Anatomy of a power play: Why Ray Lane left Oracle
REDWOOD SHORES, Calif.--For years, they were the odd couple of Silicon Valley.
Larry Ellison and Ray Lane, Oracle's chief executive and president, were a study in contrasts: one the prototypical bad boy of high-flying technology moguls, the other a safe-and-steady operations guy. Despite persistent reports of tension, the unlikely pair seemed to have created a winning formula that saw the company through some of its most turbulent times.
But behind the scenes, sources within the company and beyond say Lane--once a trusted deputy who remained loyal to Oracle despite repeated advances from other companies--was essentially neutered over 18 months, until he finally could not stand the frustration and even humiliation of working for Ellison any longer.
"Three months ago, I told (Ellison), 'You no longer consult with me or ask me about decisions.' I asked him if he wanted me to leave," Lane said in a series of interviews with CNET News.com this week. "He said: 'No, we just need to communicate more. I want you to know what is in my head, and I want us to be seen in public more. We need to communicate more, so there's no confusion among employees and customers as to what's the company's direction.'"
Then, while Lane was on vacation in Oregon on June 30, he said Ellison called "to tell me about more organizational and process changes like the way we'd give out options to executives. Again, it was a case where changes were going to be made under Larry's game plan, and I disagreed with them. I told him it seemed like it was time for me to go. And he agreed. I think he called with the intent of me pulling the plug."
His resignation was announced later that day, conspicuously absent of any comment from Lane.
Top-level moves such as this are nothing new to the high-tech business, which practically invented the concept of free agency in the white-collar world, and Lane is believed to be walking away from Oracle nothing less than a billionaire. But even the most jaded industry veterans have been fascinated by the monumental struggles behind the walls of Oracle's compound here, ensconced amid a deceptively quiet bank of industrial parks halfway between San Francisco and San Jose, Calif.
The story of Lane's plight at one of the most powerful companies in technology is one of hubris, greed, betrayal and personal epiphany--characteristics that have come to define the nucleus of Silicon Valley. Perhaps more than any other company, the $200 billion Oracle embodies the kind of gun-slinging cowboy image so often associated with the high-tech business, having long cultivated a cutthroat reputation that serves as a model for many enterprises today.
It is also a story of how quickly one's fortunes can change in this hyper-competitive industry, regardless of track record. Only a few years ago, Lane was credited with helping Oracle recover from a disastrous accounting controversy that threatened the company's future, and he was courted repeatedly for CEO posts at major companies, including Hewlett-Packard, Compaq Computer and Novell.
Finally, it is a story about the Internet's phenomenal impact on American businesses, forcing companies as enormous as Oracle and Microsoft to change courses seemingly overnight, leaving behind those who resist change or, in some cases, simply hesitate before completely overhauling their business strategies.
"I think Larry was excellent at motivating people when it came to articulating the company's strategy and where he wanted the company to go," one former Oracle executive said. "But the rest of his motivation was based on people's fear and greed."
Those familiar with Lane's relationship with Ellison believed that it was only a matter of time before the Oracle veteran ended his tenure of eight years, even if it meant leaving millions of dollars in stock options on the table.
Sources say Ellison had become dismissive of Lane, calling high-level meetings without inviting him and, in one case, even telling a group of senior executives that they "report to me now and not Ray, and make no mistake about it." When Lane did attend meetings, sources say Ellison would ignore his longtime partner in an embarrassingly obvious way.
Lane said Ellison, as chief executive, has the full right to lead in such an autocratic manner or any other way he sees fit. However, he added, "I can't fit into this kind of system. I've got be one of the guys making decisions, and right now, the only person making decisions at Oracle is Larry."
On one occasion, the newly engaged CEO stormed into Lane's office and interrupted a meeting to "yell at him" for not telling Ellison about a contract that had been lost, even though it wasn't a major deal, according to an Oracle source familiar with the incident.
In addition to such personal snubs, which Lane confirmed, Ellison diminished his role in a broader way through hierarchical reorganization and other structural changes. He elevated some of Lane's subordinates to report directly to the CEO, and he took away responsibilities for entire areas of operation within Oracle, including support and education.
Lane said he doesn't fault Ellison for the measures he took and fully understands the need for decisive action by a CEO when a company is undergoing fundamental changes. It simply wasn't an approach that fit well with his personality.
"Over a year ago, Larry's sole focus was on development and products," Lane said in an interview last night. "But around January or February of 1999, he said he wanted to focus on the whole company. He felt he had to personally make every decision, whether it was human resources or what computer to buy."
Lane was shut out of Oracle's public dealings as well. Ellison began taking over press and Wall Street briefings on earnings reports and scheduling himself for keynote speeches.
"Ray did a good job while he was with Oracle. It's just that Larry got interested in running the company again and took a lot of Ray's duties," said a source close to Oracle's board of directors. "I don't know what it was that got Larry interested again."
Lane and others know exactly what rekindled that interest, and they say it could be summed up in one word that has haunted the 55-year-old Ellison for decades: Microsoft.
Those who witnessed the renewed crusade say the change in Ellison became obvious early last year, when he sensed blood in the water around the empire of his nemesis, Bill Gates. Microsoft did not understand the Internet, Ellison was heard to say often, and was particularly vulnerable to competition at the height of the federal antitrust case against the Windows juggernaut.
It was then that Ellison, who associates say once joked about the hours he spent playing tennis on company time, decided to reclaim the helm of the company he co-founded 23 years ago. In remaking Oracle into an Internet company, instead of one that made databases that ran within private company systems, Ellison could realize several ambitions at once.
Beyond simply expanding Oracle's operations into new markets, Ellison could reignite the torch he has long carried in championing the concept of network computing, the idea that inexpensive, stripped-down terminals connected to a central network could better serve the masses because personal computers were too complicated and costly to operate. That would provide ammunition for a full-frontal assault on Microsoft, the company that he has long sought to unseat from its software throne.
Created long before the Internet became part of the public vernacular, the software manufacturer was churning out the necessary programs needed to house the massive inventories and internal files of companies ranging from automakers to travel agencies.
And while it made Ellison the world's richest man at one point--worth an estimated $53 billion in April, surpassing even Gates--associates say the Oracle chief was always resentful that his company did not have the household recognition held by some of his high-tech rivals, namely Microsoft.