What is Perplexity AI?

Can small search startups compete any longer in the era of BingAI on GPT-4 and Google with Bard?

Hey Guys,

So I’m a huge fan of alternatives to Google and Bing in search and I’ve been tracking this startup for some time.

Listen to the podcast:

Today I noticed one of its co-founders wrote an update post on LinkedIn and it got me thinking.

You can get their iPhone app here.

At a time when Microsoft is making it harder for search competitors to compete with Bing (due to them going after Google’s Search Ad golden cow), it makes me like the little guys like Perplexity, You.com and Duckduckgo even more.

Bloomberg also covers their Series A, which is somewhat small. Perplexity AI, which makes a conversational search engine using artificial intelligence, has raised $25.6 million in a funding round led by New Enterprise Associates, the latest deal in the booming AI sector. 

Apparently the executives at Microsoft don’t want any competition in their challenge of Google. This is worrisome for antitrust practices that have concerned me increasingly with the behavior of Microsoft. Even Germany has started a probe on Microsoft’s monopolistic power.

It’s also notable who joined the Series A funding round for Perplexity. The funding round led by Peter Sonsini of New Enterprise Associates (Board member, Databricks) with participation from our seed round investors Elad Gil (Founder, Color Health), Nat Friedman (Former CEO of GitHub), Jeff Dean (SVP, Google AI) and Bob Muglia (Former President of Microsoft), as well as new investors Susan Wojcicki (Former CEO of Youtube), Paul Buchheit (Creator of Gmail), Soleio (Designer of Messenger, Dropbox), and Databricks Ventures.

The connections to Google executives here is very notable. Jeff Dean and Susan Wojcicki are names you may be familiar with. Perplexity A.I. are really good at factual searches with added context via citations (though they don’t seem too accurate quite yet).

Microsoft Bing is getting really greedy and uncooperative with smaller competitors. Wired reports that startups that previously relied on licensing search results from Bing feel that Microsoft is unfairly squeezing them out of the search space. The main squeeze is a financial one — a week after rolling out Bing Chat in February, Microsoft announced as much as a 10 times increase to standard fees for search data that would come into effect in May.

It’s not as if BingAI or Google’s Bard are competing well head-to-head with ChatGPT, so it’s a bit confusing. You.com, Yahoo and Duckduckgo were already too reliant on Bing. Microsoft’s behavior going after Search Advertising is smart but also ruthless. In recent years, Amazon, Apple and Microsoft are getting more into advertising and with a TikTok ban could all benefit including Meta, Snap and platforms like Substack (who do paid subs and not ads).

Yann LeCun, the chief AI scientist for Meta Platforms Inc., is also an investor. Now if only WhatsApp tried to become a super-app with a decent search and ChatGPT like Conversational A.I. Some believe ChatGPT could create a super-app that could challenge Google and not actually Bing upgraded with GPT-4.

How New is Perplexity.AI?

Perplexcity intends to use the Series A funds to accelerate its growth and expansion plans, including developments on user sign-in, optimizing the application’s knowledge database and continuing to protect user privacy. 

Formed in 2022 by Aravind Srinivas, Denis Yarats, Johnny Ho and Andy Konwinski, Perplexity AI is the builder of a generally available conversational answer engine that draws from credible sources in real-time and directly answers users’ questions with sourcing and citations.

It’s not as flashy as some, for instance You.Com has a new writing tool. But for factual search, there’s this and Neeva as well.

• Neeva

• Perplexity

• You.com

• Duckduckgo, among others.

So Perplexity is really the new kid on the block. But just as Generative A.I. startups are getting money from the Cloud leaders, search seems stifled by the Duopoly of Google and Bing in search, not a great science for innovation.

Check out the iPhone app video promo. It seems they always want us to download another app.

Commenting on the news, Aravind Srinivas said: “When people search online for answers to their questions, they are presented with endless lists of links that can be manipulated by advertisers and search engine optimization. Individuals are then tasked with sifting through those websites and distilling the information, much of which may not be accurate in the first place. With Perplexity AI, we aspire to fix all of that.”

If only we lived on an internet not dominated by spammy Ads and monopolistic practices that aren’t regulated properly in the U.S. and abroad for the most part.

So what’s new in the product? Well, previously available via the company’s website and as an extension on the Chrome Web Store, the new iOS application enables Perplexity to introduce new features like user sign-in for personalization, persistent search history and social sharing.

Bing has become essential to nearly every search startup trying to challenge Google, including DuckDuckGo and You.com. To see Google executives investing so heavily in Perplexity.AI doesn’t make their case against Ads feel very sincere. I think however it is a testament to the pedigree and their laser-focus in terms of engineering chops.

Their long-term mission is to become the best platform for answers and information, serving as the go-to source for people seeking quick, accurate answers tailored to their asks. They envision Perplexity AI as a platform beyond a traditional search engine, evolving into a comprehensive knowledge hub where anyone can explore and learn effortlessly. In pursuit of this vision, they say they are committed to providing citations with every answer, providing proper attribution for sources of information and allowing for verification.

• Citations

• Attribution

• Personalization

• Knowledge-hug with fact verification

The key in my mind will be how they incorporate human feedback loops into the product.

Google Connection is Strong

Bloomberg notes that its backers also include at least six current and former AI researchers at Google and sister company DeepMind, including Jeff Dean, Google’s senior vice president for research and AI, who was an angel investor in the company in its early stages, according to data from research firm PitchBook. 

Just network effect eh? Aravind Srinivas, spent time as a researcher at DeepMind and the Google Brain research team before founding Perplexity. Those early relationships explain why so many Googlers have invested in Perplexity, said Bob Muglia, a former Microsoft Corp. executive who also invested in the startup.

While I prefer the interface of You.com, I like the attempt at citations of Perplexity.AI. I have not conducted many tests on Neeva, but it’s more a premium option if privacy ad-free experience is your goal from my understanding.

Perplexity’s funding round is relatively humble compared with other AI startups that have announced new hauls in recent weeks. It’s not on the Generative A.I. hype asking for outrageous valuations without revenue for instance.

According to their interview with Sarah Guo and company, they see speed of iteration as their startup advantage. As such, since its launch in December, Perplexity has been releasing new features to users every week. “Perplexity is not even six months old and has shipped more product than most companies do in their entire lives,” investor Nat Friedman, the former CEO of software platform GitHub, wrote in a post on Twitter.

However in my limited testing of Perplexity the citations and fact verification isn’t great. It confused me with other people bearing the same name for example, a common mistake of such engines.

You can see their hiring for positions in their career section here. It’s way too early to know what the ceiling of Perplexity.AI’s potential or exactly how they will differentiate from the minor actors in Search who all together don’t even have much market share currently in 2023.