Perplexity CEO: Why AI fundraising has become a rat race
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Aïda Amer/Axios
At Axios' BFD event on Tuesday, Perplexity CEO Aravind Srinivas dismissed recent rumors that the company is raising a large new funding round.
Yes, but: He had this to say about AI companies' seemingly never-ending fundraising:
There are very few people who really understand even prompt engineering, making these models do what you want them to do, making it do it reliably at scale.… This requires a lot of tacit knowledge that doesn't exist in the … wider engineering community right now. It's not yet commoditized.
So, these people are expensive and all their salaries got inflated because OpenAI started paying them a lot, and paid them through equity when they used to be valued at like $15 [billion] to $20 billion.
But now that they're valued more close to $100 billion, their salaries are all like 5x, 6x what they used to be. Now that becomes their market value, and now when other companies try to compete with OpenAI for talent, they're also willing to pay that much.
So is Perplexity playing this game?
I try not to.… At least go for talent that wants to work at earlier-stage companies and not like just optimizing for money, but in general, at some point … you do need to hire very good, talented people.…
So that's why you do need to raise more money to pay people really well, or to have a high-enough valuation that, like, you don't need to dilute their entire option pool just to hire one or two people.…
And this the other argument of building a big cluster — and so [graphic processing units] are expensive.… Out of the $6 billion Musk was raising — and he's already committing to spend $10 billion on Oracle — he's committing more than the amount he's even raising. That's a trend.… There are many startups where they raised $70 million but they committed like $300 million.
