Amazon founder Jeff Bezos is betting on Perplexity, an AI search startup that is challenging Google. MARK RALSTON/AFP via Getty Images
A reappeared Video There's a famous Jeff Bezos doing the rounds on He thought it would make sense to ride this wave and found an online retailer.
Now the billionaire is once again betting on the wave of artificial intelligence, in a sector that will directly compete with Google. Bezos isn't the only big tech investor either.
Founded in August 2022, the startup called Perplexity aims to challenge Google by offering an AI-based search engine that is “part chatbot and part search engine, providing real-time information and footnotes with the sources of their answers,” according to the company's website.
When making his investment decision, Bezos undoubtedly paid attention to the numbers, as he did in the 1990s. According to the company, Perplexity is still not profitable, but it quickly grew to 10 million monthly active users while eschewing traditional marketing almost entirely. Additionally, it claims that more than a million people have installed its mobile apps on the iOS and Android platforms and over half a billion requests were processed last year.
On Thursday, San Francisco-based Perplexity announced it had raised $73.6 million from a group of investors led by venture capital firm IVP that included Bezos, $1.2 trillion AI chip giant Nvidia and Shopify co-founder Tobias Lütke.
Perplexity is “one of the few consumer AI products to reach this important milestone of 10 million MAUs,” Jonathan Cohen, VP of applied research at Nvidia, said in the announcement. AI will “change the way we access information,” he believes.
“Google will be seen as something that is outdated and old,” Perplexity CEO Avarind Srinivas, a former OpenAI researcher, told Portal this week. “Perplexity is seen as something that belongs to the next generation and the future.”
Valuation of $520 million
Perplexity offers a Pro version for $20 per month that allows users to choose from several major language models, including OpenAI's GPT-4, Anthropic's Claude 2.1, Google's Gemini, or the company's own LLM Perplexity.
The perplexity certainly still has a long way to go. Srinivas told the Wall Street Journal that the company only generates about $5 million to $10 million in annual revenue from subscriptions and sales of its AI software. With the new funds, the number of employees will be expanded from the current 38 to around 60 by the end of the year.
Despite these meager numbers, the company is valued at about $520 million in this week's funding round.
Of course, Google parent company Alphabet has a market cap of more than $1.7 trillion and Google dominates online search with around 90% market share. It has fended off many challengers and was already a leader in AI long before OpenAI released ChatGPT in late 2022, sparking the current AI boom. And it tests AI-powered search itself on millions of users.
Meanwhile, Microsoft has integrated ChatGPT-4 from OpenAI into its Bing search engine, far behind Google.
While Google faces little immediate threat, it could be hurt in the long run if people rely less on the search engine and more on AI chatbots to find things online.
“If you can answer someone’s question directly, no one needs those 10 blue links,” Srinivas told the Journal.
In this week's announcement, he wrote: “We are at the tipping point of a massive behavioral shift in the way people access information online… The days of sifting through SEO spam, sponsored links and multiple web pages are being replaced by a much more efficient one. “ Way to consume and share information.”
His venture is still a long way off, but so was Amazon when the Internet was the wave to ride. Now it's AI, and Bezos is betting that Perplexity will do well with it.