Connectly, now backed by Alibaba, taps AI to personalize text messages to customers

Stefanos Loukakos, formerly a director at Meta’s business-focused Messenger division and, briefly, the tech giant’s blockchain org, noticed several years ago that online retailers were struggling to connect with potential shoppers. The problem, in his opinion, was that their marketing campaigns weren’t tailored enough. Merchants were sending generic social media, text, and email blasts that failed to resonate with buyers and convert.

“Businesses need a solution to create winning messaging campaigns and automate conversations with both leads and customers,” Loukakos said. “Ideally, it can also tailor suggestions to ensure customers discover products they’ll love, and help companies gain a deeper understanding of their customers.”

Things clicked when Loukakos met Yandong Liu, formerly the CTO of Strava and a former Yahoo researcher, through a mutual friend in the founder community. The pair quickly bonded over their shared interest in messaging-based marketing, and in 2020, they founded Connectly.ai, which leverages AI to help businesses, like retailers and enterprise e-commerce leaders, sell their products and services across any messaging platform. According to Loukakos, customers can “send and receive messages without having to host, manage or take care of software updates.”

Connectly’s platform integrates with a range of messaging apps and services — including WhatsApp, Instagram, SMS and web-based chatbots — to let brands create ad campaigns and automate certain basic conversations with customers. AI, fine-tuned on a retailer’s product catalog and preferences and plugged into the brand’s online store, sends texts informing customers of things like price changes, stock availability and offers.

Connectly also attempts to figure out which products customers are most interested in and automatically build audience segments. This allows it to, for example, detect when a customer abandons a cart on a brand’s website and then follow up with a message containing a discount code or lower-cost shipping offer.

I asked Loukakos about Connectly’s transparency and data privacy policies. He said that the company’s bots always identify themselves as such 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 hold the phone — do people actually want to engage with companies via chatbots? Surveys suggest they don’t. One commissioned earlier this year by customer experience platform Callvu found that the majority of people would rather wait at least a minute to speak with a live agent than chat instantly with an AI.

Of course, companies aren’t necessarily embracing AI to improve customer experiences first and foremost. Gartner predicts that contact center operators will target a combined $80 billion in labor cost savings by widely deploying AI over the next two years. One in ten customer service agent interactions will by automated by 2026, Gartner estimates, as firms look to make do with less.

A decent-sized chunk of brands view Connectly’s tech as a good investment. Loukakos said that Connectly has over 300 paying customers and expects revenue to grow 100% in 2024, after revenue grew 5x last year.

Loukakos wouldn’t give me a firm number on revenue. But considering that Connectly’s revenue was $3.5 million last year, one can assume that it’s on track to reach $7 million by the end of this year.

In spite of stiff competition from startups and incumbents alike in the conversational e-commerce space (e.g. Attentive, Twilio, Infobip, Bird, Take Blib and Yalo), VCs like what they see with Connectly. Chinese retail giant Alibaba led a $20 million Series B round in the company this week, bringing Connectly’s total raised to $37.2 million at around a $100 million valuation.

Could Alibaba’s involvement portend some sort of strategic collaboration between the retailer and Connectly down the line? Loukakos wouldn’t say — but he did call the support “profoundly impactful to Connectly’s potential.”

Said a spokesperson for Alibaba, “We look to partner with innovative companies that are paving the way in their industry. Connectly is doing just that with AI-powered conversational commerce.”

Unusual Ventures, Volpe Capital, RX Ventures and Falabella Ventures also participated in Connectly’s Series B. Loukakos said that the funds will be used to expand Connectly’s platform and grow its San Francisco-based workforce from 65 employees to nearly 80 by the end of the year.