Posts for Translation industry

5 things I learned from General Theory of the Translation Company

Experiences, Quote - Joe Campbell - March 16, 2018

Unable to make GALA 2018 in Boston? Feeling the #FOMO for #GalaBoston18?

Let me quote Renato Beninatto and Tucker Johnson recent book:

Virtually any product or service in the world can be replaced by a substitute.

They continue:

Take away your iPhone, and you will spend more time on your computer. Take away Renato’s car, and he’ll substitute it by taking the bus. Take away Tucker’s coffee, and he’ll substitute it with a sharp knife in your throat. All of these changes would suck horribly, but we would survive.

(Except perhaps the despicable person who took away Tucker’s coffee.)

This may be a controversial statement, and Renato may disagree (and potentially given the above, Tucker may violently do so), but in this case, a substitute for GALA attendance, to tide you over to next year, could be their book, The General Theory of the Translation Company. 

For anyone getting started in the industry, this book highlights the oddities that you wouldn’t expect, while giving a solid primer on how translation companies work. For someone who has spent their career in the industry, it gives a coherent structure for understanding experiences and shaping conversations around them. And it probably will make you think about a few things you’ve taken for granted.

5 things I learned from General Theory of the Translation Company

1. On what translation companies do:

“LSPs [language service providers] do not provide translation; they provide vendor management, project management, and sales.”

This is one of those obvious things that people outside the industry don’t realize. But it’s fundamental to the way the industry operates – with translation largely outsourced, but the core functions they list kept in-house.

2. On the eternal battle between project management and sales: 

“The project management function is the single most important part of the entire language services provider.”
YET
“The language services industry is a very small industry with a high degree of emphasis on brand equity. Your salespersons are your primary brand equity ambassadors. They have the power to greatly influence your reputation within the industry for better or for worse.”

Renato started out in sales. Tucker in project management. So, it’s not surprising their description of each is heroic. Yet…I can’t disagree with either. Without strong project management (which extends beyond the production side to client intake and program management), the best sales person will churn through clients. The best way to grow a business is though keeping your current clients coming back. But the second best way to grow is to have strong sales people getting your company well-positioned as each new deal comes into focus. And that skill is often rare.

3. On skepticism of the the promises of automation:

“A fully automated process has long been the sought after Holy Grail of the industry.”
YET
“Taking advantage of the technology that is available today, a single project manager can efficiently handle the work that would have taken 10 project managers as recently as a decade ago.”

The diagram below comes from their book as well – and it illustrates neatly the difference good project management software can make. Instead of project managers serving as email traffic cops, they monitor for the exceptions – which are what take up most of the time. And the exceptions are also what make the “fully automated process” this mystical faraway goal that always seems on the horizon. Current technology can makes things much easier most of the time, but people still need to deal with the exceptions which happen every day.

4. On the exit plans of translation company CEOs:

“We haven’t seen it yet but one day we would love to see an honest company unveil their new corporate mission statement that is just a bunch of green dollar signs followed by smiley face emojis. Or perhaps a Vision Statement that includes the CEO’s dream of one day owning a vacation home in Malta.”

Rory Cowan described much the same thing in his SlatorCon 2017 New York presentation explaining that many top execs just want “to exit and sip Mai Tais on the beach.”

The 5th thing I learned – On the peculiar dynamism of the translation industry:

Renato and Tucker made it very clear that there was a lot of dynamism:

What happens when the language services industry is squeezed? Well, mostly the same thing. People get laid off. People look for new jobs. People dream of going into business for themselves. But because of the very low barrier to entry in the industry, those people who are contemplating starting their own business actually have the power to do so.”

And yet, they describe a fundamental weakness:

Very few people actually know anything about the language services industry except for those of us in it…

There is a Catch-22 at play here. Nobody reports on the industry because it is not well understood and it is not well understood because nobody has taken the time to report on it. What this means is that the only people who are reporting on it are those from the industry, since they are the only ones who understand it properly. This can be problematic for two reasons…

Industry insiders are often reluctant to be critical of other players in the industry, for fear of rocking the boat too much… [which leads to] a deficit of any meaningful or actionable new information or insight into the language services industry…

You would be hard pressed to get too many industry insiders to admit it in mixed company, but this lack of outside analysis is a serious threat. The resulting groupthink compromises the credibility of the industry and serves to limit both the amount and quality of information available on the industry even further.

The dynamism is what leads to so many small companies that do well enough to create exits for their founders. And it leads to a lot of dynamic individuals driving the industry. But the lack of outside understanding and analysis – evident in many of the Silicon Valley tech startups that seem focused on theoretical problems divorced from the reality of the industry – leads to a kind of stagnation. Ideas that would probably work, but failed miserably are often passed on for years longer because the industry is insular.

I appreciate that through Nimzdi, their consulting company, Renato and Tucker are trying to address this issue. I especially commend their Nimzdi 100 for not just providing a handy list that was sort-able and easy to find, how they accounted for things such as “language services business units inside larger corporations,” but most of all for how accessible they made their data – with their raw data able to be downloaded by other analysts.

In the past year, between Slator, Nimdzi, and even a subreddit dedicated to the translation business, the translation industry is beginning to open up it’s information more to outsiders. Which – as Renato and Tucker say – is to the good.

So, what are the 5 top things that people learned from GALA this year?

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What to expect when you’re expecting…to sell out!

Experiences - Joe Campbell - October 23, 2017

Rory Cowan gave a fascinating presentation at SlatorCon on October 12, 2017 entitled, rather enigmatically, “A Seller’s Journey from a Buyer’s Perspective.”


He framed his talk as a guide for founders and translation company owner-operators. But in an industry fraught with mergers and acquisitions, it had lessons for everyone.

Cowan’s Tenure in this ‘Curious Industry’

Cowan gave this talk from a position of unique insight. He founded Lionbridge in 1996 and led it as CEO through 20 acquisitions. In 1999, he brought the company public. And then he brought it back private again in a sale to the private equity firm H.I.G. in 2017. (I met Rory when he first arrived at SlatorCon, and with a smirk, he introduced me to a fellow from H.I.G. who happens to also be on the Board of Directors.)

Cowan described the translation industry as unique. He said it in a way that you might talk about a talented but frustrating teammate when you’re trying not to offend anyone. He played up this specialness of the owner-operators in the translation industry, declaring that most founders were “sensitive humanities majors” and “global misfits” who lack “street corner hustle.”

Cowan implied that his success at Lionbridge came because he didn’t have one of those “sensitive majors”, but a Harvard MBA. The path he charted for Lionbridge could serve as a primer for the evolution of the trends du jour in the business world…going public, synergy, outsourcing, crowdsourcing, on demand, the cloud, private equity. In contrast, TransPerfect’s success has often come from New York City hustle: the willingness to work harder, figure out how to do things for the first time, and the willingness to invest in people and long-term projects. I think it’s a stretch to attribute all of this to the comparative merits of an NYU versus Harvard MBA, but there’s a reason that most of Lionbridge’s growth has come from what he called “sporty” M&A deals with owner-operators.

Perhaps the most interesting wrinkle with which to analyze his talk….Much of the team that built up Lionbridge left as the sale approached, feeling frustrated and marginalized – several of them to become my colleagues. But…only a few short months after the sale to H.I.G. closed, Cowan stepped down as CEO after 21 years. I understand that many of his closest allies at the company have been let go by the new owner as well. He remains Chairman of the Board.

Should I Sell?

Cowan said the main question to determine whether you should sell or not was whether you woke up in the morning wanting to go to work. If you don’t, he said, then this was the time to sell – at what he believes is a market peak. He focused on companies that were having trouble scaling – a major problem among the many small to mid-sized companies in the industry. He attributed much of the problem to the founders themselves, as the skill sets that make a small company successful need to evolve in order for the company to keep going. For those struggling, Cowan suggested selling out as a means to cash in and get the help needed to scale.

Cowan emphasized that the process of selling was going to be painful. And it would need to be “endured.” The roller coaster process of Lionbridge’s sale was described in an excellent Slator piece by Florian Faes: as bidder after bidder dropped out, as H.I.G. was accused of “not adequately valuing the company” and “management attention was drained.” The deal did eventually close, but as Florian concluded:

It can be taken as an indication that ownership and top management at leading LSPs consider mega-mergers in the language services industry as difficult to pull off — and post-merger integration, risky.

Cowan gave 3 warnings to any company that might consider being sold. First, be upfront:

Be sure to “Clean up” or proactively disclose all ambiguities before starting process: Buyer WILL find them and they WILL taint value.

Second, there needs to be syzygy, a complementary pairing, between the purchasing company and the purchasee. “Values and culture are paramount,” he stressed.

Third, and the most important thing being purchased, according to Cowan, was “the next tier” of leadership. Buyers need to “risk adjust” the founder’s departure. He explained that this is why it was essential to involve the senior team of the company in the acquisition process. If you don’t, you risk disappointment, he warned.

After the Sale: Curing Founderitis

Given that the industry is filled with founders who own-operate their business, and given that Cowan has acquired 20 such business, and that he was recently acquired only to be pushed out himself…he clearly has a lot of opinions on this topic.

He suggested that buyers should do more than simply price in the founders’ departure: it was better them to leave as a way to cure the “founderitis” that he saw afflicting many companies. Only then were companies able to move “from maternal/paternal leadership to business metrics.”

Addressing the 80-odd members of the language industry, Cowan was brutally honest about the costs of selling out though. Here’s my best attempt to recreate his slide:

(Sort of kidding. Cowan didn’t use a meme – though as Renato and I agree, the translation industry needs more memes…)

This for real is my best attempt to recreate Cowan’s slide:

Cowan makes very clear that founders need to get out in an acquisition – or if they stay, that they should become closer to team leads than the founders they used to be. As a founder who was pushed out of his position and much of his handpicked team fired after being sold, I wasn’t sure whether Cowan meant this as a warning or as a positive. Maybe just a description of reality.

He used a rather Harvard MBA term – “Synergy Targets” – as a soft way of saying something. He was more explicit about culture. I thought he even sounded bitter when he described how a sale destroys the culture you have built up.

The ideal seller in Cowan’s world is someone who wants to “exit” and sip Mai Tais on a beach. Because in the end, the point he tried to emphasize to any prospective seller…selling is about losing control.

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