Aravind Srinivas
Co-founder and CEO of Perplexity, the AI answer engine company that has expanded into autonomous agents, research and knowledge-work tools.
“Except when it's AI, high retention means high token consumption. And if you're free, who's paying for all of that? Retention might look good on your charts, but not on your bank account.”
Newcomer Pod · Startups & Venture · November 2026
Context
Srinivas was responding to the usual consumer-app wisdom that high retention is the goal. He explains why that logic breaks when every use of an AI product costs money, and why Perplexity moved to usage-based revenue.
Transcript
tweet once saying in consumer products, retention is actually sought after. You don't want a product with low retention.
Right.
Except when it's AI Race high retention means high token consumption. And if you're free, who's paying for all of that? So you actually, retention might look good on your charts, but not on your bank account. So you have to be in a position to monetize that. And that's why token-based revenue is good. And that's, again, getting into this territory of business use cases and enterprise, which is why we saw this coming end of last year. And that's why we moved our strategy from focusing on mass market consumer to high-value high-level. Agency, business owners, solopreneurs, and entrepreneurs, and upmarket enterprises.
Yeah. So, what is the business model for consumer then? And on top of that, you look at these agentic tools that everyone seems to be, you guys included, trying to get more users to adopt. The retention rates are fairly low on a lot of them, right? I think I've read that Muse is quite weak and…
Yeah, that's because only VCs book a lot of business-class license hotels every week. Normal people don't. That's it. Yeah. It's as simple as that.
It works so well for them.
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