AI search startup Perplexity could actually beat Google (disruption strategy lesson)

Everybody's talking about how AI changes everything and all the new business models and products that are now possible.

But few talk about how AI legitimizes ideas that we'd previously laugh about. One of them: Disrupting Google.

Bing, DuckDuckGo (privacy search), Ecosia (sustainable search), Neeva (subscription search)... none of them made a dent into Google. AI could change this. Most notably: Perplexity.

Perplexity is an AI search unicorn founded by Aravind Srinivas. It's got a $20m ARR and $1b+ valuation at about 50 people—all in under 2 years.

The product is basically if ChatGPT had a baby with Google: Perplexity aggregate search results for your query and tells you the results (with citations) in a concise answer. You never have to leave their interface to click elsewhere.

I think it has a real chance: Its search results for informational queries are (imo) already better than Google's SEO optimized jungle. Plus, millions of people are subscribing (with real money) to a search engine.

Of course, Google knows a thing or two about AI. What if Google just copies the product for their own search engine? To some degree, they've started to do this. But Google runs into a problem here:

Their core business model is based on ads, which are inserted into search results. So the more search results you can show someone, the more money Google makes. If there's just one result (aka answer), then Google makes less money.

This is a clear disincentive for Google to build these AI answers. CEO Aravind Srinivas talks about this in interviews: Google won't build everything Perplexity does because they rely on ads and AI-native search runs counter to their business model.

Of course, disrupting Google requires a lot more than to convince a bunch of tech workers excited to try new tools. My mom probably doesn't even know there are other search engines besides Google—and crossing into the mainstream takes a long time.

But if I think about how good Perplexity is in 2 years and with 50 people compared to a 26 year-old company with 180k people, I think the AI inflection point gives them a real chance.

WDYT?

If you want to read my full strategic breakdown, you can read it here: https://www.commandbar.com/blog/perplexity-vs-google/