The interview proved to be fascinating, with Ed Zander a perfect choice to push and prod Ellison on topics ranging from ORCL’s early years, his motivations for buying Sun, to politics, sailing, and the prospects for the US economy.

The title of the post “living history” hit home last night. We are fortunate to not only live in a place where monster companies are born and scale, but also to work in an industry where many of the pioneers remain active – Ellison, Jobs, Ballmer, Dell….

While the story behind ORCL is well-known, Ellison made a few very interesting comments worth sharing.

First, he argued that the reason behind the Sun acquisition is to move into the systems business. He believes that the tech industry treats customers like “computer hobbyists.” Customers are forced to buy components – servers, storage, switches, databases, app servers, applications….- from a long list of vendor and to then spend vast sums integrating systems to address a given application. His goal is to leverage Sun to create systems – billing systems, airline reservations systems….where engineers optimize the integration not customers and service providers. He envisions building the successor to Tom Watson Jr’s IBM, which he views as the most successful enterprise company of all time.

The systems vision is an interesting one and one that flies in the face of conventional wisdom – ie that the industry and customers are best served via a focus on horizontal specialization. Components rather than systems, the industry long argued, delivered the greatest innovation at the lowest total price. His systems vision challenges orthodoxy that specialization trumps integration.

Interestingly, Steve Jobs is also driving a systems based approach. Rather than follow the PC model of separation between hardware, software, peripherals, applications…., Apple provides integrated solutions – systems – that despite the significant price premiums are trumping the PC approach to consumer marketing and strategy. The integration of software, hardware, applications, and services (iTunes) provides greater consumer utility than the “computer hobbyist” the PC industry espouses. The Mac vs PC ads hit this point time and time again.

Second, Larry Ellison is bearish on the US economy. Rather than seeing a W, V, or U shaped recovery, he humorously called for an L-shaped recovery – ie a decline to a new equilibrium from which we will not see any meaningful recovery for at least five years. His logic – 70% of the US economy is premised on consumer spending and US consumers are so overwhelmed by debt that they will be forced to save, not spend, to service massive debt obligations.

Finally, he reeks of competition. He cannot go five minutes without commenting on IBM or SAP. He clearly takes tremendous energy from focusing on an competitor and on rallying the company to take share, to win accounts, and to out market the competitor in question. He made one comment that really struck home – “pick your competitors carefully for you will quickly come to resemble the companies you compete with.”

Thanks to the Churchill Club for a great event.

The problem is that such ponderings and projection limit the ability to enjoy right now and sap your energy and effectiveness.

Books on wisdom share a common refrain – the past is the past, the future is uncertain and a projection of anxiety or fantasy, and the only sure thing is right now. Too often people live in their heads – thinking about lost opportunities in the past or making up stories – both good and bad – about the future.

The lack of being present exhibits itself in many ways – chronic BlackBerry checking, the inability to listen, eyes that wander or a blank look that lets you know the mind is somewhere else, conference calls or meetings where it is clear half the attendees are 20% “there” at best.

In many ways, I am far from immune from the risk of living in a fog of yesterday/tomorrow, rather than the very real moment of the now. It is very hard not to be seduced by distraction or to walk around in a fog of thoughts that make it hard to focus or be truly with other people – actively listening and engaged.

When I get home, I try to clear my head and really be home. When I sit in a meeting, I try to clear my head and be there for that meeting. Over a coffee, talking to your wife, your colleague, focusing on the present is laughably hard to do.

But when you can – the ability to enjoy becomes so much greater.

My friend Paul Levine told me that the best you can do is wake up every day and focus on that day – not the day before, the month before, or two weeks from now. But rather, today.

As a CEO, I have found that advice to be very empowering and a great way to handle the ambiguity of tomorrows to come and the anxiety that comes from worrying about missteps in the past.

Reid, a Washington Post correspondent, explores health-care systems around the world and asks and works to answer the following questions:

• why is American the only developed economy that does not provide health care to all its citizens?
• why does American spend 2x per capita on health care while leaving 45m uninsured?
• should health care be considered a right or a privilege?
• why are administrative costs 4% of spend in France and 20% of spend in the US?
• why is the US 23rd out of 23rd in life expectancy over 60 amongst developed nations?
• hows does health care work in Germany, France, Spain, the UK, Japan….?

Health care reform is a very complex issue, and the cacophony of sound bites from both parties only serves to raise, not answer questions. In my effort to come to a personal, informed decision on the issue, I turned to Reid’s book after hearing him interviewed on Newshour.

The transcript of his interview with Betty Bowser can be found here.

See my post on “When it Goes Right, What Does it Cost to Build a Great Software Company?” for more analysis on time to profitability, time to IPO, median capital raised, etc.

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His August Outlook, Investment Potions, looks at the implication of the “new normal” GDP outlook on jobs, income growth, and return on assets.

His core point is that the current economy is premised on 5% GDP growth – ie factories, retail stores, job levels, asset allocations, forecast pension returns…all presume that the economy will continue to grow at 5% year after year. We geared our companies and economy to a fixed level of expected economic growth.

Now, we are in the Great Recession and facing high unemployment, lower consumer spending, etc., accordingly, PIMCO forecasts GDP growth closer to 3% than 5%. The implication is that we have massive overcapacity built into the system and we will simply not need all the retail space, cars, jobs, houses, etc that we have built when it appeared all but a certainty that GDP growth was a fixed variable set at 5%. Moreover, pension funds, endowments, and private investors will need to readjust their return on capital expectations to match the long-term reduction in GDP growth.

He writes:

Genghis: Birth of an Empire
Genghis: Lords of the Bow
Genghis: Bones of the Hills

Terrific stuff and if you want a great biography on Khan, read Genghis Khan, The Making of the Modern World

Finally – Agincourt, the tale of Henry V’s epic battle as told by an English bowman.

Until September of last year, the tried and true revenue model for consumer Internet services was on-line advertising. The model – page views, unqiues, and CPMs – is well understood and sites looked to use direct sales and ad-networks (read Google) to monetize traffic and impressions.

The cooling of the on-line ad market, flight to quality for advertisers (ESPN, etc), and the realization that ad revenue may not scale forced many consumer services to consider charging their users for access to functionality and value.

While SaaS is a well-defined success story in the enterprise space, it was considered a virtual truth that on-line users would not pay for on-line services. Why? – free substitutes, ad-funded business models, and a general end-user belief the web should be free, etc.

Today, “freemium” is on the rise and there are great teams across the valley working to monetize via micro-payments and subscriptions.

LogMeIn’s IPO provides insight into the power of direct-to-consumer subscription services, as have traditional success stories such as anti-virus (SYMC, MFE).

However, there are many good examples of the consumer SaaS trend

• Vimeo
• Dropbox
• Flickr
• WordPress
• Widgetbox

These teams are working on using price, features, and value to tier users into free and paid product buckets. Furthermore, good work is being done in optimizing user registration, user conversion, affiliate models, A/B testing product and purchase pages, tracking churn, etc.

I expect to see more services looking to move to charging users and to significant innovation in optimizing subscription revenue.

Here at Widgetbox, we use a AAA model to manage the business:

• Acquisition – driving new registered users
• Activity – driving activity, conversions, and value per user
• Ads – monetizing “free usage”

The model and focus on transactions is allowing for tremendous progress in understanding our users, while using the ultimate test – will they pay you for the service – to gauge our value and utility.

To put 100m into perspective, Widgetbox is now the web’s 19th largest network.

It is tremendously rewarding to work on a technology platform that touches tens of millions of people a month, and Widgetbox’s continued growth is huge validation that the atomization of the web and the rise of widgets as a valuable medium for content syndication, web page construction, and personalization continues apace.

In addition, Widgetbox’s focus on self-service solutions and the freemium model is driving tremendous growth in customer acquisition as customers – prosumer, SMB, and enterprise – use the Widgetbox platform to widgetize, distribute, and measure their content.

Running on Empty indicts both Republicans and Democrats for ignoring two troubling twin deficits – the the trade deficit and the budget deficit – which, he believes, may ultimately bankrupt the country. The hard-hitting book highlights the off-balance sheet, unfunded entitlement program liabilities that will fall due in the coming decades. With trillions of dollars in Medicaid, social security, and drug benefits promised to current and future retirees, he warns of some very hard choices that face the nation. For example, he estimates if Congress was forced to fund promised entitlement programs, we would face, “an immediate and permanent 60 percent hike in the federal income tax, or a 50 percent cut in Social Security and Medicare benefits.”

His recent book walks the reader through his quite amazing career. Quick CV

• Northwestern BA
• Chicago MBA
• Marketfacts (research analyst)
• McCann-Erickson (head of chicago office)
• Bell & Howell (CEO at 36 of Fortune 300 company)
• Chair, Council on International Economic Policy
• Secretary of Commerce
• Lehman Brothers (CEO)
• Blackstone Group (Founder and Chairman)
• Concord Coalition (Founding President)
• Fed Reserve Bank of NY (Chairman)

What strikes me is the many various industries in which he excelled – research, advertising, manufacturing, government, investment banking, merchant banking, public policy.

Each very successful person is somewhat sui generis, however, one can always learn from those who have accomplished so much for so long.

When asked how his management style has evolved, he pointed to a lesson from an early mentor.