July 20, 2020

Valley veteran Tom Siebel aims for a three-peat with AI

With his glorious return to Apple in 1997, Steve Jobs comprehensively rebutted the old Scott Fitzgerald dictum that “There are no second acts in American lives” – at least if we buy the notion that the novelist meant ‘no second chances’ or ‘no grand returns’. But Tom Siebel, deep into his sixth decade, is rarer yet in that he is pursuing his third major act with C3.ai, a company shooting to be the platform of choice for firms deploying and managing AI applications. There’s been a lot of water under the bridge since his senior role in making Oracle the go-to company for relational database management systems from the early 1980s or effectively inventing the customer relationship management (CRM) software category with Siebel Systems in the 1990s. Today, he wants to see C3.ai take a similarly dominant position in a new growth story that he believes could trump even his previous achievements.

But, if ever he feels that things are getting too tough, he can always look at a picture that’s roughly four feet square and hangs on his office wall in Redwood City, California. It depicts a rampaging elephant and it reminds him of something tougher even than repeat success in Silicon Valley. That would be the time in 2009 that he was struck by just such a beast while on foot safari in Tanzania in a famous incident that ended with him gored, with a foot detached and facing a long and painful road to recovery.

“It definitely changes your perspective on life,” he reflects in the wry, dry drawl that still bears traces of his Chicago upbringing, over a wide-ranging, one-hour Zoom call. “To be attacked and mauled by five tonnes of raging elephant is quite a surreal experience… not one I would recommend.”

The story of how Siebel survived the encounter can be found in detail elsewhere online if you have the stomach for it, but Siebel says it was also a learning experience.

“It certainly was an exercise in persistence,” he says, recalling three-and-a-half years where his very survival and his ability to walk again were open questions. Today, Siebel the comeback kid says he surfs, skis and wakeboards and the silent dialogue with the matriarchal elephant has left one mental imprint.

“I approach these day-to-day crises with much greater levels of circumspection,” he says of his work. “It took some effort to overcome all that,” he says, but at least aggressive rivals don’t stress you out as much when you’ve had an angry elephant stamp on your head repeatedly in the heart of the Serengeti…

World gone wrong

Having done as much as most to shape modern B2B technology, I begin by asking Siebel about how he sees the world today.

“It’s very unsettling and I’ve never seen anything like it,” he says. “We have a very, very funny economic situation. We look at these recessions going back to 1980 or 1990 or 2000 or 2008 and here we have a GDP decline in Europe and in the United States greater than that we’ve seen since the Great Depression. Unemployment rates in the United States are just staggering, major sections of the global economy are shut down and equity markets are at an all-time high. It just defies belief, but technology multiples are at an all-time high. So, I don’t get it.”

Looking further east, Siebel has been outspoken about China in the past, even backing up his words by declining to trade with Chinese companies at C3.ai, thereby breaking a habit he had at Oracle and at Siebel. It’s fair to say that he’s certainly not backing down and he sees his current area of endeavour – artificial intelligence – as being a determinant of our geopolitical future.

“China looks like a timebomb,” he says. “I think these issues related to China and national security are very real. We’re engaged in, kind of, non-kinetic warfare with China right now.

“The current battle seems to be largely in AI but what these guys are doing expanding the size of their footprint in the South China Sea… this is no small move. If you looked at a map that’s a big chunk of the planet China is just deciding that they own. I personally believe these issues relating to Huawei and TikTok and others are very, very concerning. I think these guys are genuinely bad guys and they have an agenda to take advantage of what’s going on in the free world. And, to the extent that these countries let them do it, they will do it.

“If they own the 5G wireless radio network, they will have a copy of every conference call, every video call and every communication that takes place in the world. We’re at war with China. At C3.ai, we do business all round the world, but we refuse to do business in China. There’s lots of opportunities to do business in China but we’ve just decided we don’t do business there and we feel very comfortable with that.”

There are two key issues, he adds.

“Certainly, that technology would be used for what I would consider unethical purposes and, secondly, they’re clearly engaged in massive state-sanctioned property theft, so that kind of makes it no fun. Both those issues are important but the first one is the moral imperative of trying to ensure that these new AI technologies are used in socially beneficial and ethical manners.”

But if he doesn’t much like the cut of China’s jib, he is also guardedly critical of matters closer to home.

“The political environment in the United States is very concerning,” he says. “It’s becoming very tribal and anytime you’re dealing with trade barriers or travel restrictions, these are not good things. This is not good for economic growth; it’s not good for broad-based prosperity.”

AI: Absolutely Integral

But why is AI so central to the future of who becomes top dog in the world?

“Putin said in 2017 that whoever wins the war on AI dominates the world. That’s true and I don’t think it’s going to be Russia; it’s going to be China or the United States. This is kind of asymmetric warfare: the West is guided by strict moral guardrails on what’s ethical or not, and I don’t think the Chinese are constrained in that respect. In a funny way, that’s an advantage. If our leaders aren’t paying attention to China, that’s a mistake.”

For Siebel, this also represents a clash of values.

“I think you have the ultimate test of two political philosophies. In the case of China, you have a command-and-control, top-down totalitarian state where the NDRC [Chinese state planning council] calls the shots in five-year plans and everyone marches in lockstep. They’re spending money in tens of billions of dollars to do advanced work in AI and they will make advances.

“Kai-Fu Lee in his book AI Superpowers predicts China will win this war. In the United States and in the western world, it’s much messier, free market, not well organised, chaotic situation where new developments in AI are happening in the UK, in garages in Palo Alto and storefronts in the Bronx. That’s an economic model that has served the West well over many generations. But I think now this is going to be the ultimate test of those two philosophies – whether it’s a free-market economy or a command-and-control, totalitarian state model that will prevail. Let’s hope the [West] wins because if we don’t win in this, it’s going to be a problem.

Siebel goes on to talk about “unconscionable” activities with, for example, the Ughurs, for example but, pressed, he is betting on the Western model prevailing.

“I’d bet on the free-market states and political models that support individual liberty,” he says. “Xi is on very shaky ground. For that regime to sustain itself they need economic growth and they don’t have economic growth. I think Xi has taken out a lot of potential competitors in his reign and now they’re sitting in the wings with their knives drawn waiting to take him out … My bet is that it crumbles under its own weight like the Soviet Union did. I’m an optimist but to pretend they’re not engaging in massive state-sanctioned cyberwar is very naïve.”

C3 and see you third time around

In truth we could easily spend a week discussing and debating the deep complexities of all the above but we have to move on: why is Siebel at it again, scaling up another company that once again speaks to the zeitgeist of our times?

“Well Martin, this is my idea of a good time so that’s what’s motivating me,” he says. “When we got involved in the RDBMS market in the early Eighties, that market was nascent and turned out to be pretty substantial. Larry Ellison built one of the great companies and it was the experience of a lifetime to be involved in the early stages of that effort. Then in the early Nineties we had a new step function [and] the internet, graphical user interfaces and nomadic laptop devices … those in turn enabled this entire enterprise applications software market and this was when Siebel Systems was formed, largely creating the CRM market.”

He saw a global IT market grow from perhaps $50bn in 1983 when he joined Oracle to $4 trillion today, he says, and there’s more to come.

“The accelerants that we’re seeing in the IT business as we go from say $4tn to $9tn are occurring in real time and those include elastic cloud computing, Big Data, the Internet of Things. And those in turn support this new class of application commonly referred to as AI and I would call, perhaps more accurately, predictive analytics.” In other words, he wants to harness AI to see further, forecast better and fix issues even before a human might recognise them as issues.

It’s a formula that has seen C3.ai raise almost $230m and, just as with Oracle and Siebel Systems, Siebel feels he has got in at the basement of the market. Customers are often blue-chips, including 3M, the US Air Force and Royal Dutch Shell. AI “promises to be replacement market for everything that we’ve done,” Siebel enthuses, with a value of maybe $250bn in the next few years, worth more than the sum of the CRM and ERP sectors combined.

“It’s the professional experience of a lifetime,” he says, echoing his comments about Oracle four decades ago. The mission is to design, develop, provision and operate AI in fields from smart grid analytics, financial services, automotive and digital oilfields to (his potentially most transformative sector) precision medicine, where treatments are personalised based on genes, environment, lifestyle and beyond.

“It’s an extraordinarily complex technology problem so it’s really fun, really hard and really rewarding,” he says of AI and analytics. “We’re enabling organisations to deliver services with greater efficiency at lower cost with greater safety and cybersecurity into the hands of more satisfied customers.”

Transformers: the new movie

AI also has the potential to dramatically accelerate digital transformation, a topic on which Siebel last year wrote a book, Digital Transformation: Survive and Thrive in an Era of Mass Extinction.

The book’s central theme is that companies need to adapt or die because without transformation they have no future, no matter how mighty they once were. But, I ask, are we still learning as we go, in terms of the structures, teams, culture, values and leadership we need to turn the tank around at big companies?

“Yes,” he concurs, “and I think we’re seeing a very significant change that is linked to this drive towards digital transformation. IT decisions were traditionally made by the CIO. For the first time, what’s very curious is the CEO is there for the first meeting and is travelling halfway around the world to come and see us in Silicon Valley and bringing this new person in the form of the chief digital officer who has this mandate to digitally transform the enterprise.”

Such is his belief in the primacy of transformation that he says C3.ai declines to engage with businesses that don’t have the commitment to change.

“If the CEO is not at the table and there’s not a commitment to get it done, we will not do business. We’re hugely selective in projects we deal with. Had we said yes to every engagement, 70-80 percent of initiatives would have failed. You need to pick your battles very carefully here.”

After the Boomers

And what of himself: has he had to transform too for a new age and a new ethos?

“I think that I’ve learned that business leaders need to be highly sensitive to the workforce as it is changing over the decades,” he says. “Back in the late-20th century, when we were managing baby boomers, that was a relatively easy problem. Baby Boomers had very similar cultural backgrounds, very similar work ethics and they tended to be motivated by whatever it said in the compensation plan. If you told someone to relocate to London or Detroit, they picked up and relocated.”

Today, you can’t use high-output management models in the same way that Intel’s Andy Grove mandated.

“Things have changed considerably,” Siebel says. “We have workforces with this enriched tapestry of people with different generations and they have a different sense of history, they come from different cultural backgrounds and they are motivated by different things. You need to get to an organisation that consists of this very rich stew to act in a well organised, cohesive fashion to attain business and social goals. It’s just much more complex than it was, and leaders that are succeeding are highly sensitive to that.”

But when I ask if he is more of a backseat driver these days, happy to delegate and be more hands- off, I get a negative response.

“I’m probably much more familiar with the details of the business than most CEOs,” he says. “I have a pretty good idea of what’s going on with every customer, any place in the world. I believe it’s important for a CEO to be in touch with the details of the business, in touch with the needs of the customers; in touch with the needs, the goals and desires of the employees.

“I don’t think you can delegate employee satisfaction or corporate culture to a head of HR or customer satisfaction to the VP of customer service. Ultimately, the CEO is responsible.”

And what of “two in the box” examples of executive co-driving or other delegation models seen at companies such as Oracle and SAP – can’t they free up the CEO to spend more time on strategy and less on the everyday?

“The idea that Larry [Ellison] is not involved in the details of the business… I find a little difficult to believe,” Siebel chides. “That’s like believing that Hasso Plattner is not involved in the details of SAP, because he is. I think the idea of two-in-a-box is not a means of delegation, it’s a means of maintaining control. I think it means the opposite of what it appears to be. There’s no question of who calls the shots at SAP and that’s Hasso Platner, or at Oracle and that is Larry Ellison.”

‘Borne back ceaseless into the past’

Mention of Mr. Ellison gives me a chance to take one final wander down Random Access Memory Lane. Siebel recalls that he had developed an abiding interest in CRM at Oracle but Ellison was not keen. “He had no interest, so I was OK, see you later, bye,” Siebel recalls.

Later, as Oracle attempted to make up lost ground in CRM and enterprise applications, matters appeared to become heated between the pair but the idea that the two had daggers drawn in some battle of the egos was more media than reality, Siebel says.

Ellison and Siebel had been on “extraordinarily positive terms, both professionally and socially” and, judging by remarks in my interview, that seems to have persisted through time.

The fact was, Siebel asserts, that Oracle assigned 3,000 people to a CRM division with the objective of taking Siebel out of the market but got a paltry market share for its efforts.

“Larry became very vocal about [CRM] and this was catnip for the media to be able to play this catfight out on the cover of Forbes, Business Week and what have you.”

“The dialogue was quite rancorous and animated, but I don’t think it ever got personal,” he laughs. But there was to be a later coming together.

“It was with some surprise my assistant in 2005 announced it was Larry Ellison was on the phone. A bit bemused, I picked up the line and said, ‘Larry, nice to hear from you. I assume you’re not looking for a sponsor for your America’s Cup boat.’ Without skipping a beat, he said, ‘That’s not a bad idea but we need to put the names in alphabetical order…'”

Siebel insists that the subsequent deal that saw Oracle buy Siebel in early 2006 was a good deal for all and notes as evidence that he can’t even use his own name for a business as Oracle continues to use the Siebel brand. But mistakes are as much part and parcel of doing business as breathing, he acknowledges.

“To a fault we’re very decisive as a team,” he says of C3.ai management. “We make a decision, we all follow that decision and a high percentage of the time that decision turns out to be wrong and then we walk it back. I don’t think making a mistake is a problem. Let’s not stick to our guns and go down with the ship like GE with that disastrous GE Digital where they knew they made a mistake and yet management failed to act.”

Ready to charge again

Tom Siebel reflects on that safari. In Tanzania there had been six similar attacks that year and he was the only survivor. “Once they engage, they finish the job. They’re not done unless they’re standing on your head grinding you into paste in the Serengeti,” he says.

He was the lucky one who escaped to fight another day — and now he’s back to doing what makes this survivor content, setting aggressive goals and building world-class technology companies that dominate markets.

Read the full article here.