Perplexity AI Business Model

Perplexity AI is an AI-powered search engine and chatbot that uses a large language model to generate natural language text. It balances accuracy and creativity, providing reliable information with personality. It offers free access and raised funding for future development. Users can create custom chatbots and share/embed them.

Foundational Layer

  • Search Process: Perplexity AI searches the entire Internet to find relevant sources and information using a Bing-based retrieval system.
  • Language Model Analysis: Perplexity AI uses a large language model (LLM) to analyze inputs and retrieved sources, generating answers in natural language.
  • Striking a Balance between accuracy and creativity: Perplexity AI aims to balance accuracy and creativity, providing factual information with added personality and flair.
  • Trust and Citations: Perplexity AI provides links and sources for answers, showing related topics and keywords, ensuring validity and credibility.

Value Layer

User-Centric Approach: Perplexity AI helps users find relevant and reliable information using natural language processing and machine learning.

Distribution Layer

  • Free Access Model: Perplexity AI offers free access to the chatbot via web browser or app store, without signup or subscription fees.
  • Fundraising: Perplexity AI raised $26 million in series A funding in March 2023 to support future business model development.

Financial Layer

  • Custom Chatbot Services: Perplexity AI offers customized chatbot services with different language models and fine-tuning options.
  • Sharing and Embedding: Users can share and embed their Perplexity AI chatbots on websites or apps.

Read Next: History of OpenAI, AI Business Models, AI Economy.

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AI Paradigm




Large Language Models

Large language models (LLMs) are AI tools that can read, summarize, and translate text. This enables them to predict words and craft sentences that reflect how humans write and speak.

Generative Models


Prompt Engineering

Prompt engineering is a natural language processing (NLP) concept that involves discovering inputs that yield desirable or useful results. Like most processes, the quality of the inputs determines the quality of the outputs in prompt engineering. Designing effective prompts increases the likelihood that the model will return a response that is both favorable and contextual. Developed by OpenAI, the CLIP (Contrastive Language-Image Pre-training) model is an example of a model that utilizes prompts to classify images and captions from over 400 million image-caption pairs.

OpenAI Organizational Structure

OpenAI is an artificial intelligence research laboratory that transitioned into a for-profit organization in 2019. The corporate structure is organized around two entities: OpenAI, Inc., which is a single-member Delaware LLC controlled by OpenAI non-profit, And OpenAI LP, which is a capped, for-profit organization. The OpenAI LP is governed by the board of OpenAI, Inc (the foundation), which acts as a General Partner. At the same time, Limited Partners comprise employees of the LP, some of the board members, and other investors like Reid Hoffman’s charitable foundation, Khosla Ventures, and Microsoft, the leading investor in the LP.

OpenAI Business Model

OpenAI has built the foundational layer of the AI industry. With large generative models like GPT-3 and DALL-E, OpenAI offers API access to businesses that want to develop applications on top of its foundational models while being able to plug these models into their products and customize these models with proprietary data and additional AI features. On the other hand, OpenAI also released ChatGPT, developing around a freemium model. Microsoft also commercializes opener products through its commercial partnership.


OpenAI and Microsoft partnered up from a commercial standpoint. The history of the partnership started in 2016 and consolidated in 2019, with Microsoft investing a billion dollars into the partnership. It’s now taking a leap forward, with Microsoft in talks to put $10 billion into this partnership. Microsoft, through OpenAI, is developing its Azure AI Supercomputer while enhancing its Azure Enterprise Platform and integrating OpenAI’s models into its business and consumer products (GitHub, Office, Bing).

Stability AI Business Model

Stability AI is the entity behind Stable Diffusion. Stability makes money from our AI products and from providing AI consulting services to businesses. Stability AI monetizes Stable Diffusion via DreamStudio’s APIs. While it also releases it open-source for anyone to download and use. Stability AI also makes money via enterprise services, where its core development team offers the chance to enterprise customers to service, scale, and customize Stable Diffusion or other large generative models to their needs.

Stability AI Ecosystem


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