With this funding, SoundHound is now valued at $1 billion
With the rise of chatbots and smart speakers, more and more brands want to incorporate voice-enabled AI into the products. The problem is that they aren't going to take the years of research and development it would take to build their own, and they also don't necessarily want to incorporate another company's brand, like Alexa or Siri, into their devices.
The way around that is with SoundHound, which offers an independent AI platform, called Houndify, which allows developers and businesses to deploy a conversational interface while maintaining control of their brand and users.
On Thursday, the company that it has raised $100 million in new funding from a group of strategic investors.
Participants in the round include Tencent Holdings Limited, Daimler AG, Hyundai Motor Company, Midea Group, and Orange S.A. They joined SoundHound's existing list of strategic investors including Samsung, NVIDIA, KT Corporation, HTC, Naver, LINE, Nomura, Sompo, and Recruit.
With this round, SoundHound is now valued at $1 billion, making it the newest entrant into the unicorn club.
Founded over 12 years old, SoundHound has been developing its voice-enabled AI technology for over a decade, which puts it in a good position to take advantage of recent technology trends, Keyvan Mohajer, co-founder and CEO of SoundHound, told VatorNews.
Mohajer said he first became interested in the space all way back when he was at Stanford for grad school nearly two decades ago, before anyone even believed it would even happen.
"The original vision of the company was always enabling voice AI for the connected world. We envisioned that you’d wake up in the morning and talk to everything around you, from the alarm clock to the refrigerator to your coffee machine to your phone and smart TV and cars and so on. It’s not just voice command, it’s about having full conversational interaction, so you talk to these devices and they talk back to you and you talk to them again, so it’s voice and AI together," he said.
"We are fortunate that we had this vision that long ago because it positioned us in that direction and we spent the last 12 years building the core technologies to enable voice AI for other companies. It takes about 10 years to build the core technologies, to offer this kind of platform. That’s why our company is very unique, because of the big investment of time that’s required you won’t see a lot of companies that will offer something like this. So even though the space is very hot and attractive, you won’t see a ton of startups enter the market because it’s just not very practical to create a startup and then spend 10 years building out the technology. We are a very unique company in that sense and the funding reflects that."
SoundHound's three products
SoundHound is now made up of three products, one of them B2B and the other two B2C.
The B2B product is Houndify, an AI platform that any company can use to add voice enabled artificial intelligence to their product. The product was launched it in 2016 and already has 60,000 customers, who are powering more than 1,000 different products.
"These customers are not end users, they are other companies and developers that are using it. There are 11 car makers that are actively using the platform, including Hyundai Motors, which announced it a few months ago," said Mohajer.
At CES in January, SoundHound announced several integrations of its Houndify platform into various products. That includes the partnership with Hyundai, along with integrations with HUMAX, BUNN, Mayfield Robotics, AvatarMind Robots, Modiface, PhotoSpring and Onkyo. There are more than 65,000 registered developers on the platform.
Houndify is also what powers SoundHound's two B2C apps, the first of which is called SoundHound. Launched back in 2009, the app s a voice-enabled music search. It not only can identify a song that's playing but allows the user to sing or hum the song, and it can identify it that way as well.
"That’s a very exclusive, unique feature. Even today, SoundHoud is the only company that deliver that kind of users experience," explained Mohajer.
Its other app, called Hound, is a voice assistant and it does things like allow users to ask for general information on things like the weather, restaurants, navigation and nutrition. The app came out of beta only a year ago.
While SoundHound doesn't disclose the specific numbers on the two apps, Mohajer did say that its products reach more than 300 million downloads globally and that both apps are in the millions of active users per day.
Competing with Google and Amazon
The most obvious competition for Houndify would be from other companies that provide a conversational AI platform, like Google and Amazon, but Mohajer makes it clear that there are some very big differences between the services that they offer and what SoundHound provides.
First, the company allows brands to create their own voice-enabled systems without needing to take on the brand name of another company.
"Houndify's value proposition is the ability for our partners to own and maintain their own brand. If you work very hard to create a brand like Mercedes Benz, do you really want your users to called your Mercedes Benz 'Alexa'? The answer is no, and what you’re seeing is companies that have a successful product don’t want to adopt Alexa and Google and Siri for product; they want to have their own user, to have their brand, they want to maintain control and they want to innovate and differentiate," he said.
"Companies like Google and Amazon can never deliver that kind of promise, and that’s why these companies come to us because we allow them to maintain their own user and brand."
The other thing that Houndify offers, he said, is "much better technology."
"We have some key differentiators. Speech to meaning is one. While others do speech to text and then text to meaning, we can go from speech to meaning in one shot and that gives us much better speed and accuracy, just like how the brain works. Then we have what we call 'deep meaning understanding,' and that allows us to understand more complex conversations," Mohajer explained.
For example, if someone were to ask Alexa to show them Chinese restaurants, it would do that by detecting keywords like Chinese and restaurants. That means that if you then ask, 'Show me restaurants excluding Chinese,' they would still show Chinese restaurants because those two keywords would still be detected.
"With Houndify, you could say, 'I’m looking for an Asian restaurant that is not Chinese or Japanese and is open after 9 pm on Wednesdays and has WiFi access and that has more than four stars,' and we can understand all the criteria and give you exactly what you want, including exclusions and double exclusions and negation. You can follow up and refine your criteria. You can say, 'Sort by rating then by price and remove Korean and Vietnamese and only show the ones that are good for kids and have a patio,' and we follow up, we understand all the criteria and give you exactly what you want," said Mohajer.
"That’s a very key message that is really helping the adoption of our platform. People are attracted to an independent provider of voice AI that can help them maintain their user and brand, but also are really impressed by the very unique technology advantages that we worked on for 12 years to prepare."
The new funding that SoundHound has raised will be used for two things. First is to accelerate global expansion, including new offices in China, France and Germany, in addition to furthering momentum in the US, Japan, and South Korea.
"We have very mature platform covering the U.S. with very good accuracy and speed and domain coverage. We have unique differentiators in the core technology that makes us smarter than the few competitors that we have with very big names. We summarize our mission as 'Houndify everything,' and everything is everywhere so we would like to be a very global company and preparing our platform in other languages and countries is a path that requires resources," said Mohajer.
"The core technology is very much language independent, so we could deliver the same quality in other languages, but we do need to spend the resources to get there, so the funding will help us accelerate that effort."
Secondly, SoundHound will use the new funding to drive adoption and distribution of Houndify across verticals including automotive, Internet of Things, consumer products, and enterprise apps and services. That means entering into partnerships with its new strategic investors.
"If you notice, 100 percent of the investors in this round are strategic investors, so they’re not traditional VCs. They are companies that have successful products and a lot of users and voice AI is important to all of them. This funding that comes from them is creating an alliance between our company and those companies and it helps us to have a deeper business relationship with them, improve the trust and partnership, and accelerates adoption of our platform by these companies and others in those regions," said Mohajer.
"If you look at the list of strategic investors that we have, they reach more than 2 billion users every year, so this was a strategy on our part. Instead of using the traditional route of raising investments, we went after strategic companies that would do the investment, create an alliance and we’d work with them to reach their massive user base."
For example, Tencent is the biggest company in China, with almost a billion users; Midea, another company in China, makes more than 300 million appliances every year; and Orange Telecom has more than 250 million users in Europe.
The only company that has formally announced a partnership with SoundHound is Hyundai, but Mohajer made it clear that there are plans to partner with the rest of the companies as well.
"A partnership is that something needs to be announced by both parties, so you could assume that when a company like ones we have listed, who have invested in SoundHound, have interest in collaborating and partnering and innovating. The one that made the announcement already is Hyundai to create voice AI in their cars. The rest, it’s safe to assume that there a lot going on but we just have to wait for those partnerships to be announced," he said.
"We already see strong adoption of our platform even without the strategic investments but with the investments we think it’s going to further accelerate adoption, and even if we capture a small percentage of these two billion users globally, it would deliver a very big number in terms of end users. So we are very excited about this milestone and we think we have everything we need to execute."
The future of voice AI and SoundHound
The ultimate vision for SoundHound is a world where everything is connected, and where every device benefits from voice AI.
“Everybody talks about IoT but they don’t talk about the interface with connected devices. If you look at the projections, there will more than 20 billion IoT devices per year within three years and that’s about 10 times more than mobile phones. There will be an order of magnitude more IoT devices and most of these devices would have voice AI as their preferred, or only, way to communicate. So voice AI is not going to replace touch and keyboard, it’s going to co-exist but we will see more and more opportunities where both AI is the preferred way to communicate with these devices. When you have a small thermostat, or a small sensor, or a device doesn’t have a mouse of a touchscreen or a keyboard, people would prefer voice AI as the preferred way to communicate with these devices," said Mohajer.
"We envision a world where there are 10 times more devices that are voice enabled and our prediction is that the manufacturer of these devices prefer to have their own assistant, and their own brands, and the ability to differentiate and innovate instead of integrating with Alexa or Google. Houndify delivers that promise."
(Image source: soundhound.com)