Speaker 1: Get in touch with technology with tech Stuff from how
Speaker 1: stuff works dot com. Hey there, and welcome to tech Stuff.
Speaker 1: I'm your host, Jonathan Strickland. I'm an executive producer at
Speaker 1: how Stuff Works and I love all things tech. And
Speaker 1: today we're gonna talk about the Oracle story. Oracles a big,
Speaker 1: big company, and this is inspired by my recent trip
Speaker 1: to Sweet World eighteen. I flew out to Las Vegas,
Speaker 1: Nevada and was part of that conference. I am back
Speaker 1: in the Atlanta studio as I record this, So if
Speaker 1: you're listening to this and you're thinking us sounds like
Speaker 1: the normal type of episode, that's why. Also I want
Speaker 1: to let you guys know we're going to step up
Speaker 1: the production schedule for Tech Stuff, so you're gonna start
Speaker 1: getting new episodes pretty much on a daily basis, at
Speaker 1: least four new episodes a week and a rerun on Saturday's,
Speaker 1: maybe more than that, depending up on how our scheduling goes.
Speaker 1: But we're experimenting with a new format to see how
Speaker 1: well it works, and I'm curious to hear what you
Speaker 1: guys think about it. But I'm really excited about this
Speaker 1: because it means I get to do the thing I
Speaker 1: love to do more often, which is awesome. All right,
Speaker 1: let's talk about Oracle. It's a huge name in the
Speaker 1: tech space. It's a software company that frequently ranks right
Speaker 1: behind Microsoft in the largest of such companies in the world.
Speaker 1: So in the world of software, Microsoft's number one and
Speaker 1: Oracles right behind it number two. And while most of
Speaker 1: Oracles products aren't the kind the average person accesses on
Speaker 1: a regular basis. You know, you think of Microsoft and
Speaker 1: you think of things like Windows, and you think of
Speaker 1: their suite of productivity software, things like Word and Excel.
Speaker 1: Oracles business isn't really about the average customer, like the
Speaker 1: average person is being a customer. Instead, it tends to
Speaker 1: be a business that sells products to other businesses. Um.
Speaker 1: It's history and its founders have very interesting stories. So
Speaker 1: to begin with, let's start with the most famous of
Speaker 1: oracles co founders, a man who has an incredible reputation
Speaker 1: for being uh flamboyant, and he speaks his mind and
Speaker 1: he can be incendiary in some cases. We're talking about
Speaker 1: Larry Ellison. Now, Ellison's story is the stuff of legend
Speaker 1: or maybe a fairy tale in some ways, because he
Speaker 1: rose from poverty to become one of the richest people
Speaker 1: in the world, and he has a reputation for being headstrong, unconventional,
Speaker 1: and at times in his life living like a rock star.
Speaker 1: Biography about his life has the title The Difference between
Speaker 1: God and Larry Ellison, which is a setup to the
Speaker 1: punchline God doesn't think he's Larry Ellison. I could do
Speaker 1: a full episode just on him and his anti but
Speaker 1: I'm gonna try and limit that a little bit and
Speaker 1: focus mostly on his behavior directly tied to Oracle, though
Speaker 1: expect some of Ellison's actions to creep in now and
Speaker 1: again because they had an impact on the company that
Speaker 1: he co founded. He was born in nineteen forty four
Speaker 1: to nineteen year old Florence Spellman. Spellman was unwed and
Speaker 1: Ellison never met his biological father. His mother handed Ellison
Speaker 1: over to her sister, Lillian and her sister's husband, Louis
Speaker 1: Louis Ellison. Larry's aunt and uncle adopted him, and according
Speaker 1: to Ellison, the family took their last name from Ellis
Speaker 1: Island after the father or the his uncle really Louis
Speaker 1: or Louis after his family immigrated to America from Eastern Europe. Now,
Speaker 1: according to Ellison himself, his childhood was pretty rough. His
Speaker 1: adopted father undermined Ellison's self worth and confidence. Apparently, he
Speaker 1: would say frequently that Larry Ellison was good for nothing.
Speaker 1: Ellison had trouble in school. He was described as intelligent,
Speaker 1: but he didn't do well with authority figures. He wasn't
Speaker 1: really crazy about being told what to do and win.
Speaker 1: But he was very smart, and when he graduated high school,
Speaker 1: he first enrolled in the University of Illinois, but after
Speaker 1: a while he dropped out, and then he enrolled in
Speaker 1: the University of Chicago, but after a while he dropped
Speaker 1: out of that as well, and at least the first one.
Speaker 1: He dropped out for good reason and that his adopted
Speaker 1: mother had passed away and he wanted to leave school
Speaker 1: to be back with his his family and to pay
Speaker 1: his respects. He made the decision in the mid nineteen
Speaker 1: sixties to head to California and try to make a
Speaker 1: living out there, and at first he did odd jobs.
Speaker 1: He also bought a book on programming and began to
Speaker 1: teach himself how to do it. According to an account
Speaker 1: he gave to the Smithsonian, he never once took a
Speaker 1: class in computer programming. He was completely self taught and
Speaker 1: in nineteen seventy three got hired on at the Ampex Corporation.
Speaker 1: Ampex is an electronics company. It started out making electric
Speaker 1: motors and generators in the nineteen forties. By the nineteen seventies,
Speaker 1: when Ellison had joined, the company had diversified and started
Speaker 1: making various types of recorders like magnetic tape recorders such
Speaker 1: as eight track or sixteen or twenty four track recorders.
Speaker 1: Larry Ellison's supervisor at Ampex was a guy named Robert
Speaker 1: Bob Nimrod Minor. Bob Minor was a first generation American
Speaker 1: born in nineteen forty one. His parents came from Iran
Speaker 1: to live in the US in the nineteen twenties. Minor
Speaker 1: had attended the University of Illinois at Urbana Champaign and
Speaker 1: graduated with a degree in mathematics. Bob Minor had a
Speaker 1: deep understanding of computers and would end up being the
Speaker 1: lead engineer for Oracle during those early days. The third
Speaker 1: co founder of Oracle was another Ampex employee named Ed Oates.
Speaker 1: He was born in nineteen forty six and graduated with
Speaker 1: a BA in mathematics from San Jose University in nineteen
Speaker 1: sixty eight. Together with Minor and Ellison, he would found
Speaker 1: what would become Oracle. Now, alright, I should say that
Speaker 1: at the very beginning here that there are a lot
Speaker 1: of conflicting reports about the actual order of events that
Speaker 1: I'm going to describe next. But based upon my research,
Speaker 1: this is how I think things unfolded. Now. I say think,
Speaker 1: because again, if you research this stuff, you're gonna find
Speaker 1: a lot of different versions of this story. Some suggest
Speaker 1: that Ellison joined the fledgling company a few months after
Speaker 1: Oates and Minor founded it. Others say that Ellison was
Speaker 1: the central role of founder in this company. I think
Speaker 1: the truth is probably somewhere in the middle. First, Ellison
Speaker 1: left Ampex in nineteen seventy six and joined another company
Speaker 1: called Precision Instruments to take the position of vice president
Speaker 1: of research and development over at Ampex. Bob Minor and
Speaker 1: Ed Oates decided they wanted to form their own business,
Speaker 1: so they left Ampex and they create They contacted Ellison.
Speaker 1: They asked him if maybe he wanted to join their venture,
Speaker 1: and Ellison agreed. So while he had joined Precision Instruments,
Speaker 1: he was not there for very long. He left to
Speaker 1: go and found this company and the brand new company
Speaker 1: was not called Oracle, at least not yet. Instead, this
Speaker 1: brand new company was called Software Development Laboratories or s
Speaker 1: d L, and their business model was to become software
Speaker 1: engineers for hire, so companies would contract with them to
Speaker 1: build out software packages that those companies needed on a
Speaker 1: per job basis. They would be contract workers. You need
Speaker 1: a platform of programs developed, call us, we'll do it.
Speaker 1: They rented out a an office out of Santa Clara, California,
Speaker 1: with nine square feet of office space and all they
Speaker 1: needed at that point, we're customers. So while they started
Speaker 1: looking for business, ed Oates was looking around and he
Speaker 1: came across a paper that was written back in n
Speaker 1: seventy by a computer scientist in the UK named Edgar F. Cod.
Speaker 1: Cod proposed using a model for information that would allow
Speaker 1: a database to organize data by its relationship with other data.
Speaker 1: And you would do this by organizing all the information
Speaker 1: into tables with columns and rows, and each row would
Speaker 1: have a unique identifier attached to it, and the rows
Speaker 1: will be called records or sometimes called tuples. Columns would
Speaker 1: represent attributes, so you would have a column that describes
Speaker 1: some sort of feature that could apply to the various
Speaker 1: records the various rows in this table, and each column
Speaker 1: would be a different feature. So let's say that you're
Speaker 1: talking about a physical product. One column might indicate the
Speaker 1: location where that physical product is. Another column might be
Speaker 1: the price of that product, or another one might be
Speaker 1: the color of that product or whatever that might be.
Speaker 1: And using this kind of approach, you could build a
Speaker 1: really useful database that could allow you to look at
Speaker 1: data in many different ways by structuring queries. So let
Speaker 1: me give you a simple example so that I can,
Speaker 1: you know, explain what this means. Let's say that you
Speaker 1: are a huge roller skate tycoon, which means you you
Speaker 1: sell roller skates and you're incredibly successful, not that you
Speaker 1: sell really big roller skates or that you are in
Speaker 1: fact a giant who wears roller skates. Now, in your business,
Speaker 1: you decide you want to see which lines of roller
Speaker 1: skates are selling best in your stores in San Francisco.
Speaker 1: So you run a query and you've got this big
Speaker 1: table of data and you're saying, well, I want to
Speaker 1: see the skates that are being sold in our San
Speaker 1: Francisco stores. I want them ranked by most popular to
Speaker 1: least popular, and then I can get a quick look
Speaker 1: at my business and see which ones are doing well.
Speaker 1: Maybe I need to order more of those, Maybe I
Speaker 1: need to order fewer of the models that are not
Speaker 1: doing really well. And so you look at this information
Speaker 1: and you see that the skates that have really good
Speaker 1: breaks on them are the ones they're doing really well,
Speaker 1: which makes sense in San Francisco, because otherwise you're just
Speaker 1: gonna take off down that hill, hurtling to your destiny
Speaker 1: until you just end up in the middle of the
Speaker 1: Pacific Ocean, so you would never be seen again. It
Speaker 1: makes sense that the roller skates would break, so the
Speaker 1: ones that are doing really well. Now this is not
Speaker 1: revolutionary these days, right. We are used to being able
Speaker 1: to create ables in this way where we can create
Speaker 1: different categories of features and then we can sort by that,
Speaker 1: or we can filter by that, so that we're only
Speaker 1: looking at the data that actually interests us, and everything
Speaker 1: else gets hidden away so that it's not distracting. That's
Speaker 1: not revolutionary today, But back then it was. This relational
Speaker 1: database idea was a huge, huge notion, and at that point,
Speaker 1: while cod was suggesting this particular model of handling information,
Speaker 1: no one had yet found a way to implement it.
Speaker 1: In an elegant way. All the different attempts were still
Speaker 1: very much in the early phases. But Oates, having read
Speaker 1: this paper, thought this sounds really really interesting to me.
Speaker 1: I think that we can make a business out of
Speaker 1: this because other businesses are going to want to be
Speaker 1: able to sort their data in various ways. So if
Speaker 1: we can figure out a way to build a software
Speaker 1: platform where we can create eate database software for these companies,
Speaker 1: that might be our entry point into the market. Maybe
Speaker 1: that's how we actually start making our money. So the
Speaker 1: databases in commercial use became known as relational database management systems,
Speaker 1: also known as r D B M s S S so
Speaker 1: are for relational dB for database, M for management, and
Speaker 1: S for systems. And that would really transform data analysis.
Speaker 1: But that's only part of the picture. So another part
Speaker 1: was thanks to the computer scientists over at IBM. There
Speaker 1: was a guy named Donald D. Chamberlain and another one
Speaker 1: named Raymond F. Boyce. They had also read Cod's paper,
Speaker 1: and they decided to create a type of programming language
Speaker 1: that could manifest those ideas make them actually work. They
Speaker 1: wanted to create a programming language that would end up
Speaker 1: allowing you to create these kind of relational databases. So
Speaker 1: they set to work and doing it, and there first
Speaker 1: such a town was originally called Square, but Square proved
Speaker 1: to be pretty clunky and inelegant. It had a lot
Speaker 1: of limitations to it, so they decided to go back
Speaker 1: to the drawing board and try again. Their second effort
Speaker 1: they called sequel s q L, or sometimes they actually
Speaker 1: would spell it out s e q L, and s
Speaker 1: q L stands for structured Query Language. S e q
Speaker 1: L was supposed to be structured English query language, and uh,
Speaker 1: it was kind of a cheeky reference to also being
Speaker 1: the second attempt to create such a language to make
Speaker 1: these r D B M s is. So the sequel
Speaker 1: language would in fact lend itself well to building this
Speaker 1: kind of database. Now what came next, Well, I'll tell you,
Speaker 1: but first let's take a quick break to thank our sponsor.
Speaker 1: All Right, So we have this concept of relational databases
Speaker 1: that cod had proposed. We've got the sequel language that
Speaker 1: was developed by the scientists over at IBM, and the
Speaker 1: three co founders decided they didn't want to challenge IBM
Speaker 1: directly by creating database systems for mainframe computers. IBMS clients
Speaker 1: tended to be really big companies, like really big ones,
Speaker 1: and they were mostly using these large mainframe computer systems
Speaker 1: that trace their origins back to the nineteen fifties. So instead,
Speaker 1: the co founder said, what we should do is build
Speaker 1: out a database system that can work on many computers.
Speaker 1: Many computers are still pretty big, right they're not. They're
Speaker 1: bigger than what a personal computer would have been. Like,
Speaker 1: especially the many computers back in the nineteen seventies. They
Speaker 1: were still large. Uh, they were less expensive than mainframes,
Speaker 1: but they were also less powerful and they were more
Speaker 1: frequently used by mid sized companies. It just made more
Speaker 1: sense to go with many computers than may frames. Now,
Speaker 1: the personal computers, those we would call micro computers, they're
Speaker 1: even a size smaller. So the co founder said, well,
Speaker 1: IBM is probably not going to go for that market.
Speaker 1: They tend to concentrate on large companies, not mid sized companies.
Speaker 1: So if we tailor a business for mid size companies,
Speaker 1: there's probably a lot of opportunity there, and we don't
Speaker 1: have to worry about IBM wanting to compete directly against
Speaker 1: us or acquire us. We can do business our way.
Speaker 1: And so ed Oates convinced his partners that building out
Speaker 1: databases using the sequel language was the way to go,
Speaker 1: and so the team got to work building their very
Speaker 1: first software product, which was called Oracle. But there's a
Speaker 1: bit more to it than that, because it was called
Speaker 1: Oracle for specific reasons. So the software gots name from
Speaker 1: a project that was being run by the first customer
Speaker 1: SDL ever had. Remember STL stood for Software Element Laboratories. Well,
Speaker 1: that customer was the little US agency called the c
Speaker 1: i A, that is, the Central Intelligence Agency. That was
Speaker 1: the first s d L customer, and the CIA had
Speaker 1: a special project they were looking to complete called Oracle.
Speaker 1: So what was the project about? Why did they need
Speaker 1: a relational database? Well, who's to say it's classified? It's
Speaker 1: probably cloak and dagger stuff. I do not have the
Speaker 1: proper clearance to find out what exactly was going on.
Speaker 1: It was all redacted. But STL took the project and
Speaker 1: they had two years to complete the work and create
Speaker 1: a relational database for the c i A. Bob Minor
Speaker 1: did most of the work and creating the architecture for
Speaker 1: the database, and they were able to turn in their
Speaker 1: project a year ahead of schedule. They spent the following
Speaker 1: year adapting this database approach so that they could create
Speaker 1: a commercial product that they could sell to other companies.
Speaker 1: So essentially, they said, well, we did this for the CIA,
Speaker 1: let's just adapt it so that we can sell it
Speaker 1: to anyone, really, any organization or a company that's out there.
Speaker 1: So they decided to stick with the name the project
Speaker 1: name the CIA project, which was called Oracle, and use
Speaker 1: that to name their product, their software, their database software
Speaker 1: thus became known as Oracle. By the way, there is
Speaker 1: an allegation out there that Oracle actually started out as
Speaker 1: a Russian software product that the c i A lifted
Speaker 1: as in stall, and then handed over to SDL. I've
Speaker 1: seen no confirmation of that allegation anywhere, and I'm inclined
Speaker 1: to consider it outright false, as it really serves as
Speaker 1: a huge injustice to the people like Bob Minor who
Speaker 1: actually worked really hard to build out this database software.
Speaker 1: But I just wanted to acknowledge the fact that there
Speaker 1: is a rumor out there. I just don't think it
Speaker 1: has any real credence. Also, the version that Ellison, Bob
Speaker 1: Minor and Oates made commercially available wasn't just Oracle. It
Speaker 1: was actually called Oracle Version two. So why was the
Speaker 1: first version ever offered in the consumer market, known as
Speaker 1: Version two. Well, it's because Larry Ellison thought no company
Speaker 1: or organization would want to buy Version one of any
Speaker 1: kind of software platform. They would worry about it being unproven,
Speaker 1: and so he said, well, why don't we just call
Speaker 1: this version two? Will bypass the problem. It was still
Speaker 1: the first version of the Oracle software, it just had
Speaker 1: the name Version two, which is sort of like forming
Speaker 1: a brand new musical band and then calling your first
Speaker 1: album your greatest Hits album, which is funny. There's a
Speaker 1: lot of hutzpa there. In fact, hutzba is one of
Speaker 1: those words that often gets used to describe Ellison. But
Speaker 1: that's why the first version of Oracle was called Version two,
Speaker 1: even though it was technically the first one. The company's
Speaker 1: first hired to help them build out this software was
Speaker 1: a programmer named Bruce Scott, and he started so early
Speaker 1: with the others that he's frequently referred to as the
Speaker 1: fourth co founder, but technically speaking, he was the company's
Speaker 1: first hire. Scott worked on the first several versions of
Speaker 1: the Oracle database software. Now, it took a couple of
Speaker 1: years to get Oracle ready for commercial deployment from the
Speaker 1: founding of the company. So again STL was founded in
Speaker 1: nineteen seventy seven, but by nineteen seventy nine, Oracle was
Speaker 1: ready to go, and the company formerly known as Software
Speaker 1: Development Laboratories, had undergone a name change, but it still
Speaker 1: wasn't called Oracle yet. Instead it became known as Relational Software, Incorporated.
Speaker 1: And one wonders if they ever got contacted by people
Speaker 1: who were compute dating enthusiasts, because Relational Software suggests to
Speaker 1: me that maybe you can hook me up with miswrite.
Speaker 1: I don't need that. By the way, I'm happily married.
Speaker 1: The company's Oracle product soon became the go to for
Speaker 1: lots of big companies and organizations, including other U. S.
Speaker 1: Government and military clients. So in addition to the c
Speaker 1: i A, there was the Air Force and the Navy.
Speaker 1: In fact, depending upon whose account you read, the first
Speaker 1: customer for the company wasn't the CIA, but instead was
Speaker 1: the Air Force. Either way, the military and intelligence communities
Speaker 1: were hot for relational databases, and it makes sense considering
Speaker 1: how much information those organizations have to handle, So one
Speaker 1: of their earliest non government contracts would be with Bell Labs,
Speaker 1: another company that has a huge amount of information to
Speaker 1: deal with, so it made sense that they wanted a
Speaker 1: database software program where they could structure that data in
Speaker 1: a way that was more useful. By the model for
Speaker 1: business computing had shifted toward mini computers and the Unix
Speaker 1: operating system for things like database management, So people were
Speaker 1: moving away from having that enormous centralized computer that mainframe
Speaker 1: inside their business. They were now starting to rely on
Speaker 1: these relatively smaller mini computer workstations and the Unix operating
Speaker 1: system so that they could actually do their work instead
Speaker 1: of having this proprietary massive computer in their building. That
Speaker 1: played right into this young company's strengths and admit, their
Speaker 1: decision to focus on many computers was a big success,
Speaker 1: and sales steadily began to climb. Now it wasn't a
Speaker 1: runaway success right out of the gate, but they were
Speaker 1: making regular sales. In one the company lured away former
Speaker 1: IBM employee Umang Gupta to join as the seventeenth employee
Speaker 1: of Relational Software. I'll be talking about some of the
Speaker 1: other early employees in part two of this episode, because,
Speaker 1: as it turns out, some people that were hired early
Speaker 1: on stuck around with Oracle for quite some time. But
Speaker 1: over that time they began to form some very strong
Speaker 1: opinions about Larry Ellison and his managerial style. Anyway, back
Speaker 1: to Gupta, his main priority was developing a business plan
Speaker 1: for the company. Because you had these three guys who
Speaker 1: had founded the company and they knew how to make
Speaker 1: and market a product. Everyone said that Ellison was kind
Speaker 1: of the marketing guy. He was the one who would
Speaker 1: go out and sell the product, and Bob Minor was
Speaker 1: the architect and at Oates was a developer. But they
Speaker 1: weren't business guys in the sense that they weren't the
Speaker 1: ones ready to run an enormous company um and so
Speaker 1: doing things like developing a business plan was not exactly
Speaker 1: in their strong suit. That wasn't one of their uh
Speaker 1: there uh features. So Gupta came in and he created
Speaker 1: a business plan for the company, and he was also
Speaker 1: the vice president of the company's microcomputer products division. Now,
Speaker 1: remember this was a time when personal computers, also known
Speaker 1: as micro computers, were really starting to become a big success.
Speaker 1: In the early nineteen eighties. The proliferation of computer systems
Speaker 1: and businesses and homes created the opportunity for software companies
Speaker 1: to go after new markets, and after a relatively short
Speaker 1: stint at the company, Gupta would end up leaving along
Speaker 1: with the first employee hire of Oracle's history, Bruce Scott,
Speaker 1: and they would found Gupta Technologies, which later became cinur
Speaker 1: A Software. Also in nineteen eighty one, the company began
Speaker 1: to work on features that would expand Oracles, such as
Speaker 1: the Interactive Application Facility. This was a tool that could
Speaker 1: handle transaction processing forms, which doesn't sound exciting, but it
Speaker 1: was an important development in the company changed names again,
Speaker 1: except this time they finally became the Oracle we know today.
Speaker 1: At that time, the company was enjoying two and a
Speaker 1: half million dollars in annual revenue. To grow further, the
Speaker 1: company leaders decided to invest a quarter of their revenues
Speaker 1: back into research and development. So how did that pan out? Well,
Speaker 1: I'll tell you, but first let's take another quick break
Speaker 1: to thank our sponsor. As it turns out, this two
Speaker 1: and a half million and annual revenue and then the
Speaker 1: reinvestment into research and development paid off in a big way.
Speaker 1: So the next big jump Oracle took was in three
Speaker 1: when the company offered up a version of relational database
Speaker 1: management software that could work on any sort of computer platform,
Speaker 1: which included mainframes, workstations, and personal computers. This expansion doubled
Speaker 1: company revenues for that year, which is pretty good validation
Speaker 1: for your decision. This was Oracle version three, which really
Speaker 1: means it was version two, because again they started with two,
Speaker 1: not one. So you know what, when I tell you
Speaker 1: version names, just mentally subtract one from the number, because
Speaker 1: that's what it really was. Now. Version three was such
Speaker 1: a big success that the company decided to push version
Speaker 1: four out the following year, in nineteen eighty four. This
Speaker 1: version included the ability to generate a report based on queries,
Speaker 1: which again seems like a no brainer these days, but
Speaker 1: it was a real innovation at the time by Oracle
Speaker 1: was selling more than twenty million dollars a year in
Speaker 1: software deals, and the company was getting into a very
Speaker 1: young field, which was the Internet. In the Internet was
Speaker 1: extremely young, not a lot of people knew about it,
Speaker 1: but in fact, of course, that was a decade before
Speaker 1: the Web would really become a thing, So this was
Speaker 1: a pretty bold move. Um. Version five of our software
Speaker 1: supported the ability for a machine running Oracle to log
Speaker 1: into a database server, so you didn't have to rely
Speaker 1: on computer systems that were co located anymore. With a
Speaker 1: connection to the Internet, you could have computers in offices
Speaker 1: around the world log into the same database. The version
Speaker 1: also included an auditing feature that tracked all the times
Speaker 1: someone accessed the database, which was a security and quality
Speaker 1: control feature. So it didn't necessarily immediately tell you who
Speaker 1: had accessed the database, but I would tell you the
Speaker 1: location of that person or the person's computer and the time,
Speaker 1: like what time did they access the database. So if
Speaker 1: you go into the database and you think, well, that's weird,
Speaker 1: three whole columns are missing. Someone accidentally deleted them. I
Speaker 1: wonder who did that. You could actually go through the
Speaker 1: audit list and find out who had last accessed that
Speaker 1: particular database, and then you could go and pay them
Speaker 1: a little visit and maybe ask them why they don't
Speaker 1: like their kneecaps anymore. I'm assuming you're using the database
Speaker 1: in the mafia. But the point being that this was
Speaker 1: a new feature that allowed for greater tighter control not
Speaker 1: just of the information but access to it. And they
Speaker 1: hit fifty five million dollars in revenue. That's not profit,
Speaker 1: that's in revenue, but still fifty five million is a
Speaker 1: huge amount of money, and it was incredible growth for
Speaker 1: the software company. That was also the year Oracle held
Speaker 1: its initial public offering or i p O. That's when
Speaker 1: a private company turns into a publicly traded one. The
Speaker 1: initial price for a share of Oracle stock was fifteen dollars.
Speaker 1: An Oracle created two point one million shares and made
Speaker 1: them available. So you multiply those two numbers together and
Speaker 1: you get the market value of the company, which was
Speaker 1: thirty one and a half million dollars. So again you
Speaker 1: just look at how much is it per share, how
Speaker 1: many shares are out there. Multiply those two numbers together,
Speaker 1: and that tells you the market value for a company.
Speaker 1: By the way, if you want to know how much
Speaker 1: a share of Oracle stock you bought back in the
Speaker 1: days when it went public, how much would that be
Speaker 1: worth today? You actually have to do a little bit
Speaker 1: of math. The day I'm doing this research, So the
Speaker 1: day I actually researched this information, Oracle stock came in
Speaker 1: at forty six dollars per share or so, which means
Speaker 1: it's about three times more than the initial offering at
Speaker 1: fifteen dollars, which means you would triple your money. Right,
Speaker 1: not so fast, because it gets way better than that.
Speaker 1: If you just thought, oh, the stock prices three times
Speaker 1: what it used to be, I make three times as
Speaker 1: much money. Here's the thing. Oracle has split its stock
Speaker 1: a few times. So splitting stock increases the number of
Speaker 1: shares a company has out on the market, and it
Speaker 1: also has the effect of lowering the price per share.
Speaker 1: But you end up with twice as many shares if
Speaker 1: you're doing a two for one split, and the overall
Speaker 1: market valuation of the company will remain the same of
Speaker 1: the moment. So, in other words, the market valuation has
Speaker 1: to remain constant. You don't magically make the company more valuable. Right,
Speaker 1: So if you already have your company valued at thirty
Speaker 1: million dollars and you've got two million UH shares out there,
Speaker 1: and you go to four million shares, your company is
Speaker 1: still going to be worth thirty million dollars. It's just
Speaker 1: that each share is going to be worth half as
Speaker 1: much as it was before. So I have I do
Speaker 1: it too. For one split, I double the number of
Speaker 1: shares in my company. I also have the value of
Speaker 1: the individual shares, because again, the value of my company
Speaker 1: does not magically change. So I'm gonna give you a
Speaker 1: full example here, Let's say that my company is worth
Speaker 1: fifty million dollars and I've got two million shares out there,
Speaker 1: which means each shares worth twenty five bucks before I split.
Speaker 1: Then I split the stock two for one. Now there
Speaker 1: are four million shares of my company out on the market,
Speaker 1: which makes the price of each share go down to
Speaker 1: twelve dollars and fifty cents. So when you split a stock,
Speaker 1: if someone already owns stock, they get the benefit of
Speaker 1: that split. Right. So if it's a two for one
Speaker 1: split and I own ten shares of the company, now
Speaker 1: I own twenty shares of the company. Each share is
Speaker 1: half as expensive as it used to be, but I've
Speaker 1: got twice as many. So why would I Why would
Speaker 1: I bother splitting if the value of the company remains
Speaker 1: the same. What's the point? Well, there's some psychological effects
Speaker 1: when you split stock. If you were to take humans
Speaker 1: out of the equation entirely, if you took human emotion out,
Speaker 1: then it wouldn't really matter if you split the stock
Speaker 1: or not. It wouldn't really have a big effect on
Speaker 1: the company's performance. But we are human, we're the ones investing,
Speaker 1: so it does matter. By splitting the stocks and reducing
Speaker 1: the cost on a per share basis, you can improve
Speaker 1: the liquidity of shares. People are more likely to trade
Speaker 1: because they don't feel they don't feel frozen either by
Speaker 1: holding onto stocks that are incredibly expensive, and therefore they
Speaker 1: have the the the reputation of being valuable. And you
Speaker 1: don't avoid investing because the entry price is too high. Right,
Speaker 1: You've lowered the entry fee to buy stock by making
Speaker 1: the stocks half as expensive. So you might have small
Speaker 1: investors out there who would jump on shares of Oracle,
Speaker 1: but if it's too expensive, they're like, I just I
Speaker 1: can't buy a forty dollar stock that drops down to
Speaker 1: twenty Oh, I can buy that. Then you get more investors,
Speaker 1: So that's one of the reasons you might do it.
Speaker 1: You might do it to try and encourage more trading,
Speaker 1: to encourage more small investors, and you're also doing it
Speaker 1: in an attempt to continue growing. So while you initially
Speaker 1: reduce the price of those shares by half, they can
Speaker 1: still climb up as the company does well. So uh,
Speaker 1: that means the stock price can increase over time. So
Speaker 1: over the course of Oracle's history, it is actually split
Speaker 1: its stock ten times. Six of those were two for
Speaker 1: one stocks, which meant if you held stocks an Oracle,
Speaker 1: the number of shares would double each time it has
Speaker 1: a two for one split, but four of the splits
Speaker 1: we're three for two stock splits, meaning that for every
Speaker 1: two shares you held, you would get a third one,
Speaker 1: or if you prefer, for each share you got one
Speaker 1: and a half shares. Right, So if you bought one
Speaker 1: share of Oracle in nine six for fifteen dollars, after
Speaker 1: all the stock splits, you would actually end up with
Speaker 1: three hundred twenty four shares of Oracle, right, because of
Speaker 1: each of the times they split, your number of shares
Speaker 1: would increase. So if you add up all the different
Speaker 1: ten splits, that one share turns into three four shares.
Speaker 1: And it's not three four shares at fifteen dollars, which
Speaker 1: is what you bought it at. It's three four shares
Speaker 1: of Oracle at forty six dollars, which means your fifteen
Speaker 1: dollar investment would turn into fourteen thousand, nine hundred four dollars.
Speaker 1: Not bad, not bad to go from fifteen to fourteen
Speaker 1: thousand bucks now almost fifteen thousand bucks now. Oracle clients
Speaker 1: were pretty huge, which makes sense. Not a lot of
Speaker 1: smaller organizations had real need for the robust databases Oracle
Speaker 1: had to offer. Instead, Oracles products were appealing to bigger
Speaker 1: organizations and companies industries like pharmaceutical companies, aerospace companies, tech firms,
Speaker 1: automotive corporations. Those were among oracles top clients. In Oracle
Speaker 1: launched a new division in the company. It was called
Speaker 1: the Applications Division, and it initially had just seven employees
Speaker 1: working in it. Their job was to put together application
Speaker 1: software to integrate various functions with the database software to
Speaker 1: make it easier to run routine tasks for large organizations. Essentially,
Speaker 1: the thought was that the database software gave organizations a
Speaker 1: lot of power to analyze their data, but they still
Speaker 1: had to develop their own tools to put that data
Speaker 1: to use. So Oracle was getting into the business of
Speaker 1: developing applications that would do that for these companies. Oracle
Speaker 1: didn't just rely on in house teams to do this.
Speaker 1: The company also acquired a company called t c I
Speaker 1: that built project management applications. The in house team got
Speaker 1: to work building on an accounting module that could integrate
Speaker 1: with Oracle databases, and this was the beginning of Oracle
Speaker 1: creating a suite of software applications that could work closely together.
Speaker 1: Branching out from being a purely database focused company, Oracle
Speaker 1: also launched a consulting service to offer support to clients,
Speaker 1: helping them best understand how to leverage Oracle software. So
Speaker 1: now not only could the company sell its products to customers,
Speaker 1: it could keep earning money from those same kind customers
Speaker 1: by explaining to them how to use their own products,
Speaker 1: which is pretty much genius. In fact, this was a
Speaker 1: top revenue generator for Oracle, was not just selling the product,
Speaker 1: but selling ongoing support for the product. In the company
Speaker 1: was outgrowing its home base, and so it relocated to
Speaker 1: Redwood Shores, California. It launched a subsidiary company called Oracle
Speaker 1: Data Publishing that was all about getting hold of data
Speaker 1: and then distributing it electronically, and the company sought out
Speaker 1: new industries and branches of computing to expand into, including supercomputers.
Speaker 1: The following year would end up being a tumultuous one
Speaker 1: for Oracle, which had to make for a pretty ugly
Speaker 1: admission for a company all about crunching numbers, because the
Speaker 1: company turns out it had misrepresented revenues, whether on purpose
Speaker 1: or by accident. It was not a pretty picture. And
Speaker 1: that's how we're gonna start our next episode of the
Speaker 1: Oracle Story talking about this massive controversy that the company
Speaker 1: and countered early in its history and what it had
Speaker 1: to do in order to climb back out again. In fact,
Speaker 1: it was so bad that there was a real danger
Speaker 1: of Oracle going away and not surviving. Now, as it
Speaker 1: turns out, Oracle still around today, so you kind of
Speaker 1: know things work out, but back then people weren't so sure. Now,
Speaker 1: if you have suggestions for future episodes of tech Stuff,
Speaker 1: I welcome you to write me and let me know
Speaker 1: what they are. The email address for this show is
Speaker 1: tech Stuff at how stuff works dot com, or you
Speaker 1: can drop me a line on Twitter or Facebook. The
Speaker 1: handle for both of those is tech Stuff hs W.
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Speaker 1: stuff and some other interesting things. Also, remember I broadcast
Speaker 1: my recording sessions live on twitch dot tv slash tech Stuff.
Speaker 1: Just go there. You'll see when I tend to stream.
Speaker 1: It's on Wednesdays and Fridays, but there's a schedule up there,
Speaker 1: so go there. You can jump into the chat room
Speaker 1: and be part of the shenanigans. What goes on when
Speaker 1: I record? I hope to see you there and I'll
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