Ripe for disruption. A VC perspective on the translation industry in 2017.

I don’t mean to predict the future and describe what the industry will be like next year, five years, ten years from now… Much more experienced people than I am have unsuccessfully tried it.

However, the future is approaching fast and there a number of signs that clearly indicate that.

The translation industry is stubbornly traditional. New trends and buzz words pop up every now and then, only to be forgotten among the presentations at the usual conferences or the blog posts of self-defined experts (yep, this may well be one of those posts, but I am no expert 😉).

Nothing disruptive seems to happen, but some say we are getting close. I, for one, can’t wait for it to happen.

A few days ago I was in London for the first SlatorCon, a cool event in a rather small room packed with 60 executives and a bunch of really interesting speakers. A rare sight.

It was refreshing to listen to and discuss about so much in just one afternoon: short presentations about technology, finance, procurement and disruption by experts — which, in this case, were people who have actually accomplished something.

The presentation by Marcus Polke (VC at Acton Capital Partners) on the patterns for the next LSP boom caught my attention for the interesting analogy he drew: the translation industry is a lot like the advertising industry in the early Nineties.

I believe he has a point there.

Advertising agencies back then were not particularly keen on investing in technology, were rather incapable of measuring the efficiency of their campaigns and only focused on the existing market. Then came Google.

Google has done so many things right that it would be impossible to go through all of them here. The analogy, however, has its merits especially considering the technological approach of the Mountain View giant, the focus on self-provisioning (AdWords allows advertisers to create and run ad campaigns autonomously) and the analytical tools that give customers full control over the efficacy of their investments (Google Analytics).

By creating such a platform, Google initially didn’t appeal too much to the usual buyers. Instead, it found a new booming market among the start-ups of the time — companies which considered the traditional advertising agencies inadequate and that were instead much better suited for Google. And, of course, companies with lots of money to invest in advertising.

Google invented a new market and then proceeded to replace or acquire the old agencies to also grow into the traditional advertising market.

Most language service providers (LSP) are a lot like the long-gone traditional advertising agencies: they all focus on the same market, targeting the same big clients, invest very little in technology and hardly ever measure the efficacy of the services they provide.

For example, they seem to be oblivious to the fact that people use Google Translate to translate over 140 billion words a day. With today’s standard translation technology and processes, this would require well over 30 million translators. Care to guess how many translators are out there? Somewhere between 300 and 500 thousand.

That’s like a gold mine that we are all just too shy or lazy to go explore.

Polke listed four characteristics that make LSPs interesting for venture capitalists and hence are indicative of great potential. Of course, they all require investment in technology.

  • Breadth: LSPs should create new services to target new markets. Just as the start-ups of the Valley preferred Google over traditional advertising agencies, there’s an untapped demand for language services better suited for the current globalised market.
  • Depth: LSPs should collect data to better understand and anticipate the needs of their clients. Don’t just assume that they all need that elusive perfect translation.
  • Time: Clients look for quick and automated services. They don’t want to wait for a tailored quote, but much rather access a self-provisioning platform.
  • Voice: User interfaces are changing. We used to interact with computers via keyboard and mouse, then we switched to multitouch devices and are now entering the voice-enabled and visual interfaces era. Translation platforms should follow the same path, become invisible and just allow users to get their messages across languages with no friction.

There’s a number of companies that are building their success on top of business models in line with the four characteristics listed above, including two I work for (Translated and MateCat).

It seems that the times are a-changing and the language services market is getting ready to be disrupted. Will the disruptor come from inside or outside the industry? Either way, cracking the language barrier would just be amazing for the future of humanity.

The slides by Marcus Polke and the other presentations from SlatorCon are available at the URL below. It’s definitely worth a read.