Jan 17, 2024
From 2,000 to 4 Million Queries: How Perplexity Broke Search
An interview with Aravind Srinivas, Founder of Perplexity AI
Founder Focused
From 2,000 daily queries to 4 million. From zero to 10 million monthly active users. From academic obscurity to an $8 billion valuation—all in just two years.
Aravind Srinivas, the co-founder and CEO of Perplexity AI, has built what many consider the world's fastest-growing startup. His conversational answer engine is challenging Google's 25-year dominance in search, delivering instant answers with citations instead of endless blue links.
In this interview, Srinivas reveals how a reality check at OpenAI shaped his approach to building AI, why pricing strategy can make or break product-market fit, and the counterintuitive philosophy that's driving Perplexity's explosive growth.
Watch the full interview now on EO's YouTube channel! Below is the complete transcription of the interview. Minor edits have been made for clarity and readability.
Key Highlights:
"I went to OpenAI and I felt really bad because people were so much better than me. It was a big reality check that I could improve a lot more in programming, first principles thinking, my clarity of thought."
"Perplexity is the world's first conversational answer engine. Instead of getting ten blue links, you can just ask questions in natural language and get it answered instantly."
"We launched on December 7th, 2022. Our first day, we saw around 2,000 to 3,000 queries. Now we serve more than 3 to 4 million queries a day. It's basically grown 1,000X over a period of one year."
"We priced at the same price as ChatGPT Plus because subsidy in any industry has product market fit. But do you have product market fit as a company because you're subsidizing something everybody wants, or do you have product market fit for your core offering?"
"When you're starting a company, do what you really love because the world changes really fast. What you love doesn't usually change, so start with that."
"Perplexity is the world's first conversational answer engine. Instead of getting ten blue links, you can just ask questions in natural language and get it answered instantly."
"We launched on December 7th, 2022. Our first day, we saw around 2,000 to 3,000 queries. Now we serve more than 3 to 4 million queries a day. It's basically grown 1,000X over a period of one year."
"We priced at the same price as ChatGPT Plus because subsidy in any industry has product market fit. But do you have product market fit as a company because you're subsidizing something everybody wants, or do you have product market fit for your core offering?"
"When you're starting a company, do what you really love because the world changes really fast. What you love doesn't usually change, so start with that."
From India to the Reality Check at OpenAI
Tell us about your background and how you got into AI.
Aravind Srinivas: So I grew up in India, studied in one of the IITs there, and I was really into algorithms, programming ever since the beginning. A friend of mine told me about a machine learning contest, which I didn't even know what machine learning was. All they told me was, hey, there's this data set and you can figure out a way to predict the output given the input, and it was fun, and I won the contest, and I didn't spend a lot of time on it and it came more naturally, so I decided to go deeper into it.
I went and did my PhD in Berkeley on AI and deep learning. I worked at OpenAI in 2018 summer as a research intern. I thought I was good. I did really well in India. I came to Berkeley. I'm like definitely one of the top AI PhD students. And then I went to OpenAI and I felt like really bad because people were so much better than me. It was a big reality check that I could improve a lot more in programming. I could improve a lot more in first principles thinking, my clarity of thought.
I went and did my PhD in Berkeley on AI and deep learning. I worked at OpenAI in 2018 summer as a research intern. I thought I was good. I did really well in India. I came to Berkeley. I'm like definitely one of the top AI PhD students. And then I went to OpenAI and I felt like really bad because people were so much better than me. It was a big reality check that I could improve a lot more in programming. I could improve a lot more in first principles thinking, my clarity of thought.
How did that OpenAI experience shape your understanding of what was coming next in AI?
Aravind Srinivas: After an internship at OpenAI in 2018, that was when GPT-1 was published. We realized that there is this new form of learning using all the internet data and learning from it, and I figured that was gonna be more important, so I told my advisor that this is the right thing to do. We should go work on this, and he was actually pretty open minded and said, okay, you know what, I'm not a specialist here, but let's try.
The best way to learn a new topic is to force yourself to teach it to others. So we spent a lot of time, holidays, weekends just learning and coding and just understanding all these things, and we did this for 2 years. All that helped me find a new research topic, which is how to combine generative AI and RL together, which is what results in these amazing technologies like ChatGPT. ChatGPT is not just predicting the next word on the internet, it's doing that and then making sure that you know how to communicate with humans.
The best way to learn a new topic is to force yourself to teach it to others. So we spent a lot of time, holidays, weekends just learning and coding and just understanding all these things, and we did this for 2 years. All that helped me find a new research topic, which is how to combine generative AI and RL together, which is what results in these amazing technologies like ChatGPT. ChatGPT is not just predicting the next word on the internet, it's doing that and then making sure that you know how to communicate with humans.
The Academic Who Found His Entrepreneurial North Star
What made you transition from academia to entrepreneurship?
Aravind Srinivas: I'd always been interested in entrepreneurship because I've been in the Bay Area. I watched this TV show Silicon Valley, which is pretty real, but never really found an example of an academic turned entrepreneur that I really resonated with. It was all like undergrad dropouts.
At one point, I was in the library in the late nights, reading books, and then I stumbled upon this book about the story of Larry and Sergey. In the book, How Google Works, Larry had written the foreword in it. I had only two career pathways for myself. It was either to be a professor or an entrepreneur. And the reason is that no other career pathway would let me execute on my own mission. I would have to be working on someone else's mission. I wouldn't be able to bring out the ideas I have in my head into reality.
Artificial intelligence would be the ultimate version of Google. So we had the ultimate search engine, it would understand everything on the web. It would understand exactly what you wanted, and it would give you the right thing.
At one point, I was in the library in the late nights, reading books, and then I stumbled upon this book about the story of Larry and Sergey. In the book, How Google Works, Larry had written the foreword in it. I had only two career pathways for myself. It was either to be a professor or an entrepreneur. And the reason is that no other career pathway would let me execute on my own mission. I would have to be working on someone else's mission. I wouldn't be able to bring out the ideas I have in my head into reality.
Artificial intelligence would be the ultimate version of Google. So we had the ultimate search engine, it would understand everything on the web. It would understand exactly what you wanted, and it would give you the right thing.
Building the World's First Conversational Answer Engine
What exactly is Perplexity and how is it different from traditional search?
Aravind Srinivas: Perplexity is the world's first conversational answer engine. What does that mean? Earlier we were used to entering something like keywords or a bunch of phrases, and Google gives you 10 blue links and you open each of them and start reading. Perplexity is trying to build a future where you don't have to do this. You can just come and ask a question just like how you would ask a friend, and that AI replies to you with the answer, but not just the answer. Every sentence that it says also has a corresponding reference, or we call it a citation.
This is all coming from an academic background, like my co-founder Dennis and I are PhDs. We figured that we would use this principle that everything in a paper that you write in academia, you have to back it up with reference from some other paper, and that's how perplexity works. It's almost like how a journalist's essay is written or research paper is written.
This is all coming from an academic background, like my co-founder Dennis and I are PhDs. We figured that we would use this principle that everything in a paper that you write in academia, you have to back it up with reference from some other paper, and that's how perplexity works. It's almost like how a journalist's essay is written or research paper is written.
How do you handle the challenge that people often don't know exactly what they want to search for?
Aravind Srinivas: Often you're curious about something, but you don't exactly know what you want even. So how can the AI help you if you don't know what you want? People are not expert prompt engineers. They're never going to be. Don't blame the user for not having a good prompt. Blame the AI for not being able to expand or help them expand themselves to a good prompt.
That's why we built this thing called Co-Pilot on our site, where as you ask a question, Co-Pilot will ask clarifying questions, and your prompt is basically getting expanded interactively. This is similar to talking to a friend, like, hey, you know what? I'm figuring out which school to go to. I was like, oh, okay, cool. What are you actually interested in? Are you interested in like English majors? Are you interested in computer science? And then they say, I think I might be interested in both English and computer science. Okay, yeah. You know what, Yale might be a good option for you. Like that's how you talk to a friend, right? We want that experience to come to a search engine too. That human intelligence needed to do that is being done by an AI now.
That's why we built this thing called Co-Pilot on our site, where as you ask a question, Co-Pilot will ask clarifying questions, and your prompt is basically getting expanded interactively. This is similar to talking to a friend, like, hey, you know what? I'm figuring out which school to go to. I was like, oh, okay, cool. What are you actually interested in? Are you interested in like English majors? Are you interested in computer science? And then they say, I think I might be interested in both English and computer science. Okay, yeah. You know what, Yale might be a good option for you. Like that's how you talk to a friend, right? We want that experience to come to a search engine too. That human intelligence needed to do that is being done by an AI now.
1,000X Growth and the Orchestra Problem
Tell us about the growth you've seen since launching in December 2022.
Aravind Srinivas: We launched the product on December 7th, 2022. Our first day, I think we saw around 2,000 to 3,000 queries. Now we serve more than 3 to 4 million queries a day. It's basically grown 1,000X over a period of one year. We have about 10 million monthly active users at this point.
A lot of our growth so far has been that somebody says ChatGPT doesn't work for this particular thing or like Bard sucks at this thing and then like people just tweet, oh look at this Perplexity thing, it just gets it. Look at this thing.
A lot of our growth so far has been that somebody says ChatGPT doesn't work for this particular thing or like Bard sucks at this thing and then like people just tweet, oh look at this Perplexity thing, it just gets it. Look at this thing.
What makes building a product like this so challenging technically?
Aravind Srinivas: How we maintain the quality of the answer comes down to improving every single component here, the component of like, does it have spammy sites or does it have like high quality sites? How good are you at writing that amazing concise summary without hallucinations? We are playing the orchestra here. These are all like individual musicians. And any one musician failing will make the result fail.
That's why this is a hard thing to build. That's why this is not something where, oh, because you're a startup, you're gonna lose, because even for a big company playing orchestra is hard. Of course, if you have more money you can hire better musicians and like you play a better orchestra over time, but that's still the part of orchestrating. But the user doesn't care where it goes wrong in any of these. For the user, they read an answer and they're like, oh this is good, or like, this is not good, right? So that's why this particular product is super hard to build.
That's why this is a hard thing to build. That's why this is not something where, oh, because you're a startup, you're gonna lose, because even for a big company playing orchestra is hard. Of course, if you have more money you can hire better musicians and like you play a better orchestra over time, but that's still the part of orchestrating. But the user doesn't care where it goes wrong in any of these. For the user, they read an answer and they're like, oh this is good, or like, this is not good, right? So that's why this particular product is super hard to build.
The $20 Pricing Strategy That Defined Product-Market Fit
Why did you price Perplexity Pro at exactly the same price as ChatGPT Plus?
Aravind Srinivas: So the pro plan is priced at $20 a month. It's the exact same pricing as ChatGPT Plus. I'll tell you why. So we use OpenAI GPT-4. If we priced it lower than ChatGPT Plus, people would come and pay for it, but not necessarily for what we're offering, probably because we subsidized GPT-4 and gave it to the user, and subsidy in any industry has product market fit.
But then do you have product market fit as a company because you're subsidizing something that everybody wants, which is GPT-4, or do you have product market fit for your core offering, which is combining LLMs and search together? And it's very important for you to not conflate something with something else.
So we decided, okay, price it at the same price and then see how many people are still paying for our product because they realize that we are the best provider of search and LLMs together. Either they have to cancel ChatGPT subscription and come here, or they have to pay for both, just like how you pay for both Netflix and HBO. That's why we decided to do this, and we are super happy that it worked because that means if a user comes and pays for us, it communicates to us one thing, which is the value that you are providing the best service of this one particular thing that they want with the highest quality.
But then do you have product market fit as a company because you're subsidizing something that everybody wants, which is GPT-4, or do you have product market fit for your core offering, which is combining LLMs and search together? And it's very important for you to not conflate something with something else.
So we decided, okay, price it at the same price and then see how many people are still paying for our product because they realize that we are the best provider of search and LLMs together. Either they have to cancel ChatGPT subscription and come here, or they have to pay for both, just like how you pay for both Netflix and HBO. That's why we decided to do this, and we are super happy that it worked because that means if a user comes and pays for us, it communicates to us one thing, which is the value that you are providing the best service of this one particular thing that they want with the highest quality.
The Philosophy of Extreme Focus and Urgency
How do you maintain focus as a startup with so many possible directions?
Aravind Srinivas: The best strategy for startups is to focus on very few things, like literally even one thing, because there's not much time. As a startup, you're supposed to move fast, and as a startup you have very few shots at failure. You're also supposed to ship high quality things so that the user trusts you. So physically impossible for you to do many things. We're still a small team, around 30 people. When you have fewer people, you can only do fewer things.
There is a quote I really like from the Airbnb founder that you have to earn the right to ship a new feature from your user. So the user wants already a bunch of things. Your job is to actually go and do that for them. And once they're happy, they're like, hey, give me new features, man, you're doing pretty well. That's when you got to go and ship new features.
There is a quote I really like from the Airbnb founder that you have to earn the right to ship a new feature from your user. So the user wants already a bunch of things. Your job is to actually go and do that for them. And once they're happy, they're like, hey, give me new features, man, you're doing pretty well. That's when you got to go and ship new features.
How do you create a culture of urgency without being toxic?
Aravind Srinivas: It's also the culture you want to set. Like you tell people, okay, I'll do it tomorrow. Why can't you do it today? Just ask that question. Don't tell them to do it today because just ask, can we do it? And if they have a solid explanation for why it cannot be done today, then fair. But maybe they didn't even consider it. They thought, okay, they could do it tomorrow.
So not in a way where it comes across as toxic, but more like trying to push them towards urgency. Hey, look, we are a startup, we need to execute. If we don't, all our potential just decays. If you have a rolling ball and you do nothing, it'll automatically stop. But if you have a rolling ball and you keep kicking it, it'll go even faster.
So not in a way where it comes across as toxic, but more like trying to push them towards urgency. Hey, look, we are a startup, we need to execute. If we don't, all our potential just decays. If you have a rolling ball and you do nothing, it'll automatically stop. But if you have a rolling ball and you keep kicking it, it'll go even faster.
Simplifying Complexity and Starting With Love
How do you approach complex problems and decision-making?
Aravind Srinivas: Something is complex because there's a lot of information. So then force your brain to say, okay, this is a lot, but what is the one most important thing? What is the second most important thing? Usually there's not more than 2. Let's say there's like one thing that has 2 choices, and there are like 3 things that are 8 choices now. Your brain is not able to process 8 choices at once. It usually has 3 or 4 at best. So your job is actually to figure out what is that 2 choices.
There is advice from Reid Hoffman that says whenever you're going to make decisions, people usually do pros and cons, where they write down the pros, they write down the cons and then see which has more, and they pick that option. But that's like the wrong way of doing things because that way you're weighing everything equally important, but things are not equally important usually. Some things are way more important than others. So you've got to be able to take something and pick the most important thing out of it and focus on that.
There is advice from Reid Hoffman that says whenever you're going to make decisions, people usually do pros and cons, where they write down the pros, they write down the cons and then see which has more, and they pick that option. But that's like the wrong way of doing things because that way you're weighing everything equally important, but things are not equally important usually. Some things are way more important than others. So you've got to be able to take something and pick the most important thing out of it and focus on that.
What's your advice for aspiring entrepreneurs?
Aravind Srinivas: I've been given this advice in other interviews. I'm gonna continue to say this, not just for consistency. I really believe in it. When you're starting a company, do what you really love because the world is not something that's static. It changes really fast. I would say what you love doesn't usually change, so start with that.
The mission is not about making money. That said, the mission requires money and therefore we will make money in order to serve the mission. The metrics should never be like, oh, by 1 year or 1 month, I'm gonna increase the valuation by X times. It should be really focused on, okay, I should make the product better. I should have more users, I should have a higher quality product, more accuracy.
A lot of people, when they wake up, they feel like going back to bed. They feel like wanna sleep one or two more hours more and nothing's really gonna change. For me, it's the opposite. I'm like waking up sooner than I wanted to, sleeping later than I wanted to. But when the day ends, I always feel like there's more stuff I could have done. So that's actually a privilege. I also feel stressed, but the opposite wouldn't make me feel any fulfillment, honestly. So, it's very fulfilling. It's definitely a privilege, and I wanna keep going this way.
The mission is not about making money. That said, the mission requires money and therefore we will make money in order to serve the mission. The metrics should never be like, oh, by 1 year or 1 month, I'm gonna increase the valuation by X times. It should be really focused on, okay, I should make the product better. I should have more users, I should have a higher quality product, more accuracy.
A lot of people, when they wake up, they feel like going back to bed. They feel like wanna sleep one or two more hours more and nothing's really gonna change. For me, it's the opposite. I'm like waking up sooner than I wanted to, sleeping later than I wanted to. But when the day ends, I always feel like there's more stuff I could have done. So that's actually a privilege. I also feel stressed, but the opposite wouldn't make me feel any fulfillment, honestly. So, it's very fulfilling. It's definitely a privilege, and I wanna keep going this way.
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