As millenials are increasingly preferring texting over calling, chat-based and messaging services are seizing the opportunity.
Last summer, Egyptian startup Elves revamped its services and expanded its operations to Los Angeles (LA). Today, Elves has 70 individual investors from Egypt, the United Arab Emirates (UAE) and the United States (US), with $3 million worth of investments.
Business Forward speaks to COO Con O’donnell to know how the company’s business-to-customer (B2C) business model ensured a product-market fit in LA and about replacing Siri and Alexa with something smarter.
What does Elves do?
Widely famous in Egypt as “Your personal little helper”, Elves offers customized services to its clients via a 27-member team – each one dubbed as an “elf”. Whatever a customer’s need, Elves steps in and fulfills it. This can include travel-related services, bill payments, or if the customer wants a certain type of rice that they cannot find- Elves can help with it. All the customer needs to do is send Elves a message on what they need assistance with.
During Christmas 2015, Elves started out as a gifting service. But it soon realized that people wanted more than just sending gifts.
“We realized that there is an opportunity in this chat-based, conversational platform,” O’donnell says. “People wanted lots of other things as well, including booking flights, hotels and paying bills.”
From this point onwards, Elves started accommodating those different needs and the business expanded accordingly.
From Egypt to LA
In Egypt, the delivery infrastructure is poor – that is why Egyptians demand different services from Elves. On the contrary, the US has a proper infrastructure and people have apps for almost everything.
O’donnell explains that Elves chose LA as its next destination because of the large urban sprawl, the amount of millennials and influencers.
The audience there is very specific about it wants – be it flight tickets, excursions or a pickup from the airport. Hence, Elves limited its services to travel-related requests because everything else is already just one button away from happening.
“Airline tickets are our gig into the market in the US and the website gives this impression on purpose,” O’donnell says. “In Egypt, we are your personal little helper. In the US, we are your magical travel companion.”
Where do profits come from?
Elves doubled its profits, number of users, transactions and accordingly sales between the first quarter of 2018 and Q1-19. While the service is free of charge, when Elves sees trends in the purchasing behavior of its users, it pursues this trend and tries to make a deal with other service providers.
An example is London Cab in Egypt. For no particular reason, a lot of people book a London Cab through Elves. “We noticed the trend, went to the owner and now get a commission for every London Cab booked through Elves,” O’donnell explains.
What does the future look like?
Elves is currently trying to build a more advanced form of Alexa and Siri; one that is more responsive, smarter and knows how to operate.
For instance, when Siri is asked about the weather, it detects the location, understands the intention and collects the relevant information to provide an answer within seconds. But Siri cannot change flight times or book a ticket, O’donnell says. This, however, requires Siri to have human intelligence.
“Using artificial intelligence (AI), we are building a system that understands the conversations between humans and users,” he explains.
Elves have thousands of conversations with their customers about one vertical – air flights for example. When annotated, the machine can quickly understand the nuances of the requests and the right response for them. The elf does not have to be involved at this point of the conversation and the computer takes over.
In the future, Elves will have minimal human intervention and the “human” elves will be pushed back further so they can handle more customers.
In terms of expansion into other countries, O’donnell believes that the model of LA is replicable and scalable by utilizing local expertise in each country.
“As a team, we differ in our opinions in terms of which markets to go first,” O’donnell concludes.