Jani Penttinen of Alumnus Transfluent: “Success will be defined by the people around you”
The world is becoming smaller every day, not just because of the amazing technological advancements of recent decades, but also because of the way the internet and the digital revolution are eradicating physical and spatial barriers. Things taking place on the other side of the globe suddenly feel like they’re right next door to us – if only those language barriers weren’t still in the way. The CODE_n alumnus Transfluent was founded in the belief that all companies should have an easy way to become global and communicate with their customers in the local language. The conviction of the Finnish startup morphed into a leading translation provider with a global team and solutions that bring them to the forefront of innovative technology. We spoke to the CEO and founder Jani Penttinen about the things that make his business model unique and the journey towards becoming a global, rapidly expanding enterprise. Jani also divulges a couple of personal tips on setting up a successful team and how he successfully pulled together 800k through the crowdfunding platform Invesdor. And that was just the prep work before the planned IPO gets underway! Jani also tells us about the up-and-coming startup scene in Finland.
Lisa: Dear Jani, great to catch up with you! Please give our readers a brief overview of Transfluent. What do you do and what does your business concept have to do with digitalization?
Jani: Transfluent is a translation agency that is built on an advanced resource management platform, but still using professional human translators to do the work. We’re focused on high-quality creative translations such as marketing, where AI-based translations are not enough. For translators, we provide a steady stream of interesting jobs; for customers, we provide an army of translators available to assist when needed.
Lisa: What is unique about your service?
Jani: We are a rarity in the translation world – professional translation services with a deep understanding of technology. Most translation companies are either good at translations and have zero understanding of tech, or they build some tech but have no real understanding of actual translation. Our offering is an online-based, easy-to-use interface where businesses can submit and manage translation tasks, combined with skilled translations and professional project management that you would expect from a translation agency.
Lisa: So much has happened since you took part in the global CODE_n CONTEST in 2012. How has the Transfluent startup developed since then? What has happened in recent years?
Jani: Back in the day, we had just launched and our focus was on social media translations. These days, our area is as a full-service translation agency and most of the work consists of anything but social media. The same tech platform still powers everything – though it’s much more advanced now – which makes Transfluent much, much faster and easier to use than any other translation platforms out there (speed and convenience were the biggest requirements for social media translation, and it turns out those are much appreciated features with more traditional translations as well!)
Lisa: How did the idea of Transfluent come about? Where did you meet your co-founder? We’re curious to hear more about your founder story!
Jani: It all goes back to Shenzhen, China, around 2005. I had moved there to build a game development company. That company didn’t work out, but while there I met a girl called Wen who helped me with the process of setting up and managing the business (which, in China, is impossible if you don’t speak the language!).
After the game business failed, we moved together to my home country, Finland, got married and started a social media company called Xiha Life. Xiha was a language-related company as the idea was to facilitate networking between people who don’t speak the same language, using machine translation. The first employee we hired for Xiha was called Tomi, who became the CTO. Xiha was quite successful, at the peak we had over 20 million users around the world, but we could not get the monetization side of things to work and then Facebook started to grow and enter international markets.
Finally, in 2011, Wen, Tomi and I decided to pivot the business and founded Transfluent. We thought long and hard about what to do and decided that using our expertise from language technology to build a real translation company was a good idea – and it turned out to be right.
Lisa: Transfluent is a fast-growing company (8% per month). How do you handle the hiring of talents – people who fit with your team and mission? Do you have a special approach?
Jani: We have always maintained a vision of keeping the core team lean and mean, so that scaling up the revenue does not equate to a huge burden in terms of hiring. We always try to hire the best people we can, and we try to be very picky about who we accept as a team member. The bigger challenge is building the translator team, as we work with thousands upon thousands of professionals who live all across the world. We have built good processes for dealing with this, but the challenge is still there and one of the most resource-intensive parts of the work we do (and for a good reason – quality translators are the most important resource for us!)
Lisa: What’s your attitude toward enterprise culture and leadership? Do you have a specific vision you are pursuing in this area?
Jani: My vision is to work with skilled, ambitious professionals who take pride and ownership in the work they do. The company is headquartered in Finland, but I am based in California and my co-founder Tomi is based in another city in Finland, Jyväskylä, so the team has to work independently. This limits what kind of people we can hire, but in the end it works really well for us.
Lisa: If you had to start all over again from scratch, what would you do differently? And, of course, what would you do the same way again?
Jani: I could think of many mistakes to avoid, which might save us 2 or 3 years of time to get to the same point as where we are now, but then again we’re here because of the successes and the failures we’ve had. We cannot change the past so the best thing to do is try to learn from it for the future. If I were to single out the area where we have made the biggest mistakes and the biggest wins, it would be recruitment. I cannot stress enough how important recruitment is.
Lisa: What have been the biggest obstacles you’ve had to overcome in setting up your company?
Jani: The translation industry is quite old-fashioned and we definitely have had struggles establishing ourselves in industry circles. The initial feedback from many traditional industry players was that our model will never work, because this is not the way things have been done in the past. This was reflected not only in the attitudes of other translation companies, but at some of the bigger or older companies as well. It was somewhat difficult to get big companies to use our services at first, in fact practically impossible in Finland.
Fortunately people in Silicon Valley are more open-minded, so after opening an office in California we were able to land a couple of big-name customers and after that the doors started opening in Finland as well. These days we’re the trusted choice for several publicly listed companies in Finland, as well as in the US, so the efforts clearly paid off.
Lisa: Your tips for other founders in building up a team and scaling a business?
Jani: Be very careful who you hire, and be quick to fire people who do not seem to fit the team. Remember that your success will be defined by the people around you, and the only way to really scale a team is by having a solid foundation of people you trust and who believe in your vision and work well together.
Lisa: With Slush, you guys in Finland created one of the hottest startup festivals in Europe. How is the Finnish startup scene evolving?
Jani: I have attended every Slush from the very first, so even though I wasn’t involved in creating it, I’ve been there to see it grow from a gathering of a few friends to one of the biggest startup conferences in the world.
Slush started around the same time as our previous business, Xiha, was founded. Back then there was no real startup ecosystem in Finland. Young people dreamed of a career at Nokia and startups weren’t considered a real career path. Now, it has all changed. We have plenty of support available for people starting their first companies, and there are plenty of options for funding, especially in the early stages. Angel investing in startup companies has become commonplace, something thousands of people do. We just recently raised a round of funding from over 200 angel investors, most of whom were from Finland. This wouldn’t have been possible just a few years ago.
Lisa: You’ve just recently raised over half a million with crowdfunding on https://www.invesdor.com. You left your previous path in raising capital via VC. Why did you go this new way?
Jani: We ended up raising almost 800k euros, about a third of which came from our VC investors. The investment round was unique in that it was possibly the first time in the world where notable VC investors allowed angels to join the round and participate on the same terms. We did this for a couple of reasons.
First, the model of Invesdor is not all that different from Transfluent. They’re in a different industry, but their way of operating is quite similar to us, so we wanted to give it a try. We obviously didn’t know beforehand how it would go, but it was a very positive experience.
Second, our future goal is to do an IPO in the nearish future, so doing a public offering, a kind of a mini-IPO, was an interesting exercise. During fundraising we had to open up all of our financials to be visible to investors, our competitors, and everyone. We now have over 200 shareholders and even though we are not scrutinized quite the same way as public companies, we need to get used to openness and transparency in a whole new way. I guess this is part of the process of growing up as a company.
Lisa: Your tips for other founders in planning a crowdfunding campaign?
Jani Penttinen: Do your homework in terms of which platform to use. Some, like Invesdor, are basically just marketplaces where interested investors can invest if they like your company. Others offer services like salespeople who call through a list of deep-pocketed individuals. For us the kind of open marketplace was better – we were already a pretty well-known brand and the public process of marketing the round worked as a good PR stunt that attracted quite a lot of new customers. If our brand had been completely unknown, or if we didn’t want so much public promotion, then perhaps another platform would’ve worked better.
In either case, be prepared for public scrutiny. You will be making all of your startup’s little secrets public information, as everyone who considers investing in your company will need to get access to a lot of information. In a typical VC round, you will have to reveal the same info, but only to the prospective VC investors. With crowdfunding, you don’t know beforehand who the investors are, and you need to treat everyone, including the CEOs of your biggest competitors, as potential investors.
Lisa: What are your next steps?
Jani: Our focus now is to keep growing the business. We reached profitability last winter and the business has been growing well, but we’re still quite small. We need to double our revenue a couple of times over the next couple of years while maintaining the high quality of service and keeping the business profitable. We are living in exciting times, since the translation industry is going through a major transition from the old ages to the digital age, and I believe Transfluent is one of the companies that could benefit a lot from the upheaval.
Lisa: Thanks for that, Jani, and we’d like to wish you every success with the upcoming IPO! We’ll keep our readers up to speed after the next stage of the Transfluent success story. Happy to personally connect at Slush in Helsinki in November!
Write a comment