Why Oracle can't buy Workday

The myth in the enterprise software world is that any company that succeeds will eventually “either fall apart or be bought by Oracle,” Fortune editor Adam Lashinsky joked with Aneel Bhusri, CEO of Workday.

Bhusri didn’t miss a beat and shot back. “We’re not falling apart and we’re not selling to Oracle.”

That’s not an idle comment.

Bhusri and his Workday co-founder David Duffield were famously once forced to sell their last company, PeopleSoft, to Oracle. Duffield was PeopleSoft founder and Bhusri was a key executive there, and it was the nastiest hostile takeover in software history.

After losing that battle, Duffield and Bhusri turned around and founded Workday, a cloud service that provides human resources and financial software to large enterprises, and got right back into competition with Oracle.

This time however, they designed their corporate structure so that Oracle can’t buy Workday, even though Workday went public in 2012.

“Dave and I control the votes, we have a dual-class [stock] structure. We learned our lesson,” Bhusri said on stage during the Fortune Brainstorm Tech conference taking place this week in Aspen.

A dual-class stock structure means that founders and other insiders get a separate class of shares with greater voting rights than normal shareholders.

It’s not just protecting their company. It’s also to stop what could have been a lot of questions from potential customers who remember that long, drawn out Peoplesoft battle.

“Fear of company like us being acquired might have impacted a customer that wanted to buy from us,” Bhusri said.

Dual class structures are increasingly common in tech companies, including Google and Facebook. Facebook CEO Mark Zuckerberg recently credited that structure with allowing him to think about the long-term rather than being forced to worry about facing a hostile takeover if Facebook misses a few quarters.

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