Bret Taylor's AI startup Sierra lands $4.5 billion valuation with funding

• Bret Taylor and Clay Bavor, the founders of Sierra, have secured a funding round that values the company at $4.5 billion.
• Greenoaks Capital led a $175 million round, with ICONIQ and Josh Kushner's Thrive Capital also participating.
• An artificial intelligence startup received one out of every three venture dollars this year, according to CB Insights.

Sierra, an artificial intelligence startup founded by ex-co-CEO Bret Taylor, has quadrupled its valuation to $4.5 billion in a new funding round.

In January, the San Francisco-based company was valued at $1 billion, and now it has raised $175 million in a funding round led by Greenoaks Capital. Earlier this month, The Information reported that Sierra was in the process of raising capital.

Taylor served as chairman of OpenAI's board and previously ran Salesforce alongside Marc Benioff. He was also chairman of Twitter during Elon Musk's negotiations to purchase the social media company. Taylor is a well-known entrepreneur who played a significant role in creating Google Maps. At , he met his Sierra co-founder Clay Bavor, who spent nearly two decades at the tech giant, leading virtual reality efforts and Google Labs.

The startup, founded by Taylor and Bavor, earlier this year, is focused on helping enterprises like home security company, Weight Watchers, and Casper personalize and implement AI agents for customer service.

"Taylor stated in an interview with CNBC that every company, regardless of its industry or age, can benefit from AI technology, which is currently available. He emphasized the need for Sierra to expand internationally and into other industries to address this market."

The new funding round was supported by ICONIQ and Thrive Capital, which is backed by Josh Kushner.

Taylor characterizes Sierra as a conversational AI and is averse to the term "chatbot," even prohibiting its use in the company's downtown San Francisco office. Sierra aims to enhance the conversational nature of its interactions, as Taylor illustrated by referencing the smooth experience of interacting with OpenAI's ChatGPT and the frustrating experience of speaking with an airline bot on the phone.

"Taylor stated that when people think of chatbots, they often picture robotic and irritating entities. However, Sierra is working to improve their agents' empathy and conversational abilities."

Sierra's team allows clients to personalize the agent's character to match their brand identity. For instance, Chubbies chose a more sarcastic approach with a younger-sounding agent named Duncan Smothers. Taylor stated that some luxury brands are going for a British accent with a more serious tone.

"Taylor stated that the conversational AI agent should not only be transactional but also serve as a brand ambassador. He emphasized that this was a reflection of the company's values. Taylor then posed a question: "Do you want the AI agent to sound sarcastic, use emojis, or sound like text messaging, or do you want it to sound like a lawyer?""

Sierra employs a "constellation" of models, including a "supervisor," to perform heavy lifting and ensure accuracy. The technology utilizes one model to do the main work, while a second model serves as a backup to check the others and improve reliability. The company currently uses large language models from OpenAI, Anthropic, and other sources.

Taylor's former company, Salesforce, and OpenAI are collaborating to explore the AI agent space. Taylor compared Sierra to the companies that developed cloud software on top of Web Services and other cloud infrastructure.

""In the AI era, I believe the same thing will happen with Sierra as it did with Salesforce in the cloud era, where we help their branded customer-facing agent," Taylor stated."

He mentioned startups such as Cursor, which creates coding agents, and Harvey, which develops legal agents.

The flurry of major AI announcements in Silicon Valley has led to Sierra's funding, as well as OpenAI's $157 billion valuation and Perplexity's $9 billion valuation. Additionally, one in three venture dollars this year has been invested in an AI startup, according to CB Insights.

"When a technology wave occurs, many individuals attempt to predict the winning company," Taylor stated. "Although I am uncertain about the specific company, investing in this area is wise. The customer experience and service sector presents a significant opportunity, and our company is leading the way. We are seeing a surge in demand due to our expertise in this area."

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