OpenAI’s New Competitor Has Sam Altman Worried

Hey SaaS Sentinel reader. Welcome back. Sam Altman is worried about a new OpenAI competitor that offers AI-assisted search, investors are sharing their advice for when to think about selling a startup, and Google’s profits are soaring despite ongoing regulatory challenges. Here’s what’s happening in SaaS this week.

• Enterprise search startup, Glean, is a new OpenAI competitor.

• Tech founders and investors share a framework for determining when to consider acquisition.

• Alphabet's Q3 results reveal a 34% profit increase despite ongoing regulatory challenges.

Meet OpenAI’s Biggest Competitor—An AI Search Platform Sam Altman Deemed a Threat

With OpenAI CEO Sam Altman urging investors to steer clear of a select group of competitors, the lesser-known startup Glean has found itself in the spotlight. Founded in 2019 by Arvind Jain, a former Google engineer, Glean offers a powerful enterprise search tool that’s already valued at $4.6 billion—and it’s growing fast.

The Enterprise Search Solution

Glean’s mission is simple but ambitious: to help employees find information across the countless tools and apps their companies use. Integrating seamlessly with platforms like Slack, Dropbox, and others, Glean’s AI-enabled search saves employees hours each week by centralizing access to data scattered across different systems. Since hitting $50 million ARR over the summer, Glean is expected to close the year with $100 million in ARR, with projections soaring to $250 million by 2025.

A Journey from Jaipur to Silicon Valley

Jain’s path to building Glean began in Jaipur, India, where he was raised far from the world of Silicon Valley tech. After excelling in math and gaining admission to IIT Delhi, Jain pivoted from an initial interest in pharmaceuticals to computer science—thanks to a nudge from university counselors. He went on to work at Microsoft, Akamai, and eventually Google, where he contributed to major projects like Google Maps and YouTube.

After co-founding the cybersecurity firm Rubrik, Jain recognized a critical gap: companies struggled to manage and access their own information spread across various platforms. Glean was born from this realization, aiming to be the “Google for the workplace.”

Work AI Meets LLMs

Beyond search, Glean has integrated large language models (LLMs) to act as a work AI assistant, helping employees summarize conversations, synthesize documents, and generate answers based on internal data. It’s a robust, secure solution tailored for enterprise use, ensuring employees only access information they’re authorized to see.

Altman’s warning to investors might seem like a competitive gesture, but Jain sees it as a nod to Glean’s innovation and impact. With high-profile clients like Reddit, Pinterest, and Databricks, Glean is proving itself a powerful tool in the crowded enterprise AI space. As Jain puts it, “companies win or lose because of themselves, not because of competition.” Glean’s growth trajectory suggests it’s doing something right.

Read more.

When Should You Sell Your Company? Look for These Signals

In Silicon Valley, the high-profile IPOs tend to grab the headlines, but for many startups, acquisition is the more likely—and sometimes more strategic—exit path. 

At this year’s TechCrunch Disrupt, seasoned founders and investors shared insights on spotting the right moment to sell a company, a decision that requires careful planning and often goes unspoken in the startup world.

“Good Companies Are Bought, Not Sold”

Naveen Rao, VP of AI at Databricks, and Kamakshi Sivaramakrishnan, Head of Data Clean Rooms at Snowflake, shared their experiences building and selling multiple companies, including Rao’s recent sale of MosaicML to Databricks for $1.3 billion. Both emphasized that founders shouldn’t build a company solely with a sale in mind but should be open to opportunities when the right deal arises. Rao’s advice? Build with purpose, and if an acquisition opportunity presents itself, be prepared to evaluate it critically.

The 3-Point Framework for Selling

Dharmesh Thakker, a general partner at Battery Ventures, outlined a practical framework to help founders assess when it might be time to sell:

1. Product Fit: Is your product gaining traction and deeply resonating with customers? If not, it might be time to pivot—or sell.

2. Sales Cycle: If sales are stalling or customer acquisition is challenging, that could indicate underlying issues.

3. Financial Health: A dwindling runway or tightening finances are clear signs to consider alternative paths.

If a startup is struggling in two out of these three areas, founders should start exploring acquisition options to prevent burning through resources.

Balancing Stakeholders in a Sale

For Thakker, a successful acquisition isn’t just about the founders and investors—it’s also about doing right by the employees who helped build the company. Structuring retention packages for employees, he noted, can foster loyalty and create a supportive ecosystem where former team members may return as founders or investors in future ventures.

Selling a company is rarely a one-size-fits-all decision, but as founders weigh their options, Rao and Sivaramakrishnan’s experiences underscore the importance of staying flexible and prioritizing long-term growth, whether through acquisition or continued independence.

Read more.

Google Is Still Pumping out Massive Profits Despite Multiple Threats

Alphabet, Google’s parent company, showcased impressive financial results for Q3 2024, reflecting the tech giant’s continued dominance even amid a storm of legal battles and intense competition in AI. 

Alphabet reported a $26.3 billion profit for the quarter, a 34% jump from last year, with revenues rising 15% to $88.27 billion. Driving this growth are Google’s bread-and-butter search ad revenue and a booming cloud division, which saw a 35% revenue boost, thanks to skyrocketing demand for AI-driven services.

Betting Big on AI

While other tech giants, including Microsoft and OpenAI, are racing to lead the AI arms race, Google’s hefty investments in AI appear to be paying off. Google’s AI ambitions come with a hefty price tag, though, as its capital expenditures soared 62% year-over-year to $13.1 billion. Yet Google’s AI innovations are already bearing fruit, with over 25% of its coding now being generated by AI—a shift that’s bound to have a long-term impact on efficiency and costs.

The Antitrust Cloud

Despite strong quarterly results, regulatory headwinds loom large. In an ongoing antitrust case, a federal judge recently labeled Google’s search engine as an “illegal monopoly,” leaving the company vulnerable to potential breakup by the U.S. Department of Justice. Compounding these challenges, Google is also navigating rulings that demand more openness in its Play Store operations and prepare for an additional antitrust trial over its digital ad network in Virginia.

Investors Stay Optimistic

For now, the markets are still showing faith in Google. Alphabet shares spiked 5% in after-hours trading, with analysts optimistic about Big Tech’s earnings trajectory. As more tech earnings reports roll out from heavyweights like Amazon and Meta, investors are keeping a close eye on the sector’s resilience and adaptability in the face of regulatory scrutiny.

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Parting Thoughts

Well, that’s the tech news for this week. Hit reply and let us know—did you learn something from today’s newsletter?

Until next time!