Category: Startups

Explaining Transfluent’s crowdfunding “IPO”

Ever since Transfluent’s crowdfunding round was announced two weeks ago, there is one question I have been asked over and over again: Why crowdfunding? Why not VC funding?

Crowdfunding is a new thing and has evolved rapidly during its short existence, so I can see why many of you are confused. Some have never heard of it, while others may have heard the term only in relation to Kickstarter or something similar, where money is not actually invested but donated or used as pre-payment for a product.

What Transfluent is doing is different – we’re offering an equity-investment round. Indeed, everyone who puts money down will become an actual shareholder, with the same terms as our big institutional investors.

What’s more, I believe this is the first time ever in Europe that everyone gets to invest on the same terms as large institutional funds. This round is lead by Vision+ and also joined by Avera, two major Finnish VC funds. We negotiated the terms of investment with these funds, and then extended the same terms to everyone else investing through the Invesdor platform.

So what is the difference between an IPO and crowdfunding?

In a way, this is an initial public offering, or IPO if you will. It is the first time the shares of our company are being offered for public to buy. But it is not an IPO in a traditional sense because our stock will not be listed for trading at any of the exchanges.

This means that even though you can easily buy shares, you will not be able to easily sell them until the company lists to a stock exchange or is sold to another company. The “real” IPOs like the one by Next Games in NASDAQ First North just recently make the stock available for trading at all times after the initial listing.

Trading volumes for small young companies tend to be small so even with a First North listing you may not be able to sell your Next Games shares as quickly as you want, but at least you have a marketplace where shares can be traded. This will not be the case with Transfluent shares.

The pros and cons of public offering

Then why did we choose a public offering rather than a closed investment round directed at selected venture capital firms? One of the most interesting aspects of the public option is the large number of shareholders. Rather than being a company with a handful of owners, Transfluent is becoming a company with hundreds.

In a way, this makes us “everyone’s translation company.” In an ideal world, every prospective customer would know someone with a cousin who has invested in Transfluent. All things being equal, they would be more likely to choose us over a competitor.

Another big difference is control – having one investor control a large number of shares vs. having a lot of investors control those shares. Having a lot of investors means the founders have more control over the vision and can keep building the company with less potential distraction from the investors.

The burden, of course, is that we must be fully transparent about everything. We’re disclosing all financial information and all our plans and company details. We are not scrutinized quite the same way as listed companies, but still we need to be careful to treat all prospective investors equally. We cannot disclose new information about the company to any one investor – whatever we reveal has to be made public. It’s not a heavy burden, but it means we need to be quite careful about what we say. Good practice for a public listing, should we want to do that later on!

Either way, it’s a lot of work

Raising money from VC funds is quite tedious. You need to meet around 50-100 investors before you find one that is a mutual match. It takes around six months from start to finish, and during this time much of CEO’s time is spent on fundraising related activities. It’s very easy to lose focus and stall the company’s growth during this time.

Crowdfunding is no less laborious, but the upside is that much of the effort is public. While the VC rounds happen in secrecy and everything is confidential, the public offerings are the complete opposite. Much of the work I have to do in order to put this funding together ends up being publicly distributed. I have created presentations, given interviews, attended events, answered a ton of questions in the Invesdor forum. All of these actions double as PR work, so rather than stall the growth, I am actually helping boost our growth.

Right decision?

We are now two weeks in, with five weeks remaining. As of this writing, we are at 65% of our target, and there has been a lot of positive publicity. We have already gained new customers who heard about us because of the fundraising. So far, I must say, this seems to have been a good decision!

I think going forward you will see more startups going this way with their funding needs. Crowdfunding certainly is not for everyone, but neither is VC funding, so having a whole new way of funding innovation is huge!

Invest now!

The round is open until May 31, 2017, but there is always a chance we sell out and close early. In order to secure your share of the world’s most innovative translation company, proceed here and make an investment now: www.invesdor.com/transfluent. The minimum investment is only 480 eur.

SINA Weibo

I recently wrote a blog post to Transfluent’s blog about SINA Weibo. I’m doing a partial repost here as well, as this certainly is a topic of great interest these days. For the full blog post, see Fancy being big in China? Weibo is the key in Transfluent’s blog.

For those who don’t yet know, Weibo is a Chinese word that means ‘microblog’. While it has only been around for about three years, Weibo has exploded in popularity to become the only social network to be seen on in China. If you want to be popular in China, you absolutely must be on Weibo.

Since most of you probably have no idea what Weibo is, other than “the Twitter of the east”, I decided to write this short introduction to SINA Weibo, strategies on how to get started and listing of who are the top Chinese and western stars currently on top.

SINA Weibo

The biggest and most important microblog is SINA Weibo, with over 400 million registered users. This, along with active usage profile, makes SINA Weibo one of the most important social networks in the world; perhaps second only to Facebook. Yet despite its immense popularity, SINA Weibo remains a mystery to most non-Chinese users. Most profile pages are only visible to registered users, and the Chinese user interface makes it nearly impossible to even sign up for an account if you don’t know the language.

Recognizing this, Transfluent has just launched an integration of our translation service in Weibo. Using Transfluent you are able to write posts in English, and have them posted to Weibo in Chinese using our large network of professional translators. You can read back and reply to comments using English, giving you a chance to engage directly with the Weibo community.

We are also seeing signs that SINA is taking interesting steps to open up globally. Just a few days ago, SINA announced it would be launching an English-language user interface, to accommodate international users. This is great news, and will make it possible to use Weibo even if you don’t read Chinese. However, currently nearly 100% of the Weibo posts are in Chinese, and most Weibo users don’t speak any English, so don’t expect to be able to get much out of it right away.

 

Who needs services in multiple languages?

Here’s a question I’d like you to think about: what language do you prefer to be served? I mean in general, when shopping, calling the cable company, accessing government services or any other daily duties. Would you like to shop in your native language, or would you be OK with English? And if English is your native language, then how about taking care of your daily duties in Spanish?

The view on multilingual services varies greatly depending on where you are. If you ask a random American, they’ll probably say that English should be made a mandatory language and everyone in the world should learn to speak it. Except, if this person represents the 1/5 of the American population that is not natively English speaking. They would likely feel it’s important to be able to continue using their native language and stay in touch with friends and relatives in some other country.

Now, let’s go global and ask the same question from a random Chinese person. The first problem is that he or she will likely not understand anything we say, so we’ll first have to get the question translated to Mandarin (or Cantonese, depending on where you are asking the question). Once we get this part done, we’ll receive an answer and then get it translated back to English. The odds are our target person only cares for services in Mandarin or Cantonese, as one of those would be the only language they speak.

Jani and the Switzerland flag

If we ask a Swiss, they’ll likely have a preference on the main language they receive service, but they will often be ok with German, French, Italian or sometimes English or even Spanish. Ask a Finn and you will hear mostly Finnish or Swedish. Currently I am in Mauritius and the locals here are comfortable speaking in English, French or Creoli, which is the native language for most of them.

The point is, if you want to reach a global audience, you need to be prepared to serve people in their own language, no matter how dominant you think English is in the internet. Facebook would not be at 500 million global users without the 70 or so languages the service supports. They could do a lot better job in supporting friendships between speakers of different languages, but the key is that at least they let people use their native language to access the service.

This has been true for retail sales forever, all kinds of products you can buy at your local market always have text on them in the local language (and possibly a number of others). For some reason we tend to forget it when we create websites. Most of the websites serve just one language group, even though the service would work equally well to people in other language groups.

The thing that caught me by surprise when we first built Xiha was the attitude from several venture capitalists that nobody needs a website that works in multiple languages. Why? Because everyone speaks English. Or French. Or Chinese. But not many languages. Let’s ignore the fact that this is not true (more than half of the world’s population speaks at least two languages) and assume that this is the case. Let’s over-simplify the situation even further and say that people in France speak French, and people in China speak Chinese. And I guess people in England speak English.

The world language map (courtesy of bab.la)

Now, even if everyone speaks just one language, you will still want your web service to work in as many languages as possible, or you will be limiting yourself to only a small portion of the internet users. According to Internet World Stats (www.internetworldstats.com/stats7.htm), just 27% of the internet users are English speakers (again, many of the non-English speakers might understand some English, but remember that we are now assuming each person can only speak one language).

Chinese comes at number two with 22% of the internet users, and the remaining languages each command for less than 10% of the total. The fastest growing languages in the past decade have been Arabic, Russian and Chinese, and in fact the number of English speakers in the internet is growing proportionally slower than the total number of internet users, so the percentage of English speakers will continue to decline even as the absolute numbers grow.

By offering your product or service in multiple languages, you can easily multiply the size of your potential customer base without any significant extra work. The technology is at the point where translations are accessible to everyone and neither the price nor the required technical skills are a real barrier anymore. There are services, for example PremiumFanPage which is a product of my company, that help you take your website in a number of languages even if you personally don’t speak any of those languages.

Chinese shopping list

It may sound like a solid strategy to build your service in English first, and once it captures a good market share of the English speaking users, then expand to Spanish, then to French, and so on. The problem with this idea is that the technology is evolving really fast now and a lot of companies and individuals out there are really good at reacting to changes in the market. By the time your service takes off in the US and you prepare for foreign expansion, the Chinese, French and Swedes will have already saturated their local markets with copy-cat products.

What is a good solution, then? Go global, and go multilingual, from day one. Your customers will love you for serving them in their language. For a long time it has been a known fact that one of the best ways for a small startup to win customers from a giant market leader is by providing excellent customer service. There is no better way to get started with that than providing your website in as many languages as possible.

 

Red Herring 100 Europe Conference 2009

I attended the 2009 edition of Red Herring 100 conference in Berlin last week (March 31th to April 2nd). This conference report is a little delayed. Right when I returned from the trip, our family relocated from Zürich to Rapperswil, half an hour away on the coast of Zürichsee, and I’ve been without internet access ever since.

For the entire week I’ve managed the business by sitting at Starbucks and using their wlan, but there’s only so much sitting in a cafe one can handle. Fortunately we can now use our neighbor’s wlan (thanks very much!) to survive until Swisscom gets their act together (to their credit I should mention they’re giving us three months free service as an apology of the delays, but still… I would rather have had a functional internet access from day one!)

As I posted some time ago, XIHA Life was selected as one of the 200 finalists of Red Herring 100 this year. The winners were announced at the end of the conference in Berlin. Attending the conference was not a requirement for being a winner, but I decided to use the chance to do some networking with European VC’s and fellow startups.

The conference was held in a very nice Radisson SAS Blu hotel right in the center of Berlin, walking distance from many amazing old buildings as well as the DDR museum and the Berlin TV tower. While it’s nice to have fancy surroundings, I must question the logic of organizing a startup event at such an expensive location. Especially during economic downturn.

Radisson SAS lobby in Berlin

The fancy location resulted in über expensive admission fee, which in turn surely was one of the reasons for low attendance numbers. I don’t know what, if anything, the VC’s or media paid, but at least for the startup companies the €1700 fee is quite outrageous, even if it appears to be in line with other similar conferences. It makes the awards a little more precious for sure, but I think it would benefit everyone if more people were able to attend.

Two of the best outcomes from the conference: the VC pitch boot camp before the actual conference started, and networking between the sessions and at cocktail parties. Most of the actual keynote sessions carried more entertainment value than anything else, really.

Sami Niemi of scalado networking at Red Herring conference

Something that I didn’t like is the total lack of transparency from Red Herring’s part. Most of the startups (XIHA included) presented in small rooms, and the attendance was just a handful of people (half of which were other startups waiting for their turn). However, some companies were allowed to pitch in front of the entire conference, between keynote sessions. This obviously would have been incredibly valuable, but there was no information on how these companies were selected, and if there would have been a chance for anyone.

Red Herring conference 2009

The schedule was off by 30-60 minutes through all of the first day. I heard quite a few people complain that there was no way to actually see the companies you wanted to see as you couldn’t know what time they would be presenting. This, with the fact that very few people actually were watching the presentations, meant that the pitches were quite useless and the only way to make connections was to be active in networking.

The conference concluded with an awards dinner where the winners were announced. XIHA Life was one of the winners of Red Herring 100 Europe, which is a great honor and receiving the award certificate from Farley Duvall was one of the highlights of the conference for me (this was the first year for Farley to be the host of the show so I’m sure for him handing out the awards was an equally special moment!)

Red Herring awards dinner 2009

At the end of the day, it was still a positive experience. XIHA came out as a Red Herring winner and I made a lot of very useful contacts. The number of VC’s present was limited, but obviously it’s the quality that matters, not the quantity. I think I was able to talk to most of those that could potentially invest in XIHA in the future.

If I don’t think of the price (kind of hard to do when bootstrapping!), the conference would get a good rating indeed. The minor issues (schedule delays, problems with WLAN, etc.) are almost a de facto standard of IT conferences. What was special with the Red Herring conference was the warm and intimate atmosphere. The pitch coaching was a good experience too, special thanks go to Jennifer Hicks, Ari Wegter and Gary Reeman!

Cornelius Claudio Kreusch performing at Red Herring 2009

Worthy of special mention was a fantastic piano performance by Cornelius Kreusch, CEO and founder of MUSICJUSTMUSIC. I think he played improvising the entire performance, and unlike the typical musical guests in this type of events, he was truly able to capture his audience.

Some of the most interested startups, all of which are also interesting to me due to their potential of partnering with XIHA Life in the future, were TellmeTwin from IcelandAnimasher from Sweden and Teacheo and jog the web from France.

 

 

StartupCamp Switzerland ’09

Being probably the newest entrepreneur in Switzerland I was excited to attend StartupCamp Switzerland ’09 in Basel. I will be running the new XIHA Life office in Switzerland, so this was a great chance to meet to make first contacts with the local startup scene.

I’ve attended several startup conferences before, but this was the first BarCamp style “unconference” for me. The idea is that there is no pre-scheduled program, and most of the people will present something.

Unfortunately I couldn’t make myself to present this time, but I definitely enjoyed the presentations and will surely present something next time around.

BarCamp presentation matrix

 

Suhas Gopinath delivering a keynote

The day started off with an interesting and inspiring keynote by Suhas Gopinath, once titled as the “youngest CEO in the world”. Aged 14, he moved from India to the Silicon Valley and started a company which today runs a multimillion dollar revenue and keeps growing at a rapid pace.

Some of the things he said really made me realize – more than ever before – how much control we have on our own fortunes. Some people may appear to be luckier than others, but ultimately you can do a lot to improve the odds.

During the course of the day I had interesting discussions with Gregory Gerhardt of Amazee about ways to help boost the Switzerland startup scene truly to the next level. StartupCamp is definitely something that is needed, but in addition to that we should have more collaboration with startups from other countries.

I am anxious to learn new things, which is why it is so great to live in yet another country, but at the same time I believe I have a lot to give based on my past experience in various other countries. If we can get more people from other countries to come together, it will be helpful to everyone involved.

Switzerland startups by Gregory / Amazee

One of the interesting presentations was Farley Duvall’s “Why Red Herring Likes Switzerland!” He compared the differences between Silicon Valley and Switzerland. He considers Switzerland a strong contender to becoming the “Silicon Valley of Europe”, but a lot of work needs to be done.

Special thanks to the organizers of the event, StartupCamp Switzerland ’09 was a real success. There were 160 entrepreneurs and investors present, which is more than I would have expected to see. One reason for the high attendance levels much be the cost – the event was free of charge. Yet, in this rare case the old saying “you get what you pay for” turned out to be totally wrong.

There was food – plenty of good food. There were drinks – the day ended at a local micro brewery with an open bar. The quality of presentation was excellent – often your fellow entrepreneurs are the best source of information. I’m glad to see there are companies willing to sponsor a startup event, even during the tough economic times.