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Jeddah - Yasmine El Tohamy - CAIRO: Saudi Arabia’s growing business landscape has encouraged regional and global companies to establish a local presence in the burgeoning market.
Egypt-born generative artificial intelligence startup DXwand is leaving no stone unturned as it aims to get closer to its clients with an on-ground team.
In an interview with Arab News, Ahmed Mahmoud, CEO of DXwand, shared the company’s strategic insights into establishing a local office in Riyadh by mid-year.
“We already started formalities and got the MISA (Saudi Arabia’s Ministry of Investment) license. The exact location is still in discussion, but it shall be in the amazing capital of Saudi, Riyadh,” he said.
One step closer
Mahmoud emphasized the importance of delivering value and impact swiftly 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 objective 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 firmly aligned with Saudi Arabia’s Vision 2030, focusing on economic diversification and digital transformation.
Mahmoud said: “By focusing on delivering impact on Saudi’s focus areas of its 2030 vision, especially in economic diversification, quality of life, environmental sustainability, and culture and entertainment, we have set long-term goals and corresponding initiatives to support and impact these areas.”
He further explained: “DXwand’s expansion always involves local partners who are industry-focused or technology builders, leading to larger contributions to each country’s economy, delivering faster and deeper impact, and achieving marvelous results with local talent and resources who understand the culture and local pains very well.”
One of these partners includes Gulf business expansion platform AstroLabs which aims to leverage DXwand’s strong presence in the US, the UAE, and Egypt.
Mahmoud emphasized the importance of working with official bodies to enhance their sector’s services.
“Collaboration with the Saudi government is a key cornerstone to deliver our expansion vision, and we are in the process of identifying potential collaboration areas of focus and concerned government entities,” he said.
This collaboration is intended to support DXwand’s alignment with the country’s evolving regulatory environment.
Our solutions align with the country’s goals to enhance digital infrastructure, improve government services, and foster innovation.
Ahmed Mahmoud, CEO of DXwand
“Regulations for AI is an emerging area not just for Saudi but also worldwide. We believe in early engagement with regulators to benefit both parties in understanding risks and building proactive mitigations. We believe AI companies should be responsible, regardless of regulations, to build safe AI technology and ensure it follows standards of privacy and safety worldwide,” Mahmoud said.
“This shall help us adapt to any regulatory needs in Saudi as we are proactively mitigating risks and ensuring a safe experience for our community,” he added.
Mahmoud said the company has been growing yearly by a multiple of two since 2020, and he is looking to maintain this trajectory along with delivering two nationwide impact initiatives per year.
He added that Saudi Arabia would be a major geography for one of these national impact initiatives in 2024. “We believe Saudi has all needed success elements to deliver not just one of our national initiatives, but it could even be the best delivered,” he said.
Mahmoud also revealed that the company has three new products in the pipeline, leveraging their generative AI technology, although details are still under wraps.
“With the help of our co-build partners, we have three new products in the pipeline leveraging our same generative AI technology. We can’t at the moment share more details about them while we shall have them announced with relevant partners very soon,” he said.
Expanding to Saudi Arabia is pivotal for DXwand’s strategy due to factors like 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 align with the country’s goals to enhance digital infrastructure, improve government services, and foster innovation,” he said.
He added that significant investments in sectors such as healthcare, education, financial services, and tourism present lucrative opportunities for DXwand.
Government support for a knowledge-based economy and technology investment also aligns with his company’s objectives, Mahmoud said.
Initiatives to attract foreign investments and create a favorable business environment make Saudi Arabia a strategic location that offers access to other Middle Eastern markets, serving as a springboard for regional expansion, Mahmoud explained.
The tech-savvy Saudi population provides a receptive market for AI-driven solutions. “This demographic is receptive to adopting new technologies, creating a conducive environment for AI solutions,” he said.
Business fundamentals
Regarding funding, DXwand has raised $6.7 million since its foundation, with the latest $4 million series A round closing in December 2023. This investment will ignite the establishment of DXwand in Saudi Arabia, fostering strategic partnerships with local partners, educational institutes, and strategic clients.
Mahmoud said: “We plan to use part of the fund to ignite activities of first establishment of DXwand in Saudi and fostering strategic partnerships to build an ecosystem that both delivers DXwand’s ambition of growth while partnering with Saudi to impact and accelerate the execution of its 2030 vision outcomes and land nationwide 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 issues such as high large language model costs, lack of managed accuracy measurement, and slow time to market.
“DXwand’s platform DXP offers over 90 percent cost optimization leveraging low-end LLM offerings, while increasing accuracy by over 30 percent using one tool that enables experiments to measure and RAG (retrieval-augmented generation) to optimize accuracy and costs easily,” Mahmoud said.
DXwand operates on a subscription-based business model, selling its products with annual or monthly subscriptions relevant to the problem size, represented by conversation volume or user numbers.
Mahmoud stated that DXwand is a profitable company with a healthy 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 ventures focused on the region’s cultural and linguistic needs.
“This potential was not served and it gave me the temptation to take a leap of faith and resign from such a reputable international Silicon Valley giant to start DXwand’s journey,” he stated.
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 client sign-ups, and their experience with costs and accuracy optimization,” he noted.
Mahmoud assesses the current market landscape in Saudi Arabia for AI and technology as rapidly evolving, with numerous opportunities and challenges.
He highlighted the Saudi government’s leadership and investments in economic diversification, digital transformation, artificial intelligence, and talent development.
“With government leadership and investments in economy 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 stated.
Regarding industry forecasts, Mahmoud anticipates a downturn in adoption due to economic factors and the costs of operating generative AI, impacting their business cases. However, he sees this as an opportunity.
“We foresee a downturn in adoption impacted by economic factors and costs of operating generative AI and its reflections on their relative business cases, which is a great opportunity for the upcoming year or two to leverage this challenge if you have a solution that can deliver such technology with cost efficiency and ability to scale fast,” he explained.
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