Sramana: How did you get your first clients once you started this new company?
Mark Lancaster: Most of my contacts were at large companies. I knew people in Microsoft, Computer Associates, and a company called Contact Software in Dallas. I was lucky because I am not really a salesman. We got our first big contract from Contact Software in Dallas. We worked with them for many years. We also got a sizeable contract with Microsoft and we still work with them to this day. We really built the business from there. As the company got larger, we started moving from language services, which we did until 1996, into creating software to help businesses and the people in the language ecosystem. We created software that allowed them to be more effective. We essentially started building a language software business in 1996.
Sramana: You started the company in 1992 by helping companies globalize their software products. How long did that aspect of the business last?
Mark Lancaster: We still do that work. About half of our revenues are derived from globalizing and localizing products. We essentially translate an English product into multiple languages.
Sramana: Somewhere along the way, you also started developing language software products. When did you introduce that second line of business and why?
Mark Lancaster: We did that in 1996. We started creating translation productivity software.
Sramana: What was your revenue level at that point? You had a services business from 1992 to 1996 that really provided the foundation for your product business later. How far did the services business take you?
Mark Lancaster: The business probably grew by 200% per year. When you are a small business and start with no revenues, it’s easy to grow fast. In 1996, we were doing about $4 million in revenues.
Sramana: That gave you profitable services revenue in the market and you decided to introduce productivity tools. Were those tools meant to make your services team more profitable and efficient, or were they tools intended to be sold to the outside world?
Mark Lancaster: The company was pretty much profitable from day one. We were profitable in our first year, and we have continued that trend. We started the small software team using the profits of our services work. If you look at our first products, you will see that we sold them for about $150. In my view, you can’t really develop good software just for your own use. You won’t make the appropriate investments or have the right style to innovate and drive proper products. Initially, we did use the products to increase productivity, but we did sell the products to the language industry. That has been an issue ever since. We sell to our competitors and they don’t like to buy from their competitors; however, that has not done us too much damage.
The majority of the business income was still derived from services at that point. To this day, the services side of the business has remained profitable. It has remained at a similar level of profitability for many years. We run at about 15% to 18% EBT on the services side. Today, we are by far the largest provider of language products so that business is very important to our future as well.