Bootstrapping a Language Product Company Using Services from London, Then Taking it Public and Scaling It to $450M: SDL CEO Mark Lancaster (Part 4)

Sramana: What is the composition of your business? Are you selling these products to software companies who do translation work themselves, or are you selling it to competing services companies who compete with you using your own products?

Mark Lancaster: About 50% of our revenue is derived from technology. Since that very early translation technology, we now have leading web content management technology, campaign management technology, document management, social insights technology, and personalization. We wrap all of that into what we call a customer experience platform.

We sell that customer experience platform. Typically larger companies are our customers because they have more data and they tend to have more complexities. Typical customers come from retail, banking, agriculture, and similar verticals.

Sramana: Would that compete in the same space as someone like Salesforce?

Mark Lancaster: Yes, exactly. Our biggest competitors are people like IBM, Adobe, Oracle and a few smaller firms. All businesses are realizing that in order for them to be successful, they have to embrace the world. We try to identify what business problems companies are going to have and then we develop software to address those business problems. We started investing in web content management technology in 2006.

We typically find it easier to buy a smaller business that has really good IP. We can then build on that business. In the case of web content management, we acquired a Dutch company that had leading web content management technology. We then built that out.

Sramana: In 1996, you introduced the first product which was the language translation product. What were some of the next few important milestones?

Mark Lancaster: We received some VC investment around 1996. At the same time, we started investing in products.

Sramana: Was that a UK VC?

Mark Lancaster: I think I talked to 4 or 5 VCs and we did get one from the UK. The thing about VCs is they have a time horizon of five or so years. We were very lucky and found a UK VC who wanted to invest in us. VCs tend to create preference shares and ordinary shares. The preference share equates to the amount that they invest and they get first pickings. The ordinary shares are actually what everybody else gets. I did not allow that to happen in this case, the VCs were required to buy ordinary shares. Everything was equal, which meant the company was not set up in a financially complicated way. We had a very good investment company.

Sramana: You said you had interest from a number of VCs and you had a requirement that all shares be common shares. When you put that requirement on the table, how many of your investors walked away?

Mark Lancaster: We did not have anyone walk away. They were not OK with the terms per se, but they were OK with the company. It’s easy to get money from a bank when you have a lot of money, but when you really need it, then they won’t give you any. We were in a situation where we were in a very strong negotiating position.

This segment is part 4 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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