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C3.ai stock soars in public debut

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Tom Siebel, C3.ai CEO joins Yahoo Finance Live to weigh in on the company’s public debut and what the future of AI looks like.

Video Transcript

ZACK GUZMAN: But of course, it's not the only IPO we should be discussing today, since we saw another one, you know, make the headlines here on their opening pop, too.

AKIKO FUJITA: That's right. Let's bring in Tom Siebel. He is the CEO of C3.ai, listing today-- also seeing a significant pop-- enterprise AI software company. And Tom, you know, you certainly picked a good day to come to the market today. And investors like what they see in the company.

Just give me a sense here of what you're seeing play out right now in the tech space as a whole. I mean, you're an old hand at this. You're very familiar with it. Is this sort of just euphoria that's taking hold right now, or do you think that the market conditions are just sort of lining up?

TOM SIEBEL: Well, I think if we look in this kind of post-COVID crisis situation, we're seeing a dramatic acceleration of interest in digital transformation, in enterprise AI, in all things related to distance work environments. So I think this is a secular change in an industry and a secular change in information technology markets. So I think this is a very real trend that is being, obviously, very highly valued by the equity markets.

ZACK GUZMAN: Yeah, Tom, I mean, you've got the history here. We were just talking with Laura Davis a little bit earlier on the show, talking about how important talent's going to be. You've got the resume to show. You know, you had a company, Siebel Systems, bought by Oracle back in '06.

But, you know, your business this time around in C3.ai very similar to some other companies that took quite a hit in the pandemic. Revenue growth slowed pretty considerably in the numbers that you reported through, you know, this year. Talk to me about the rebound and how quickly some of these software companies, and specifically yours, is expecting to see things come back to where they were pre-pandemic. And what are you seeing right now in the companies you work with?

TOM SIEBEL: Oh, it's true. I mean, C3.ai, I think last year, we grew at about 71% top line revenue growth. And when you get into February, March, April, May, when the world shut down-- London closed, Paris closed, Rome closed, New York closed-- our business slowed down very dramatically. And so that kind of moderates growth for this year.

Now that being said, with-- we get into this after all the economic stimulus and we have all this interest in digital transformation now at the top of every CEO's agenda, interest in enterprise AI, we have seen just dramatic growth and increase in our pipeline getting into, say, June, July, August, September, October. And, you know, the interest in what we do is growing very dramatically.

And so, what this financing is about is raising the capital necessary to be able to support a much larger global customer base. So we see this market growing at a healthy rate, OK, in the next-- you know, in the coming years. But there's no question we did hit a speed bump in the first, say, four months of 2000 associated with COVID.

AKIKO FUJITA: Tom, you put the Total Addressable Market, the TAM, for this space at $271 billion. How much of that space do you think C3.ai can capture in terms of market share? And who do you consider to be your biggest competitor?

TOM SIEBEL: Our competitor is do-it-yourself. So our competitor is IT organizations that attempt to assemble 20 or 30 or 40 various open source or proprietary components and wire them together into something that works. The classic case of that would be GE Predix, where I think they spent a decade and $6 billion trying to build something that never worked. So that is the competitor.

The-- you know-- and, you know, what we built is we spent 1,000 person years building a uniform, cohesive AI platform that allows our customers to-- that provides all of the services necessary and sufficient to develop enterprise AI applications for banking, for oil and gas, for telecommunications, travel, transportation, and healthcare. And so, we've delivered a solution. I don't think there is a competitor in the market for what we do. I'm confident there is not. There is no AI platform out there. So, you know, we expect the business to be growing at a rapid clip in the coming years.

ZACK GUZMAN: Yeah, and Tom, I mean, when we talk about the rapid clip and where investors might be wanting to put their expectations on that, as you said, you were growing pretty substantially, 75% year over year before. And then the pandemic hit in that, and the latest numbers dropped to 11%.

You've also been pretty outspoken about not working with companies in China, not looking at that opportunity. It's something we heard from Palantir as well when it comes to national security concerns there, too. But how big of an opportunity there might C3 be overlooking if you guys do not want to address that opportunity in China there? Talk to me about that thinking and, again, kind of the growth that you would expect even not bringing that into the fold.

TOM SIEBEL: I believe that we can-- OK, we will not be growing at 70%. We'll be growing at a lower growth rate than that. 70%, we're going off of relatively small numbers. When you get out into 22, 23, 24, you're living off of, you know, relatively large numbers. And so, the growth rate will be smaller than that, although I think it will grow at a pretty good clip.

Now, it was a strategic decision not to do business in China. OK, that's a big chunk of the AI world. We've also made a decision that we'll not allow our technology to be used for any unethical purposes. Unethical purposes would include, you know, the types of things that social media do, where they misuse personal information and manipulate people at the level of the limbic brain. Unethical purposes would be applications that perpetuate social bias. Unethical applications would be military applications where there is no human in the loop.

So there are many, and there are other companies in this space, some of you-- some that you mentioned, OK, who are happy to do that kind of business all day long for the interest of growth. Well, we will not do that. We were very-- we will only allow our technology to be used for ethical business purposes. We will not do business in China. And we may grow-- you know, we may give-- we will give up some revenue growth for doing that. But we'll also be able to sleep at night and look at our kids in the eye and be proud of what we're doing.

ZACK GUZMAN: All right, there you go, the latest there from C3.ai. CEO Tom Siebel, appreciate you coming to us on day one of trading. Got more than $650 million to work with now. Congratulations on making it out as a public company here.

TOM SIEBEL: Thank you so much.