Smartling’s USD 160m Mega-Round, Avantpage CEO on Serving LEP Populations

SlatorPod - Avantpage CEO Luis Miguel on Serving LEP Populations

Luis Miguel, CEO of Avantpage Translations, joins SlatorPod to talk about the LSP’s mission over the past 25 years of helping immigrants and other limited-English-proficient (LEP) populations reach their American dream.

Luis walks us through his journey in the language industry, from immigrating from Mexico to founding and leading a California-based LSP. He introduces Avantpage’s leadership team and highlights the importance of developing talent within the company as it grows.

The CEO discusses the key differences between servicing government clients versus the private sector. He reflects on the dynamics of Language Access regulation as Biden’s new administration and the pandemic affected the regulated industry in the past year.

Luis shares his approach behind building a proprietary technology stack, explains his attitude toward prioritizing organic growth over M&A, and shares his outlook for the future.

First up, Florian and Esther discuss the language industry news of the week — and the launch of the Slator Transcreation and Multilingual Content Origination Report. Esther shares highlights from the 60-page report, which delves into the role of language services in advertising and marketing, the use of technology, different pricing models, the competitive landscape, and more.

Florian shares key takeaways from SlatorCon Remote, which featured 13 guest speakers, drew in over 300 attendees, and facilitated around 300 individual networking sessions. Esther covers the latest funding news as language services and technology provider Smartling raised USD 160m in growth investment from Battery Ventures.

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Florian: Tell us a bit more about your background, your route into the language industry. You have been in this industry for quite a long time, but originally you studied Plant Science and Computer Science at university, so how come you ended up in language services?

Luis: Life takes us down very interesting roads and what we need to do is just go with the flow, make the best of it. I started my first translation company back in 1990 with my wife at the time named Transcend here in Davis and Transcend is still around. She is running it and has done a great job with it. She was an interpreter at the time and through her interpreting assignments, we decided it would be a great idea. I have had the entrepreneurial bug for a very, very long time and business is in my DNA. My family immigrated from Lebanon to Mexico about 100 years ago and they have been in the business of business since. My first job was at one of my father’s businesses so, from a very early age, I had that entrepreneurial bug. I also had a very studious, good boy bug of doing well in school. When you are good at that, you think, this is great, I can shine doing this, so I moved all that from high school through college through graduate school and that is how I came to Davis. I came from Mexico to Colorado and then Davis looked like a great agricultural school and I came here back in 1989.

Esther: You have just celebrated 25 years of service with Avantpage, so congratulations on that particular milestone. Take us back to the beginning, tell us what is the origin story of Avantpage and some of the key milestones and challenges that you faced over the last 25 years.

Luis: Avantpage came into existence on Halloween of 1996, so as you mentioned, we have celebrated our 25th anniversary. The way it started is I was working at a company called Sybase. It was very strong at the time. I was working in the database area and I was disappointed. I did not like being a software engineer. I had problems with my joints. I had carpal tunnel syndrome, so I decided to go back to what I love. My wife had Transcend and I decided to leave the software industry and start a new business in this area. The web was starting to take off and there was another trend that I recognized, which is working with double bind languages like Chinese, Japanese, Korean, and right to left languages like Arabic and Farsi. There was not any good software to do desktop publishing, word processing very well with it. Given my technical background, I was able to understand it and do a good job, so the first few services that I started doing were both website localization and desktop publishing of these exotic languages.

Florian: I am curious to know how website localization was in 1997 or 8? I first started playing around with Dreamweaver in maybe 2004, but it was almost consumer-grade already.

Luis: First, because I understood the technical issues, I was able to produce a website page that displayed the different languages correctly. Unicode is the way that almost every computer now represents every single language. At the time there were many different encodings for the different languages and so you needed to make sure that you were working with coding for Vietnamese or Chinese or Korean. At the time Netscape was the biggest one and this was the time of the Netscape versus Microsoft in terms of the browser war, so the technical issues were much more complicated. I mastered those, that was not the problem. The issue was that the market was very difficult to crack. There were not many companies or institutions that had the know-how and the foresight to be translating their websites. We did a few projects in the webspace at that time, but the main area where we started to grow was in the handling of the languages in both translation and desktop publishing. The web started as one of our focuses, but because of the marketplace and the difficulty at that time, we moved away from it gradually and started concentrating more on the translation and the desktop publishing area. 

Florian: Tell us about Avantpage in a nutshell. What is the company in a nutshell now? What are your key services, key client segments, industries?

Luis: At Avantpage, we are mission-driven. Our mission is to eliminate language as a barrier to success for all immigrants so that they can achieve the American dream. Everything that we do, the kind of market that we pursue, the kind of people that we recruit, the growth strategy that we follow comes from that mission. We are based in Northern California, our headquarter is in Davis. We have a couple of locations, one is in Warsaw, Poland and a company in Mexico City hosts a good number of our project managers, desktop publishers, and proofreaders. There are employees for us over there and we are virtual here in the United States, so we have a workforce that is spread out. Our main markets are both healthcare and state and local government in the United States. Now, why those markets? We believe as part of our mission that those are areas that provide very important services to the people that do not speak English very well in the United States. Most of them tend to be recent immigrants and me being an immigrant originally from Mexico, I came to the United States around 1980, I identified very much with the difficulties of immigrants. I saw that language as a barrier continues to be a very important determinant of success here. When my kids were growing up, they had a lot of friends at school that were similar to them, they had Mexican parents and yet their parents did not speak English very well. Their academic outcomes were dramatically different, so I had an understanding and empathy for their situation. That is what drives who we are, what we do, where we are. The people that we recruit, the way we train them, the way we communicate internally, the market that we follow is all centered around making sure that the mission is fulfilled and the division is realized.

Esther: What do you think are some of the key differences between servicing government or state clients versus the private sector?

Luis: There are pretty big differences. The procurement process is very different as you might imagine. Many times in the government the people that are providing the services are at the mercy of the people that are contracting in the procurement area. Many times the government side has very rigid rules as to how they are going to be selecting a provider and your performance has not much impact on that because the contractors run for say two years and we have to go back to bid and depending on the way they classify the contract, it can be one that is completely based on cost, so that is one important difference. Another important difference tends to be also how savvy and how far in the localization maturity matrix the people that are procuring your services are. Government tends to have a lot more rotation and you never know the people that normally are in charge of translation or interpreting. These services are not always very savvy about what they are doing. In the private sector, with the sophisticated healthcare plans that we work with, the people in charge tend to be much savvier. They understand they need to invest. They know about translation memories. They know about glossaries, all of these things that are on a basic level for us. For somebody who is not privy to this industry, they have never done it, they do not understand how those things work and how important they are.

Florian: When you work for the government and also for the big healthcare providers, the US language access regulation/framework plays a big role, and from what we are seeing here, it is sometimes hard to crack the US regulatory environment. Would you agree that there is a renewed push for language access and are you seeing an increase in demand since the new administration has been in power?

Luis: That is a very interesting question. To be honest, the impact on us because of our market has not been that huge. You are correct to point something out, we work in the regulated industry. Both the health care sector and the government sector that we serve have regulations that obligate them to reach out to people that do not speak English well. But the laws that are affecting us have been at the federal level. They come from the 60s, 70s, 80s, 90s. There have been no new laws in that area. There have been regulations that are modified frequently, but the laws have not changed. A great amount of the work that we do comes from state regulations and state laws. Those have not been affected by the change of government because the states that we tend to work in primarily are governed by Democrats on the West Coast of the United States, so they have not been affected by the change of administrations in Washington. The regulations have continued to get more stringent, so for us, that definitely has been a growth area. The pandemic has opened up a great amount of work opportunities for companies that are serving immigrants because of the  Covid-19 emergency. There has been a whole lot of reaching out to people in electronic media, which is where a lot of the interpreting and translation services that we provide are being consumed.

Florian: Do you do any onsite interpreting and how has that been impacted long-term? If you do it, there was probably a full stop, but then it came back quite quickly. Can you tell us a bit more about that? 

Luis: Interpreting is new for us. We entered the market just a couple of years ago, so as the pandemic struck we were entering the market. We decided at that time that we do not want to go into the in-person interpreting because that collapsed. We are ramping up very strongly in the virtual interpreting area, both over the phone and video, and we have seen quite a bit of increase. A couple of years ago we were almost at zero so that is a new market for us that we are exploring and we are enjoying it. It complements the services that we provide to our clients so it is a very natural extension for us.

Florian: What is the natural part? Is it you talking to the same decision-makers, is it the scheduling component of it, is it a general understanding of the problem? Or is it all of the above or something else?

Luis: Many things and you mentioned some of the issues. It is the same organizations that are serving the same people that we have been selling through translation so a health plan, for example, has to provide services for a population that speaks Chinese and Spanish. For them, they have to provide both in written communications as well as when they go and there are interactions with the organization per se. They may not be the exact same people that are in charge of the translation and interpreting, but it is very much the same population. There are very similar regulations that apply to both of them and the same language mix that comes and many times you see that in the procurement, the contracts are mixed for both services.

Esther: Let us talk a little bit about the leadership team at Avantpage and your approach as well to retaining and developing talent. At the moment, we are hearing stories about how challenging it can be to hire top talent in the US. What is your stance on leadership and hiring and retaining employees? 

Luis: That goes to a lot of what I was saying before that it comes from our mission. The people share that mission and the vision that the company has. In our case, we are a smallish company and we have big ambitions and we have big expectations, but we have not been very successful recruiting people that have come with a lot of experience from other translation companies. We have had a lot of success developing our own people. I have four people in my leadership team besides me. I have Jorge Villafuerte, the Director of Technology, Vera Hooijdonk who is the Director of Operations, Joanna Oseman who is in charge of the Marketing and Business Development area, and Nicole Spyt-James, who is in charge of People Operations and Finance. They all started from a project manager role or an IT role in the case of Jorge, and over the years they have grown in the company. 

About four years ago I understood that for our company to grow and develop and for me not to be doing everything, I need to have people that I trust that are better than me in their area. Even though I have worked in every single area of the company over the years, which I think is a big advantage, having people that know who we are, understand that the best interest of the company is critical. We have a great group that we get together day in and day out. I may not know details about what is going on in some areas because I defer to them. We use the philosophy of Pat Lencioni. He is a great organizational psychology guy. I was inspired by him to set up this leadership team and to cultivate them and luckily they decided to stick around. I hope they decide to stick around for a little bit longer and grow together with us. 

Esther: It seems that you have built out quite an extensive proprietary technology stack, so you have got AvantData, AvantFlow, and AvantMemory that you have presumably developed in-house. What is it that is influencing this buy versus build decision and why bring some of the development in-house?

Luis: For a small company like us, I think that is very critical. One of the most important things that I do as a CEO is to look around and see what is out there. For example, right now there is a lot of activity on crypto, how is that affecting us? Does it? I go to conferences like SlaterCon and I listen to podcasts and so on. I look at what is happening in a certain area and then I decide is this of interest to the company or not? If it is not then I watch it if it is an interesting thing to see. But if it is of interest then I decide is this something that we can develop? Does it make sense for us to develop it, or is it better for us to buy or lease something that is already out there? For example, with machine translation, is it something that impacts us? Of course, it is. It is impacting every single company that is out there, but given our market, it is not critical because both the government and the healthcare industry in the United States, a number of years ago when machine translation was very poor, set some rules that say you cannot use machine translation, so that is still in effect. Things have not changed very much there, so even though we are watching it, we decided it is not a critical technology for us right now. On the other hand, translation memory is a very critical technology for us. We see what is available out there and we see there are great systems that we can use and they have great interfaces so does it make sense for us to develop our own machine memory? We decided no, let us lease one of the existing ones or play with several of them, so what we decided to do is to create a layer. 

We saw that data is becoming hugely important so the first thing that we decided to do is to create AvantData, a huge repository of information. We had all of these different systems and we decided to capture this data, we will know what to do with it later. Once we started looking at all that data that was coming from the different systems in a more unified sense, we said, let us start developing some new capabilities that put together these systems that we are using and the data that we have. AvantData is the core, but we now have something called AvantPortal. AvantPortal puts together all of the different systems that we have in a single login so that our clients are able to log into the portal and then automatically see all of their interpreting assignments or all of their translation assignments and they are able to communicate with a project manager. We provide a unified platform for our clients and at the same time, we make it very open so that as technologies change on the outside we can connect to the different kinds of websites, CRMs, accounting software out there, and so on. We decided to provide some additional capabilities and make it easy and comprehensive for our clients to be able to do the work that they need to do day in and day out.

Esther: In terms of scaling the business and future plans for growth, what is your approach or attitude to M&A or are you prioritizing organic growth at this phase? I Recruit Talent. Find Jobs

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Luis: There is a huge amount of M&A activity going on right now. Larger companies are absorbing smaller companies in the industry, outside capital coming in, and companies that want to just buy, others that just want to absorb. Because of our mission, I have not wanted to relinquish control of the company because I believe that the commitment to eliminate language as a barrier for immigrants would be lost if we become part of a bigger corporate entity. On the other hand, another thing that I believe to be important is, I am from Mexico. The decision that we go and work with this other company in Mexico had also to do with the fact that I wanted to develop this industry and this talent base in Mexico, where I come from because I have a commitment to doing some social good for the people there. In the 40 years that I have been here in the United States, I have seen a huge improvement in the education level and the achievement level of a lot of the people there and it takes a while for a new area to take over. Argentina is a big Latin American hub for translation but I believe there is also a huge amount of talent and potential in Mexico, so that is why I would be reluctant to go the M&A route for us.

Another thing is, I have been in the business for 25 years, the fastest way to get there, in my opinion, is slowly. Having built up the technology over the last five years, right now we are at the point where we have this great interface for our clients. We are starting to develop some very exciting new technologies in the interpreting area and slowly but surely, we are building it more and more and more. We will get to the point where we can then decide once we are stronger if there is a place for us to become part of a bigger organization or start buying other companies. For now, the best thing for Avantpage is to continue to grow organically. Money has never been a big motivator for me. My experience and philosophy is if you do great work, money will come. I have been very fortunate that this has happened and so when people come and want to buy me out and offer me money, I tell them, I am sorry, at this point that is not what we are after. We are after something that is greater than that and that is our mission. 

Florian: How bullish or optimistic do you feel about the industry in the next three to five years in the framework of the past 25 years? At what point of excitement are you at?

Luis: I am an optimist. I think that we are starting out in this industry. There is a huge way to go. The changes that we have seen in technology and the marketplace favor us. The meat and potatoes of our company continues to be what project managers do day in and day out. I do not see that changing for the foreseeable future because I see it as being a service industry. The way we procure translation and interpretation for the clients has been changing. It used to be that there were no translation memories. It was only pure translators and interpreters. Now we have some mediation of the systems. In some cases, you are going to have great quality with just machine translation, but ultimately our client base that we are working with has a need for some services. I see the source of where the language comes from as one thing that has changed a lot. We have to have people that are selling. We need to have a marketing department. We need to have an accounting department. That has been pretty constant. I do not think that in essence is going to change. 

What I see changing is in the area of technology, which is where we are growing, and I believe we are being responsive. We may not be the pioneers. We are not the first ones to do what we are doing, but if we do it well, and we do it consistently there is a market for it so I see it growing steadily. I am in my 60s, I am in no hurry to retire. I love this industry. I think Renato Beninatto said that once you start working here, people just love it and stay here. It is a small world. Even though there are thousands of thousands of companies all over the world, in a sense, we are quite small. That is the vibrancy of the industry that keeps us engaged. There are always new things. I have been in the industry for 25 plus years, but there is something new that comes along today, next month, next year, and I love that.