Enabling Ecological Data Centers: Rackable Systems CEO Mark Barrenchea (Part 3)

SM: How long were you at Oracle?

MB: I worked for Larry for about eight years. I am definitely in the Larry Ellison fan club. He is one of the smartest technicians and hardest driving executives I have ever met. I think the world of him. His ability to set up organizational structures which slightly compete with each other so the best and brightest rise to the top, his financial discipline, and throwing up billions every year in capital, all contributed to making me a fan.

At the end of that period I got a phone called from CA. I had the opportunity to lead all of engineering for CA. I went from a $2 billion product line to a $4 billion product line. It seemed like a good opportunity. I left Oracle and moved to New York City. I ran all of the security product lines, mainframe, did some marketing, and was essentially the CTO/CIO of 6,000 individuals.

I made a joke my first week at CA that they did not release products, rather products escaped. At the time we had 400 simultaneous projects underway for release and 85 acquisitions to date. There were $4.5 billion in revenues and very little hard lifting had been done to integrate those acquisitions. It was a completely different company. At Oracle everything had been built from the ground up, and all engineering was local. At CA everything had been acquired and there were engineers on every continent. It also had a very big IBM suit and tie culture. One of the first things I did was get rid of that in engineering.

I also changed the organizational structure into business units. We empowered the leader of each business unit to have engineering, product management, product marketing, QA and all the security functions and enterprise systems management successful.

SM: Did you follow the Oracle structure to some degree?

MB: The Oracle structure was a bit more fragmented. You had engineering which was all engineering. There were various strong marketing organizations which fed product ideas and go-to-market ideas. It was a much more nimble environment.

SM: Given that you have seen these different scale organizations, what is your instinct today as to which works better? Is it a P&L organization or a functional organization?

MB: I conclude the scale curve applies. As you start to scale an organization from startup towards $100 million, at the billion plus scale a different organizational structure is required. I like empowering people. I hire the smartest people I can, with the best skill and discipline they can have, and them give them the tools to be successful. In that case a P&L structure.

You can make a segment between how Oracle and IBM operates. IBM is modeled to death. What is your plan? Have you gone to the 7 Sources of Experts with your plan? Have you re-reviewed the plan? What is the revenue forecast number from sales? Can you validate that with growth rates from Gartner.

SM: It would drive me crazy but they do well.

MB: It is certainly a rigorous process. Then there is the Oracle process which does the modeling required to get to a yes, but it has much more empowerment and reliance on people. I could go in an approve a $5 million or $10 million project because there was more risk taking and tolerance for failed projects.

SM: More of an entrepreneurial spirit.

MB: I refer to it as much more of a VC mindset than private equity mindset. Private equity will make three investments and they must all be successful. VCs can make 10 investments and be happy knowing eight will fail because they will make money on the two successes. Oracle is a bit more VC like and IBM is more like private equity in how they invest, build and go to market.

This segment is part 3 in the series : Enabling Ecological Data Centers: Rackable Systems CEO Mark Barrenchea
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