2004: Oracle's powerful mystery woman, Safra Catz
By Mercury News | themerc@bayareanewsgroup.com, Chris O'Brien and Elise Ackerman |
(This article originally appeared in the Mercury News on January 25, 2004.)
Safra Catz, a major architect of Oracle's $7.5 billion hostile bid for rival PeopleSoft, is one of the most powerful women in Silicon Valley. And she doesn't want you to know it.
For years, the intensely private Catz, 42, has operated behind the scenes as chief of staff and de facto No. 2 to Oracle's colorful chief executive, Larry Ellison. A former investment banker, she reportedly persuaded Ellison to launch his takeover bid for PeopleSoft in June — a battle that escalated Friday when the Redwood Shores company launched a proxy fight for control of PeopleSoft's board of directors.
Described as smart, motivated and blunt, Catz in recent years has also revamped operations and led a massive internal cost-cutting campaign at the world's second-largest software company.
But even as her methodical, disciplined approach has won accolades from Ellison and Oracle's board, Catz remains a mystery to analysts, investors and even the company's employees.
She declined to be quoted for this article, a stance consistent with the low profile she has tried to keep throughout her career.
Catz's promotion this month to co-president of Oracle could begin to change her image, thrusting her, somewhat reluctantly, into the public spotlight.
"She is taking off her veil," said Donald Lucas, a longtime Silicon Valley venture capitalist who is on Oracle's board. "We are proud to have a woman who is doing so wonderfully."
Tech-friendly banker
Safra Ada Catz was born in 1961, the first of two daughters of a physics professor at the University of Massachusetts-Boston. She spent seven years at the University of Pennsylvania, where she earned her undergraduate business degree in 1983 and a law degree three years later.
Not long after, she was hired by Thomas Greig, head of technology investment banking at Donaldson Lufkin & Jenrette.
Lots of prospective employees were put off by the complex and uncertain tech industry. Not Catz. "She didn't know software from hardware from jellyfish," said Greig, now a managing director at asset management firm Liberty Partners. "But that did not deter her."
Though she worked from New York, far from West Coast tech clients, she compensated by spending hours on the phone building relationships.
That same year, a Silicon Valley start-up named Oracle went public in an offering led by another Penn alumnus, Frank Quattrone, who was then at Morgan Stanley.
By 1987, Oracle was growing and looking to issue additional stock to raise more cash. When it came to delivering the pitch, DLJ sent Catz. Greig recalledthat Catz was impressed by Ellison's vision, strategy and grasp of technology.
She apparently liked the man, too. At one point, Ellison and Catz dated, according to two biographies of Ellison and interviews with former Oracle employees. And they remained friends over the next decade.
But while Ellison would blossom in the media as the bad boy of Silicon Valley, Catz intentionally shunned the limelight, even as her reputation grew in tech circles.
Colleagues claim she has an almost total lack of ego. With shoulder-length, jet-black hair and a petite 5-foot-4-inch frame, Catz packs a steely determination and single-mindedness. That, combined with her dedication and sharp advice, endeared her to clients.
Gordon Eubanks, CEO of Symantec when it went public with DLJ in 1989, said Catz was committed to doing right by the company, which used her services for a decade. On one occasion, she argued over the price of an acquisition at 2 a.m., convinced that paying an extra penny a share wasn't in Symantec's best interests.
"I think she's interested in getting the job done, not in visibility for getting the job done," said Eubanks, now CEO of Oblix in Cupertino.
After years of building DLJ's software practice, Catz became disillusioned by the dot-com bubble in the late 1990s, according to "Softwar," a recent biography of Ellison. She talked about leaving banking, and Ellison made a pitch of his own: Come work for me at Oracle.
In April 1999, she did.
Rise at Oracle
Oracle was coming off a decade of growth that had turned it into an unwieldy international giant. Ellison wanted the company to become more centralized, with all parts of the business having one set of standards, contracts and processes.
But if Ellison's strength was vision, his weakness was execution and follow-through. He asked Catz to evaluate every part of the business.
Michael DeCesare, a former Oracle vice president, recalled colleagues being surprised to see this mysterious woman following Ellison everywhere and camping out in his office. Executives found they would receive messages from Ellison through Catz.
In person, Catz can come across as charming and witty, bursting with energy when talking about business. However, some former Oracle employees say she can also be intimidating, flashing her quick temper at people who aren't producing the results she wants.
And the cost-cutting and broad operational changes she launched made her a sometimes contentious figure within Oracle.
"That willingness to do the hard things, that didn't make her the most popular person," said George Roberts, an executive vice president who left Oracle in July after 13 years. "That doesn't mean it wasn't the right thing to do."
By the summer of 2000, President and Chief Operating Officer Ray Lane, who had been seen as Ellison's successor, left the company in an acrimonious split with Ellison that he blamed in part on Catz's growing influence.
DeCesare said the resignation of Lane, who was popular with the sales force, put Catz in a tough position. But she did win over some employees.
DeCesare recalled trying to close a $10 million deal with Hewlett-Packard on the last day of a quarter. Catz was briefed at 9 p.m. and spent the next three hours on the phone with him, helping finish the deal just in time. "We were high-fiving each other at the end," he said. "It was terrific."
Other colleagues were persuaded — or worn down — by her ability to marshal piles of data and analysis to support her views.
"She is very much fact-based. She steps back, listens, filters through a lot of data," said Mark Barrenechea, who headed applications market development before leaving Oracle last year.
Over the past five years, Oracle officials say, the changes overseen by Catz have cut annual costs by $1.5 billion and raised operating profit margins from 22 percent to 37 percent. Board members credit those savings with helping the company avoid large-scale layoffs during the tech downturn.
Role in PeopleSoft deal
For several years, Ellison had toyed with the idea of trying to acquire rival PeopleSoft of Pleasanton. When PeopleSoft CEO Craig Conway — a former Oracle executive — approached Ellison in the summer of 2002 about merging the companies' applications businesses, Catz represented Oracle in the discussions.
Talks didn't get far, but Catz continued to analyze possible acquisition targets. Catz was the one who reportedly urged Ellison to go after PeopleSoft after it announced its merger with J.D. Edwards on June 2. Four days later, Oracle made its hostile offer, then valued at $5.1 billion.
Things haven't gone Oracle's way since then. PeopleSoft has put up a tougher fight than expected. An antitrust review by federal regulators has dragged on for months. And PeopleSoft's share price of $22.57 remains above Oracle's $19.5O-a-share offer, making it difficult for Oracle to win the support of PeopleSoft shareholders.
Still, Oracle is pressing on, announcing Friday that it will seek shareholder support to replace five of PeopleSoft's eight board members with more merger-oriented candidates.
The PeopleSoft bid has been part of Catz's gradual emergence into the spotlight over the past year. Besides publicly advocating the deal to investors and customers, she's become more visible at trade shows and analyst conferences.
Still, Catz remains relatively unknown on Wall Street.
"You know how people are on the Street — what you don't know is a bad thing," said Charles DiBona, an analyst at Sanford C. Bernstein. "Safra's the senior manager we're least familiar with."
Under the management changes announced in mid-January, Chief Financial Officer Jeff Henley becomes chairman. Ellison remains CEO. Catz becomes co-president along with Chuck Phillips, a former stock analyst who joined Oracle last spring.
Michael Boskin, an Oracle board member and Stanford University economics professor, said Ellison remains fully engaged in running the company, though it's only natural that he will cede some authority to others.
When Catz takes the helm in Ellison's absence — such as during his recent honeymoon or when he's sailing in the America's Cup races — the board feels lucky to have someone so attuned to the boss.
"She usually has the best read on Larry Ellison of any of us," Boskin said.
Chris O'Brien
Elise Ackerman