“Startups are all about being bold,” Perplexity CEO Aravind Srinivas recently told Fortune. “Are you building a company that has unbounded potential? That’s risky, but there’s an infinite reward if it works.”
Founded in August 2022, Perplexity aims to challenge Google by offering an AI-based search engine that is “part chatbot and part search engine, offering real-time information and footnotes showing the sources of its answers,” as its website states.
In January, Srinivas shared in a blog post that Perplexity had grown to 10 million monthly active users and had served over half a billion queries in 2023. He also revealed that the company had raised $73.6 million from venture capitalists, companies including Nvidia, and various angel investors—as well as Jeff Bezos, through his Bezos Expeditions Fund.
The funding round valued Perplexity at about $520 million. Now, just a few months later, the venture is finalizing a new funding deal at a valuation of around $1 billion, according to a report this week by the Wall Street Journal, which cited unnamed people familiar with the matter.
If accurate, that means Bezos’s investment has nearly doubled in the space of a few months. No doubt the ability of Perplexity to quickly reach 10 million monthly active users impressed him, just as, nearly three decades ago, the “startling statistic” of the web growing at 2,300% a year inspired him to start Amazon.
He wasn’t the only investor to take notice of the startup’s rapid growth. Perplexity is “one of the few consumer AI products to reach this major milestone of 10 million MAUs,” said Jonathan Cohen, VP of applied research at Nvidia, in the January funding announcement. Artificial intelligence, he added, will “transform how we access information.”
CEO Srinivas certainly believes so, and he’s taken numerous digs at Google search, which he believes has grown tiresome.
“Google is going to be viewed as something that’s legacy and old, and Perplexity will be viewed as something that’s the next generation and future,” he told Reuters in January.
Of course, Google isn’t sitting still. Indeed, it’s been testing AI-powered search on millions of users.
Srinivas recently told Fortune, however, that Google “has no incentive to actually move fast and nail this product experience because their core money is coming from making people click on links and view links.”
Perplexity makes money by offering a Pro version for $20 per month that allows users to pick from various large language models, among them OpenAI’s GPT-4, Anthropic’s Claude 2.1, or the venture’s own LLM Perplexity.
“Our value proposition is that the free product is already so good that you can still use it without having to pay for it, but the paid product is going to be insane,” Srinivas told Fortune.
He’s also counting on people increasingly turning to AI chatbots instead of Google as they look for things online.
“The times of sifting through SEO spam, sponsored links, and multiple web pages will be replaced by a much more efficient way to consume and share information,” he wrote in the January announcement. And as told the Wall Street Journal around the same time, “If you can directly answer somebody’s question, nobody needs those 10 blue links.”
Of course, even Perplexity does hit a $1 billion valuation, it has a long way to go to truly challenge Google, which has enormous resources and AI talent at its disposal—and whose parent Alphabet is valued at $1.7 trillion.
