Perplexity says it's moving away from ads and betting on subscriptions (www.businessinsider.com)

Perplexity, the San Francisco-based AI search startup, has announced a strategic shift away from advertising revenue, opting instead to focus on subscription services tailored for businesses and high-profile users such as CEOs and finance professionals. This decision positions Perplexity in stark contrast to its competitor OpenAI, which is leaning heavily into ad-based monetization. The startup aims to enhance its business sales team, currently just five members, to better capture this market, emphasizing revenue retention over other metrics like the volume of user queries. This pivot comes at a time when venture capital enthusiasm for Perplexity has waned, highlighted by a recent poll at an AI conference where investors expressed skepticism about the company’s future. Despite this, Perplexity reported substantial growth, achieving an annual recurring revenue (ARR) of $200 million as of October 2023, a significant increase from the previous year. The company also reiterated its commitment to maintaining a free tier for users, albeit with limitations, while unveiling enterprise-focused features that combine internal and external data for generating research reports. This strategy aims to solidify Perplexity's competitive edge against others in the AI space, particularly against startups like Glean, which specialize in enhancing workplace efficiency through AI.