"We might have killed the goose that lays the golden egg," Siebel told those gathered for an annual cocktail event put on by Silicom Ventures, a sort of private equity matchmaking group. Siebel said the costs associated with Sarbanes-Oxley haven't been calculated yet, as management teams spend increasing amounts of time sweating over issues that affect margins rather than on big-picture business decisions. Perhaps the most damaging impact, he said, is the creation of an increasingly risk-averse business infrastructure. "You're mitigating every possible risk that can be conceived," Siebel said. "Risk didn't use to be a bad thing." As a result, Siebel suggested that the biggest opportunities over the next 10 years are in China and India.
In addition to his gloomy economic forecast, Siebel shed light on a couple of matters involving Siebel Systems. Since Siebel stepped down from the company's CEO post in May, naming former IBM exec Mike Lawrie as his replacement, there's been much analyst and customer speculation as to the events that led to the move. Siebel said Tuesday night that he'd decided to separate the CEO and chairman roles and bring in fresh blood to lead Siebel Systems into its second decade of operation. Lawrie was chosen in part for one simple reason: With 66,000 active seats of Siebel Systems' customer-relationship-management software, IBM was the company's largest customer, as well as a significant partner. Siebel felt no one would be more invested in Siebel Systems and have a better idea of where the company should go than a valued customer.
Not surprisingly, however, Siebel saved his most animated comments for a question about testimony from the Oracle-PeopleSoft antitrust trial suggesting that Oracle at one time was close to buying Siebel Systems. He said that wasn't quite true, but that he had gotten an urgent message from Larry Ellison, his former boss, back in the fall of 2002, asking that Siebel call him right away. Siebel said he waited two days before returning the call, and once he did, the discussion focused on succession management at Oracle. Ellison was considering dividing the company into three smaller entities--an applications company, a database company, and a professional-services organization. Then he dropped his bomb. "He said, 'We're going to buy Siebel, and you're going to be the CEO of the application software company, and it'll be built around Siebel technology,'" Tom Siebel said. "I said, uh-oh."
As CEO of a public company, Siebel was obliged to meet with Ellison to discuss the proposal further, but he said he never seriously entertained the idea. "I said, 'Larry, you and I worked together for nine years, and that was enough.' "
Amid continued speculation that Siebel Systems could be an acquisition target, the chairman stressed that company execs aren't looking for a buyer. "I still think Siebel looks a lot more like an acquirer than an acquiree," he said. "That strategy has been enormously successful for us."