At a recent AI conference in San Francisco, over 300 founders and investors were asked a provocative question: which billion-dollar AI startup would you bet against? The answer was surprising. Perplexity AI topped the list, with OpenAI coming in second. While the OpenAI vote raised eyebrows given its market dominance, the Perplexity verdict reveals something deeper about the AI search landscape in 2025.
Perplexity Founded in 2022, the company hit a $20 billion valuation by September 2025, processing 780 million queries monthly with over 30 million active users. Impressive on paper, but the company has raised nearly $1.5 billion in funding, with valuations jumping from $500 million to $20 billion in just 18 months. Fundraising rounds roughly every two months suggests either extraordinary growth or growing desperation to prove the business model works.
Here's the uncomfortable truth: Perplexity is increasingly looking like what Silicon Valley dreads most a wrapper. The company initially had a competitive edge when it pioneered AI powered web search with real time information. But that advantage has evaporated faster than anyone expected.
[...] The AI bubble will eventually deflate. When it does, wrappers built on vanity metrics and unsustainable unit economics will be the first to go. Perplexity's 360 million "free users" in India won't save them when those users discover that ChatGPT and Google do the same thing for free and they don't need to pay ₹17,000 for the privilege.
(Score: 1, Redundant) by Frosty Piss on Friday November 21, @01:04AM
Ha ha ha ha...
(Score: 4, Insightful) by khallow on Friday November 21, @01:14AM (4 children)
So what is a "wrapper" in this context and why is it dreaded? At a guess, the author later says
So something like a software wrapper? Doesn't sound that dreadful to me, but then I'm not valuing Perplexity at $20 billion.
(Score: 5, Funny) by driverless on Friday November 21, @01:17AM (1 child)
I think it's more the UK-style soggy newspaper used to wrap your fish and chips, ready to fall apart at any moment.
(Score: 4, Interesting) by istartedi on Friday November 21, @04:31AM
Well, when you look at all the news sites that just wrap AP, the National Weather Service and a few other things; it all comes together. I mean, it all falls apart. I wonder if what's really going to start the crash is Bitcoin. That's crashing now, and allegedly some margin calls have gone out on it. So then you sell AI stuff to meet your BTC margin call and that gets the ball rolling. Next thing, the same "reporters" who wrapped stories about why AI companies were great start wrapping stories about why it's not so great. Kind of a shame really. AI, that is. Bitcoin is just an energy guzzling waste of time. It can sod right off; but I've actually been enjoying AI as a un-enshittified search with a bit of reasoning layered on top. I had a feeling we might be living in a brief little golden age. This time next year, we might be forced to pony up for it or else go back to the absolutely useless Google search that produced 1,452,355 results all of which were just SEO'd garbage. I'm not sure if I can bear that.
Appended to the end of comments you post. Max: 120 chars.
(Score: 4, Informative) by darkfeline on Friday November 21, @01:52AM (1 child)
They're a wrapper around the API/model. Someone else offers a send_to_ai(). Perplexity then sells you send_to_perplexity(foo) { send_to_ai(foo) } with markup. In theory the extra stuff they do is worth the cost.
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(Score: 0) by Anonymous Coward on Friday November 21, @03:41AM
This is a solid idea. Use something else to do the heavy lifting, and offer a nice interface for it. Worthwhile, so long as people are paying for it.
(Score: 2, Insightful) by Anonymous Coward on Friday November 21, @03:48AM (4 children)
Perplexity is a free AI-powered answer engine that provides accurate, trusted, and real-time answers to any question.
Sounds good. Can it be installed on a local network and run against internal sources without an internet connection?
https://www.perplexity.ai/search/how-do-i-solve-world-peace-NBNV3lTQQuKpFrV0_3lT_Q [perplexity.ai]
Now that is a missed business opportunity. I know of several companies who would love to have a working interal AI/LLM solution. They are all trying to get an offline version of ChatGPT or similar working. Which is hard. They would rather pay money for someone to do it.
If Perplexity is free then how does it make money?
(Score: 5, Funny) by khallow on Friday November 21, @04:18AM (1 child)
Volume!
(Score: 1, Touché) by Anonymous Coward on Friday November 21, @10:51AM
So true, yet so horrible.
Q. What do you earn if you multiple zero dollars by 1 trillion?
A. The investors get a bail out while the executives get a golden parachute and the tax payers eventually pay for it all
(Score: 2) by RedGreen on Friday November 21, @01:21PM (1 child)
"If Perplexity is free then how does it make money?"
Does not have to the money is in the scamming of the rubes into investing even greater amounts of cash due the hype of the bubble they are in. How this AI stuff is the next coming of the messiah do not miss your opportunity to make your fortune by giving us all your money when we have absolutely no clue how to make a return on it. See Dutch tulip craze from several hundred years ago for the template used, it has been recycled many times since then with the same end result always happening a massive crash in the "value"...
"Cervantes definitely was prescient in describing a senile Don fighting against windmills." -- larryjoe on /.
(Score: 1) by khallow on Friday November 21, @08:10PM
(Score: 4, Funny) by MonkeypoxBugChaser on Friday November 21, @01:40PM
No, the bubble is going to explode. Take a lot of things with it.
(Score: 1, Insightful) by Anonymous Coward on Friday November 21, @11:55PM
first in a long line