Translation tool breaks $1.2m run rate, 3,000 customers, new raise soon?

Nathan: Hey folks, my guest today is Marko Hozjan. He’s building a tool called Taia – a tool that helps translation via the combination of AI and human translators. He’s a manager and is passionate about leadership and business operations. He’s been a serial entrepreneur for many years, with many companies founded and exited.

He’s also an experienced sailor. He’s a bookworm in the topics of leadership in business and is a person with very liberal views. Marko, are you ready to take us to the top.

Marko:  Yeah, sure. So firstly, yeah.

Nathan:How did you come up with the idea of Taia? (and if people want to follow along, it’s Taia.io).

Marko:Exactly. So actually, the idea came from a language school that me and my partner Matija had before this business. We started a language school and it grew and grew, and we soon realized that we cannot scale it. So, at that time, first demands for translations came within the language school. We started first, we call it a traditional translation agency or, within the field, they call it an LSP – language service provider. And we quickly saw that we could only compete with price and that the whole market is competing on price. And then the market is really outdated. So, with our technology and with our business knowledge, we actually combine this together and…

Nathan:When did you launch this Marko?

Marko:In 2017, and then Taia was then born in 2018.

Nathan:Got it. So in 2017, the agency launched and how much revenue did the agency get in 2017?

Marko:Almost nothing. Like a couple of 10,000.

Nathan:Okay. Call it $30,000 or something. You then launched the technology in 2017, and walk me through, what are customers paying you today on average per month to do these translations.

Marko:It really depends. So, translation as a product is very, very complex and very, very different. So, we have customers that order one time for 100 euros, and we have customers that order a couple of 10,000 euros per month. So, it’s very different. Our focus of course, is B2B, so medium to big-sized companies that need a lot of translations, but anyone can come to our platform and order any kind of translation.

Nathan:Okay. What do you price off of? Is it the number of words?

Marko:Exactly. So, we have two products. The whole platform actually is a one-stop shop for any translation needs that you have, from machine translation up to advanced human translations. But within the platform, we have our own SaaS tool, which is subscription-based. So everything else is per-word-based, but the SaaS part is subscription-based. This is Catapult. And the main function of it is for you to translate on your own.

Nathan:I see. So, how many customers do you have paying either for catapult or your machine learning service?

Marko:3,000.

Nathan:Oh, wow. So this is a ton of customers. And where were you exactly a year ago? How many customers?

Marko:Less than a thousand.

Nathan:Okay, so there’s been a lot of growth. Did you do that organically or have you raised capital?

Marko:We’ve raised capital.

Nathan:When did you raise?

Marko:So last year, October, 1.2 million. And before that, 200k, 1.2 plus 200 – 1.4 altogether. So yeah, this is for European standards and actually a lot.

Nathan:Yeah. When you raised 1.2 million last year, what valuation do you raise that at?

Marko:6 million?

Nathan:Was that a good valuation looking back?

Marko:Yes.

Nathan:Was that pre money or post money?

Marko:Pre.

Nathan:So 7.2 post. Interesting. And what was the company doing in terms of revenue when you did the round?

Marko:So in 2020, 300,000, and our plan for this year is 1.5 million.

Nathan:What did you do last month?

Marko:Good question. Around a hundred thousand.

Nathan:Wow. Okay. Interesting. And how many people are on the team today full-time?

Marko:30.

Nathan:And how many engineers?

Marko:Let’s say 12, at least. Because by engineers, people mostly mean developers and similar, or people that work on machine translation, but we have engineers, we have linguists, we have marketing gurus and so on. So, I would call them engineers as well.

Nathan:How did you grow from, you know, on average $25,000 per month last year, to now $100,000 a month this year? Where’s all that growth coming from?

Marko:Actually, the growth was mostly due to old school, cold call sales. But now we want to really scale it up by transforming this old school funnel into an online marketing lead generation, marketing automation and so on.

So, to really optimize the sales and to move it towards the marketing funnel, not so much the sales funnel. Of course, the big fish, so the bigger customers will still have their own BDMs, which means that a BDM takes over because they are not a one-time customer. They just usually need to sign a contract. You have a procurement process and so on.

Nathan:When you say cold calling customers, walk me through that process. How do you get the list of phone numbers? And you know, of the right people to call?

Marko:Sure. So firstly, we chose the industries. The industries we chose are based on what we do best, and some industries are more interesting when it comes to translations than others. Then you have many types of software. Now lately we use ZoomInfo, before we used many others. So that’s it. Otherwise, LinkedIn as well. But the software is where you can get these kinds of data.

Nathan:What were the top two industries you picked?

Marko:One is, we call it, business services where you have finance, banking, insurance and similar. So, business services, and the other is manufacturing. These were the first two that we picked because they were the best fit because we were focused at a time on document translations. But now we’re converting more and more into rising service categories which are e-commerce software and gaming.

Nathan:So what job titles at the insurance company will you go after the phone numbers of in ZoomInfo?

Marko:It really depends how big of an insurance company. If it’s big, they for sure have a localization manager. Otherwise, heads of departments; for example, mostly in marketing, they are mostly responsible for texts and similar stuff. Otherwise, heads of different departments; for example, it’s really, really interesting how different it is from company to company when it comes to decision-making for translations. In most companies, they don’t have this centralized with localization management; each department orders translations on their own.

Nathan:Got it. And how much do you pay ZoomInfo each month to get access to all the phone numbers?

Marko:We pay yearly about 10k.

Nathan:Is it worth it?

Marko:Difficult question, because for now this is the third software that we use, and we’re not satisfied with any of it really.

Nathan:Who did you move from? Apollo and who was before that?

Marko:Apollo.

Nathan:And who was before that?

Marko: Oh, I can’t remember the name. It was some UK software. I can’t remember the name.

Nathan:And why ZoomInfo? Why are you not happy with it? What are they missing?

Marko:Just the quality of data. So, for example, you get a phone number, you call, and they say the person’s not working there anymore. Or you get an email and it should be accurate, but it’s not. Just the quality of data – the most important thing that they should have.

Nathan:Yup. No, makes a lot of sense. Now, obviously you’re at 3,000 customers doing about a $1.2 million run rate. Are you profitable or burning?

Marko: Burning still. We could be profitable, but we’re burning. So, we have enough until the beginning of 2022. So that’s why in autumn, actually now, we are starting our new round to close our next round in the first quarter of 2020.

Nathan:So how much in the bank do you have right now?

Marko:Nil.

Nathan: Okay. And how much are you wanting to raise?

Marko:This is not clear yet. It depends on our results these next six months, but around 3 million.

Nathan: And what valuation are you going to try and raise at?

Marko:Again, not clear. It depends on… the better the results next six months, the better the evaluation. So, you know chicken and egg. So, really difficult. So, for example, at least x2 what we did, but now you caught me a bit off guard that I would say these terms.

Nathan: You mean, you raised at a $6 million valuation, so you want to do at least two X that on your next round?

Marko:Yeah.

Nathan: Now, were you the only founder? Do you want 100%?

Marko:No, we are two founders, me and my co-founder Matija. Half-half.

Nathan: Okay. Did you guys split it 50:50 at the beginning?

Marko:Yes.

Nathan: And then the new investor took, what about a fifth? 12, 13% of the business?

Marko: 20. 20% of the business. So, with the six million, 20% of the business.

Nathan: Got it. So, the investor currently owns 20%, you guys each own 40%

Marko: Yeah.

Nathan: Interesting. Okay. What’s next on a product roadmap? What are you guys going to build next?

Marko:So, we’re mostly focused on the SaaS part. So, this LSP part is built, so it’s actually a very much automated platform where you can order any type of translation, but this part is not so scalable as the SaaS part. But it is very necessary for the SaaS part to have more fuel. So now we have Catapult, a tool where anyone can translate by themselves using the power of machine translation, keeping the formatting intact and so on.

Next, we’re going to continue with building MT products. So, we see the future in machine translation – machine translation is going to go everywhere – but we want to offer it as a professional service, which means, for example, if you use Google translate today, you have to copy-paste. Formatting’s not intact. If you need additional services, you don’t get them and so on. So, machine translation for advanced users, and then we have tons of opportunities within the integration part because this problem is not solved. There is a big pain, there is no standard when it comes to translating software, web pages and so on, and we want to become the standard, which means we want to be one platform that solves the translation problem.

Nathan:How do you measure churn?

Marko: What is it or how do we measure it?

Nathan: How do you measure it?

Marko:I don’t know, I should ask my CMO. I’m not sure, good question.

Nathan: Okay, let me ask you a different question, what is your churn?

Marko:A good question again. I’m not sure what our churn is.

Nathan: I asked on purpose because your model, it’s hard to measure, because you have a usage-based model and then a SaaS based model. So, if people love the product and they keep increasing usage, that sort of looks like net revenue expansion. If they decrease usage, it looks like contraction, and that’s very different than a SaaS model of paying a flat fee per month to do something, right?v

Marko:Later, we’re going to have to do a matrix for both separately, because they are, even though they’re a part of one platform and then you just choose, you want to outsource, or do you want to do it yourself, because this is how we do it now. When we have a customer, we ask them if a customer is a company, do you outsource or do you have your own team? Because the trend is that the companies translate more and more by themselves. The reasons are technical knowledge, SEO, optimization, security, and so on. And with machine translation, actually, you don’t need such good translators anymore because you just post-edit something that’s good.

Nathan: Last question is how much did you spend on paid marketing last month?

Marko:Not so much because – okay, let me give you a number, around 30k. This number is increasing month by month.

Nathan: And how many new customers did you have last month?

Marko:Now this is another tricky one because you asked “customers”. We gained approximately 300 users, but it’s not necessarily that each user becomes a customer. You know, because some users just come on the platform, this we’ll see. So, I would say that about 80% of users definitely become customers.

Nathan: So, call it 200 new customers on 30,000 spend, you spent about 150, roughly $150 to get a new customer.

Marko:Yeah. Our costs, when it comes to sales acquisition are still high.

Nathan: Why do you say it’s high? Your average is about $40 or $50 a month per customer. On average you are paying about $150. So you get paid back in three or four months.

Marko:I don’t know. When I read comparisons with our competitors or with similar companies, these numbers were usually lower.

Nathan: Interesting. Well, it’s the right place to focus. Let’s wrap up here, Marko, with the famous five. What’s your favorite book?

Marko:Never Split the Difference.

Nathan: Is there a CEO you’re following or studying?

Marko:No.

Nathan: What’s your favorite online tool for building Taia?

Marko:Online tool for building Taia?

Nathan: Yeah, just a tool that you like.

Marko:Hmm. Just give me a second because there are many. Well, a good one for building Taia…

Nathan: Just think about what you used this morning.

Marko:I used the Revolut online banking, but it’s not for building Taia. We use Transferwise as a bank instead of a bank account, for example, you know.

Nathan: Okay. How many hours of sleep do you get every night?

Marko:Last night, five hours, otherwise about seven.

Nathan: And what’s your situation? Married, single, kids?

Marko:Yeah, like not married, but in a relationship, with one little boy.

Nathan: And how old are you?

Marko:I’m 38.

Nathan: Got it so, sorry, one kid. And you’re 38?

Marko:Yes, and I’m going to stay with one kid. This is our decision. One is enough.

Nathan: Very cool. Last question, something you wish you knew when you were 20?

Marko:To have a mentor in which books to read.

Nathan: Guys, there you have it. Taia.io. They help you translate your stuff if you’re localizing your website, things like that. They have a model where you pay per, sort of, word translation. And also then, a Catapult model, which is basically a SaaS service. They have over 3,000 customers doing 100 grand per month in revenue today, up from 25 grand a month just a year ago. So, nice growth. They’ve raised 1.2 million on a $6 million valuation last year, looking at raising at the end of this year, early next year, 3 million on maybe like a 12, or something higher. We’ll see what happens over the next 12 months. Marko and his co-founder split the equity 50:50 at the beginning, so healthy capital management as they look to take over the space. Marko, thanks for taking us to the top.

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