LIVE: How AI is Reinventing Software Business Models ft. Bret Taylor of Sierra

Recorded live at Sequoia’s AI Ascent 2025: Sierra co-founder Bret Taylor discusses why AI is driving a fundamental shift from subscription-based pricing to outcomes-based models. Learn why this transition is harder for incumbents than startups, why applied AI and vertical specialization represent the biggest opportunities for entrepreneurs and how to position your AI company for success in this new paradigm.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  Hi and welcome to Training Data. We are mixing it up for this week's episodes and dropping a conversation that was filmed live at Sequoia's annual AI conference, AI Ascent in San Francisco, with Bret Taylor, the founder/CEO of Sierra, the former co-CEO of Salesforce and CTO of Meta, and the current board chair at OpenAI. Brett is interviewed by our partner, Ravi Gupta. We hope you enjoy this far-ranging conversation with Brett about the opportunity for vertical-specific agents, what it means to charge on outcomes and for jobs rather than for productivity tools, and more on how he sees the competitive landscape for foundation models evolving. Stay tuned for a few more special AI Ascent drops on our podcast feed later this week.

• 0:43Pat Grady?

  Next up, we have Bret Taylor. He was part of the, I think, first APM program at Google where he famously rewrote all of Google Maps in a weekend. Then he founded a company, then he went ahead and was just CTO of Facebook for a while, and then he founded another company, which we're lucky enough to be in business with him on, which is redefining the front door for businesses. And Brett will be joined by our partner, Ravi, who used to deliver groceries and now gives people money. About the same. Please welcome, Ravi and Brett.

• 1:20Speaker 02

  Yeah, but a lot of groceries, okay? I thought Pat was saying I was the legend, so I was pretty upset when apparently it was Brett.

• 1:29Pat Grady?

  You're a legend to me, Ravi.

• 1:30Speaker 02

  Thank you. I really appreciate you saying that. Having Jeff Dean and then Brett Taylor is like having LeBron and Steph of engineers. It's amazing. Or rule off two random rugby people that only you know, you know, like maybe an analogy you'd get. All right. I want to ask you a question. There's very few people that have been described as 10,000x engineers, probably in general, but also extremely, extremely few people who've done that and also been good at enterprise sales. Okay? And I think one of the things that'll be fun today is we can be like highfalutin and talk about where the world's going, but we can also talk about like how to sell things. And so the question I have before we get to tactical advice on that is like, what made you even think that you could do something other than just be an amazing engineer?

• 2:16Speaker 03

  Yeah, I actually think this is one of the greatest challenges to overcome as an entrepreneur. This is really reductive, but I think if you talk to an entrepreneur, they often have some unique insight on the business they're creating. So maybe it's a technical insight. If they come from a background in, say, business development, maybe they see an opportunity in the market that they can take advantage of as a partnership or business opportunity. In the financial services industry, maybe you see an inefficiency in the market you can take advantage of. The issue I see with a lot of entrepreneurs is you sort of become single-issue voters. It's like every time there's a problem in your business, if you're a product person, you go change the product. There's always the famed redesign, like the dead cat bounce before your company gets destroyed.

• 3:00Speaker 03

  And it turns out that as you're growing your business, at any given point, you may have a go-to-market problem, you have a product problem, you have a competitive problem. And I think the hardest thing is when you come out of business with what you're comfortable with, you regress to sort of what makes you comfortable. For me, my most vulnerable moment was when I was 29 and became the CTO of Facebook. I was one of the older people at Facebook at the time.

• 3:28Speaker 02

  Yeah, all good.

• 3:29Speaker 03

  Well, I didn't know what the... I was about to cuss, I shouldn't cuss. I didn't know what I was doing.

• 3:34Speaker 02

  No, no, it's totally fine.

• 3:35Speaker 03

  You told me this was recorded.

• 3:36Speaker 02

  I did say, I think that you should not give away state secrets about OpenAI on this year.

• 3:40Speaker 03

  Yeah.

• 3:41Speaker 02

  You can curve, it's fine, it's good.

• 3:42Speaker 03

  And I wouldn't have self-described that I was sort of struggling in my job, but I think I was. I was sort of trying to do everything myself. And Sheryl Sandberg, who was the chief operating officer at the time, took me aside and kind of had a sort of come-to-Jesus conversation with me, essentially saying, "You need to hold your team to as high of a standard as you hold yourself. You need to stop trying to do the work yourself, and you need to identify the people who aren't meeting your needs, replace them, but you need... You're not scaling the way you're operating effectively." And it was kind of the conversation I needed to have at that moment. I felt really shitty for about an hour and then like woke up the next day with kind of a fire in my belly. And I realized upon reflection, she didn't sort of diagnose it this way, but upon my

• 4:27Speaker 03

  reflection, I was going into work every day and trying to say, how do I conform this job to me and my strengths? And instead of thinking like, what's the most important thing to do in this job today, even if it's not something I find delightful or interesting. So I sort of came at the job and I always modeled it as giving myself advice, like I was sort of my own board of directors. And sometimes it would be people, sometimes it would be business, sometimes it would be technology. I was the CTO, so hopefully it wasn't that some of the time. And interestingly enough, I got more joy from it. I realized at that point, I actually just appreciated having an impact more than I appreciated any act of doing my job.

• 5:08Speaker 03

  And so I ended up with this really nice reinforcement of, wow, I'm better at my job than I was last month because I'm not just doing what I like or what I feel comfortable doing. And that ended up like a really virtuous cycle. So I've had a, I've been a little bit of a chameleon. I've, you know, it's interesting, if I meet people from Facebook, they think of me as an engineer. If I meet people from Salesforce, they think of me like a suit, you know, like, I don't know generously, I have something, the boss. And I'm not any one of those things. I just sort of showed up every day to, you know, be, to have an impact. And as I said, I just, I gained a ton of joy from it. And the reason I bring it up for the entrepreneurs in the room is I think at every stage of your company, at the beginning, product probably is all that matters, you know, finding your

• 5:53Speaker 03

  first and happy customers. As you scale, what you need to be great at changes. And I think having the self-awareness and self-reflection to actually change what you spend your time on is actually, I think, one of the greatest challenges of not having your company sort of get away from you and continuing to be effective leader at that company.

• 6:12Speaker 02

  I would tell you, I think it's something, just so you have it, is something I have taken and share with my kids, which is like, don't let something you're good at become who you are, right? And I think that that is something I've learned from you that I really appreciate and I think you're doing in the day to day. So tell people about Sierra. Why did you and Clay start it? What's the vision? What are you guys up to?

• 6:32Speaker 03

  At Sierra, we help companies build customer-facing AI agents. We started on the hypothesis that every company's main digital interface will be an AI agent. You know, and maybe 20 years ago, your main digital presence was your website, your .com. Remember listing on Yahoo Directory was the bee's knees, you know, back in the day?

• 6:57Speaker 02

  I do, I do remember that.

• 6:58Speaker 03

  Yeah, yeah, yeah.

• 6:58Speaker 02

  Thank you for noticing.

• 7:01Speaker 03

  Yeah, and then for a lot of brands, whether it was like your social profile or your mobile app, you know, companies have a lot of different digital touchpoints today. Our hypothesis, I don't know if you measured it, like what percentage of digital interactions happen on a touchscreen now versus a keyboard? It never replaces, but it certainly sort of displaces. Our hypothesis is you fast-forward five years, the vast majority of digital interactions will happen via an agent. And as a consequence, every company will need their singular agents, not plural, the one that has their brand at the top that represents the whole of their customer experience. And so we've worked with a lot of different companies from ADT Home Security to SiriusXM to help them build their primary customer-facing AI agent.

• 7:45Speaker 03

  A lot of it is AI and it's an agent, but a lot of it is also business. You know, like what is the customer experience you're providing? For ADT Home Security, your alarm might be going off. Your alarm might be broken. For SiriusXM, someone might want a better price on their plan because their promotional period expired. So it's actually really interesting because just like your website, I don't think most people think of websites as a piece of technology nowadays, right? It's almost just an expression of your brand and your business. That's actually kind of the agents that companies are building on our platform. But I hope, you know, if we're successful, if you run across a branded AI agent in the wild, I hope it's powered by our platform. That's what we're trying to do.

• 8:22Speaker 02

  And one of the things that comes up a lot is like, what are the foundation models going to do versus what are the application layer companies going to go do, right? And I think you have probably the most unique vantage point on this, being the chair of OpenAI, as well as building an application layer company. So can you help our founders here think about what is going to belong to them versus the foundation models?

• 8:43Speaker 03

  Yeah, I've, I'll say a strong opinion loosely held on this. So I think there's really three big markets that I see, and I'll end with the one I think is the most exciting. First, you have the foundation models, and Jeff said something similar to this, but I think there's going to be a ton of consolidation in the foundation model market. It's fundamentally just a capital-intensive business, just like building data centers. Effectively, it is building data centers, you know, at the core of the expense. And as a consequence, it just, you know, if you have large-scale CapEx, you can generate more CapEx, and it sort of benefits scale. And as a consequence, I think it'll end up a little bit like the cloud infrastructure market, a handful of players, relatively low margin, but very, very high scale, and

• 9:25Speaker 03

  sort of collecting taxes from everyone in the AI ecosystem. I think the next market is really making tools, the proverbial pickaxes in the gold rush. And I think, you know, a lot of companies created prior to large language models, like, you know, Databricks and Snowflake will sort of be in that category, but a lot of new ones as well. There's a lot of nuance there. I think that will be a market that can really be threatened by the foundation model companies. I imagine every cloud infrastructure company has some, there's probably an AWS or Azure equivalent to what they do. And so you end up with a naturally sort of more challenging, but it can be very high scale. But it's just a, you definitely are closer to the sun, you know, the closer you are

• 10:10Speaker 03

  to the models themselves. And then there's the AI, applied AI market, and I actually think this will manifest its form as agents. So, you know, there's companies like Harvey that make an agent for the legal profession. There's companies like Sierra that make it for customer experience. There's companies that make it for marketing. There's companies that do it for visual effects. My view is this is sort of the new software as a service. Companies will, the form factor of purchasing AI will be purchasing an agent that does a job. I think there's a, it's a really exciting time. I actually, I think I assume a lot of folks in this room are working on sort of applied applications in AI. The reason I think is exciting are sort of twofold. One is,

• 10:53Speaker 03

  I think it's the way software should be consumed. I think right now, a lot of particularly large enterprises

• 11:01Speaker 03

  in the excitement after ChatGPT licensed a lot of models. And as we all know, software is like a lawn, you have to tend to it. So I think there's a lot of buyer's remorse right now from a lot of spend and a lot of proof of concept, but not a lot of value. The second thing is, I think it changes the markets. You know, there's these markets where like selling enhanced productivity to attorneys is not like a huge TAM. And so you sort of run up against just the natural thing. Like even if you get, you know, 80% market share, how big could this company be? You know, but if you're actually selling antitrust review or something, I don't know much about the law. So I just made this sound credible.

• 11:38Speaker 02

  Really? You are like, you know,

• 11:40Speaker 03

  Okay, okay.

• 11:40Speaker 02

  Court governance crisis to the stars and you don't know anything about the law? That seems not incredible.

• 11:45Speaker 03

  You know, it turns out that the crisis to the start.

• 11:50Speaker 03

  You know, that has a ton of value because you're essentially, you know, providing something that very high cost labor produced before. And as a consequence, I think if you look at the total addressable market of, you know, all these vertical specific, domain specific agents, the market is gigantic. And actually, it's interesting, if you look at the public markets, if you look at the top, you know, five software companies that dominate the S and P 500, that dominate the stock market, none of them are sort of pure play, software as a service companies. Obviously, Microsoft is, and it has some enterprise software. Amazon has AWS, but they're infrastructure companies, they're consumer. And if you look at the software as a service companies, ServiceNow, Salesforce, SAP, Oracle,

• 12:32Speaker 03

  they're all sort of in that sort of 200 to 300 billion dollar market cap range. You wonder in this new world of agents, will we see our first trillion dollar sort of applied enterprise software company? And I think the answer is yes. Because you're going from selling productivity enhancement to selling outcomes. And outcomes are valuable. Some outcomes are extremely valuable. And so I think there's been a little, understandably, a little too much excitement around the models themselves. Not that I, I mean, obviously at OpenAI, We're very excited about it. But as an entrepreneur, I think that it's sort of the pickaxes are obvious, but actually the value is elsewhere in my mind. I think the value is taking these, this amazing next generation technology,

• 13:17Speaker 03

  solving a very valuable business problem that was high cost before, and selling something valuable for an order of magnitude less money than the current cost is really fucking easy. So I just think it's a great business and I'm super excited about the future of the software industry as a consequence.

• 13:35Speaker 02

  What do you think is the right way to price those outcomes when you think about them? Right? I think that there's all the former seat-based models, right? And now Sierra obviously does it differently. How, maybe talk about Sierra's pricing model and then also talk about how applicable you think that is or isn't to other agent companies?

• 13:52Speaker 03

  Yeah, at Sierra, we do, we call it outcomes-based pricing. So for our media and customer, that typically means when the AI agent resolves the issue for the customer autonomously, there's a pre-negotiated rate for that. And if we do have to escalate to a person, it's free. We do that just to align with the business model of our customers. And I actually view it as sort of a natural evolution of software. We went from box software with a perpetual license to, you know, once you delivered software in a browser, most, everyone's on the same versions. You needed to sort of invent a new business model to sustain R and D, which led to software as a service, subscription-based business. And we just thought from first principles and said, hey, if you're selling software that completes a job, what is sort of the secular business model for that?

• 14:37Speaker 03

  And it felt like, let's pay for a job well done. You know, salespeople get paid a sales commission, you know, why not the AI as well? It does really disrupt the way you build a software company in my mind, though. If you look at particularly the enterprise software ecosystem, there tends to be sort of an arms-length relationship between software vendors and customers. Typically, you'll sell a piece of software and be done. Then you'll have systems integrators come in and spend, you know, for large-scale enterprise software deployment, sometimes six months or a year to implement that software. And that's well, I mean, by the time the software's being used, you know, the vendor's been, probably not gone, they're probably going to sell them more things, but effectively gone for six to 12 months.

• 15:22Speaker 03

  That, so as a consequence, there's almost like an active disassociation with the act, with the outcomes. And so you end up with a confluence of, I think, a lot of different factors that I think are interesting. There was a question just before I walked up here about, you know, agents that can code, what will that do to the professional services industry broadly? There's a question of if the right thing for AI software is outcomes, how do you actually align your company with that kind of accountability?

• 15:50Speaker 02

  Yep, yep.

• 15:51Speaker 03

  I think it sort of blows up a lot of the model. But that's why, you know, as Steve Jobs said, it's more fun to be a pirate than it is to be in the Navy. And I think it's a really good time to be a startup because most people in this room are not encumbered by a business model, which is a funny way of thinking about it. But if you look at the history of software, Salesforce beating Siebel Systems, you know, ServiceNow beating the plethora of ITSM companies that came before, it's actually much, closing a technology gap in your product is hard, but not impossible. Changing your business model is really hard. And you look at Microsoft transitioning from Windows to Azure and how incredibly awkward

• 16:33Speaker 03

  that transition was, and Satya deserves a bunch of credit. Shantanu did a great job at Adobe, going to ratable revenue. But there's like a graveyard of CEOs who've been fired because they couldn't make that transition, in part because public company investors are horribly impatient in these things. And so I just think that what's exciting about AI is I think it's going to give rise to new delivery models, new technology models, but as importantly, new business models. And I think that if you think about what are the opportunities for startups relative to incumbents, don't lose sight of the business models. I actually think it's usually one of the greatest advantages that startups have relative to incumbents.

• 17:11Speaker 02

  Yeah, I think historically, speed has been something, but I think on this point, it's like you also have this enormous benefit of, you know, you're not encumbered by the old business model. Well, you referenced the previous companies that you've been in and you started. One of the things we've talked about is like, there are things that are similar about building a company now, and there are things that are different. What are some of the things that are the same as the previous companies that you've built that you're doing now? And what are some of the things that are different?

• 17:35Speaker 03

  Well, at FriendFeed, my not so successful social network, we built our own servers.

• 17:41Speaker 02

  Can you tell the story about the Facebook IPO real quick, just about FriendFeed for everyone, where you got recognized?

• 17:47Speaker 03

  I'll do that there.

• 17:50Speaker 02

  Okay. It's a good story.

• 17:52Speaker 03

  It's a good story.

• 17:53Speaker 02

  We stand between these people and drinks, man. You've got to make them laugh, like, let's go. Hit them with something.

• 17:57Speaker 03

  Pull it out the deep cut.

• 17:58Speaker 02

  Okay.

• 17:59Speaker 03

  You know, I think a lot has changed just in the infrastructure world. You know, I think literally we built our own servers at FriendFeed and, you know, like, brought them into the colo. We brought our site down once by tripping over a power wire in the colo. That was Sajiv's fault. We love him. I'm just kidding. So it's a different era. You know, I do think it is, as we've virtualized infrastructure and built, you know, just the software development lifecycle we have today, from cloud infrastructure like Azure and Amazon Web Services to GitHub and GitHub Actions and, you know, all the incredible open source libraries.

• 18:42Speaker 03

  And then you have sort of the virtual infrastructure to help support your companies, like, you know, Ramp, you know, and Rippling. You end up where there's a certain, like, there's a very different level of focus now in starting a company. It used to be you just had to do all these things to, like, build the scaffolding of your company, and it was actually like a non-trivial amount of work. And the thing I find just so exciting about, like, the future of entrepreneurship is there's just so little overhead now in terms of just, like, intellectual overhead. And I remember actually just how hard it was to get, like, credit cards for employees. Like, they had to all get a credit check. I'm like, are you kidding me? Like, it's our bank account. Like, what are the...

• 19:25Speaker 03

  And, you know, now you can, you know, print a virtual, you know, credit card with, you know, things like Ramp. It's so easy. So I think we've just seen every aspect of starting a company that was about sort of like the operational sort of scaffolding and infrastructure do so. Many startups that you all have funded are now doing that. And so as a consequence, you can focus on just purely what defines your company and what makes it different. My color commentary on that is I actually think one of the mistakes a lot of smaller companies make is spending their resources and time on things that aren't core to their business.

• 20:02Speaker 02

  Yep.

• 20:03Speaker 03

  It's more than a hidden cost. I think like every ounce of time you're spending on something that fundamentally should be a commodity to your business is time you're not spending on like selling your product to more customers or like working on like true differentiation. And it takes a lot of discipline because a lot of those things are like catnip, you know? It's like fun to work on that part of your business. And I always like to say like, you know, Clay, who's somewhere around here, we always talk about like what will make us happy a year from now? And that's always our metric. And then, John, you could take it to 10 years. If you want to be like, no one knows what the hell is gonna happen in 10 years, by the way.

• 20:37Speaker 02

  If you don't know what's gonna happen in 10 years, nobody knows what's gonna happen in 10 years.

• 20:40Speaker 03

  And I do think it's very clarifying. And I just think it's, it always surprises me how much I tend towards some of those things that are wholly undifferentiated at this point.

• 20:50Speaker 02

  Okay. Well, you mentioned some of the companies that Sierra works with, right? And some of those are companies that have been around for a long time, right? They are established companies. What does the T and ADT stand for?

• 21:01Speaker 03

  Telegraph.

• 21:02Speaker 02

  Telegraph. Okay. So how do established companies?

• 21:05Speaker 03

  It's cool, by the way. Home security over telegraph. I actually imagine someone coming to like the sequoia of that day. It's like home security over telegraph. Like YouTube for cats, you know? And like, and they built that business. It really was. And now they're actually doing home security with AI agents. What a cool privilege. I think it's awesome.

• 21:24Speaker 02

  And, you know, it's a better acronym than AD AI, you know? Okay. So, but what do they have to do? What are the ones that are, if he's gonna succeed, what are they gonna do to, in a world of changing technology? And what are the ones that are not gonna succeed? What is holding them back?

• 21:39Speaker 03

  So.

• 21:40Speaker 02

  And how can this group help all of those established companies succeed?

• 21:43Speaker 03

  Yeah. So I think it's a really interesting opportunity for companies in competitive markets like home security, or a company like Sirius XM that's got incredible, unique, original content, but they have a lot of cord cutting and a lot of competition around them. You have this technology in AI that drives incredible amounts of productivity in departments that had previously been incredibly underserved by software. Everything from, you know, large-scale contact centers to, we talked about things like legal departments, large operations departments. And as a consequence, companies that lean into this can really change the cost structure of their business.

• 22:27Speaker 03

  If you think about, I mean, there's companies that have like 20,000-person contact centers and, you know, this costs hundreds of millions of dollars every single year. And if you can take all of that OpEx and put it back into your business, you can lower prices, you can invest in growth. And so it's really interesting, and I think it is one of those opportunities where the shovel-ready applications of AI, even if it's indirect, because it can drive such structural changes to the, essentially, essentially the unit economics of so many companies' businesses, I think it will change market share. And so I think that it's a little bit like the birth of the internet, you know, and, you know, Walmart did very well since the birth of the browser, even in the face of Amazon.

• 23:12Speaker 03

  There were a lot of retailers like Blockbuster who did not. And so I think because most executives running these companies now lived through the web browser era, saw the birth of the smartphone, and saw the growth of things like Instacart and DoorDash and others, they see this. They're not, and they're modeling, what is the future of our industry going to look like? And, you know, you mentioned enterprise sales. I think the key thing about selling anything is speaking the language of your customer and having empathy. I think one of the things I see a lot with entrepreneurs is they'll go into a meeting and sell their product. If you ever see a really good salesperson, the first thing you'll see them do is ask a lot of questions.

• 23:58Speaker 03

  But then the next thing you need to do is actually listen and understand what they're saying and then reflect the value that your technology provides through the problems that they just described. And I actually think that actually a lot of the technologies in AI will immediately benefit a lot of these businesses, but they're being pitched by 20 AI vendors every single day and they all sound the same. Yep. They literally all sound the same. Yep. You could see like the first call deck of startups to do completely different things and there's like the same words on the slides. And so this is the, I think, the really opportunity right now is how do you actually stand out in such a saturated market? I actually, Clay and I talk a lot about this because we both started web design companies in high school, you know, like during the dot com bubble.

• 24:43Speaker 03

  I went door to door, flower shops. He did more like graphical things. I think he made a little more money than you did in high school. He did. Okay, good, yeah. It's, he did. Yeah. His business was more successful. It's a source of success, it's fine. He also got sued by the California Raisins, but all that's a whole nother story. So, true story. His name's Clay. He named his company Claymation. Bad look. Sorry, Clay. I did, this is public. It's public now. Love you, man. And- This guy doesn't know anything about the law. Yeah. We, we talk a lot about the experience that, you know, we were young and I, not in the center of it, during the dot com bubble where you didn't just have Google, you had AltaVista, all the web.

• 25:25Speaker 03

  You had Ink2Me, which was a B2B search player that was quite, we respected quite a bit. You had amazon.com and you had buy.com and half.com. You had eBay and, you know, you had PayPal and all the other folks pursuing payments. I think now, like, Victor's write the history books, so you, you look at all these magnificent companies coming out of that era and you forget that it was like a fight to the death. The idea that, hey, maybe we should search the internet was not exactly novel. But the actual, like, detailed execution of those ideas was paramount. And I think, you know, going back to the, how do you help companies like ADT succeed?

• 26:07Speaker 03

  The first thing you need to do is like show up as a partner to them and help them solve their acute business problems. And that's a uncomfortable sort of conversation because I think a lot of people don't feel equipped to do it. You know, one trick that I would just recommend is before you meet a customer, do deep research on them. And by that, I mean like the actual feature deep research in chat GPT. You know, show up educated in these conversations and I think you find the more you spend researching your customer and understanding their needs and less time you're thinking about like the next feature going to launch, the better that conversation will go. And I think you'll end up finding that, you know, sweet spot between like where is the intersection of what you do differently and actual business value.

• 26:48Speaker 02

  That's awesome. Let's go to audience questions. I just realized that I've taken up a lot of Brett's time, so please, go ahead.

• 26:58Speaker 04

  Thank you.

• 27:03Speaker 04

  Hi, I'm Robin. What are your learnings in building branded AI agents for specific verticals? And how is it different to building horizontally?

• 27:14Speaker 03

  I really believe in verticals in AI. I think that if you think about what the job proverbially of an AI agent is for a telecommunications company and you think about what's important to them versus say a commercial bank versus say a residential bank versus an insurance company who might be concerned about claims processing versus a health insurance company that's, you know, answering things like explanation of benefits. Every single one of those applications is actually quite specialized. And, you know, right now, I think that the companies that can actually provide value

• 27:57Speaker 03

  quickly around these core workflows of these businesses that are actually valuable to them, actually sort of when I talk about sort of like coming into those conversations and actually providing value really quickly, just have a leg up. I am fairly skeptical of horizontal AI platforms. It doesn't mean they won't succeed, by the way. There's always an exception to every rule. But you know, things like Langchain, I think, probably will succeed. They're open source and you know, you end up sort of, you need to sort of develop a horizontal business in a different way. But it just your pure play enterprise business. I think it's very hard to go in with a horizontal platform because there's just lots of good enough. There's lots of homegrown solutions.

• 28:40Speaker 03

  There's lots of not invented here. And you know, having a slightly better mousetrap is rarely, you know, doesn't pass the like vitamin painkiller threshold, generally speaking. So my rule of thumb is like, the closer you get to solving a problem for a company, the more successful your, your business will be, assuming you're talking about an enterprise business. And you know, the other thing that I really learned from Marc Benioff at Salesforce is like, if you have one successful customer, make it two. And if you have two, make it 10. And if you have 10, make it 100. I do think there's a certain amount of tactical excellence that comes in when you're building a B2B software business and ivory tower cleverness rarely wins.

• 29:25Speaker 03

  It doesn't mean you shouldn't have a long-term strategy, by the way, but there's a certain, if you focus on making your customers successful, that's where the truth is and where your like product should go. Sometimes you can be led astray by that mechanism. You like, the first one was not representative. That's rarely the concern, though. Usually it's being very, very clever and sort of ivory tower with your strategy. So that's why I love verticals.

• 29:51Speaker 05

  Maybe one more? Hey Brett, I was really interested in the question around how you price AI agents. Specifically, have you seen customers being more open to you taking a cut of cost savings or of incremental revenue that you've created? And what are the main kind of pushbacks that you're hearing from customers? Because impact pricing has been historically quite hard. So wondering what you're seeing there.

• 30:14Speaker 03

  Yeah, we see interest in both. You know, if you're owned by a private equity firm and have a big bunch of debt, you probably say the word EBITDA like 20 times a day. It's like what you do at private equity owned companies. And you probably care a lot about cost savings. That's basically all you do. You just walk around. EBITDA. EBITDA, yeah. He actually really simplified it. He got it. It's like, see, I know finance too. Oh, yeah. Yeah, yeah, yeah. You have not ever let an ossified version of yourself. So you don't, please. And in contrast, though, you know, if you're in a very competitive market, like if you talk to any CEO, they generally care more about growth than they do cost savings.

• 30:56Speaker 03

  And in fact, I think one of the counterintuitive things, there's lots of talk about with models becoming cheaper, will demand for infrastructure go down? No, in fact, demand will go up just because new use cases will emerge. I think the same will be true of most cost savings in AI. I think most sophisticated companies will recoup those soft cost savings and reinvest in growth. And so it won't actually be cost savings necessarily. It will actually flow to other parts of the business just because that's what capitalism does, right? It's like, you know, saving a lot of money for what reason? Like, you want to grow, you want to beat your competitors. So sort of first principles and our lived experience is that, you know, top line matters more. There's just no doubt about it. And if you can drive a measurable top line outcome, that's always more valuable.

• 31:41Speaker 03

  But cost savings do matter because fundamentally, if you, you know, look at sort of productivity growth in the world over the past 30 years, it hasn't been as dramatic as I think many people thought it would be after the 90s, where we saw a huge spike in productivity growth. So fundamentally, just like in the economy, we're driving efficiency, productivity in the economy. And so the answer is definitely both. The interesting thing about cost savings is I assume those will be compressed over time. You know, right now, most of your AI startups are being compared to the labor costs. 10 years from now, when it's all AI agents, you're going to be compared to other AI agents. So the other thing about cost savings is it's a temporary drug. You know, because the costs of actually all these things are going to change because

• 32:25Speaker 03

  of the presence of of technology. So it's a little bit like, you know, your mobile phone plans or actually all I think about is like the computers we used to buy growing up in the the 80s and 90s. They would get cheaper and better every single time. And that's sort of where we are in this AI market. So our view is that like, figure out what the outcomes are that your customers want. And it really depends on the application, honestly. Even how you price it is interesting. One of my favorites, I don't know if this is actually true, but I I heard it. And even if it's not true, it changed my ethic, which was when LinkedIn was at one point trying to grow the recruiting business, they started to do, they started out with some usage based model.

• 33:05Speaker 03

  But it turns out HR departments don't have a lot of license to spend like, you know, in a variable amount. So making a subscription model just help with the procurement process. I love that example because it's a really nuanced and insightful go to market point, which is that department, HR is generally a cost center in most companies. Unlike marketing departments, which have like, you know, money flowing from the the ceiling, you know, this is a department that has to go through a pretty rigorous procurement department. So actually going to a subscription model was necessary to actually sell a product into that department. It's that type of thing, I think, is where it's like, is it cost savings or top line? Yes, both. But also, like, who are you selling to? How do they buy?

• 33:49Speaker 03

  Who are the gatekeepers to approving how they spend? That's how you grow like an enterprise offer business. You really need to understand who your decision makers are, who's approving it, and actually, like, how do they budget? And I have a lot of counterintuitive things, but it's like sometimes easier for companies to prepay for things than to pay on demand. Counterintuitive. But just, I think that's like, you really need to get into the details of your buying cycle to answer that in a in a accurate way.

• 34:13Speaker 02

  I'm going to wrap us up. Brett, thank you. They say you should do business with people you like, trust and admire, and you are that for me. So I really appreciate you doing this, and all of us do as well. Thank you.

• 34:23Speaker 03

  Thank you.