they could sell to other companies.
So essentially, they said, well, we did this for the CIA,
let's just adapt it so that we can sell it
to anyone, really, any organization or a company that's out there.
(17:13):
So they decided to stick with the name the project
name the CIA project, which was called Oracle, and use
that to name their product, their software, their database software
thus became known as Oracle. By the way, there is
an allegation out there that Oracle actually started out as
a Russian software product that the c i A lifted
(17:36):
as in stall, and then handed over to SDL. I've
seen no confirmation of that allegation anywhere, and I'm inclined
to consider it outright false, as it really serves as
a huge injustice to the people like Bob Minor who
actually worked really hard to build out this database software.
But I just wanted to acknowledge the fact that there
(17:58):
is a rumor out there. I just don't think it
has any real credence. Also, the version that Ellison, Bob
Minor and Oates made commercially available wasn't just Oracle. It
was actually called Oracle Version two. So why was the
first version ever offered in the consumer market, known as
(18:18):
Version two. Well, it's because Larry Ellison thought no company
or organization would want to buy Version one of any
kind of software platform. They would worry about it being unproven,
and so he said, well, why don't we just call
this version two? Will bypass the problem. It was still
the first version of the Oracle software, it just had
(18:40):
the name Version two, which is sort of like forming
a brand new musical band and then calling your first
album your greatest Hits album, which is funny. There's a
lot of hutzpa there. In fact, hutzba is one of
those words that often gets used to describe Ellison. But
that's why the first version of Oracle was called Version two,
(19:04):
even though it was technically the first one. The company's
first hired to help them build out this software was
a programmer named Bruce Scott, and he started so early
with the others that he's frequently referred to as the
fourth co founder, but technically speaking, he was the company's
first hire. Scott worked on the first several versions of
(19:26):
the Oracle database software. Now, it took a couple of
years to get Oracle ready for commercial deployment from the
founding of the company. So again STL was founded in
nineteen seventy seven, but by nineteen seventy nine, Oracle was
ready to go, and the company formerly known as Software
Development Laboratories, had undergone a name change, but it still
(19:48):
wasn't called Oracle yet. Instead it became known as Relational Software, Incorporated.
And one wonders if they ever got contacted by people
who were compute dating enthusiasts, because Relational Software suggests to
me that maybe you can hook me up with miswrite.
I don't need that. By the way, I'm happily married.
(20:09):
The company's Oracle product soon became the go to for
lots of big companies and organizations, including other U. S.
Government and military clients. So in addition to the c
i A, there was the Air Force and the Navy.
In fact, depending upon whose account you read, the first
customer for the company wasn't the CIA, but instead was
(20:30):
the Air Force. Either way, the military and intelligence communities
were hot for relational databases, and it makes sense considering
how much information those organizations have to handle, So one
of their earliest non government contracts would be with Bell Labs,
another company that has a huge amount of information to
deal with, so it made sense that they wanted a
(20:51):
database software program where they could structure that data in
a way that was more useful. By the model for
business computing had shifted toward mini computers and the Unix
operating system for things like database management, So people were
moving away from having that enormous centralized computer that mainframe
inside their business. They were now starting to rely on
these relatively smaller mini computer workstations and the Unix operating
(21:17):
system so that they could actually do their work instead
of having this proprietary massive computer in their building. That
played right into this young company's strengths and admit, their
decision to focus on many computers was a big success,
and sales steadily began to climb. Now it wasn't a
runaway success right out of the gate, but they were
(21:40):
making regular sales. In one the company lured away former
IBM employee Umang Gupta to join as the seventeenth employee
of Relational Software. I'll be talking about some of the
other early employees in part two of this episode, because,
as it turns out, some people that were hired early
on stuck around with Oracle for quite some time. But
(22:03):
over that time they began to form some very strong
opinions about Larry Ellison and his managerial style. Anyway, back
to Gupta, his main priority was developing a business plan
for the company. Because you had these three guys who
had founded the company and they knew how to make
and market a product. Everyone said that Ellison was kind
(22:26):
of the marketing guy. He was the one who would
go out and sell the product, and Bob Minor was
the architect and at Oates was a developer. But they
weren't business guys in the sense that they weren't the
ones ready to run an enormous company um and so
doing things like developing a business plan was not exactly
(22:46):
in their strong suit. That wasn't one of their uh
there uh features. So Gupta came in and he created
a business plan for the company, and he was also
the vice president of the company's microcomputer products division. Now,
remember this was a time when personal computers, also known
as micro computers, were really starting to become a big success.
(23:08):
In the early nineteen eighties. The proliferation of computer systems
and businesses and homes created the opportunity for software companies
to go after new markets, and after a relatively short
stint at the company, Gupta would end up leaving along
with the first employee hire of Oracle's history, Bruce Scott,
and they would found Gupta Technologies, which later became cinur
(23:32):
A Software. Also in nineteen eighty one, the company began
to work on features that would expand Oracles, such as
the Interactive Application Facility. This was a tool that could
handle transaction processing forms, which doesn't sound exciting, but it
was an important development in the company changed names again,
(23:53):
except this time they finally became the Oracle we know today.
At that time, the company was enjoying two and a
half million dollars in annual revenue. To grow further, the
company leaders decided to invest a quarter of their revenues
back into research and development. So how did that pan out? Well,
I'll tell you, but first let's take another quick break
(24:16):
to thank our sponsor. As it turns out, this two
and a half million and annual revenue and then the
reinvestment into research and development paid off in a big way.
So the next big jump Oracle took was in three
(24:36):
when the company offered up a version of relational database
management software that could work on any sort of computer platform,
which included mainframes, workstations, and personal computers. This expansion doubled
company revenues for that year, which is pretty good validation
for your decision. This was Oracle version three, which really
(25:00):
means it was version two, because again they started with two,
not one. So you know what, when I tell you
version names, just mentally subtract one from the number, because
that's what it really was. Now. Version three was such
a big success that the company decided to push version
four out the following year, in nineteen eighty four. This
(25:22):
version included the ability to generate a report based on queries,
which again seems like a no brainer these days, but
it was a real innovation at the time by Oracle
was selling more than twenty million dollars a year in
software deals, and the company was getting into a very
young field, which was the Internet. In the Internet was
(25:46):
extremely young, not a lot of people knew about it,
but in fact, of course, that was a decade before
the Web would really become a thing, So this was
a pretty bold move. Um. Version five of our software
supported the ability for a machine running Oracle to log
into a database server, so you didn't have to rely
(26:07):
on computer systems that were co located anymore. With a
connection to the Internet, you could have computers in offices
around the world log into the same database. The version
also included an auditing feature that tracked all the times
someone accessed the database, which was a security and quality
control feature. So it didn't necessarily immediately tell you who
(26:29):
had accessed the database, but I would tell you the
location of that person or the person's computer and the time,
like what time did they access the database. So if
you go into the database and you think, well, that's weird,
three whole columns are missing. Someone accidentally deleted them. I
wonder who did that. You could actually go through the
audit list and find out who had last accessed that
(26:50):
particular database, and then you could go and pay them
a little visit and maybe ask them why they don't
like their kneecaps anymore. I'm assuming you're using the database
in the mafia. But the point being that this was
a new feature that allowed for greater tighter control not
just of the information but access to it. And they
(27:13):
hit fifty five million dollars in revenue. That's not profit,
that's in revenue, but still fifty five million is a
huge amount of money, and it was incredible growth for
the software company. That was also the year Oracle held
its initial public offering or i p O. That's when
a private company turns into a publicly traded one. The
initial price for a share of Oracle stock was fifteen dollars.
(27:37):
An Oracle created two point one million shares and made
them available. So you multiply those two numbers together and
you get the market value of the company, which was
thirty one and a half million dollars. So again you
just look at how much is it per share, how
many shares are out there. Multiply those two numbers together,
and that tells you the market value for a company.
(27:59):
By the way, if you want to know how much
a share of Oracle stock you bought back in the
days when it went public, how much would that be
worth today? You actually have to do a little bit
of math. The day I'm doing this research, So the
day I actually researched this information, Oracle stock came in
at forty six dollars per share or so, which means
(28:21):
it's about three times more than the initial offering at
fifteen dollars, which means you would triple your money. Right,
not so fast, because it gets way better than that.
If you just thought, oh, the stock prices three times
what it used to be, I make three times as
much money. Here's the thing. Oracle has split its stock
(28:41):
a few times. So splitting stock increases the number of
shares a company has out on the market, and it
also has the effect of lowering the price per share.
But you end up with twice as many shares if
you're doing a two for one split, and the overall
market valuation of the company will remain the same of
the moment. So, in other words, the market valuation has
(29:03):
to remain constant. You don't magically make the company more valuable. Right,
So if you already have your company valued at thirty
million dollars and you've got two million UH shares out there,
and you go to four million shares, your company is
still going to be worth thirty million dollars. It's just
that each share is going to be worth half as
(29:24):
much as it was before. So I have I do
it too. For one split, I double the number of
shares in my company. I also have the value of
the individual shares, because again, the value of my company
does not magically change. So I'm gonna give you a
full example here, Let's say that my company is worth
fifty million dollars and I've got two million shares out there,
(29:44):
which means each shares worth twenty five bucks before I split.
Then I split the stock two for one. Now there
are four million shares of my company out on the market,
which makes the price of each share go down to
twelve dollars and fifty cents. So when you split a stock,
if someone already owns stock, they get the benefit of
(30:04):
that split. Right. So if it's a two for one
split and I own ten shares of the company, now
I own twenty shares of the company. Each share is
half as expensive as it used to be, but I've
got twice as many. So why would I Why would
I bother splitting if the value of the company remains
the same. What's the point? Well, there's some psychological effects
(30:27):
when you split stock. If you were to take humans
out of the equation entirely, if you took human emotion out,
then it wouldn't really matter if you split the stock
or not. It wouldn't really have a big effect on
the company's performance. But we are human, we're the ones investing,
so it does matter. By splitting the stocks and reducing
(30:47):
the cost on a per share basis, you can improve
the liquidity of shares. People are more likely to trade
because they don't feel they don't feel frozen either by
holding onto stocks that are incredibly expensive, and therefore they
have the the the reputation of being valuable. And you
(31:10):
don't avoid investing because the entry price is too high. Right,
You've lowered the entry fee to buy stock by making
the stocks half as expensive. So you might have small
investors out there who would jump on shares of Oracle,
but if it's too expensive, they're like, I just I
can't buy a forty dollar stock that drops down to
(31:32):
twenty Oh, I can buy that. Then you get more investors,
So that's one of the reasons you might do it.
You might do it to try and encourage more trading,
to encourage more small investors, and you're also doing it
in an attempt to continue growing. So while you initially
reduce the price of those shares by half, they can
(31:52):
still climb up as the company does well. So uh,
that means the stock price can increase over time. So
over the course of Oracle's history, it is actually split
its stock ten times. Six of those were two for
one stocks, which meant if you held stocks an Oracle,
the number of shares would double each time it has
(32:12):
a two for one split, but four of the splits
we're three for two stock splits, meaning that for every
two shares you held, you would get a third one,
or if you prefer, for each share you got one
and a half shares. Right, So if you bought one
share of Oracle in nine six for fifteen dollars, after
(32:35):
all the stock splits, you would actually end up with
three hundred twenty four shares of Oracle, right, because of
each of the times they split, your number of shares
would increase. So if you add up all the different
ten splits, that one share turns into three four shares.
And it's not three four shares at fifteen dollars, which
(32:56):
is what you bought it at. It's three four shares
of Oracle at forty six dollars, which means your fifteen
dollar investment would turn into fourteen thousand, nine hundred four dollars.
Not bad, not bad to go from fifteen to fourteen
thousand bucks now almost fifteen thousand bucks now. Oracle clients
(33:18):
were pretty huge, which makes sense. Not a lot of
smaller organizations had real need for the robust databases Oracle
had to offer. Instead, Oracles products were appealing to bigger
organizations and companies industries like pharmaceutical companies, aerospace companies, tech firms,
automotive corporations. Those were among oracles top clients. In Oracle
(33:44):
launched a new division in the company. It was called
the Applications Division, and it initially had just seven employees
working in it. Their job was to put together application
software to integrate various functions with the database software to
make it easier to run routine tasks for large organizations. Essentially,
the thought was that the database software gave organizations a
(34:07):
lot of power to analyze their data, but they still
had to develop their own tools to put that data
to use. So Oracle was getting into the business of
developing applications that would do that for these companies. Oracle
didn't just rely on in house teams to do this.
The company also acquired a company called t c I
that built project management applications. The in house team got
(34:29):
to work building on an accounting module that could integrate
with Oracle databases, and this was the beginning of Oracle
creating a suite of software applications that could work closely together.
Branching out from being a purely database focused company, Oracle
also launched a consulting service to offer support to clients,
(34:49):
helping them best understand how to leverage Oracle software. So
now not only could the company sell its products to customers,
it could keep earning money from those same kind customers
by explaining to them how to use their own products,
which is pretty much genius. In fact, this was a
top revenue generator for Oracle, was not just selling the product,
(35:10):
but selling ongoing support for the product. In the company
was outgrowing its home base, and so it relocated to
Redwood Shores, California. It launched a subsidiary company called Oracle
Data Publishing that was all about getting hold of data
and then distributing it electronically, and the company sought out
new industries and branches of computing to expand into, including supercomputers.
(35:34):
The following year would end up being a tumultuous one
for Oracle, which had to make for a pretty ugly
admission for a company all about crunching numbers, because the
company turns out it had misrepresented revenues, whether on purpose
or by accident. It was not a pretty picture. And
that's how we're gonna start our next episode of the
(35:55):
Oracle Story talking about this massive controversy that the company
and countered early in its history and what it had
to do in order to climb back out again. In fact,
it was so bad that there was a real danger
of Oracle going away and not surviving. Now, as it
turns out, Oracle still around today, so you kind of
(36:16):
know things work out, but back then people weren't so sure. Now,
if you have suggestions for future episodes of tech Stuff,
I welcome you to write me and let me know
what they are. The email address for this show is
tech Stuff at how stuff works dot com, or you
can drop me a line on Twitter or Facebook. The
handle for both of those is tech Stuff hs W.
(36:37):
Remember we have an Instagram account. You can go and
follow us there and see all the behind the scenes
stuff and some other interesting things. Also, remember I broadcast
my recording sessions live on twitch dot tv slash tech Stuff.
Just go there. You'll see when I tend to stream.
It's on Wednesdays and Fridays, but there's a schedule up there,
(36:58):
so go there. You can jump into the chat room
and be part of the shenanigans. What goes on when
I record? I hope to see you there and I'll
talk to you again. Really sick for more on this
and thousands of other topics. Is it how stuff works
dot com
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