What Every CEO Can Learn from Oracle’s Larry Ellison on Building Great Companies
November 1 2013 by Igor Sill
An executive who worked for Larry Ellison for 11 years commencing 1983 distills the Oracle founder’s key to its growth and success: The ability to select and recruit exceptionally talented and capable management leaders. Here’s how he does it.
Not long ago, Oracle Team USA clinched victory to capture America’s Cup trophy in a miraculous rally that will go down in history as one of the greatest comebacks by any sports team in any series. As Oracle Team USA berthed their winning boat, owner Larry Ellison jumped on board and told his crew, “Hey guys, you just won America’s Cup!”
“It’s really about the team, man,” Oracle Team USA’s Captain exclaimed, ”On your own, you’re nothing. But when you’ve got a team like this around you, they can make you look great. It’s a fantastic team.”
There’s a correlation between today’s most successful technology companies and their competitive spirit, drive and culture. At their core exists the fundamental trait inherent in a CEO’s ability to hire world class team players. Here are ten lessons learned while working with Larry Ellison, co-founder, CEO and Chairman of Oracle and owner of Oracle Team USA. It’s not surprising that his top executive team also went on to build meteoric, successful businesses as entrepreneurial CEOs.
Jeff Walker, former SVP and CFO of Oracle developed the original hiring model for key executives and went on to found Tenfold and take it public (Nasdaq:TENF), others were Tom Siebel, founder, CEO & Chairman of Siebel Systems, Craig Conway, former CEO of Peoplesoft, Marc Benioff, Salesforce.com founder, CEO & Chairman, Bernard Liautaud, co-founder, CEO of Business Objects (SAP), Evan Goldberg, founder of Netsuite, Pete Cittadini, CEO of Actuate and Marten Mickos, CEO of 4 year old start-up, MySQL (acquired by Sun Microsystems, now Oracle, for $1B).
These successful CEOs each shared some very similar approaches to Ellison’s hiring process, which are outlined here:
Seek intelligent, driven people: These are the “type-A” overachievers with an inbred “fear of failure” personality. You are clearly looking to hire people far more capable than yourself, people who are driven by something to prove to themselves and their peers. “A” players hire “A” players, and “B” players hire “C” players. You spot these prospects through asking deep questions about their roles, their company’s mission, and how they sought to fulfill their company’s vision. Ask “how” they accomplished their results. Look for strategic thinkers seeking to improve their employer’s systems, processes and results. Ask what they actually accomplished while in their roles. Look for details accurately articulated, team oriented descriptions, versus the “I did it by myself” syndrome. Look for people striving to continually improve themselves and their personal reach. Look for those utilizing innovative resources, while providing credit to their subordinates and other colleagues. Always hire talented people with great DNA who are incredibly bright, very hungry and very ambitious.
Seek evangelistic “believers”: These are people who believe in your industry, your products and services. They “see” and “get” the full value proposition to customers. Of course, you need to establish that key accomplishments, appropriate education, and relevant industry experience are a good fit for the position, but,a genuine burning passion for your company’s solution offering far outweighs lesser irrelevant duties. Ask your candidate to describe your company and its products to you. You’ll get a quick sense of how well your candidate prepared for your meeting and how likely he or she will prepare for critical company/customer meetings. Well placed passion is a key ingredient for a long term successful hire.
Hire ethical, high integrity players: Ask situational ethical behavioral questions pertaining to such sensitive topics as personal integrity, revenue recognition, customer side letters, sexual harassment, customer promises, hiring preferences, etc. This is well worth taking some time to fully explore with every prospective new leadership hire. Not only do you shift through the marginally ethical, but you also send a clear message of your company’s ethics expectations. Seek out candidates who are employed by highly ethical and successful companies. They’ll bring that same sense of ethical behavior to your company. Quality in-quality out.
Check References: You learn so much about a company, its management style, processes, and the prospective candidate’s actual work ethic via good reference checking. A good way to verify a candidate’s credentials is to ask for organizational functions and responsibilities, and who held them within the candidate’s last position during the initial interview. Take accurate notes of names and titles mentioned. These will generally not be the same names provided as referents. If the candidate deserves serious consideration, first ask for a list of references so that you have permission to check references in general, then, pursue those individuals who worked closely with your candidate to verify actual work responsibilities, work style, leadership skills, communication skills, performance, etc. If you locate a peer within the organization ask about the company’s compensation scheme, salary, bonus, incentives, stock options, etc. This will give you a good sense of what a comparable level professional at the same company earns versus what you may have been told during the interview. If there’s a significant discrepancy, ask your candidate “why”. Look for tell tale signs of exaggerations and “embellishment”.
Trust your Intuitions: You can discern so much by looking directly into a candidate’s eyes and facial expressions as he or she describes their roles, accomplishments, performances and organizational interactions. Act on your intuitions.
Be Decisive: Once you’ve identified your top choice don’t procrastinate. Set a plan for completing the hire with dates, position expectations, compensation discussion, board member preview of stock options to be offered, scheduled meetings with other key company management and an expected start date. Once you’ve determined that you have the right candidate lined up, make the hire a time sensitive priority. Be clear and specific in communicating your expectations and performance requirements.
Compare the prospective candidate’s credentials against your own management team: Take another look at your current teams’ experience and pedigree. Make sure that you are augmenting your team with superstar additions; people that they will respect, admire, and say to themselves, —-“we were able to attract her/him here- wow!“ Great moral booster.
Don’t assume the Candidate will accept: Spend time on presenting the position offer personally. If possible, invite the candidate and spouse for a dinner outing. Nothing demonstrates the genuineness and importance you share in the candidate’s future than spending some social time outside the office setting. Nothing emboldens and bonds a candidate more that sharing their stature within the industry in front of their spouse at such an outing. Follow up personally and get a verbal offer acceptance, then, follow-up again before the candidate’s actual start date. If the candidate is looking to resign and then come over, consider inviting him/her over for a strategic company review meeting before they actually start employment as a way of getting involved and committed. Use all the resources available at your disposal to land your ideal candidate, including your CTO, CIO, CFO, board of directors, company advisors, etc.
Integrate and transition the new hire: Once your candidate joins, invest time indetailing your vision, the company’s mission, expectations, how the company actually operates, the executive functions and roles, how the company communicates with its managers, resources available, etc. Check in once or twice during the orientation period to insure that all is going smoothly while building trust. A critical dimension to team moral and sustainability. If your new hire happens to be a “trainee”, place them in a telesales role whenever possible—an excellent training ground. As they learn your customer’s needs and mature into the business, these hires reduce the company’s risks further up the organizational ladder and tend to become your best “promotables”.
Seek referrals from your best hires: Once you’ve hiredyour superstar ask for recommendations of other potential employees. The newly hired executive will always point to the top 2% achievers within their previous employers. It’s a highly effective vetting process to recommend someone you already know. Superstars know at least six other high achievers, and no one wants to recommend someone who’s going to make them look bad. “A” players attract “A” players!
Oracle Corporation has spawned some of the tech industry’s top entrepreneurs and CEOs including Marc Benioff, Tom Siebel, Craig Conway (former PeopleSoft CEO), Jeff Walker (Walker Interactive and TenFold founder) Pete Cittadini (Actuate CEO), Craig Ramsey, Umang Gupta (Gupta Technologies & Keynote Systems), Bernard Liautaud (Business Objects co-founder), Sohaib Abbasi, Evan Goldberg (NetSuite founder), Zack Nelson (NetSuite CEO), as well as numerous others. Their post Oracle successes are a tribute to the “house that Larry built.”
The author, Igor Sill, worked directly with Larry Ellison and Jeff Walker, then later with Tom Siebel, Marc Benioff, Bernard Liautaud, Umang Gupta and Evan Goldberg. Other CEOs that utilized this model were Marten Mickos (MySQL), Steve Jobs (NeXT/ Apple), and Samir Arora (NetObjects) during their respective company’s pre-IPO high growth period and today manages Geneva Venture Group, an advisory, investment and M&A firm, utilizing some of the same performance metrics and growth processes used by Oracle for its investments in technology startups. (www.genevagroup.com)