Stefanos Loukakos, former director of Meta's business-focused Messenger division and briefly head of its blockchain division, noticed a few years ago that online retailers were struggling to connect with potential shoppers. In his opinion, the problem was that their marketing campaigns weren't customized enough. Retailers were using generic social media, text and email mass messaging that didn't resonate with buyers and didn't lead to conversions.
“Businesses need solutions that help them create effective messaging campaigns and automate conversations with both prospects and customers,” says Loukakos. “Ideally, they can also customize offers to help customers find products they'll love and help businesses get to know their customers better.”
Things started to click when Loukakos met former Strava CTO and ex-Yahoo researcher Yandong Liu through a mutual friend in the founder community. The two quickly clicked over their shared interest in message-based marketing and founded Connectly.ai in 2020. The company leverages AI to help businesses, including retailers and enterprise e-commerce leaders, sell their products and services on any messaging platform. Customers can “send and receive messages without having to host, manage, or manage software updates,” according to Loukakos.
Connectly's platform integrates with a range of messaging apps and services, including WhatsApp, Instagram, SMS and web-based chatbots, allowing brands to create advertising campaigns and automate basic conversations with customers. Fine-tuned to a retailer's product catalog and preferences, and connected to the brand's online store, the AI sends texts informing customers of price changes, availability, offers and other information.
Connectly allows brands, especially e-commerce retailers, to customize the types of text messages their customers receive. Image credit: Connectly.ai
Connectly tries to understand which products customers are most interested in and automatically builds audience segments, so it can detect when a customer abandons their cart on a brand's website, for example, and follow up with a message that includes a discount code or low-cost shipping offer.
I asked Loukakos about Connectly's transparency and data privacy policy, and he said that its bots always clearly state that they are bots and that Connectly is “fully compliant” with GDPR, at least in the sense that users can opt out of receiving messages from brands at any time.
But wait a minute: do people really want to interact with companies via chatbots? Research suggests not. A survey commissioned earlier this year by customer experience platform Callvu found that the majority of people would prefer to wait at least a minute to speak to a live agent, rather than instantly chat with an AI.
Of course, companies aren't adopting AI primarily to improve customer experience: Gartner predicts that contact center operators will aim to save a combined $80 billion in labor costs over the next two years through widespread adoption of AI. Gartner estimates that as businesses look to do more with less, one in 10 customer service agent interactions will be automated by 2026.
A significant number of brands see Connectly's technology as a good investment: Loukakos said Connectly has more than 300 paying customers and expects revenue to grow 100% in 2024 after growing five-fold last year.
Loukakos didn't provide specific revenue figures, but considering Connectly made $3.5 million in revenue last year, we can assume it's on track to hit $7 million by the end of the year.
Despite stiff competition from startups and incumbents in the conversational e-commerce space (Attentive, Twilio, Infobip, Bird, Take Blib, Yalo, etc.), venture capitalists are raving about Connectly's situation: Chinese retail giant Alibaba led the company's $20 million Series B round this week, bringing Connectly's total funding to $37.2 million and valuing it at about $100 million.
Does Alibaba's involvement portend some kind of strategic partnership between the retailer and Connectly in the future? Loukakos didn't say, but he did say that the backing will have a “huge impact on Connectly's potential.”
“We want to partner with innovative companies that are paving the way in their industries, and Connectly is doing just that with AI-powered conversational commerce,” an Alibaba spokesperson said.
Unusual Ventures, Volpe Capital, RX Ventures and Falabella Ventures also participated in Connectly's Series B. Loukakos said the funding will be used to scale Connectly's platform and grow its San Francisco-based employee base from 65 to nearly 80 by the end of the year.