Aravind Srinivas: evaluation

Transcript context

…All right, so what do you learn from that, and how is Perplexity different from that and not different from that? Yeah, so Perplexity makes answer the first party characteristic of the site, instead of links. The traditional ad unit on a link doesn’t need to apply at Perplexity. Maybe that’s not a great idea. Maybe the ad unit on a link might be the highest margin business model ever invented, but you also need to remember that for a new business that’s trying to create, for a new company that’s trying to build its own sustainable business, you don’t need to set out to build the greatest business of mankind. You can set out to build a good business and it’s still fine. Maybe the long-term business model of Perplexity can make us profitable in a good company, but never as profitable in a cash cow as Google was. You have to remember that it’s still okay. Most companies don’t even become profitable in their lifetime. Uber only achieved profitability recently. I think the ad unit on Perplexity, whether it exists or doesn’t exist, it’ll look very different from what Google has. The key thing to remember, though, is there’s this quote in the Art of War, make the weakness of your enemy a strength. What is the weakness of Google is that any ad unit that’s less profitable than a link, or any ad unit that kind of disincentivizes the link click is not in their interest to go aggressive on, because it takes money away from something that’s higher margins. I’ll give you a more relatable example here. Why did Amazon build like the cloud business before Google did? Even though Google had the greatest distributed systems engineers ever, like Jeff Dean and Sanjay, and built the whole map produce thing, server racks, because cloud was a lower margin business than advertising. There’s literally no reason to go chase something lower margin instead of expanding whatever high margin business you already have. Whereas for Amazon, it’s the flip. Retail and e-commerce was actually a negative margin business. For them, it’s like a no-brainer to go pursue something that’s actually positive margins and expand it. You’re just highlighting the pragmatic reality of how companies are running?…

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