A Marc Benioff Protégé Has Morphed Into Salesforce’s Big Worry
After a shock exit as Salesforce co-CEO, Bret Taylor has positioned his AI startup to seize a sizable piece of Marc Benioff’s business.
The Takeaway
• Bret Taylor, Salesforce’s former co-CEO, has sparked one of tech’s most talked-about rivalries with his former boss Marc Benioff.
• Taylor has targeted Salesforce customers to grow his new startup, Sierra.
• Salesforce has responded by sending teams of sales engineers to dissuade them from using Sierra and talk up its rival product, Agentforce.
After an unexpected exit as Salesforce co-CEO in 2022, Bret Taylor sat down with a friend, Benchmark’s Peter Fenton, to brainstorm ideas for what to do next. He knew if he chose to go up against ex-boss Marc Benioff, who had shared the CEO duties with him, Benioff would be a formidable opponent. “He had an immense admiration for Marc,” Fenton recalled. “And that was conveyed to me.”
Still, Taylor has ignited what has turned into one of the most intense and personal rivalries in Silicon Valley with Benioff.
In February 2024, Taylor launched his new startup, Sierra, igniting what has quickly become of the. Sierra makes automated AI software, or agents, for managing client relationships—exactly what much of Salesforce’s software is used for. Sierra has actively courted many of Salesforce’s customers and has signed deals with some of them, including SiriusXM and Sonos, according to a consultant who works with Salesforce customers. (Neither Benioff nor Taylor would comment for this story.)
Salesforce has responded by sending teams of sales engineers to dissuade them from using Sierra and explain why its agent-building service, Agentforce, is better for their needs, said two Salesforce consulting partners. It has also taken other steps to prevent competition from AI companies, like blocking rivals from accessing data in Slack.
In recent months, Benioff has also been calling senior executives at customers to ask why they aren’t moving faster to deploy Agentforce, said a person who has spoken with those executives.
Benioff’s assertive response to Sierra might seem disproportionate given the size of Taylor’s startup. Publicly traded Salesforce commands a market capitalization of more than $250 billion. By contrast, Sierra was last valued at $4.5 billion in an October funding round, which included investors such as Greenoaks Capital and Thrive Capital.
Still, Sierra is growing fast and was recently on pace to generate tens of millions of dollars in revenue this year, according to people close to the company. While that’s not a lot of revenue, it does threaten the part of Salesforce’s business that Benioff has refocused the company on: Agentforce and artificial intelligence, which he sees as the area that’s ripest for growth.
And the threat is led by someone who’s intimately familiar with Salesforce and its weaknesses, including its dependence on a seat-based pricing model that some critics say is outdated. Plus, Taylor enjoys a broad perspective on AI from his perch as OpenAI’s chair.
The Taylor-Benioff rivalry may come down to a truism about any David-versus-Goliath contest: For the smaller contestant to have a credible chance at winning, it helps to know exactly how the giant moves—and where it might stumble.
The relationship between Benioff and Taylor goes back years. Taylor, who previously worked at Google and as Facebook’s chief technology officer, took on increasingly senior roles at Salesforce after it bought Quip, which made software for office workers to collaborate on documents and spreadsheets. In late 2021, Benioff made Taylor his co-CEO, though Taylor continued to report to Benioff.
One of Taylor’s major initiatives at Salesforce was the company’s $27.7 billion purchase of Slack, the largest acquisition in Salesforce’s history—a long-running list given Benioff’s fondness for dealmaking. Although Benioff initially gushed about the deal, he later distanced himself from it by telling colleagues Taylor was its architect.
At the time, some senior Salesforce staff were skeptical that Slack was worth the hefty price tag, given that many of its customers were already using rival software from Microsoft. Despite saying privately that he expected to eventually become Salesforce’s solo CEO, Taylor suddenly left in late 2022, saying that he wanted to start a new company.
Taylor had been closely watching the ripple effect ChatGPT was having on the tech industry, and he knew that he wanted to launch a company based on new AI like OpenAI’s GPT models, recalled Fenton, the venture capitalist. Around that time, Fenton said, he visited Taylor at his home in Lafayette, Calif., when he was still considering a range of directions, from consumer products to business applications.
“That was in a time when he had not decided exactly where to take the technology, but you got the sense that he would land somewhere that would be unbounded,” Fenton said. “I saw his deep curiosity—he’d been reading the white papers, he’d been playing around with the code in Python.”
In the following weeks, Benchmark led a $25 million funding round in Taylor’s new company, which he started with Clay Bavor, a longtime Google executive.
Over the next 12 months, Sierra assembled a small team of engineers and salespeople to develop an early version of its product and begin marketing it to businesses, including consumer-focused companies like WeightWatchers and SiriusXM. Taylor also became enmeshed in the drama surrounding OpenAI’s leadership, joining as the company’s chair in November 2023 after the ouster and subsequent rehiring of CEO Sam Altman. Taylor and a handful of others replaced earlier directors who had clashed with Altman over whether he had been truthful with OpenAI’s board.
Then in early 2024, Taylor publicly unveiled Sierra. He was betting that its agent-powered chat software could better solve customers’ issues while lowering companies’ costs. That mission placed Sierra in direct competition with Salesforce software.
In February 2024, Taylor also announced a funding round of $110 million at a valuation of more than $1 billion from Benchmark and Sequoia Capital, two marquee venture capital firms. The price they paid for Sierra made it one of the most expensively valued startups in tech, relative to how little revenue it had generated to that point.
Seven months later, Benioff announced Salesforce’s contender in the AI agent field: Agentforce. In a splashy presentation at Dreamforce in September 2024, the company’s annual conference for customers and developers held each fall, Benioff announced his intention to reorient the software company around agents that can carry out tasks for workers, including handling support queries. It represented an AI-or-bust bet on the part of Benioff, who has since admitted to considering renaming his company after the new AI software.
By the end of 2024, Microsoft had announced its own agent product, as did more specialized customer support software vendors like Intercom, Zendesk and Decagon.
Sierra seemed to have particular success winning over business from Salesforce customers, many of whom Taylor already knew from his time there. “Bret’s using his Rolodex to get in there,” said Cameron Deatsch, former chief revenue officer at Atlassian and a board director at Intercom, a customer support software startup that competes with Sierra.
In a presentation to a potential customer in late 2024, Sierra said that many of its customers were also Salesforce customers, and that it had specifically designed its product so they could use it in conjunction with the CRM database they buy from Salesforce. For example, Sierra’s AI can respond to a request to return a product by using information stored in a customer’s Salesforce CRM. (Sierra is one of thousands of software providers that sell products that tap into Salesforce data.)
Sierra’s workforce also came to resemble Salesforce’s. As Sierra has grown, Taylor has hired more than 40 former Salesforce employees, who now make up a fifth of Sierra’s roughly 200 total employees. At least 11 of those came directly to Sierra from Salesforce, including Tableau’s former senior vice president of marketing and Salesforce’s senior vice president for self-service and growth.
Some enterprise buyers have come to see Sierra more favorably than Agentforce, which executives have said is far more difficult to set up, according to a person who has spoken with executives who have tested both products at their companies. Still, Salesforce has been giving customers aggressive discounts on the Agentforce software, including bundling it with other offerings like its data management product, this person said. The bundling makes it hard to determine how much revenue the company is bringing in from other products, this person added.
Meanwhile, Sierra still faces its own issues, including how accurate its chatbot is. For instance, when The Information used a Sierra-powered virtual agent on shoe seller OluKai’s website, the agent incorrectly said that the company’s Lae‘ahi Lauhala shoes were out of stock when the product page showed they were available in many different colors and sizes. OluKai was one of the first Sierra customers the company disclosed publicly.
Olukai did not respond to a request to comment. But the company appears to be generally satisfied with the performance of Sierra’s software, which as of February 2024 was enabling it to resolve 70% of its customer inquiries using the virtual agent, according to a case study on Sierra’s website. (Other companies that sell virtual agent software, including Salesforce, have had similar issues with accuracy.)
To win customers over, Sierra has said it will assign engineers to monitor its performance on a weekly basis based on metrics like what portion of customer inquiries it can resolve automatically, according to a person who has heard its sales pitch. But Sierra has also designed its product so non-technical users can use it without assistance from the startup’s engineers, a person close to the company said.
As Sierra courts large businesses, it has offered to customize its product extensively to work with their other software systems, a process that could take months, this person said. That customization could appeal to enterprises that need the AI to work across many different software systems, but it could also come with risks if technology advances quickly, according to Intercom’s Deatsch. If the product becomes obsolete or outdated in the interim, those investments in custom software might look wasteful in hindsight.
Some rival executives privately grumble that Sierra is pinning its hopes on its well-connected CEO instead of on developing cutting-edge technology. The company uses a variety of models, including software from Anthropic, OpenAI and Meta Platforms, to generate responses for customers, a Sierra spokesperson said. Sierra’s system determines which model produces the best answer for each query and uses the response from that one.
One risk to both Salesforce and Sierra is that model providers like Anthropic and OpenAI could come up with their own customer support applications even if Salesforce and Sierra might have a better understanding of what customers want from such technology.
Other software industry executives speculate that Sierra will inevitably end up in the hands of a bigger tech company—possibly even Salesforce itself. That would help justify Sierra’s sky-high valuation for a company with relatively little revenue, said Muddu Sudhakar, a longtime enterprise software executive who co-founded Aisera, a startup that automates IT help desks.
Another possible acquirer could be OpenAI, where, of course, Taylor sits on the board. OpenAI recently hired another senior tech leader, Instacart CEO Fidji Simo, to run its applications business, and the addition of Taylor could help the company gain more market share among corporate customers, many of whom use software from rival Anthropic, Sudhakar said.
While Sierra’s future isn’t entirely clear, one thing is not: Benioff will be coming for Taylor with full force—a reality Benchmark’s Fenton, who knows both men, acknowledged with his usual amount of understatement.
“Part of Marc—of any CEO—is that they have a strong competitive drive,” he said.
