Is Perplexity the first AI unicorn to fail?
6 days ago
- #Perplexity AI
- #Tech bubble
- #AI startups
- Perplexity AI is considered the first AI unicorn likely to fail, as voted by over 300 founders and investors at a recent AI conference.
- Despite a $20 billion valuation and 780 million monthly queries, Perplexity has raised $1.5 billion in funding, raising concerns about its business model.
- Perplexity is seen as a 'wrapper'—a company that relies on third-party AI models, making it vulnerable to competition from OpenAI and Google.
- OpenAI's ChatGPT and Google's integrated AI search capabilities have eroded Perplexity's competitive edge in the AI search market.
- Perplexity lacks a strong distribution moat, unlike OpenAI and Google, which have massive existing user bases.
- A partnership with Bharti Airtel in India offers free Pro subscriptions to 360 million users, but conversion to paid subscriptions is unlikely due to price sensitivity.
- Perplexity's reliance on third-party models (e.g., GPT-4o, Gemini 2.5) means it lacks control over its core technology, making it unsustainable in the long run.
- Investors predict Perplexity's downfall due to unsustainable growth, competition from tech giants, and reliance on vanity metrics.