When we think about search engines, Google usually comes to mind, but there is a new kid on the block called Perplexity. It’s an AI-based engine backed by Amazon’s Jeff Bezos. Valued at over US$1B, the Silicon Valley startup has some impressive fans, including Nvidia CEO Jensen Huang, who says he uses the product almost every day.

Aravind Srinivas, Co-founder & CEO of Perplexity, joined BNN Bloomberg’s Jon Erlichman to talk about what drove him and his team to try to shake up an industry with major entrenched players.

“I was really obsessed about search,” he said, adding that he and the company’s other cofounders “all had this giant drive and passion for reinventing the space.”

The idea of incorporating artificial intelligence into a search engine came after the team noticed the boom in Generative AI and how it had such enormous potential in the software space. "AI is eating all software and the king of all software, in terms of good business, is consumer search.”

Taking on Google

With over 10 million monthly active users, Perplexity is gaining popularity among internet users. But what distinguishes this platform from others?

Srinivas, who was inspired by a book about the evolution of Google called In the Plex, says people are obsessed with user experience.

"They love products that are designed for them. Google used to be that when it first came out that’s why it disrupted... but then it ended up going the same path as Yahoo by becoming an advertising platform."

Srinivas added people want search engines to work for them, not for advertisers. Perplexity is better at serving users, he says, because it provides answers to their questions directly without forcing people to skim through different sites to figure out what is accurate and relevant.

With Perplexity “people don’t have to waste their time browsing, instead, they just get an answer.” The program also does the entire process in seconds, which means "your time is saved and your knowledge is expanded."

Srinivas said advertising may well play a role in the company’s revenue model at some point, but the critical next step will be to do it in a way that doesn’t compromise the user experience.

When asked how AI will transform traditional search models like Google, Srinivas said AI is already disrupting the advertising industry, as consumers are no longer clicking on them as much.

It’s a concerning trend for names like Google-owner Alphabet, where ads are their highest-margin business.

IPO on the horizon

Perplexity has  been around for less than two years but the company is already meeting its targets with plenty more room to grow, he said.

Srinivas added he would like to take Perplexity public in the future.

“Of course we want to go public... at some point, you have to get serious about building a business.”

He doesn’t anticipate Perplexity will be going public next year but an IPO “is definitely on the cards five years from now.”