THE PERPLEXITY EFFECT

WHEN YOU GOOGLE THE TERM "PERPLEXITY AI," YOU GET A FAMILIAR-LOOKING RESPONSE: A LINK TO THE COMPANY'S WEBSITE FOLLOWED BY FOUR OTHER RELATED POPULAR QUERIES, A HANDFUL OF PUBLISHED ARTICLES, RELATED SEARCHES, AND AN ENDLESS SCROLL OF LINKS THAT IF PRINTED OUT MIGHT EXTEND FROM SAN FRANCISCO TO AUSTIN.

- MARK SULLIVAN

PERPLEXITY'S ANSWER MACHINE, HOWEVER, PROVIDES A VERY DIFFERENT EXPERIENCE: ENTERING THE PHRASE "WHAT CAN YOU TELL ME ABOUT PERPLEXITY AI?" YIELDS SEVERAL LINKS TO CREDIBLE-LOOKING ARTICLES AND RELEVANT INFORMATION FROM THE COMPANY'S WEBSITE, FOLLOWED BY AN ARTICULATE AND NEATLY ORGANIZED BRIEF OVERVIEW.

And therein lies the allure. Perplexity is easy, it's elegant, it's specific. Eighteen months after the online tool (then called Ask) first launched, it's become one of the buzziest products in the buzziest of all tech sectors-generative AI. Journalist and educator Jeremy Caplan described Perplexity as "like having a smart assistant who not only finds the book you're looking for in a vast library but opens it to the exact page that has the information you need. Google just points you toward potentially relevant shelves."

Perplexity's growing popularity illustrates a seismic shift in the tech industry. When real people (not just researchers) witnessed for themselves in late 2022 the sometimes shocking skill of ChatGPT, many of them realized that conversational back-andforth with a chatbot might be a better way of accessing the web's information than typing keywords into Google and wading through a list of blue links, many of them sponsored or otherwise optimized to appear at the top, cluttered with ads and Google's own content. Both ChatGPT and Perplexity are examples of emerging AI-native tools that are disrupting the search space. Because of this, research and consulting firm Gartner predicts that traditional search volume will drop 25% by 2026. Even if Perplexity only manages to capture 1% of the $300 billion search advertising market, that's $3 billion in annual revenue.