Monday, February 22, 2010
Language Weaver's Mark Tapling On Growth, Exits
Story by Benjamin F. Kuo
Its been awhile since we last caught up with Los Angeles-based Language Weaver (www.languageweaver.com), a venture-backed firm which develops language translation software, so we sat down the other day with Mark Tapling, the President and CEO of the firm, to hear more about where the company is nowadays--plus its strategy for growth and an exit. Language Weaver is backed by Palisades Ventures, the Tech Coast Angels, and The Athenaeum Fund.
What's new with Language Weaver?
Mark Tapling: Since you last did an in depth interview with us in 2007, the company has doubled in size. We've got approximately 400 deployments around the world, launched a successful emerging commercial business, and captured some really great brand names. We also continue to be a leader in intelligence and defense worldwide. The fastest growing part of our business it he commercial part. We've also introduced over 16 new language combinations since we last spoke, supporting now up to 35 differnt languages in 75 different combinations. We've also had great advances in engaging the trust of the commercial community, with patented advances like automatic scoring of our algorithms, which predicts the quality of translations based on a one-through-five scale.
Originally, you had a lot of government customers, and were just starting out with a few commercial customers. What's the mix now?
Mark Tapling: The government business continues to be a strong contributor to our business. Our continuing relationship with USC is precious in that regard. We've been able to harvest lots of scientific advances from Kevin Knight (editor's note: founder and Chief Scientist, and a researcher at USC's Information Sciences Institute), which we've been able to include in our business. So that continues to be a core area of focus for us, and has grown significantly over the last few years, an in which we've continued to invest. What we've discovered on the commercial business side, is that there is a massive need for translation of digital content on the Internet. But, because of the large volume of digital content out there, most of it simply is not being considered for translation, because there's just not enough money, people, or time. That said, we made an entry into the commercial market in the digital content space. In order for that to be credible, we found that there was a lack of trust--most people do not think translation software works well enough to be commercially viable. Our strategy was twofold--one, was to go out and get brand name customers, and to translate their content to such a high quality, with no human oversight, that they'd be willing to post that on the internet. We've been able to achieve that. We're not able to publicize their names, but if you use the link on our home page, it takes you to their live translations on their sites. The second thing we needed to do, was to engage our users trust. In order to do that, they needed to know when a translation was good or bad. So, we established a patented algorithm--a trust score--which automatically ranks a translation from 1 to 5, five being great, one being poor, so that a customer can determine the trust of that. We calibrated that to our customers own, native speakers, who scored them, so that everyone has trust in the score. That has taken the risk out of the conversation, because we only ask customers to pay when the translations are good.
You mention your government business continues to expand?
Mark Tapling: It's been massive. It tracks the evolution of the digital content population on the Internet. The business of intelligence is about effectively intervening and saving lives as quickly as possible, as opposed to trying to dig Osama Bin Laden out of a cave for $90 billion dollars. Twenty years ago, this was looking for a piece of paper, in a manila envelope, somewhere in a Virginia park. The problem them was, we've got ten documents, how do we get through those. That evolved to that guy has a PC, and has emailed a file. Now, it's a PC, with hundreds of megabytes on his hard drive, who is on email, on 25 chat sites, and you've got only 24 hours to figure out what he's up to before you have to let him go. It's gone from document acquisition, to document exploitation. There's so much to review in the intelligence and defense area, the single most valuable thing one can deliver is elimination. We help to eliminate the 98 percent of stuff that doesn't matter, so our customers can focus on things that do matter. I was talking with a very senior person reporting into the White House and told him, it's like looking for a needle in a needle stack. He said, no, Mark it's like looking for a needle in a junkyard, and there are junkyards in every world in every country. As the effective nature of our output become more widely known, the demand grows, and there are now customers across Europe and new agencies in the U.S. who have recognized this.
Let's switch over to talking about the company's funding--what's the status there?
Mark Tapling: As a result of our financial success, over the life of the company we've earned more money that we've raised. It's been in an interest bearing account. We've also gotten a fair amount of consistent interest from new investors, who'd like to put money into the firm. Along with our board, we'd consider that opportunistically, but we feel like we've been really, really fortunate in a down market that we have lots of choices. We've been pretty happy.
You've been around for awhile, and have some investors, have you ever thought about exit strategy--and have you gotten any pressure from them about exits?
Mark Tapling: Fortunately, we have very supportive investors, who have taken a long term view. Since our financials have been so attractive, there's no stress on them, and it's been an easy investment to support. Since we have not spent the money, it would be pretty easy to give it back and roll right along as is, or with new money. We're not under any pressure, and because our organic growth is good, they've been happy about that. We'd think opportunistically about M&A, but we don't have a strategy of waking up and looking for targets. I'd say, however, over time, that Language Weaver has elements to be a good public company. We've got a massive market, with multiple dimensions, wide competitive separation, and a global footprint, which investors might find attractive. We're not in the market, but I think if we picked a target that would be it.
Where do you see growth coming from in the future?
Mark Tapling: We see consistent growth in the government. We're now introducing new capabilities into the government, giving them more control over deployment, and wider distribution of systems. That's quite exciting. Plus, we've got some government customer moving into subscription-based environments. Candidly, in the commercial market, there's some indigestion, rather than starvation, but we see that we've got some unlimited sources of growth. We think the application use cases there to help deliver complete solution sets. In today's world, the focus is on customer care. If you ship your product in 20 languages, it's pretty important to be able to answer customer requests in 20 languages. Businesses are seeing the we have can have a direct effect on the costs of operating support centers. We also see digital content usage in Internet businesses, looking to communicate with customers, specifically in travel. We see opportunities for travel producers to help manage the travel experience, who want to communicate with customers in different languages. So, we're seeing strong growth in commercial and government markets, and will be rolling out new products, as well.