There will only be a few AI winners, C3.ai CEO explains

Across industries, artificial intelligence will be a monumental turning point for how many businesses will operate as large-language models are fine-tuned for widespread adoption. C3.ai (AI) Founder, Chairman, and CEO Tom Siebel meets with Yahoo Finance's Julie Hyman and Brian Sozzi from the World Economic Forum in Davos, Switzerland to discuss his background developing enterprise software and the expectations for AI products as more companies pivot into the space.

"We're going to see a proliferation of a thousand points of light, and consolidate down to a few winners, just as it does in all other aspects of the information technology business," Siebel ascertains, adding that the true AI winners will simply be "people who deliver high-quality products, deliver economic benefit to their customers — hard stop."

It's all part of Yahoo Finance's exclusive coverage from the World Economic Forum in Davos, Switzerland, where our team will speak to top decision-makers as well as preeminent leaders in business, finance, and politics about the world’s most pressing issues and priorities for the coming year.

Watch this full episode of Yahoo Finance Live here.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

- Sometimes at the World Economic Forum in Davos, Switzerland, you come across a Yahoo Finance fan favorite-- one of those tickers on our platform that everybody just seems to love. Joining us now is C3 AI CEO, Tom Siebel. You have one of the most popular tickers on our platform. Good to see the man leading the company in person.

TOM SIEBEL: Thank you, Brian.

- So what are you working on next? Tell us a little bit about enterprise software and what's the next big thing in your space.

TOM SIEBEL: We've been building enterprise AI applications now for 15 years, and we spent almost $2 or $3 billion building this applications for manufacturing supply chain, demand chain, precision health, finance, defense intelligence. And for the last two years, we've been really buckling down on generative AI. Generative AI changes everything.

And so now, we're applying generative AI to manufacturing, generative AI to defense, predictive maintenance for the United States Air Force, contested logistics for Transcom, supply chain optimization for Coke, production optimization at Nucor Steel.

Generative AI changes everything and fundamentally changes the nature of the human computer interface as it relates to enterprise application software, and this is big.

- Now, you are, I think we can say, a corporate technology pioneer, right? Siebel Systems was the company that you had that you ended up selling to Oracle, and so you were there at the beginning edge of customer relationship management software. Compare that with what we're seeing with generative AI-- because you said it's going to change everything. So what are the parallels, and what are the big differences?

TOM SIEBEL: Actually, I was at the beginning of enterprise application software because I was there when we started Oracle database, that ERP, and then CRM, then Siebel.

- So you've seen a lot of these different-- yeah.

TOM SIEBEL: So I've seen this for a while. And when I began the information technology business, globally it was about $200 billion, OK?

Now, it's like 7 to 8 trillion. Generative AI alone is predicted to be like a $1.3 trillion market in a few years. This is the fastest growing segment of the enterprise application software market in the history of enterprise application software.

- Got that walk down the Promenade, Tom, and there's all these companies with demos, and buzzy installations, and trying to pitch people things, but not everybody can win in this. And I'm sure you know about that just having the arc of your career. Is there a shakeout in AI? And it consolidates around three or four companies.

TOM SIEBEL: Well, a lot of it is just noise. I mean, we have these enterprise applications software companies that wrote their stacks 20 years ago, and now, they've put AI on their ticker-- AI on their name. And because--

And every company on the Promenade, it now says AI, even though they shipped their software in 2003, so a lot of it is just fluff. You know, I think, like, every big change like the internet, like the smartphone.

I mean, we're going to see a proliferation of technologies. I mean, how many smartphones did we see before it came down to like two? OK? And you know, how many smartphones did Microsoft release? Motorola, Nokias-- I mean, where are they? They're gone, and we're down to like two.

So we'll see a-- this is big. It's really big, and we're going to see a proliferation of a thousand points of light, and then it'll consolidate down to a few winners just as it does in all other aspects of the information technology business.

- What will characterize the winners?

TOM SIEBEL: People who deliver high quality products deliver economic benefit to their customers-- hard stop.

- It's easy then, right?

TOM SIEBEL: Hard stop.

- Talk to us about just the-- your order book. Your financials. How much will you earn over the next couple of years because of this boom you're talking about?

TOM SIEBEL: Well, we're anticipating significant growth. In other words, we have clearly seen in the last two or three years the interest in AI and enterprise AI that we've been working on for 15 years just grow exponentially, right? I mean, there's nobody at Davos who isn't talking about AI.

So we have, today, I think 58 tried, tested, proven enterprise application software products in the market today that handle everything from generative AI for Salesforce and generative AI for Workday to general AI for manufacturing, supply chain, demand chain, and production optimization.

So I think we're in a pretty good position to benefit from this interest, and we'd expect to see our growth rates grow considerably in the coming years.

- That said, just quickly, your last earnings report did disappoint the street to some extent. So when you go forward into this year-- I don't know how much you can tell us, given where you are in the reporting cadence.

But you know, what kind of-- as you're looking into the quarters that are coming, what kind of spending cadence do you expect from clients?

TOM SIEBEL: Well, we changed our pricing model about 8/4 ago from a subscription-based pricing model to a consumption-based pricing model. So for a short period of time, that depressed our growth rates and brought the stock price down. Now, you know, I'm not sure what happened last quarter, but last year, I think our stock price was up 156%. So I mean--

- Not bad.

TOM SIEBEL: But cry me a river, OK? And so I think that was pretty good. So we have seen in the last three quarters our growth rates accelerating, and we'd expect to see-- I mean this enterprise application software market for enterprise AI applications is going to be huge.

Our goal is to establish a market leadership position globally in that space. We might succeed at that. And if we don't succeed, we might be number two or three, OK? Any way you slice it, that's a hugely successful global juggernaut.

- Before we let you go, as I mentioned at the intro, you have one of the most viewed tickers on Yahoo Finance. People love trading your stock, looking up into it, and studying it. What do these folks need to know about you as a leader?

TOM SIEBEL: We're focused on quality. We're focused on excellence. We're focused on innovation. We're focused on customer satisfaction. I mean, we're not the woke company. I mean, we're here for business ethics, high quality products, customer satisfaction, delivering economic benefit to our customers.

Some of our customers generate-- actually, one customer has $2 billion in economic benefit from our use of our products last year. Another customer that's in the lumber and manufacturing business generates a billion in economic benefit.

Brian, I mean, at Oracle, at Siebel, at SAP, at Salesforce, there is no customer that has stood up on stage and said we're getting $2 billion in economic benefit a year from the use of our products.

In the case of C3, we have customers that say that. That's what we deliver-- high quality customers into the hands of satis-- high quality products in the hands of satisfied customers. That's what we do.

- Well said, sir. Good to meet you in person. C3 AI founder and CEO, Tom Siebel. Enjoy the rest of Davos. Appreciate it.