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We have long been familiar with the concept of customer experience, which involves enhancing consumer interactions with firms via digital means. The findings have been varied, with no clear positive outcome.
Bret Taylor and Clay Bavor’s new company, Sierra, thinks that AI agents could develop into a crucial technological frontier, similar to websites or mobile apps. They could serve as essential digital assets for all companies and enhance the digital customer experience.
The two founders saw AI agents as a new technology category that offers consumers a novel way to connect with companies and enhance their overall experience.
Our argument is straightforward. Taylor said that conversational AI is expected to become the primary method via which customers engage with companies, including all facets of the customer experience beyond simply customer care.
Customers may input open-ended queries and requests into a search-like box. The AI agent should comprehend the request and interact with necessary transactional systems to fulfill it. Tasks may include searching for an order in an order management system or rearranging a delivery in a scheduling system, as examples.
Taylor and Bavor recognize that establishing connections with these systems may be challenging, particularly if they are outdated. However, the majority of the CIOs they have spoken to have said that they have developed APIs to link with these legacy systems, facilitating communication with Sierra.
Taylor and Bavor acknowledge the significant problems and hazards involved in human interaction with AI entities. “Placing an AI in direct interaction with customers increases its value significantly, but also raises the risks associated with brand misrepresentation and technical challenges, which are considered the most difficult problems in the field of AI,” Taylor said.
The concerns, especially the problem of hallucinations in big language models, are significant. This occurs when the models invent information when they are unable to respond to a cue. It has the ability to severely damage a brand’s reputation, depending on the content of the response.
Although no firm has completely resolved hallucinations, Sierra is striving to minimize the issue, as do others. The company’s software operates using autonomous agents as its foundation. “In practice, this means that a Sierra agent does not rely on a single model to generate a response.” Taylor explains that the process may include up to seven models, with one known as “the supervisor” overseeing response quality. If the answer is considered doubtful, the supervisor sends it back for reassessment. Taylor recognizes that managing hallucinations is a persistent research challenge for the business.
In addition to existing concerns, managing consumer data automatically involves several regulatory and data protection difficulties. Taylor and Bavor assert that their agents are also equipped to manage such.
Taylor asserts that AI is distinct from traditional software and necessitates an instructional element to aid clients in comprehending its capabilities and risks. He said that part of our strategy is to reduce these risks and educate our clients on the functionality of this new software.
However, the potential downside also creates a significant opportunity for the organization. “Whenever there is a significant change in technology, it creates an opportunity for smaller companies to innovate and take risks by exploring new possibilities,” said Bavor.
Taylor said that this emerging AI wave would create a minimum of five to 10 distinct new business software firms, similar to the impact seen with the introduction of cloud and mobile technologies. There is a chance for a novel technological model. Currently, there is no dominant player in the field of conversational AI due to its novelty. It is around a year old, and so, everyone is still learning about it as it happens,” he said.
Taylor, who serves as the board chair at OpenAI, does not see any competition or friction between the two firms, despite the potential for argument to the contrary. “We do not view OpenAI as a competitor, and I will recuse myself if there is a possible conflict,” he said.
The creators believe that a new platform should have a unique pricing strategy centered on results, which they have developed. They want clients to pay based on results, namely when an issue is addressed, rather than using tiered subscription fees or usage-based pricing like other software businesses.
“We believe that outcome-based pricing is the future of software.” I believe that AI represents a technological advancement that not only enhances productivity but also performs tasks autonomously. Taylor said that it is genuinely doing the task. That is the exact moment at which they plan to bill the consumer. The mechanics are still being refined with first consumers.
Brent Leary, founder and lead analyst at CRM Essentials, believes that despite the expertise of the two founders, it will be challenging to compete with established companies like Salesforce.
Leary acknowledged Taylor’s exceptional intelligence and competence. Startups lack the institutional knowledge, skills, and resources that Salesforce offers, despite having a leader like Bret. Large corporations are investing heavily in research and development and reorganizing their operations to take advantage of the potential presented by artificial intelligence.
Sierra is heavily funded, but not as much as a business like Salesforce. Taylor and Bavor’s impressive background, together with the lucrative target market, has attracted significant investment. The firm has secured $110 million in funding, including $25 million from Benchmark and an additional $85 million from Sequoia. This is a substantial sum of money for a startup, but the founders are exceptional.
Ravi Gupta, a partner at Sequoia Capital, is spearheading the company’s investment in Sierra. He said that apart from the founders’ backgrounds, the firm was particularly intrigued by the technology and its potential. He found the demonstration impressive and believes it sparked ideas about potential future client encounters. He had no hesitation in deciding to invest.
Sierra perceives a significant chance to revolutionize customer experience with AI, although facing several challenges. If the founders can effectively overcome the challenges of AI-driven automated customer service agents and outperform established enterprise competitors, their startup could be successful. However, they must demonstrate consistent and scalable performance, as is required in all AI-related endeavors.
