CAIRO: Saudi Arabia's growing business landscape has encouraged regional and global companies to establish a local presence in the emerging market.
Egyptian-founded generative artificial intelligence startup DXwand is leaving no stone unturned to get closer to its customers with a local team.
In an interview with Arab News, Ahmed Mahmoud, CEO of DXwand, shared the company’s strategic insights to open a local office in Riyadh by mid-year.
“We have already started the formalities and obtained the license from MISA (Saudi Arabian Ministry of Investment). The exact location is still being discussed, but it will be in the wonderful capital of Saudi Arabia, Riyadh,” he said.
One step closer
Mahmoud emphasized the importance of delivering quick value and impact through quick wins and also wants to demonstrate the company's differentiated position in the technology space and long-term ambitions in partnerships.
He said: “To ensure our success, we want to achieve this goal with local partners in technology and other industries. We already have several partners in Saudi Arabia and plan to multiply this number by the end of 2024.”
DXwand's expansion strategy is closely aligned with Saudi Arabia's Vision 2030 and focuses on economic diversification and digital transformation.
Mahmoud said: “By focusing on influencing the priority areas of the Saudi Vision for 2030, particularly in the areas of 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-specific or technology-focused. This leads to greater contributions to the country’s economy, delivers faster and deeper impact, and achieves great results with local talent and resources that understand the culture and local issues very well.”
These partners include Gulf business expansion platform AstroLabs, which is looking to leverage DXwand’s strong presence in the US, UAE and Egypt.
Mahmoud stressed the importance of working with official bodies to improve the services of their sector.
“Working with the Saudi government is an important cornerstone in implementing our expansion vision and we are in the process of identifying potential focus areas for cooperation and government entities concerned,” he said.
This collaboration is intended to help DXwand adapt to the country’s evolving regulatory environment.
Our solutions are in line with the country's goals of expanding digital infrastructure, improving government services and promoting innovation.
Ahmed Mahmoud, CEO of DXwand
“AI regulation is an emerging area, not only in Saudi Arabia but globally. We believe that early engagement with regulators will help both parties understand risks and develop proactive countermeasures. We believe that regardless of regulations, AI companies should have the responsibility to develop safe AI technology and ensure it meets global standards for privacy and security,” Mahmoud said.
“This is intended to help us adapt to all regulatory requirements in Saudi Arabia as we proactively mitigate risks and ensure a safe experience for our community,” he added.
Mahmoud said the company has grown two-fold annually since 2020, and he plans to stay that trajectory while implementing two nationwide impact initiatives per year.
He added that Saudi Arabia would be a key geographic target for one of these national impact initiatives in 2024. “We believe that Saudi Arabia has all the necessary elements for success to not only implement one of our national initiatives, but it could even be the best implemented one,” he said.
Mahmoud also revealed that the company has three new products in the pipeline based on 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 that leverage our generative AI technology. We cannot reveal any further details at the moment, but will announce them to the relevant partners shortly,” he said.
Expansion into Saudi Arabia is central to DXwand's strategy, as factors such as alignment with Vision 2030, market opportunities and government support play a crucial role, Mahmoud stressed.
He also explained how DXwand’s AI solutions align with Vision 2030’s goals of economic diversification and digital transformation.
“Our solutions are in line with the country’s goals of improving 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 offer lucrative opportunities for DXwand.
Mahmoud also said that government support for a knowledge-based economy and technology investments is in line with his company's goals.
Initiatives to attract foreign investment and create a favorable business environment make Saudi Arabia a strategic location that provides access to other markets in the Middle East and serves as a springboard for regional expansion, Mahmoud said.
The tech-savvy Saudi population provides a ready market for AI-based solutions. “This population is open to adopting new technologies and creates an enabling environment for AI solutions,” he said.
Business basics
In terms of funding, DXwand has raised $6.7 million since its inception, with the latest $4 million Series A funding round closing in December 2023. This investment will fuel DXwand's establishment 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 kickstart activities to launch DXwand in Saudi Arabia and foster strategic partnerships to build an ecosystem that both meets DXwand’s growth ambitions and works with Saudi Arabia to influence and accelerate the implementation of Vision 2030 outcomes and create countrywide impact.”
Mahmoud addressed the challenges facing the industry in Saudi Arabia and discussed the hype surrounding generative AI and DXwand’s approach to finding niche solutions.
He noted that DXwand's DXP platform is designed to solve problems such as high costs of large language models, lack of managed accuracy measurement, and long time to market.
“DXwand’s DXP platform delivers over 90 percent cost optimization by leveraging low-end LLM offerings while increasing accuracy by over 30 percent using a single tool that enables experimentation to measure and RAG (retrieval-augmented generation) to easily optimize accuracy and cost,” said Mahmoud.
DXwand operates on a subscription-based business model and sells its products on annual or monthly subscriptions based on the size of the problem represented by call volume or number of users.
Mahmoud explained that DXwand is a profitable company with a healthy financial model designed to ensure profitable unit costing.
The motivation behind founding DXwand stemmed from Mahmoud's experience at Microsoft, where he saw the potential for AI projects focused on the region's cultural and linguistic needs.
“This potential was not being realized and I was tempted to put all my eggs in one basket and resign from such a respected international Silicon Valley giant to start the DXwand journey,” he explained.
Key performance indicators for DXwand include LLM cost optimization, accuracy over time, new signups, new contracts, new partners, and time to market.
Mahmoud stressed the importance of carefully managing growth in Saudi Arabia to maintain reputation and customer experience.
“Since we are still new in Saudi Arabia, I would specifically focus on new partnerships, new customer sign-ups and the company’s experience with cost and accuracy optimization,” he noted.
Mahmoud estimates that the current AI and technology market landscape in Saudi Arabia is rapidly evolving and offers numerous opportunities and challenges.
He highlighted the Saudi government’s leadership role and its investments 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 see great growth opportunities in such an emerging market with a remarkable GDP (gross domestic product) and population,” he said.
As for industry predictions, Mahmoud expects a decline in adoption due to economic factors and the cost of running generative AI, which will impact their business models. However, he sees this as an opportunity.
“We are predicting a decline in adoption due to economic factors and the cost of running generative AI and its impact on the business models involved. There is a great opportunity to meet this challenge over the next one to two years if you have a solution that can deliver such technology cost-effectively and with the ability to scale quickly,” he explained.
