Out From Oracle’s Shadow: NetSuite

Allen Bernard

Updated · Apr 03, 2004

Ten minutes on the phone. That’s all it took one day in 1998 for NetSuite
(formerly NetLedger) founder Evan Goldberg and Oracle founder Larry Ellison
to come up with the concept for the birth of NetLedger, an online, on-demand
application service provider (ASP) delivering accounting software to small
businesses.

At the time, neither could have foreseen the disastrous downfall of the
dot-coms and associated demise of the ASP industry that came along with it.
It was, after all, 1998, and all things IT were hot.

As the slowdown in IT spending really took hold and ASP and dot-coms began
to disappear in droves, NetLedger, which was backed by Ellison both
financially and as a member of the board, made a deal with Oracle to supply
the software that would become the Oracle Small Business Suite (OSBS). But
there was a problem.

While the online solution sold well, NetLedger was being slowly but surely
subsumed by Oracle. Indeed, for a time, NetLedger’s only product was the
OSBS and it needed to retain the Oracle name to attract skeptical buyers,
which it did. Thousands of them.

Today, however, NetSuite has a new name and product line that has nothing to
do with Oracle.

NetSuite’s “NetSuite” is an integrated CRM/ERP application, still delivered
online but now heralded as an “on-demand” application. Even though it still
sells the OSBS for Oracle and Ellison is still the majority stockholder,
most of NetSuite’s clients are buying NetSuite, not OSBS. And the company no
longer looks to its larger partner for marketing and branding muscle.

“Certainly from a messaging perspective we were very, very integrated into
(Oracle’s) messaging about the (OSBS) suite,” said Goldberg, who used to
work as a vice president for Ellison at Oracle. “The thing that’s changed,
from a positioning perspective, is when we first did the deal with Oracle
really everything was focused on the (OSBS) suite. Our entire product line
was OSBS for all intents and purposes. But now OSBS is really a relatively
small part of the low-end of our product line.”