Wtf is Oracle and why do 97% of companies use it? Larry Ellison's $457bn gamble

0:00Just to jump in here with a little update two weeks ago we filmed an episode called What the fuck is Oracle and as an update to that episode, Oracle have just increased their stock price by about 23 % which has resulted in Larry Ellison who owns 40 % of the company, there's a founder, having his net worth surge to being the second wealthiest person in the world with a net worth of over$200 billion and that's broadly based on the market buying the idea that Oracle are going to become a very AI driven company and with Ellison recently saying in the press that they're going to become the company for the smallest, most efficient data centers in the world.

0:38So whatever Oracle are doing, it's working. Oracle is a tech company so powerful that 97 % of Fortune 500 companies would fall apart if it disappeared today. It's a company that turned a$2 ,000 investment into a$200 billion empire. And yet, when you think about the most valuable tech companies... Oracle never comes up. Never. A quick Google search will tell you that Oracle is a technology provider with a complete suite of integrated cloud applications and a cloud infrastructure platform, whatever the hell that means. But really, what the f*** is Oracle? And how did it become the silent giant of tech?

1:16Before we get into that, please take a moment to press the subscribe button. It really helps us get more great guests doing great shows like this, if you're enjoying it. Otherwise, more crap shows like this. Either way, hit subscribe. The birth of the database empire. All right, so it began in 1977. Jimmy Carter is president, Star Wars has just hit the theater, and in sunny Santa Clara, California, a 33-year-old college dropout named Larry Ellison is about to change the world of computing forever. Ellison, along with Bob Miner and Ed Oates, all met when they worked at the electronics company Ampex.

1:53Together, they left the company to bet big on an idea that was inspired by a relatively obscure journal. It was a paper by IBM researcher Edgar Codd on relational database management systems, whatever the fuck that is. It sounds like nonsense to me and must not have seemed like much to people at the time because they missed out on something really big. And Ellison and his team saw an opportunity. They believed that organizing data in a more efficient relational way could revolutionize how businesses operate. And they were right. Their first product, Oracle version 2, yeah, they actually skipped the first version because they thought it would sound more established, would go on to become the foundation of their empire.

2:34By the way, why was it called Oracle? Well, it came from a CIA project codename that Ellison had worked on when he was employed at Ampex. Hmm. Is that the reason Oracle is so low-key? Because it's really a CIA operation? No. But maybe. Still no. Ah, whatever. Rise to database dominance. Now, to understand Oracle's rise to dominance, we need to talk about SQL, or Structured Query Language. Imagine you're running a business in the 70s or 80s. You've got tons of data, customer information, inventory, sales figures, but it's all stored in separate files. Finding connections between this data is like trying to solve a puzzle in the dark.

3:18SQL and relational databases changed all of that. With SQL, you could ask your computer complex questions about data and get instant answers. Show me all customers who bought Product X in the last month and live in California. Boom. Done. It was like giving businesses a superpower. And in the arms race of tech, Oracle's SQL was so good, it quickly became indispensable. So following this SQL breakthrough, Oracle's growth was nothing short of explosive. By 1986, just nine years after their founding, Oracle went public. The IPO was an incredible success, raising$31.5 million, which was a lot of money back then, by the way, and valuing the company at$270 million.

4:03This influx of capital allowed Oracle to accelerate its research and development, staying ahead of the competition in the rapidly evolving database market. Throughout the 80s and the early 90s, Oracle kept innovating. In 1992, they released Oracle 7, which introduced new features like application development tools and security enhancements. I presume that's actually Oracle 6 on the basis of them skipping a version. True. Yeah. This version cemented Oracle's position as the leader in the database market. And for a while, it was like they were playing chess while everyone else was still figuring out checkers in a database kind of way.

4:40But the team at Oracle weren't content with just dominating databases. They realised that dominating one market wasn't enough. In the late 90s and early 2000s, they embarked on an enormous expansion strategy. In 2005, they acquired a company called PeopleSoft for$10.3 billion. In 2006, they bought Siebel Systems for$5.8 billion. And then in 2010, they bought their crown jewel, Sun Microsystems, for$7.4 billion. Over five years, this$23.5 billion shopping spree turned out to be a brilliant investment for them. And Oracle didn't just buy these companies, they bought the future. Each one was strategic, allowing Oracle to diversify its product offerings and expand its customer base, but none more impactful than the Sun Microsystems acquisition.

5:30It gave Oracle control over Java, the programming language that powers everything from Android phones to smart TVs and MySQL, the most powerful open source database in the world. If Oracle were a plant, at this point, it would not be growing leaves. It would be growing roots, becoming more and more integrated with fundamental technology and systems that future technology would depend on. Oracle's ascension to the cloud. So how does Oracle make money? Well, first, there's licensing. Companies pay big bucks to use Oracle software. Then there's support, and then there's maintenance fees. And once you're using Oracle products, you're pretty much committed to their ecosystem.

6:13Then there's the cloud services. Instead of buying and maintaining their own hardware and software, companies could now rent computing power over the internet. It was cheaper, more flexible and scalable. But when cloud computing began to emerge, Oracle was caught flat-footed. Larry Ellison famously dismissed the cloud as a fad. Sounds as embarrassing as Kamala Harris recently to see her stuff with the cloud. I didn't. All right, take a look at this. So you're now no longer are you necessarily keeping those private files in some file cabinet that's locked in the basement of the house. It's on your laptop and it's then therefore up here in this cloud that exists above us.

6:55Right. They invested billions in developing their own cloud infrastructure and transitioning its products to the cloud. But this transition wasn't just about technology. It required a fundamental shift in Oracle's business model. The company had to move from selling expensive, upfront licenses to a subscription-based model. This shift was challenging both from a financial and cultural perspective, but Oracle managed it. Oracle's cloud strategy also involved a unique approach. Instead of trying to compete head-on with Amazon or Microsoft and general-purpose cloud services, Oracle focused on creating a cloud platform optimized for its own applications.

7:36This strategy played to Oracle's strengths and allowed it to offer a differentiated product in a crowded market. Today, they're a major player in the cloud market, competing adjacently with giants like Amazon Web Services and Microsoft Azure. And this makes up a large part of their revenue. Now, here's where Oracle's story gets really interesting. Despite being absolutely massive and integral to how modern businesses operate, they've basically managed to stay unknown to the general public. It's like they're the invisible hand of the tech world. Think about it. When you use your credit card, check your bank balance, book a flight, the chances are you're interacting with Oracle's database.

8:15And they're everywhere and in everything. Like microplastics powering the back end of countless industries, from healthcare to finance, all the way to the government. So how have they remained so under the radar? Well, unlike companies like Apple or Google, Oracle doesn't make products for everyday consumers. They are the ultimate B2B company. They don't need flashy marketing campaigns or a compelling brand image. They just need to keep the world's data flowing smoothly. But before we wrap this up, let's talk numbers for a second. because Oracle's scale is mind-boggling. As of 2024, Oracle is worth$200 billion.

8:57They have operations in 175 countries and over 135 ,000 employees. And as of 2024, they have an annual revenue of almost$53 billion. What makes Oracle unique is their end-to-end offering. From hardware to software to cloud services, they can do it all. And for tech enterprises, it's a one-stop shop. Of course, no story about a tech giant would be complete without some juicy controversies. Oracle has had its fair share of legal battles, most notably with Google over the use of Java APIs in Android. This case dragged on for over a decade and went all the way to the Supreme Court. They're also known for their aggressive sales tactics and sometimes for difficult customer relations.

9:43Oracle's sales reps have a reputation for being, let's say, persistent. It's a double edged sword. It's driven their success, but it's also rubbed some people up the wrong way. But hoping to have learned from their cloud computing mistake, Oracle is betting big on emerging technologies. They're investing heavily in AI and machine learning, integrating these technologies into their cloud services and applications. So what the fuck is Oracle? They're the silent giant of the tech world, a company that built an empire on organizing the world's data, expanded into every corner of enterprise software, and is now reinventing itself for the cloud era.

10:20They became a silent giant by focusing on businesses rather than consumers, and by being the backbone rather than the face of technology. Still don't really get it. Something something database. Their success comes from a combination of technical innovation, strategic acquisitions, and a business model that keeps customers locked in. The implications of Oracle's success are far-reaching. They show that you don't need to be a household name to be incredibly successful and influential. They prove that sometimes the real power lies in controlling the infrastructure that everyone else relies on. And that, dear listeners, is the story of Oracle, the tech giant hiding in plain sight.

11:03Next time you hear the name, you'll know they're not just another tech company. They're the invisible force powering virtually everything. All right. Thanks for listening or watching this episode on Oracle. We're ramping up our content to bring you more in-depth analysis of tech giants, hidden influencers, and game-changing business models. And this is where we need your input. Did you enjoy this episode on Oracle? Do you even know what a relational database is by the end of it? And are there other tech companies or business models you're curious about? Maybe you want to know more about cloud computing giants.

11:36I mean, you probably don't, but just in case. Or perhaps you're interested in the companies behind AI and machine learning, for example. We've got a long list of fascinating topics lined up, but we're keeping those under wraps for now. The best way to make sure you don't miss out on any of it is to hit that subscribe button right now. And if you hit that subscribe button right now, Chris will get naked in the next episode. That's not happening.