Washington wanted C3 AI to find "extremists"

Welcome to Runtime! Today: C3 AI chairman and CEO Tom Siebel on the good sides and bad sides of AI, Microsoft introduces a small large-language model, and the latest funding rounds in enterprise tech.

(Was this email forwarded to you? Sign up here to get Runtime each week.)

SNAIFU

Tom Siebel has made a lot of money in enterprise technology over the last 25 years by being in the right place at the right time. This time around, it's not clear how much he's enjoying the AI boom.

C3 AI builds AI applications for enterprises and governments, and also sells a development platform for companies that want to do it themselves. Siebel has been selling software to powerful people for decades, but in a recent interview the chairman and CEO of C3 AI expressed a little trepidation about how the government is thinking about deploying AI.

Excerpts from that interview follow below:

On the AI boom:

Siebel: This is the first time we've done things in computer science that weren't a mathematical certainty, other than random number generators. Everything else we've done in computer science, up until this day, has been deterministic. Every time you run it, it's going to happen that you get the same answer. Now, with generative AI, you'd never quite know what the answer is going to be. And that creates some very interesting issues.

What everybody is scrambling about, whether we're dealing with government leaders, military leaders, or business leaders, I think they're scared that if they don't take advantage of these technologies that they'll be at a competitive disadvantage, whether that's China in the military context, or whether it's the other automotive manufacturers. And it's true, they will be at a disadvantage if they don't figure out how to take advantage of these technologies.

On C3 AI's customers:

The largest primary application of AI in the U.S. Department of Defense is for predictive maintenance for aircraft, where they can look at all the telemetry and identify failures before they happen. And one of the systems that we do, on any given day we can get 25% more aircraft in the air, which at the scale of the United States Air Force is kind of a big deal.

It's also used for testing logistics; these people move a lot of stuff around the world, and they're doing it in very hostile environments where your shipping lanes and ports are disappearing in real time. That's a classic, perfect example of AI and a place where we do a lot of work.

On the federal government's interest in AI:

I have been asked — and I won't say what administration, and I won't say in what department — but let's say it was as senior a person as there is, almost, in the United States government. And the question was, "Tom, can we use your system to identify extremists in the US population?"

Is conversation really taking place in the United States of America? Like, what's an extremist? Like, maybe, white, male, Christian? I mean, what's an extremist? I was in a very important building with a very important person and candidly was really disturbed. I was like, how fast can I get out of this meeting?

I said, "You know, I don't feel comfortable with a conversation, and I'm the wrong person to be talking to." I can think of vendors who would say yes to that in a heartbeat. I think the next guy in the door said yes, and you've just got to live with that.

Read the full interview on Runtime here.

A phighting chance

Enterprises are starting to understand what they want and need from generative AI technology after a year on the receiving end of a marketing blitz, and vendors are reacting accordingly. Microsoft introduced the latest edition of its small-model approach Tuesday, which delivers performance similar to early models at a fraction of the cost.

Phi-3 offers about the same level of performance as GPT 3.5, Microsoft told the Verge, but it can run on personal devices rather than huge racks of servers. That means it will also be far cheaper to operate, and while smaller models won't be able to compete with the most powerful ones available, there are a lot of enterprise use cases where that's just fine.

Google and Anthropic have already jumped on the small-model train, and others are likely to follow. It now seems clear that businesses won't pay anything for generative AI tools given the returns on those investments to date, but they will spend money where and when it makes sense.

Enterprise funding

Rippling raised $200 million in Series F funding as well as an additional $590 million tender designed to let employees and early investors cash out.

Perplexity scored $62.7 million in new funding and launched an enterprise version of its AI search engine.

Anvilogic landed $45 million in Series C funding to bring the data-lake architecture to the world of SIEM (security information and event management) tools.

Nominal emerged from stealth with $27.5 million in seed and Series A funding to develop data-analysis tools for industrial companies.

Clazar raised $10 million in Series A funding to help SaaS companies get up and running on cloud provider marketplaces, which are an extremely important vehicle for reaching potential customers.

The Runtime roundup

UnitedHealth confirmed that it paid the ransom demanded by the Change Healthcare attackers "as part of the company’s commitment to do all it could to protect patient data from disclosure," but that data remains available, which is exactly why security experts urge ransomware victims never to pay the ransom.

AWS unveiled a new feature in its Amazon Bedrock AI platform that lets companies import their own AI models to run on AWS.\

IBM is "nearing" a deal for HashiCorp, according to the Wall Street Journal, and HashiCorp's stock closed up nearly 20% Tuesday ahead of IBM's earnings call Wednesday.

Splunk was awarded a whopping single U.S. dollar by a jury after winning its copyright-infringement case against Cribl, which seems like it was a good use of everyone's time.

Oracle is possibly moving once again after founder Larry Ellison announced plans to open a new office in Nashville, "which will ultimately be our world headquarters," he said, later adding, "I shouldn't have said that."

Thanks for reading — see you Thursday!