CAIRO: Saudi Arabia’s growing business environment has encouraged regional and global companies to establish a local presence in the fast-growing market.
Egyptian generative AI startup DXwand is going all out to get closer to its customers through its field team.
In an interview with Arab News, DXwand CEO Ahmed Mahmoud shared the company’s strategic acumen to establish a local office in Riyadh by the middle of this year.
“We have already started the process and have received the MISA (Ministry of Investment and Trade) permit. The exact location is still being discussed but it will be in Riyadh, the amazing capital of Saudi Arabia,” he said.
One step closer
Mahmoud emphasized the importance of delivering value and impact quickly while achieving rapid results, while also demonstrating the company’s differentiated position in the technology space and long-term ambitions for partnerships.
“We plan to achieve that goal with local partners in technology and other industries to ensure success. We already have several partners in Saudi Arabia and plan to increase this number by the end of 2024,” he said.
DXwand’s expansion strategy is clearly aligned with Saudi Arabia’s Vision 2030, which focuses on economic diversification and digital innovation.
“By focusing on the focus areas of Saudi Arabia’s 2030 Vision, particularly 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,” Mahmoud said.
He further explained, “DXwand’s expansion has always included local partners who are industry-focused or technology builders, which allows for greater contribution to each country’s economy, faster and deeper impact, and amazing results with local talent and resources who understand the culture and local pain points.”
One such partner includes AstroLabs, a Gulf business expansion platform, which seeks to leverage DXwand’s strong presence in the US, UAE and Egypt.
Mahmoud stressed the importance of working with official institutions to improve services in the sector.
“Working with the Saudi government is a key cornerstone to realizing our expansion vision, and we are in the process of identifying potential areas of collaboration and relevant government agencies,” he said.
This collaboration is intended to support DXwand in evolving to meet the country’s changing regulatory environment.
Our solutions align with the country’s goals to strengthen digital infrastructure, improve government services, and foster innovation.
Ahmed Mahmoud, CEO of DXwand
“Regulation of AI is an emerging area, not only in Saudi Arabia but also globally. We believe that engaging with regulators early on will help both sides understand the risks and build proactive mitigation measures. We believe that AI companies, regardless of regulation, must take responsibility for building secure AI technologies and ensuring that they adhere to privacy and safety standards globally,” Mahmoud said.
“This will help us adapt to all Saudi regulatory requirements as we proactively mitigate risks and ensure a safe experience for our community,” he added.
Mahmoud said the company has doubled in size every year since 2020, and it aims to maintain that momentum by delivering two national impact initiatives each year.
He added that Saudi Arabia will be a key location for one of these national impact initiatives in 2024. “We believe Saudi Arabia has all the ingredients for success to deliver just one of these national initiatives, and it may even be the best delivered,” he said.
Mahmoud said the company is developing three new products that leverage generative AI technology, though he declined to provide specifics.
“With the help of our co-creation partners, we have three new products in the pipeline that leverage the same generative AI technology. We can’t share specifics on those at this time as we will be announcing them soon with our relevant partners,” he said.
Mahmoud emphasized that expansion into Saudi Arabia is crucial to DXwand’s strategy due to alignment with Vision 2030, market opportunities, and government support.
He further explained that DXwand’s AI solutions are in line with Vision 2030’s ambitions for economic diversification and digital transformation.
“Our solutions align with the country’s goals to strengthen 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.
The government's support for a knowledge-based economy and investments in technology also align with the company's goals, Mahmoud said.
Mahmoud explained that Saudi Arabia’s initiatives to attract foreign investment and create a conducive business environment have made it strategically positioned to access other Middle Eastern markets, which serves as a springboard for regional expansion.
Saudi Arabia’s tech-savvy population provides a receptive market for AI-based solutions. “This demographic is receptive to adopting new technologies, creating a conducive environment for AI solutions,” he said.
The basics of business
In terms of funding, DXwand has raised $6.7 million since its inception, with its most recent $4 million Series A round closing in December 2023. This investment will accelerate DXwand’s establishment in Saudi Arabia and foster strategic partnerships with local partners, educational institutions, and strategic customers.
Mahmoud said: “We plan to use a portion of the funds to kick-start DXwand’s initial operations in Saudi Arabia and to foster strategic partnerships to realise DXwand’s growth ambitions while working with Saudi Arabia to accelerate the execution of our 2030 vision outcomes and build an ecosystem that will deliver on our national impact.”
On Saudi Arabia’s industrial challenges, Mahmoud discussed the hype surrounding generative AI and DXwand’s approach to finding niche solutions.
He noted that DXwand's platform, DXP, was designed to address issues such as the cost of large-scale language models, lack of governed accuracy metrics, and delays in time to market.
Mahmoud said, “DXwand’s platform DXP delivers over 90% cost optimization by leveraging low-cost LLM offerings, while increasing accuracy by over 30% using a single tool that measures through experiments and makes it easy to optimize accuracy and cost through RAG (Augmented Search Generation).”
DXwand operates on a subscription-based business model, selling its products on an annual or monthly subscription basis, depending on the size of the problem expressed in conversation volume or number of users.
Mahmoud said DXwand is a profitable company with a sound financial model designed to ensure profitable unit economics.
The inspiration behind DXwand came from Mahmoud’s work at Microsoft, where he saw the potential of AI ventures focused on local cultural and linguistic needs.
“This potential was not being tapped and I was tempted to take a leap of faith and resign from a prestigious international Silicon Valley giant to start the DXwand journey,” he said.
DXwand's key performance indicators include LLM cost optimization, after-hours accuracy, new subscribers, new contracts, new partners, and time to market.
Mahmoud stressed that managing growth carefully is critical to maintaining reputation and customer experience in Saudi Arabia.
“For Saudi Arabia in particular, we are still new to the market, so we will focus on new partnerships, new customer sign-ups, and experience in optimizing cost and accuracy,” he said.
Mahmoud assesses that Saudi Arabia’s AI and technology market environment is rapidly evolving, with numerous opportunities and challenges.
He highlighted the Saudi government's leadership and investment in economic diversification, digital innovation, artificial intelligence, and talent development.
“With government leadership and investments in economic diversification, digital innovation, artificial intelligence and talent development, we see significant growth opportunities in these emerging markets with notable GDPs and populations,” he said.
As for the industry outlook, Mahmood expects adoption to slow down due to economic factors and the operational costs of generative AI, which will impact the business case. However, he sees this as an opportunity.
“We expect adoption to slow down due to economic factors, operational costs of generating AI, and a reflection of the relative business case. This presents a great opportunity to capitalize on these challenges over the next year or two if there are solutions that can deliver these technologies with cost efficiency and rapid scalability,” he explained.
