How we built $1B Startup in 2 Years | Perplexity AI, Aravind Srinivas

Summary

Arvind Srinivas, CEO of Perplexity AI, introduces Perplexity as a revolutionary conversational search engine that delivers instant answers in natural language, eliminating the need for users to sift through multiple links. Launched in December 2022, it has grown exponentially to 10 million monthly active users. Arvind's journey from India, through IIT and Berkeley, to an impactful internship at OpenAI, led him to co-found Perplexity. The company's mission is to create an AI that not only provides answers but also cites sources, akin to academic research, fostering a knowledge-centric future for online information consumption. With a focus on quality and user experience, Perplexity aims to redefine how we interact with the internet.

Takeaways

• 🧑‍💼 Arvind Srinivas is the co-founder and CEO of Perplexity AI, a conversational search engine designed to answer questions in natural language.
• 🚀 Perplexity AI launched on December 7th, 2022, and has grown to 10 million monthly active users within a year.
• 🎓 Arvind's background includes studying at IIT, a PhD in AI and deep learning from Berkeley, and an internship at OpenAI.
• 💡 Arvind discovered his interest in AI through a machine learning contest and was inspired to delve deeper into the field.
• 🔍 Perplexity aims to revolutionize online information consumption by providing instant answers to questions rather than lists of links.
• 🤖 The company's technology combines generative AI and reinforcement learning (RL), leading to innovations like ChatGPT.
• 🔗 Perplexity's AI provides answers with corresponding references or citations, inspired by academic practices of backing up claims with sources.
• 🤝 Arvind emphasizes the importance of entrepreneurship and creating a product that allows him to execute on his own vision.
• 💡 The concept of a conversational answer engine is to mimic how a person would ask a question to a friend and receive a well-informed response.
• 💰 The Pro plan of Perplexity is priced at $20 a month, the same as ChatGPT Plus, to ensure users value the unique service provided by Perplexity.
• 🛠 Arvind discusses the challenges of building a high-quality AI product, emphasizing the importance of improving every component of the system.

Q & A

Who is Arvind Srinivas and what is his role at Perplexity AI?

Arvind Srinivas is the co-founder and CEO of Perplexity AI. He is responsible for leading the company, which has developed a conversational search engine designed to revolutionize how people consume information online.

What is the main goal of Perplexity AI's search engine?

The main goal of Perplexity AI's search engine is to allow users to ask questions in natural language and receive instant answers, rather than the traditional method of receiving a list of links to explore.

When was Perplexity AI's product launched and what is its current user base?

Perplexity AI's product was launched on December 7th, 2022. As of the transcript, they have approximately 10 million monthly active users.

What was Arvind Srinivas' educational background before co-founding Perplexity AI?

Arvind Srinivas grew up in India and studied at one of the IITs (Indian Institutes of Technology). He was interested in algorithms and programming from the beginning and later pursued a PhD in AI and deep learning at Berkeley.

How did Arvind Srinivas get introduced to machine learning?

Arvind Srinivas was introduced to machine learning through a friend who told him about a machine learning contest. He found the process of predicting outputs from inputs to be fun and won the contest, which led him to delve deeper into the field.

What was Arvind Srinivas' experience like during his internship at OpenAI?

During his internship at OpenAI in 2018, Arvind Srinivas realized that there were many people who were much better than him, which served as a reality check and motivated him to improve his programming and first principles thinking.

What is the significance of the research topic Arvind Srinivas found during his time at Berkeley?

Arvind Srinivas found a new research topic on how to combine generative AI and reinforcement learning (RL), which led to the development of technologies like ChatGPT that can predict text and communicate effectively with humans.

What is the concept behind Perplexity being the world's first conversational answer engine?

Perplexity aims to build a future where users can ask questions in natural language and receive answers with corresponding references or citations, similar to how academic papers are written with backed-up claims, making the interaction more conversational and informative.

How does Perplexity AI's 'copilot' feature enhance the user experience?

The 'copilot' feature on Perplexity AI serves to interactively clarify and expand on the user's query, similar to how a friend might ask clarifying questions to better understand and provide a helpful response.

What is the growth trajectory of Perplexity AI since its launch?

Since its launch on December 7th, 2022, Perplexity AI has grown from serving around 2000 to 3000 queries on the first day to more than 3 to 4 million queries a day, reflecting a significant increase in user engagement.

How does Perplexity AI ensure the quality of the answers provided to users?

Perplexity AI ensures the quality of answers by continuously improving every component of their system, such as filtering out spammy sites, writing concise summaries without errors, and maintaining a high standard across all aspects of their service.

What is the pricing strategy for Perplexity AI's Pro plan and why is it set at that level?

The Pro plan for Perplexity AI is priced at $20 a month, the same as ChatGPT Plus. This pricing strategy is to ensure that users value Perplexity AI for its unique offering of combining large language models (LLM) with search, rather than just for the use of GPT 4.

What advice does Arvind Srinivas give to startups regarding their focus and execution?

Arvind Srinivas advises startups to focus on very few things, ideally one thing at a time, due to limited resources and the need for speed and quality. He emphasizes the importance of earning the right to ship new features from users by delivering on their needs and maintaining a culture of urgency and execution.

What is Arvind Srinivas' perspective on the decision-making process for startups?

Arvind Srinivas suggests that startups should not weigh all options equally when making decisions. Instead, they should identify the most important factors and focus on those, avoiding the trap of trying to be perfect and embracing the process of continuous improvement.

How does Arvind Srinivas describe his motivation and fulfillment in running a startup?

Arvind Srinivas describes his motivation as being driven by a love for what he does, which remains consistent even as the world changes rapidly. He finds fulfillment in the privilege of working hard and constantly striving to improve the product and serve the mission of the company.

Outlines

00:00

🤖 Introduction to Perplexity AI and its Founder

Arvind Srinivas, co-founder and CEO of Perplexity AI, introduces the company's mission to revolutionize online information consumption. Launched on December 7th, 2022, Perplexity AI aims to replace traditional search engines with a conversational search engine that provides instant answers in natural language. The platform has grown exponentially, boasting 10 million monthly active users within a year. Arvind's background includes studying at an IIT in India, winning a machine learning contest, and pursuing a PhD in AI and deep learning at Berkeley. His experience includes an internship at OpenAI and a deep dive into generative AI and reinforcement learning, leading to the creation of technologies like ChatGPT. Perplexity AI's conversational answer engine is designed to provide answers with citations, much like academic papers, reflecting the founders' academic roots.

05:03

🚀 Growth and Strategy of Perplexity AI

Perplexity AI has experienced significant growth, serving millions of queries daily since its launch. The company focuses on maintaining answer quality by improving every component of its system, akin to conducting an orchestra where each part is crucial for success. The Pro plan is priced at $20 a month, matching OpenAI's GPT four pricing to ensure users value the unique combination of large language models and search capabilities offered by Perplexity AI. The company's strategy emphasizes focusing on a few key areas due to limited resources and the need for speed and quality. They prioritize earning the right to introduce new features by satisfying existing user needs and maintaining a culture of urgency and execution. Decision-making is streamlined by focusing on the most important factors, avoiding the trap of equal weighting in pros and cons analysis.

10:05

💡 Entrepreneurial Insights and Personal Reflections

Arvind shares his entrepreneurial philosophy, emphasizing the importance of starting with what you love due to the dynamic nature of the world. He believes that a company's mission should drive its actions, not short-term financial goals. Arvind stresses the importance of product improvement, user satisfaction, and accuracy as key metrics for success. He also reflects on the privilege of working on something fulfilling, expressing a sense of urgency and desire to achieve more each day. Arvind encourages continuous improvement and learning, advocating for a focus on the process rather than striving for perfection.

Keywords

💡Perplexity AI

Perplexity AI is the company co-founded and led by Arvind Srinivas. It is a conversational search engine designed to provide answers to user queries in natural language, aiming to revolutionize online information consumption by offering immediate responses instead of traditional search results. In the script, Srinivas discusses the growth of Perplexity AI from its launch on December 7th, 2022, to having about 10 million monthly active users, highlighting its innovative approach to search and information delivery.

💡Natural Language Processing (NLP)

Natural Language Processing (NLP) refers to the ability of a computer program to understand, interpret, and generate human language. In the context of the video, Perplexity AI uses NLP to interact with users, allowing them to ask questions naturally and receive instant answers. This technology is central to the company's mission to transform how people consume information online, as it enables a more conversational and intuitive search experience.

💡Machine Learning

Machine learning is a subset of artificial intelligence that enables systems to learn and improve from experience without being explicitly programmed. Arvind Srinivas was introduced to machine learning through a contest and later pursued a PhD in AI and deep learning at Berkeley. His background in machine learning is integral to the development of Perplexity AI's capabilities, as it underpins the system's ability to understand and respond to user queries effectively.

💡Generative AI

Generative AI is a type of artificial intelligence that can create new content, such as text, images, or music, based on learned patterns. In the script, Srinivas mentions that Perplexity AI combines generative AI with reinforcement learning (RL) to create technologies like ChatGPT. This combination allows the system to not only predict and generate responses but also to communicate effectively with humans, providing a more interactive and dynamic search experience.

💡Reinforcement Learning (RL)

Reinforcement Learning (RL) is a type of machine learning where an agent learns to make decisions by taking actions in an environment to maximize some notion of cumulative reward. Srinivas discusses how Perplexity AI integrates RL with generative AI to create a system that can interact with users and improve over time, based on the feedback it receives and the goals it achieves.

💡Search Engine

A search engine is a software system that is designed to search for information on the World Wide Web. Traditionally, search engines like Google provide users with a list of links to web pages deemed relevant to the user's query. In contrast, Perplexity AI aims to offer a more direct and conversational approach to search, providing answers rather than links, which aligns with the company's mission to change how people find and consume information online.

💡Academic Background

Academia refers to the world of higher education and research. Srinivas and his co-founder, Dennis, both hold PhDs and bring an academic approach to Perplexity AI's development. The script mentions that their academic background influenced the design of the AI, such as the inclusion of citations for every sentence the AI generates, mirroring the practice of academic papers where claims are backed by references.

💡CoPilot

CoPilot is a feature of Perplexity AI that assists users in refining their queries. It operates interactively by asking clarifying questions to help users better articulate their needs. This feature is likened to a conversation with a friend who asks questions to better understand and provide useful advice, demonstrating Perplexity AI's commitment to a natural and helpful user experience.

💡Product Market Fit

Product market fit is a term used to describe a situation where a product satisfies a market need, and is well-received by its target audience. Srinivas discusses the importance of establishing product market fit for Perplexity AI's core offering, which is the combination of large language models (LLMs) and search. The company's pricing strategy for its Pro plan reflects this focus, aiming to demonstrate the value of their unique service.

💡Entrepreneurship

Entrepreneurship is the process of designing, launching, and running a new business, which is often initially a small business. Arvind Srinivas has always been interested in entrepreneurship and was inspired by the story of Larry Page and Sergey Brin, the founders of Google. His journey from academia to founding Perplexity AI exemplifies the entrepreneurial spirit, as he seeks to bring his vision of a conversational answer engine to reality.

💡Quality Assurance

Quality assurance in the context of Perplexity AI involves ensuring that the AI provides accurate, concise, and relevant responses to user queries. Srinivas emphasizes the importance of improving every component of the AI system, from filtering out spammy sites to generating summaries without errors. This focus on quality is crucial for building user trust and satisfaction with the AI's performance.

Highlights

Arvind Srinivas is the co-founder and CEO of Perplexity AI, a conversational search engine designed to deliver answers in natural language.

Perplexity AI aims to revolutionize online information consumption by providing instant answers to questions instead of traditional search results.

The product was launched on December 7th, 2022, and has grown to 10 million monthly active users within a year.

Arvind's background includes studying at one of the IITs in India and a deep interest in algorithms and programming.

He won a machine learning contest which sparked his interest in the field and led him to pursue a PhD in AI and deep learning at Berkeley.

Arvind interned at OpenAI in 2018, where he realized the need to improve his programming and first principles thinking.

The advent of GPT 1 inspired Arvind to focus on combining generative AI and reinforcement learning, leading to technologies like ChatGPT.

ChatGPT's innovation lies in not only predicting the next word but also ensuring effective human communication.

Arvind's interest in entrepreneurship was influenced by the book 'How Google Works' and his desire to execute his own vision.

He sees artificial intelligence as the ultimate search engine, capable of understanding and providing precise information.

Perplexity is the world's first conversational answer engine, offering a new way to interact with search engines.

Perplexity provides answers with corresponding references or citations, inspired by academic practices.

The company's growth has been driven by word-of-mouth and users seeking alternatives to other AI platforms.

Maintaining answer quality involves improving every component of the AI system, akin to conducting an orchestra.

The Pro plan is priced at $20 a month, the same as ChatGPT Plus, to ensure market fit is for the combined offering of LLM and search.

Arvind emphasizes the importance of focusing on very few things and executing them well as a startup.

The company culture encourages urgency and a focus on what is most important to achieve the mission.

Arvind advises startups to focus on what they love and to view the mission as more important than making money.

He finds fulfillment in the challenges and pace of startup life, viewing it as a privilege to make a difference.

Transcripts

I'm Arvind Srinivas.

I'm the co-founder and CEO of perplexity AI. Perplexity is a conversational and

search engine that aims to deliver answers to you, to whatever questions you may ask.

We are trying to revolutionize how people consume information online.

Instead of getting ten blue links, they can just ask questions in natural language

and just get it answered instantly.

And we launch the product on December 7th, 2022.

We have like about 10 million monthly active users at this point.

It's basically grown thousand X over a period of one year.

So I grew up in India, studied in one of the IIT's there,

and I was really into algorithms programing 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, what?

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.

And 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, okay, 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, okay, I could improve a lot more in programing.

I could improve a lot more in first principles.

Thinking my clarity of thoughts.

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 going to 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 like pretty open minded and said, okay, you know what?

Like I'm not a specialist here, but let's try.

I mean, if this is the next thing, 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 two 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.

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, wrote 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 vision.

I would have to be working on someone else's vision.

I wouldn't be able to bring out what 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.

Yeah.

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 ten 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 our 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 essay is written or research paper is written.

Often you're curious about something, but you don't exactly know what you want.

Even so, how can I 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 copilot on our side, where as you

ask a question, copilot will last.

Clarifying questions on 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?

So you're interested in computer science?

And then 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,

to that human intelligence needed to do that is being done by an AI now.

And we think this is the future of how people are going to interact

with information on the internet.

We launched the product on December 7th, 2022, our first day,

I think we saw around 2000 3000 queries.

Now we serve more than 3 to 4 million queries a day.

It's basically grown thousand X over a period of one year.

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.

This is how we maintain the quality of the answer comes down to improving every

single component here a 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 hallucination?

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 going to lose.

Because even for a big company, playing the 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.

And that's why, like, we are so focused on improving every aspect of this.

This is a really hard problem.

And we believe it can be solved over time as we gather more data from users

as improve our own like stacks in each of these components, your experience is going

to keep getting better.

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's GPT four.

If we priced it lower than chat GPT plus, people would come and pay for it,

but not necessarily for what we're 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 everybody wants, which is GPT 4, or do you have product

market fit for your core offering, which is combining LLM and search together?

And it's very important for you to not conflate something with something else.

So we decided, okay, we'll 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 algorithms together.

Either they have to cancel GPT subscription, 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 that worked, because

that means what if a user comes and pays for us, communicates to us one thing,

which is they value that you are providing the best service of this one particular

thing, that they want the highest quality.

Yeah, 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.

So therefore you spend a lot of time thinking about what to do.

And once you've decided, you just do it.

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, because

the user wants already a bunch of things.

Your job is to actually go and do that for them, and once they are happy,

you're like, hey, give me new features when you're doing pretty well.

That's when you got to go and ship new features.

We have this mentality in the company that don't immediately say yes

to every single obvious idea that you can do, try to really think about

what the user wants and how does it work in the context of our mission, which is

to make the world's most knowledge centric company ultimate knowledge app

And once we have strategized that well, we would just focus on execution.

We wouldn't get distracted.

And once it's shipped and it's in a good enough state, we would finish the project

and move on to the next thing.

And then it becomes like a repeatable workflow.

And 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 no, no, no, you do it today

because just ask can we do it today?

And if they have a solid explanation for why it cannot be done today, then fair.

But maybe they didn't even consider 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.

Like if we don't, all our potential just decays.

If you have a rolling ball and you do nothing, it will automatically stop.

But if you have a rolling ball and you keep kicking it, it'll go even faster.

Something is complex because there's a lot of information.

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 two.

Let's say there's like one thing that has two choices.

And there are like three things that are eight choices.

Now your brain is not able to process eight choices at once.

It's usually has 3 or 4 at best.

So your job is actually to figure out what is that two choices.

In fact, there is like a advice from Reid Hoffman that says, in life,

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, where 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.

Usually it works.

Reformulate the problem better, and so the complex problem becomes

much simpler and then iterate.

Look, I'm not saying I'm really good at this today.

I can still improve and so can everybody. So believe in the improvement process.

Don't believe in like being perfect. And we all learn.

We all make mistakes and it's fine.

So I've given this advice in other interviews I want to continue

to say this not just for consistency.

I really believe in it.

When you are starting a company, do what you really love because the world

is not something that's static, it changes dynamically 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 like serve the mission.

The metric should never be like oh, by X year or X month.

I'm going to increase the valuation by alpha times X. 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 want to sleep 1 or 2 more hours more,

and nothing's really going to change.

For me, it's the opposite.

I'm like waking up sooner than I wanted to, sleeping later than I wanted to.

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 stress, but the opposite wouldn't make me feel

any fulfillment, honestly.

So it's very fulfilling.

It's definitely a privilege and I want to keep going this way.