• Interview
  • Tom Siebel Interviews with theCUBE at AWS re:Invent

Transcript:
Voice-over:
Live from Las Vegas it's the Cube, covering AWS Re:Invent 2017, presented by AWS, Intel, and our ecosystem of partners.

John:

Hello and welcome back to the Cube. This is Silicon Angle's exclusive coverage with the CUBE here at Amazon re:Invent. It's our 5th year covering Amazon, explosive growth. I'm John Furrier, founder of Silicon Angle Media and I'm here with Justin Warren, my co-host. Our next guest on set is Tom Siebel who is the founder and CEO of C3. Industry legend, knows the software business, been around the block a few times, now part of the new wave of innovation.

Welcome to the Cube.

Tom Siebel:
Thank you.

John:
I hear you just got in from San Francisco, what a world we're living in. You're at the front end, you've founded and now are running an IoT, big data play, you're doing extremely well, even last year the whisper in the hallway was 'C3 is absolutely doing great,' in the industrial side, certainly in the federal government side, and on commercial. Congratulations.

Tom Siebel:
Thank you.

John:
What's the update? What's the secret formula?

Tom Siebel:

Well, we live at the convergence of elastic cloud computing, big data, AI, and IoT. At that convergence, I think it's something called digital transformation, where you have these CEOs that are concerned that companies are going through a mass extinction event. The companies are seeing 52% of the FORTUNE 500 companies since 2000 are gone. They've disappeared and it's estimated that as many as 70% might disappear in the next 10 years.

We have this new species of companies with new DNA that look like Tesla, Uber, and Amazon. And you'll have no drivers, no cars, and they have their own transportation. And I think these CEOs are convinced that unless they take advantage of this new class of technologies, they might be extinct.

John:
And certainly we're seeing it, too in a lot of the old guards, as Andy Jassy calls it. We're really talking about Oracle, IBM, and some of the folks that are trying to do cloud, but they're winning. I have to ask you, what's the main difference between the culture of a company trying to transform? What's the difference between the old way and the new way now, that has to be implemented quickly, or extinction is a possibility? I mean it's not just suppliers, it's the customers themselves.

Tom Siebel:
Customers have changed.

John:
What's the difference?

Tom Siebel:

So this is my fourth decade in the information technology business. I've seen the business grow from a couple hundred billion dollars, to say, two trillion dollars worldwide and I've seen it go from mainframe to mini computers to personal computers to the internet, all over that.

I was there in all those generations of technology, when we brought these products to market, would come up in the organization, through the IT organization, to the CIO. And the CIO would say we're never going to use a mini computer, we're never going to use relational database technology, or we're never going to use a PC. So you'd wait for that CIO to be fired then you come back two years later, right?

So, meanwhile we've built a two trillion dollar information technology business globally. Now what's happening in this space (AI, IoT, predictive analytics), is all of a sudden CEOs are at the table. The CEO was never there before. And the CEO is mandating this thing called digital transformation and he or she is appointing somebody in the person of a Chief Digital Officer who has a mandate and basically a blank check to transform this company and get it done.

And where it used to be the CIO would report to the CEO once during the quarterly offsite, the Chief Digital Officer reports to the CEO every week, so virtually, for every one of our customers it's now a CEO driven initiative.

John:

You bring up a good point I want to get your thoughts on. Because the old way, and you mentioned it was IT, reporting to the CIO. They ran things, they ran the business, they ran the plumbing, the software was part of that. Now software is the business, nobody goes to the teller, the bank relationships, the software or whatever vertical you're in, there's now software, whether it's at the edge or it's data analytics, is the product to the consumer.

So the developer renaissance, we see software now, changing. Were the developers now an influencer in this transformation?

Tom Siebel:
True.

John:

Not just 'hey go do it and here's some tools.' Can you share your perspective on this? Because if we're in a software renaissance, that means whole new creativity is going to unleash with software. With that role of the CDO, with that blank check, there's no dogma anymore, it's results.

So, what's your perspective on this?

Tom Siebel:

Well, I think that there's enabling technologies that include the elastic cloud. Computation in storage is basically free, right? Everything is a computer, IoT used to be about devices. But IoT is about the changing form factor of computers. In the future, everything's a computer, your eye glasses, your watch, your heart monitor, your refrigerator, your pool pump, they're all computers right?

And then we have the network effect of Metcalf's law saying we have 50 billion of these fully connected devices, well that's a pretty powerful network. Now these technologies in turn, enable AI, machine learning, and deep learning. Hey, that's a whole new ballgame.

We're able to solve classes of problems with predictive analytics and prescriptive analytics that were simply unsolvable before in history and this changes everything. About the way we design products, the way we service customers, the way we manage companies. So I think this AI thing is not to be underestimated. I think the cloud, IoT, big data, devices, those are just enablers.

John:
And data's key, right? Data trains the A.I, data is the fundamental new lifeblood.

Tom Siebel:

Big data. Big data is about, people think big data is the fact an exabyte is more than a gigabyte, that's not it.

Big data is about the fact that there's no sampling error, we have all the data. So we used to, due to limitations of storage and processing, we used to basically take samples and infer results from those samples and deal with it with the level of confidence that was there. With big data, there's no sampling error, it's all there. It's a whole different game.

Justin:
You were talking before, and John you mentioned before, about the results that you need to show. I know that you picked up a big new customer that I hope you can talk about publicly, which is a public sector company, but that sounds like something. You were doing predictive maintenance for the US Air Force, so that's a big customer, so good win there. But what are the results they're actually getting from the use of big data, and these machine learning analytics that you're actually doing?

Tom Siebel:
Okay, by aggregating all the telemetry, all their maintenance records, all their pilot records, and building a machine learning class of ours, we can look at all the signals. We can predict device failure or system failure well in advance of the failure. So the advantage is some pretty substantial percentages. Some of F-16's will not deploy, because they go to push the button and there's a system failure. Well if we can predict system failure, I mean, the cost of maintenance goes down dramatically, and basically, it doubles the size of your fleet. And so, you know, the economic benefit is staggering.

John:

Tom, I gotta ask you a personal question. I mean you've gone through four decades, you're a legend in the industry, what was the itch that got you back with this company, why did you found and run C3? What was the reason? Was it an itch you were scratching? Were you like 'damn I want the action'?

I mean, what was the reason why you started the company?

Tom Siebel:

Well, I'm a computer scientist, and out of graduate school, I went to work with a young entrepreneur by the name of Larry Ellison. Turned out to be a pretty good idea. And then a decade later, we started Siebel Systems. And then I think we did invent the CRM market, and that turned out to be a pretty good idea.

I just see at this intersection of these vectors we talked about, everything changes about computing, this is a complete replacement market and I thought, 'There's opportunity to play significant role in the game,' and this is what I do. I collect talented people, and I try to build great companies, and make customers satisfied. This is my idea of a good time.

John:
You're on the beach, you're on your board hanging ten on big waves, what are the waves? Because we're seeing this inflection point, a lot of things coming together, what are the waves that you're riding on right now? I'll see the ones you mentioned. What's the set look like? If I lose the surfing analogy, what's coming in? What are the big waves?

Tom Siebel:
The biggest, the two biggest were IoT and AI. Since 2000, we've deployed 19 billion IoT sensors around the world and in the next five years, we're deploying 50 billion more. Everything will be a computer, and you connect all these things if they're all computing, and apply AI. We're going to do things that were unthinkable in terms of serving customers and building products, cost efficiencies. We're revolutionizing healthcare with precision health. Processes like energy extraction and power delivery will be much safer, much more reliable, much more environmentally friendly, this is good stuff.

Justin:
What's your take on the security aspect of putting a computer in everything? Because I mean, the IT industry hasn't had a great track record with security and now we're putting computers everywhere as you say. They're going to be in watches, they're going to be in eye glasses, what do you see as the trend in the way security is going to be addressed in computers everywhere?

Tom Siebel:
Well I think it's clearly not yet solved and it's a solvable problem. I believe that it's easier to secure data in cyberspace than it is in your own data room. Maybe you could secure data in your room if you took a forklift to move a storage device, but it doesn't take a forklift anymore, right? It takes one of these little flash drives to move. I think the easiest place we can secure it is going to be in cyberspace. I think we'll use encryption. I think we'll be computing on encrypted data and we haven't figured out algorithms to do that yet. I think blockchain will play an important role but I think some sort of invention has to happen.

John:
So you like block chain?

Tom Siebel:
I think block chain plays a role in security.

John:
It does. So I have to ask you, you're sinking your teeth into a new venture, exciting, it's on the front lines of innovation. There are other companies that are trying to retool, IBM, Microsoft, Oracle. If you were at Oracle, Microsoft, IBM, what's their strategy? If you were there at the helm of those companies, what would you do?

Tom Siebel:
Well number one, I would not bet against Larry. I know Larry pretty well. He is a formidable player in the information technology industry. If you have to identify one of the four companies that's surviving the long run, it'll be Oracle in that set. Betting against Larry is a bad idea.

John:
He'll go to the mat, big time. Won't he? I mean, Jassy and him, barbs are going back and forth. You gotta be careful there.

Tom Siebel:
Andy Jassy is extraordinarily competent. I think as it relates to this elastic cloud, I think he's got a lock on that, but IBM is hard to explain. IBM is a sad story. I think there's some risk that IBM is the next Hewlett Packard. They might be selling this thing off for piece parts. If we look at the last 23 quarters, it's not good.

John:
And Microsoft's done a great job recently. And they're retooling fast, you can see them beavering away.

Tom Siebel:
IBM, but how do you bet against the cloud, are you kidding me? It's a sad story, it's one of the world's great companies. It's an icon. And companies like IBM's size do fail. Let's look at GE. That would be a sad state for America.

John:

On a more positive upbeat, what's next for you? You're doing great, the numbers are good. I mean, the rumors in the hallway say you're great financially. I'm not sure if you can share any color on that. Big wins, obviously.

These are not little deals that you're on but what's next? What's the big innovation you've got coming around the corner for C3?

Tom Siebel:

Our business grew last year about 600 percent. This year it will grow about 300 percent. We're a profitable, cash-positive business. Our average customer is say, a $20 to $200 billion business.

We're engaged in very, very large transactions. In the last 18 months, we've done a lot of work in deep learning. The next 18 months, we'll do a lot of work in NLP (natural language processing). All of those technologies are hugely important, so technologically, this is where we'll be going.

I think machine learning, traditional NL, we have that nailed. Now we're exploiting deep learning in a big way, using GPU's and a lot of the work Jensen Wang is doing at NVIDIA. And now, I think NLP is the next frontier for us.

John:
Final question for you. What's your advice to other entrepreneurs. You are a serial entrepreneur, very successful. You've invented categories. You're looking at Amazon, how do you work with the Amazons of the world? What should entrepreneurs be thinking about in terms of how to enter the market, funding and just strategy in general? The rules have changed a little bit. What advice would you give the young entrepreneurs out there?

Tom Siebel:
Okay, become a domain expert at whatever domain you're proposing on entering. Then surround yourself with people, whatever job they're doing, engineering, marketing, sales, F&A, who are better than you at what they do. To the extent that I've succeeded, this is why I've succeeded. This might be easier for me than for others, but I try to surround myself with people who are better than me. And to the extent that I've been successful, that's why.

John:

I really appreciate you taking the time to come on here. You're an inspiration, serial entrepreneur, founder and CEO, Tom Siebel, of C3. Hot company, big part of the Amazon Web Services ecosystem. They are doing great stuff. Again, serial entrepreneur, great four-decade career, thanks for coming on the Cube, Tom Siebel.

Here inside the Cube I'm John Furrier, Justin Warren, here in Las Vegas for AWS re:Invent. We'll be back with more live coverage after the break.

Tom Siebel:
Thanks guys, good job.