Tom Siebel - the collateral damage from the tech market correction will be significant

Stuart Lauchlan Profile picture for user slauchlan December 14, 2022
Tech veteran Tom Siebel offers a pragmatic assessment of just how bad the current market downturn is going to be.

Tom Siebel

By now we’re all used to the current quarterly earnings cycle including commentary on how the sales cycle has lengthened as buyers display more caution in the turbulent macro-economic climate.

Many CEOs and CFOs have provided their insights into this current reality, but my attention was caught by remarks made last week by Tom Siebel, formerly the founder of CRM giant of its day Siebel and now founder and CEO of

During’s latest analyst call, Siebel, never one to mince his words, had some downbeat predictions for the tech sector as whole, saying:

There is no question that there is pervasive economic uncertainty in the global business community that continues to provide bookings headwinds. This has been especially significant in the tech markets that are experiencing a blood bath in equity prices, with significant layoffs at companies, including Amazon, Meta, Salesforce, Google, Snap and many others.

And there’s more to come, he added:

I believe this is just the start of what will be a significant tech market correction. Layoffs of established companies will accelerate. The many Series A, B, C and D companies that are haemorrhaging cash will simply not survive… In the short run, we believe tech companies and tech equities will continue to face headwinds, as long as the Fed keeps its foot on the brake. The collateral damage, I think, is going to be more significant than people think.

There is a silver lining here, he suggested:

Just like every other tech recession that we're seeing, the human capital at the piece parts companies will be redistributed to those companies that survive…In the second quarter, we received over 23,000 job applications. We interviewed over 2,200 of these applicants, and we hired 90. One of the secular changes of this tech downturn is the increased availability of highly-trained professionals who are willing to come into the office, roll up their sleeves and get to work.


The wider question, of course,  is how organizations - both buy and sell side - ought to respond to the current market conditions.  The temptation is all too clearly to start freezing or cutting away at budgets. That’s not the answer, suggested Siebel:

We can turn this [company] to be cash positive and profitable, honestly, within 90 days. All I got to do is layoff about 40% of the workforce, OK? That might make some analysts happy and it might make some shareholders happy, but it's absolutely not in the best interest of the shareholders, employees or the customers. But…all we have to do is basically stop our marketing expenses and lose 40% of the people. I don't know whether it's 40% or 50% or 35%, but, I mean, hard stop, it's cash positive and profitable like this quarter. But I don't think that would be responsible, and I don't think it's anybody's interest.

Siebel argued that there are two categories of organization - those who are bearing down on technology to figure out how to save money, and those who are slashing away at expenditure in a knee-jerk response to a pending recession.

Into the first camp, he puts customer, Shell:

Shell has continued to expand their use of our solutions in new areas, and have successfully implemented C3 AI sustainability for manufacturing at two of their key offshore platforms in the Gulf of Mexico. We also have successfully concluded an ESG trial with Shell. This focuses on leveraging NLP to generate targeted insights on the rapidly evolving ESG priorities of Shell's key stakeholders.

Shell has already addressed and communicated that they are realizing massive economic value annually by deploying our C3 AI applications across the enterprise, upstream, downstream, midstream renewables.

We're just getting started. There's a large and growing pipeline of enterprise applications that Shell is building, testing and deploying using the C3 AI platform, realizing the strategic value of our partnership and the fulfillment of the digital transformation of one of the largest and most iconic companies in the world.

As for the second camp:

There's companies whose names I will not mention, that are just absolutely going to the mat and slashing expenses on everything…They’re going into recession mode, and we will see some customer churn from that. Hard stop. They're just cutting to the bone.

He concluded:

I don't know how long this lasts…whether it's 12 or 24 months. But when it's over, we're going to still be here.

My take

You cannot deny it. I mean, it is rocky out there.

I’ll confess that over the years my interactions with Tom Siebel have not always been harmonious, to say the least. (One resulted inadvertently with me being accused by an irate conference organiser of defaming the reputation of the whole of Catalonia - long story…). But what he articulated last week makes a lot of sense.  The sentiment seems to be turning away from the frothy optimism that drove tech and crypto to the crazy highs of 2021. Next year will probably feel a lot like 2001 and 2008. Keep calm and carry on.

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