The Exchanges

Q What are some of the use cases that you're seeing? I mean, I, my, my email, I thought, I think is pretty fun. I let that go. Um, but I also see taxes.

A Yeah. I mean, it's, it's any, uh, so we actually are launching this week, 36 different workflows that go on top of computer. Um, so this is everything from building a financial model, uh, of a company, uh, to filing your taxes, uh, if you're a wealth manager, uh, prepping for a meeting with a client, um, and again, this takes advantage of connecting to, you know, your internal data systems, your, your, you know, your Snowflake, your Databricks. Uh, just last night, Uh, I ran a, uh, analysis of, you know, what are the models that are being used inside of perplexity right now? Like, what's the distribution of between, you know, Opus four seven and, uh, GPT and Gemini, and it got a very elaborate, uh, result back, and I know zero SQL. I don't, I can't code if my life depended on it, and I didn't bug a single data scientist at perplexity. Um, and I was able to do this because we connected perplexity computer, uh, to our snowflake, and I was able to, you know, pull in that, that analysis, you know, within a few minutes that in a previous world, you know, that would have been 10 emails, and I certainly would not have been able to get it at midnight, um, as, as I wanted to kind of dive into that, right? Um, what we're seeing people do is, is be able to operate with much greater velocity, uh, whether they're accomplishing marketing objectives, analytical objectives, like building produ…

AI assessment note: “everything from building a financial model, uh, of a company, uh, to filing your taxes”

Q of record, so to speak, um, that handles all this stuff. And I think they, they might even prefer a world where, you know, that would just be the single app to rule them all. Um, you're orchestrating their models. So long term, aren't you sort of at least dependent on their benevolence to allow you to use these models, um, even as you compete with their core products now?

A Yeah, I, I think ultimately all these companies are platform businesses in addition to product businesses, and they, You know, they aggressively petition us to use their models. They want, they, they give us early access. They want us to run evals. Um, and so we, we have, you know, the exact opposite dynamic right now where they're, they're, you know, more than happy to take revenue from us. Um, and you know, they're the beneficiary of, of, you know, more consumption of computer credits as well. Uh, and, and I think they, You know, because they are all competing with each other on their platform businesses as well, and, you know, there's open source, which, which is, you know, you know, Continuing to push at the frontier, not necessarily at the frontier, but pushing at it. All those competitive dynamics are very healthy for us. Now, I agree with you. If we lived in a world where there was just one frontier model that was twice as good as the next best model, that wouldn't, that would be a bad scenario for perplexity. I wouldn't deny that. But, you know, Since this industry has kicked off, there's never been a moment where the delta between the, you know, the best model and the second best model was, like, more than maybe, like, a 10, 15% gap. And again, like, best model is, is probably, I shouldn't even be using that phrase because it's best model at what, right? There's differ…

AI assessment note: “All those competitive dynamics are very healthy for us.”

Q unlimited. Like you wouldn't do an unlimited electricity plan or an unlimited fuel plan. But for some reason, a lot of these companies have been doing this. Um, do you think that this is like a legitimate issue that she's pointing out that basically like we don't really know what AI demand is because it's been subsidized so heavily for so long? Uh, and if so, what's the answer here?

A So we, uh, at Perplexity, we've never subsidized paying users. So if you're on a, you know, pro or max plan, uh, you know, we're, thank you, you're, you're contributing to our success. You're welcome. Uh, the, uh, and, and, you know, we see great retention, so clearly folks are finding value there. Uh, and that's actually why computer credits are so important, right? So that as you have, Uh, because you can have a certain computer task, uh, cost you 50 dollars for, you know, say it's like video generation, and it's like long horizon running. You know, you can, one task can cost up that much, and then you have certain tasks that cost, uh, you know, five cents. Uh, and so there's no way to encapsulate all of that in a, you know, subscription product, right? So I, I think the mental model I would have is, AI is going to become a lot like Costco, uh, where you pay for the membership, right? And that gets you in the store. Uh, and that's actually the part of Costco's business that is, you know, the highest margin. And then you have, you know, everything you're buying in the Costco, you know, you have confidence that there's like a max margin, right? And those are kind of like computer credits, right? And it's, you know, some people go to Costco and they just buy the hot dog. Uh, and then, you know, you know, there's people who go and spend, you know, thousands of dollars every trip,…

AI assessment note: “AI is going to become a lot like Costco, uh, where you pay for the membership”

Q but that growth has tailed off. Uh, what do you think is behind this, um, flattening of consumer AI product growth overall? Let's just take it with the whole industry, because it's certainly happening. Is it just that, like, they kind of hit saturation? Or is it, you know, we know there are fears about AI? Is it people are just too afraid of AI? What's your best diagnosis there?

A I think, um, there's, some of the use cases got ahead of, ah, where people were curious to explore, like, what is this AI thing, but their behaviors didn't change. Um, but, but I also think, There, there's a fusion of consumer and prosumer that we find very interesting. Um, a lot of people are now empowered to, uh, explore launching a side business, uh, or, you know, explore like doing that, you know, you know, that project that they never had the activation energy for. And now because you have these super powerful tools at your disposal, uh, you're more than happy to, to spend, you know, you know, Money behind that because you feel like you get leverage there. So I think consumer to us is not just people using perplexity to look up the weather, right? You don't need AI for that. And so I think part of what the broader industry needs to do is educate users on what is possible now. Like people refer to this as the capabilities overhang, right? Where the models got a lot more powerful Especially in the last six months, and people are still using them in a very, you know, web one point away. Um, and that's just going to take time for, for, for that, that discovery to catch up. Uh, but we're, we're, you know, I'd say this is less relevant for perplexity, but I, I'm confident that, uh, everyone will prefer to have a more intelligent, uh, set of software they use to, to help run thei…

AI assessment note: “some of the use cases got ahead of, ah, where people were curious”

Q everyone is now pivoting to the super app, this app that can control your computer. You guys open AI, Anthropic. I'm wondering, is this happening from a position of strength, um, which is that, okay, if we're just going to move, move here because the technology is so strong, um, or is it potentially a reaction to the fact that consumer AI hit a ceiling and you need something else?

A So, um, well, I'll tell you the, the, I don't know those metrics that you shared, but the stats I look at every morning is our revenue. Um, and we started the year at under two hundred fifty million ARR and Aravind recently shared that, you know, as of a month ago, uh, we crossed five hundred million ARR. Um, and so clearly, uh, we're creating value for our users. And when we actually go back and understand Who was using perplexity even when it was, you know, more focused on, let's say consumer AI as you define it. People were actually using perplexity for work and knowledge related tasks. Uh, so they were coming to us, you know, as much as we were talking up, you know, this is the Google search killer. Um, people were using perplexity to, to get ahead at work. Um, even when they weren't using the enterprise version, this was their secret weapon to be more productive, Uh, have greater leverage as they build businesses, create businesses, and so in some ways, you know, We're not, we haven't shifted our focus. We're really going to meeting our users where they always were. And what's possible now is, and this really started, you know, you couldn't have built something like computer before November, December of last year, because model capabilities advance where you can have longer time horizons for running tasks, right? Where you're not just answering a question, but you're actua…

AI assessment note: “we crossed five hundred million ARR. Um, and so clearly, uh, we're creating value”

Q How much can you trust this stuff? You know, again, going back to this taxes example, I don't trust it to do my taxes. Am I just a Luddite? Or is there legitimacy to the worry that if it gets something wrong, I could get a letter from the IRS?

A Well, actually, I would flip it the other way. The way people are using computer is to double check the work done by their accountant and finding significant errors done there, right? So it's actually one of the workflows that we're most excited about is called Final Pass, and you submit a PDF, a presentation, a spreadsheet, and it basically does a detailed fact check on every assertion and claim In that document, and, and both in terms of fact checking against the outside world, and then for internal consistency. Um, and we, we actually did, you know, ran through a Gartner, uh, press release about their earnings, and found, like, four glaring, you know, like, mistakes in it where they, like, misstated the earnings. Um, and, uh, you know, we're, we're gonna have a fun marketing exercise. We basically go through Public companies, uh, press releases and, and run final pass through them, uh, and show just how much, you know, error lives in the world right now. Um, and so I, I think, you know, there's, But to get to the heart of your question, I think there's always going to be three fundamentally like human activities when it comes to using AI. One is we talked about curiosity, right? You have to give it the spark, like you have to define, you know, we, we say, you know, we're shifting from an era of, um, instructions to objectives, right? So you have to define where the objective…

AI assessment note: “understanding where AI might go sideways and, you know, do validation testing.”