Hey, Justin here, and welcome to Just Go Grind, a newsletter sharing the lessons, tactics, and stories of world-class founders! Today, we’ve got a throwback from the archives about one of the world’s most successful entrepreneurs.

About a week ago, Larry Ellison briefly overtook Elon Musk as the richest person in the world.

It reminded me of the deep dive I wrote about his story and just how wild it was.

Today, I’m sharing it with you, covering the first 20 years of Larry building Oracle.

Before we get into it, I’d love to understand who’s reading. Click the option below that best describes you:

Let’s dive in.

As of this writing, Larry Ellison is the second-richest person in the world and the company he founded, Oracle, is valued at more than $800 billion.

By 1996, nearly 20 years after starting the company, he was already worth $6 billion and was the richest man in California.

Today, we’re diving into his story, before and during those first 20 years of building Oracle.

To write today’s deep dive, I read the insightful book The Difference Between God and Larry Ellison: *God Doesn't Think He's Larry Ellison by Mike Wilson. For the full story, I highly suggest you check it out.

Let’s get to it.

Larry Ellison was born on August 17, 1944 in Manhattan.

After nearly dying from pneumonia at just nine months old, his unmarried, nineteen-year-old mother, Florence, sent him to live with relatives in a middle-class suburb of Chicago.

Not until he was twelve years old did Larry know he was adopted and this was a powerful motivator for him, thinking he had something to prove.

But Larry’s desire to succeed wouldn’t yield tangible results for many years to come.

Along the way, he’d find other motivators, his unsupportive, adoptive father being one of them:

While in high school, Larry mostly flew under the radar, described by one classmate as, “very quiet, very withdrawn, not at all in the mainstream.”

He also started to display the rebelliousness he’d use later in life, refusing to read many of the books he was supposed to read, instead choosing to read what interested him most:

Nonconformist.

Classic entrepreneur, right?

After graduating high school in 1962 he attended the University of Illinois in Champaign-Urbana where his rebelliousness continued:

Larry didn’t stay in college long.

After his sophomore year, when his adoptive mother, Lillian, died of cancer, he left the University of Illinois.

Before leaving school, and after giving up his aspirations to become a doctor, Larry learned to program a computer and utilized that skill to get a job as a programmer at the university.

Not long after, in 1966, he left Illinois for California, a decision that proved incredibly fruitful.

Larry enrolled at Berkeley in the summer of 1966, though he wouldn’t attend long.

After getting married to Adda Quinn in January 1967, Larry worked as a systems programmer for IBM mainframes for a few years at several companies.

It was “monotonous and unchallenging” and, even though he wasn’t making much money, he was spending exorbitantly.

Adda said he had “champagne tastes on a beer budget.”

LOL.

His spending, among other reasons, caused his wife to leave him in 1974.

It was a turning point in his life:

She wasn’t the only one concerned about his prospects though.

Larry later said:

Adda later said of Larry:

This is the type of person that builds a multi-billion dollar company.

But it’d still be a few years before Larry started the company that made him a billionaire.

After losing his job at a company called Amdahl, Larry joined Ampex, an important company for our story.

At Ampex, Larry worked under Bob Miner, in what would later become a collaboration for the ages.

It was through Larry’s dissatisfaction with a manager at Ampex that he even started working with Bob in the first place:

Shows you the value of speaking up and surrounding yourself with great people, doesn’t it?

Larry and Bob would create an iconic, generational company together.

They’d also find their third future co-founder, Edward A. Oates, while at Ampex.

Working together at Ampex for a brief time, the three of them often discussed their disdain for the corporate world.

Soon, they’d start a company of their own.

After quitting Ampex to join a company called Precision Instrument, Larry jumped on an opportunity to work with his former colleagues, Bob and Ed.

Precision Instrument needed software for its hardware and didn’t have programmers who could write the code.

When bids came in from other companies to take on the work, they were overpriced, giving Larry an opening.

Wait, but why pursue this in the first place?

Larry had a good job as a VP, why shake things up?

Larry explained:

Larry, Bob, and Ed organized a bid of $400,000 for the Precision Instrument contract and won it.

They formed a company, Software Development Laboratories, Inc. (SDL) to fulfill it:

In their new venture, Ellison paid $1,200 for 60% of the company’s shares, with Bob and Ed each buying 20%.

Ed explained why Larry got the majority of the stock:

That chutzpah was on display for SDL’s first programmer, Bruce Scott:

With a team being built, Larry and his co-founders had to decide what kind of company they were creating.

Would they take on more contract work or build their own products?

Bob explained the simple rationale behind the decision to build their own products:

It’s also important to understand at this point in our story just how important it was that Larry and Bob had each other to build Oracle:

So we have the right co-founders working together.

They decide they want to be a product-oriented business.

Now… what product?

Well, thanks to IBM researchers, they’d have their answer.

It all started in 1970 with an article by IBM researcher Edgar H. “Ted” Codd.

The title was, “A Relational Model of Data for Large Shared Data Banks” and it was published in June 1970.

At the time, people didn’t make much of it, doubting the potential of relational databases.

As it turns out, years later, relational databases were exactly the product many companies needed.

Without going into too many of the technological details, of which I know very little anyway, here’s what’s important to know:

IBM researchers publicly published several papers about System R, their database research project that used SQL, a programming language built to be a better way to store and process information in a relational database.

But IBM didn’t release a product till years later.

That was Larry Ellison’s opening.

And boy oh boy did he make the most of it.

As Mike Wilson wrote in his book:

It’s a good example of how corporate bureaucracy slows down, and sometimes, kills companies.

IBM didn’t want to sell a product that would cannibalize the products they already had. That resistance by people at IBM slowed down the development of their relational database product.

In the meantime, Larry Ellison and his company took full advantage.

The first customer for Larry’s company?

The Central Intelligence Agency.

Once again, this came, in part, thanks to IBM.

With IBM not yet ready to sell relational database software, the CIA had to look elsewhere.

Relational Software Inc. (RSI), the new name for what would become Oracle, is where they ended up.

After landing the CIA deal, Larry also sold Oracle to the Navy.

Only one problem.

Between the two customers, there were three different operating systems they needed Oracle software to work on.

It forced Oracle to build portable software:

This turned out to be a critical part of the Oracle story.

Larry Ellison promoted the hell out of it too:

One of the computers Oracle software had to work on was the Virtual Address eXtension (VAX) which was developed and sold by the Digital Equipment Corporation (DEC).

But in 1979 Larry didn’t have money to buy a VAX machine.

What’d he do?

He made a deal with the University of California, Berkeley to use theirs.

Another time, Larry negotiated a deal with a different company to keep their VAX machine at Oracle and allow them to use it too.

Eventually, Larry borrowed money so that Oracle could buy its own VAX machine.

It was a worthy investment.

In the ensuing decade and beyond, Oracle made hundreds of millions of dollars from VAX users.

The person who helped Larry with the loan was Donald Lucas, who worked in the same office building as Larry and his team:

Don came into play when Ed Oates, Oracle’s third co-founder, decided to leave the company after his work was suffering and his marriage was dissolving.

They needed to know the fair market value of Ed’s stock and Don helped them do just that.

He’d eventually become the first Chairman of the Oracle Board.

To take Oracle beyond those first couple of customers, Larry did what many software companies at the time were doing - exaggerating both the number of customers they had and what their software could do.

Larry was trying to give Oracle more credibility in the early days.

He knew how important it was to win as much market share as possible as quickly as possible, as he later mentioned:

And although Oracle’s software didn’t always work as advertised in the early days, companies still bought it.

Part of the reason was Oracle’s phenomenal ability to sell it.

Another was that they were building a product on the bleeding edge of technology, a product the CIA, the Navy, and others desperately hoped would work, and so, early on, they got a lot of leeway.

As one member of the Navy said of Oracle software:

With Oracle selling a new sort of software product, Larry’s job was not just to sell Oracle itself, but relational database technology more broadly.

He did it to perfection.

In 1982, Oracle did $2.4 million in sales.

The next year, that number was $5 million.

By 1984, it was $12.7 million and Larry was leading a company of 150 employees.

The same year, Jenny Overstreet became Larry’s assistant, and a driving force for Oracle behind the scenes for years to come:

Of course, Ellison had his own view on time management, offering a lesson on the value of focus:

It’s hard to argue with the results of that approach.

Here’s a ridiculous growth streak for you.

Oracle’s sales doubled in 11 of its first 12 years.

Larry’s sales strategy for Oracle’s software focused on three things:

And he had a peculiar hiring strategy to build the team that would execute:

With that team, Larry had the highest of expectations:

He was also unforgiving:

The culture was ultra-competitive, with “frequent pickup basketball games among Oracle executives” in the 1980s.

I find that amusing and I’m not sure why. Seeing a young Larry Ellison take it to his executives in a pickup game just seems like it’d be fun to witness.

The culture included a high level of commitment as well, especially from salespeople, who were all expected to hit their numbers, and who used some questionable tactics to do so, which put Oracle in a bind later on.

With a salesforce humming along selling Oracle software, Larry ramped up advertising with the help of Rick Bennett.

In Rick’s first year at Oracle, after rarely spending on advertising, they spent $330,000 on ads. The next year, $1.33 million. And by 1987 that number was $4.8 million.

Unsurprisingly, Larry took an aggressive advertising approach as well:

Larry also found another creative way to get an advantage over his competitors:

When the founder of Ingres, Mike Stonebraker, one of Oracle’s main early competitors, was asked about the competition between the two, it was clear why Oracle won out:

Superb marketing certainly goes a long way.

For Oracle, it led them to an IPO in March 1986.

By 1989, Oracle was cruising, doing $583 million in sales.

The company had more than 4,000 employees at this point.

But a big problem, one that had been building for years, was about to show up in a major way.

The numbers told the story:

No bueno.

To grow at a rapid rate, Oracle got sloppy. Very sloppy.

They had negative cash flow, booked very questionable deals for years that included everything from extended payment terms to side letters, and the company took a massive hit.

After announcing their financial results for Q3 of the 1990 fiscal year on March 27, 1990, one where profits increased only 1% compared to the previous year, Oracle’s stock dropped from $25.38 to $17.50, losing 31% in a day.

Mike Wilson’s book goes into way more detail about what led to this, but all that is to say that it was a terrible situation.

Then, on September 6, Oracle announced its first quarterly loss in company history.

Larry had to lay off 10% of Oracle’s workforce, about 400 people in total.

A few weeks later, the stock fell to around $6. It had been above $28 only six months before.

The stock continued to dive, dipping below $5 in November.

Several people thought Larry would be on his way out of Oracle at this time.

Stephen Imbler, the VP of Finance, was not one of them and he made a good point about Larry:

After the dip, Oracle made changes.

Their new CFO, Jeff Henley, was one of the people leading the charge.

In 1989, revenue grew 102%.

In 1991, growth was only 12% and in 1992 it was 15%.

This was painful given what they were used to, but was completely necessary.

The crazy part?

In hindsight, the bad quarter didn’t matter much at all:

In 1996, nearly 20 years after Larry Ellison started Oracle, the company had 23,113 employees and did $4.2 billion in revenue with $603 million in profit.

The key to the success of Oracle in those first 20 years could be summed up with a quote by Gary Kennedy: We did what we had to do.

Larry built a company filled with people who played to win.

Yes, it caught up to them in 1990, but it also made Oracle remarkably successful.

Could a more passive founder have accomplished what Larry did in those first 20 years?

I doubt it.

There’s a reason why companies like Oracle and Microsoft came out on top at that time - they were both led by aggressive founders who played to win… and won.

Larry was ruthlessly competitive in all areas of life during that time and it made Oracle fabulously successful, but also came at a high personal cost, including multiple failed marriages.

Nonetheless, Larry built Oracle his way:

Thanks for reading! If you’d like to read the book by Mike Wilson, which includes way more details than I could include in this piece, check it out here.