All in the family
A meeting at Oracle HQ started a series of multi-billion dollar events. Now it’s come full circle.
Day before yesterday, tech behemoth Oracle agreed to buy fellow cloud software company, Netsuite, for $9.3B, the company’s largest acquisition since it acquired PeopleSoft in 2004.
But this isn’t your typical takeover. Silicon Valley, despite its global reach and constant innovation, still remains a tiny place full of friendships, family, and rivalries.
Back in the late 1990s…
A meeting was held at Oracle HQ in Oakland, California between the company’s CEO, Larry Ellison and 3 key employees: Evan Goldberg, Zach Nelson, and Marc Benioff.
During that meeting, Goldberg, a developer, came up with the idea of software as a service (SaaS), painting Ellison a picture of building an internet version of Siebel, the biggest CRM software maker at the time.
Ellison liked the idea but told Goldberg he’d first need to build finance software, then build the customer software around it. So that’s exactly what Goldberg did and Ellison personally funded it.
Anyone care to guess what the company was called? Yep, Netsuite.
That means Larry Ellison just bought a company he helped launch and, more importantly, a business where he’s a 40% stakeholder. Carry the 2… that means he just netted $3.5B in cash.
As for the other two guys in the meeting…
They play a role in this, too — Zach Nelson is the current CEO of Netsuite, a position he’s held since 2002.
And as for Marc Benioff… let’s just say he left that meeting with a few ideas of his own. As Nelson tells it, “Benioff called back two weeks later and said ‘I’m going to do that Siebel online thing,’ and that became Salesforce.com.”
Salesforce and Oracle began competing for business shortly after that and the companies remain rivals to this day. In fact, Ellison is dead set on making $10B in revenue from cloud computing before Salesforce does.
So Ellison wants to beat Benioff, and Netsuite helps him do that?
Pretty much, yeah. The move makes plain business sense.
In order to continue growing its cloud market, Oracle had to start playing in Netsuite’s world, selling to small and midsize companies. And, prior to yesterday, there were two possible ways to play the game: Oracle snuffs out the little guy or the little guy defends its turf.
Larry the Cloud Guy decided to go rogue and whipped out the checkbook to create outcome #3: buy the little guy and win the whole f’n thing.
Source Credit: The Hustle