How Oracle turned a program that salespeople hated into one of its secret weapons

On a beautiful day in the fall of 2015, Oracle executive chairman Larry Ellison and CEO Mark Hurd flew to Austin, Texas. They were doing one of Ellison's favorite things: shopping for real estate.

"We literally walked the river looking for property," Hurd told Business Insider.

They were looking for a spot to build a new state-of-the-art campus to house employees that were part of Hurd's "Class Of" program, once an object of controversy inside the company.

Hurd had launched this program in 2013 to hire thousands of college graduates straight from school to become salespeople and help sell Oracle's cloud. It was the year he revamped the company's legendary hard-hitting salesforce.

By the time Hurd and Ellison were in Austin, the College Of program was proving to be a success. And Ellison had agreed with Hurd that they wanted to keep expanding it.

In Austin, they saw a site with an apartment complex under construction plus some vacant property. It looked out over Lady Bird Lake and was close to downtown.

"We had a real estate agent with us, and I said him. 'How much does that cost?' And the guy looks at me and says, 'In dollars?'" Hurd tells us. He still rolls his eyes in disbelief that a salesperson could be so unprepared to reel in a deal while standing toe-to-toe with such big fish.

"I'm like, 'Yeah, in dollars. I've got a checkbook. I'm ready to buy,'" he recalls. "Here you've got Larry Ellison and Mark Hurd walking around. We're qualified buyers." He shakes his head.

Flustered realtor or not, the two still loved the piece of land and promptly bought it for an undisclosed price. In December, Oracle announced plans to build a 560,000-square-foot campus there, including the apartment complex.

"Our idea is, many of these kids, when they get out of school, their biggest issue for them is cash flow. Can we give them a housing advantage? They can come to work, have an apartment there, this facility will have fitness facilities. There will be restaurants nearby. It's going to be great," Hurd lights up while talking about it.

(Oracle isn't the only one thinking that way. Facebook is also building luxury apartments in Menlo Park, California.)

A bumpy start

But back in 2013, when the Class Of program launched, a lot of people in Oracle's sales team were not happy about it.

"Not everybody thought this was the greatest idea. When we started there were some groups that said, 'I just don't want to do it," Hurd admits.

But he was not going to be deterred.

The idea was inspired by a dinner he had with his daughter and her friends who had just graduated from college. They were working as salespeople at a startup and were rooming together in San Francisco.

"All they could talk about was that they partied and they sold. They would go to work, sell stuff, party, sleep some, sell stuff and party. This was life. They were so energized," he remembers.

He told Ellison about the dinner and the two of them wanted to bring back that startup feel to Oracle. He and Ellison decided, "Let's go back to the future, the way it used to be," Hurd recalls.

Hurd had changed up the sales team that year in other ways. He hired thousands more people and altered territories and quotas. A lot of experienced sales people were unhappy and bailed from the company, they told us at the time.

Sales managers worried their territories would be flooded with these lower-paid, inexperienced people, making it harder for everyone to make their quotas. And they thought they'd have to babysit them.

"Anytime you start something, it's always extra work until it matures. Our view was once we get [the program] at scale and maturity, the benefits would be significant for us," Hurd told us.

But by the time he took that walk in Austin with Ellison, even the naysayers were starting to come around.

For instance, Hurd talks about a meeting in Austin a few months earlier.

"This manager said to me, 'You know, when you started this Class Of program I thought this was one of the worst ideas, I ever heard," Hurd told us. "Now I have five of them from the first class and they've been with me for 18 months. This is the greatest thing ever happened. I didn't like the first year, but now that I've got them productive, I want more'," Hurd said.

Bumpy for the new hires, too

As of 2016, Oracle has now hired thousands of folks straight from college.

But for that first class, even Hurd admits it was all untried territory.

The first class got about five weeks of intensive training with brand new curriculum, then they got a quota and were put to work cold calling.

"We got thrown into the fire," remembers Ryan Thomas, a graduate of that first class. "Here are your accounts. Here are your mentors and your manager, it's time to sell. If you didn't realize this was a cold-calling job before, you realized it now. It was terrifying," he laughs today.

Thomas came to Oracle from USC where he studied marketing and economics and ran for the school's acclaimed track team. He survived those early days at Oracle and is now a sales rep for the company's flagship database product.

He still remembers his very first sale that first year.

"The first time someone said yes, I was confused," he grins. The person wanted to upgrade his database and was happy to have Thomas help him.

Oracle has since changed the training program, in large part because Hurd hosts a graduation party for every graduating class at his house. He meets and talks with each graduate and asks for suggestions to improve the program. They all said they wanted more training and more practice.

Over time, Oracle learned that the whole training process can take up to 2.5 years, Hurd tells us. "We really didn't do it as a replacement for a field salesperson," he says.

Today, College Of participants get their five weeks of training. Then they become "Business Development Consultants" (BDC) for a good nine months, where they find leads through cold calling. They still have quotas but they turn over those leads to others to close sales.

Then they mirror a salesperson. The salesperson gets to share in the grad's spoils, which motivates them to train the new hire. And then they can become an independent salesperson (a field rep) or a manager training other BDCs, or they can opt out of sales and go into a different part of Oracle altogether, like marketing, customer support, or events.

Big pond, small fish

Newer graduates are excited by the possibilities at their big tech company.

"Oracle is a big pond and we're smaller fish," says Jacob Gerson, a Class Off graduated that joined Oracle just over a year ago.

"We're part of a team that's going 100 miles an hour and we can make contributions. I personally mapped the State of Texas and developed strong relationships with field teams. When I can lock in a meeting for a higher rep, it is rewarding," he says.

Another way Oracle supports them is the idea of hubs. There's the hub in Austin, but also at Oracle's headquarters in Redwood City, California; in Santa Monica; and in Burlington, Massachusetts. Plus a smaller one for those working with government products in Reston, Virginia.

Groups of students from each Class Of class are placed in each hub together, so they start their jobs with a social group of people they know, their own age.

"One of reasons I chose Oracle is the opportunity to grow within the company," says Camille French, a BDC that's been with Oracle for three months. She studied political science and economics at UC Berkeley.

"With the Class Of, they are investing in me, so they are going to want me to succeed. And the company is so big, you can take so many paths."

The work is demanding and focused. They want everyone to make their quotas. But it can be fun too, such as the daily mass email that circulates in Burlington that says, "time to do push-ups," says Dan Elfman a BDC hat joined Oracle in February from University of Massachusetts, Amherst. "Oracle found me through my LinkedIn resume and said I should apply," he recalls.

And, because this is sales, all four of these Class Of grads said their favorite perk was the money.

Glassdoor says that Oracle BDCs make $68,000 on average, including cash bonuses and commission sharing. But some of them have reported salaries to Glassdoor over well over $100,000.

"Why I took the job. Oracle offered me the most money," Thomas said. And now that he's become a full-fledged salesperson, "The paycheck is most times unbelievable."

High churn rate, no worries

That's not to say that all of the Class Of grads are happy or stay at the company. As the program heads into its fourth year, the churn rate is pretty high. Between 40% and 50% of graduates don't stick it out to become sales people.

Hurd is fine with that.

"If this churned over 4 years to where we lost 40% of the people, we might lose half of that to other things inside Oracle. That is just fine," he says.

And, he says, as Oracle improves its training of both the college kids and the supervisors who mentor them, the number of Class Of graduates that leave is declining.

Meanwhile, sales of Oracle's all important cloud products where most of these kids sell, are growing, were up nearly 80% last quarter and are on track to become a $2 billion business this year, Hurd says.

"If at the other end, I get 50% or 40%, it doesn't matter. My entry level costs to bring them is materially lower than what it would be to bring in a mercenary hire," he says, meaning poaching a top salesperson from another company.

"If I get people who are great and are productive, this is a home run for me," he says.