Am I right in thinking you're valued the business Perplexity at about 20 billion US dollars? Is that right?
So, 20 billion dollar valuation, that is not investors valuing you as a search engine, right? So, what are they valuing? What is the business that they're seeing that they're valuing you at 20 billion US dollars?
So, investors are investing in Perplexity for accuracy and orchestration. Last year, we were orchestrating across multiple different models. With the launch of Perplexity computer, we took it to a whole new level where we started orchestrating across models, files, tools, personal contacts, connectors, and most recently even chips where we can offload some of the tokens and inference through your local devices. So, we think of Perplexity as the only company that's truly incentivized to maximize the output token value per power watt per user. That is the orchestration problem to solve. So, it requires you to balance intelligence, accuracy, cost, privacy simultaneously. It's easy to be good at one thing. It's easy to be really good at cost, but not offering accuracy and intelligence. It's also easy to be really good at accuracy, but being super expensive. It's really hard to do it all simultaneously. So, that is the orchestration problem we're solving and doing it in a way that simplifies everything AI can do and putting it in one unified interface is basically what we tried to do with Perplexity computer.
What was the technical moat or the technical moats to get to that point?
The hardest engineering problem to solve in achieving this is building the most sophisticated inference engineering platform. So, you're not just routing to one model. You have to know which model is good for what task. You also have to know how to do a particular task cost-efficiently. You should be good at knowing what to do with any model failing at a task. And so, you're essentially building the most sophisticated applied inference engineering platform in the world. And by bringing in proprietary web search capabilities that Perplexity is known for, turning that into deep research and wide research, and finally into doing anything a human can do on a computer except the AI becomes the computer, that is the engineering problem. And so, the good thing that comes out of solving that problem is creating the most value of the output tokens for power watts consumed. Everyone's freaking out about how many tokens they're spending, and some companies are burning half a billion dollars in a month because of one engineer's token maxing. I think that's not the way things should be headed. We all should get the benefits of AI, frontier AI, without having to worry about whether we can afford it. The whole thing of a permanent underclass doesn't make sense.
How deep is that backlash to token maxing right now?
I think the customer essentially speaks the truth. If a lot of people are saying, 'Hey, I don't think my task requires this much dollars spent for the tokens,' I think it's worth listening to. That's actually why some AI inference needs to move local. Open source models are definitely going to play a big role in this future. It's never about only wanting to use open source models or only frontier models. You essentially need hybrid compute between frontier on the server and open source models that can run locally. And that only increases the need for the existence of an orchestrator, which is the role we want to serve in the community.
I'm just thinking of that pushback around maxing out on tokens and switching up between open source and the frontier models. What does that do for the business models of Anthropic and OpenAI? Does that challenge their business models? Does that challenge their trillion-dollar valuations?
Well, I think competition is good. No company is immune to competition.
It's certainly good. Frontier model companies only deserve trillion-dollar valuations if they continue to stay on the frontier. If there are multiple people who can provide the same capability at a far lower cost, then you're no longer at the frontier. And so the value accrues to applied inference platforms and orchestration layers. As new frontier capabilities keep emerging from the next-generation models, those companies will command their high valuations. If they do not, then it's obviously going to be difficult. It's an exciting time to be in AI because no one is guaranteed victory. Things change so fast.
Whoever is the market leader, whichever company is the one that everyone talks about...
Who's the market leader now?
The market leader depends on what metric you measure. If you measure revenue, obviously whoever is doing well right now. But the long-term metric that really matters in AI is the token value per watt per user. That's the metric we want to win on. And it's okay to win on that slow and steady. You have to win on it right away.
There's some reporting today, Wall Street Journal reporting that Sam Altman and OpenAI are looking to cut prices.
That's amazing. I'm super glad he's doing that.
You're happy to hear that. Is it going to be a price war amongst the frontier labs?
I hope so. And I think that war benefits users and companies like Perplexity a lot. Because that way we can orchestrate cheaper prices, bring down the cost, which will mean that by Jevons paradox, more people are going to use it and people who are using it a lot will use it even more, will automate even more things, will be able to build even more business ideas faster.
Perplexity computer, which is what you started off talking about. Where do you see that? Is that an enterprise and a consumer product?
Where are you seeing the greatest demand? What are the numbers looking like? What is adoption looking like? What is it doing to revenues?
In the financial services sector. It's natural there because we're known for accuracy and that's one vertical where accuracy matters a lot. Same thing in legal. We're seeing a ton of demand among small business owners, people who are running one to five-person teams. The C-level executives, the founders, they're all really automating a ton of things and building things that they could never build before with teams that are really small. Our power users happen to be executives, founders, people in hedge funds, private equity, investment banks. So, a lot of adoption in these sectors.
Are there certain tasks that we should never delegate to agents?
You always want to stay in the loop. You don't want to completely give all the autonomy to the agents yet.
It's all about making sure you scaffold it in the right way where you're able to verify its outputs and the guardrails are in place.
How do you think all of this, I want to broaden it out to what this all does, what your perception is, what your view is on what this all does to the labor market. You're creating this harness for agentic AI. You want to be the operating layer for AI.
Yeah. So, I have a very optimistic view about the future. I do not like talking about job losses. What I actually want to think about is how can this set of tools and capabilities help us build new businesses way faster? The economy only flourishes if there are new companies being built. If the next trillion dollars of market value is all shared by the big seven or the foundation model layers, that's not going to benefit all of us. But if everybody in this room or our friends can go try to build a new company and turn it into a hundred million dollar company or a billion dollar company, a passive income of ten to a hundred million dollars a year, that's awesome. The benefits are shared more widely. You need to have the tools in place to help you spin up small businesses and get them flourishing. That's why we announced this Perplexity for small businesses program and a billion dollar build to support entrepreneurs. We would give them computer credits and allow them to turn creative ideas into multi-billion dollar companies.
Where are you on hiring? Is Perplexity hiring? Are you adding head count as you push out these new capabilities?
The most curious and highest agency people do really well at Perplexity. It's not about the number. We've never been interested in token maxing or head count maxing. Both of these things don't make sense. I think what really makes sense is how curious you are, what are the questions you ask and what are the creative ideas you can come up with. This is the best time to, if these values resonate with you, this is the best time for you. There's never been a better time for a curious and high agency person.
You recently, am I right in thinking you recently crossed 500 million or you're close to crossing 500 million ARR? Is that...
Could you give us an update? Where is ARR?
I'm not at liberty to share exact numbers yet. All I can say is those are pretty old numbers right now.
Those are pretty old numbers. By a significant amount?
