That’s how it is for Aneel Bhusri and Zachary Nelson, whose companies are in contention over the next major shift in computing. In a way, the men are reliving history. Two decades ago, their mentors feuded, and that time, too, the dispute took place against the backdrop of a major shift in corporate computing — when customers gave up their mainframes and moved to software that relied on personal computers closely connected to a server. Mr. Nelson, the chief executive of NetSuite, used to work for Lawrence J. Ellison, the billionaire chief executive of Oracle. Mr. Bhusri, the co-founder of a competitor company called Workday, used to work for David Duffield, a rival of Mr. Ellison’s. Mr. Duffield is the low-profile founder of PeopleSoft, a once-powerful maker of corporate software that Oracle acquired in a bitter, 17-month hostile takeover fight. How bitter? Oracle defeated a federal antitrust lawsuit brought by the Justice Department before it could reel in its rival. And a month after PeopleSoft was acquired, 5,000 of its 11,000 employees were laid off. Together, NetSuite and Workday are among a growing circle of tech outfits poised to cash in on the migration to cloud computing services and perhaps elbow aside today’s corporate software giants, like Oracle and the German company SAP. “It would be a mistake to see this as a revenge play, though other people might see it that way,” Mr. Bhusri (pronounced “Bush-ree”) said in an interview, referring to his company’s efforts to take on Oracle’s business. “PeopleSoft came in second or third. This time we can be first.” Workday and NetSuite each have annual sales of less than $400 million, about 1 percent of what Oracle sells in software, but the stock of both companies has rocketed on expectations that they are in the heart of a market that could grow five times faster than the rest of the tech industry, according to IDC, the technology research firm. Companies in this growing area could be acquisition targets. IDC predicts that by mid-2014 the big software makers will have spent as much as $25 billion on acquisitions as they build out their cloud services. While the market value of Oracle and SAP both reflect about four times their annual sales, NetSuite shares trades at 20 times its sales, and Workday is valued at 40 times. Last Wednesday, Workday reported revenue for its first fiscal quarter of $91.6 million, up 61 percent from a year earlier. In its most recent quarter, which ended March 31, NetSuite also had $91.6 million in revenue, up 32 percent from the same period a year ago. The two upstarts both deliver services — NetSuite in accounting and Workday in human resources — that perform essential business functions, and from there have broadened into other areas. Their services perform the same functions as traditional business software to manage tasks like accounting and tracking employee benefits. But instead of selling a license to own that software, which requires the customer to install it on a server, the two companies provide access to their services over the Internet and customers pay on a subscription basis. Mr. Bhusri, 47, and Mr. Duffield started Workday in 2005. Mr. Bhusri is chairman, and the men share the chief executive role. Mr. Bhusri, a partner at the venture capital firm Greylock Partners, is on the board of several other cloud companies. “They are all companies in the Dave Duffield model — the good guy model, as opposed to the other guy,” Mr. Bhusri said. An open, self-effacing man, he declined to identify the “other guy,” but added, “I would be amazed if Oracle does not buy NetSuite.” Mr. Duffield hired Mr. Bhusri at PeopleSoft. Based in Pleasanton, Calif., about 30 miles from Oracle, it was sometimes called the “People company” and was known for its casual atmosphere.
