Yuan Hui’s company Xiao-I has come a long way since it launched its first chatbot two decades ago. Today, the Shanghai-based firm is valued at over US$400 million, listed on the Nasdaq, and aims to expand its presence in the global market. Yuan, the chairman and chief executive of Xiao-I, was inspired to develop a chatbot back in 2003 during the severe acute respiratory syndrome (SARS) outbreak in China. The company’s first chatbot was released in January 2004 and quickly gained popularity among users.
However, Xiao-I faced challenges in monetising its technology in the consumer market. Yuan decided to shift the company’s focus to business clients, starting with call centres and eventually expanding to banks, securities firms, government agencies, and e-commerce companies. Today, Xiao-I serves over 1,000 business clients across more than 50 industries, primarily in mainland China.
In 2021, the company generated US$32.5 million in revenue, a significant increase of nearly 135% from 2020. Xiao-I also managed to turn a profit of US$3.4 million, after recording a net loss of US$7.1 million the previous year. The firm is backed by Alibaba Group Holding, the owner of the South China Morning Post.
Following the success of US start-up OpenAI’s ChatGPT, Xiao-I plans to expand further in the enterprise market and explore new opportunities in the consumer market. The company increased its research and development budget to US$24 million last year, despite posting a loss even as revenue rose 48% to a record high of US$48.2 million.
Yuan believes that AI’s potential to reduce costs and improve efficiency across various industries may far exceed the benefits of the first three industrial revolutions. He also notes that the emergence of ChatGPT has raised clients’ expectations for chatbot services based on large AI models.
Xiao-I is set to launch its own large language model (LLM) in June, along with new applications. With the funds raised from its IPO, the company is also looking at international expansion. Yuan aims for Xiao-I’s sales outside mainland China to account for over 50% of the company’s total revenue in the next five years, up from around 10% currently.
As Yuan puts it, “The curtains have been drawn: we are standing at the beginning of a golden decade for AI.”
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