Bootstrapping a Language Product Company Using Services from London, Then Taking it Public and Scaling It to $450M: SDL CEO Mark Lancaster (Part 6)

Sramana: Let’s move our discussion forward to the product era of your company. What were some of the milestones in building that phase of the business?

Mark Lancaster: We probably started very slowly on the software side. Over the first three years, in the 1999 timeframe, we were doing less than $3 million in software revenues. We then took the decision to float the company. Remember, we are on the London Stock Exchange. When you said there was not a lot of technology in the UK, I would reclassify that to say there is no technology in the UK. There are a few very good technology companies, but they are all specialized and mature. There is nothing like what you are going to find in Silicon Valley. We definitely consider ourselves cutting edge. We are leaders in innovation. However, analysts don’t understand us; the understanding of our business just does not exist. Generally speaking, it is not a good idea to start a tech company in the UK.

One of the reasons that I have been successful is that I spent most of my career prior to starting this business working with American software companies. In many ways, I consider myself an American because I have spent so much time in Silicon Valley as well as some time on the East Coast. That has given me a completely different perspective and experience in understanding opportunity and risk.

Sramana: In 1999, you decided to go public on the London Stock Exchange with a few million in product revenue and some services revenue?

Mark Lancaster: We probably had about £10 million of services revenue at that time.

Sramana: So the company was doing about £12 million in revenue?

Mark Lancaster: That’s about right. That’s probably about $17 million.

Sramana: That is a relatively small company relative to what goes public here. It sounds like the London Stock Exchange was OK with those numbers.

Mark Lancaster: I’ll tell you the story on that. It was not all that great. There are two lists in the UK, one for small companies known as AIM and one for the main list. I did not want to go on AIM because it does not attract the really big investment houses. You don’t have high quality investment there. We tried to go on the main list and approached a few brokers and they told us to go away.

Then the dot-com boom came around the corner. We changed our company name to STL.com and the brokers suddenly welcomed us. We turned the company into making a small loss, which is crucial if you are going to float a dot-com company. We got an enormous valuation for the time. We showed £12 million at a small loss and the company was placed at £45 million. The first day we priced the shares at £1.34 per share and they went to £3.89 on the first day.

Sramana: How much did you raise at the IPO?

Mark Lancaster: I think we only raised about £7 million. There were still an awful lot of shares in our own hands. That also gave the VCs a vehicle to exit, which they loved.

This segment is part 6 in the series : Bootstrapping a Language Product Company Using Services from London, Then Taking it Public and Scaling It to $450M: SDL CEO Mark Lancaster
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