We've been hearing a lot about the concept of customer experience, the idea that interactions between customers and brands can be improved digitally. So far, results have been mixed at best.
Sierra, a new startup from Bret Taylor and Clay Bavor, believes AI agents, unlike websites and mobile apps before them, could be the next technology frontier. In other words, it's an essential digital asset for any business, one that can ultimately deliver on its promise. of digital customer experience.
Whether that's true or not, the founders essentially see AI agents as a new technology category that offers entirely new ways for customers to interact with brands and improve their overall experience.
“Our thesis is really simple: We believe that conversational AI will transform not only current trends such as customer service, but also the key forms people use to interact with brands across all aspects of the customer experience. We think that's going to be a factor,” Taylor told TechCrunch.
This means customers can enter free-form questions or requests into a search-style box, and an AI agent must be able to understand those requests, connect to the desired transaction system, and take action. Examples include tasks such as looking up an order in an order management system or rescheduling a delivery in a scheduling system.
Taylor and Bavor acknowledge that it's not always easy to connect to these systems, especially if they're older. But most of the CIOs they spoke to said they were building APIs to connect to these older systems, making it much easier to communicate with Sierra.
Either way, Taylor and Baber acknowledge that there are some serious challenges and risks when humans interact with these AI agents. “When you put AI in front of the customer, obviously the value is much higher, but the risks are also much higher, such as brand misrepresentation and hallucinations. All these technical issues, frankly This is the most difficult problem in AI,” Taylor said. Said.
These are not small problems, especially problems with hallucinations, where large language models can make up something when they don't know how to answer a prompt. Depending on the nature of the answer, it can be devastating to your brand's reputation.
While no company has yet solved hallucinations, and likely never will, Sierra is working to alleviate the problem (but aren't we all?). The company's software is based on the idea of autonomous agents. “What this actually means is that there is no single model that generates the responses from the Sierra agents,” Taylor said.In reality, there is a model called a “supervisor” that monitors the quality of the answers. including a model to monitor the quality of responses, including sending responses back for re-evaluation. Taylor acknowledges that addressing hallucinations is an ongoing research topic in the industry.
As if that's not enough to worry about, there are plenty of regulatory and data privacy issues to deal with when processing customer data in an automated manner. But Taylor and Baber say their agents are designed to handle that as well.
Taylor said AI is fundamentally different from the software we've known for the past 30 years, and an educational component is needed to help customers understand its capabilities and pitfalls. thinking about. “It is therefore important that we also mitigate these risks as part of our go-to-market activities.” [and] “We’re teaching our customers how this new type of software works,” he said.
However, on the other hand, this risk also represents a great opportunity for companies. “Every time there's a big change in technology, it opens up an opportunity for small businesses to explore that open space and really take risks and try new things,” Baber said.
This new wave of AI will create at least five to 10 meaningful new independent enterprise software companies, similar to what happened with cloud and mobile, Taylor said. “There's an opportunity for a new technology model. Conversational AI is new, so there's no market leader right now. That was a year ago, and then everyone is figuring this out in real time,” he said. Ta.
Taylor, who is also chairman of the board at OpenAI, doesn't think the two companies are competing, or even competing, although some would argue that they are. “We don't think OpenAI is competitive. If there was a possibility of conflict, I would obviously decline,” he said.
The founders also believe that a new platform requires a new pricing approach, and have designed an entirely new pricing model based on their results. We want our customers to pay only for results when their problems are resolved, rather than the tiered subscription fees or usage-based pricing seen with other software companies.
“We believe outcome-based pricing is the future of software. With AI, we believe we finally have the technology to not only increase productivity, but actually get the job done. We actually just finished the job,'' Taylor said. And that's what they're trying to charge customers. However, the mechanism is still being worked out with early customers.
Brent Leary, founder and principal analyst at CRM Essentials, said that even with all this in mind, it will be difficult to compete with regular incumbents like Taylor's former company, Salesforce. thinking.
“In other words [Taylor] There is no question that he is incredibly intelligent and talented,” Leary said. “But Salesforce has a lot of organizational experience and skills and other resources that startups don't have, even if they're led by someone like Brett. We are going all in and are already restructuring our entire business around the opportunities presented by AI.”
To be clear, Sierra is well capitalized, but it's not at the level of a company like Salesforce. The pedigree of Mr. Taylor and Mr. Bavor, coupled with the potential market they are targeting, means the company has already earned $110 million, with $25 million from Benchmark and an additional $85 million from Sequoia. have acquired and attracted huge investments. That's an unusual amount for an early-stage company, but these aren't typical founders.
Ravi Gupta, a partner at Sequoia Capital who is leading the firm's investment in Sierra, said that beyond the founders' backgrounds, the firm was impressed by the technology and its potential. “I think it was eye-opening to see it in action, and it really captured our imagination of what future customer interactions could be like.” “I think it was,” he said, adding that writing the check wasn't a difficult decision.
Sierra reveals a huge opportunity to transform the customer experience with AI, but many obstacles stand in the way of success. Startups can succeed if founders can find a way to successfully address the pitfalls of free-form, AI-driven automated customer service agents while keeping established corporate competitors at bay, but AI As with everything else related, challenges remain. Prove it can be done and do it consistently and at scale.