Let's hope this doesn't become a trend. A second "AI Company" revealed to be intensely dishonest

Billionaire Tom Siebel keeps remnaming his company(ies) after the latest trend.

When oil prices fell and nobody wanted his windmill software, he re-branded his “C3 Energy” as
“C3 IoT” IoT stands for “Internet of Things.” Internet of things is the kind of software that

  • HP uses to shut off your printer if you install a competitors ink
  • Companies like Peloton use to lock your stationary bicycle if decide you don’t need their monthly-subscription videos and would rather pedal while watching TV or listening to music.
  • Bicycle rental companies use to lock your brakes when your hourly rentals runs out (video below)

His most recent toy is “Cloud Computing” which companies use such as when a salesman in California sells a hammer, the salesman in NY knows it is no longer in inventory and the hammer producer in China knows to make another one.

That rebranding helped him raise over $100 million in investor money including investments from U2 singer Bono and movie mogul Jeff Skoll. (Internet of Things is sometimes advertised as the application that “will help you reorder coffee beans before you run out.”)
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(cont’d)

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Well people aren’t buying as many hammers any more, and they seem to be getting “subscription fatigue,” so he re-described his company as an AI company, renamed it C3 AI and bought the stock ticker symbol “AI.” (Hey ordering coffee beans and answering questions about your inventory is kinda sorta AI, right?")

Whether or not his product is actually AI he tells investors that it is.
He also told investors (on over a dozen different occasions) that he had an agreement with oil industry mainstay Baker Hughes, and that Baker Hughes had dedicated 11,000 salespeople to sell his product every single day.

The stock price has tripled in the first 6 months of this year.

The problem?
Oil industry mainstay Baker Hughes entire salesforce is 11,000 people and assigned just “Well beyond 60” of them to sell his product, and by no means are they one-product salespeople.

Anyway, his “misrepresentations” are at the center of a lawsuit.

The plaintiffs appear to be some combination of

  • investors who lost money in one or more of his companies early iterations (now trying to get their money back),
    and
  • short-sellers who knowing Siebel’s reputation with the truth hedged against the company but haven’t seen a pay-off yet

Short sellers have been pounding his company of late with a series of allegations: inflating margins, misclassifying revenue, engaging in “aggressive accounting” and for a lack of transparency in how it counts customers. . . .

And over two dozen former C3.ai employees, who CNBC contacted in looking into these allegations, described a culture of fear at the company that filtered down from the top. Most of the ex-employees asked not be named because of nondisclosure agreements or concerns over job repercussions for those still in the tech industry.

Wall Street doesn’t know what to make of the story. . . .

“Shares plunged 77% in 2021, a year that was quite good for software, and then another 64% in 2022, which was the worst year for tech since the financial crisis.”

That clip was hilarious and that SOP is doomed to pay out a lawsuit.

It is.

I once bought some exercise equipment and somewhere on the box in a place I did not notice was a legal notification that the monthly subscription software was NOT optional. (The notice was there but it read like an advertisement touting some sort of an optional added feature.)

Anyway when things (coffee machines, exercise bikes, printers etc.) are connected to the internet that is the “Internet of Things.” Seibel’s latest contraption may be AI or it may be just fancy cloud computing that he is passing off as AI. I don’t know.

The core of the lawsuit is that a man who has a history of playing fast-and-loose with the truth, now has a so-called AI company and he attracted investors by buying a ticker symbol and (apparently) grossly over-stated the size of the salesforce selling his product.

It has a $4.5b market cap and Seibel draws a salary of $2.16 million plus stock.

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