Perplexity AI, the startup that aims to challenge search giants like Google LLC with an AI-powered answer engine, was voted most likely to fail by over 300 founders, investors and operators at the Cerebral Valley AI Conference in San Francisco
In the informal poll, Perplexity took the top spot, followed by OpenAI in second place.
The poll asked attendees: “Which billion-dollar AI startup would you be willing to bet against?”
Why the verdict happened
Several reasons were cited for this sceptical view of Perplexity:
- Its valuation has soared rapidly (claims of ~$14 billion to ~$50 billion) without a clearly proven revenue model.
- The company is attempting to take on the entrenched dominance of Google in search—a massive challenge requiring scale, data, trust and ecosystem advantages. Moneycontrol
- Observers believe many AI startups currently ride on hype rather than metrics or fundamentals, and this one is seen as emblematic of what some call an “AI bubble”.
- Some found signs of overreach in Perplexity’s product launches and expansion strategy.
Key facts at a glance
- The poll was anonymous and informal; it reflects sentiment, not a rigorous financial forecast.
- Perplexity’s business: AI-powered search engine / answer engine that tries to combine conversational AI + web data.
- The company is led by Aravind Srinivas.
- The result is less about guaranteed failure, more about investor and founder scepticism in the wider AI ecosystem.
What this means
For Perplexity
- The company now faces a heightened expectation to deliver results: grow usage, monetise, show differentiation.
- This verdict might increase pressure from investors and stakeholders to demonstrate clear path to sustainability.
- It may impact partner or investor sentiment, though the company still retains its startup funding momentum.
For the AI startup space
- The result signals that insiders are becoming more cautious: they’re scrutinising valuations, business models, not just hype.
- It may cool down some of the exuberance in the AI funding market—or at least lead to deeper questions about ROI.
- It underlines that even high-profile AI startups are not immune to doubt if the fundamentals aren’t visible.
For users and the broader market
- It highlights risk: not all AI startups will succeed, even if they get massive funding and press coverage.
- Competition in AI, especially in search and assistant-type products, remains brutal. Dominant players have huge advantages.
- For users, the question becomes: which companies can deliver useful, differentiated AI features—not just make promises.
My take
This verdict doesn’t necessarily mean Perplexity will fail — startups always carry risk — but it is a strong signal that many in the industry believe the startup has more uphill battles than most. The Western AI market is entering a phase of second-order scrutiny: after the hype rush, investors and practitioners are asking, “Ok, now what is your moat? how will you make money? how will you scale?”
Perplexity is tackling one of the hardest problems in tech (search + inference) against one of the biggest incumbents (Google). Without a clear differentiator or proven model, the scepticism is understandable. That said, if Perplexity can execute better than expected, this moment might come to look like a turning point rather than a failure-flag.
What to watch going forward
- Does Perplexity announce a clear monetisation strategy (ads, subscriptions, enterprise)?
- How does its usage growth compare and how it retains users vs competitors?
- Partnerships and integrations: will it lock in worthwhile alliances to build scale?
- Does it secure further funding and at what valuation (and what terms)?
- Market dynamics: how will Google, Microsoft, OpenAI and others respond and how will that affect Perplexity’s position?
