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Perplexity, the rapidly growing AI search company, has made a strategic move by acquiring Carbon, a Seattle-based startup specializing in retrieval-augmented generation technology. This acquisition, announced in December 2024, represents a pivotal moment in the company’s expansion of enterprise search and data connectivity capabilities.
Company Background and Founding
Carbon was founded in 2022 by Derek Tu and Aditya Chempakasseril, two tech entrepreneurs with impressive backgrounds. Derek Tu, previously a tech leader at Italic and having held product roles at companies like Wayfair and 6sense, brought extensive product experience to the startup. His co-founder, Aditya Chempakasseril, an engineer from Italic with a master’s in computational science, complemented Tu’s strategic vision with technical expertise.
The startup initially emerged from collaborative whiteboard sketches at a WeWork location and quickly evolved into a leading solution for connecting external data sources to large language models. Carbon raised a modest $1.3 million seed round in 2023, attracting investments from Treble, MKT1 and several angel investors, which validated the potential of its innovative approach to data integration.
Technological Innovation and Strategic Rationale
Carbon’s core technology specializes in RAG, a sophisticated approach that enables large language models to access and incorporate information from external data sources. This capability allows AI systems to pull data from diverse platforms such as Google Drive, SharePoint, Notion, Slack and other enterprise applications.
Perplexity’s acquisition of Carbon signals a clear strategic intent to enhance its answer engine’s capabilities. Aravind Srinivasan, Perplexity’s CEO, articulated this vision by emphasizing the importance of making AI “personal to you—at home, work, or on the go.” The integration of Carbon’s technology will enable Perplexity’s platform to draw information from internal databases, cloud storage and document repositories, creating a more comprehensive and personalized search experience.
Fueling Enterprise Search Ambitions
The acquisition positions Perplexity as a serious contender in the emerging enterprise search market. By bringing Carbon’s four-person team on board, the company aims to develop advanced features that allow users to search through personal and professional files, work messages and unstructured organizational data.
Perplexity plans to launch these enhanced search capabilities in early 2025, potentially revolutionizing how professionals interact with their digital information. The technology will enable seamless searching across multiple platforms, transforming the traditional approach to information retrieval.
Market Context and Competition
The enterprise search landscape is becoming increasingly competitive, with major players like OpenAI, Google and Microsoft developing similar technologies. Perplexity’s acquisition of Carbon represents a strategic move to differentiate itself in this crowded market.
This acquisition comes at a time of significant growth for Perplexity. The company recently secured a $500 million funding round, bringing its valuation to $9 billion—a remarkable increase from just $520 million at the beginning of the year. The investment from Institutional Venture Partners underscores the market’s confidence in Perplexity’s innovative approach to AI-powered search.
Broader Implications for AI Search
The Carbon acquisition highlights a broader trend in artificial intelligence: the increasing importance of contextual and personalized search experiences. Perplexity is pushing the boundaries of what’s possible with generative AI technologies by enabling AI systems to access and integrate information from multiple sources.
The integration will allow users to perform more nuanced and comprehensive searches, drawing from web-based information and personal and organizational data repositories. This approach represents a significant advancement in making AI search tools more intelligent, context-aware and ultimately more beneficial for individual and enterprise users.
Future Outlook
As Perplexity continues to expand its capabilities, the Carbon acquisition represents more than just a technological enhancement—it’s strategic positioning for the future of AI-powered information retrieval. The company is clearly signaling its ambition to move beyond traditional search engines and create a more intelligent, interconnected search experience.
The technology promises to break down silos between different data sources, enabling users to access information more efficiently and comprehensively. Integrating Carbon’s RAG technology could fundamentally transform how we interact with digital information, whether for personal productivity, professional research, or enterprise-level information management.
With this acquisition, Perplexity is not just improving its search capabilities but reimagining the entire concept of information access in the age of artificial intelligence. The coming months will be crucial in demonstrating how effectively they can leverage Carbon’s technology to create a truly revolutionary search platform.