Note: Data as per publicly available information

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Jasper reached $42.5M in ARR in the first 12 months of launch, growing 30% MoM, and we expect it to cross $75M in 2022, a 1.75x growth over 2021. Jasper charges its customers a subscription fee for a fixed number of words generated per month, with more expensive tiers providing more features, pre-built templates, seats, and priority support. Jasper has 70,000 customers with a skew towards SMBs who use it in place of expensive content writing agencies and freelancers who use it to improve their content and resell it to their clients on Upwork or Fiverr. 

Jasper raised $131M from Insight Partners, Coatue, Bessemer Venture Partners, and Y Combinator, and its last private valuation is $1.5B at a revenue multiple of 20x. As a tool for marketing teams, its revenue multiple is lesser than other tools such as Grammarly (26x), Canva (26x), and Notion (133x). Publicly listed sales and marketing SaaS companies have an average revenue multiple of 7.1x, reflecting the recent tech selloff. However, as there are no public generative AI companies, there are no visibly crashing multiples to weigh down private valuations for generative AI startups. 

Jasper is a generative AI copywriting app built on top of OpenAI’s foundational AI model GPT-3. Jasper resells the GPT-3 model to marketers and content generators by adding a UX layer and integrations like SEO, plagiarism, and grammar check that make it easy to write marketing copy without manually tuning GPT-3’s knobs. 

Jasper found initial traction as a tool to write Facebook ad copies and doubled down on two core growth loops: community (69,000 members) and running paid Facebook/Google ads. It improved the GPT-3 models through prompt-based learning using narrow marketing content and examples, improving its output compared to other apps. It was also one of the first apps to add a Google Docs-style word processor to generate long-form content, which is now 60% to 70% of its usage.

In a Wix-like manner, OpenAI abstracts all complexities of running an AI app in production by providing compute and load balancing, apart from the AI models. Jasper pays to OpenAI every time a user generates a new word in a Spotify-like manner which pays to record labels every time someone plays a song. OpenAI charges 6X more for API calls to fine-tuned models than vanilla GPT-3 API, so as Jasper shifts towards fine-tuned models built on proprietary training data, the margins may come under pressure. 

Jasper’s price per word decreases as users generate more words, incentivizing them to expand usage. At the same time, Jasper gets the upside of making more money and more data to feed into fine-tuned models, improving their output.

Users can access Jasper through the web app or Chrome extension that works in a Grammarly-like manner inside other apps like Google Docs, Notion, and social media apps. Users start by using any of the 50+ pre-built templates, enter a prompt and a few keywords, pick the desired tone, and Jasper throws out multiple options for them, which they can use as it is or iterate by generating more options. Jasper generates content by calling OpenAI’s APIs to access either vanilla GPT-3 or fine-tuned GPT-3 models. 

Jasper started by using vanilla GPT-3 models and then added fine-tuned GPT-3 models to the mix. By tracking user actions like saving, favoriting, and copying to the clipboard as a signal of high-quality AI output, Jasper builds training data for models, and then AB tests them to assess how well they work, creating a data flywheel.

Jasper evolved from a one-and-done tool where you offer input, get Facebook ad headlines, and then keep it or throw it into a tool that can be used as a starting point for writing long-form content. However, as the fidelity of the output depends on the prompt quality and how well GPT-3 was trained on that type of content, it needs human intervention to add the finishing touches. 

Jasper's pre-built templates

Jasper's UI for converting prompts and keywords to text

Google Docs-style word processor for generating long-form content