Aravind Srinivas and Sebastian Mallaby at Sohn 2025

Summary

• Perplexity’s valuation went from what Mallaby thinks was $9B in December to a not-yet-closed $14B five months later — Mallaby’s math: “another unicorn effectively every month.” Aravind’s defense of the froth: this isn’t crypto’s paper money — people depend on these apps daily, and “anytime product goes down we only hear thousands of complaints.”
• The headline call: “it’s the first time in like two decades that Google is extremely vulnerable” — possibly since founding. The mechanism is margin math, not technology: search advertising runs 80-90% profitable and pays for everything else, while “AI may never be as high margins… ever,” so defending means cannibalizing the world’s best business.
• The browser, not search, is the real battle: “whoever owns [the omnibox] is going to get everyone’s traffic.” Just as 20 search engines collapsed into the one integrated in the browser, the AI that blends navigation, Q&A, tasks and agents into one box wins — but “it’s going to take at least half a decade.”
• Brand risk is brutally asymmetric: a 1-in-10 error rate makes a startup look impressive, but at Google’s 10 billion daily queries it’s “a billion mistakes a day” that destroys a two-decade brand. His verdict on Gemini: “It kind of works. It’s not like Google where it just really works.”
• On the A+ technology / C-minus business model problem: paying for an answer feels weird when open source is free, but a true assistant that has absorbed your context and workflows is “worth way more than $20 a month” — and margins expand structurally, because operating costs fall as models commoditize while value rises as the assistant gets better and absorbs context.
• The moat against a crowded field (4-5 US contenders, China, likely Mistral, the Middle East): “obsession and attention to detail… are still in scarcity.” If money and talent were sufficient, “likely OpenAI would be dead” — Microsoft has no innovator’s dilemma. Shipping past the threshold where users bear with mistakes “is still art.”

Deep dive

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