Has Larry Ellison Disrupted Himself?

Netsuite is a Larry Ellison experiment. A successful one, I would say, although it has gone through some hiccups.

Founded in 1998, Netsuite has grown into a $40 million revenue company with a product suite that spans accounting, e-commerce enablement & CRM, and project 100% revenue growth in 2006. It is a loosely integrated ERP SaaS, and competes on the low end against Intuit Quickbooks and Act!/Goldmine, and on the high end against the Microsoft Dynamics [formerly Navision/Great Plains], Epicor and Lawson. In other words, their market comprises of small- to mid-sized enterprises that are looking to move beyond point products into a loosely integrated solution set.

Larry Ellison is a majority shareholder in NetSuite.

It is interesting that one of the most active and successful Angel investors in the On-demand, SaaS model, and targeting the highly fragmented and hard-to-reach SME market is Larry Ellison, the king of Enterprise Software.

I heard Marc Benioff, CEO of Salesforce.com speak last year at a HBS event, and he described his fund-raising experience. Pretty much all VCs turned him down, and he had to go the route of Angel financing. Good thing he had access to deep-pocket angels like Ellison, otherwise this posterchild of On-Demand software would not have happened.

It is also interesting to see that Ellison’s investments have created maximum headache for the Enterprise Software business, as these lightweight On-Demand software providers have moved up the chain and started disrupting the likes of Siebel, as evidenced by Salesforce.com’s success.

As Ellison continues to strengthen his monopoly, Netsuite probably features somewhere in his acquisition plans within the next 12 months.