Article

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

by Pete Sonsini and Ann BordetskyMar 28, 2023

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.

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.

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.

About the authors

Pete Sonsini

Pete is a Venture Advisor at NEA, focused on early-stage software investing. He was GP and head of the firm’s Enterprise investing practice for more than a decade. Pete led NEA’s early investment in several companies that became unicorns, including Databricks, Upstart, Anyscale and Instabase. Before his venture career, he held sales and product management jobs at HP, and also was an early employee at VMware, where he built the OEM channel from the ground up. He has BA from UC Berkeley, MBA from Kellogg and was Varsity Letterman and National Collegiate Champion in rugby while at Cal. He currently sits on the board of Cal Rugby.
Pete is a Venture Advisor at NEA, focused on early-stage software investing. He was GP and head of the firm’s Enterprise investing practice for more than a decade. Pete led NEA’s early investment in several companies that became unicorns, including Databricks, Upstart, Anyscale and Instabase. Before his venture career, he held sales and product management jobs at HP, and also was an early employee at VMware, where he built the OEM channel from the ground up. He has BA from UC Berkeley, MBA from Kellogg and was Varsity Letterman and National Collegiate Champion in rugby while at Cal. He currently sits on the board of Cal Rugby.

Ann Bordetsky

Ann is a Partner at NEA, where she focuses on early-stage investing in consumer technology and AI application software and marketplaces. Prior to NEA, Ann was Chief Operating Officer of Rival (acquired by Live Nation) and held business leadership roles at Uber and Twitter during their growth phase. As an operator, she has seen Silicon Valley startups through each phase of the company-building lifecycle, from first launch to IPO. Ann holds an MBA from the Stanford Graduate School of Business and a BS from UC Berkeley.
Ann is a Partner at NEA, where she focuses on early-stage investing in consumer technology and AI application software and marketplaces. Prior to NEA, Ann was Chief Operating Officer of Rival (acquired by Live Nation) and held business leadership roles at Uber and Twitter during their growth phase. As an operator, she has seen Silicon Valley startups through each phase of the company-building lifecycle, from first launch to IPO. Ann holds an MBA from the Stanford Graduate School of Business and a BS from UC Berkeley.