CAIRO: Saudi Arabia's growing business landscape has encouraged regional and global companies to establish a local presence in the growing market.
Born in Egypt, generative artificial intelligence startup DXwand is leaving no stone unturned as it strives to get closer to its customers with a team on the ground.
In an interview with Arab News, Ahmed Mahmoud, CEO of DXwand, shared the company's strategic insights on establishing a local office in Riyadh in the middle of the year.
“We have already started formalities and received the MISA (Ministry of Investments of Saudi Arabia) license. The exact location is still being discussed, but it will be in Saudi Arabia's stunning capital Riyadh, he said.
One step closer
Mahmoud emphasized the importance of delivering value and impact quickly with quick wins and is also keen to demonstrate the company's differentiated position in technology and long-term ambitions in partnerships.
He said: “That goal is planned to be achieved with local partners, in technology and other industries, to ensure our success. We already have several partners in place in Saudi, and our plan is to multiply this number by the end of 2024.”
DXwand's expansion strategy is well aligned with Saudi Arabia's Vision 2030, focusing on economic diversification and digital transformation.
Mahmoud said: “By focusing on providing impact on Saudi's focus areas in its Vision 2030, particularly in economic diversification, quality of life, environmental sustainability and culture and entertainment, we have set long-term goals and corresponding initiatives to support and influence these areas .”
He further explained: “DXwand's expansion always involves local partners who are industry-focused or technology builders, leading to greater contributions to each country's economy, faster and deeper impact, and achieving great results with local talent and resources that understand the culture and the local pain very well .”
One of these partners includes Gulf business expansion platform AstroLabs which aims to capitalize on DXwand's strong presence in the US, UAE and Egypt.
Mahmoud stressed the importance of working with official bodies to improve his sector's services.
“Collaboration with the Saudi government is an important cornerstone in delivering our expansion vision, and we are in the process of identifying potential areas of collaboration with focus and relevant government entities,” he said.
This collaboration is intended to support DXwand's adaptation to the country's changing regulatory framework.
Our solutions are in line with the country's goals to improve digital infrastructure, improve government services and promote innovation.
Ahmed Mahmoud, CEO of DXwand
“AI regulation is an emerging area, not only for Saudi Arabia but also worldwide. We believe in early engagement with regulators to benefit both parties in understanding risks and building proactive constraints. We believe AI companies should be responsible, regardless of regulation, for building secure AI technology and ensuring that it adheres to privacy and security standards worldwide,” Mahmoud said.
“This will help us adapt to all regulatory needs in Saudi as we proactively reduce risk and ensure a safe experience for our community,” he added.
Mahmoud said the company has grown annually by a multiple of two since 2020, and he wants to maintain this trajectory along with delivering two nationwide impact initiatives per year.
He added that Saudi Arabia would be a key geography for one of these national impact initiatives in 2024. “We believe that Saudi has all the necessary elements of success to deliver not just one of our national initiatives, but it may even be the best delivered,” he said.
Mahmoud also revealed that the company has three new products in the works, which take advantage of their generative AI technology, although the details are still uncertain.
“With the help of our co-build partners, we have three new products in the pipeline that leverage our same generative AI technology. We cannot share more details about them at the moment while we will announce them with relevant partners very soon,” he said.
Expanding into Saudi Arabia is critical to DXwand's strategy due to factors such as alignment with Vision 2030, market opportunities and government support, Mahmoud highlighted.
He further explained the alignment of DXwand's AI solutions with Vision 2030's ambitions for economic diversification and digital transformation.
“Our solutions are in line with the country's goals to improve digital infrastructure, improve government services and promote innovation,” he said.
He added that significant investments in sectors such as healthcare, education, financial services and tourism offer lucrative opportunities for DXwand.
The government's support for a knowledge-based economy and technology investment is also in line with his company's goals, Mahmoud said.
Initiatives to attract foreign investment and create a favorable business environment make Saudi Arabia a strategic location that offers access to other markets in the Middle East, serving as a springboard for regional expansion, Mahmoud explained.
The tech-savvy Saudi population offers a receptive market for AI-powered solutions. “This demographic is receptive to embracing new technologies and creating an enabling environment for AI solutions,” he said.
The business basics
In terms of funding, DXwand has raised $6.7 million since founding, with the most recent $4 million Series A round closing in December 2023. This investment will start the establishment of DXwand in Saudi Arabia and foster strategic partnerships with local partners, educational institutions and strategic customers.
Mahmoud said: “We plan to use part of the fund to start the activities for the initial establishment of DXwand in Saudi Arabia and foster strategic partnerships to build an ecosystem that both delivers DXwand's ambition to grow while partnering with Saudi to influence and accelerate the implementation of its 2030 vision results and country-wide impact.”
Addressing industry challenges in Saudi Arabia, Mahmoud discussed the hype surrounding generative AI and DXwand's approach to finding niche solutions.
He noted that DXwand's platform, DXP, is designed to solve problems such as high large cost of language models, lack of managed accuracy measurement and slow time to market.
“DXwand's platform DXP offers over 90 percent cost optimization by leveraging low-end LLM offerings, while increasing accuracy by over 30 percent using a tool that enables experiments to measure and RAG (recovery-augmented generation) to optimize accuracy and costs easily,” said Mahmoud.
DXwand works on a subscription-based business model, selling its products with annual or monthly subscriptions relevant to the size of the problem, represented by conversation volume or user count.
Mahmoud stated that DXwand is a profitable company with a sound financial model, designed to ensure profitable unit economics.
The motivation behind founding DXwand stemmed from Mahmoud's experience at Microsoft, where he saw the potential for AI efforts focused on the region's cultural and linguistic needs.
“This potential was untapped and it gave me the temptation to take a leap of faith and resign from such a well-regarded international Silicon Valley giant to start DXwand's journey,” he said.
Key performance indicators for DXwand include LLM cost optimization, accuracy overtime, new sign-ups, new contracts, new partners and time to market.
Mahmoud emphasized the importance of managing growth carefully in Saudi Arabia to maintain reputation and customer experience.
“For Saudi specifically, as we are still newly introduced, I would focus on new partnerships, new customer sign-ups and their experience in cost and accuracy optimization,” he noted.
Mahmoud assesses the current market landscape in Saudi Arabia for AI and technology as rapidly evolving, with many opportunities and challenges.
He highlighted the Saudi government's leadership and investment in economic diversification, digital transformation, artificial intelligence and talent development.
“With government leadership and investment in economic diversification, digital transformation, artificial intelligence and talent development, we foresee a great growth opportunity with such an emerging market with a remarkable GDP (gross domestic product) and population,” he said.
In terms of industry forecasts, Mahmoud foresees a decline in usage due to economic factors and the cost of running generative AI, which affects their business case. However, he sees this as an opportunity.
“We foresee a decline in adoption driven by economic factors and costs of driving generative AI and its reflections on their relative business case, which is a great opportunity for the next year or two to capitalize on this challenge if you have a solution that can deliver such technology with cost efficiency and the ability to scale quickly,” he explained.
