Our Investment in Perplexity AI: Answer Engines and the End of Traditional Search

Perplexity AI logo

For over 20 years, we have used the static search box as our window into the world’s knowledge base. At first magical in its simplicity and speed in serving up the most relevant information, the search engine quickly became our default user interface for the internet, but even as content creation proliferated, the search experience remained the same.

How often have you found yourself navigating through pages of search results, struggling to find a quick answer or unsure which sources to trust? Search engines are invaluable tools in our lives, yet the core technology upon which they were built, PageRank, dates back to 1996. As content creation proliferated and sponsored ads took up more visual space, we accepted the cognitive load of parsing through results. Approximately 50% of consumers report that they sometimes feel misled by search results, many complain about ads, and a quarter report they often end up somewhere unexpected that does not provide what they were looking for[1].

A few months ago, the world discovered a new way to query information—simply asking questions to large language models (LLMs). Instead of spending 10-15 minutes sifting through links, answers were presented instantaneously and in a human-like conversational response. Users were dazzled but there were issues: LLMs were difficult to continually update with the latest information, and they often provided incorrect answers or confidently 'hallucinated' incorrect responses. Enter Perplexity AI.

Tweet by renowned AI researcher and Perplexity AI angel investor Andrej Karpathy
Tweet by renowned AI researcher & Perplexity AI angel investor Andrej Karpathy

Perplexity’s mission is to build the world’s best conversational answer engine and be the source people trust to discover and expand their knowledge. Perplexity AI's game-changing product combines traditional search pipelines with LLMs while emphasizing scientific fact and verification through a rigorous citation process that grounds every answer in referenced sources. Accuracy through transparency, context and user feedback is a core tenet of Perplexity’s knowledge engine. Harkening back to the simplicity of early search, Perplexity’s conversational engine is a leap forward in user experience.

Check it out for yourself at Perplexity.ai

The company has seen strong momentum in its web product offerings, consistently growing about 100% month-over-month with 10M monthly visits and 2M unique visitors in February alone. Previously available via the company’s website and as an extension on the Chrome Web Store, the new iOS application enables Perplexity to introduce new features like user sign-in for personalization, persistent search history and social sharing. The product's popularity is driven not only by its technical merits but also by an intuitive UI, enabling users to explore threads of knowledge, dive into related topics, provide input and corrections, and share link their unique threads with anyone. Perplexity is becoming an indispensable co-pilot for browsing and synthesizing information.

Screenshots of Tweets about Perplexity AI

Search has historically been an elusive category for disruption. We were compelled by the extraordinary founder-market fit of the Perplexity AI team. The founding team includes CEO Aravind Srinivas, a former PhD at Berkeley who has contributed to groundbreaking AI research [2] at Deepmind, Google, and OpenAI; CTO Denis Yarats, a former PhD at NYU, Meta AI staff research scientist and head of Quora's Ranking & ML team; Chief Strategy Officer Johnny Ho, previously at Quora and Tower Research Capital, and the former World #1 IOI 2012 and World #3 ACM-ICPC (olympiad and collegiate computer science competitions); and President Andy Konwinski, co-founder of Databricks, who brings extensive expertise scaling one of the world’s fastest-growing decacorns. In addition to their backgrounds, the team has demonstrated one of the fastest shipping velocities we have seen, bringing serious competition to companies with multiple orders of magnitude more employees in a matter of months.

We are delighted to lead Perplexity’s Series A funding round and to support their mission of advancing the way people discover and share information. The company founding team's pedigree and track record of fast execution has attracted numerous industry leaders who bring a wealth of relevant expertise and experience to the table, including Elad Gil (co-founder Mixer Labs/Color Health), Nat Friedman (fmr. Github CEO), Pieter Abbeel (Professor at UC Berkeley), Paul Buccheit (Creator of Gmail), Yann LeCun (Head of Meta AI), Ashish Vaswani (Creator of the Transformer Architecture), Amjad Masad (Replit CEO/Founder), Clem Delangue (HuggingFace CEO/Cofounder), Andrej Karpathy (founding member OpenAI and fmr. Head of Tesla AI) and others.

At NEA, we have invested in transformative companies in each era of AI. Our portfolio includes trailblazing infrastructure companies including Databricks, DataRobot, Weaviate, Anyscale and applied AI companies, such as Forethought AI, Mashgin, Instabase, Uniphore and Wispr AI. Yet even we are awed by the game-changing advancements in generative AI over the last few months and the rapid acceleration of AI capabilities as a building block for consumer and enterprise applications. The generative AI renaissance we are in now will forever change how we work, create and consume information. From synthesizing stores of useful data to automating a multitude of functional tasks, from writing content to delighting us with wondrous imagery, there is no doubt we are in a new era of productivity and human creativity. In particular, we believe that conversational AI introduces an opportunity for a paradigm shift and a new user interface for how we access knowledge. We couldn't be more excited to work with the Perplexity team to improve knowledge access for millions of people.

Perplexity is hiring for exceptional engineering talent. Check out their Careers page for opportunities.

The information provided in this blog post is for educational and informational purposes only and is not intended to be investment advice, or recommendation, or as an offer to sell or a solicitation of an offer to buy an interest in any fund or investment vehicle managed by NEA or any other NEA entity. New Enterprise Associates (NEA) is a registered investment adviser with the Securities and Exchange Commission (SEC). However, nothing in this post should be interpreted to suggest that the SEC has endorsed or approved the contents of this post. NEA has no obligation to update, modify, or amend the contents of this post nor to notify readers in the event that any information, opinion, forecast or estimate changes or subsequently becomes inaccurate or outdated. In addition, certain information contained herein has been obtained from third-party sources and has not been independently verified by NEA. The companies featured in this post are for illustrative purposes only, have been selected in order to provide an example of the types of investments made by NEA that fit the theme of this post and are not representative of all NEA portfolio companies. The company founders or executives or any other individuals featured or quoted in this post are not compensated, directly or indirectly, by NEA but may be founders or executives of portfolio companies NEA has invested in through funds managed by NEA and its affiliates. Any statements made by founders, investors, portfolio companies, or others in the post or on other third-party websites referencing this post are their own, and are not intended to be an endorsement of the investment advisory services offered by NEA.

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