20VC: Perplexity's Aravind Srinivas on Will Foundation Models Commoditise, Diminishing Returns in Model Performance, OpenAI vs Anthropic: Who Wins & Why the Next Breakthrough in Model Performance will be in Reasoning

Aravind Srinivas is the Co-Founder and CEO @ Perplexity where he is on a mission to build the world’s most knowledge-centric company. Recent reports have suggested the company is raising $250M at a $3BN valuation and the company’s cap table currently includes all stars such as Jeff Bezos, Elad Gil, Nat Friedman, Tobi Lutke, Yann LeCun, Naval Ravikant, Paul Buchheit and Andrej Karpathy. Prior to founding Perplexity, Aravind was a Research Scientist @ OpenAI and before that a research intern at both Google and Deepmind.

In Today’s Episode with Aravind Srinivas:

1. Are We Reaching a Stage of Diminishing Returns with Models:

• Have we reached a stage where more compute will not result in a proportional improvement in model performance?

• What are the most exciting new modalities we will see breakthroughs in?

• Is voice the radical new modality that everyone thinks it is and OpenAI demoed?

• What will it take and when will we have true reasoning in models?

2. Are Foundation Models Commoditising:

• What is the end state for the foundation model layer?

• Will we see the specialisation of models? Will different models be used for different things?

• Is there room for a new foundation model to be born? Is it VC backable?

• Why does Aravind believe that two players will win this layer? What happens to the rest?

• What is needed to win in this layer?

3. How to Survive in a World of Incumbents: Funding the Machine:

• How can any of the current players compete in a world where Microsoft has $300M in free cash flow per day?

• How much money does one need to build a foundation model today? Are the barriers lowering?

• Why does Aravind argue that talent is not simply a game of cash?

4. From Burning Money to Printing It:

• What does Aravind believe are the four core monetisation methods for Perplexity?

• Why does Aravind think that advertising will be their largest?

• Why does Aravind think that consumer subscription is not a very good business for them?

• Is Aravind concerned about having to build an enterprise go-to-market?

• What will it take to have a super successful API printing money machine business?