Fennelly recalls his path to joining Lionbridge in mid-2017 after leadership roles at Thomson Reuters and Hireright — and why he stressed the theme of simplification and relentless customer focus in his first years as Lionbridge CEO. He discusses how the 6,000-person company adapted quickly to a remote-first world.
The CEO shares his views on the dynamics of competing with rival Super Agencies, as well as emerging tech-enabled, VC-funded players. He also reflects on the M&A space and shares Lionbridge’s motivation for selling its data annotation business, Lionbridge AI, to (again) become a core language and tech-services player in one of the language industry’s most successful spin-offs.
Fennelly talks about the various considerations when it comes to building, buying, licensing, and owning localization and translation management workflows and machine translation engines. He concludes with Lionbridge’s plans for 2022 in regards to M&A and strengthening growth verticals. His observation: despite a challenging geopolitical environment, enterprise customers are not pulling back from global markets.
First up, Florian and Esther discuss the language industry news of the week, which saw AI video-generation provider Synthesia raise USD 50m in series B funding from Kleiner Perkins.
Esther talks about Manchester-based DA Languages, whose core is public-sector interpreting, switching ownership from previous investor, Foresight Group, to IK Partners. In M&A news, UK-based Take1 acquired transcription and captioning company Verb8tm to strengthen its position in the US.
Florian: You are celebrating your 25th anniversary, so tell us more about how you are celebrating this milestone.
John: It has been remarkable. Most companies do not last a year, let alone two years, let alone 25 years. I read that the average life of an S&P 500 company is 17 years. Lots of change has happened in the last 25 years. Much of the story of Lionbridge is the story of global technology. We have grown up in the technology industry. You can chart Lionbridge over 25 years and what big tech has done in 25 years. Some of the big household names were not even in existence 25 years ago. Some were fledgling and just beginning, but it was the beginning of a profound movement from a technology standpoint and we have been very lucky to have been a participant. A fairly vital part of the supply chain is they have grown on a global basis and along the way, we picked up a lot of other customers, we have gotten into a lot of other verticals and we have done a lot, so an action-packed 25 years. There are various phases of companies. We have survived. What is important for us, and we have tried to focus on this year, is celebrating what has happened. We are very proud of the fact that we have made it to 25 years. Recognizing what got us through 25 years is not necessarily going to get us to the next 25 years, so what do we have to do for companies to stay relevant? What do we have to do to thrive and grow, have a wonderful place for our folks to work, deliver for customers? What do we need to do differently? How do we have to think about technology and how do we plan for this year, next year, the following year? That will give us the foundation to grow into the future for another 25 years.
Florian: You had key leadership roles before with Thomson Reuters and HireRight, tell us a bit more about that. How did you get into this industry?
John: I would have never thought that I would have gotten into some of the things that I did. But somebody said to me once, years and years and years ago, that timing was everything. It has taken me a very long time to appreciate what that meant. Try to put yourself in a position where when opportunities come you have the ability to take advantage of them. At Thomson Reuters, I ran a billion-dollar division that was quite successful and grew quite rapidly when I was lucky enough to be there and then I took a big leap of faith. I was offered an opportunity to become a CEO of a company in the human capital management space and that was a big sea change for me and very different. I have been in financial services most of my life and took a risk at that point in my life to leave a very nice company, fairly good stable job and it turned out to be the best decision I ever made. It says a lot about how to manage your career and where you have to take some chances and opportunities. It gave me the opportunity to go out and do something different with a different customer base and build out a lot of things that I have worked on for years. I am focusing on customers and technology and that worked out quite well and then I was looking for something else to do and the Lionbridge opportunity came my way and it was attractive on multiple fronts. A complicated company, we were a public company that had gone private. Big global footprint, lots of countries, lots of complexity. Some of my friends said, why did you ever get involved with that, all you do is work? I like difficult stuff, but it has been a fascinating four and a half years. I love the language industry. I love the people more than anything else in the language industry and I have been very fortunate to have a lot of things come my way, particularly in the last four and a half years. I was fortunate enough to go out and meet so many people, internally and with customers, that once we moved to a remote world, it was easier. It would have been a little bit harder if that had happened just as I had taken over the company, but that is another story for another day.
Esther: Can you give us a sense of the size, the breadth of the company? Just in terms of staff, offices, revenue, that sort of thing?
John: We have close to 6,000 people in the company. We do well over 500 million dollars in revenue, we would get significantly more than that before with the rest of our AI business. We operate in 26/27 countries, 51/52 offices so fairly wide reach globally, and the majority of our employees are outside of the United States.
Florian: Let us look back a little bit at the milestones. Even though you were not there for the whole 25 years, can you give us three or four key milestones of the company?
John: There are multiple milestones, but there were probably some acquisitions that were foundational and predated me, like the Bowne acquisition for Lionbridge. Lionbridge went public and Rory had started the company. He did a phenomenal job growing it and had made some smart acquisitions. The story of Lionbridge was a story of acquisitions, as you would know, CLS. Bowne was bigger than Lionbridge at the time and Lionbridge acquired Bowne and gave Lionbridge a big global footprint and even today we still have lots of just wonderful employees that came from Bowne and Berlitz that were purchased by Bowne. Obviously a big name in the language industry. There were a couple of other acquisitions that were quite transformational and foundational to driving Lionbridge to what it became. Also, things along the way in the industry. TMs were a big change in the industry. The financial crisis in 2008 was a big challenge for the industry. Big seismic events, acquisitions, changes in technology, economic events. Those are probably three or four that were fairly significant in the 25-year history of Lionbridge.
Florian: What have been some of the key learnings for you over the past four years going into this business that serves every other business under the sun, including a lot of the big names in tech?
John: Yeah, there are multiple. There is a complexity to the language business that remains inherent, confounding in some respects. It is an industry in transition and right for transition. I still think of that exactly the same way. You have content, you enhance that content for customers, you bring value, and then you deliver it back. The way I look at it is the customer transfers their complexity and formats to you, you figure out how to normalize that content, you get it to a data enhancer or a beautiful community of translators, they enrich it, you send it back to the customer. Sounds quite simple. I spent two hours early this morning for the umpteenth meeting I have had trying to break down various parts of the workflow. How do we do that? To your question, I do not underestimate it because things are complex and wide. There is an inherent complexity of this business everybody is grappling with right now. Somebody is going to crack the code. I think it is us and it is going to be a big sea change in the business.
Esther: How is your experience of managing nearly 6,000 employees? How has the remote first working world impacted the day-to-day at Lionbridge?
John: We are all in the same boat. If you go back two years to January of 2020, we saw this thing coming out of China. We have got a big outpost in China, we have got a lot of people, so something is happening. Is it going to get bigger? Then we have got to figure out a way to get everybody in this company remote. It was fairly daunting for us with all the locales that we are in and thinking, can we get enough equipment to people? Can we get people home? Do they have broadband? Can they support customers? What is going to happen to customers? We were all pleasantly surprised that knowledge workers adapted pretty well to remote work. We have been very consistent since day one and we said, we trust everybody. I know lots of companies have tried to monitor productivity. They are very worried about productivity. There are a lot of people that monitor what people do on networks during this period of time and I said, I trust our employees to do the right thing. We know people will do their work. We also are cognizant that people have lives and life is complicated and they have families and elderly relatives and kids and pets and lots of stuff that need to be looked after. We trusted our employees. We have had a very good cultural change at Lionbridge in the last four and a half years which to me is unequivocally the hardest thing that you can do in a company to shape and change a culture. It is easy to change policies and procedures. Anybody can do that, but to have people adhere to them, believe in them, believe in the vision, believe where you are going, is quite difficult.
A global workforce is a challenge unto itself, and it is a complicated world that we live in today. The job of the CEO is to try to provide direction and guidance and goals that everybody can get their head wrapped around. You have to communicate a lot, you have to communicate effectively and you have to communicate in a way that people understand what you are talking about and it is visceral to them. I spend quite a bit of time, on a weekly basis, communicating with the company on a very broad range of subjects, certain things that I am personally interested in at times, where they dovetail with what the company is interested in. I have been very consistent. We set out three or four priorities from day one with the company. The first was simplification, to simplify a very complex organization. That probably holds true at most companies that have become quite complex over the years and when I was here originally everybody said, who is this guy, who is simplification? All he talks about is simplification. Simplification to me is how do we make it easier for our customers to do business with us? A lot of companies fail on this one. How do you make it much easier for your people to do business with customers? The other two priorities were people and customers. I have always been a believer that if you take care of your people and they believe in what you are doing, then all kinds of benefits will manifest themselves from that. You will have people that will be very interested in taking care of your customers. They will believe in what you are doing. Fortunately, I can look back now four and a half years later and think, we have been pretty successful on all of those measures.
Florian: How did that attempt at simplification transfer into the organization? You have the geographies, the matrix, the verticals, can you speak to that a little bit?
John: Everybody wants control. The world is going to end if everybody does not report to everybody and you try to strike the happy medium. What I came into was a company that was very internalized and was very focused on internal operations. I have always come at it with what does the customer think? What is the customer’s view? What is important to the customer? We were an inside-out company. We were worried about the inside of our operations versus how that fit into customers. I said, no, we have got to become an outside-in organization. Focus on customer demands. Why do customers want things? How are we building solutions for customers? I do not care that we are building solutions that make us feel better, does it work better for customers or does it work for me? That is going to be changed. Now, we are organized in a way to try to scale and try to rationalize and be smart about things which is an ongoing effort on our side. You are always tweaking organizations. You are always trying to optimize. You are always trying to empower. There is always that perfect tension between scale, accountability, control that everybody has. I do not think a day goes by that I am not in a vigorous debate with somebody who wants to change the way we are or does not believe that we are going to get scale this way. If you are into complex organizations, run a company with 50 offices in 27 countries and 6,000 employees, you will have some fun.
Esther: What can you share about your views on the dynamics of competing with other rival leading super agencies and at the same time these tech-enabled, emerging, or new VC-funded players in the space?
John: There is a lot of money that continues to come into the space. VCs, private equity money, so people think there is something happening in the space, obviously. As do I. I always respect our competition. We have got a lot of great competitors that are out there. I am not worried about the competition and there is no hubris in that whatsoever. I am super respectful of competition, but I know what big super agencies are about, what they have to offer, and it is what it is. We compete very effectively with our focus on customer technology, et cetera. I think we are winning market share, we bring great value to our customers of scale and breadth and customer intimacy and those are things that we are quite focused on. I am always more worried about what I do not know. Now, we have seen things that look like they are emerging in the space, but they get to a point, they do not seem to be able to scale more. Somebody will, and so that is what I worry about. Again, no disrespect to any of the main competitors that we have got in the space because they are all very good companies. As a plug for Lionbridge, I would say one thing that is always a litmus test for me is we have a lot of people from within the industry that now want to join Lionbridge and that tells me that we are doing the right thing in a very competitive labor market. I take great pride in that. It is a fascinating time in the language space right now. Technology is changing the language space and we can see what the end game looks like. We are just racing to get there.
Florian: Would you see the end game as the AI Agency? Do you think that is where it is all going? Fundamentally, at the core, there is a piece of AI and then companies lay the agency model on top of it?
John: I do not know if I look at it that way. I think about content. I come from the content world and even in the human management space, everything I have been involved in is technology and content. That is the commonality. We have got big audacious goals. We want to democratize localization, translation, and say, give us all of your content and you can localize anything you want. Now, easier said than done. There are huge amounts of content out there. But we want to drive customer intimacy and our vision is breaking barriers and building bridges and I do not think that is ever been more apropos. We want to help our customers connect with their communities, whether it is social media, whether it is SEO, whether it is ROI, whatever it might be. How do we help them push more content in the right language and in the right inflection into the hands of people that need that content? That is the end game. How do we do that at a cost level that they now can push way more content into their ecosphere than they could before because of various system constraints, content management system constraints, complexity constraints, cost constraints, whatever it might be?
The way the industry is set up today is still very manual and you cannot get to that level of scale in the current operating model. Something has got to give, and it will. If you think about a lot of things that are in the LSP space today, sometimes it is helpful to come from the outside. As in any business, you learn a lot of things. I still look around and think, I can name ten. This is still too manual. If I looked at it and I came into the space, I would never believe this is manual. I would think this would be automating this particular problem, so somebody is going to get it. Somebody is going to figure it out. It is AI-driven. It is knowing more about content, it is routing content. There are a variety of things to go into it but that is the future. I think some companies were early and any time you find new things, there are people that figured it out a long time ago. They were just early. They did not have the funding. They could not stay long enough to see the vision come true. That is where we are at right now and there are lots of things that are happening. What is coming that is new? What are some of the funding rounds? Where is it going? The next three or four years in this space will be absolutely fascinating.
Florian: Lionbridge was successful with the spin-off of your AI business and you became a core language service and tech player. What can you share about that spinoff?
John: We have been very fortunate in the last four and a half years. We have a board and an ownership group that is highly invested in success. We have a very aligned view of the future. We got into this business, we took Lionbridge private. The idea was that we thought that there was a tremendous amount of runway in the language space, and nothing has dissuaded that view in the last four and a half years. Along the way, we unearthed and allowed our crowd-based business to flourish and I spent quite a bit of personal time on that. We think more about that business as a crowd-based business and we were able to scale that. We had somebody who came to us and from a financial standpoint, it made a lot of sense. TELUS was the buyer. It has worked out extremely well for them and what you always want in life is a win-win situation, which does not always happen. In this case, it was. What it has allowed us to do is get back to our core and focus on where we think we can create a lot of value for our customers, for our shareholders, for our employees and accelerate what we think we can do over the next couple of years and that is the primary rationale behind it. We culminated the transaction at the very end of last year. When we think about where we are here in December of 2021, we have grown. Our localization business has flourished this year. Our strategy has continued to work. We are focused on key growth verticals, our automation initiatives, our technology initiatives, so everything that we planned is in flight. As we look back 11 months, I think things have gone as planned, which does not always happen in life. We are pretty happy about that. As we focus on the future, it is very much on the language side of the business, not on the crowd business for us. There were some language components in the crowd business, but it was much more of a crowd-based business than what you would think of as traditional LSP.
Esther: As far as I am aware, Lionbridge has got a wide range of TMS’ and owns pretty much all of that end-to-end piece. Are there any plans for developing that and potentially licensing the technology externally in a SaaS model or some other way?
John: We have not licensed technology as some of our competitors have around translation management systems and that was a decision that was made predating me. I thought long and hard about that and we have looked at partnering with a lot of smaller technology companies that have come up. There are quite a few as you know and there has been quite a bit of M&A activity in that space and evaluations on some of those assets have been extremely high, so kudos to some of the people that have a vision and develop those applications. Our current view is to continue to bolster our technology. We think we have a very strong tech stack and we have done a few partnering deals in certain verticals where it has made sense for us. It is a means to an end for us and for managing projects effectively and we will continue to look at it but our current thinking is that we like where we are. We think our technology is what is needed to get us to the next level. We have recently made some very large investments in people in our space and in the technology space. We will continue to try to allocate more capital to our technology teams and build out our fairly ambitious roadmap. As of now, we will continue to develop and where we think it makes sense strategically, either acquire or license pieces for us.
Florian: What are your thoughts on machine translation? Do you want to own the full stack and develop from scratch these open-source frameworks? Or are there certain components that you think lend themselves more to licensing?
John: We have never been in the game of trying to develop our own MT engines and there is a lot of good stuff, as you guys know, that is out there, and so our view is always to try and optimize what is best for our customers and try to pick the engines for language sets that make the most sense for customers. That will continue to be the way we operate and we want to provide as much choice as possible to customers and provide them the highest level of return for them per language. That has been our strategy in the past. That will continue to be our strategy, building lots of pieces in what we call smart content and smart MT around that, but really giving customers choices. I do not envision us building out proprietary MT engines, but continuing to work with a series of, whether open source or partner fed MT engines that we then will license for customers. We have never seen that we would gain a competitive advantage by doing something differently. There are some people, some really good ideas. You get to a point of diminishing return though and that you spend a lot of money that a lot of time you can just get with off-the-shelf stuff.
Florian: What are some of the most exciting initiatives and projects you have for Lionbridge in 2022? Then your vision for the industry in three, five years, whatever timeframe you want to pick.
John: We made a lot of acquisitions up until we got here and now we have been focused more on organic growth than anything else. We have been active in the M&A front and we will see what happens there. That is not our strategy going into 2022 but continues if we see things that make sense. Along big strategic verticals, we will continue to focus on technology, life sciences, and games. We are very bullish on Europe, Asia. What is interesting in life in this very polarized world that we live in on multiple fronts, I have seen no pullback by big companies chasing global markets. I have not seen anything. We have one customer that I have seen a budget pull back and say, no, we are not going to try and grow. We are going to pull back. We are going to retrench. We are going to focus on the domestic market. Despite all of the noise that is out there on the political front and the media front, big companies will continue to grow and the localization industry is pretty well-positioned to be a participant in that. What we have been doing on our product side, on our technology side, we have our year-end, beginning of the year kickoffs coming up. We have more going on right now than we have ever had, on what we are trying to do with smart content with AI. We have ambitious plans and the question for this is, can we execute everything that we have envisioned and can we get it all done in 22, 23? We are very excited about the upcoming year, we are thrilled about what we have been able to do this year, and hopefully, that will continue as we move into the new year.