Artificial intelligence startup Perplexity won support from Nvidia, Bezos, and numerous venture capitalists on Thursday (January 4th), betting that the company's new search engine products will overturn the way people search for information online and challenge Google's dominant position in online search.
Perplexity has been established for less than two years, with a total of less than 40 employees, and its headquarters is also located in a joint office space in San Francisco, which is quite dilapidated.
However, now there are about 10 million users using the company's search product every month, which the company refers to as the "answer engine".
It is reported that Perplexity announced on its official website on Thursday that it has completed a Series B financing of up to $73.6 million at a valuation of $520 million, led by Institutional Venture Partners. This is also the largest amount of funding raised by internet search startups in recent years.
NEA, Elad Gil, Nat Friedman, and Databricks, investors in the company's Series A financing, continued to participate in this round of financing, while perhaps more notable were the two new investors in Series B financing - NVIDIA and Amazon's CEO Jeff Bezos (through the Bezos Adventure Fund) who both participated.
So far, the total financing amount of Perplexity has reached 100 million US dollars.
Over the past few decades, many companies that have attempted to challenge Google have ended in failure. Even giants like Microsoft have struggled to leverage Google's approximately 90% share in the internet search market for many years. So, what are the advantages of Perplexity and how can it win the favor of Nvidia and Bezos?
The advantages of Simplicity
In response, Perplexity founder and CEO Aravind Srinivas stated that their advantage lies in fully utilizing the advancements in artificial intelligence technology to provide direct answers when answering search queries, rather than website links, thus avoiding certain restrictions like large companies like Google.
Srinivas said, "If you can directly answer someone else's question, no one needs the 10 blue links (provided through traditional search)."
According to public information, Perplexity is the world's first conversational search engine, which uses advanced AI technologies such as GPT-4 to directly provide generated answers to user input questions, and has high standards for accuracy and efficiency.
Srinivas stated earlier last year that, "We exist because we want to improve search, increase information acquisition efficiency, reduce keyword searches, filtering, link clicks, and page browsing; let people directly understand the truth of things and make decisions through concise and personalized answers. This is not in line with Google's financial and business goals, and it is an opportunity for others to rethink products and businesses from scratch."
In fact, through practical applications, perhaps the functionality of Permlexity can be more vividly demonstrated. When we search for "Bezos Investment Perplexity", Perplexity can accurately explain the specific situation of the latest news released on Thursday and provide corresponding news report links.
It also performs well in obtaining and summarizing Chinese information. For example, when we ask it to provide a specific introduction to the currently popular TV drama "Flowers" in China, Perplexity can also capture more smooth and accurate information from different channels.
It is worth mentioning that Google also began attempting to launch a similar feature last year - "Search Generation Experience" (SGE), which provides lengthy answers to certain search queries. However, currently Google has not fully promoted this feature globally and has only landed in a few regions such as the United States and Japan.
Permlexity is developing rapidly
According to Similarweb's data, the website and mobile applications under Perplexity had 53 million visits in November 2023, more than 20 times the 2.2 million visits when the service was first provided in December 2022.
Srinivas stated that since its establishment, the company has hardly invested in traditional marketing, relying solely on word-of-mouth and hot discussions on X to attract new users.
Perplexity even caught the attention of some Google executives. Susan Wojcicki, former CEO of YouTube, and Jeff Dean, Senior Vice President of Artificial Intelligence Research, both made personal investments prior to the recent round of financing.
Of course, if this startup wants to directly engage in a head-on battle with a behemoth like Google, it clearly needs to overcome a series of challenges. The valuation of Google's parent company Alphabet is currently as high as $1.7 trillion, and Google has also invested billions of dollars in recent years to lay out in the AI arena, which is a challenging task for a smaller startup.
Currently, the paid version of Perplexity charges $20 per month. Srinivas stated that Perplexity has not yet been profitable and can currently generate approximately $5 million to $10 million in annual revenue from subscribing to and selling AI software to other businesses. The company does not rule out the possibility of introducing advertising in the future. Perplexity states that it will strive to reduce costs by acquiring more users and studying their commonly used search patterns.
"If this project is successful, it could eventually become a truly big project. Of course, they cannot defeat Google yet," said Cack Wilhelm, a partner at Institutional Venture Partners