Zero Clicks #13: Fast times at Perplexity High

Perplexity’s killer use case, society without arbitrage, and three retailers that have outperformed Amazon and Walmart over the last five years

Sara Platnick has one hell of a job. Every day brings a new tentpole narrative for Perplexity’s communications leader. Most recently, the company is seeking to raise $500M at an $8B valuation, Perplexity’s fourth (!) major fundraise this year. This news comes as the ink is barely dry on Perplexity’s response to a lawsuit filed by Dow Jones, which accuses the search engine of mass copyright infringement. Then, there’s the casual rumor that OpenAI, X, and Microsoft have all looked at buying Perplexity…

All the while, the company is shipping new features at a relentless pace. In just the last few weeks, Perplexity has launched a native Mac app, a purpose-built interface for finance (+ added a new GM to build this out), and distribution deals with major platforms like LinkedIn Premium. But amidst these juicier narratives, there’s a decidedly unsexy feature that has gotten almost no buzz but holds the key to dethroning Google at scale.

Perplexity is building a suite of third-party integrations for internal search into its core interface, beginning with more esoteric data providers such as Crunchbase and Factset but ultimately expanding to Google Drive, Slack, and Notion. The endgame here–if executed correctly– is a company that challenges Google’s stranglehold on both the personal and professional internet alike. One seamless interface for knowledge workers to search both the open web and their own information repositories is the key to cracking the enterprise.

One of the timeless adages in B2B marketing is that business buyers are just consumers behind desks. As the lines between work and life blur even further, providing a single search engine that can serve your needs as both a person and an employee is how you disrupt decades-long entrenched habits of just Googling it.

Perplexity is not the first company to go down this road. While Google has never really found an elegant way to blend search and G-suite, one challenger search engine already did. For a glorious period in 2022, I lived a life without Google Search thanks to Neeva, which built a Google Drive integration into search from day one. Since Neeva effectively went under as a consumer product, I’ve only been able to outsource roughly half of my Google searches to DuckDuckGo + Perplexity, an act of tacit rebellion more than utilitarian convenience.

Neeva was beloved by the tech press and a small hardcore fan base, but never really sniffed true product-market fit of getting a critical mass to pay $10/mo. Alas, their legacy is crawling so other Google challengers like Perplexity can walk.

Many pundits are balking at Perplexity’s valuation, which would be somewhere around a 200X multiple on their $50M annualized revenue. That said, Perplexity is a living, breathing application of AI with a real growth trajectory attacking one of the largest addressable markets known to man. What the hell does venture capital exist to throw massive sums of money at, if not this?

Computing power, of course, is stupid expensive. Perplexity will need to raise a gargantuan amount of money to make its business model work. In fact, the most likely outcome is that it will never work. Going head to head with Google in search is an audacious proposition that borders on crazy. For all of Google’s flaws, it is still a firmly entrenched monopoly with the best business model in the history of American capitalism.

In order to have a viable long-term business model, Perplexity will need to:

1. Prove that hundreds of thousands, if not millions of knowledge professionals will pay for something that has traditionally been “free”

2. Convince a generation of marketers to pay $50+ CPMs for advertising that has conventionally cost a couple of bucks per click

I’m more bullish than most on Perplexity’s ability to build an elegant ads product, but curiously, the company does not have any publicly listed headcount for ad sales roles nor do they appear to have a media sales leader on their team. I’d venture a big part of the next $500M fundraise is to staff up a proper media sales operation.

It will take a bit more than treating Madison Avenue suits to a few extra dry Tanquerays with a twist to unseat AdWords, but hey, you gotta start somewhere.

Product Marketing Manager, Perplexity

If any of my 750 words above resonated with you, Perplexity is looking for marketing talent to help position its ever-expanding range of vertical use cases.

If Perplexity does in fact raise at an $8B valuation, the timing for prospective hires here is interesting. If you can get in before the next round of funding wraps up, you could essentially double your equity on paper. Conversely, joining early-stage startups after a fundraise at a gaudy valuation is publicly announced is the ultimate sucker’s bet. Ironically, this is when most applicants tend to apply.

That said, Perplexity has a “bet your career” energy around it. This might be the rare time to not worry about when you catch the rocket ship and just go ahead and hop in if you can.

Director, Brand Marketing, Caraway

Right on Zero Clicks theme, another one of the truly great performance marketing enterprises (and products) of the golden years of DTC arbitrage is making a major investment in brand.

Caraway’s cookware is phenomenal and its execution across search, social, and affiliate is world-class, but the brand is not yet a household name outside the yuppie bubble where most of its long-term addressable market lies. A great brand leader could easily change that.

Senior Reporter & Event Host, Newcomer

In the same week that a bunch of really smart, important people opined on whether “media could survive” Eric Newcomer posted this job opening for a journalist to join his staff with a salary range of $200-300K.

Newcomer also announced that four years in, his titular publication has crossed $2M in revenue with >$1M in pure profit. You absolutely love to see it.

Fellow, AI Initiatives, The New York Times

This is an extremely cool job and initiative from the Times but… if an indie media publication can pay up to $300K for a talented reporter, perhaps a company doing $2.5B in revenue should shell out a bit more than 80 grand for technical talent?

In case this hasn’t been clear to date, all of the memes you see in Zero Clicks are originals. We can’t write a newsletter bemoaning the amount of derivative content on the internet and then copy memes :)

First up, congrats to Daniel, Greg, and Jason for correctly identifying that AppLovin (up 350% this year) was last week's mystery stock.

Let's run it back. Can you guess the stocks based on the charts below?

No cheating...

Reply directly to this email with your guess. First one to guess correctly (without help from AI) gets a shoutout next week (plus unlimited bragging rights in their company Slack).

Retailer #1: Up 137.5% 

Retailer #2: Up 183%

Retailer #3: Up 435% (!)