Perplexity AI offers better conversational generative AI than Chat GPT and better search than Google.

By J.R. Robinson, Financial Planner (August 2024)

Readers of our newsletter may recall that I have twice documented my experiences using generative AI to assist with content creation. In both instances I used Chat GPT and was decidedly underwhelmed by the output.  These experiences left me resigned to the notion that artificial intelligence is still years away from being useful for my purposes.  However, my perspective changed a few weeks ago when I was on the treadmill listening to another Acquired episode and podcast host Dan Gilbert casually mentioned in passing that he has been using a new search algorithm called Perplexity AI.  

After my workout, I checked out Perplexity’s Wikipedia page where I learned that the company is pioneering conversational search and is renowned for its acuity in providing answers to search queries using natural language predictive text.  In the rapidly evolving landscape of artificial intelligence, Perplexity AI has quickly emerged as a groundbreaking platform that bridges the gap between traditional search engines and AI chatbots. 

Origin Story

Perplexity was founded in 2022 by a team of former employees from tech giants including Google, OpenAI, and Meta.   The platform was born out of its founders’ shared vision to democratize access to knowledge. The founding team, led by CEO Aravind Srinivas, recognized the untapped potential of large language models (LLMs) in transforming how people interact with information. Frustrated by the limitations of existing search engines and the opacity of AI chatbots, they set out to create a platform that would combine the best of both worlds. 

The company’s journey began with a simple yet powerful idea: to build an AI-powered search engine that could provide concise, relevant answers to user queries while maintaining transparency and accuracy. This vision was inspired in part by the success of GitHub Copilot, which demonstrated the practical applications of AI in assisting users with complex tasks. 

Perplexity’s early days were marked by experimentation and rapid iteration. The team’s first product, Bird SQL, launched in December 2022, allowed users to search Twitter data using natural language queries. This project, while short-lived due to changes in Twitter’s API policies, laid the groundwork for Perplexity’s core technology.

Unique Advantages in Search and Generative AI

Perplexity AI distinguishes itself from both traditional search engines and AI chatbots through several key features:

1. Real-time Web Search: Unlike static AI models, Perplexity performs live web searches to gather the most up-to-date information. This ensures that users receive current and relevant answers, even for rapidly evolving topics or breaking news.
2. Transparent Sourcing: One of Perplexity’s most significant advantages is its commitment to transparency. The platform provides citations for the information it presents, allowing users to verify claims and explore topics further. This approach addresses one of the main criticisms of AI chatbots – the lack of source attribution. This is extremely helpful for me, because changing constantly changing tax rules and the rise of popular but flawed guidance from TikTok finluences and the like caused Chat GPT to persistently “hallucinate” in its content creation. 
3. Multi-model Integration: Perplexity leverages multiple large language models, including GPT-4, Claude, and its own proprietary models. This multi-model approach allows for greater flexibility and potentially more accurate responses across a wide range of queries.
4. Conversational Interface: The platform offers a user-friendly, conversational interface that allows for natural language queries and follow-up questions. This makes it more intuitive and accessible than traditional search engines, especially for complex or nuanced inquiries.
5. Reduced Information Overload: By providing concise, direct answers rather than a list of links, Perplexity helps users quickly find the information they need without wading through multiple web pages.
6. Continuous Learning: The platform is designed to learn from user interactions, improving its ability to understand context and provide personalized responses over time.
7. Versatility: Perplexity can handle a wide range of tasks beyond simple information retrieval, including code generation, math problem-solving, and document summarization.

Impact and Growth

Since its launch, Perplexity AI has experienced rapid growth and garnered significant attention from both users and investors. The platform already boasts more than 15 million active users and has secured funding from prominent investors, including Jeff Bezos, Nvidia, and Yann LeCun, valuing the company at over $1 billion. Perplexity’s success can be attributed to its ability to address key pain points in both search and AI technologies. By combining the vast knowledge base of the internet with the natural language processing capabilities of advanced AI models, Perplexity offers a more intuitive and efficient way to access information.

Challenges and Future Directions

Despite its innovative approach, Perplexity AI faces several challenges as it continues to grow:

1. Accuracy and Bias: Ensuring the accuracy of information and minimizing bias in AI-generated responses remains an ongoing challenge.
2. Privacy Concerns: As with any AI platform that processes user queries, addressing privacy concerns and protecting user data is crucial.
3. Scalability: Maintaining performance and accuracy as the user base grows and the volume of queries increases will be essential.
4. Competition: With tech giants like Google and Microsoft investing heavily in AI-powered search, Perplexity will need to continue innovating to maintain its competitive edge.

Looking ahead, Perplexity AI aims to further refine its technology and expand its capabilities. The company is exploring ways to enhance its understanding of complex queries, improve multilingual support, and develop more specialized tools for specific industries or use cases.In conclusion, Perplexity AI represents a significant step forward in the evolution of search technology and AI-assisted information retrieval. By combining the strengths of traditional search engines with the power of advanced language models, Perplexity is paving the way for a more intuitive, transparent, and efficient approach to accessing knowledge in the digital age. As the platform continues to evolve, it has the potential to reshape how we interact with information and unlock new possibilities for AI-assisted learning and discovery.

So far, I am blown away by Perplexity.  I am only using the Freemium subscription model, but it it head and shoulders above the Chat GPT for content generation.  It also seems vastly superior to Google in terms of basic search.  I do not know if Perplexity’s emergence poses an existential threat to Google’s business model, but if I was Google, I would be worried.

In closing, it is worth mentioning that this article and the FDIC rule change article that is also included in the July-August-September of issue of Financial Planning Insights were both generated by Perplexity.  I added a little color here and there, but Perplexity did the heavy lifting.  Could you tell?