#ai

Perplexity: the $11M/year Cliff Notes for the web growing 4,272%

Featuring

Perplexity San Francisco, CA

Perplexity is an AI-native web search startup.

Listed In

#ai

#ai-search

Jan-Erik Asplund

Published Mar 07th, 2024

TL;DR: Last month, Perplexity hit $11M annual recurring revenue (ARR) with their AI-powered search tool. Their master plan hinges on using that wedge to back into rebuilding the entire search stack with AI-native components and taking Google on directly. For more, check out our dataset on Perplexity.

Key points from our research:

Perplexity (2022) found initial product-market fit answering complex queries like “How do I provide a California employee with health insurance?” by pulling up the top search results on Bing and passing them into OpenAI’s GPT-3.5 to synthesize the content into an AI-generated summary with citations. Perplexity has now positioned itself as the “Google Search for knowledge work”—designed for the 0.2% of queries longer than 10 words—monetizing with a $20/mo paid subscription that offers unlimited Copilot searches and usage of the latest models like Claude 3 Opus.

About 94% of all searches on Google today are 1-5 word queries, both basic information requests and high-intent searches like “pizza near me” against which Google has built a $260B/year business selling ads. ChatGPT launched with the promise of replacing Google for more complex queries, but with training data that’s still stuck in January 2022 for free accounts, it can’t give up-to-date information.