Sierra crosses $200M ARR and earns FedRAMP High certification, opening the door to federal government contracts

Speaker 2: It's crazy. Florsheim repeatedly ignored signs outside of the dentist's house that said private property behind the sign, only water access behind this beyond this point. Demagala kept calling the cops and the village eventually issued a trespassing citation rather than pay the fine and walk away Florsheim dug in at stake is what right people in Wisconsin have to take a shoreline stroll. It's high stakes stuff, and we'll be following this case closely, of course.

Speaker 1: We have One of the most important stories in technology.

Speaker 2: Importantly, we have Brett Taylor from Sierra here in the waiting room. Welcome to the show, Brett.

Speaker 7: How you doing?

Speaker 3: Doing great. How are you?

Speaker 2: You going dentist or dog walker? We won't make you take a side. That's a tough question.

Speaker 1: That's a tough question.

Speaker 2: We're gonna ask you the real tough questions. How's business going?

Speaker 3: Business is great. We just crossed 200,000,000 in ARR. We were Great news. I was hoping to get a gong out of that.

Speaker 2: Of course. Of course.

Speaker 1: That revenue revenue gongs are always the best gong.

Speaker 2: Yeah. Yeah. I mean, fundraising is easy.

Speaker 3: Yeah. And today we announced we're a certified FedRAMP high, which really simply put means now federal government agencies have access to Sierra, which I think is really exciting. If you look at, you know, the conundrum of the federal government, it's like we want greater services for our citizens but we have a really big national debt. I think AI is gonna be a huge benefit to, you know, programs whether it's, you know, getting a passport or Medicare. So this is the first sort of the door opening so we can serve these agencies which I'm really excited about.

Speaker 2: Interesting. I don't think of like you're breaking my brain because I don't think of like getting a driver's license to the DMV as like a customer service interaction. But is that where we're going where more and more of these like like

Speaker 1: an address change on like an ID. Like something Yeah. Like, you know, if if Calling the tax department. Calling IRS. There's a lot of these.

Speaker 2: So, yeah, I mean, what

Speaker 3: all these government services. Got Medicare, you've got Medicaid, you've got the Department of Veterans Affairs, you've got, you know, immigration, like, you know, the passport agency. All of them run large call centers, but more importantly, people depend on them. You know, people depend on them. You have, you know, someone on Medicare or you have a vet who depends on Department of Veterans Affairs for their health care. It's a really big both payer provider. If you look at, you know, what we do for, you know, folks like Cigna and Blue Cross Blue Shield and you squint, well, it's almost that entire stack in a in a federal agency. And, you know, for good reason, there's just a very high bar for cloud technologies when you're serving the federal government and this is the main certification that kinda opens the door there. We're already working with a few agencies, none that I can fortunately talk about today. We work with FINRA, the regulator. Mhmm. So we we've always been really passionate about, we want the best technology to be available even in regulated industries. And so it's a big step for us. We're really excited about it. I hope hope we can contribute to the quality of life as US citizens, you know, and do so in a way that's a lot more cost effective.

Speaker 2: Yeah. I'm I it's interesting. Like, would you would you is the is the biggest low low hanging fruit just taking some of these agencies and making them available twenty four seven? I feel like one of the most frustrating things that I run into is like, call from nine to five. And I'm like, I have a job. Yeah.

Speaker 1: The thing like the difference between interacting with like a public utility versus like waste management. Right? Like waste man like waste management. Right? Like Yeah. You know, maybe it's not perfect, but like it's pretty fast. Like you can get stuff done. Like it's efficient. And then like the trying to do the same exact thing with like a public utility, you know, usually you I I I always personally estimate like, okay, if it would take me like, you know, ten minutes with waste management, it'll take me like thirty minutes with a public utility. Sure. And so like bringing bringing that there's there's no reason that those two things can't be at parity, but it is entirely it is almost entirely a a technology and like process Mhmm. Problem.

Speaker 3: Right? A 100%. And there's a couple of factors that I think go into why it's so hard to have great experience with some of these government programs. You know, first, a lot of people do need to call things on the phone and it's only been the past couple of years that we could digitize a phone call with AI agents. So we've essentially digitized the last remaining analog channel and everything you said is true, could it be twenty four seven. As importantly, it could be multilingual. If you imagine staffing up a big call center and you wanna represent all the languages in this country from Spanish, Mandarin, Tagalog, you know, like go down the list, really really expensive to do. Now you can do it at scale. Each new language, the marginal cost is effectively zero. And then the other part of it is for good reason, as I said, there's just a a really high compliance bar for technologies to be available. And as a consequence, if you look at, you know, what waste management or just pick any private company, they can go off and get the best of breed solution for any given technology problem they have. That is not something all federal agencies can do. And so what I'm really proud of is that CIRA is the best of breed solution in customer experience. We power everyone from, you know, Singtel to Rocket Mortgage on our platform. And now because we have this certification, federal agencies have access to the best of breed solution in this space as well. And so I'm really hopeful. I think AI if you look at some of the parts of the economy, the governments, both state and federal, the healthcare industry which has gotten progressively less productive over the past decade, it's one of the few parts of the economy that has, I think AI is incredibly important because these are the parts of the economy that need productivity. You know, we actually want to have great service as citizens and reduce our spending. AI is the answer. So we're really passionate about it. We're patriots here and we love our technology. And so I'm just excited that we can apply it in a in a in a great way.

Speaker 2: Talk about pilot programs and conversion to real customer. Is that timeline a KPI for you? Is that something that you monitor very closely? I have to imagine that it's speeding up. But whenever you shake the hand of a CEO and they say, Let's do this, or someone in the federal government perhaps, an agency lead and they say, I'm ready. I'm I'm bought in on the vision. The demo looked good. But then there's obviously an implementation time. Does that look What like did it look like a year ago? Where is it going in the future?

Speaker 3: We track it and we measure it in days not weeks.

Speaker 6: And

Speaker 3: so, you know, some of our favorite like Nordstrom, know, from, you know, concept to a 100% of their phone calls was thirty five days.

Speaker 2: That's good. Said three thousand days is good, then we're back to, oh, you're game in the stats.

Speaker 3: What's the thing about that too is we started out at 1% of their phone calls in I think four weeks and went to a 100% in just a week and that's because of the Nordstrom team. Yeah. You know, actually in Fiserv, which is an amazing, you know, financial technology company for banks, just broke the record. So I don't know if I'm at liberty to show the number of days Yeah. But That's they have an amazing president named Divya. She was just top down, like, we're gonna do this and broke the record. So we have a leaderboard internally about how quickly when a customer talks to us can we go live and start delivering value. For what it's worth, I think it's really relevant in this world. You can Financial Times, Wall Street Journal, it's all, you know, token maxing. Yeah. What value are we getting from the tokens? Like, is kind of in the headlines right now. We don't really have that issue with our clients because, like, our thing is, like, let's start answering the phone as quickly as possible, start driving those operating expense savings as quickly as possible, but as importantly, that you can actually improve sales, improve CSAT at the same time. Our you know, as you know, we've been really pioneering this idea of outcomes based pricing with the idea being you only pay Sierra when we successfully resolve a call or successfully make a sale. It's it sounds like a small business model thing, but it's big because we don't get paid until it's live. So Yeah. It really aligns like all the incentives. Like, we don't care about the sales process. We care about the go live process.

Speaker 2: Sure. And I

Speaker 3: think it really changes, I would say, almost the social dynamics between vendor and customer where we really become a partner because we have the same incentives as our clients. And I think it's a really big shift and you know how much I'm an advocate for it, but I actually think a lot of the, you know, token maxing issues would go away if more companies were just focused on outcomes.

Speaker 1: We're How are you tracking the popularity of the message talk to a human? Or the statement.

Speaker 2: No. No. When I pick up the phone I say talk to an agent, agent, and then they put me on the phone with an AI agent. It's great.

Speaker 3: Yeah. No. Thank you for that. You're on my side. Yeah. So we actually have a name for it. We call it greeting acceptance, which is basically what percentage of the time do people get past the greeting and actually give the AI agent a shot. It's going up. People in general I think the problem was we had ten, fifteen years of bots that were really bad. And so we're just you're just, like, paying down this debt because if you were talking to an AI more than three years ago, it sucked. Like, let's just be blunt about it. Now you can talk to an AI and it's conversational, it's multilingual, it has access to systems. I mean, the AI agents of today are just, like, a completely dead it's like horse and carriage versus flying car. Right? They're just very different technologies. The problem is in the first five seconds of a call, you're wondering, is this one of the crappy ones or is this like one of the good ones? And so we have a lot of techniques on our platform to help people with that. I think the real key is making sure the first greeting is personalized, is engaging, is empathetic. And I think the trend is in the right direction. I think over time I mean, don't know if you have this experience. If I have to call a restaurant to make a reservation, I'm like, I'm I'm going to a different place. Like, if you don't have OpenTable or Resi or whatever, I'm out. I think we're gonna get to the point where people demand an AI because they're not gonna wanna wait on hold, you know? And what's also interesting is these AI agents, once they're properly configured, are faster for me as a consumer. They have access to my information. They can get the things done quickly. We're not a 100% there and as I said, we're just paying down the debt of bad tech that we've had for the past ten years. But I'm hopeful Yes. In three or four years it will be the norm.

Speaker 1: When did it become popular to to get the, like, there's a thirty minute wait, like press 1 if you want a callback. Because I felt like that wasn't a thing when I was a kid, but now that feels like a pretty meaningful innovation at some point in the last Yeah. Ten years where it actually is really convenient to not be like, okay, like, I'm on I'm just gonna Some

Speaker 2: guy has a patent on that and

Speaker 1: has I'm I'm I'm sure, but like that was like the last great innovation Yeah. In customer service. Yeah.

Speaker 2: It was.

Speaker 3: Well, I think it's going in a really good direction. I mean, I think, you know, not having to wait on hold. We should never have to wait on hold again. Like, that is gonna be a thing of the past.

Speaker 2: But the GPUs are on fire. It's like, we'll call you back when the GPUs call like, cool off. We're load balancing right now.

Speaker 3: Please wait on hold. Yeah.

Speaker 2: Maybe. Imagine that world. That is a bizarre outcome. I mean on that on that note, are are are there any are there any like how how close are we to thinking about like a six for voice models or we were talking to Matthew Prince from Cloudflare about edge computing for voice models. That feels more relevant than, yes, if you're going to cook for an hour on some deep research project, go do it in the on the NBL 72. But how are you actually at the point where you're starting to think about that optimization or is that more a few years away?

Speaker 3: I think it's probably not a few years away, but it's definitely in the future. But I'm excited for it. I actually agree with your intuition that, you know, we're entering a world where first, the frontier models are actually separated in my opinion. GPT five five, the recent releases from Anthropic, I mean, you can just see it like Yeah. The gap between the best models like GPT five five and the the others, the open source models is growing not shrinking, which is probably not something we would have predicted a year ago or at least, like, certainly not what I saw in X and and the press. But we've reached sufficient intelligence for a lot of different domains. Like, you don't need, you know, a multi billion dollar multi billion parameter account model to do a simple classification or, you know, just do basic, you know, transcription. So as a consequence, I'm hopeful that over the next few years we'll end up with a constellation of models with really purpose built ones. And as you said, just given the power of the hardware in our pockets right now, I think edge will be a part of it. There's just no doubt. And it and it just stands to reason there might be creative ways to, you know, maybe convert what you're doing into tokens, you know, so that you have, like, lower bandwidth connection if you're doing voice. Could there be opportunities there? There also could be some privacy benefits to that. I I, know, I have a strong intuition, though no knowledge, but just intuition. That's gotta be something Apple's thinking about just given their their posture on privacy. So I'm very bullish on the frontier models like, you know, OpenAI and Anthropic have, you know, really shown the the strength of the research groups, but not at the expense of all the specialized models. I think we're in a in a world where, you know, just as we become more sophisticated in deploying AI, we're going to have a constellation of models with just different capabilities. So I'm excited for it, but it's not now. It's it's in the the short term future.

Speaker 2: Yeah. Yeah. That makes sense.

Speaker 1: Did you guys have to build in guardrails to prevent people from access? Every every like month there's a post that goes viral of somebody that's like figured out like some endpoint that Chipotle they can get to get like

Speaker 2: cold? Like

Speaker 1: frontier model

Speaker 2: in Chipotle code. Somebody figured out how to wire up. Well, they took some sort of like, open code fork of like codex agent, coding model, but it's wired up to Chipotle's customer service in the back end. This is a huge risk because you could run up a big token bill that way. Is this is this We actually a tough

Speaker 3: we have guardrails on it and, you know, it's it's just like any other thing. It's, you know, sort of you're always in a race, the good guy, the white hat versus the black hat to, you know, handle it. You know, in practice, I think it's more like digital graffiti, think nowadays. Like in the early days, you'd see a post online of a chatbot saying something goofy like, oh my gosh, now people are like, yeah, you you fooled with it, you know, like, come on, you know. So I think first, I think it's it's probably jailbreaking I think is a really interesting area of AI security, but probably more around the areas of cyber security and bio and things like that. I think this type of thing, you you it's why people work with places like Sierra to good guardrails. I also think like, you know, social media has sort of become numb to it at this point, you know. It's like, oh, great. You got a chatbot to say something silly again, you know. Yeah. I I think the bigger issue will be just as these frontier models become more capable, the guardrails around using them need to be more and more effective. And I think, you know, as you think about kind of the mission of OpenAI ensuring AGI's benefits humanity, you really need to make sure that those guardrails are effective against jailbreaking, which is not you you you know, it's not like possible to make perfect by the way, but just because these models are sort of capable under the hood, which is why there's been such a interesting, you know, topic around cybersecurity and others. That's probably the area I think more about though, you know, the digital graffiti is gonna continue to exist as well.

Speaker 1: Yeah. That's a good good term.

Speaker 2: I have you ever heard of $0.00 2¢?

Speaker 3: No. Tell me.

Speaker 2: Famous customer service nightmare call where someone called Verizon. They were getting billed at 2¢ and they were and the and the actual rate was supposed to be 0.002¢. So they were off by two orders of magnitude. They're talking to this customer service agent. We'll play it on the show after we wrap. But they're talking to this customer service agent and the customer service agent just actually doesn't know the difference between a decimal cent and an actual cent. And it the frustration that just ensues is like turned into this massively viral video. There's whole websites about it. Verizonmath.blogspot.com from 2006 and it's like this whole deep dive. I'm sure you've heard about

Speaker 3: all these different the good part is a super intelligent AI probably will know.

Speaker 2: Yeah. I think it will. It's some ground truth things, some code and there's there's opportunities here.

Speaker 1: The level intelligence for

Speaker 2: The raw audio for this call is twenty seven minutes. The guy went back and forth and it's hilarious. Cut downs we'll have to play. Yeah, he had unlimited data plan in The US and recently crossed the border to Canada. Prior to crossing the border, he called customer service to find out what rates he'd be paying.