How Much Revenue Does AI Startup Sierra Need? $225M

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Sierra

I get trying to apply AI to human-intensive tasks like Sierra is with its customer service product. Even when we consider AI’s greater compute costs than many other digital tasks, it’s still lots cheaper than paying largely hairless primates to push small buttons in front of a magic mirror all day.

What I don’t get is the price.

Coming out of the 2021-2022 era boom, it felt like there was a collective rebalancing of venture capital wagers in terms of price paid for startup shares. Back in the boom times, software startups that could show early traction were given valuations as if they were derisked late-stage startups with a glide-path to IPO. That worked out about as well as trying to use gloves made of marshmallow in a iron foundry.

And yet, with Sierra, we’re once again seeing a company valued so far in advance of its revenue results that it has now pre-sold years of growth and success. Which means it will have to soar to just make its trailing math work out. Let alone raise more, and more expensive capital.

Tell me if I am out to lunch: