Bret Taylor, co-CEO of Salesforce, speaks at the Viva Technology Conference in Paris on June 15, 2022.
Nathan Laine | Bloomberg | Getty Images
Artificial intelligence startup Sierra, co-founded by ex-Salesforce co-CEO Bret Taylor, is more than quadrupling its valuation to $4.5 billion in a fresh funding round.
The San Francisco-based company, which was valued at $1 billion in January, raised $175 million in a funding round led by Greenoaks Capital. The Information reported earlier this month that Sierra was in the midst of raising capital.
Taylor is chairman of OpenAI’s board and previously ran Salesforce, alongside Marc Benioff. He was also chairman of Twitter when Elon Musk was negotiating to buy the social media company. Taylor is a longtime entrepreneur, widely credited with helping to create Google Maps. At Google, he met his Sierra co-founder Clay Bavor, who spent nearly two decades at the tech giant, leading virtual reality efforts and Google Labs.
Sierra is focused on helping enterprises like home security company ADT, Sonos, Weight Watchers and Casper personalize and implement AI agents for customer service. Taylor and Bavor unveiled the startup earlier this year.
“We think every company in the world, whether it’s a technology company or a 150-year-old company like ADT, can benefit from AI, and the technology is ready right now,” Taylor told CNBC in an interview. “We want to enable Sierra to address that market, and that means expanding internationally and to other industries.”
ICONIQ and Josh Kushner’s Thrive Capital contributed to the new funding round.
Taylor describes Sierra as “conversational AI,” and bristles at the word “chatbot,” even banning the phrase in the company’s downtown San Francisco office. Sierra is looking to create a more conversational style of interaction, Taylor said. He pointed to the ease of OpenAI’s ChatGPT and compared it to the frustrating experience of talking on the phone with an airline bot.
“When you think of chatbots, you think of those annoying, robotic things — you can feel the difference,” Taylor said, adding that Sierra is making their agents more “empathetic and conversational.”
Sierra’s team lets each client customize the agent’s personality to its corporate brand. Clothing company Chubbies, for example, took a more sarcastic route with a younger sounding agent named Duncan Smothers. Taylor said some luxury brands are opting for a British accent with a more serious tone.
“We really think that your conversational AI agent should be not only transactional, but a brand ambassador,” Taylor said. “It’s actually something that is a statement of your values. So do you want to be sarcastic? Do you want to use emoji? Do you want it to sound like text messaging, or do you want it to sound like a lawyer?”
Sierra uses what Bavor and Taylor describe as a “constellation” of models, with a “supervisor.” The technology uses one model to do the heavy lifting, with the expectation that it won’t be 100% reliable, but use a second model as a backup, to “check” the others and help with accuracy. The company currently relies on large language models from OpenAI, Anthropic and Meta, among others.
There’s competition in the space. Taylor’s former company, Salesforce, as well as Microsoft, in partnership with OpenAI, are exploring the AI agent space. Taylor compared Sierra to the companies that built cloud software on top of Amazon Web Services and other cloud infrastructure.
“In the cloud era, you had Shopify, Salesforce, ServiceNow and Adobe — I think the same thing will play out in AI with Sierra,” Taylor said. “We’re helping their branded customer facing agent.”
He mentioned startups like Cursor, which makes coding agents, and Harvey, which makes legal agents.
Sierra’s funding follows a flurry of major AI announcements in Silicon Valley. OpenAI raised billions of dollars at a $157 billion valuation. Perplexity is in the midst of raising a round that values the company at $9 billion, a source confirmed to CNBC. One in three venture dollars this year has gone to an AI startup, according to CB Insights.
“When a technology wave like this happens, I think a lot of people are trying to place their bets,” Taylor said. “I don’t know which company will win, but it’s a smart investment, categorically. Clearly customer experience and customer service is a huge opportunity, and I think we are the leader in this space, and seeing a lot of demands because of that.”
Check out the companies making headlines in extended trading: Rivian — The electric vehicle maker added nearly 2% despite missing on both top and bottom lines in the third quarter. Rivian posted an adjusted loss of 99 cents per share on $874 million in revenue. Analysts polled by LSEG had forecast a loss of 92 cents per share on revenue of $990 million. Pinterest — Shares tumbled 11% after the social media company posted weak guidance for its fourth-quarter revenue. Pinterest guided revenue to fall between $1.125 million and $1.145 million. The midpoint of the fourth-quarter guidance, $1.135 million, came below analysts’ estimates of $1.143 million, per LSEG. The company posted beats on the top and bottom lines in the third quarter. Block — Shares dipped 2% after the fintech firm reported a third-quarter revenue miss . Block posted sales of $5.98 billion, while analysts polled by LSEG had anticipated $6.24 billion. On the other hand, Block’s adjusted earnings of 88 cents per share beat analysts’ estimates by one cent. Airbnb — Shares of the online homestays company slipped nearly 3%. Airbnb posted third-quarter earnings of $2.13 per share, 1 cent shy of the consensus forecast, per LSEG. Quarterly revenue of $3.73 billion was slightly above analysts’ estimates for $3.72 billion. Akamai Technologies — Shares slid 6% as the cloud computing company issued disappointing full-year guidance. Akamai said its adjusted earnings for the period will range between $6.31 and $6.38 per share on revenue of $3.966 billion to $3.991 billion. Analysts polled by FactSet anticipated $6.43 per share in earnings and $3.99 billion in revenue. DraftKings — The sports betting company tumbled 4% after guidance missed the mark. DraftKings said its fourth-quarter adjusted earnings before interest, taxes, depreciation and amortization will range between $240 million and $280 million. Analysts polled by LSEG sought $340 million to $420 million. The company also fell short of the Street’s expectations in the third quarter. Sweetgreen — The salad chain dropped more than 10% after missing on top and bottom lines in the third quarter. Sweetgreen announced losses of 18 cents per share, while analysts had expected a loss of 13 cents per share, according to LSEG. Revenue of $173 million also fell short of the $175 million forecast by analysts. Toast — Shares of the restaurant management software company surged 19% on strong fourth-quarter guidance. Toast guided fourth-quarter adjusted EBITDA between $90 million and $100 million. Analysts polled by StreetAccount estimated $74.8 million. Third-quarter results also beat estimates on both top and bottom lines. Expedia Group — Shares of the travel service company jumped 3%. Expedia’s adjusted earnings for the third quarter came in at $6.13 per share, beating analysts’ call for $6.04 a share, per LSEG. Revenue came in at $4.06 billion and narrowly missing analysts’ forecast for $4.11 billion. The company also said Chief Financial Officer Julie Whalen will be stepping down from her role. Arista Networks — The computer networking company fell 6% despite third-quarter results that topped estimates. Arista Networks reported third-quarter adjusted earnings of $2.40 per share on revenue of $1.81 billion. Analysts had expected earnings of $2.08 per share on $1.74 billion in revenue. The company’s fourth-quarter revenue guidance range also beat forecasts. Arista Networks also announced a 4-for-1 stock split. Lucid Group — The electric car manufacturer advanced 6% after narrowly beating analysts’ expectations in the third quarter. Lucid reported an adjusted loss of 28 cents per share on revenue of $200 million in the period. Analysts polled by LSEG expected a loss of 30 cents per share and revenue of $198 million. The company also reaffirmed plans to produce about 9,000 vehicles this year, up 6.8% from 2023. Capri Holdings — The owner of Jimmy Choo lost 7% after results in the fiscal second quarter missed analysts’ estimates. Capri reported adjusted earnings of 65 cents per share on revenue of $1.08 billion, while the Street sought 75 cents a share in earnings and $1.18 billion in revenue, per LSEG. Revenue for Michael Kors and Versace also came up short of expectations. — CNBC’s Darla Mercado, Lisa Kailai Han and Alex Harring contributed reporting.
Federal Reserve Chair Jerome Powell speaks during a news conference following the Nov. 6-7, 2024, Federal Open Market Committee meeting at William McChesney Martin Jr. Federal Reserve Board Building in Washington, D.C., on Nov. 7, 2024.
Andrew Caballero-Reynolds | AFP | Getty Images
Expectations for a December interest rate cut remained strong after the Federal Reserve trimmed rates by a quarter percentage point in November, but market pricing is suggesting the likelihood of a “skip” in January.
On Thursday afternoon, the U.S. central bank lowered the federal funds rate, which determines what banks charge each other for overnight lending, to a target range of 4.5% to 4.75%.
Before the Fed released this decision at 2 p.m. ET, market pricing pointed toward a 67% chance of another quarter-point cut in December and a 33% chance of a pause that month, according to the CME FedWatch Tool.
The probability of a quarter-point December rate cut rose to more than 70% following the meeting, while the chances of a pause slipped to nearly 29%. Future rate probabilities found in the CME FedWatch Tool are derived from trading in 30-day fed funds futures contracts.
Meanwhile, the odds that the Federal Reserve would skip an interest rate cut in January was around 71%. This was slightly higher from 67% before the release of the Fed’s November decision on Thursday afternoon.
Jeffrey Gundlach speaks at the 24th Annual Sohn Investment Conference in New York, May 6, 2019.
Adam Jeffery | CNBC
DoubleLine Capital CEO Jeffrey Gundlach said Thursday that interest rates could shoot higher if Republicans end up controlling the House, securing a governing trifecta that gives President-elect Donald Trump free rein to spend as he pleases.
Gundlach, a noted fixed-income investor whose firm manages over $96 billion, believes the higher government spending would require more borrowing through Treasury issuance, putting upward pressure on bond yields.
“If the House goes to Republicans, there’s going to be a lot of debt, there’s going to be higher interest rates at the long end, and it’ll be interesting to see how the Fed reacts to that,” Gundlach said on CNBC’s “Closing Bell.”
The race to control the House is undecided as of Thursday after Republicans clinched their new Senate majority. The Federal Reserve cut rates Thursday, and traders expect the central bank to cut again in December and several times in 2025.
Notable investors such as Gundlach have been voicing concerns about the challenging fiscal situation. Fiscal 2024 just ended with the government running a budget deficit in excess of $1.8 trillion, including more than $1.1 trillion dedicated solely to paying financing costs on the $36 trillion U.S. debt.
“Trump says he’s going to cut taxes … he’s very pro cyclical stimulus,” Gundlach said. “So it looks to me that there will be some pressure on interest rates, and particularly at the long end. I think that this election result is very, very consequential.”
If the Trump administration extends the 2017 tax cuts or introduces new reductions, it could add a significant amount to the nation’s debt in the next few years, worsening the already troublesome fiscal picture.
Still, Gundlach, who had predicted a recession in the U.S., said the Trump presidency makes such an economic downturn less likely.
“I do think that it’s right to see the Trump victory as being as reducing the odds for near-term recession fairly substantially,” Gundlach said. “Certainly, the odds of recession drop when you have this type of agenda being promoted in plain English for the past three months by Mr. Trump.”