3 weeks ago
July 16, 2021
Scaling a Translation Startup with TAIA CEO Marko Hozjan
A serial entrepreneur with eight company launches under his belt, Marko discusses what brought him into the world of translation from a background that spans everything from economics and leadership, to language teaching and…sailing. In his view, translation offers the opportunity to build a company on tech and scale a business.
He talks about automation and machine translation, building Catapult — a solution for companies that want to translate in-house — and the need to remain focused and disciplined when developing translation products.
First up, Florian and Esther discuss the language industry news of the week — which saw three M&A and Funding announcements.
The duo talk about Rome-based Translated’s USD 25m investment from Ardian, which propelled the LSP to a nine-figure valuation; Argos Multilingual’s acquisition of Chillistore, a linguistic quality assurance provider based in Ireland; and Big Language Solutions’ acquisition of UK-based Dora Wirth Languages (DWL), a life sciences specialist founded back in the 1960s.
Stepping away from corporate transactions, Esther talks about media localization provider ZOO Digital’s 2021 annual report, which detailed a shift in their service mix toward Media Services (media packaging, content preparation, etc.), while the Localization division was flat in the 12 months to March 2021 on the back of a temporary, pandemic-linked decline in subtitling. Cloud-based dubbing services still grew substantially to USD 9m, and ZOO said March–June was their best ever quarter.
Florian also muses about the minefield of intellectual property rights and licensing when it comes to voices, after Vice covered the case of a voice actor suing social media giant TikTok, which allegedly acquired and replicated via AI the actor’s voice without her knowledge.
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Florian: What was your story before you went into the translation business? Tell us a bit more about your personal background.
Marko: I am generally a serial entrepreneur. I am an economist passionate about leadership so I have started six companies already. I have had two small successful exits. Two of the companies that I founded are still going. One is the language school, and one is TAIA. I failed with one company and the other I left, so for my age (38), I have a track record of six. Otherwise, I do a lot of other things. I am a bookworm, I read at least 50 books per year. I am also a passionate sailor so one of my businesses was I made the biggest nautical school in the region. I taught about 500 people how to sail and I got a skipper license. I published four books and so on. These days TAIA occupies most of my professional time.
Florian: That is quite the background. Why translation though? How does translation fit in here?
Marko: I have been searching for a tech business for some time and I have been searching for a scalable business because I could not scale most of my businesses that I had before. Now with TAIA, I finally think that I am in the scalable universe, but the idea itself was born very organically. Matija, the Co-founder, and I own a language school, and out of the language school came the first questions about translation. Out of that, we started translating as a traditional LSP, but then quickly realized that everything is really outdated. This was about four years ago when we were checking out the market and seeing that most LSPs are outdated and using old tech.
Esther: What is TAIA’s elevator pitch? Coming from that background in education, what do you bring to TAIA as well?
Marko: TAIA is now becoming a tech company, which means that we have solutions that are hand-in-hand with technology and it is becoming a one-stop-shop for all your translation needs, but more and more we are going into the SaaS market, and we are grasping at MT as a tool. Either way, the majority of our business today is still human translations, of course, post-editing. When it comes to languages, I have to be honest, we did not bring much from the language school. For example, we had 150 teachers at the time, but what we realized is that none of the teachers, not even one, could be a translator. When it comes to teaching a language, it is a totally different sphere than translating. Teachers usually have a language on a lower level than a translator so we could not really harvest anything from that, except a general business experience and a reference.
Esther: Tell us a bit about the current team size. What is the role and involvement of your Co-founder Matija?
Marko: I would say that we are a perfect match, like yin and yang. We are very different personally, but we get along. He is much stronger on the technical side while I am stronger on the business side so he is a perfect partner for me to have. Otherwise, we have 30 employees now all around Europe, mostly in Slovenia still but also in Cyprus, Spain and the UK. That is why I am eager to go to the UK so that we can replicate the positive culture that we have set up here. I am very proud of the team that we have now. I have managed many teams from a few up to a hundred and this is the best and most motivated team I have ever worked with. When I mention the culture, we really went onto the edge with autonomy, mastering, and inclusivity, which means that I push myself to have less power each day so that people can be autonomous and learn. With inclusivity, for example, we just started an ESOP program where we will include everyone in the company and all this culture that we have created helps them with motivation.
Florian: What is the team set up? You have a fair amount of project managers, customer success, but probably no internal linguists. Is that correct?
Marko: We have four internal linguists out of 30 and three of them are translating full-time, but this is from the beginning so we are not planning to expand on the linguist part, but mostly on research and marketing. The departments are marketing, sales, PM, vendor management, HR, admin, and development. Due to the way we are going, we will mostly grow in the development part, but other parts as well for specific needs.
Florian: How do you guys run the TMS part that you are developing proprietarily? Which parts do you build? Which parts do you buy? What can you share about that?
Marko: For now, the whole philosophy of the company is that we insource things, which means that we insource our team. We very rarely outsource development or marketing and in the end, it turns out it is very similar to the product itself. Of course, we use some other software as well, but we try to build everything on our own. TAIA is becoming its own TMS and in some cases, even an ERP system. When people see the details of TAIA they say ‘you can sell this to other LSPs’ but this is not our goal. We want to build this for ourselves and for customers in the end.
Florian: When we talk about machine translation, are you connecting to some third party big tech engines? Are you building some of them from scratch from these open source frameworks? How does that work?
Marko: Both, so we are combining several different neural networks into one. We are trying to make a smart algorithm behind all of this to pick the best out of all of them and at the same time we are building our own neural network. This is why sometimes even our investors ask us, why do you need the LSP part when the SaaS part shows much more promise? The LSP part is a complimentary business because we translate so many words each day that we can use them to teach the machine. It is a great complimentary to have when you are selling, for example, machine translation, if you have an LSP in the background.
Esther: We covered TAIA recently when you raised the series A funding. What can you tell us about raising capital during the pandemic?
Marko: In this case, a lot of people said we were lucky, but I guess it was just our time, regardless of the pandemic. Even today, there is a lot of money on the market so raising capital, even with the pandemic, is not a problem in general. We got the initial pre-seed investment of 200k before, and then we started searching for the second one but what mostly turned the tides for our investment was automation in general. When we explained how big the market is and how fast the market changes, it was really interesting for them and when we showed what we can do with the solutions, they were immediately on board. Fil Rouge Capital was not in the translation market before, but now it is actually very interesting for them. For us, it was quite easy and even the impact on the transition industry was not so negative in comparison to some other industries like tourism. I think the drop at the time was about 15%, but overall we had a rise because we are a growing company.
Esther: Why did you decide to partner with Fil Rouge Capital in particular?
Marko: Mostly it was chemistry and trust. I have experience now with VCs, they are not as tech-savvy as you would wish they would be. In my opinion, they do not understand in detail what technologies their startups use, which means at the end what they decide on mostly is the team, the market, and the business model that has not got any holes. We proved to Fil Rouge Capital that we can do it and we have been proving that ever since with our results and just keeping that trust. We saw immediately that they are not a VC where we will need to fill reports every month or have additional board meetings. It is most important for us that we can do what we have intended to.
Florian: Tell us a bit more about that journey from your MVP to your current offering. What will the next six to nine months bring?
Marko: TAIA now is mostly useful for document translation so we claim that we are the best partner. Within TAIA, our customers will be able to order any kind of translation service so TAIA’s becoming a one-stop-shop for all your translation needs. We are working a lot on other technical integrations, like software integrations, website translations, and so on but as I mentioned before the most interesting thing that shows the most growth are the SaaS products. About a month and a half ago we launched our first test product. It is called Catapult, so you drag and drop the document, about 70 file types are supported, you come into the CAR tool, everything is pre-translated, you post-edit, you click finish and you download the document with the formatting being 99% the same. We are quite successfully selling this to different service categories. Mostly it is legal so law firms that translate by themselves or some marketing teams in manufacturing companies, or for example, e-commerce as well because of SEO optimization. What we see there is a big rise in the need of companies to translate by themselves and we see that our very light tool, which you can learn to use in 10 minutes, is a great thing in comparison to a very big and complex tool that is meant for translators.
Florian: That is such a hyper-competitive market. You are saying that your USP right now is the simplicity of it. How do you sell that? Is it mostly coming in through search or are you proactively going out and selling this to a confined set of target clients?
Marko: Since the product is new, we are doing outreach for now. We are getting some inbound leads, of course, but we are doing it by ourselves through marketing and through direct sales. When we talk to a company, there is a division or two that will use our LSP services, but there are other divisions that will use Catapult. It is very different, not only between service categories, not only between companies but even within a company. There can be a legal department within the company that would use Catapult and there could be a marketing department that would need LSP services with certified translations with TEP and so on. It is very different.
A lot of people are bilingual and there are a lot of cases where they want to translate by themselves. These cases are mostly related to safety or the documents or sometimes to specific terminology and they are afraid to outsource that because they have to double-check it anyway when they get it back. It is easier for them if they translate by themselves or if they give it to their colleagues in other countries. We found out that there are a bunch of reasons where people need this, and we are addressing this very niche market.
Esther: On a management level, how are you balancing the tech development piece versus the services business?
Marko: With a good team communication is key here. A lot of input comes from sales and PM and goes directly to Dev so we have many different meetings. We need to make a lot of decisions about where to go because if we were to listen to our customers, we get about five different wishes each day about what they would want. We need to keep our focus and we are just trying to see what the trend is and going that way. For now, TAIA is becoming a one-stop-shop where automation is the middle name. Our goal is 95% automation of the PM process and about 90% automation of the VM process. We could automate part of the marketing and sales, of course not all of it, but the automation of these processes buys us additional time so our services can be faster and it lowers our costs. We are looking for new developers every day. They are very difficult to get, but our current team does the job for now.
Florian: For a more traditional company it is probably super hard to hire. You at least have that edge of being a VC funded startup, but how do you recruit domestically and globally?
Marko: We try to be open as much as possible so we do it globally, but as it happens, most of our employees are European for now. There are two positive sides when it comes to employing, for developers is that we have our own product. For example, developers in general, do not like to work for agencies where they need to work on a different product each month and so on. The other is the culture that we have built so we are putting a lot of emphasis on that. As a very young and small company, we only had 15 people. We employed our first head of HR and we are putting a lot of emphasis on the team feeling good, learning each day, and growing the ambition of the team. Whoever joins us immediately gets the feeling that we live our values.
Florian: Customers come in and every day there are 10 new feature requests, but you want to keep the products simple and focused. I would imagine it is very tough to say no, but also that in the long-term it is probably better for the product. Is this your vision or is it just an early version and then long-term you want to make it more complex?
Marko: We want to keep it simple, but we have to restrain ourselves because, in every software, you want to have millions of different functions and our buyers are pushing us towards that, but we know that we have to keep it simple. Of course, new features will be added, but the main simplicity needs to stay as is. Otherwise, we will start competing with the biggest ones, for example, TMS’s, CAT tools or similar software and we do not want to go into that space.
Esther: Thinking about the two to three-year outlook for this industry, presumably, you and your investors have a fairly optimistic outlook, but where do you see things heading?
Marko: Exciting times are here because there is this big wave of automation that is killing a lot of businesses that are not willing to change, but at the same time, creating a lot of surfers. We consider ourselves as one of the surfers of this wave, who take advantage of the change. This is one of the reasons why we are in this industry and why our investors invested in us. When I talk about this wave, this is the wave of automation in combination with machine translation, when it comes to the translation industry. I see a lot of practical solutions, either way. MT is getting better and better. It surprises us each month. We will see what the new tech like GPT-3 or what Google can bring to the table. New tech, new neural networks, or even something else can surprise us each moment. Otherwise, practical solutions.
Localization will become a part of our life. Everything that we see and do will be localized. I remember Windows 95, no one imagined that Windows could be in so many different languages. Now, this is a standard and this will become a standard for not only software, but for everything we do in life such as IOT, Speech to Text, Text to Speech. Everything will combine together and machine translation will take over. This does not sound so good so a lot of discussions have been raised. What about the translators? Of course, their jobs will change, but I believe in a positive way. The industry, in general, will keep on rising and just the possibility to access any kind of content within your language is a great thing for everyone. That is how I see the industry.