Larry's Kids

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Nelson dismisses Intuit's new offering as a "neutered version of QuickBooks Enterprise." He is equally dismissive of SalesForce.com's move into the midsize market. "There's only one thing you can't do with SalesForce.com: sell anything," he says. "SalesForce.com is about managing leads and prospects. The minute they become customers, all that data leaves SalesForce.com."

For his part, Marc Benioff professes scant respect for the suite model. Which is all the more surprising because it's a model that Oracle has embraced, and Ellison, of course, helped fund SalesForce.com and still retains a small stake -- although he did step down from SalesForce's board in 2001 because of product conflicts. At NetSuite, Ellison relinquished the title of chairman in March 2003 but remains on the board. But the sibling and oedipal rivalries may just be getting started.

Last summer, NetSuite shed the last vestiges of the name Oracle Small Business Suite, which had been slowly reduced to about 5% of the company's sales. Nelson says this was done to allow NetSuite to establish its own identity. But it also likely had something to do with the fact that in September, after years of testing it overseas, Oracle released its Oracle E-Business Suite Special Edition. Oracle is explicitly targeting small to midsize businesses with a full suite of integrated business software delivered, of course, over the Internet. The difference is that instead of renting the software in perpetuity, as with NetSuite, customers purchase a one-time license (the minimum order is for 10 users at approximately $2,000 each) and then pay local resellers to maintain the software.

Nelson denies that there's any real competition between the two Ellison-controlled companies, saying they only cross paths a couple of times a month. But with its first 1,000-user deal in the bag and another in the pipeline, there are sure to be more and more awkward moments in front-office waiting rooms when Oracle's salespeople walk in and NetSuite's walk out. "We're going to continue to march upstream," says Nelson, "still servicing small businesses but also reaching much larger companies over time."

But, according to the Yankee Group's Kingstone, both NetSuite and Oracle have their work cut out for them. NetSuite's challenge is that new customers have to dump years' worth of expensive software to use them. And the bigger the company, the more entrenched they are. As for Oracle grabbing a slice of the small-biz pie? "They have never been able to pull that off," says Kingstone. "In the back-office, yes, in the front-office, no." Of course, Oracle's new E-Business Suite is only just getting started here in the States.

When big businesses want to innovate, what do they do? They take a bunch of guys, throw them out, and let them create a small business."
-Zach Nelson

Ellison declined to be interviewed for this article, citing the desire to avoid any perception of conflict of interest, as his three kids duke it out in corporate boardrooms across America and beyond. It's hard to know if he's conflicted or overjoyed. But it's even harder to imagine that any of his progeny would have set off down this path without at least his tacit approval.

The executive overseeing marketing for Oracle's small to midsize business market, Frank Prestipino, downplays any rivalry, but his words about NetSuite's product aren't entirely brotherly. "If financials are all you'll ever do," he says, criticizing NetSuite for not being as customizable as Oracle, "and you don't care what your general ledger is going to look like, and you'll take whatever comes, then great, that's the thing for you."

He also suggests that NetSuite's rental model is ultimately more expensive than buying the software outright, and points out the lack of manufacturing-systems software in the suite. But does he expect to see NetSuite pop up more frequently as a competitor, as NetSuite moves upmarket and Oracle moves down? "Yeah," he says, "I would say so."

But for all NetSuite's drive to go after bigger fish, Nelson zealously espouses the small-business model and its contributions to society. "When big businesses want to innovate, what do they do?" he asks. "They take a bunch of guys, throw them out of the building, and let them create a small business."

That, of course, is pretty much what Larry Ellison did with NetSuite and SalesForce.com. But how much longer will each one be happy serving its own niche? "That's always been true with software," says Nelson. "Everybody wants to be where they're not."

Rob Turner, who wrote about celebrity entrepreneurs in Inc.'s December issue, can be reached at dashboard@inc.com.

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