Our mission to improve business is fueled by readers like you. To enjoy unlimited access to our journalism, subscribe today.
Nine out of ten companies fail when implementing artificial intelligence software, says Tom Siebel, the billionaire founder and CEO of C3.ai. And in this failure, Siebel found an opportunity.
C3, which sells software that allows large companies to implement and manage large AI applications, saw its shares jump more than 150% on their first day of trading on Nasdaq on Wednesday. The company raised $ 651 million in IPO this saw the company valued at over $ 10 billion.
“Virtually every one of our customers has failed once, twice or three times” when trying to build their own AI systems, Siebel said. Fortune hours after the IPO. He says it’s the same model he saw earlier in his career, first selling database software in the 1980s at Oracle, then founding Siebel Systems, the sales force automation and customer relations software company that he sold to Oracle for $ 5.85 billion in 2005. “History doesn’t repeat itself, but it rhymes of course, ”he says. “These companies try several times. They fire the CIO, then they get serious and get the job done. “
C3, which Siebel founded in 2009, saw its revenue jump 71% to $ 157 million in the 12 months to April 2020. But the company’s expenses, especially its research and development costs and its sales and marketing expenses are growing even faster. As a result, the company lost $ 70 million over the same period.
“We are building a structurally profitable and structurally positive cash flow business,” says Siebel. But, he says, investing in growing the business means that it will continue to lose money on an operational basis over the next several years. He says cash flow is expected to turn positive within three to four years and the company should be able to generate profit margins above 20% over the long term.
The company has around 50 customers, but makes a large part of its sales – 44% – from just three of them: the oil services company Baker Hughes, the French energy company Engie, and industrial equipment manufacturer caterpillar. Siebel says the business is diversifying quickly and that he knew of at least 50 additional customers that the company was working to close in the next six months.
CEO says he sees biggest AI market health software, where he predicts it will help usher in a revolution in personalized medicine, helping doctors predict which patients are most likely to develop certain diseases and intervene earlier to prevent them. He also says it will help with more targeted treatments for cancer and other conditions.
Siebel, who is nothing if not blunt, says the incoming Biden administration should set some guidelines for AI companies, in particular around the ethics of AI. “There are many instances where AI is being used, especially by social media, in my opinion huge social harm,” he says. He highlighted youth mental health issues that are caused or exacerbated by social media as well as political polarization and misinformation as areas where government should step in and regulate technology. He also said regulation was needed on how companies could use personally identifiable information in training AI software.
He also urged incoming Biden administration to devote more resources to using AI in military and intelligence applications, especially in light of China’s multi-year and multi-billion dollar investment. in these technologies. “Make no mistake, we are at war with China over artificial intelligence,” he said.
C3.ai has major contracts with the U.S. Air Force, for which it has built a system that predicts when aircraft parts will need to be replaced, helping the force keep more of its planes ready to fly, as well as with Raytheon, a major defense contractor. And although the supply of AI systems to the U.S. military has proven to be controversial for some tech companies – with Google pulling out of the Pentagon’s Maven project in 2018 following an outcry among its employees – Siebel says C3 has no problem providing AI technology to the U.S. military as long as a human remains “in the loop ”into any system that the company helps deploy. “We are proud to serve democratic governments and governments that support human rights and individual freedom and we will continue to do so,” he said.
And while some AI researchers have also objected to providing systems to oil companies that continue to extract hydrocarbons, Siebel says. Fortune he has no problem providing AI software to large energy companies to help them become more efficient. “What we’re doing for some of the biggest utilities in the world and some of the biggest oil and gas companies in the world is empowering them to reinvent themselves,” he says. “To help them convert to safe energy, secure energy, lower cost energy and much more reliable clean energy.”
In general, says Siebel, AI ethics are too important to be delegated to an AI ethics officer or AI ethics department. “He’s just a cop,” he said. “The CEO has to own this, the entire management team has to have it, and the board.”
More to read absolutely technological coverage of Fortune:
- 2020 was a record year for European technological investments. Not even a pandemic could slow it down
- Shipping times for the holidays for FedEx, UPSand the postal service
- Quantum computing is enter a new dimension
- Battery boot backed by Bill Gates claims a major advance
- The founder of Indiegogo launches Vincent, a site to discover alternative investments