9 months ago
January 29, 2021
Mark Shriner on Asia as a Translation and Localization Market
Special guest Mark Shriner, adaQuest’s Director of Business Development in North America & Japan, joins the pod. Mark is also the Founder & Host of the Secure Talk Podcast, which discusses the latest threats, tips and trends related to cybersecurity.
Mark shares insights on his 20+ years of experience leading Asian offices for some of the world’s largest LSPs and discusses his experience of selling language services across the vast, diverse continent.
Mark also offers tips for motivating LSP sales teams and talks about localization through the lens of enterprise technology. Mark ends the pod on the Western side of the world with his outlook on the US localization market and the rise of SaaS.
First up, Esther and Florian discuss Iyuno Media Group’s upcoming plans to acquire dominant rival SDI Media. The two also talk about fellow media localization provider ZOO Digital’s recent trading update, as the UK-listed company forecast revenues of at least USD 38m for the full-year to March 2021.
From media localization to another thriving niche in the language industry. Esther talks about game localization for the hugely popular game Call of Duty.
Florian focuses on two press releases this week: Swiss-based LSP Supertext launched a chat-based instant translation service. (Supertext Managing Partner Fabian Dieziger teased the announcement when he joined SlatorPod three weeks ago). And MT provider Tilde explained how the EU Council Presidency Translator helped dramatically increase the volume of words translated by the Council.
Stream Slator webinars, workshops, and conferences on the Slator Video-on-Demand channel.
Florian: Mark has worked in several roles in the language industry. Now you are running North America sales for adaQuest, but tell us a bit more about your personal and professional background. What brought you into the language industry and what are you doing now?
Mark: I had about 10 years of executive-level experience all across Asia in various roles. In 2008 CLS Communication, now CLS Communication Lionbridge, was recruiting for a CEO Asia Pacific. I read the job description and they were looking for somebody who had a lot of business development experience in Asia and somebody who had some turnaround experience. I went through that job description and every single thing on here aligned with some of the experiences and the skills that I had. I reached out to CLS and went through this long torturous, highly analytical, involved recruitment process where they at one point sent me to Princeton, New Jersey for an onsite one-on-one with a PhD in behavioral psychology, just to prod me and put me through all these different exercises. Eventually, I convinced them that I was okay.
I ended up working with CLS, and that was interesting because I was an outsider from the loc industry, but I had the Asian experience and a lot of business experience. Coming in from the outside gave me a unique perspective. After four years at CLS, I moved to Japan, I did some consulting work with Gengo. I also ran APAC for thebigword for almost two years. Did a consulting project with Welocalize and also worked with Wordbee and helped them to grow their North American sales. I have worked on the LSP side, I have worked on the cloud kind of side with what Gengo was doing, and then also on the technology side. It is a unique thing, and now I am with adaQuest, which has deep roots in the localization industry. Hiram Machado, the CEO used to work for Bowne, worked for Lionbridge, used to have a couple of hundred loc PMs onsite at Microsoft, but now has shifted and pivoted into becoming a cybersecurity partner for Microsoft. That is what I am doing now.
Florian: In this industry, generally, there are a lot of industry lifers. You have jumped in and out of the language industry and went into enterprise, software, sales, et cetera. Give us a little bit of perspective from the outside, on this industry, what are some of the differences? Is it as niche as we sometimes think? Is it up to speed on many things? What is your take on that?
Mark: Yes, I agree with you, there are a lot of lifers. I was talking with Renato one time specifically about that and I commented that the loc industry was like the mafia and Hotel California, all combined. You can check out, but you can never leave. It is like you are in for life. It is interesting because I find in some ways the loc industry is very entrepreneurial in the meaning or the sense that you have a lot of mom-and-pop startups, family-run businesses that grow and develop.
Then I find at a certain level some of the entrepreneurial-ism and the innovation might slow down. I sense that some of the larger players in the industry lose sight of building a better mousetrap and finding a better way to service our clients and just chase growth for the sake of growth. How do they grow? Typically it is through acquisition and the idea is, we will buy this company and we will bolt it on and we will buy this company and bolt it on. It sometimes seems that they are bolting on organizations just for the sake of making the whole ship bigger, but they are not making the end service to the customer any better. That is ultimately what you have to be doing, either making your employee experience better or your customer experience better.
Now, there are exceptions to that. There are some companies out there that are doing amazing things with organic growth, with innovation. I think TransPerfect has an amazing record of growing organically. They have done it time and time again for so many years that it becomes part of their DNA so that when they grow, they know the drill, how to expand. That is another challenge with this industry is when you go get a new customer, you have got to get the project management team in place, you have to get the linguists in place, you have to get whatever technology or the tool in place. It is challenging to scale, but if you are continually growing organically, you have built that into your DNA and you can do that. But if you are just out acquiring companies, unless you are really good at bolting these on, it can be a challenge to scale.
The other thing is, it is not just the scale, it is the challenges. Where do you get the synergy? For example, we are a US-based LSP and we go buy a technology company. Does that make sense for us? Maybe it does, maybe it does not. We go buy an LSP in Spain, are we going to share linguists? How are we going to make, instead of one plus one equal two, one plus one equal three, where do we get the synergy? Many times I have seen the acquisitions fall short of not even one plus one equals two, but maybe one plus one equals 1.5 and that is disappointing. The 1.5 is from three different angles, looking at the financial bottom line, some of the companies that are out there acquiring, you can look at their financial reports and you can see how profitable they are. You can see whether or not they are getting a lift from this. Their stock price might be getting a lift, but are their revenues, are their gross margins getting a lift, is their employee retention getting a lift. Oftentimes it is not.
I love the industry, some of the nicest people I have ever met are in this industry, some of the best people I have ever worked with are in this industry. I think that it is ripe for innovation and that if you are in this business, you should be asking yourself, what problem can we solve? Now translating words from one language to another, that is not solving a problem. Everybody is doing that. Adding on a translation memory or TMS, or even the whole workflow system, that is just table stakes these days. You need to be looking at bigger problems, and when I say bigger problems, maybe that is security. For example, at CLS, one of our unique value propositions was the fact that we had a very secure platform, but we could also place our linguists onsite 24/7 anywhere in Asia, actually, anywhere in the world. We also had some very unique domain expertise in the investment banking, equity research areas, et cetera. Those are unique value propositions that are solving a problem.
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Florian: You were talking about the difficulties to scale when you are looking at some of these super fast-growing tech companies. Is there a structural difference when you look at these companies versus an organically or bolt-on LSP or is it comparable or do these fast-growing SaaS businesses look completely different versus some of these LSP businesses?
Mark: My take on that would be when any service industry is going to be more challenging to scale, because more customers, more projects means more staff. Many of the projects, much of the work, even though you can automate it still requires people. Whereas a lot of the SaaS-based companies out there have invested in their product and just need to make sure they have got enough server space to accommodate more subscribers and greater volume. That is the inherent difference, and it is probably a simplification of your question. I do think it is challenging.
One of the things that I feel that some of the companies in this industry could do a better job of is since it is a service industry the key people are people, so project managers, linguists. Oftentimes the linguist and the project managers are almost treated as a commodity, and I have seen time and time again, where you damage a customer relationship if they lose their favorite linguist or especially their favorite project manager. You might think that the salesperson is important. No, once the work starts, it is the project manager and they are the ones that are holding the customer hand, solving all their problems. That job is tough, they are in the middle between everybody, they have got the salesperson, the customer, the linguists all coming at them.
A way to scale is to really develop a core solid team of project managers and linguists, and linguists can help you in many other ways, aside from just translation. They can mentor other linguists, they can help you with recruiting, with vetting, et cetera. I see that as one of the forgotten keys to this industry, and again, that is just from my perspective with the companies that I have worked at. Not all of them have neglected that and some of them have done better jobs than others, but I think it is really important.
Esther: It would be good to find out a bit more about some of the unique challenges of Asia and also recognizing that it is not one homogeneous market. When we talk about Asia, how diverse is it? What are some of the differences that you are aware of when it comes to the various markets and countries in Asia?
Mark: Yes, you just touched on one of the key challenges, that there is a perception that it is all just one market. How is that a challenge? When you are dealing with the mothership and the mothership could be in Europe or the US and they have this perception where they have been told that Asia is like this, or even at the country level, we have heard that in Japan it is like this or it is very challenging, but they do not have on the ground experience that can lead to a lot of miscommunications and misunderstandings.
I was fortunate at CLS that we had a senior leadership team and very specifically our CEO, Doris Albisser, she would come out to Asia three or four times a year and spend anywhere from a week to two weeks and we would do nothing, but go on four to five customer visits a day and then team meetings in the evening. She would get the perspective of the customers, the prospects, and the team in all of our locations across Asia. That is hugely important. If you have people who are trying to manage Asia from an arm’s distance on the other side of the planet and in between you and them is their misperception or conception of what Asia means and what it means to do business out there, that can be a challenge.
Now, if we wanted to turn it around and say, what are some of the challenges inside of Asia? I would say it depends on the market. For example, in China right now retaining people is incredibly tough because the cost of living is going up so high and everybody is just trying to get ahead. There is not a sense of loyalty to companies as maybe there are in some other markets. On the business side in China, for example, it is very price-sensitive, price competitive, and if you are an international LSP going into China, you better have a recruitment plan in place for linguists that is going to allow you to recruit linguists that are price competitive to the competition or you better have one hell of a unique value proposition. At CLS we did not have to cut our prices in China, but we were selling into a very niche market and we were doing some very niche services. We had linguists working on-site and they were very focused and specialized in terms of their domain. If you are out there translating for heavy equipment manufacturers in China, you are going to have a tough road to hoe.
Now in Japan, for example, the challenge could be that it takes some time to get the business relationships going. People want to get to know you, the trust is incredibly important, they want to understand everything about your process, and of course, there are exceptions to that. Most of the time it takes time, and when you go in there, you have to just try to get, what I call, a minimum viable project. Just give us something so that we can prove to you that we can do a good job and then give us something a little bit more, a little bit more, and then after a while the floodgates open. I have had some tremendous successes in Japan, they take time but the great thing about Japan is that once you have a customer and you take care of them, they are with you. They are not going to jump ship because somebody else is going to offer them a cent or two cents lower per word rate. They do not care about that. They care that they trust you and you are going to get the job done.
To sum up, one of the biggest challenges is looking at it from a non-Asian point of view and knowing what is real and what is not real because you will have people in different markets telling you in Singapore it is like this and you are coming at it from a multinational perspective, an international perspective. You say these are some global standards and we work with these international companies in many different markets, and we think that this model might work here. Then you go to Hong Kong and get the same Hong Kong argument, in Hong Kong we do not do it that way, and in Japan, we do not do it that way. You have to be able to figure out what is real and what is not? What is going to work and when do we impose our global standards? When do we become a little bit flexible? Sometimes it is very clear you are not going to bend to the local standards. There are certain situations that borderline on customer rebates in borderline unethical manners and you are like we have nothing to do with that, that is not acceptable, even though that might be part of the local practice. As a non-Asian company or even if you are an Asian company doing business in other markets, you have got to be able to sort out what is real and what is not.
Esther: If you are a North American or a European mothership type LSP and you want to gain a real foothold in Asia, is it enough to have one office in Hong Kong or one office in Singapore to try and break into the region? Do you think you also need to have these kinds of sales offices and more in different countries?
Mark: I think it depends on your business. If you already have existing multinational customers and they need service in Asia you might try a couple of countries at once. My preferred choice in most situations is to pick one market, embed yourself there and then start to use that as a base of operations to start expanding. If you go into Singapore, Hong Kong, Shanghai at once you are dealing with a lot of uncertainty, you are spread thin, and you are almost at the mercy of a lot of different factors. It can be very expensive really quickly so if you can build some core expertise, say in Singapore, or Hong Kong, maybe you are in financial printing or financial translation. You start in Hong Kong, maybe the next logical step might be Shanghai if that is your niche. I would focus on one market.
If I were going to pick one market in all of Asia I would pick Japan. Why? Because it is the second or third largest translation market in the world. It is about $2.2 billion. The largest translation company in Japan would be Honyaku Center, they are about a hundred million dollars, so they have about four to five per cent market share. Highly fragmented, not very well automated, relatively unsophisticated, high margins and right for disruption. That was one of the reasons that I moved to Japan, as I still believe that there is a huge opportunity there.
Florian: If you tried to buy a company as opposed to trying to greenfield and doing it on your own because you are going to spend a lot of time and money on it. Once you have it, it is great to be in the actual country, even in the city. Do not try and greenfield in multiple locations, for an LSP is tough, so maybe look at the acquisitions, but do not just stay in one particular market. I have always struggled with the mental shift, like when you operate in China and then you go for some client visits to Japan, it was just the etiquette, then the whole thing was just so challenging.
Mark: It is very much different. I think a good point of acquisition is a very successful strategy. I have seen thebigword, that is how they got their start in Asia with an acquisition. Welocalize, a couple of different acquisitions, Japan and China, way back in the day. I know that Straker right now has purchased a couple small companies. Lionbridge has a very large operation in Yokohama. I do not know if that was an acquisition, but I am assuming, and so I think that is a good point right there.
You talked about the differences in business and you mentioned the business development person or the meeting, the dynamics in China versus Japan. It is fun sometimes to see the different cultures collide. We had a meeting at the Shanghai office. Doris, our CEO was there and we had the Asia representative for a large German company. It was our first time for him to visit our office, and we had one of our business development people from the Shanghai office. Now in Japan, you never answer a phone call when you are in a meeting. I am guessing based upon the response of our German customer, that you do not do that in Germany or Switzerland, either. Our BDM’s phone rang and he picked it up, but then he talked and then he put it down and it rang again. Then all eyes went to him and there were laser beams from our customer looking at him like what are you doing? Then it happened a third time, and that time I took him by the arm and I said, hey, why do not take this outside. That clash, that is a big example, but you see it at all different levels all the time, and that is what, in some ways, is enjoyable. It was not fun at all at the time.
Florian: Generally sales and BD in the language industry, what works, what is your take? You have managed a lot of sales teams outside and inside of the language industry, what do you think are some of the key things that you need to take care of?
Mark: It is funny because somebody just asked me the other day what would you do if you had a highly experienced loc BDM who has been in the industry for many years but was just continually underperforming. I said unless they are highly coachable probably say goodbye to them. That is one of the things you see in the industry, are people who are lifers and I would almost say it like a loc family vibe to the industry and you see BDMs move from one company to another, to another, and do a couple of years here, a couple of years here. Some of them do great and some of them just continually go about.
Whereas, America is cutthroat. If you do not hit your quota, you might be out. You could have been the star for the last three years, you do not hit your quota, there is going to be blood on the sales floor. I see that our industry, it can be forgiving and then in terms of advice or observations, I think sales is complicated. You could talk about proper targeting and building trust and how to run a meeting and everything like that, but I think a foundation for this industry is you have to have a very strong USP. If you cannot articulate that to yourself, you are not going to feel comfortable about going out, because then you are just out selling words.
You have to have a very strong USP, a unique selling point or unique value proposition that defines exactly what you can do and how you can help your potential customers in a unique manner that everybody else cannot do. If you just go in there and say we have professional linguists and we have got a two-step quality process, they will be like, everybody else has that too. If you can go in and say we have got some super unique technology that allows us to use freelancers, but does not allow them to download documents onto their computers or thumb drives so they can do the translation but they cannot download the documents. Now you are solving a security problem, or we can place people onsite or we have a partitioned virtual data room, where you just throw everybody into an office and lock them down until the job is done, that kind of stuff.
Another strong USP for me is, can you do SEO optimized translation? I will tell you a quick story about how that helped our team close a deal in Japan. First meeting with the customer, I think it was about $120,000/130,000. This American private equity company had purchased a chain of hotels, about 110 properties in Japan and their primary market was Northeast Asia. They wanted to go into Korean, Japanese, simplified Chinese and traditional Chinese for Taiwan. I ended up getting an introduction and getting a meeting. Fortunately, the company I was working with had just acquired a company that specialized in SEO content. They were merging the two and so this is one of the cases where one plus one of an acquisition equals more than two, it equals three because now you can offer SEO optimized translation with real SEO experts.
The CEO of that company that we acquired was visiting Tokyo right at the time I got the meeting and so we went up there and it was the best meeting I have ever had in Japan. I took one of our senior Japanese PMs, and I told him this is an American private equity company, this meeting is going to go very quickly. We are not going to spend a lot of time introducing ourselves. I will just give a quick introduction and then we will start talking about their requirements. We sat down in the meeting and the key person was not there, his two colleagues were there and they said, here is what we need, no introduction, anything like that. We turned the conversation a bit to ask how important it is for you to drive traffic to these websites? It is hugely important and that was the key to opening up the SEO optimized part because that is what it is all about. Then the CEO took over the conversation, the key guy came in and this conversation was like ping pong, back and forth question, answer, question, answer for an hour and a half. We walked out of there with an agreement that if we could do everything we said we could do, they would sign the deal the next week, and we got it.
That is an example of, we are not just selling translation, if we were just selling translation, we would have probably lost the deal to one or two of those other local Japanese translation firms. Since we start talking about, do you want to drive traffic to the site? How do you measure conversions? What is a conversion worth to you? What is the cost of acquisition? The CEO to his credit could speak all of that language. I shut up for an hour and a half, I might have asked a couple of questions, but when you see real subject matter experts go into it, I have done my job, I have got the right people at the table and they are not talking about translation anymore.
What unique value propositions are you seeing out there, something that looks cool? What are companies doing that you are like, wow, that is not just translating words, that is something cool?
Esther: Florian and I ran a sales and marketing webinar not so long ago, and we are talking about some of the different USPs people can choose. The general advice was to focus really. If you want to choose a technology USP, go for a technology USP and pursue it and make sure that everybody is comfortable articulating it. If you want to pick a vertical or a couple of specific niche verticals, do that, but do it well, articulate it well by sales and also in your marketing material. It could be a geography USP as well that you have just got super deep relationships in a particular geography that we have talked about. I do not necessarily think one is best, but it will be a question of evaluating where you are and where you want to get to as well.
As LSPs and the language industry becomes more focused on providing technology and on using technology and operations, do you think there is a shift that needs to happen for salespeople to articulate that to customers? What does that involve for sales operations?
Mark: I agree with what you were saying about the USPs. It does not have to be some amazing technology, it could be subject matter expertise in a particular vertical, certain geographic expertise, et cetera. I think that salespeople, and I do not even like the word salespeople, I prefer business development. Whatever your title is, if you are out there interacting with your customer, whether it is the first meeting, the second or the 50th, you should always be looking to help them solve problems, bring value to the table. If they are using a CMS and they are translating and you are sending over files and they do not know about plugins that will allow them to just pull that content directly in, that is an opportunity, bring value to the table. That is a simplistic version, but I think there are always ways that we can bring value to the table. If you continually do that, you are going to have a much stronger relationship with your customers. They are going to trust you as an advisor, they are going to keep you around. If you are just selling them words and your USP is that you are at 15 cents a word and the competition is at 16, guess what, the next guy in the door is going to be at 14 or 13. You need to have a stronger USP.
Florian, what about the companies that focus, for example, in multimedia, because there is an explosion of web content. You look at Netflix and all the other video streaming providers out there, do you see that as a sweet spot right now in the industry?
Florian: It is a sweet spot, but it is no longer a little universe, it used to be somewhat niche, small but it is growing very quickly. It is still very much contained, and I think it is super hard for an LSP to expand organically into that. That is why, for example, TransPerfect that never buys anything bought dubbing studios and media production studios. You cannot build that expertise from scratch, you could, but it is just going to take you forever. It is very hard, although a great area, but also where the language component is less dominant.
If you look at dubbing, the actual translation is a small part of the whole value, but actually the performance of the voice artists and having the studio, or now having the SaaS software that does the cloud dubbing, et cetera, that is the big chunk of the work and the revenue. It is very hard for salespeople or business developers, it is practically impossible for you to go into a meeting with an investment bank and sell them a pitchbook translation and then turn around and go to Netflix and talk to them about, localizing a kids TV show. It is just not possible because you need to talk the language of your client, you need to be very much educated in the area you are selling it to.
This media business is very much self-contained and I think it is an interesting one, but a challenging one to get into. I think for me, one of the biggest challenges in sales in this industry, is what you mentioned, but also with Esther mentioned, it is those niches, you cannot be an expert in everything. I remember I ramped up on selling the IBD, the investment banking stuff, then the private equity stuff, and then it took me like two years to understand how to sell to a pharmaceutical company. What did I know about phase one/two/three, clinical, linguistic validation? That is a huge challenge to know all of these different verticals, like if you want to sell into, so you have to specialize a little bit.
We talked about Asia, but let us talk a bit about the US. US localization, SaaS, a lot of companies based in the US that do localization, software as a service. What is your take on where this is going and just generally since you are in Seattle, that is like the heart of the tech localization market, is that something you are still keeping a pulse on and anything you can share about that?
Mark: There are a couple of different angles that are interesting. I am curious how they are going to play out. I do not have a horse in the race at this point, but I see two competing models. You have the pure-play technology companies, the Wordbee’s, the Memsource’s, et cetera, out there. Then you have the Smartling’s who are selling services and technology. I think TransPerfect and Lionbridge and SDL all fall into that kind of camp. They can provide both the tools and the technology.
Now, if I were a large multinational company that was translating millions of words every year, and I wanted a highly automated workflow, I am not sure I would want to go and buy technology and then go find a vendor. There is some freedom for doing that though because then I am not locked into one vendor. That said some of those companies that I mentioned that as doing both translation and having their own tools, do allow for multi-vendor access. It is going to be interesting to me because I think there is a pretty big paradigm difference there in which one is the real end play. Right now if we look at the pure technology companies, none of them come even close to the volume or anything of the large LSPs. I would be surprised if there is a pure-play technology company in the loc space that is doing 15 million a year.
Florian: Memsource now with the acquisition, they are probably getting to 15/20, that is the upper end.
Mark: That is nothing and so what does that mean in terms of resources and the ability to expand, and what is their upside? If you take Memsource and their acquisition and you take the next 10 companies combined and throw them all together, and assuming that they do not lose anything and they are able to leverage each other’s technology or just inherit those customers, what are you talking about? 50 million, something like that. I think the real upside as I see it right now, is not on the technology, it is on the blending of technology and services. Now, what happens when everything is being translated by AI? That is a whole other conversation, and I do not know where that is going to go. Right now I just see those two paradigms competing against each other and I feel that the blended approach has the most potential to grow at this point. What do you see?
Florian: I agree, there is basically competition and I think in terms of size, yes, the service providers are much larger, but in terms of the attractiveness of the revenue as it were, you probably want to have more SaaS and tech revenue. That is why these companies are valued at a multiple of revenue. I think that some of the bigger and growing tech companies are increasingly very deeply embedded with the big accounts. That is a real threat to the LSPs, they used to own the account and use the tool. Now the tool increasingly owns the account and the tool uses the service provider. There is quite a big battle of the giants going on there. Let me close on a question. Are you missing the language industry yet?
Mark: Yes. I have worked in a variety of different industries and the one thing I do like about this industry is it does have a bit of a family vibe and family can be good. I do like the industry, the people are super nice. If you think about it, the core of this industry as I mentioned earlier is your project managers and your linguists. A lot of the companies were founded by linguists who said, you know what we can scale this, but these are people who got into the industry because of a love of languages or travel or internationalism or international outlook, and that kind of fits or aligns quite well with my interests as well.