The Oracle of Silicon Valley : Larry Ellison’s databases manage business information. Can Oracle Systems Corp. manage to beat Bill Gates to the video server?

Larry Ellison just can’t help himself. As his long-suffering public relations man squirms in his chair, Ellison, the 50-year-old co-founder and chief executive of Oracle Systems Corp., gets a few things off his chest.

In short order, Ellison disses a peer, gives his side of a wrecked love affair with an ex-employee that almost landed him in court, and addresses his reputed ruthlessness.

On former Apple Computer Chairman John Sculley:

“It’s widely known that John Sculley didn’t know anything about computers. But he had the audacity to appoint himself Apple’s chief technology officer. That would be like me buying the Oakland A’s and installing myself at shortstop.”

On former girlfriend Adelyn Lee, a marketing department employee who sued Oracle for wrongful termination after she and Ellison broke up: “She pursued me; I never pursued her. She asked for a Rolex, a car and 150 grand, and then she makes these (allegations) up. She wants money, and this is another way of trying to get it. Settle? I’d rather be robbed at gunpoint.”

On himself:

“I have this reputation for firing everyone in sight. If that were true, Oracle might have been a lot better off.”

All of this is served up with little prompting. As aide-de-camp Zach Nelson smiles sheepishly and shrugs, Ellison even offers an explanation for the apparent candor: “My sister, who’s a psychologist, tells me I have a self-destructive streak.”

But if such a streak exists, it has thus far proved anything but destructive to Oracle. The software company’s phenomenal growth has made Ellison the wealthiest man in the Silicon Valley, richer even than his best friend, Steve Jobs, the legendary co-founder of Apple Computer. According to Forbes magazine, Ellison is worth more than $3 billion, most of it in Oracle stock, making him one of the richest men in America.

And those who know Ellison say the colorful statements are carefully choreographed image-building, not reckless candor. His friend Jobs, for one, insists the real Ellison “is really very shy, very guarded.” But on this day, for public consumption, the chameleonlike software mogul serves up quotable morsels for a reporter--aiming, presumably, to win friends, put a spotlight on Oracle at a crucial time, and perhaps draw some attention away from archrival Bill Gates, the chairman of Microsoft Corp.

Indeed, on closer inspection, Ellison’s pointed comments are not what they seem: It has become downright fashionable to dump on Sculley, the Silicon Valley outsider whose record at Apple was decidedly mixed. As for former girlfriend Lee, Oracle settled with her to the tune of $100,000 only weeks after the interview.

“The case was resolved to the mutual satisfaction of both parties,” said Frank Pitre, Lee’s attorney. “Ms. Lee wants to put this behind her. I think she’s a class act to put this behind her.” Her view of Ellison’s allegations? “He could have had his day in court, and he chose to settle,” Pitre noted.

Ellison’s increasing appetite for attention comes at a crucial time for Oracle. The company has become the third-largest independent software firm in the world by creating and marketing computer database software, which businesses use to manage information such as payroll records, inventory and customer accounts. More powerful than the databases that run on personal computers but cheaper and more flexible than mainframe databases, Oracle’s mid-size databases have found a fat niche--and, through aggressive marketing and continued technical development, the company has dominated it.

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Now, Ellison is taking aim at a brand-new niche, one that promises to be worth billions of dollars annually in the not-too-distant future. He wants Oracle to provide the multimedia database technology needed to manage the digital movies, the interactive shopping services and much of the rest of the exotic data that will soon be barreling down the information superhighway.

It’s a challenge that Oracle appears well-equipped to meet. Storming back from a dangerous stumble five years ago, the company has grown at a torrid pace in recent years. Last week, the company reported third-quarter revenue of $722 million, an increase of 50% over the same period last year; net income grew by 50% to $105 million, or 24 cents per share.

And Oracle’s eagerness to play a big role in interactive multimedia has as much to do with self-protection as it does with ego. “This isn’t a new business for us. We manage data. It’s our core business,” Ellison explains. “Today, that data comes in the form of text. Tomorrow it will be audio and video. We have to handle new data types or we will be endangering our core business.”

So far, Oracle is off to a strong start. It has numerous alliances with the regional Bell telephone companies, the phone giants that are racing to build the networks for interactive services. It gets a mention in most discussions of the companies that are building the information superhighway. Visitors to Oracle headquarters are treated to a snazzy demonstration of its “media server” technology: With the press of a button, a TV set calls up the movie of one’s choice, or a digital book complete with video clips and sound, or even orders a pizza.

But the array of competitors in the media server arena is formidable indeed: Computer hardware giants such as Silicon Graphics, Hewlett-Packard, Digital Equipment and a revitalized IBM all have high hopes for this nascent market, as does database rival Sybase.

And then there’s the omnipresent Microsoft. Though the Redmond, Wash.-based software company specializes in personal computer software, not big-machine databases, it has aggressive plans to participate in nearly every aspect of the information superhighway, and video servers are no exception. Like a duelist throwing down his glove, Gates has said Microsoft will build its own video-server software system, called Tiger.

One of Oracle’s archrivals is already claiming a major victory in the video-server wars. Regional phone operator BellSouth Corp., on the verge of commencing its video-on-demand trials, decided to drop Oracle in favor of Sybase.

“To put it mildly, we displaced Oracle at Bell South,” gloated David Peterschmidt, Sybase’s chief operating officer. Taking a jab at Oracle’s reputation for hype, he added: “What Sybase historically has tried to do is to have real substance before we go out and start talking.”

Ellison says Oracle lost Bell South not because his technology was found wanting, but because the company mishandled the account.

At this point, Bell South’s switch is more embarrassing than damaging for Oracle. But to some it’s a disturbing indication that Oracle may be reverting to its bad, old ways: over-promising to sign the deal and under-delivering once the ink is dry.

It was just such practices that nearly destroyed Oracle less than five years ago. In fiscal 1991, the company posted a big loss and was forced to restate earnings, admitting that it had “mistakenly” counted as sales certain transactions in which products had not been shipped. Some of the supposed deals eventually blew up: The alleged customers backed out, and no money was ever collected.

Those who were at Oracle at the time say there was tremendous pressure to produce numbers. “The company had grown 100% a year for almost 13 years straight,” says Craig Conway, who left as vice president of sales and marketing in March, 1993. “Larry hired high achievers: The expectations were high, but the rewards were high too. The salaries, bonuses and sales commissions were two to three times what you could make at other companies.

“The problem was that at some point, it’s not realistic to grow 100% a year, but you had this sales force that will do whatever it takes to hit it,” Conway continues. “It was like a racehorse who breaks down trying to win the race.”

Ellison himself set the goals. “I have been in sales meetings where managers would say, ‘Let’s lower expectations,’ ” Conway says. “Larry wouldn’t stand for it.”

And he surrounded himself with tough-guy types to carry out his demanding orders.

“There was this feeling that Larry never had to get rough because he had these other guys to do it for him,” says one former employee.

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Although he accepts responsibility for the loss, Ellison denies creating undue pressure to produce numbers and lays the blame for the accounting irregularities on subordinates.

The period following this crisis was a time of painful self-assessment for Ellison. The week the loss was announced, he stayed away from the office. During long jogs and bicycle rides near his Atherton home, he contemplated a future without Oracle. “Do I want to fix it? Should I be the one to fix it?” he says. “But it wasn’t obvious to me who I could be replaced with.”

Ellison returned, determined to stay and make changes. Among them was the dismissal of some longtime lieutenants. “I was inexperienced, and that was bad enough, but I had an inexperienced management team. It’s not much fun to fire your friends. I tried to fire (Oracle USA President) Jeff Walker three times. Each time I would try to do it, I backed out.”

Despite his protestations that he’s really a pussycat, former company insiders say Oracle’s hard-charging style--which was often viewed by customers and business partners as arrogance--was created by Ellison. “In the beginning, it was a small group all hand-picked by Larry,” says Umang Gupta, who left Oracle to start Gupta Corp., which makes software tools for customized databases.

“Larry used to like to tell me that if a person is smart and has drive, then there’s no stopping them,” Gupta continued. “It was a small group of highly talented individuals that didn’t always work like a team, but Larry dominated the agenda. It really hasn’t changed that much.”

There are signs that Oracle has matured. Seasoned managers such as Ray Lane, a former vice-president in charge of systems integration for consulting giant Booz, Allen & Hamilton who heads up Oracle’s domestic operations, have been brought in. It’s been a delicate balance to temper the arrogance while maintaining the spirit. Many former Oracle employees speak fondly of both Ellison and the company, saying working there was the most fun they have had in their careers. “We were all cowboys,” says Gupta.

In the five years since the loss, Oracle has strengthened its grip on the market for software to manage large corporate databases. And it has done so in the face of strong competition from rivals such as Sybase. The market for database software continues to grow at 30% year over year, dwarfing almost every other sector of the computer industry. Every company has vast stores of information--from customer profiles to the employee payroll--that it would like to be better organized. And Oracle, which runs on nearly every piece of computer hardware being built, has been the software of choice for many of them.

How big is the market for video servers? If Oracle was to supply but a fraction of the software that would pipe movies in the homes of metropolitan America, the rewards would be enormous.

With Oracle’s day-to-day operations in the hands of experienced managers, Ellison now has time to fashion the company’s future. He’s out evangelizing for the information superhighway. There’s been talk that Ellison is in an acquisitive mood: He made a run at Gupta--”Larry called me the day they exceeded 5% (of Gupta’s outstanding shares). It was never hostile, and when they sold the stock, they apologized,” Umang Gupta says.

Persistent rumors now have him stalking much bigger prey, like Lotus Development or Apple Computer. “I’ve always had an interest in Apple,” Ellison says. “When we did our strategic alliance with Lotus, (Lotus Chief Executive) Jim Manzi said: ‘Who knows what this could lead to? You could even buy us.’ ” But Ellison says both companies would be too expensive.

Ellison claims that just as Oracle has changed, so has he. Certainly there been events in his life of the sort that often contribute to a mellowing: the company crisis, a near-fatal surfing accident in Hawaii two years ago, and most recently the death of Oracle co-founder Robert Miner. (Ellison and Miner, colleagues at a company called Omex in the mid-’70s, bootstrapped Oracle into existence by hiring themselves out as technology consultants while they wrote the first version of the database software--venture capitalists were not interested in financing their project.)

Ellison says he now spends more time with his two young children--the offspring from the most recent of his three marriages--and that he devotes more time to hobbies. He’s writing a novel about two brothers divided by the Vietnam War.

He’s taught himself to play the piano, learned as much about Far Eastern history as many of the scholars at nearby Stanford University, and speaks eloquently about Japanese design as he shows a visitor the art, furniture and gardens of his Japanese-style mansion.

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But clearly many of the basic traits of his overachieving lifestyle and eager-to-please personal style--rooted, perhaps, in his poor, unstable childhood on the South Side of Chicago--endure. Ellison can’t resist telling his guest that he was the largest individual contributor to President Bill Clinton’s presidential campaign (via the Democratic National Committee), drops the names of famous friends like Jobs and Intel Chief Executive Andy Grove, and mentions a recent party in which “I was the only one there who had not won the Nobel Prize.”

“There was a time when someone like Steve Jobs wouldn’t give Larry the time of day,” said former Oracle marketing vice president Tom Siebel. “It’s important to him to be accepted by those kinds of people. He really wants to be as famous as Steve Jobs or Bill Gates.”

For a man as accomplished as Ellison, the obvious delight that he takes in a lifestyle that is probably grander than any he had ever dreamed of is almost endearing.

“Do I want to be famous? Sure,” Ellison admits. “It’s a measure of success.”

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BACKGROUND

Oracle’s media server is a digital library that stores, retrieves and manages video, audio, photos, graphics, text and tables. It allows movies, articles, charts and other types of information to be delivered simultaneously to thousands of households. The information can be sent along phones lines or cables. The server is designed to run 24 hours a day, seven days a week.

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Database Giant

Oracle Systems Corp. has become the world’s third biggest software company by making and selling database software that customers use to manage information on mid-size computers.

Revenue (in billions of dollars) 1990: $0.9 1991: 1.0 1992: 1.2 1993: 1.5 1994: 2.0

Earnings (in millions of dollars) 1990: $80.9 1991: --12.4 1992: 61.6 1993: 98.3 1994: 284.0

Business Segments (Based on 1994 revenue) Database servers: $679 million Tools: $326 million Applications: $94 million Support: $383 million Consulting and education: $454 million Other: $65 million

ORACLE AT A GLANCE * Headquarters: Redwood City, Ca. * Chief Executive: Larry Ellison * Employees: 12,500 worldwide * Major products: The world’s largest vendor of database software and information management services.

* Third-quarter results: For the three months ended Feb. 28, revenues were $722 million, an increase of 50% over the same period last year. Net income grew 50% to $105 million, or 24 cents per share.

* Friday stock price: 32.125 on Nasdaq

KEY CHALLENGES

* To sell media servers for the information superhighway.

* To fend off aggressive competitors like Sybase and Informix, which are challenging Oracle in its core market of providing database software for corporations.

* To improve its position in applications, the software that customizes databases.

* To shrink its database software for use on smaller computers such as technical workstations and PCs.

Sources: Lexis/Nexis, Times research

Researched by JENNIFER OLDHAM and JULIE PITTA / Los Angeles Times

The Company He Keeps

He is hardly the best known, but Oracle Corp. founder Lawrence J. Ellison is among the wealthiest technology entrepreneurs, with a net worth far exceeding $2 billion. By Forbes magazine’s count, there are only six other billionaires in the ranks of high tech.

Estimated net worth

OVER $2 BILLION

Bill Gates: chairman/ceo, Microsoft

Paul G. Allen: co-founder, Microsoft

Lawrence J. Ellison: president/ceo, Oracle

David Packard: co-founder, Hewlett-Packard

OVER $1 BILLION

Steven A. Ballmer: executive vp, Microsoft

William R. Hewlett: co-founder, Hewlett-Packard

Gordon E. Moore: co-founder, Intel

Source: Forbes