This Jeffersonian dream of building this educated republic — agriculture and engineering and science and medicine — and the miracle is exceptionalism. And what we have enabled is entrepreneurship. We enabled greatness.
We always say that America is a land of opportunity and also a land of reinvention. Our history is full of stories of ambitious entrepreneurs meeting opportunities to transform technologies, industries, and society, often more than once in their lifetime. Reinvention takes resilience, getting back up after being knocked down. Tom Siebel, serial entrepreneur, veteran of Silicon Valley technology, and living testament to the power of resilience. Tom embodies the idea of reinvention in America. From surviving a near-fatal elephant attack to dominating in some of the most competitive industries on earth, Tom Siebel has remained grounded in history across a long career, driving innovations in business and technology. At the headquarters of C3AI, his latest venture, Tom shared his vision of America's future, and how the country can draw on history to chart a course to unprecedented prosperity. Now for Only in America, my conversation with Tom Siebel.
So I'm on a new adventure — a number of new adventures, some actually really interesting ones that I'm doing with Stanford, all kind of related to neuroplasticity. We're starting a really interesting initiative that will be world-changing, exploring every means of increasing neuroplasticity with the idea of getting the brain to heal itself. The question is, can we get the brain to wire around faults? And I have a fault in the optic nerve. Now, we are absolutely 100% demonstrating that you can do it. Now, one of the things associated with that that I'm doing that you'll chuckle at is I'm learning to play the organ. So, I have one song — one song that I'm working on. I do one at a time and it's Joy, which is simple, right? I mean even Tom can figure out that. Well, it's actually not so simple actually. But I won't tell you that. Yeah. Well, I'm playing the baby, you know. I'm playing the simple one. No, but I have one song and then I'm going to learn another song and then I'm going to just one. And so that's my —
No. No. I've never — I mean like every kid I played the piano but not really.
There's just no question.
So the organ is really hard. I took organ lessons. Now I played piano since three. My mother was an organist. It is hard to play the organ.
Yeah, I guess. And before this is over.
Well, I am fascinated by history. I read history all the time. I think the background I have in history as an undergrad was very helpful. I mean, it was really focused on history of technology, history of science, Thomas, Aristotle, Galen, and you know, I think that foundation, you know, really inspired my interest in history. And I've been reading about history non-stop through my whole life. History of technology, diplomacy, civilization. I find history, you know, fascinating.
I think to the extent that I — you know, I suspect it doesn't repeat itself. I'm certain it rhymes. You know, I think that to the extent that I've been fortunate professionally and you know, no one has been luckier than I, no one has had more lucky bounces than I have. Well, I guess a lot of people have had more lucky bounces than I have, but I've had a lot of lucky bounces. And you know, I think to the extent that, you know, I've guessed, made good guesses about what was going to happen next, it was well-informed by what happened prior. But unfortunately one of the consequences of the concentration that we've seen on STEM particularly in the last 15 years is I think the arts and sciences are suffering. Okay. And things like history, classics, languages, literature are being discouraged and I think that's a big mistake.
It is. I was just going to say you know the number of history majors in universities has been dropping for a long time. Although I will say, you know, I'm beginning to run into students who are computer science and history or computer science and — I had one student computer science and religious studies. So something about this age is turning people to look again more at humanity and what it means. But I want to take you back to entrepreneurship for a minute because when one thinks about the history of this country, you can't write the history of this country without writing the history of its great entrepreneurs going back a long, long time. How do you think about that? How do you think about the role of entrepreneurship in American history? As we were walking in, you told me you have a different view of what we call American exceptionalism. Talk a little bit about that.
The role of entrepreneurship and philanthropy, okay, in this country, I mean, is really impossible to overestimate, overstate. And we get to, you know, be it Vanderbilt, Carnegie, Edison, I mean, these people are all giants, okay? And Franklin. And, you know, this is this whole story, this whole experiment about, you know, American exceptionalism. I mean, it is just so real. And I think much of that has to do with the focus going back to Cotton Mather with the Puritans, okay, has been on the education system in the United States which has been simply exceptional and remains exceptional. When we get to 17th and 18th century America, these Puritans that came out of Boston into Ohio and Illinois. I mean the stuff that they taught in one schoolroom, log school rooms, to people like Lincoln and people like George Washington, okay. And people like Ulysses Grant, I mean these guys went on to quote Plutarch, Aristotle, I mean Homer, who quotes Plutarch like nobody. And in first draft, they write these incredibly eloquent documents. And you get into 19th century America the education system that's in place is unbelievable.
Okay. And then we move on, let's move on to the Lincoln era, when we have this issue where this form of a republican government and these geniuses come up with I think it was called the Morrill Act, okay, in 1862 and they decided to form the land-grant institutions. I think as I recall 78 land-grant institutions like Berkeley, like Michigan State, like Illinois, like Ohio, like Oregon State. And holy moly, I mean I think that changed everything. This idea that education historically had been something available to the rich landed class who could send their sons to Harvard, Yale, Princeton, okay, males. And all of a sudden we have this idea where we're sending men and women, okay, and Germans, and Irish, and African-Americans. And I think that really is the heart of this miracle. I mean, look what's happened. Berkeley, Illinois, Cornell, Purdue. I mean, these are amongst the greatest institutions on earth. And I think that is the foundation where we took this Jeffersonian dream of building this educated republic.
And we educated in agriculture and engineering and science and medicine and the miracle is exceptionalism. And what we have enabled is entrepreneurship. We enabled greatness. I think that is the heart of American exceptionalism is the educational system that was here in the 18th century, the 19th century and now continues in the 20th century. And I think we have this system and now Stanford being a co-ed institution from day one. I mean the Ivy Leagues caught on late — Brown, Harvard, Yale — when did they admit women, like yesterday. But they came along. Okay. And so anybody could become anybody you wanted. You could even become anybody you wanted in America. The American exceptionalism is real.
I think was started with the Puritans and then the revolutionaries, this idea where they wanted limited government. They wanted individual liberty. They wanted freedom. They wanted religious freedom. And they wanted a republican form of government. Big experiment, republican form of government. I think it tried twice before on pretty small scale. Once in Athens and for a short period of time in Rome. I mean here 250 years later this thing is rocketing. And this idea that we have limited representational government. We keep governments in place. Let people do what they want and give them the tools to be whatever you can become. And I think we have to thank for that the land-grant institutions in America. I think that is the core fabric of American exceptionalism and American greatness.
You know, it's very interesting because you mentioned the kind of late 19th century. Of course, one of the other great institutions — historically black colleges come out of the notion in Reconstruction that you're going to have people that have to be educated. And so this is a part of our DNA, this idea of the educated populace. That's one of the pillars of republican government, one of the pillars of democracy. It's also one of the pillars of making sure that anybody who is smart enough and has a good idea can thrive. That you don't have to be of a certain class to be an entrepreneur. You look at some of the people who've come up from basically nothing and have contributed in this way. But there's another element of it and C3AI, which you founded — not your first company that you've founded — has a state and local practice. So we also have this federalism embodied in our DNA, in our exceptionalism, the idea that not everything happens in Washington too, and we're now a big country. But can you talk a little bit about the kind of federalism piece of it because you decided to actually make a product for state and local.
We make AI products for all forms of entities that can use AI to be more efficient. So yes, state and local government. I think that certainly things like manufacturing, process optimization, demand forecasting, what have you in the manufacturing sector, in the finance sector, it's obvious. I think the obvious forms where we will be using AI beyond the prosecution of war in state, local and federal government services has to do with delivering higher quality services at lower cost into the hands of more satisfied constituents. So we can use AI if we think about once we get — I'm not sure what the federal budget is today because they raise it by a few trillion dollars every day, but I think it might be roughly seven or eight trillion. And everybody wants to focus on the War Department, which would result in about $1 trillion of that. And the rest is all kind of various benefit programs, Social Security, Medicare, Medicaid, what have you. So that would be the other 85% of the federal budget. So these programs — Medicaid, Medicare, health benefits, food benefits — I mean we can provide those benefits, higher quality benefits at a fraction of the cost using this new generation of generative AI technologies. So the government will be more efficient. There will be dramatically less fraud and it's just a natural application of this new generation of technology.
What is your AI — what are your greatest hopes about it and then do you have any — are there any warning signs about it?
Well, AI I think is a fascinating area and a lot of people in Silicon Valley like to think that they invented it and a lot of friends of yours and mine like to think they invented it. They didn't invent it. I mean AI was kind of — and pretty much everything that we know about but for generative AI was invented by John McCarthy at Princeton in 1950. Hard stop. Supervised learning, unsupervised learning, reinforcement learning, TD learning — all Princeton, 1950.
Absolutely. I mean he did it, he described that. Now, it took us maybe 70 years to get the computing capacity and the storage capacity to be able to run those systems and that's when AI winter turned into AI spring and summer as we get into the 21st century when we have essentially this cloud computing phenomenon where we have virtually infinite computing capacity, infinite storage capacity at no cost. So as we power into the 21st century with this infinite cloud storage and computing capacity for free — and free is pretty cheap — now we can solve these problems that were previously unsolvable. Now as we power into the 21st century, say 2022, we have something genuinely new in this area that's called agentic AI, and this is about these generative pre-trained transformers, what most people know about as LLMs.
And the rate of innovation there — it is new and it is staggering and it is unbelievably important and it does change everything. And the rate of innovation is absolutely breathtaking. Now this sounds a little bit unhinged but I am not certain — we might have seen as much innovation in the last year as we saw in the last 60 years in computer science. It is unbelievable and it changes everything about the way we work, the way we govern, the way we conduct war, the way we engage in social exercises, it changes everything.
I mean, let's just think about something that everybody knows and nobody's really thought about. With these large language models, we have — I think there's roughly 8 billion people in the world. You'll correct me if I'm wrong. And there were about six billion plus smartphones out there. And pretty soon everybody has one in the Gobi Desert, the Serengeti, I mean you name it. And on these devices we will have, like tomorrow, a large language model that will be available in that person's language. The union of the information collected in the history of mankind will be immediately available to that person in microseconds. This makes — we talk about polymaths like Jefferson and Franklin. This makes them look like nothing. A polymath — how to drill a well, how to grow corn, how to irrigate a field, how to deal with childbirth, how to raise a cow. I mean you're going to have this information available to 7 billion people every day. What's the correlation between that and productivity? Directly positive and it's high. What's the impact on global GDP? It's staggering. I mean, it's breathtaking what's about to happen and everybody knows that happens. This is before you get to any of this magic stuff that people are talking about with all the demons associated with that. This happens where everybody in the world in 200 local languages can ask any question about any subject and get the answer in a language they can understand it. Their child survives. Their family eats. They have fresh water. Think about it. The implications of that on the global economy — we're going to enter a new world of productivity and prosperity that is going to be unimaginable and magical.
Now Tom, hearing this from you because you've been through several of the technological revolutions in this era — you've been through the internet revolution and you've been through the software revolution having created Siebel Systems and so forth. So to hear you say this is new is really quite stunning. Why do we keep in the United States of America then — coming back to kind of the American story, the 250-year American story — why does it keep happening here? Because you think of all these technological revolutions and they all seem, at least in recent times, to be happening here.
I think there are three great experiments that happened here beginning in the 18th century through today. We have freedom of our religion — how big was that? It was big. Republican government — big. The idea of limited government — this is huge. And individual liberty, and that is the republican form of government. And this is what people like Lincoln drove home and Grant drove home and before that of course we had Washington and Adams and Jefferson. This experiment is a miracle and it's about keeping government in its place. It's about letting people do this thing and it's about making sure that everybody is educated because that is the ultimate form of welfare — to make sure that people are educated so we don't really need to deliver fish to people. Teach them how to fish.
And with this land-grant educational system that we have in place, I mean, come on. Oregon, Alabama, Mississippi, Illinois, New Jersey, Rutgers, Cornell — this is a miracle. And it is the apogee of global education and it is the foundation of American exceptionalism. And you can be anything you want to be. And my family came from Europe in the middle 19th century. They were not indentured servants and we'll agree that they were not slaves, so they did have some rights, but they were serfs and they were poor and they had nothing and not religious liberty — I mean they were Protestants, they wanted a direct relationship with their God and so they bailed and they came through New York and Chicago and became farmers and then one becomes a lawyer and one becomes something else. And Tom gets to go to the land-grant institution in Illinois because that's where he could afford to go. I'm a public school kid.
And I got to study history and then later business and engineering and computer science at a land-grant institution that turns out to be a pretty respectable engineering school and learned some languages. I think I learned how to read. I wish I learned how to write better but I try. And learned the languages of information technology and I got to play the game. I mean I got to play the game with the giants of the industry for 50 years. I played the game with Bill Gates and Larry Ellison and Gordon Moore and Andy Grove. There's nobody I didn't play the game with. I had a seat at the table. What a privilege. I wanted to have a seat at the table and I was able to get a seat at the table and play the game with the greatest people I think maybe in the history of commerce and I know it and I'm lucky and I benefited from everything that everybody did to get individual liberty for everybody in America. And I am a highly, highly privileged and fortunate person and I know it.
Do you think that you had to take risks — at the time did you think they were risks? Did you think it was risky to leave Oracle and form Siebel Systems? Did you think in terms of risk or did you just do the next best thing? It's always interesting because when we think back on our ancestors or immigrant populations they were taking big risks. They were leaving everything behind and going into a world that they really didn't know what to expect. I grew up in Denver after leaving Alabama and I've always said I know how Denver got there because people looked up at those mountains and they said we're good. We're staying right here. We don't need to cross those mountains. But some people did. Did you think throughout this about risk?
Well, you know, yes. I remember my first job out of undergraduate school. I just graduated history from the University of Illinois and I got in a pickup truck and started driving west. My father was in tears at the end of the driveway and I started driving west and I stopped in Bellevue, Idaho and became a cowboy. That was my first job — driving cattle and cutting hay, baling hay on the Divine Ranch in Bellevue, Idaho. And later I was a manager of a shovel on a construction job in Haley, Idaho, SMV Construction, laying Johns-Manville, believe it or not, asbestos sewer pipe and water pipe. That was my second job at $7.50 an hour. Union job. I couldn't believe it.
So where do we go? Was there risk in that? I don't know. That was adventure. As we get professionally, did I take calculated risk every day? Was it a risk to go to work for Oracle? Yes, it was a calculated risk. Oracle was a small startup company with about 20 or 30 people when I got there. And that was a calculated risk. And relational database technology didn't even exist commercially. That was my field of research in grad school was relational database theory. And back then it was just a theory. It hadn't been productized yet. So we were involved. Could this concept of relational database technology — an important concept in the history of information technology we'll talk about some other time — could it be commercialized? I thought it could, but that was a definite risk. That was a gamble but it was a well-informed gamble.
When we later founded Siebel Systems and we created the idea of applying information technology, communication technology to the business process of sales, marketing, customer service — a market that we named and later became known as CRM — was there risk in that? Absolutely there was risk. Every expert in the world knew that there was never a market for that. It was never going to materialize. I believed that the fundamental economics and history of information technology suggested that it had to happen. When we started C3AI in 2009 — I mean 2009, understand this is before Google Cloud, before Azure. I believed that the fundamental economics of information technology had to converge on the explosion of elastic cloud computing, the internet of things, predictive analytics, and therefore enterprise AI. And so we started years before there was any market there. And nobody believed in 2009, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19 that there was going to be a market for enterprise AI. Nobody.
So you're using artificial intelligence, AI, to see growth. Tell us about the company.
We live at the intersection of artificial intelligence and this new phenomenon called internet of things. There's this phenomenon called digital transformation and there are companies who are driving that like Amazon and there are companies — maybe 30% of the Fortune 500 companies likely will not exist in 10 years if they don't make this transformation. But I believed due to my background and what I had studied that this had to happen. And so by the time we get to 2022 — maybe everybody now believes 2022 and beyond — I would say that the world is pretty well resolved that yes there is a market for enterprise AI. And however big we thought it was when we started, it's 10,000 times bigger than that. So was that a risk? Absolutely it was a risk but I knew it to be true. So it was a calculated risk, but I think there was really no risk. It was just a matter of time.
So, let's check in with Tom Siebel, the founder, chairman, CEO of C3AI to get a better read on the company. Mr. Siebel, welcome to Mad Money.
Jim Cramer, nice to see you.
