High Margins Made Higher with In-House AI Tool
How SimplyWise looked past the hype and found a real use case for artificial intelligence
It is hard to read any news publication without coming across at least one story about artificial intelligence. The technology sector can be cyclical, and we’ve seen many “AI Winters,” but it is clear we’re currently in an “AI Summer.” Much of the discourse is hype, of course; however, there are clear and pragmatic use cases for AI being explored right now. One of Deciens’ portfolio companies, SimplyWise, found one of these cases – and has reaped significant benefits.
The problem:
SimplyWise is a smart filing cabinet that helps users, most of whom are small or medium businesses and business owners, keep track of their spending and financial data for budgeting, accounting, and organization purposes. Most customers do not have an accounting department; it’s on the founder/business owner to keep track of where and how they’re spending money. SimplyWise serves as a partner in this task, keeping things organized and producing data analytics that most business owners don’t have time to generate themselves.
SimplyWise uses Optical Character Recognition (OCR) to process customer documents and translate them into usable filetypes their software can then sort and analyze for customers. By scanning a receipt or invoice into the SimplyWise app, the user’s data is synthesized and organized for them almost immediately.
Since its inception, SimplyWise has been using a third-party OCR to perform this vital business function. However, the vendor it was using did not meet all of the company’s growing needs for both character recognition and analytical tools.
The challenge:
In the summer of 2022, co-founders Sam Abbas and Allie Fleder started assessing whether a different OCR vendor might be able to offer all of the functionality they needed. SimplyWise had been working with the same OCR provider for over two years and was paying about 30-40% of its gross revenue to them – making it the company’s single largest expense.
Abbas and Fleder spent about a year looking for a new OCR provider that met SimplyWise’s specific needs. While many vendors offered some of the functions SimplyWise needed, they were unable to find a single OCR provider whose technology was capable of everything they hoped to accomplish.
The strategy:
After determining there were no existing OCR solutions that met all of their needs on a single platform, the SimplyWise team decided to build their own tool using artificial intelligence. They launched the effort in July 2022, allocating 15-20% of their engineering resources toward the development of the tool – and worked with their existing employees to drive the project forward.
“They were excited about the chance to work on an AI project,” said Fleder. “The engineer who headed up the project did not even specialize in Machine Learning – he was just excited to build something cutting edge.”
Creating and building the tool in-house also allowed them to make tweaks during development, ensuring the end product achieved all of their objectives. The process cost the company about $100,000.
The results:
The new AI tool took SimplyWise’s profit margin from about 60% to more than 90% in the less than 12 months it took the team to get the AI tool up and running.
Because it owns the tool, SimplyWise also owns the data it generates. This was not the case with third-party OCR tools – making it more difficult for the SimplyWise employees to determine how to improve the app.
Now, they can see how often the tool misreads or mischaracterizes a data field. This has allowed SimplyWise to improve the accuracy of their app and reduce manual editing. The company can also benchmark itself versus its competitors for their edit rate and accuracy.
Further, as the tool was designed in-house and built by their employees, they can update it constantly to keep up with customers’ demands.
What’s next:
The introduction of an AI tool has not just been popular inside the company; SimplyWise touts their AI-enabled capabilities in advertising and noticed it has helped the company acquire customers.
SimplyWise has already iterated on the tool. Version 1 took a photo of customer documents and extracted basic information (amount spent, date, etc.). Now, the tool can take a photo of many types of receipts and differentiate between types (e.g., a gas station receipt versus a restaurant receipt) and synthesize that data for the customer – how much they are spending per gallon of gas, how much they spend on gas every month, and so on. This inspired them to develop additional plugins specific to commonly scanned document types and create corresponding reports for users.
“It’s just magic,” said Abbas.
In order to deploy the AI more quickly, SimplyWise used an existing large language model (LLM) to build their tool. However, Abbas and Fleder said it could easily be replaced with something their engineers can build and are currently working toward that.
