Stepmark Partners

Company Spotlight: Sierra – Conversational AI Agents for Business Interactions

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Author: Hibah Alam, Analyst

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Table of Contents

Introduction

Sierra AI is a conversational AI platform that enables companies to create sophisticated AI agents for customer service and interactions. They aim to solve the challenge of integrating AI into enterprise systems while maintaining brand authenticity and accuracy, addressing issues like AI hallucinations and seamless integration with existing business processes. Currently, Sierra operates primarily in the customer service industry for consumer brands in the United States, with clients including WeightWatchers, SiriusXM, Sonos, and OluKai.

Meet the Founders

The founders of Sierra AI, Bret Taylor and Clay Bavor, have extensive backgrounds in technology and leadership at major tech companies. Bret Taylor was the co-CEO of Salesforce, CTO of Facebook, co-creator of Google Maps, founder of Quip (acquired by Salesforce), and completed his bachelor’s and master’s degrees in Computer Science from Stanford University. Clay Bavor spent 18 years at Google, most recently leading Google Labs, led Google’s AR/VR efforts, Project Starline, and Google Lens, and led product and design teams for Google Workspace. This background enabled them to recognize the potential of AI in transforming customer interactions.

Inspirations

The inspiration to start Sierra came from their observations of the rapidly evolving AI landscape. In December 2022, shortly after the release of ChatGPT, Taylor and Bavor met for lunch and discussed the possibilities of AI technology. They saw an opportunity to create AI agents that could revolutionize how businesses interact with their customers. Rather than encountering a specific problem, they recognized a broader opportunity to make sophisticated AI technology accessible to businesses of all sizes. They aimed to solve the challenge of integrating AI into enterprise systems while maintaining brand authenticity and addressing issues like AI hallucinations. Their motivation seems to stem from a desire to democratize access to advanced AI capabilities. As Taylor stated, “The greatest opportunity we have is to enable every company, no matter how sophisticated or technical, to deploy [AI] successfully”.

The Early Days

The first version of Sierra’s product appears to be a conversational AI platform that enables companies to create sophisticated AI agents for customer service interactions. These AI agents were designed to engage in natural language conversations with customers, understand and access business data from within the company, take actions on behalf of employees, such as initiating and completing customer service tasks, and integrate with existing enterprise systems like CRM and order management systems. Sierra’s initial approach involved building custom AI agents for their clients, rather than just providing tools for companies to build agents themselves. This hands-on approach allowed Sierra to tailor the AI agents to each brand’s specific needs and identity. The company used a combination of proprietary and open-source large language models, including frontier models from OpenAI and Microsoft. These models were customized by Sierra’s team of researchers to fit each customer’s use case.

Sierra’s early clients included notable brands such as WeightWatchers, SiriusXM, Sonos, and OluKai. These companies were using Sierra’s technology to handle hundreds of thousands of customer conversations per month, even before the official public launch of the platform.

The first version of Sierra’s product emphasized brand consistency and authenticity in AI interactions, the ability to handle complex queries and take actions within company systems, quick adaptation to new policies or changes in customer needs, a “constellation” model approach, and using multiple AI models for different aspects of interactions (e.g., generating responses, preventing hallucinations). By February 2024, when Sierra publicly announced its platform, the company had already grown to a team of 30 staffers and secured $110 million in funding, indicating significant early traction and investor confidence in their approach.

Product Offerings

Sierra AI provides a conversational AI platform that enables companies to create sophisticated AI agents for customer service and interactions. Their product allows businesses to build AI agents that can engage in natural language conversations with customers, access and understand company-specific data and knowledge bases, take actions on behalf of employees, such as processing exchanges, scheduling deliveries, or updating subscriptions, and integrate with existing enterprise systems like CRM and order management systems. The platform emphasizes creating AI agents that are capable of complex problem-solving and decision-making, aligned with the company’s brand voice and values, and adhering to security policies and data governance standards. Sierra AI appears to be primarily focused on enterprise clients, suggesting a B2B model. The company has not publicly disclosed detailed pricing information for their platform.

Use Cases

Sierra AI is clearly positioned as a B2B product, targeting companies looking to enhance their customer service and interaction capabilities. Their clients include notable brands such as WeightWatchers, SiriusXM, Casper, and Athletic Greens. Companies are using Sierra AI to transform their customer experience by providing 24/7 AI-powered support, handle complex customer interactions at scale, improve self-service resolution rates and reduce average handle times, and provide consistent brand experiences across multiple channels (chat, voice, etc.). This represents both an enhancement of current workflows (improving customer service efficiency) and enabling new ways of working (providing always-on, AI-powered customer interactions).

The Technology

Sierra’s platform uses a combination of proprietary and open-source large language models, including frontier models from OpenAI and Microsoft. These are customized to fit each customer’s specific use case. The platform includes an “Agent OS” for building and managing AI agents, a “constellation” model approach, using multiple AI models for different aspects of interactions, integration capabilities with existing enterprise systems, and analytics and quality assurance tools for monitoring and improving agent performance.

Challenges

Similar to other AI agents, Sierra AI faces challenges in ensuring AI agents maintain brand consistency and authenticity, preventing AI hallucinations and misrepresentations, meeting compliance and data protection standards, integrating seamlessly with diverse enterprise systems, and competing in a rapidly evolving AI landscape with established tech giants entering the space.

Competitor Landscape

The company’s high valuation ($4.5 billion) and significant funding ($175 million recent round) suggest it’s seen as a strong player in the enterprise AI space, despite the competitive landscape. While the conversational AI market is competitive, Sierra’s approach and the pedigree of its founders have helped it secure a strong position and significant funding. However, there are some significant competitors in the AI agent space. For instance, Voiceflow offers a comprehensive platform for businesses to create human-like AI agents. The company last raised $15 million at a valuation of $105 million and has raised $35 million to date. IBM also released AI agents with similar functionality to Sierra AI, displaying large industry players’ ability to capture the space quickly with its existing resources.

Financials

Sierra AI’s total funding to date is $285 million. Their latest funding round was $175 million at a $4.5 billion valuation. The company’s current investors are Greenoaks Capital (lead), ICONIQ, Thrive Capital, Sequoia Capital, and Benchmark25. As of October 2024, their annualized revenue is over $20 million. The significant increase in valuation, from nearly $1 billion in January to $4.5 billion in October 2024, suggests strong investor confidence in Sierra’s potential.

Future Outlook

Sierra AI’s founders, Bret Taylor and Clay Bavor, have expressed ambitious visions for the company’s future. They believe conversational AI will be as transformative as the graphical user interface or smartphones. Taylor stated, “In the future, a company’s AI agent—basically the AI version of that company—will be just as important as their website”. They aim to shift automated customer interactions “from hell to happiness”. The potential market for Sierra is vast, as their target customers include any company that communicates with customers. This broad applicability suggests significant growth potential.