The year 2024 has been a tough one for many service companies in the market. Development of AI, along with geopolitical changes that inevitably affect the economic environment, caused many companies to downscale.
However, SmartCat actually was among those companies that grew. It’s the result of “focusing on the basics, product development and strategic partnerships.”
Together with key organizational changes and successful product deliveries for important clients, this has proven to be an excellent strategy.
In this interview with Nenad Božić, CEO of SmartCat, you’ll get an inside look into the details of the company’s journey in 2024 and its vision for 2025.
Nenad, can you summarize SmartCat’s primary activities in 2024?
2024 was a challenging year for the IT industry, with many companies downsizing. Despite this, SmartCat achieved 30% growth while undergoing significant organizational restructuring.
It’s mostly thanks to our positioning. We have a proper mix of products/data/AI solutions that allows every business to optimize in such macroeconomic conditions..
We also did three important things internally. First, organizational changes.
We brought a new CTO to our leadership team, Matija Gobec, who has extensive experience overseas (ex Google), and added a new leader to the Delivery team, Damir Solajic. Having these two experienced, battle-tested professionals at our side helped us form a strong moat and optimize operations further.
We also focused on building a growth team. Most companies, when making budgeting decisions in challenging times, usually cut down on marketing and sales. We did it differently.
We developed our in-house growth team, enabling us to move beyond relying solely on word-of-mouth referrals and external help. It takes a lot of time to get contractors up to speed, and time is vital in our industry, with new trends appearing every single day.
Second, we built a partnership ecosystem. By partnering with crucial companies in the backend of AI, such as Databricks, Pinecone or Vantage Discovery, we could position ourselves as experts for these solutions specifically.
And last, but not least, we focused on building products in the so-called co-creation partnership, stepping away from the classic outsourcing model, as well as building products based on chatbots and GenAI.
Why did you focus on developing GenAI applications and chatbot solutions?
GenAI was a natural progression for us, given our decade-long focus on AI and ML. Having implemented many chatbots and seeing them in action provided us with a clear picture of the direction of business applications of AI.
We wanted to stay away from the hype and provide tangible business value on everything we do. Of course, the biggest challenge was the mindset shift. You can’t become a product development company overnight.
You developed internal AI assistant solutions. Have you tested them on the market, and what benefits have they brought to your clients?
All of our solutions have in fact been tested before bringing them to our clients. It sounds counterintuitive, but we used our knowledge of customer problems and solutions we provided them with to solve our internal challenges.
That’s how AI assistants came to be. We realized we needed faster information spread across the almost 100-people organization, and emails or endless meetings just aren’t our thing. So we made AI assistants. Basically, chatbots trained on company knowledge, but with specific purpose.
This allowed us to have tangible results that we could present to our clients. It’s a fine loop, really. Implementing the solution, trying your own medicine, refining it, and delivering it again.
It’s important to note, however, that while we’ve invested heavily in the Assistant development, the technology in this segment develops quickly. AI assistants are gaining traction, but agents are the next big thing.
This area requires substantial R&D and knowledge building, and we’re going to focus on it in 2025.
After the Assistants, you’ve also built the CMA platform. What value does it bring to companies, and how do you plan to further enhance it?
As with the Assistants, we identified a need for knowledge management across various sectors both at our clients’ organizations and at our own. The CMA (Company Mind Assistant) does exactly that – allows you to manage internal knowledge and provide access to everyone in the company faster.
It’s a natural progression from a simple chatbot because the CMA uses AI to self-improve, while also allowing you to upload new documents and expand it. Vector databases and semantic search add significant value here.
Currently, our solution supports the sales sector by transferring knowledge (case studies, positioning, strategy…) to new sales agents. This makes training and onboarding so much easier, and eases the burden on senior professionals.
We plan to expand its application to other departments like HR, marketing, and finance.
Can you elaborate on how partnerships with companies like Databricks and Vantage Discovery have enhanced your products and services?
Partnerships are something we’ve always excelled at. Working with companies whose tools you use gives you a 360 overview of capabilities. These collaborations often evolve into more thanks to mutual understanding and cross-promotion.
Databricks’ platform provides credibility and is ideal for large companies needing mature, AI-ready solutions.
Many companies don’t have an AI problem, but a data problem. Data is stored in silos, and although we cover that service spectrum as well, developing internal data management and integration tools isn’t always an option for many reasons. That’s where Databricks excels. It’s off-the-shelf, it’s reliable, and it’s robust.
On the other hand, Pinecone specializes in providing vector databases and is becoming increasingly popular. Nowadays, one can hardly imagine a LLM-RAG-based assistant without their solution.
Lastly, Vantage’s innovations have the potential to revolutionize search in e-commerce, and we’re keen to leverage their platform. We don’t just state that we’re focused on innovation. We actually take the risk. Adding semantic search to huge marketplaces is the next big thing.
Being recognized as a partner of these companies allows you to position yourself as an expert in a competitive market.
How do you see the role of technologies like artificial intelligence and automation in addressing key business challenges in the coming year?
Efficiency is a primary focus. AI can automate processes, freeing up employees for more critical tasks. It can also improve customer experience, driving revenue growth. We see AI’s potential in both reducing spending and increasing earnings.
AI can also improve UX, which also affects customer experience, engagement and loyalty. As many research studies point out, investing just $1 in UX can bring up to $100 in revenue, so there’s a huge potential there.
Who are the ideal clients for SmartCat? You were mentioning product co-creation.
At this stage of growth, of course, our clients would be ideally tech- and AI-mature companies. Yet, optimal AI maturity is questionable even in the most developed verticals, so we opted for a more hybrid approach.
Drawing on 10 years of experience building tech/data/AI products, we provide a series of educational workshops that bring our clients to a needed level of AI/data readiness.
With AI readiness handled, our ideal clients seek full product service or a partner to co-create products. The product co-creation model has proven to be powerful both for our clients and for our growth.
In the essence of the model lies true partnership. Clients come with ideas and technical vision, and we take part in refining them.
We’re not order-takers. Many companies have already taken that position, and the market is shrinking for that type of service.
We take part in strategic decisions and mutually define directions, suggest technologies and elevate the general AI maturity in the organization.
This model is challenging because it pushes you to the limit. You need domain expertise and top-tier engineering knowledge, but also business acumen and product development skills. Let’s not forget initiative, strategy and creativity involved.
That’s what makes it also lucrative. It’s all-encompassing.
What are your key principles in delivering value to clients?
Transparency is our core value. We don’t aim to win every project and are honest about our limitations. Our decade-long experience allows us to select impactful projects.
While managing expectations can be challenging because of the hype around AI, we are actively addressing this through transparency, but also experience, knowledge and case studies.
Our clients actually want someone to keep the guardrails and not let them fall into the hype.
What can we expect from SmartCat in 2025? What are your main strategic goals, and how do you plan to achieve them?
We aim to increase our impact by providing specialized AI and data expertise and co-creating products.
We want to position ourselves for having specialized, vertical knowledge and the development of complete solutions. We are building a stronger product and consulting mindset within the company to facilitate this.
Do you have a message for your clients and partners?
Expect an innovative partner committed to transparency and delivering the best solutions for your business needs. Our goal is to create value by first defining it together and then meeting those expectations. We are also prioritizing market education to better manage expectations.
Keep an eye on our activities and join us at our events. We like to be held accountable for reaching the goals we set for ourselves.
