Russ: This is the BusinessMakers Show, heard here and seen online at theBusinessMakers.com. And now it is time for the BusinessMakers Flashback. And for this morning's Flashback, we are going to stay consistent with the Oracle theme and revisit our interview with the Chairman of the Board of Oracle, Jeffrey Henley, that took place back in 2007. We entered the discussion where I had just asked Jeffrey to tell us about Larry Ellison.

Jeffrey: He's, obviously, very, very bright. Sometimes people's image is different than they really are. I mean, he's certainly very competitive, and I think people know that. But he's actually very funny. He's [laughs] got a real wit about him and he's just a colorful guy.

Russ: Well, as I understand it, he's been doing this now for almost 30 years?

Jeffrey: Yes, he founded the company 30 years ago, and still going strong. And I think, hopefully, will keep going strong for a lot longer. I think he adds a lot in terms of keeping the company focused and growing and he's sort of not too bureaucratic. And you need people like Larry at the top, I think to continue to think about the future. And technology companies lose their way sometimes because they don't anticipate the next big trend. So a lot of his time's thinking about strategy, thinking about where the world's going.

Russ: Well, I think our entrepreneur audience loves to hear the fact that a founder would still be leading the company. That's quite unusual. And so you spent quite a bit of time at Oracle as the chief financial officer -

Jeffrey: Yes.

Russ: - before you became chairman, right?

Jeffrey: Yes, I did.

Russ: So what's it like to be chairman and formerly the CFO? I would think that you're not an engineer as well, are you?

Jeffrey: No, no. I'm not. I'm not technical. I'm a business guy. As opposed to finance guy, I consider myself a business guy. So I've gotten involved in a lot of parts of the company beyond just finance. And I spent a lot of time with customers.

Russ: Sure. But I assume along the way, too, you start becoming familiar with the technology -

Jeffrey: Yes.

Russ: - the competitive platforms and -

Jeffrey: Oh, for sure. I'm on the board. I'm on the executive committee. I'm a big user. My organizations over the years have been big users of our technology. So, certainly, I think I - while I'm not a super techie coder, I certainly understand a lot about what our products do, and certainly the business value. And I think that's what I can communicate to our customers.

Russ: Great. I'm aware, of course, that Oracle and the major success and the growth, quite a bit of it has been accomplished via acquisition. And I would assume that as former CFO and now as chairman, you get involved in deciding the strategy in acquisition.

Jeffrey: Well, we have a team of a dozen people that do a lotta work on analyzing and negotiating and all that. As a board member today, I certainly see the deals and we have to approve the larger ones. But I'm not as involved in all the details as I once was.

Our board, and certainly our finance and audit committee spend a lot of time reviewing these deals. So that's part of good governance, I think is that we're comfortable that we have good people analyzing that we have good processes, that we've really been thorough in thinking through because the reality is about two-thirds of all deals - M&A deals historically in corporate America failed financially, have not worked out financially. So we're aware of all of that, and we wanna be sure that we have a much higher percentage of success.

Russ: Well, and it seems to me that it's probably quite a challenge integrating another company's culture into Oracle.

Jeffrey: I don't think it's as big as in some industries. I think this is a young industry. I think we're much, much bigger than most of the companies we're acquiring. So I don't think it's culturally that difficult to bring people together. They come in knowing this is the Oracle way.

Russ: I've heard your perspective on entrepreneurship and on venture capital in general, and I assume that it sorta synchs up with some of the acquisition strategy at Oracle. But share with us what you think of entrepreneurship. Is it absolutely a must, particularly in the software world, that an innovator be first in his space, or are there other aspects that are perhaps more important?

Jeffrey: Yeah. I think don't think you have to be first. I think Microsoft wasn't first in operating systems. They weren't first in Office. I remember using VisiCalc on Apple IIcs, and then you had Lotus, and then Microsoft came third. So I think if you can be first, all the better. But I think you have to be reasonably early, I guess, and you have to take a good idea. You've gotta really have a great product. You gotta find the right business model. So there's a whole bunch of aspects.

So I think the so-called first mover advantage is terrific, but it turns out that people sometimes aren't always the first mover. Google would be a great example. They didn't invent search, right?

Russ: Right.

Jeffrey: I think that it's really getting a good idea and then figuring out how to get it to market and scale it up. And the sooner you can do it, the better. But you don't have to be first.

Russ: I assume this sort of position holds firm mostly in the software world. But I think that you've witnessed some success of small companies growing even without venture funding.

Jeffrey: Yes. Oracle did. Oracle basically got financing from its first customer, and advances and - which was the government, the CIA. And, of course, software companies aren't that capital-intensive. And the other thing that Larry always believed that you needed to make money quickly. So I think that sometimes the reason that software companies ended up getting venture capital was they weren't creative in terms of how to raise alternative funding, and they wasted a lotta money and they built up their bureaucracies and sales forces way too early.

So I think Larry was very cognizant of the fact that he didn't want to dilute himself and have a bunch of VC money. And so he needed to run lean and get profitable quickly. And you can do that in software, in my opinion. So I think there's a lotta goodness that comes sometimes from advice from VCs. Sometimes it's a good source of money. But you do dilute yourself as an entrepreneur. So I think - I always say you should try to minimize the amount of dilution and keep more for yourself. [Laughs]

Russ: Great. I agree with that as well. Bringing up Larry, again, just out of curiosity in the period of time that he's been the leader of the company, which is obviously from the beginning, has his position always been secure, or were there ever board members that thought he needed to be replaced?

Jeffrey: [Laughs] Well, the only traumatic time we had was in about 1990, and the company hit a recessionary period and a had a lot of management issues. And the company started losing money for the first time. That's kinda when they brought me in. But there was rumor out in the street Larry might lose his job and all that. And so I think that that was the only tenuous time. But one of the things when I came in and talking to the board members, I wanted to be sure that Larry was gonna stay, because I thought it was critical that he stay. And I think the board members did, too. So he did end up replacing virtually his entire management team.

Russ: Jeff, I've gotta think that, boy, the whole aspect of the global economy, the engineering talent across the world these days, has to be playing a big role in decisions being made at Oracle.

Jeffrey: Oh, for sure. I mean, we sell to customers all over the world, and so we're very knowledgeable about what's going on in the world there. But clearly, the marketplace for talent has changed a lot since I started at Oracle. So we have a lot of our developers offshore these days. We've bought some companies offshore. We've got a large Indian company that's in the banking software business. So it's very much a global world, not just in selling products, but in sourcing talent, ideas. And if you don't take advantage of it, I think you're gonna lose your competitive advantage.

Russ: What percentage of the Oracle employee base is outside the US these days?

Jeffrey: I think roughly two-thirds. I think it's close to the right number.

Russ: Wow.

Jeffrey: It's probably the converse of what it was when I joined. We were probably 65 percent domestic. So in the space of 17 years, that's flipped.

Russ: Okay. Well, let's say that we have an owner of a small software company that has decided that their best exit strategy is to be acquired by a company like Oracle or one of the other large software companies. What sort of advice would you give to them?

Jeffrey: If they made that decision or they're thinking about doing that, they can certainly reach out to an Oracle or others and try to establish a dialogue and pitch themselves, if you will. I think to do it, most - certainly in the case of Oracle, we have a got probably a dozen people that are very professional; they're very thorough. And so they're gonna have to make their case, just like going public. They've gotta be buttoned up and very thorough, and they've really gotta convince the buyer of why they need to be purchased and so forth. So I think first, get yourself successful, create some value there that somebody'll wanna buy you, and then figure out who the logical buyers are.

A lotta times firms will use investment bankers, and that's obviously helpful and sometimes can help them do a more thorough job of figuring out who the logical buyers are, can help them negotiate. But we've bought companies without bankers involved, so I guess it's up to the company to decide how they wanna approach people and do they need a banker or not to help sell themselves.

Russ: Well, for my last question, what kind of advice, education-wise and even career-wise, would you give to say a youngster that's just now graduating from high school and trying to prepare themselves for an exciting career in the technology space?

Jeffrey: Well, I think Larry Ellison and Bill Gates basically dropped out of college after a year. So, certainly, I would never tell you had to get a college degree.

Russ: Right. [Laughs] Right.

Jeffrey: But I do think your chances go up by getting a college degree. So I think it still doesn't hurt to go to college and get a degree and then go out from there.

As an undergraduate, I'm not sure it matters what your degree is. I think there's all kinds of degrees. If you're inclined towards engineering and want to get involved in technology, I think that's fabulous. I think that there's nothing better than to start with a good technical base to get involved in some of these industries. But, again, you don't have to. But if you want a found a technology company, I think most of these people come with an engineering base, had some sort of computer science, some sort of technical base. So I think if you're inclined towards technology and founding something and you like that, then certainly you should major in that. And then maybe get some sort of business training after that. There's a variety of schools that have graduate programs in that, and that sorta thing.

So I still think it's good to maybe work for a larger company right out of college. And, again, there's the model's not always that way. A lotta guys go straight out and start a company. But I still think going out and learning a little bit about business, working maybe in a bigger company and seeing how things work before you try to start your own. But there's certainly, again examples of people that start from a - Larry Ellison, worked for several company. He didn't start Oracle till he his 30s. But there's other companies, the Steve Jobs and others, that started companies right out of college. So there's no perfect answer here.

Russ: Ok and that wraps up this morning's BusinessMakers Flashback with Jeffrey Henley recorded back in 2007. You've been listening to the BusinessMakers Show, heard here and seen online at TheBusinessMakers.com.