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Bret Taylor’s AI startup Sierra valued at $4.5 billion in funding

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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 co-founder Bret Taylor on AI agent startup: We want to make our customers successful

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.” 

WATCH: Anthropic adds new feature that gives its models new abilities

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See what changed in the new statement

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This is a comparison of Thursday’s Federal Open Market Committee statement with the one issued after the Fed’s previous policymaking meeting in September.

Text removed from the September statement is in red with a horizontal line through the middle.

Text appearing for the first time in the new statement is in red and underlined.

Black text appears in both statements.

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Fed rate decision November 2024:

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Federal Reserve cuts interest rates by a quarter point

The Federal Reserve approved its second consecutive interest rate cut Thursday, moving at a less aggressive pace than before but continuing its efforts to right-size monetary policy.

In a follow-up to September’s big half percentage point reduction, the Federal Open Market Committee lowered its benchmark overnight borrowing rate by a quarter percentage point, or 25 basis points, to a target range of 4.50%-4.75%. The rate sets what banks charge each other for overnight lending but often influences consumer debt instruments such as mortgages, credit cards and auto loans.

Markets had widely expected the move, which was telegraphed both at the September meeting and in follow-up remarks from policymakers since then. The vote was unanimous, unlike the previous move that saw the first “no” vote from a Fed governor since 2005. This time, Governor Michelle Bowman went along with the decision.

The post-meeting statement reflected a few tweaks in how the Fed views the economy. Among them was an altered view in how it assesses the effort to bring down inflation while supporting the labor market.

“The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance,” the document stated, a change from September when it noted “greater confidence” in the process.

Fed officials have justified the easing mode for policy as they view supporting employment becoming at least as much of a priority as arresting inflation.

On the labor market, the statement said “conditions have generally eased, and the unemployment rate has moved up but remains low.” The committee again said the economy “has continued to expand at a solid pace.”

Officials have largely framed the change in policy as an attempt to get the rate structure back in line with an economy where inflation is drifting back to the central bank’s 2% target while the labor market has shown some indications of softening. Fed Chair Jerome Powell has spoken of “recalibrating” policy back to where it no longer needs to be as restrictive as it was when the central bank focused almost solely on taming inflation.

Powell will answer questions about the decision at his 2:30 p.m. ET news conference. The November meeting was moved back a day due to the U.S. presidential election.

There is uncertainty over how far the Fed will need to go with cuts as the macro economy continues to post solid growth and inflation remains a stifling problem for U.S. households.

Gross domestic product grew at a 2.8% pace in the third quarter, less than expected and slightly below the second-quarter level, but still above the historical trend for the U.S. around 1.8%-2%. Preliminary tracking for the fourth quarter is pointing to growth around 2.4%, according to the Atlanta Fed.

Generally, the labor market has held up well. However, nonfarm payrolls increased by just by 12,000 in October, though the weakness was attributed in part to storms in the Southeast and labor strikes.
The decision comes amid a changing political backdrop.

President-elect Donald Trump scored a stunning victory in Tuesday’s election. Economists largely expect his policies to pose challenges for inflation, with his stated intentions of punitive tariffs and mass deportations for undocumented immigrants. In his first term, however, inflation held low while economic growth, outside of the initial phase of the Covid pandemic, held strong.

Still, Trump was a fierce critic of Powell and his colleagues during his first stint in office, and the chair’s term expires in early 2026. Central bankers assiduously steer clear of commenting on political matters, but the Trump dynamic could be an overhang for the course of policy ahead.

An acceleration in economic activity under Trump could persuade the Fed to cut rates less, depending on how inflation reacts.

Questions have arisen over what the “terminal” point is for the Fed, or the point at which it will decide it has cut enough and has its benchmark rate where it is neither pushing nor holding back growth. Traders expect the Fed likely will approve another quarter-point cut in December then pause in January as it assesses the impact of its tightening moves, according to the CME Group’s FedWatch tool.

The FOMC indicated in September that members expected a half percentage point more in cuts by the of this year and then another full percentage point in 2025.

The September “dot plot” of individual officials’ expectations pointed to a terminal rate of 2.9%, which would imply another half percentage point of cuts in 2026.

Even with the Fed lowering rates, markets have not responded in kind.

Treasury yields have jumped higher since the September cut, as have mortgage rates. The 30-year mortgage, for instance, has climbed about 0.7 percentage point to 6.8%, according to Freddie Mac. The 10-year Treasury yield is up almost as much.

The Fed is seeking to achieve a “soft landing” for the economy in which it can bring down inflation without causing a recession. The Fed’s preferred inflation indicator most recently showed a 2.1% 12-month rate, though the so-called core, which excludes food and energy and is generally considered a better long-run indicator, was at 2.7%.

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Stocks making the biggest moves midday: WBD, APP, WOLF, LYFT

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