Sierra, a 21-month-old, San Francisco-based startup that builds customer service AI agents for enterprises, announced on Friday that it reached $100 million in annual revenue run rate (ARR). The company’s rapid growth suggests that businesses across industries are embracing AI agents.
The startup’s growth rate surprised even its seasoned co-founders, former Salesforce co-CEO Bret Taylor and longtime Google alum Clay Bavor, who wrote on their blog: “That’s a heck of a lot quicker than we expected.”
Sierra’s customers include tech companies like Deliveroo, Discord, Ramp, Rivian, SoFi, and Tubi, as well as well-established businesses outside of the tech sector, such as ADT, Bissell, Vans, Cigna, and SiriusXM.
Taylor and Bavor said they expected tech companies would feel comfortable experimenting with AI customer service agents, but they were astounded that older businesses also became Sierra’s customers.
The company says it can build AI agents that can handle tasks like authenticating patients for healthcare providers, processing returns, ordering replacement credit cards, and helping customers apply for mortgages — essentially automating customer service work that previously required human agents.
Sierra faces competition from startups like Decagon and Intercom, but the company claims to be the leader in the AI customer service category.
Sierra was last valued at $10 billion when it raised a $350 million round led by Greenoaks Capital in September. Other investors in the company include Sequoia, Benchmark, ICONIQ, and Thrive Capital.
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Based on its $100 million ARR, Sierra is currently valued at a 100x revenue multiple, a hefty valuation despite its exceptionally fast growth.
The startup employs an outcomes-based pricing model, charging customers for completed work rather than charging flat subscription fees.
Taylor and Bavor met at Google in 2005, where Taylor hired Bavor as an associate product manager.
A Stanford computer science graduate, Taylor co-created Google Maps before founding FriendFeed, which Facebook acquired. At Facebook, he served as CTO and helped create the iconic “Like” button. He later founded Quip, a Google Docs competitor that Salesforce acquired for $750 million in 2016.
Taylor went on to serve as Salesforce co-CEO alongside Marc Benioff for over a year. After Taylor left Salesforce in 2023, Bavor — who had spent 18 years at Google leading products like Gmail and Google Drive — invited him to lunch, where they decided to launch Sierra.
OpenAI chairman Bret Taylor has held many notable titles in tech. Katelyn Tucker/ Slava Blazer Photography
A.I. agents are the next big platform shift in tech, on par with the dawn of the internet 30 years ago and the rise of mobile apps a decade ago, according to OpenAI chairman Bret Taylor, who also runs his own A.I. startup, Sierra. Speaking at the Skift Global Forum in New York City yesterday (Sept. 18), the tech executive argued that enterprises are now racing to adopt A.I. agents much like they once scrambled to build websites or launch mobile apps.
“I think this is an opportunity that, probably, the closest catalog would be the birth of the internet,” Taylor said during an onstage interview.
Taylor has seen several waves of disruption firsthand. At Google in the early 2000s, he helped launch Google Maps. He went on to serve as chief technology officer at Facebook (now Meta), co-CEO of Salesforce, and chair of Twitter’s board during Elon Musk’s tumultuous takeover. In 2023, he was tapped as chairman of OpenAI’s board after the ChatGPT-maker briefly ousted and reinstated CEO Sam Altman.
Now, his focus is on Sierra, the conversational A.I. startup he co-founded two years ago with former Google colleague Clay Bavor. The company has quickly become a “decacorn,” hitting a $10 billion valuation earlier this month after raising $350 million from Greenoaks Capital. Sierra already counts hundreds of enterprise customers across financial services, health care and retail. A fifth of Sierra’s customers have annual revenue over $10 billion.
Taylor insists that A.I. agents are more than just cost-cutting tools. Increasingly, they’re revenue drivers. Sierra’s platform is helping companies sell mortgages, make outbound sales calls and even manage payroll for small businesses. “These agents are not only doing services, but also doing sales,” he said.
And the form factor is evolving. While chatbots dominate today’s landscape, Taylor believes voice-enabled A.I. is “as, or more important, of a channel than chat.” Multi-modal agents are also emerging. For instance, retailers are beginning to process warranty claims by analyzing photos of damaged products.
Just as the internet gave rise to search engines and aggregation platforms, Taylor expects agentic A.I. to spawn entirely new business categories. The challenge will be ensuring that they meet consumer expectations as their desires inevitably evolve with the technology’s development. “Consumers are moving faster than most companies can make decisions,” Taylor warned, noting that ChatGPT became the fastest-growing consumer app in history. “It’s on all of us leaders to push decisively towards this new world.”
Taylor echoed Altman’s sentiments, suggesting that we are indeed in an AI bubble — but like Altman, he didn’t sound too worried about it.
“I think it is both true that AI will transform the economy, and I think it will, like the internet, create huge amounts of economic value in the future,” Taylor said. “I think we’re also in a bubble, and a lot of people will lose a lot of money. I think both are absolutely true at the same time, and there’s a lot of historical precedent for both of those things being true at the same time.”
Specifically, Taylor compared today’s AI landscape to the dot-com bubble of the late ‘90s. While many companies failed when the bubble burst, he argued that “all the people in 1999 were kind of right.”
OpenAI announced Thursday it reached a nonbinding agreement with Microsoft, its largest investor, on a revised partnership that would allow the startup to convert its for-profit arm into a public benefit corporation (PBC).
The transition, should it be cleared by state regulators, could allow OpenAI to raise additional capital from investors and, eventually, become a public company.
In a blog post, OpenAI board chairman Bret Taylor said under the nonbinding agreement with Microsoft, OpenAI’s nonprofit would continue to exist and retain control over the startup’s operations. OpenAI’s nonprofit would obtain a stake in the company’s PBC, worth upward of $100 billion, Taylor said. Further terms of the deal were not disclosed.
“Microsoft and OpenAI have signed a nonbinding memorandum of understanding (MOU) for the next phase of our partnership,” the companies said in a joint statement. MOUs are not legally binding but aim to document each party’s expectations and intent.
“We are actively working to finalize contractual terms in a definitive agreement,” the joint statement added.
The development seems to mark an end to months of negotiations between OpenAI and Microsoft over the ChatGPT maker’s transition plans. Unlike most startups, OpenAI is controlled by a nonprofit board. The unusual structure allowed for OpenAI board members to fire CEO Sam Altman in 2023. Altman was reinstated days later, and many of the board members resigned. However, the same governance structure remains in place today.
Under their current deal, Microsoft is supposed to get preferred access to OpenAI’s technology and be the startup’s primary provider of cloud services. However, ChatGPT is a much larger business than when Microsoft first invested in the startup back in 2019, and OpenAI has reportedly sought to loosen the cloud provider’s control as part of these negotiations.
In the last year, OpenAI has struck a series of deals that would allow it to be less dependent on Microsoft. OpenAI recently signed a contract to spend $300 billion with cloud provider Oracle over a five-year period starting in 2027, according to the Wall Street Journal. OpenAI has also partnered with the Japanese conglomerate SoftBank on its Stargate data center project.
Taylor says OpenAI and Microsoft will “continue to work with the California and Delaware attorneys general” on the transition plan, implying the deal still needs a stamp of approval from regulators before it can take effect.
Representatives for California and Delaware attorneys general did not immediately respond to TechCrunch’s request for comment.
Tensions between OpenAI and Microsoft over these negotiations reportedly reached a boiling point in recent months. The Wall Street Journal reported Microsoft wanted control of technology owned by Windsurf, the AI coding startup that OpenAI had planned to acquire earlier this year, while OpenAI fought to keep the startup’s IP independent. However, the deal fell through, and Windsurf’s founders were hired by Google, and the rest of its staff was acquired by another startup, Cognition.
In Elon Musk’s lawsuit against OpenAI — which at its core accuses Sam Altman, Greg Brockman, and the company of abandoning its nonprofit mission — the startup’s for-profit transition is also a major flash point. Lawyers representing Musk in the lawsuit have tried to surface information related to Microsoft and OpenAI’s negotiations over the transition.
Musk also submitted an unsolicited $97 billion takeover bid for OpenAI earlier this year, which the startup’s board promptly rejected. However, legal experts noted at the time that Musk’s bid may have raised the price of OpenAI’s nonprofit stake.
Notably, the nonprofit’s stake in OpenAI PBC, under this agreement, is larger than what Musk offered.
In recent months, nonprofits such as Encode and The Midas Project have taken issue with OpenAI’s for-profit transition, arguing that it threatens the startup’s mission to develop AGI that benefits humanity. OpenAI has responded by sending subpoenas to some of these groups, claiming the nonprofits are funded by its competitors — namely, Musk and Meta CEO Mark Zuckerberg. Encode and The Midas Project deny the claims.
Without OpenAI equity, Sam Altman is already worth $2 billion. Stefano Guidi/Getty Images
OpenAI CEO Sam Altman, who has famously claimed he doesn’t own any equity in the $157 billion A.I. company he runs, could soon be a multibillionaire as OpenAI is reportedly looking to grant him a 7 percent equity stake, worth $11 billion, according to Reuters. While Altman denied the report, OpenAI chairman Bret Taylor issued a statement saying the company’s board indeed had discussions about “whether it would be beneficial to the company and our mission to have Sam be compensated with equity, but no specific figures have been discussed nor have any decisions been made.”
The pressure to give Altman equity likely came from external investors. Fortune reported on last week that OpenAI investors are “pushing hard” for him to have skin in the game in order to raise massive funding. Reuters reported last month that OpenAI was ready to raise $6.5 billion from investors contingent on whether the company can change its corporate structure and remove a profit cap for investors.
Restructuring the company and giving Altman equity would reassure OpenAI investors that the leadership team is committed to maximizing their returns, which is crucial as OpenAI seeks more funding to meet its ambitious goals. Earlier this year, Altman made headlines for eventually wanting to raise up to $7 trillion in funding—more than Germany’s annual GDP, the world’s third largest—to achieve its long-term goals.
While Altman has not confirmed his plan to transition OpenAI into a for-profit structure, he said at a technology conference in Italy last week that OpenAI had been considering a restructuring to get to the “next stage.” Also last week, OpenAI’s CTO, Mira Murati, announced resignation. So did two other senior executives, Barret Zoph and Bob McGrew. Industry observers wondered whether their exits were related to the company’s restructuring, although Altman denied such speculations at the Italy conference.
OpenAI was founded in 2015 as a nonprofit research lab funded by donations from billionaires like Reid Hoffman and Elon Musk. Realizing that “donations alone would not scale with the cost of computational power and talent required to push core research forward,” according to its website, OpenAI in 2019 introduced a for-profit arm. The arm operates by a capped-profit model but the cap is so high that it might as well not exist—it allows OpenAI’s investors to reap a gain of up to 100 times their initial investments.
Altman is already a billionaire
Altman, 39, is currently estimated to be worth $2 billion, according to Bloomberg. He has $1.2 billion invested across a range of venture capital funds branded as Hydrazine Capital, along with an additional $434 million in Apollo Projects.
Altman owns shares in several high-flying tech companies, including a 8.7 percent stake in Reddit. In 2021, he invested $375 million in Helion Energy, a startup building the world’s first fusion plant. In 2022, he invested $180 million Retro Biosciences, a startup focused on slowing aging.
At a congressional hearing last May, Altman said he owned “no equity in OpenAI.” In a later statement through OpenAI spokesperson Steve Sharpe, Altman confirmed he doesn’t own profit-participation units either, an OpenAI scheme that gives employees a right to earn a given percentage of the company’s profit, similar to equity compensation.
According to regulatory filings, Altman owns 75 percent of the OpenAI Startup Fund, an independent entity associated with OpenAI but doesn’t receive funding from the company. The fund manages $325 million in assets to invest in smaller A.I. companies. However, Sharpe said Altman has not invested his own money, so he cannot financially benefit from the fund. In April, Altman was removed as an owner or controller of the startup fund over scrutiny that it’s too closely tied to OpenAI despite claiming independence.
Sam Altman will have a key role in OpenAI’s new safety committee. Justin Sullivan/Getty Images
Following the dissolution of an OpenAI team focused on artificial intelligence safety, the company has formed a new safety and security committee that will be led by CEO Sam Altman and other board members to guide its safety recommendations going forward, as revealed by the startup in a blog post yesterday (May 28). The announcement also noted that OpenAI has begun training a new A.I. model to succeed GPT-4, the one currently powering its ChatGPT chatbot.
The committee’s formation comes shortly after OpenAI’s “Superalignment” team, which worked on preparations regarding the long-term risks of A.I., was disbanded with members dispersed across different areas of the company. Key employees overseeing the safety team left OpenAI earlier this month, with some citing concerns on the company’s current trajectory.
“It’s pretty clear that there were these different camps within OpenAI that were leading to friction,” Sarah Kreps, a professor of government and director of the Tech Policy Institute at Cornell University, told Observer. “It seems that the people who were not aligned with Sam Altman’s vision have off-ramped either forcibly or by their own volition, and what’s left now is that they’re all speaking with one voice and that voice is Sam Altman.”
Members of the new safety and security committee will be responsible for advising OpenAI’s board on recommendations regarding company projects and operations. But with its CEO leading the group, “I would not anticipate that these other committee members would have anywhere close to an equal voice in any decisions,” said Kreps. In addition to Altman, it will be headed by OpenAI chairman and former Salesforce co-CEO Bret Taylor alongside board members Nicole Seligman, a former Sony Entertainment executive, and Adam D’Angelo, a co-founder of Quora. D’Angelo notably was the only member of the original OpenAI board to stay on as a director after its failed firing of Altman.
OpenAI’s technical and policy experts who have previously expressed their support for Altman will make up the rest of the committee. These include Jakub Pachocki, who recently filled Sutskever’s role as chief scientist, and Aleksander Madry, who oversees OpenAI’s preparedness team. Both researchers publicly resigned amid Altman’s brief removal last year and returned following his reinstatement. The committee is rounded out by Lilian Weng, John Schulman and Matt Knight, who respectively oversee the safety systems, alignment science and security teams at OpenAI and in November were among the more than 700 employees who signed a letter threatening to quit unless Altman was reinstated.
OpenAI also revealed plans to consult cybersecurity officials like John Carlin, a former Justice Department official, and Rob Joyce, previously a cybersecurity director for the National Security Agency. “Happy to be able to support the important security and safety efforts of OpenAI!” said Joyce in an X post announcing the news. The company’s newly formed committee will spend the next 90 days developing processes and safeguards, which will be subsequently given to the board and shared in a public update describing adopted recommendations.
While OpenAI didn’t provide a timeline for its new A.I. model, its blog post described it as one that will “bring us to the next level of capabilities” on its path to artificial general intelligence, or A.G.I., a term used for A.I. systems matching the capabilities of humans. Earlier this month, the company unveiled an updated version of ChatGPT based on a new A.I. model known as GPT-4o that showcased enhanced capabilities across audio, image and video.
“We’ve seen in the last several months and last few days more indications that OpenAI is going in an accelerated direction toward artificial general intelligence,” said Kreps, adding that the company “seems to be signaling that there’s less interest in the safety and alignment principles that had been part of its focus earlier.”
(Bloomberg) — OpenAI will bring back Sam Altman and overhaul its board with new directors, a stunning reversal in a drama that’s transfixed Silicon Valley and the global AI industry.
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Altman is returning as chief executive officer and the initial board will be led by Bret Taylor, a former co-CEO of Salesforce Inc. and director at Twitter before it was acquired by Elon Musk. The other directors are Larry Summers, the US Treasury Secretary under President Bill Clinton, and existing member Adam D’Angelo, the co-founder and CEO of Quora Inc. OpenAI is now working “to figure out the details,” the company said in a post on X, formerly Twitter.
The reworked board will not be final: its main priority is to select up to nine new directors, said a person familiar with the negotiations who asked not to be identified. Board composition proved to be a major sticking point in negotiations for Altman’s return after his shocking ouster on Friday.
The decision to restore him to the world’s best-known AI startup marks a victory for biggest backer Microsoft Corp., which worked with fellow investors to reverse Altman’s firing. The two new board members also hold appeal for Wall Street and the Silicon Valley crowd. Summers, a Harvard academic and paid contributor to Bloomberg Television, sits on the board of several startups, including Jack Dorsey’s Block Inc. Taylor is a director at Shopify Inc. and helped steer the sale of Twitter to Musk last year, acting as a calming force.
Parties are still determining which members — beside D’Angelo, who has been appointed — will stay on the new OpenAI board.
Altman agreed not to take a board seat initially in order to get the deal done, said the person. It’s likely he’ll join the board eventually. He also agreed to an internal investigation into the conduct that led to his dismissal, another person said.
OpenAI’s biggest backer celebrated Altman’s return to the helm, after briefly agreeing to hire him on Sunday to start a new in-house research group. Microsoft, whose AI strategy hinges on the startup’s technology, will likely have representation on the new board, certainly as an observer and possibly with one or more seats, one of the people said.
OpenAI’s earlier board members included D’Angelo, OpenAI co-founder and chief scientist Ilya Sutskever, Tasha McCauley of GeoSim Systems, and Helen Toner, director at Georgetown’s Center for Security and Emerging Technology.
Read more: OpenAI Negotiations to Reinstate Altman Snag Over Board Role
The agreement followed four days of high-stakes negotiations, after nearly all of its employees threatened to quit if Altman was not reinstated. Much of the drama played out on X as notable financiers, Silicon Valley honchos and key players from Nadella to Altman himself posted declarations, exchanged messages, liked each others’ posts and otherwise advocated their position. Altman’s rehiring triggered swift congratulations on X from main characters in the saga, including former president Greg Brockman — who said he too is returning to the company — and Chief Technology Officer Mira Murati.
In a statement Friday that triggered the furor, OpenAI said Altman was dismissed after an internal review by the board found the chief executive “was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities.”
Negotiations for his return reached an impasse on Sunday in part over pressure from Altman and others for existing board members to resign, according to people familiar with the matter. Instead, the board named a new leader — former Twitch CEO Emmett Shear.
Within hours, most of OpenAI’s 770 employees signed a letter to the board saying they might quit and join Microsoft unless all directors resigned and Altman was reinstated. Among the many who signed the letter was Murati, who had been named interim CEO on Friday, and Sutskever.
The quick reversal could appease investors and reduce the threat of employees fleeing. But it also raises questions about the path ahead for the ChatGPT maker and other AI startups, which have tried to balance developing artificial intelligence responsibly alongside the need to raise vast amounts of capital from investors to support the expensive computing infrastructure required to build these tools.
Investors were blindsided by Altman’s removal. Microsoft, which backed the startup with a more than $10 billion stake, had only a few minutes’ advance notice about Altman’s firing. The software giant began working with investors including Thrive Capital and Tiger Global Management to bring him back, according to people familiar with the matter who asked to remain anonymous discussing private information.
Read More: OpenAI Leaders Tell Staff ‘Get Back to Shipping’ Amid Tumult
More than any other figure, Altman, 38, emerged as the face of a new era of artificial intelligence technology, thanks to the viral success of ChatGPT. Altman was at the center of the industry’s efforts this year to work with regulators and he met regularly with world leaders, including US President Joe Biden and UK Prime Minister Rishi Sunak. On Thursday, he appeared on a panel at the Asia-Pacific Economic Cooperation conference, attended by other executives and world leaders, to discuss the future of AI and its risks.
Behind the scenes, however, Altman clashed with members of his board, especially Sutskever, over how quickly to develop generative AI, how to commercialize products and the steps needed to lessen their potential harms to the public, people with knowledge of the matter have said.
Alongside rifts over strategy, board members also contended with Altman’s entrepreneurial ambitions.
He has been looking to raise tens of billions of dollars from Middle Eastern sovereign wealth funds to create an AI chip startup to compete with AI accelerators made by Nvidia Corp., according to a person with knowledge of the investment proposal. Altman was courting SoftBank Group Corp. chairman Masayoshi Son for a multibillion-dollar investment in a new business to make AI-oriented hardware in partnership with former Apple Inc. designer Jony Ive.
The boardroom drama carried echoes of other coups in Silicon Valley history. Apple co-founder Steve Jobs was fired as CEO in 1985 only to return more than a decade later. Twitter co-founder Dorsey was pushed out in 2008 and came back as CEO seven years later.
–With assistance from Dina Bass, Ashlee Vance, Ed Ludlow and Anne VanderMey.
(Updates with board deliberations from the second paragraph. A previous version of this story was corrected to reflect Summers’ tenure.)
SAN FRANCISCO—Microsoft said it is hiring Sam Altman to helm a new advanced artificial-intelligence research team, after his bid to return to OpenAI fell apart Sunday with the board that fired him declining to agree to the proposed terms of his reinstatement.
Microsoft Chief Executive Satya Nadella posted on X (formerly Twitter) late Sunday that Altman and Greg Brockman, OpenAI’s president and co-founder who resigned Friday in protest over Altman’s ouster, will lead its team alongside unspecified colleagues. Nadella said Microsoft was committed to its partnership with OpenAI and that it would move quickly to provide Altman and Brockman with “the resources needed for their success.”
