Will Perplexity and Aravind Srinivas finally win over India with the airtel deal? Here’s what the math says.
They went live with a distribution deal with Airtel today, offering all of their 360 million customers 1 year of free Perplexity Pro worth $200 (₹17k).
Firstly, not everyone is going to claim the offer. I suspect less than 10% will. Perplexity hopes that a year from now, they will see meaningful free to paid user conversion to justify this discount binge.
Even if 50M claim the offer, at 1 query/day, it can cost Perplexity $100M-$500M/year. This is very conservative and actual costs could be more.
But what exactly is Perplexity’s TAM via Airtel? I reckon it’s largely going to be corporate crowd who will use it for work. The general population is never going to pay for a 'Google alternative'.
Urban Airtel customers who are in formal salaried roles comes to 24M (estimated by Perplexity). To get to $500M ARR, at least 10% of this (2.4M users) must convert to Pro. That’s an impossibly high number to achieve.
Perplexity can go on a marketing drive in India to educate people about their complex feature set to increase their odds.
Lastly, Airtel stands to gain very little, though this deal is exclusive to them (Jio has 500M users).
While PPLX may be paying Airtel for distribution, you can reasonably expect Airtel to gain a few new customers (not a needle-moving number) who’d gain from this offer. Airtel’s cheapest prepaid annual plan is ~₹2k. Still a notional ₹15k benefit for a user who can throw away the SIM after a year.
What could go wrong when the most expensive customer acquisition strategy meets the world’s most price-conscious market?
Somewhere in SF, a Perplexity exec is about to learn what every Silicon Valley startup eventually discovers Indians love free trials almost as much as they hate paying for subscription.