Larry Ellison's octopus empire: Oracle's 40% owner-operator is now a neo-cloud betting everything on AI and Hollywood

Speaker 2: see you soon.

Speaker 1: Cheers, Molly. Goodbye. Have a great weekend.

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Speaker 1: it. Time.

Speaker 2: Tom Dotan. The cat is in the bag, and the bag is in the river. We got the former host of Dead Cat. Welcome to the show. How you doing,

Speaker 4: I love the reference. I'm glad that you're still keeping the memory of Dead Cat alive.

Speaker 2: It was such a fantastic show. You guys gotta bring it back. I mean, I know it's like a...

Speaker 1: To me that that was like like there's not a lot of hardcore podcast that goes on. Like, when I was Matthew Bellini on the town Yeah. With Ari Emanuel. And I was like Yeah. This is hardcore podcasting. Yep. This is people like kinda arguing and bickering Yeah. Saying what they saying what they actually think. And I have some good memories of dead cat in like 2021, that era where you... People would actually stay what they they really thought.

Speaker 9: Yeah.

Speaker 1: You know, that these days...

Speaker 4: Yeah. No. I'm trying to think if am I the Ari or am I the Bell in that situation with Eric there. I don't know.

Speaker 1: Well well, it's just more like you're listening to that and you're like, wow, this actually feels like you're just listening into...

Speaker 2: Yeah. It was inside baseball.... Lunch. Right? Yeah. Yeah. The the Bellini Emmanuel thing doesn't match because like I feel I feel like all the Dead Cat hosts were like on the same lens, like they're all like real journalists in tech. But Yeah. The fact that it was called Dead Cat and it's like this obscure reference that you have to explain to like everyone who joins is was like...

Speaker 4: Everybody has Dead Cat Bounce. Yeah. Think it was a reference to that, which is a good one, but that wasn't it. But you know, Eric and and and Katie Benner Yeah. And I were all like the first journalists at the information.

Speaker 2: Oh, that's good.

Speaker 4: So Jessica hires us like right when the place launches. And so there's a brief period of time where we are all crunched into this very small office space where Amir Fratti, also early player, would

Speaker 1: Sure. Wow.

Speaker 4: Burn his toast every day and we would kind of deal with the toxic fumes with that. So from that environment birthed a podcast that

Speaker 2: Sure.

Speaker 4: You guys remember.

Speaker 2: I do. Yeah. It's great. Yeah. Yeah. This Ellison profile, it could be it could be turned into a serialized podcast. It's obviously a profile avail... Available at Vanity Fair. But what got you

Speaker 1: With AI, it could be turned into a playable browser based

Speaker 2: game. Yes. Perhaps. But

Speaker 4: I don't know what that even means.

Speaker 2: Yeah. What what got you interested in Ellison? Because we read an older Vanity Fair profile about Ellison that was fascinating where it shows that he's like dogfighting with David Ellison when David's like younger and they're like literally flying planes at each other. Fascinating character. Obviously, at the center of the AI build out but not at the White House dinner. A little bit more behind the scenes. Why'd you settle him for the

Speaker 4: Yeah. That profile that you read, the Vanity Fair one, was that... Do you remember? Was that the '97 one that Yeah. That Brian Burrow wrote? Yep. Such good legend. Game

Speaker 2: Insane.

Speaker 5: Such a good... Yeah. I talked

Speaker 4: to Brian actually while I was doing the story because I kinda wanted his blessing and

Speaker 2: Yeah.

Speaker 4: This is the side point. Yeah. He told me I have no memory of doing that story. I have no... It is it is lost in time to him. But it was an amazing piece. Recommend everyone go out and read it because because Brian got access, you know. Like he was sitting next to to Larry at the the Bulls game and watching him with his then wife and fascinating. Steve Jobs is in it. It's a great piece. But look look for me, it was like, why not? You know? Like someone had to do it. The guy is everywhere. He's been around for generations, for for decades. I mean, of that first vintage of Silicon Valley titans, and the last guy who's who's in the game, you know, Steve Jobs has passed. Bill Gates is kind of sort of in it, but he's also more of like a grandfather like figure and, you know, also kind of tainted because of the Epstein stuff. And and and Larry is sort of the last one. He still really runs Oracle, and they're in the midst of, like you said, so many things between AI and the crazy bet that they're making to build data centers. They own 15% of TikTok, and how that came to pass was an incredible journey. And then everything that he's doing with David, you know, just today they finalized, you know, the the acquisition of Warner Brothers and Skydance is now like, I don't have this in front of me, I assume the largest studio in in Hollywood. And and Larry is, you know, he and David have 77% voting control over this

Speaker 1: thing. Yeah.

Speaker 4: And so, know, the guy's like in the last chapter of his life or the latest chapter of his life and and and more active and more present than ever. And the and funny thing is he's also not available. He's not present. He's not someone that you see at the White House or in the office. And so, you know, all of that is just like as a reporter, you're like, what's going on?

Speaker 2: Yeah. That seems like a shift because obviously he participated in the last Vanity Fair profile, but in the nineties and he was... I think he went on Oprah or something. There's a there's a vignette about that where like his person like like people were so obsessed with him like would be suitors effectively would call Oracle headquarters and and try and ask him out on a date which is Yeah.

Speaker 1: One anecdote. He... Like... I remember the day very very early in building the show where he followed TBPN in like q... Like within a quarter of starting. And to me that to me that was wild too because as somebody who appears to be like outside playing outside of the matrix of the tech, you know, he's very like you're saying, he's in the industry but he's not like doing the the the comms tours and doing media and all these things like able to be like a very much a live player but behind the scenes. It was notable. Was like, he's on x? You know, and...

Speaker 4: Tweet You that out? You know, he is not on x anymore. I think he closed that

Speaker 2: account. So I don't... The whole, like, big tech monitor tweet, like, the automated account, like, posted it, basically.

Speaker 4: Yeah. And so, like Okay.

Speaker 2: You see it there. Fascinating. What was interesting is, like, for the last year, I've been mapping the Ellison strategy as, like, a more of a barbell strategy. Like, you're building the data factory, the data centers, the chips, the the the... Potentially, like, the AI slop. But then you're also building Hollywood and TikTok and, like, legacy IP. And we see this with a number of investors where, you know, Josh Kushner is an investor in OpenAI, but also buying a sports team. Right? And these these two things are, like, at the opposite ends of the continuum for like high-tech, low tech. You center on a different analogy, not a barbell, but tentacles of an octopus. Can you tell me Yeah. About that and like what will it like what what actually does that mean? And then he's into this metaphor himself. Right?

Speaker 4: Right. Right. I mean, that was kind of, you know, it is sort of a a well known trope of of what it means to have power everywhere is you have your tentacles. It's it's just a saying. But with Larry, I mean, he he's been taking that seriously for as long as he's been in business. Yeah. You know, as I list out in the story, he's got multiple holding companies that are octopus themes. So between Yeah. You know, Octopus Corp, there's cephalod... Cephalopod Corp, there's tentacle Corp. Yeah. There's taco ventures, and taco is the Japanese word for for octopus.

Speaker 2: And

Speaker 4: as I I also wrote in the story, when he first moved out to California, you know, right after he drops out of college and he's sitting with his buddy and they're looking out over the city and talking about the buildings that they're gonna own, he has a vision of a company called Universal Octopus Corp or something like that.

Speaker 2: Mhmm.

Speaker 4: You know, universe... Anyway, so so this idea of having, you know, your your your your arms over multiple parts of the world in an industry is very much appeals to him. Yeah. And, you know, that is very instructive to his ambition. Like, he's someone who never stops. Like, Oracle is one of the great stories of tech. Right? It's it's this company that gets in at the ground level of of Silicon Valley with Steve Jobs and all these guys, and he has this very focused image of of the database and the relational database and it's not, you know, sexy in the way that Apple was consumer and stylish and and Bill Gates sort of, you know, this idea of workplace software. Oracle is really the the mechanics, the plumbing, but it's a great business

Speaker 2: Yeah.

Speaker 4: And it's still around to this day and it's like people are still using the Oracle database and and he's still running it and so...

Speaker 2: And he maintained his ownership in Oracle so remarkably when there there are other companies that I put in that same category where there were multiple founders, things got split up, maybe the company got taken private, went public again, and, like, you... The founder winds up with, a couple percent. Larry was really able to continue reinvesting, buying stock at key moments, like maintaining that economic pool. Then when the AI moment comes and and and it booms, like, he's still in the the... That really tight club of, like, truly richest men in the world. It's a it's

Speaker 4: a And not only does he he maintain control, he grows control.

Speaker 2: Yes.

Speaker 4: Like its stock was was basically flat, you know, went sideways for for decades as Yeah. You know, the database would spin off cash, but he weren't really growing it at anything else. And during this period, he accumulates more and more control to a point where he owns 40% of the company, which is unheard of for for for a company of that size. Right? I mean, reason he's so rich is because he owns so much of this one company. And like, you know, I talked to some analysts for it. Oracle is basically considered by most traders like a public private company.

Speaker 2: Sure.

Speaker 4: You know, it's it's it's... The float is relatively small, and and Larry is totally in control, and you just sort of accept it. That's that's part of the game.

Speaker 2: That's part of the bargain. Yeah. I I think a lot of founders, don't necessarily realize, like, what a... What an effective stock buyback program over a decade can do to your ownership. We've seen this in the cloud storage market with the diverging paths of, Box and Dropbox where, you know, the... If you're buying back a lot of stock, even if you got diluted from those VC rounds, like, you could crawl your way back to twenty, thirty, 40% ownership over time. It's not going to happen in a year, but you don't need to just magically materialize, you know, $20,000,000,000 to actually go buy back It your can happen sort of slowly. I have one more question on this. Elizabeth Holmes, Theranos, there's a new movie coming What did you learn about the motivations there? What's going on? And do you have any predictions for what's going to happen in the movie? Because all of the all of the critics are saying like, it's the most unexpected thing ever. And I feel like the the story of Theranos has been told so many times. I can't imagine what might actually happen. So I want your take.

Speaker 4: I've kept myself spoiler free. I know there are some reviews out there that say exactly what what goes on in the movie. I So can't Yeah. Claim any knowledge I I think the variety or someone like that put out a review that really pissed people off because they walked you through the whole thing. But I mean, as far as Ellison goes, because he, you know, he's part of the story. Yeah. You know, he he invested there, you know, through multiple vehicles, through Taco, through other... Probably some of the octopi companies too. And you know, credit to him, he still believes in her, you know, long after she ends up getting... You know, this is in the story, but like he is, as some sources told me, smitten with her. He really thought she was the greatest and defended her to this day, said he was a she was a genius, is misunderstood and you know, part of the Alison story now is that he's also spending probably most of his investments are going into cancer research. He which you know, maybe we can talk about, but you know, the the idea of using, you know, tech dollars to fund cancer research and novel medical treatments for cancer, you could argue came from Elizabeth and like a shared interest there. Yeah. So they're deeply connected and and just one kind of funny point about it. Yeah. I don't know if you guys watched the the dropout. Now what was the name of the the Theranos series on the

Speaker 2: dropout? Yes.

Speaker 4: The dropout. Right? So Larry has a scene. I'm gonna say say for it. It's... Honestly, if the tech shows of that era, that's probably the best one. But, you know, there's a scene of Larry in the show where, you know, they're on one of... They're on a yacht and and he's telling her, can I swear on on TBPN?

Speaker 2: We don't swear actually.

Speaker 4: But... Okay. Alright. Get the get the freaking You

Speaker 2: know. Yeah. I'll I'll I'll try and thank Naughty naughty.

Speaker 4: I missed it. Missed it. Well, you guys can look up the clip but but he's in it and and and he's like, get the effing money.

Speaker 2: The money.

Speaker 4: And and that scene definitely never happened, mostly because they show him drinking, which he does not do. He's a he's a teetotaler. Teetotaler.

Speaker 1: So, yeah. Yeah. Fascinating.

Speaker 2: Do you know if he eats calamari because he loves the octopus? Does he also enjoy dining on octopus?

Speaker 7: You know, I don't... I I wish the...

Speaker 4: A better reporter would have found that out. I do know that he eats the same breakfast almost every day and probably if I worked the New York Times, would have written that that particular meal.

Speaker 1: Yeah. Did stay at at any of the sensei properties to try to immerse yourself in his his world?

Speaker 4: I have been so lunatic three times Okay. Now.

Speaker 1: There you Which

Speaker 4: is I feel like a lot. No. I've never stayed at the sensei properties. So I I I first started covering Larry when I was at the Wall Street Journal. Mhmm. I did a story about Sensei Farms, is this hydroponic... Yeah. I I read that story. Yeah.

Speaker 2: That was good.

Speaker 4: Thank you. Yeah.

Speaker 1: It was like this kind of... Yeah. Read... Didn't we read that on the show like Yeah. Within the first...

Speaker 5: On the show?

Speaker 1: Oh, sorry. Within the first... It was probably within the first month. Yeah.

Speaker 4: Yeah. It's this crazy boondoggle of, you know, he he wanted to reinvent, you know, indoor hydroponic farming and create the Tesla of agriculture and, look, it's still around. You can buy other salads in in Hawaii. But anyway, so for that I went to Lanai, went for two days and met a lot of the people there, and then I went back again for this story. I have been inside Sensei. I have walked the grounds of the wellness retreat, which has this incredible art installation, all of Larry's art. There's like Damien Hirst and Jeff Koons and

Speaker 2: Mhmm.

Speaker 4: Stuff like that. I have not gotten Vanity Fair or the Wall Street Journal to ever pay for a night at the Four Seasons. I I

Speaker 2: think you need a month at the Four Seasons to get to the bottom of this thing personally....

Speaker 1: Put a note. I mean Yeah. Rogers out. But... Maybe he's out. The new CEO will will say. I think it's Yeah. Important. I will say Yeah. That the... I haven't been to Sensei Lanai, but I've been to the one in Palm Springs, Palm Yeah. Palm Springs. And that property is amazing because it's it's called Sensei Porcupine Creek. Okay. And it's completely, like, you... The whole... It's a wonderful place, but for me as somebody who's very commercially minded, it's hard to sort of wrestle with the thought that the the the... It must be losing so much Yeah. Just just because I think there's like 16 rooms these massive grounds Yeah. And there's a nobu and this golf course that sits empty most of the time. Sure. And and the staff's amazing. It's an amazing experience. I highly recommend it. But it is it is just wild because you're sitting there and be like, every day they're just waking up and we're losing another probably, you know, however much money. What what... The the last question I had is Yep. How... Like, talk about his relationship with risk and and willing to, like, make these sort of all in bets at different moments throughout his Yeah. Career. Like, do you think he's... Is he getting more risk on? Like, you know, with with all... Last year with all of the the sort of pushing the chips in on Mhmm. On Oracle with AI, you know, it felt significant. But at the time, you know, and and still unclear, like, whether that'll be the right decision. But I think a lot of people like to chatter and and try to evaluate the decision when they have literally, like, not even 1% of the context that he has. Yeah. And then and then with with Paramount and Warner Brothers as well, you know, I... When when somebody has like reinvented and and executed well for that many decades, like, you kinda need to default to like, hey, maybe he knows what he's doing.

Speaker 4: Yeah. I mean, he loves big swing bets. That's that's just a a core part of his like reputation and strategy as a business person is he will do it. Yeah. Exactly. Oracle, like, you know, it almost goes bankrupt in the nineties because of an accounting scandal. I wouldn't necessarily call that a big swing bet, but like he lives... Exactly, Borat. Like, he lives he lives on the edge and he's totally fine to kind of go there because he has so much control. And like one of the fascinating parts of the Oracle AI story to me is that Sofrakatz, is a fascinating figure. I did not have enough time in the story to kind of dive into her, but she's in the middle of of obviously Oracle, but also his relationship with Israel. Mhmm. Super smart, conservative executive. She does not love the AI bet. She does not love infrastructure. She is, you know, a huge fan of the high margin software business. And I think it's very telling that when Oracle goes, you know, all in on AI, basically on OpenAI, like that's the client that is making that

Speaker 2: Yeah.

Speaker 4: Hold that work is the fact they're building data centers for for Sam.

Speaker 2: Yeah.

Speaker 4: You know, software ends up stepping down in the middle of that.

Speaker 2: Mhmm.

Speaker 4: And and you you've entered this new era where they are essentially a neo cloud. Yeah. And and Larry's on board with that. He's a technologist and Yeah. And this is... Look, when it when it was working, the stock, he was the richest man in the world. Yeah. You know, like it was going crazy Yeah. And then since then everyone...

Speaker 2: RPO day. I remember it.

Speaker 4: Yeah. Yeah. Exactly. 7... You know, $317,000,000,000. Yep. You know, the next day, you know, the Wall Street Journal, former former place of work, you know, reveals that it's all OpenAI basically. And then the debt starts being a terrifying reality

Speaker 2: for

Speaker 4: people where they're like, you know, our cash flow has just turned negative. Like, this is terrifying. And so that's just built into Larry's DNA in a lot of ways. He's fine with that, not everyone is. And then... But the funny thing is with the Paramount stuff, like, know, that's all built on Oracle stock.

Speaker 2: Yeah.

Speaker 4: You know, his ability to finance these multibillion dollar media consolidations are at least to some degree margin loans on... Or loans on on his Oracle holdings. It's very least collateral. Like, we know that because he had to do the $40,000,000,000 backstop, you know, to make the Warner Brothers deal happen. And so it's like the guy... It's weird to think about in this context, but, the guy is living on the edge. You know? It's like you're worth $200,000,000,000, but, like, it's very risky, you know, that the banks are selling off debt, you know, for the different data centers at like 90¢ to the dollar. Like no one knows how it's gonna play out, but I think, you know, Larry at 82 years old, he he loves this shit.

Speaker 2: The full set octopus. Let's go.

Speaker 1: Yeah. Where else when when you've when you've owned, you know, racing teams and sailing teams and you've dogged... Yeah.

Speaker 5: Didn't get it on dogfighting.

Speaker 1: How do you get the rush without a little leverage? Yeah. You know?

Speaker 2: Well, we'll dig into it next time. We'd love to have you back on the show, Tom.

Speaker 1: Yeah. This was this was great.

Speaker 2: Always a great time.

Speaker 1: And excited for for viewers to dig in and...

Speaker 2: Yeah. Yeah. Go read the full piece and subscribe to Vanity Fair. Obviously, we love them over there.

Speaker 4: Yeah. And newcomer.co, my my other employer.

Speaker 2: That's right. Yeah.

Speaker 4: Was go read Eric and newcomer and all all of our stuff.