Perplexity AI has secured a $73.6 million investment, propelling its valuation to a staggering $520 million. Led by tech giants NVIDIA and Amazon founder Jeff Bezos, this funding round marks the largest for a web search company in recent years.
The young startup, which describes itself as the “world’s first fully functional conversational response engine was founded just two years ago, it boasts a unique approach. Instead of traditional search results, Perplexity leverages AI to directly answer user queries, eliminating the need to sift through links. This “conversational response engine,” as co-founder Aravind Srinivas calls it, has attracted 10 million monthly users and served over half a billion requests in 2023.
Perplexity AI offers a unique chatbot-like interface that allows users to ask questions in natural language1. The platform’s AI responds with a summary containing source citations, enabling users to ask follow-up questions and dive deeper into a particular subject1.
The company’s CEO, Aravind Srinivas, has previously worked at OpenAI, where he researched language and generative AI models. This experience has undoubtedly contributed to the development of Perplexity’s innovative platform.
Despite its impressive growth, Perplexity remains a lean operation with fewer than 40 employees, operating from a San Francisco co-working space. Their success hinges on the versatility of their AI technology, aptly likened to a Swiss Army knife. From solving math problems to crafting essays, generating weather forecasts, and even assisting with professional learning and travel planning, Perplexity’s capabilities are vast.
“We spent virtually nothing on traditional marketing,” Srinivas reveals, attributing Perplexity’s rise to organic buzz and word-of-mouth. While currently unprofitable, the company generates revenue through subscriptions and software sales to other businesses, with an annual income of $5-10 million. Future plans include exploring advertising as a potential income stream.
Perplexity’s rapid ascent reflects the growing appetite for AI-powered search solutions. Its direct answer approach offers a compelling alternative to traditional search engines, promising faster and more efficient information retrieval. With backing from industry heavyweights and a rapidly growing user base, Perplexity is poised to shake up the search landscape, making it a company to watch in the years to come.
