Tuesday, September 23, 2014

Larry Ellison Bought an Island in Hawaii. Now What?


Henry Jolicoeur is a retired French Canadian hypnotherapist and a glass-products importer who enjoys making very low-budget documentary films. In the summer of 2012, Jolicoeur read that Larry Ellison, a founder of the Silicon Valley giant Oracle and the fifth-richest man in the world, had bought 97 percent of the Hawaiian island of Lanai — not a 97 percent stake in some kind of company, but 97 percent of the physical place. Jolicoeur was curious, so he booked a flight and packed his camera.

Jolicoeur knew a little about Lanai, having lived in Hawaii in the ’90s. It is among the smallest and least trafficked of Hawaiian islands — a quiet, spectacular place where Cook Island pine trees vault up everywhere, like spires or giant peacock feathers — and can feel like a charming wormhole to an earlier era. There is only one town, Lanai City, where virtually all of the island’s 3,200 residents live. Ellison now owned a third of all their houses and apartments; the island’s two Four Seasons-run hotels; the central commons at the heart of Lanai City, called Dole Park, and all the buildings around it; the town swimming pool; the community center; the theater; a grocery store; two golf courses; a wastewater treatment plant; the water company; and a cemetery. In a single sweeping real estate deal, reported to cost $300 million, he had acquired 87,000 of the island’s 90,000 acres. And he would subsequently buy an airline that connects Lanai to Honolulu as well. On all of Lanai, I heard of only a handful of businesses — the gas station, the rental-car company, two banks, a credit union and a cafe called Coffee Works — that are neither owned by Ellison nor pay him rent. (...)


Ninety seven percent of Lanai may be a lot of Lanai, but it’s a tiny part of Ellison’s overall empire. Ellison, who stepped down as C.E.O. of Oracle on Sept. 18, is estimated to be worth $46 billion. He made an estimated $78.4 million last year, or about $38,000 an hour. He owns a tremendous amount of stuff — cars, boats, real estate, Japanese antiquities, the BPN Paribas Open tennis tournament, an America’s Cup sailing team, one of Bono’s guitars — and has a reputation for intensity and excess. Recently, The Wall Street Journal reported that when Ellison has played basketball on the courts on his yachts, he has positioned “someone in a powerboat following the yacht to retrieve balls that go overboard.” One biographer called him “a modern-day Genghis Khan.”

At a public meeting on Lanai last year, an Ellison representative explained that his boss wasn’t drawn to the island by the potential for profits but by the potential for a great accomplishment — the satisfaction one day of having made the place work. For Ellison, it seemed, Lanai was less like an investment than like a classic car, up on blocks in the middle of the Pacific, that he had become obsessed with restoring. He wants to transform it into a premier tourist destination and what he has called “the first economically viable, 100 percent green community”: an innovative, self-sufficient dreamscape of renewable energy, electric cars and sustainable agriculture.

Ellison has explained that Lanai feels to him like “this really cool 21st-century engineering project” — and so far, his approach, which seems steeped in the ethos of Silicon Valley, has boiled down to rooting out the many inefficiencies of daily life on Lanai and replacing them with a single, elegantly designed system. It’s the sort of sweeping challenge that engineering types get giddy over: a full-scale model. Of course, there are actual people living inside Ellison’s engineering project — a community being hit by an unimaginable wave of wealth. But unlike all the more familiar versions of that story, Lanai isn’t being remade by some vague socioeconomic energy you can only gesture at with words like “techies” or “hipsters” or “Wall Street” but by one guy, whose name everyone knows, in a room somewhere, whiteboarding out the whole project.

Jolicoeur seemed to understand the precariousness that power imbalance created: the staggering responsibility, the incomprehensible control. At one point, standing on a beach, he announces theatrically to the camera, “The Bible says, ‘Where there is no vision, people perish.’ ” Eventually he visits the island’s animal-rescue center, where a young employee explains that because there are no natural predators on Lanai, the feral-cat population just explodes. Right now, she tells him, the shelter is housing 380 cats.

From behind the camera, Jolicoeur hollers: “So basically, these are 380 cats of Mr. Ellison’s?”

“They’re his cats!” the woman says, laughing and laughing. (...)

Like a lot of omnipotent forces, Ellison has remained mostly invisible. He has visited Lanai many times — locals told me they can tell he’s on the island when they see his yacht hitched in the harbor — but he seems determined to keep a formal distance from the community, shielding himself behind the executive team of Pulama Lanai, the management company he set up to oversee the island’s transformation. Although Pulama holds frequent public meetings on Lanai, Ellison has declined to attend any or to address residents directly. Several residents told me that they’d resorted to reading biographies of Ellison to learn more about the man — books that have somewhat disquieting titles like “Everyone Else Must Fail” and “The Difference Between God and Larry Ellison,” the punch line being: “God doesn’t think he’s Larry Ellison.”

Ellison’s vision for the island was first delivered, by proxy, early last year, at a meeting of the island’s Community Plan Advisory Committee. These meetings were part of a county-government process to update the island’s comprehensive planning document, which dictates everything from zoning and land use to cultural preservation. Butch Gima, a Lanai native and social worker who was chairman of the committee, told me that Ellison’s takeover put them in a tricky position. On one hand, it allowed for greater ambition. (“A new world has opened up,” one member told the committee.) But it also felt strange to chart a course for an island that someone else had taken control of. Even the committee’s economic research and growth projections might now be obsolete, depending on what Ellison wanted to do. And so they invited Pulama’s new chief operating officer, Kurt Matsumoto, to brief them.

Matsumoto was hired to oversee operations on Lanai a couple of months earlier. He had a background in running large resorts, but he was also a “Lanai Boy,” as people kept putting it to me — he grew up on the island. “He doesn’t come off as being real slick,” Gima told me. (As kids, Gima and Matsumoto were in Boy Scouts together.) His appointment was encouraging; the relationship between the island and its new owner had been brought down to a more human scale.

Matsumoto appeared before the committee in mid-January — a middle-management Moses coming down the mountain with an important PowerPoint. He prefaced his presentation by explaining that Ellison didn’t have any firm plans yet, only “intentions.” Then he put up his first slide.

That night, and in other meetings, Matsumoto unveiled a startlingly ambitious vision for the island. He explained that Ellison aimed to build a third resort, this time on the uninhabited southwestern coast, as well as a complex of private estates — maybe 50 of them, each five or more acres. Ellison intended to expand Lanai’s airport, adding a bigger runway to accommodate direct flights from the mainland for the first time. The limiting factor on Lanai has always been water, but Ellison would build a state-of-the-art desalination plant to produce more fresh water. Ellison would expand Lanai City; build an “energy park,” where electricity produced with solar panels or photosynthesizing algae would be fed into a new smart grid; and bring commercial agriculture back to the island, in fields outfitted with sensors to control fertilization and irrigation, so that Lanai could begin to feed itself and even export products, rather than depend on weekly food barges from Oahu. Eventually Matsumoto would tell The Wall Street Journal that Ellison hoped to see the island’s population double to about 6,000. Elsewhere, there was talk of organic wineries and flower farms and an innovative aquaponics-and-hydroponics operation that would raise fish and fruits and vegetables in a sustainable symphony of positive feedback loops. Better health care. A bowling alley. An institute for the study of sustainability. A 22-acre film studio. A top-flight, residential tennis academy for competitive youth.

Matsumoto’s tone at that first meeting was low-key, humble and inclusive. He used words like “respect” and “empower,” “sharing” and “investing.” Then, eventually, he hit his last slide: “Mahalo” — Hawaiian for “Thank you” — and was done.

“It was hard to formulate any thought-out questions,” Gima recalled about the presentation. “I think people just went, ‘Whoa.’ ”

by Jon Mooallem, NY Times |  Read more:
Images: Mark Peterson and Greta Pratt for The New York Times