Bret Taylor on Sierra's $350M raise, beating incumbent SaaS, and the future of AI agents in customer service

our first guest of the show, Brad Taylor, coming into Altron from the Reading room. Brad, how are you doing? I didn't get the wardrobe notice. Yeah, we normally wear white suits when the market is ripping and and we're celebrating ripping. So, we're celebrating. We're wearing them for you.

Thank you for celebrating our growth. I really appreciate it. Yeah, it's been fantastic. Uh, give us give us the brief history, the the founding of the company to the news just last week. Yeah. So, Sierra, we help companies build AI agents for customer experience.

So, think uh maybe it's on a website, maybe it's answering the phone. Uh no one likes to wait on hold. Now, you can chat with an AI agent.

We're helping do everything from originate mortgages to help you get a better rate on your Sirius XM plan to helping, you know, when your ADT home alarm system doesn't work, you'll now chat with an AI agent to fix it. Um we're a couple years old. Uh we're the leader in this space.

Um, we kind of uniquely have run towards, I would say, larger enterprise businesses.

We're trying to help companies that candidly it's it's hard for them to deploy AI because they've got lots of legacy systems, maybe they're in a regulated business like the health insurance market or banking with the whole hypothesis is if we can help them be successful, there's just a ton of value and leverage in that.

So, uh, as you mentioned a couple weeks ago, we announced a recent round of financing, which is, uh, we're proud of, just a milestone on the path, but I think kind of recognizes our leadership in this space. You're the chairman of OpenAI. How should I think about application layer versus model layer.

I'm sure you get this all the time. Uh, there was a meme for a long time about, oh, OpenAI is going to go on stage at Devday and just steamroll a bunch of companies. You seem to have good information on what they're going to steamroll. Yeah.

And the other thing is there was there was so many you know two years ago so many different companies that had thriving businesses doing customer various customer service platforms and you know many people would have said these companies are just going to move quickly on AI get this you know they have the customer relationships uh but you clearly saw it differently and have proven that that that uh hasn't been necessarily the case.

I'll answer both. I'll start with the foundation models.

My my theory of how the market plays out is that the foundation model market will look a little bit like the infrastructure as a service market where it you know primarily provides technology low-level technology to a lot of applications companies and then there's all the adjacencies you know like if you look at Amazon web services they've got some developer tools if you're kind of in the area like snowflake and data bricks there's probably an Amazon product that competes with you the farther you go towards serving a line of business um you know like ERP systems or CRM systems the less likely it is that you're going to run into uh you know an infrastructure provider competing with you.

I think the same is roughly true in the AI market. You know if you think about what's required to make AGI it's a lot of like you know training stuff but it's also maybe software engineering agents. So that's probably sort of in the the the target of these foundation model companies.

the closer you get to, you know, Harvey doing legal AI or Sierra doing customer service AI probably doesn't seem in the core of these, you know, research labs, you know, primary uh functions.

Um, the reason I think that the applied AI market is exciting, not just for Sierra, obviously I'm a, you know, very loyal to my own company. I don't think most companies want to buy a bag of floatingoint numbers and then figure out what to do with it. You know, they want to buy a solution to their problem.

And if they can, you know, turn on Sierra and it will answer the phone and bring down their customer service cost by 50% overnight, they're going to do that, not try to, you know, take these models and try to do it from scratch.

If they can buy Harvey and get an antitrust review for onetenth the cost, they're going to do that. Um, and I think, you know, I al I was talking to Toby Luke at Shopify one time and he was joking how many people come up to him and me and like, "Aren't you just a database in the cloud?

" And you're like, "Yeah, I guess so. " But there's a lot more to it. And it turns out these workflows are valuable. So I'm I'm really banking our company that there's a lot of value in these agents. Uh and I but going to the second question on the incumbent software providers in this space.

It's very hard to disrupt your own business model. If you're licensing customer service software per seat and you have to make an AI agent that will actually cannibalize your own business to realize the value of this new technology. That's not just a technology problem, right? That's a business model transition.

And the history of technology is littered with companies that saw the slow motion car wreck of their business model being hurt by a technology trend and not really being able to respond to it fast enough.

And I have so much respect for people like Satcha who navigated those transitions, but you know, candidly, there's a lot more companies in history that didn't navigate transitions like that.

And I think that's candidly just a simple reason why it's hard for a lot of the incumbent companies to to respond to this new technology trend. When you were thinking about starting this company, did you did you like how methodical were you about ma mapping the market?

Is there like a whiteboard picture of you looking at maybe I should do ERP? Maybe I, you know, was this one of a few options that you narrowed down once you studied the market or was it something that just came to you in a fugue state or something? Yeah, it's such an interest you said that.

We actually did call up some, you know, uh, potential customers. We started those conversations just saying, "Hey, if you could put us on one problem, what would it be? " And by the end, we had a pretty clear picture of the available markets. I don't think any of it was particularly surprising in some ways.

You know, it's like software engineering, customer service, content marketing, you know, all these things that come up when you think about if you have a technology that can see and understand text and voice, that can reason, you know, what are the direct applications?

But kind of the to the the thing that we're most excited about is not where we are today, but where it might head. And our whole theory is that your AI agent will end up more important than your website or your mobile app in the future.

Uh and as a consequence, we think the addressable opportunity here isn't just customer service, which is really compelling and interesting, but saying, you know, how can you actually drive more sales? How can you actually create a personalized concierge for your your brand?

I mean, just to give the math of it, if you actually have a phone call with a human being, uh, it probably will cost on the order of $20 at least, and it really depends whether it's onshore or offshore. If you think about running a large-scale consumer brand with an arpoo of $20, you know, how do you afford that?

And you can't. And as a consequence, it's almost impossible to talk to most consumer brands. You bring down that cost to 20 cents or even 2 cents over time. You just think about the dynamics. Let's say you're a large mobile phone carrier and you're fighting for retaining your subscribers.

You're not just going to recoup cost savings in customer service. You're going to say, "How many phone calls can I have with my customer so that I retain this subscriber for five more years? " Think about the impact on your lifetime value of your customer.

So, what's exciting about this like so many new technologies is like the first order effect is obvious which is saying hey let's reduce the cost of customer service by you know 50%.

The second affordable effects are almost more exciting which is the companies that lean into this faster will actually grow their topline faster than their competitors.

So that's what's so fun about technology disruption right is that you know you can end up sort of upending you know sort of the incumbent versus insurgent dynamic. At the same time the value proposition to the companies using Sierra is more than just cost reduction.

It's saying like how can we actually give you a competitive edge by moving faster in this new world of AI. How are companies actually, you know, you're you're going and and landing some of the probably just crazy logos, right?

And and these are, you know, massive uh companies with uh you know, operations all over the world. How are they actually rolling it out? Are they are they giving you specific sort of segments, regions, you're proving it out uh at a smaller scale or you what is the actual roll out look like?

Yeah, so starting you're right. One of the things I'm most proud of is the scale of some of the companies working with us. Over half of our customers have over a billion in revenue. Over 20% have 10 billion in revenue or more, which is pretty I'm just really proud of that.

And I think it shows you do not need to be a small startup to deploy AI successfully with Sierra. Um on the roll out, it's a very kind of a variation of what you said. Some companies start with us on a use case or two.

um we're going live with one of the largest healthcare companies in the world and actually replacing their IVR system, you know, and it was just in a handful of months to do that.

So, you know, it can really I think it's really up to the the customer how assertively or aggressively they want to roll out these new technologies. And the thing that I've been most pleasantly surprised is some of the largest more well-regulated companies in the world actually want to move faster.

Uh, I was having a conversation with my co-founder Clay about one of our largest clients and kind of being all inspired about how fast they're moving and I said, "Now I know why they're big.

" You know, now I know why they're successful because they're moving faster than some of their smaller competitors that we also work with. And you kind of you really learn to respect the I say intentionality, assertiveness of a lot of these like really well-run companies.

What's the sales process for a huge company like that? is that like you meet the CEO at a you know fancy conference and start pitching or I mean like it feels like an advantage of like having a career like yours and the rolodex that like that's sort of like the unfair advantage here.

Yeah, it in many ways Sierra like you know doing what you guys have done in two years is incredibly impressive yet at the same time it's what I would expect out of out of the team right and Karp like he's just so fun to talk to.

He's in all these interesting places and it's like, yeah, I could imagine that some big Fortune 500 company just wants to hang out with Karp and like talk to him and then they do a deal together. Is that how it works? Well, it's funny when you said this is what I expected.

This is like why it's hard to start multiple companies. Like yeah, of course it's going to be successful. I'm like, have you ever started a company? It's hard, you know? So, but uh yeah, but I mean it's it's and I and I and I say that as like a as a compliment where it's like it's Yeah.

going from zero to a $10 billion company, having, you know, this crazy, you know, list of customers is incredibly difficult. But I like when people have a lot of advantages through what they've done in their career and their network and then they just put on an absolute master class. Like it's it's very satisfying.

Well, I appreciate you saying that. You know, it does all have to start with the product though, you know, because certainly I would say my guess is the way I think of Sierra is we have the best product, but because we have a founding team that's sort of been there and done that, we're not like a hugely risky bet.

You know, we know how to work with large companies. We're not going to show up and be learning from, you know, first principles how to engage with a large bank or a large health insurance company.

And that's a unique value proposition because right now most of the incumbent technology platforms their products don't really work. And so you really want to use a best of breed product right now.

And I think our value proposition is we are a best of breed and I believe the best of breed product in this space but we also know how to like work with complex companies.

You know we're going to show up with as many people necessary to help you be successful as opposed to just throwing a product over the wall and saying good luck to you. And uh so that I think I you know certainly our reputation helps but at the end of the day it's the quality of the product that really matters here.

And just you know think about it this way. If you have 400 million phone calls a year the difference between having an AI answer 100 or 300 million of them is probably measured you know and you know at least eight or nine figures right in terms of like the impact on your business.

And so we always start with the product and as you said take advantage of our unique uh unique advantages as a company which fundamentally means we know how to work with you.

Uh it's sort of interesting like it just turns out that you know there's lots of different stakeholders between a business team a technology team compliance understanding just like the constraints that a company is dealing with.

Uh we just try to show up with a ton of empathy and you know show up recognizing this isn't just a technology problem. You know, it's sort of a kind of bureaucratic word, but it's a change management problem.

You know, how do you get from point A to point B when your auditor and your regulator is scrutinizing everything you do? Well, we understand that. Like, we're going to help you with that problem, not just the technology problem. What do you think the steady state of commerce interactions look like?

because I imagine that uh companies will be using AI to interface with their customers, but then customers will be using AI agents to negotiate on their behalf and select products and uh without leaking too much of the OpenAI road map.

I think we're all pretty convinced that some sort of agentic commerce thing is going to happen. I'm already seeing popups for, you know, links to products. when I uh search for things, I'm going to be able to say, "Hey, go get me the best option, the best price.

" Is the future a voice agent talking to another voice agent or do they just interact at some lower level API level at some point? Like, how does that all play out when you get agent on agent warfare?

It I I think you're right about your intuition, but it's also, as you were sort of alluding to, the future's not perfectly clear, even for people in the middle of it like me.

But I I think in general I think a lot of intent has already gone from search towards chat GPT especially for the more considered the purchases, the more you're likely to use something like AI. You know, when I was traveling this past summer, I used Chat GBT to plan the entire trip.

If you think about something serious like purchasing a home or you know I you I've talked to so many friends who are using chatb to figure out how's the school district in this area what neighborhoods are good you know and you think about that just from a commercial standpoint that is extremely qualified intent at the very top of the funnel and so much research is already being done there but as you alluded to the thing that's not happening is you're not kicking off your agent to go fulfill that transaction.

It sort of stands to reason to me that that will likely happen at some point. And then the question is for a lot of our customers are sort of on the other end of that is what do you how do you want to show up in that new world? You know, how do you ensure that you know your goods and services show up in the right way?

You know, when you're engaging with an agent, how much do you want to directly engage with consumers? How much will you be able to directly engage with consumers? I don't know all the answers, but step one is make an agent.

You know, step one is, you know, make an agent so that whatever inter agent protocols emerge, you can be present and do business in that new world.

And that's one of the main value propositions Sierra provides its customers is like we don't know exactly where the world's going to go, but a prerequisite is to uh technically be able to interoperate in that new world. Uh, and I think impact different industries differently. Sorry.

Do you think the do you think the form will generally die? Well, there there's certain businesses out there that sell basically sell product, let's say like a a company that makes aircraft, right? If you go to their website, you're not just like browsing inventory and checking out. It's like you Yeah.

You're not adding to cart. Um Tesla's likes to do add to cart buttons on, you know, most companies out there. Let's say somebody contact aviation enthusiast wants to buy a small plane.

they've got to contact sales and then like the second you get to the form so much like uh so many leads just die at the form and something I've been doing with LLMs is just ask talking to them about like the pricing of different products because I don't want to go to the form and like get a sales rep to call me.

I don't want to be waiting I don't want to just get a call back at a random time.

I don't really want to go through the but but I want to kind of understand and so it feels like the form is something that fundamentally could just potentially go away and it's you go to a website you talk with an agent maybe you give them your information because you do want to hear more you do want to talk to somebody at some point but uh feels like uh feels like that could be going away.

I agree. I mean, if you just think about qualifying a lead, which is basically what those forms are, why not ask follow-up questions? Why not collect enough information so that when that great salesperson does follow up, 80% of the work is done? And it's just the the human touch uh part of it.

You know, agents are already doing outbound sales, debt collections for credit cards, processing, payroll for small businesses. Uh these agents are already doing sales.

And I think that, you know, the best sales people, the reason why they're the best paid people in most companies because they're worth their weight in gold. But what about the median salesperson?

And my guess is you can make an AI agent that's actually quite a bit stronger than most, you know, just because you're standardizing the best practices really, really fast. You can run AB tests on AI agents.

It's hard to run AB tests on people, you know, and there's so many advantages, as you said, to not only just forms, but really thinking about agents as not stuck in one part of your customer life cycle, but really managing the whole thing.

And let's just take I don't know much about airline, you know, buying a an airplane uh for a a hobby pilot, but imagine this AI agent sort of the concierge to the whole experience. So, you're browsing around Empires, you set up an appointment. You know what?

If it's uh collecting a bunch of information before you get on site after you, I don't do you test drive an airplane, but let's say you do that, you know, afterwards it's asking you questions, maybe helping you with financing.

I think that's the future of where these things are going, which is whether or not a person's involved, it's a concierge helping you through the whole process.

Yeah, there's something about, you know, the the consumer being proactive, engaging for information, but then, yeah, using the the the airplane example, let's say they don't have something in stock, you know, the the agent at at what point are you guys already thinking about agents being proactive and and reaching out to to a customer after they already engaged?

Like I imagine a lot of the core of what you're doing today is just reacting to customer needs inbound questions things like that or or problems with a product whatever it is but then at some point or another the the agent is going active and actually going outbound but how do you think about uh how do you think about that?

That's exactly right. I almost think of it as like Masow's hierarchy of needs of agents. Yeah. Step one is answer the phone. You know when your customers call. Step two is can you actually get in front of of customer issues? Um I noticed the ramp logo in the top right.

They're they're one of our customers and like they have like the coolest implementation of our platform. Uh the it's you know not only doing service but really like I love their aski function in their product. It's just one of the coolest experiences and it's just it's not service right.

It's basically a conversational experience around one of the best design technology products in the world. And I think, you know, RAMP is obviously one of the the best engineering teams in the world. But can every can every brand do that?

You know, can every brand make their their agent proactive, offer a conversational experience? I look at if you've ever visited like Brazil or India and you look at the impact of WhatsApp, it's like, well, can you be present there in a way you weren't before? Well, yeah, you can. What an awesome opportunity for agents.

It's new channels. It's proactive. Uh and this is really uh where we're trying to to guide our customers and I think you know kind of represents the future of our platform in a lot of ways. Uh the the latest round I think it's 350 on 10 billion that feels low on the dilution side.

Uh how did you think about uh the amount of money you needed to raise sizing that? I mean you've been part of so many interesting financings throughout your career.

uh how did you land on that and uh what does it say about the the usage of that fund how in capital intensive your business is the state of the markets right now just take me through the the thesis for the round yeah I always think of rounds in pretty simple ways which is what valuation are you raising at um what do you need to fill in that valuation so that if you need to raise another round or if you're going public that you've uh you more than filled out that valuation with fundamental business metrics like in your revenue and growth rate and and then you start and then you say okay how much capital do you need to to reach that milestone.

Um and so that's kind of how we reached it and and that 350 number it's not it's obviously there's a lot of precision involved but it is a bit of an art form because you're making a lot of assumptions about the future which is what are the capital that we need to reach the revenue scale where uh you know we can reach the next milestone in our business.

So that's how we think about it. I I'm I'm pretty methodical about it.

You know, I think a lot of entrepreneurs make the mistake of raising too little at too high of a valuation and they end up sort of sort of walking sort of a zombie company just because they've they don't have the capital they need to to reach the next milestone, but they've uh uh but their valuation is such that they've sort of priced themselves out of the market.

So, that's the main sort of thing I'm paranoid about and I feel really good about how much we've raised. But more than anything, too, I feel great about the investors we have around the table. uh benchmarks.

Yeah, Green Oaks, uh Neil Met at Green Oaks is just remarkable and so love our board and and in particular, you know, I think about who do you want to be on the journey with to get to that next milestone and and really happy with the folks we have around the table.

How are you thinking about uh IPO timelines just generally? Do you think Sierra is going to be another Stripe or data bricks where you just stay private forever because you can and it's probably allows you to to um whatever take more risk, think long term, etc.

Or given that you've been um you know uh done your tour of duty on the on the public side in the past, I'm I'm curious how you think about it. Yeah. Uh I don't think we're Clay and I have talked a lot about this. I think our intention is to eventually go public.

uh you know we uh there's a lot of advantages to staying private. I also think there's a lot of advantages to sort of having liquidity for your employees. You know that access to capital. Um you know I really admire the way I know the Stripe founders pretty well and you know they're in a really unique position.

I respect what they're doing. I think we'll probably take the more traditional path though it's far enough in our future. You know that's just more our philosophy because I think that's where you're going. We don't have reticence to do it eventually and we'll probably more take the traditional path. That makes sense.

H how do you think about uh the Sierra fundraising process versus what's happening at OpenAI? Is it just so much simpler to under? Have you have you learned it's not it doesn't feel like it's just add a couple more zeros like the Open AI stuff it's seems deeply complicated.

Is it refreshing to have more of a simpler business to underwrite or are there at least lessons that you've ported over? Have you learned something from OpenAI that you brought back? I'm interested. Like CC Corp traditional equity financing. It's pretty it works pretty well.

Open are just a really I mean it's a oneofone business as you all know really well. The thing that's just so different about building the AGI versus building a PI company, they're just so different from a capital standpoint.

you know, uh, as Sam has articulated better than I could, AGI will fundamentally in some ways be driven by compute.

And so much of the capital strategy, um, that Sam's articulated is really how can we have the best compute infrastructure and the most uh, resources available for both training and inference, especially with these reasoning models and and meet the scale of demand there.

And when you have something that capital intensive, it just changes your approach to fundraising partnerships.

Uh and uh I really admire, you know, what the management team of OpenAI has sort of orchestrated there just because I think it's the company that is best positioned to to essentially build the the best computer, the largest computer in the world and have the best research team, which I think if you're saying what are the ingredients to winning in that market, I think they've checked both those boxes.

in some ways the applied AI market I I'm not sure other founders in the space would agree like I don't think you know we're like an AI company I mean we're using AI to solve business problems but well and that's what that's what I what I love about kind of the whole approach is that we you know we talk to a lot of companies that say we're an AI agent company or we're an AI company and then you look you ask a few questions and you realize like you're building enterprise software there's a bunch of things there's a bunch of things that And there's nothing bad about that.

We love we love enterprise SAS more than anyone.

But you know, if you forget that and you get fixated on, you know, we're building, you know, we're just building agents, it's like you're going to your customers will eventually ask you for a feature set that looks like traditional software, although maybe it's a different workflow.

Or you might burn 20 million of capital training a model because it makes you cool at a San Francisco cocktail party and lose sight of why your customers are hiring you to do the job that you're doing. And so, you know, to some degree, I as you said, I'm we're un unashamed of being an enterprise software company.

And more than that, you know, I think the way we invest our capital is very different. Thank you. Thank you. uh how do you what's your framework for understanding uh SAS companies and the public markets today?

Uh what what percentage do you think we'll be able it feels like everybody will have to transition at some point from traditional seatbased pricing to value based pricing? You guys have the benefit of starting out with value based pricing and saying how many phone calls do you get?

How many how many uh how many individual reps do you have? you know what what percentage of that can we uh you know augment or replace but uh just feels like doing that transition on a on a on you know a quarterly reporting cadence feels completely you know miserable. Yeah.

My high level premise is it's easier to transition your technology than it is to transition your business model.

Uh, and it's especially if you're public just because if you just think about uh let's say you have uh your I'll just pick an ERP company and you have an enterprise license agreement for some number of seats you know and uh or you know ITSM or something like that and then you say okay we're going to make an agent to automate 70% of what this platform does.

That's easy in theory, but what happens in the next renewal like in six months? Maybe your AI agent platform isn't quite mature enough uh to actually, you know, make up for the difference in loss seats.

So maybe your sales rep who's incentivized on increasing the size of that contract goes and it says you should buy both, you know, buy the same number of seats and an AI agent and all of a sudden the CFO of that company is like, wait, I thought this was supposed to reduce our cost, you know, like what's going on here?

And so I think the I think all these incumbent SAS companies have an opportunity to come out strong in this market, but they have to really transition their business model and their technology model at the same time.

And anyone who says it's easy has never been a public company CEO because it's it's really hard, you know, because you end up uh having to tell a story to your investors, to your customers, to your employees. You have to go through a trough of despair probably.

Um and you know if you look at Microsoft's transition to the cloud and and it was really complicated to go from Windows revenue to Azure revenue now Sach is you know a hero for having done it but at the time you know there's a lot of people including me who wrote them off you know and and then afterwards you're like wow props to them for making that transition and coming out so strongly but for every Microsoft there's a seable systems who didn't make a transition you know and for those of you online who don't know seable there was the company that that Salesforce beat in the transition to the cloud and and now you probably don't know their name because you know they they didn't sort of make it through that that transition despite being the market leader in the on- premises software era.

So you know I think all these companies have an opportunity and I think that it really takes leadership. I think it's very hard to do as a public company just because it's very hard for investors to sort of see through the quarterly earnings to see because you can it's just hard.

It's just like is this company mid-transition to something great or are they just dying, you know, and like it's easy and it's like and a lot of it a lot of it is ambition and storytelling and so it's just a complicated time in software.

Um I think it's really going to come down to leadership both like uh stakeholder management and technology leadership for companies to make this transition.

Are you getting uh a bunch of calls yet from AI application companies that haven't found product market fit and uh need to find a a soft landing or do you think that's a a few more quarters out because those companies are still well capitalized?

We are there's definitely the you know uh just given the amount of revenue growth for the ones that are working it's pretty clear the ones that aren't um there's some good teams and good technology there too. So, uh, we try to look if it makes sense at all of them, if there's a good team that could contribute.

Um, uh, we actually when did that when did that start? Uh, about six months ago. Okay. Yeah. What's your I assume it will accelerate. Yeah. We're having him from General Catalyst on the show Friday. What's your reaction to his uh sort of hot take?

I don't know how much it was taken out of context, but this idea that triple triple double double double is kind of dead. you need to be 10xing every day. You're not interesting unless you're 10xing. Um, is there something there where like the power law is getting steeper?

There's uh there are more winner take all markets, more faster growth companies, but then also just some that are, you know, triple triple, but then going to be nothing. Yeah. So, I have a complicated opinion on this one.

So, first I'll say uh the faster you grow is sometimes correlated uh with a lack of a moat just because what enabled you to grow fast might enable your future competitors to grow there as well. You see this in some social services as well.

You know, you'll have these social services grow from zero to whatever million users overnight based on a social mechanic and very few of those have ended up durable.

Some of them ended up incredibly valuable like Tik Tok but there's like you know the club but Tik Tok also spent like billions of dollars on user acquisition right exactly exactly in enterprise I do think that growth is greater in agents in part just because there's more value in agents than there is in software because you're uh you know essentially doing things like that were people were doing before so you're you're just achieving more valuable outcomes than just slight productivity enhancement.

The reason I'm cautious on it is I think uh growth can sometimes be artificial you know so you can basically juice the numbers and and the question is are you creating a durable business and you know we talk a lot about like in our board meetings just about first mover matters and there's definitely like a green field right now but what matters is where you are 10 years from now so like are you creating a machine to make happy customers at scale and so many of these businesses can grow to like you know 50 or maybe even 100 million in AR are and plateau and you saw this with a lot of different businesses actually.

I mean it was and so the question is what is your addressable market? What are your product advantages? What are your gotom market motion and can you scale to add to the next zero? Can you grow to the next order of magnitude?

And I the only reason I I think he's a smart I thought it was a smart point that growth has definitely accelerated in this world of agents but as an investor in particular you're you're really worried about can they get a billion in revenue? Can they get 10 billion in revenue?

And it turns out they're like growing really fast to 20 million is like loosely correlated with that. You know, it certainly means there's product market fit, but the question is like was it with a very small niche of startups or selling or selling tokens at a loss and you're just subsidizing it, right? Yeah.

So, I'm I'm a huge believer in quality annual recurring revenue and very happy customers. And my view is if you can do that quickly like we have, that's great.

If you had someone growing more slowly but it was very high quality revenue from very happy customers, I'd probably bet on them over just the fast growth rate because to me that's a more durable business over time.

Do you think do you think ex like just raw execution can be a moat because some of those things you were saying earlier. It's not like you guys have access to different LLMs that someone else in your category might not.

But it's just this kind of like knowhow of selling into the enterprise and being able to do that at, you know, just with with pure excellence that feels like it's separated you guys from I'll say it's a I think it's I think it's all the above. You want the best technology, best product, best go to market.

But I think right now because the technology is changing so fast, execution compounds over time, you know. So if you had a great product today but you weren't executing well, you will not have the best product a year from now.

So that's where I think execution is maybe the main thing we focus on because it's basically the pace of innovation in your product and the pace of reaching and making new customers successful and we want to have the best pace because I think what we want if I I come on this show a year from now I want to be farther ahead of our competitors than we are now and that is all a function of execution.

Last question I have, I know I know we're a few minutes over uh so hopefully you don't have to jump, but uh how how are you thinking about the evolution of the cloud market broadly? You have companies like Oracle waking up and uh getting extremely aggressive. You also have a bunch of Neoclouds.

I'm sure all of these different players are calling you every day. uh hopefully not sending you AI uh chat GBT generated cold emails but but I'm curious like you know where you expect to be uh and what kind of vendors you expect to be using on that side over the next 5 10 years.

Yeah, the Oracle story is pretty incredible, isn't it? I don't like uh who would have predicted that. What's your backlog if if you were going to do you that's amazing. Well, it's really impressive, too, just cuz it sort of shows you, you know, sort of like a founderdriven big view of the market.

It's super impressive and and I've just like kind of I just I love stories like that just because it's like just I mentioned the Microsoft story where so many of us had written them off and like it's just super impressive the level of execution and uh clarity that Larry brings to that business.

you know, broadly I think the things that changed in cloud is just the shortage of supply of GPUs and the demand for compute and I think that is bringing a lot of uh you know there's a geopolitical angle too. Where are these data centers built? Uh data sovereignty all of that as well.

So I think we're in this new era of of cloud infrastructure where you know the capex is getting larger.

um you're seeing like the market crediting boldness in a lot of ways because if there's truly a a scarcity here, you know, and and I think Sam has been articulating, you know, it's like who whoever has the best infrastructure will really contribute to this world of AI in different ways.

And so I do think we're definitely in a new chapter there just because it's like, you know, different players are making different bold bets.

Um, and one of the things that's been really fun to be involved with OpenAI is just seeing sort of OpenAI's influence on that as we try to, you know, pursue our mission of ensuring AGI benefits humanity. And a huge part of that is related to cloud, right?

It's if you don't have the right computer, you're not going to achieve that mission. Makes a ton of sense. Uh, well, thank you so much. We conver uh congratulations and we'll talk to you soon. Yeah, thanks for having me. Cheers. Great rest of your day. Let me tell you about graphite. dev code review for the age of AI.

Graphite helps teams on GitHub ship higher quality software faster. We are joined by Joe Lansdale. Next,