This is an excerpt from Alex Heath’s Sources, a newsletter about AI and the tech industry that is syndicated to The Verge subscribers only once a week.
A new trend has quickly emerged for AI startups that want to stand out from the rest: bragging about revenue.
Take Sierra, Brett Taylor and Clay Bower’s AI customer support firm, which was recently valued at $10 billion. On paper, you’d think Sierra could pick up almost anyone who wants to work in AI — both co-founders are well-known names in Silicon Valley, Taylor is also the president of OpenAI, and Sierra has raised more than $600 million in less than two years.
But Sierra also feels the need to put a bigger number on the board to compete for talent. Taylor told me Thursday that the company’s annual recurring revenue has reached $100 million, up from about $20 million at this time last year. Unlike many AI startups that are now increasing their ARR, Sierra books its revenue through upfront contracts. The company says its customer support agents are already used by millions of people, many of whom may not realize they’re interacting with AI to process returns or troubleshoot bugs. Its clients include SoFi, Wayfair, Ramp, Rocket Mortgage, and hundreds of others.
“I think AI is a category where it is relatively easy to create demos and win popularity contests on social media.”
Taylor spent a large portion of our conversation explaining why he thinks Sierra’s $100 million means more than the typical AI startup ARR number. Sierra follows the same model used by public enterprise software companies like Salesforce and ServiceNow. It signs at least 12-month, often multi-year contracts, bills annually in advance, and gives customers 30 days to pay after signing.
In contrast, many AI startups, especially those with more consumer-ish products or usage-based pricing, arrive at a public ARR figure by multiplying a good month’s revenue by 12. If growth slows or users churn, that ARR evaporates just as quickly. Taylor’s argument is that Sierra’s numbers look like what public-market investors care about: contracted revenues that are hard to walk away from.
He wouldn’t name names, but Taylor made it clear that Sierra is trying to differentiate itself from AI startups that boost ARRs from a leaky base of pay-as-you-go users. In those cases, an ARR figure may hide high churn or a product that is riding a promotional wave or temporarily driving sign-ups with incentives.
“I think AI is a category where it’s relatively easy to create demos and win popularity contests on social media,” he said. “But building a sustainable revenue stream, especially from serving the Fortune 1000 and regulated industries, is incredibly challenging. I think a lot of people want to work for the leader in this category.”
This milestone makes Sierra one of the fastest-growing AI companies, although it’s hard to make apples-to-apples comparisons in a world where private companies can define their own metrics.
“There is no official leaderboard, but we believe we are well ahead of other companies in our category,” Taylor said. “We want to make sure that recruiters know this and potential clients know this because I think it’s a sign that we’re doing something right and the product is high quality and our clients love working with us and they’re deeply invested in us.”
Real estate moves are another sign
This is the subtext here: ARR has quietly become one of the most important recruitment signals in the AI startup market. Startups used to promote funding rounds or valuations. They still do, but are also sharing some revenue figures that would have remained buried in a different era.
Anton Osika, CEO of Lovable, recently shared at a conference that the company doubled its ARR to $200 million in four months, and this month Cursor announced that its annual revenue has surpassed $1 billion. For a recruiter, these revenue figures are meant to indicate that a startup is not just riding the hype cycle, but has customers and real traction.
Taylor’s mental model for what is happening now is the late 90s. “I think the closest analog to this AI wave is the dot-com boom or bubble, depending on your level of pessimism,” he said. At the time, he said, everyone knew e-commerce was going to be big, but there was a huge difference between working at Buy.com and Amazon.
“As a candidate, you want to work for a company that will ultimately be the leader,” Taylor said. He argues that Sierra is on that path in AI customer support: a company that has real contracts from large, often regulated customers.
Their recruitment plans reflect that ambition. Sierra today has approximately 300 employees. Taylor wouldn’t commit to an exact headcount target for next year, but acknowledged there is a scope to “double or more”, mostly driven by international expansion and customer-facing roles.
His real estate moves are another sign. Taylor confirmed that Sierra has signed a lease for approximately 300,000 square feet of office space in San Francisco’s China Basin neighborhood, a block away from Oracle Park. The company will vacate its current building and nearly triple its footprint, which will be the city’s largest office lease since taking over OpenAI’s former Old Navy headquarters near Chase Center last year.
Taylor is also already wondering what will happen when today’s crop of AI startups matures. He expects the industry to follow a familiar pattern: an initial “best-of-breed” phase where specialist tools grow rapidly, followed by a platform-consolidation wave. “Reductively, you either earn the right to consolidate or you get consolidated.” Sierra is not shopping for an acquisition right now, he said, but it wants to be in the former camp when the time comes.
All this explains why a company like Sierra — backed by blue-chip investors, run by a former Salesforce co-CEO who now heads OpenAI — is touting its early revenues. The AI agent market for customer support is already crowded, with upstarts like Decagon and incumbents like Intercom and Salesforce competing for the same budget. In that world, a startup announcing nine-figure ARR is a sign of strength for a small group of people who can work anywhere.