AI-powered search engine Perplexity AI, now valued at $520M, raises $70M

As search engine incumbents — specifically Google — amp up their platforms with gen AI tech, startups want to reinvent AI-powered search from the bottom up. It would appear like a Sisyphean activity, going up towards rivals with billions upon billions of customers. However this new breed of search upstarts believes it may possibly carve out a distinct segment, nevertheless small, by delivering a superior expertise.

One among the many cohort, Perplexity AI, this morning introduced that it raised $70 million in a funding spherical led by IVP with extra investments from NEA, Databricks Ventures, former Twitter VP Elad Gil, Shopify CEO Tobi Lutke, ex-GitHub CEO Nat Friedman and Vercel founder Guillermo Rauch. Different individuals within the spherical included Nvidia and — notably — Jeff Bezos. 

Sources aware of the matter inform TechCrunch that the spherical values Perplexity at $520 million post-money. That’s chump change within the realm of gen AI startups. However, contemplating that Perplexity’s solely been round since August 2022, it’s a nonetheless spectacular climb.

Perplexity was based by Aravind Srinivas, Denis Yarats, Johnny Ho and Andy Konwinski — engineers with backgrounds in AI, distributed programs, search engines like google and databases. Srinivas, Perplexity’s CEO, beforehand labored at OpenAI, the place he researched language and gen AI fashions alongside the traces of Stable Diffusion and DALL-E 3.

In contrast to conventional search engines like google, Perplexity presents a chatbot-like interface that permits customers to ask questions in pure language (e.g. “Do we burn calories while sleeping?,” “What’s the least visited country?,” and so forth). The platform’s AI responds with a abstract containing supply citations (principally web sites and articles), at which level customers can ask follow-up inquiries to dive deeper into a specific topic.

Performing a search with Perplexity.

“With Perplexity, users can get instant … answers to any question with full sources and citations included,” Srinivas stated. “Perplexity is for anyone and everyone who uses technology to search for information.”

Underpinning the Perplexity platform is an array of gen AI fashions developed in-house and by third events. Subscribers to Perplexity’s Professional plan ($20 monthly) can swap fashions — Google’s Gemini, Mistra 7Bl, Anthropic’s Claude 2.1 and OpenAI’s GPT-4 are within the rotation presently — and unlock options like picture era; limitless use of Perplexity’s Copilot, which considers private preferences throughout searches; and file uploads, which permits customers to add paperwork together with photographs and have fashions analyze the docs to formulate solutions about them (e.g. “Summarize pages 2 and 4”).

If the expertise sounds similar to Google’s Bard, Microsoft’s Copilot and ChatGPT, you’re not flawed. Even Perplexity’s chat-forward UI is paying homage to right this moment’s hottest gen AI instruments.

Past the plain rivals, the search engine startup You.com presents related AI-powered summarizing and source-citing instruments, powered optionally by GPT-4.

Srinivas makes the case that Perplexity presents extra strong search filtering and discovery choices than most, for instance letting customers restrict searches to tutorial papers or browse trending search matters submitted by different customers on the platform. I’m not satisfied that they’re so differentiated that they couldn’t be replicated — or haven’t already been replicated for that matter. However Perspective has ambitions past search. It’s starting to serve its personal gen AI fashions, which leverage Perplexity’s search index and the general public internet for ostensibly improved efficiency, via an API obtainable to Professional clients.

This reporter is skeptical in regards to the longevity of gen AI search instruments for a lot of causes, not least of which AI fashions are pricey to run. At one level, OpenAI was spending approximately $700,000 per day to maintain up with the demand for ChatGPT. Microsoft is reportedly losing a mean of $20 per person monthly on its AI code generator, in the meantime.

Sources aware of the matter inform TechCrunch Perplexity’s annual recurring income is between $5 million and $10 million in the mean time. That appears pretty wholesome… till you issue within the millions of dollars it usually prices to coach gen AI fashions like Perplexity’s personal.

Picture Credit: Perplexity AI

Issues round misuse and misinformation inevitably crop up round gen AI search instruments like Perplexity, as effectively — as they effectively ought to. AI isn’t the most effective summarizer in spite of everything, generally missing key details, misconstruing and exaggerating language or in any other case inventing facts very authoritatively. And it’s vulnerable to spewing bias and toxicity — as Perplexity’s personal fashions recently demonstrated.

Yet one more potential pace bump on Perplexity’s highway to success is copyright. Gen AI fashions “learn” from examples to craft essays, code, emails, articles and extra, and lots of distributors — together with Perplexity, presumably — scrape the net for tens of millions to billions of those examples so as to add to their coaching information units. Distributors argue fair use doctrine offers a blanket safety for his or her web-scraping practices, however artists, authors and different copyright holders disagree — and have filed lawsuits in search of compensation.

As a tangentially associated apart, whereas an increasing number of gen AI distributors provide insurance policies defending clients from IP claims towards them, Perplexity doesn’t. Based on the corporate’s terms of service, clients conform to “hold harmless” Perplexity from claims, damages and liabilities arising from the usage of its providers — that means Perplexity’s off the hook the place it considerations authorized charges.

Some plaintiffs, like The New York Instances, have argued gen AI search experiences siphon off publishers’ content material, readers and advert income via anticompetitive means. “Anticompetitive” or no, the tech is actually impacting site visitors. A mannequin from The Atlantic found that if a search engine like Google have been to combine AI into search, it’d reply a person’s question 75% of the time with out requiring a click-through to its web site. (Some distributors, resembling OpenAI, have inked offers with sure information publishers, however most — together with Perplexity — haven’t.

Srinivas pitches this as a characteristic — not a bug.

“[With Perplexity, there’s] no need to click on different links, compare answers, or endlessly dig for information,” he stated. “The era of sifting through SEO spam, sponsored links and multiple sources will be replaced by a more efficient model of knowledge acquisition and sharing, propelling society into a new era of accelerated learning and research.”

The various uncertainties round Perplexity’s enterprise mannequin — and gen AI and consumer search at massive — don’t seem like deterring its buyers. So far, the startup, which claims to have ten million lively month-to-month customers, has raised over $100 million — a lot is which is being put towards increasing its 39-person crew and constructing new product performance, Srinivas says.

“Perplexity is intensely building a product capable of bringing the power of AI to billions,” Cack Wilhelm, a common companion at IVP, added through electronic mail. “Aravind possesses the unique ability to uphold a grand, long-term vision while shipping product relentlessly, requirements to tackle a problem as important and fundamental as search.”