This AI search startup now faces Google and OpenAI

When I was in high school, I had to know who the Secretary of State was for a homework assignment. Now you can just google it. Back then, you had to be more diligent.

My stepfather, always eager to teach a lesson, told me to call the library and ask for the reference librarian, who would tell me it was the Secretary of State — and he mumbled the answer. I read his lips and exclaimed, “Warren Christopher!” but he made me call the library anyway, thinking I was learning a valuable life skill.

Soon, the role of the reference librarian could be filled by generative AI, and more specifically, gen AI-driven search. It’s a field that’s garnering the attention of the heavyweights in artificial intelligence.

Both search giant Google and ChatGPT maker OpenAI have their own visions for the future of search, called AI Overviews and SearchGPT respectively. They aim to provide more immediate responses through AI-generated summaries. Ideally, this results in faster answers than scrolling. Starting in June, AI Overviews automatically appeared at the top about 8% of all Google search results. Meanwhile, SearchGPT is reportedly being tested by some 10,000 users.

There is also a startup called Confusion.aithat fast waves made in the tech sector with its novel blend of AI and search. In his review, my colleague Imad Khan said that Perplexity’s use of the open web and ability to draw from social media platforms like Reddit and X make it a competitive alternative to Google Gemini and ChatGPT 3.5. However, he said that AI startup Anthropic’s Claude model is “better tuned to provide more nuanced answers with greater informational synthesis.”

Ultimately, all of these companies are after the same thing: a share of the search engine market. projected to achieve $430 billion in 2032.

‘A large language model as a summarizing model’

San Francisco-based Perplexity calls itself an AI answer engine. Instead of having you click on links as you would in traditional search, Perplexity finds what it calls trusted sources, identifies relevant facts from those sources, and combines them into answers with citations to the sites where the information came from, making fact-checking easier.

It sounds a lot like OpenAI’s SearchGPT, but Chief Business Officer Dmitry Shevelenko prefers to think SearchGPT is inspired by Perplexity, which rolled out to the public in December 2022. (OpenAI didn’t unveil SearchGPT until July, a few months after Google’s troubled introduction of AI Overviews.)

He differentiates the two by noting that Perplexity focuses on answering questions, while SearchGPT focuses on chat. But that could be six of one and a half dozen of the other.

Three of Perplexity’s four co-founders have doctorates. According to Shevelenko, this experience in academia “where the currency of the realm is citations”led to Confusion in its current form.

“The idea of ​​using a large language model not as an information source, but as a synthesizer and summarizer of information, and then using high-quality, reliable sources on the real-time Internet as a knowledge base, that was kind of an aha moment for them,” Shevelenko said.

(A large language model is an AI model that uses machine learning to understand text. It is trained to predict future words based on past words. [Machine learning is a branch of AI that uses data and algorithms to imitate the way humans learn.])

To do this, Perplexity created its own web index and ranking system. Shevelenko said it uses 50 data signals to determine the trustworthiness and reputation of domains. (For comparison, Google has at least 200 (ranking signals.)

“Things that will always be reliable [are] news organizations,” he added. “The facts that go into their stories always take priority and that’s reflected in a lot of the data signals that we look at.”

The startup has a complicated relationship with those news organizations. Earlier this year, Wired and Forbes said Perplexity was using their content without permission. Perplexity CEO Aravind Srinivas denied the allegations. A month later, the startup said an initiative unveiled called the Perplexity Publishers’ Program, which includes a revenue-sharing component for media partners such as Time, Der Spiegel and Fortune.

Perplexity offers two plans for consumers. A free version allows you to perform unlimited “Quick” searches and five “Pro” searches per day. The $20 per month Pro plan allows you to perform over 300 Pro searches per day.

According to a blog post about PerplexityThe Pro version, released in July, can answer more complex questions, perform advanced math and programming tasks, and generate more informed answers.

Perplexity also offers business subscriptions and an API — which developers can use to build new applications based on Perplexity technology — and it plans to launch advertising in the third quarter. The startup is developing an advertising unit called Sponsored Question, which will allow brands to sponsor follow-up questions in search results.

“We expect this to be our largest source of revenue within the next 18 months,” Shevelenko said of advertising.

He declined to share user numbers, but said Perplexity answered 250 million questions in July. That’s still a drop in the ocean compared to you-know-what.

Google doesn’t share search volume data, but it is estimated The search giant receives 8.5 billion searches every day, which equates to 255 billion searches per month.

Where does the expression ‘sacred cow’ come from?

While writing this I was talking to an SEO friend about ranking signals and he said that Google’s official number is 200, but a leak Internal documents from earlier this year suggested the number may have been as high as 8,000.

“Holy cow,” I said. And then I wondered where that phrase came from. So I went to Perplexity.

List moving company Square Cow Moversanswer site HowStuffWorks and news site Indian ExpressPerplexity told me the phrase dates back to at least 1913, when baseball commentators used it to avoid swearing. But, Perplexity continued, it could also be a variation on “Holy Christ!” and/or could have been influenced by Irish immigrants who said “Holy cathu.” The word cathu means sadness in Gaelic and sounds like cow in English.

Google’s AI Overview, meanwhile, cited Wikipedia and the same article from the Indian Express, along with a YouTube video by a creator called English with Jackie. It emphasized the cathu explanation first.

In a regular Google search, Wikipedia is the top search result for the phrase, followed by Square Cow Movers, social forum site Reddit, question-and-answer site Quora, HowStuffWorks, and Indian Express.

I was honestly surprised that there was so much overlap in purchasing.

When I asked, “When are the Braves playing tonight?” both Perplexity and Google told me they would be playing the Los Angeles Angels at 9:38 ET. Perplexity quoted the network’s website CBSSports.comwhile baseball website MLB.com has the highest ranking in Google, followed by the New York Times and CBSSports.com.

A search for tomato recipes perhaps illustrated Perplexity’s limitations, as it highlighted only one panzanella recipe, while Google offered much more variety.

Perplexity plans to add more visual elements to search results in the future, Shevelenko said.

The company has raised $165 million to date, including $63 million in a fourth round earlier this year.

Shevelenko confirmed that Perplexity has raised “over $100 million” and has “no specific plans” for more.