CAIRO: Saudi Arabia’s growing business landscape has encouraged regional and global companies to establish a local presence in this rapidly growing market.
Egyptian generative AI startup DXwand is leaving no stone unturned and aims 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 regarding the opening of a local office in Riyadh by mid-year.
“We have already started the formalities and obtained the MISA (Ministry of Investment of Saudi Arabia) license. The exact location is still under discussion, but it will be in the extraordinary Saudi capital, Riyadh,” he said.
One step closer
Mahmoud stressed the importance of generating 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: “This goal is planned to be achieved with local partners, in technology and other sectors, to ensure our success. We already have several partners in Saudi Arabia 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: “Focusing on achieving impact on Saudi Arabia’s focus areas in its 2030 vision, particularly in economic diversification, quality of life, environmental sustainability, 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 industry-focused partners or technology developers, which results in greater contributions to each country’s economy, with faster and deeper impact, and achieving wonderful results with local talents and resources who understand local culture and challenges very well.”
One of these partners includes AstroLabs, a Gulf business expansion platform, which aims to leverage DXwand’s strong presence in the US, UAE and Egypt.
Mahmoud stressed the importance of collaborating with official bodies to improve services in their sector.
“Collaboration with the Saudi government is a key element in realizing our expansion vision and we are in the process of identifying potential areas of collaboration to focus on and interested government entities,” he said.
This collaboration aims to support DXwand's alignment with the country's evolving regulatory environment.
Our solutions are aligned with the country's goals of strengthening digital infrastructure, improving public services and promoting innovation.
Ahmed Mahmoud, CEO of DXwand
“AI regulation is an emerging area not only for Saudi Arabia, but also globally. We believe in engaging with regulators early to benefit both parties in understanding the risks and creating proactive mitigations. We believe AI companies should be responsible, regardless of regulations, to create safe AI technology and ensure it follows privacy and security standards around the world,” said Mahmoud.
“This will help us adapt to any regulatory needs in Saudi Arabia as we proactively mitigate risks and ensure a safe experience for our community,” he added.
Mahmoud said the company has grown by a multiple of two annually since 2020 and plans to maintain this trend, while also running two impactful initiatives nationwide each year.
He added that Saudi Arabia would be an important geography for one of these national impact initiatives in 2024. “We believe that Saudi Arabia has all the elements of success needed to realize not only one of our national initiatives, but it could be the best one,” he said.
Mahmoud also revealed that the company has three new products in the works that leverage generative AI technology, though the details are still under wraps.
“With the help of our co-build partners, we have three new products in the works that leverage our own generative AI technology. We can't share more details about these at this time, but we will be announcing them very soon with interested partners,” he said.
Expansion into Saudi Arabia is central to DXwand’s strategy, due to factors such as alignment with Vision 2030, market opportunities and government support, Mahmoud stressed.
He further explained the alignment of DXwand's AI solutions with Vision 2030's ambitions for economic diversification and digital transformation.
“Our solutions are aligned with the country’s goals of strengthening digital infrastructure, improving government services and promoting innovation,” he said.
He added that significant investments in sectors such as healthcare, education, financial services and tourism represent lucrative opportunities for DXwand.
Mahmoud said the government's support for a knowledge-based economy and technology investments is also in line with his company's goals.
Initiatives to attract foreign investment and create a favorable business environment make Saudi Arabia a strategic location offering access to other Middle Eastern markets, serving as a springboard for regional expansion, Mahmoud explained.
Saudi Arabia’s tech-savvy population offers a receptive market for AI-based solutions. “This demographic is receptive to adopting new technologies, creating a favorable environment for AI solutions,” he said.
Business Fundamentals
In terms of funding, DXwand has raised $6.7 million since its founding, with its latest Series A round of $4 million closing in December 2023. This investment will kickstart DXwand’s foundation in Saudi Arabia, fostering strategic partnerships with local partners, educational institutions, and key customers.
Mahmoud said: “We plan to use part of the fund to kick-start the operations of DXwand’s first foundation in Saudi Arabia and foster strategic partnerships to build an ecosystem that realizes DXwand’s growth ambition and works with Saudi Arabia to impact and accelerate the execution of its 2030 vision and achieve impact nationwide.”
Addressing industry challenges in Saudi Arabia, Mahmoud spoke about the hype surrounding generative AI and DXwand’s approach to finding niche solutions.
He stressed that DXwand's DXP platform is designed to solve problems such as the high costs of large language models, the lack of managed accuracy measurement, and slow time to market.
“DXwand’s DXP platform offers over 90 percent cost optimization by leveraging low-end LLM offerings while increasing accuracy by over 30 percent using a single instrument that allows experiments to easily measure and RAG (recovery augmented generation) accuracy and cost,” said Mahmoud.
DXwand operates a subscription-based business model, selling its products on an annual or monthly basis based on the size of the problem, as represented by the volume of conversations or the number of users.
Mahmoud said that DXwand is a profitable company with a sound financial model, designed to ensure unit profitability.
The motivation behind founding DXwand stems from Mahmoud’s experience at Microsoft, where he saw the potential of AI initiatives focused on the cultural and linguistic needs of the region.
“This untapped potential prompted me to take a leap of faith and resign from such a reputable international Silicon Valley giant to start the DXwand journey,” he said.
Key performance indicators for DXwand include LLM cost optimization, time accuracy, new enrollments, new contracts, new partners, and time to market.
Mahmoud stressed the importance of carefully managing growth in Saudi Arabia to preserve reputation and customer experience.
“Specifically for Saudi Arabia, since we are still in the early stages, I would focus on new partnerships, new customer signups and their experience with cost and accuracy optimization,” he noted.
Mahmoud believes that the current AI and technology market landscape in Saudi Arabia is 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 economic diversification, digital transformation, artificial intelligence and talent development, we see a huge growth opportunity in an emerging market with a significant GDP (gross domestic product) and population,” he said.
As for industry forecasts, Mahmoud expects adoption to decline due to economic factors and the cost of running generative AI, impacting their business cases. However, he sees this as an opportunity.
“We expect adoption to decline as it is driven by economics and operational costs of generative AI and its implications for the business cases, which is a great opportunity in the next year or two to capitalize on that challenge if you have a solution that can deliver that technology in a cost-effective way and scale rapidly,” he explained.
