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October 31, 2016

Building multilingual understanding between companies and their customers

Notion Capital leads Series A round in Unbabel with Caixa Capital, to bring artificial intelligence to the global translation market.

My starting point for any investment is simple, is this a problem worth solving? Well imagine a world where language differences were no longer a barrier to globalized commerce, because that’s the promise of Unbabel.

In my opinion, Global GDP would be a multiple of what it is today if language barriers in the written form were removed as a head wind for growth.

We had personal experience of this at MessageLabs – the company we founded in 2000. By 2008 we had 10 million users and 20,000 customers in over 200 countries. However we were only dominant in English speaking countries or where English was the enterprise business language.

With more than 600 employees, we only had more than two employees in two countries where English was not the first language – Germany and Hong Kong. We grew to $150m subscriptions in eight years in English speaking countries because they needed zero localization, our unit economics were phenomenal and our NPS was off the charts.

SO that’s where we deployed investment and people compared to non English speaking countries. Imagine how much bigger we could have been if language had not been a barrier – FAQ’s, Data Sheets, Service Tickets, Website, Blogs, Content, Communications – need I go on? It’s a massive headwind and billions in wasted opportunity.

Continuing on that theme we are pleased to announce that Notion has led a $5m Series A round with Caixa Capital to build multilingual understanding between companies and their customers.

Our Unbabel View

Every globalizing company is experiencing the issue of translation and it’s a serious issue for them, their consumers, customers and staff and it’s going to become more prevalent.

There is a $38billion market translation services market (rising to $45bn in 2020) which currently has a low technology and high cost approach – therefore the vast majority of the market does not get to play as it’s typically too expensive and involves too much human intervention. In short, there is limited advanced technology driving the speed and the quality up and the cost down which reduces the number of use cases and adoption at scale.

When we looked at the results Unbabel was delivering for customers like Pinterest, Oculus VR, UnderArmour and SkyScanner, the value was off the charts. For one customer, support cases fell by 20% and customer satisfaction shot up by over 50%. For another, their USA-based customer service managers used Unbabel to “speak” German, with a much higher CSAT score than the native German speakers they had previously used. In short, incredible results with every stakeholder winning and an entirely new and explosive paradigm for globalising enterprises.  

What’s exciting about the business model?

No two business models are the same, so with new investments I am often asking myself “what’s the advantage of your model which consolidates market participants to you and why now?”  

I get a little bit geeky and very creative when we’re working on business model innovation and strategy. And everyone at Notion knows what I like; business models which consume and enrich data, develop proprietary data networks and address an industry defining problem. And the very essence of solving the problem creates even more demand.

So what is Unbabel?

Unbabel is building the translation layer for the internet and exposing this via API’s. There are over 6,000 languages in the world and we are shifting from an 75% dominant English-speaking Internet in the mid-90s to around 25% by the end of 2015, with Arabic, Russian and Chinese content rising by thousands of percent per year.

In the future, Enterprises, Organisations and Governments will no longer operate in isolation from their markets or their customer’s mother tongue and will have no choice but to execute in localized language. Or suffer the negative impacts on the brand, sales, support, costs, NPS, satisfaction and staff. The pain and the cost is huge and upside even bigger. Whilst today we may have an Internet of walled gardens tomorrow, with Unbabel, those walls come crashing down.

Unbabel brings together some big converging technologies and trends (mobile, AI, ML and API’s) to solve their problem as a platform, driving up the quality of translation and driving down the price, creating entirely new markets and use cases for their API’s and services. Take the explosion of bots – they are only trained in one language unless they plug into the Unbabel API Cyrano. This is just a tiny insight of the power of the platform.

With Unbabel – everyone is speaking the same language regardless of the mother tongue. Including the Bots!

The Light Bulb moment

I have to really challenge myself about all the founders we invest in and what impact are they going to have on the world we live in.

I am fascinated by any founder’s story and that “light bulb moment” which drives them to imagine a world fundamentally different from the one we live in today. This light bulb moment, the proverbial apple on the head, often drives them for the rest of their lives and becomes more fully who they are and often becomes their identity. What led them there, what’s happened since and how’s this going to play out over time? The bigger the impact they have on the world the less human they become and the more they become the ‘founder of’ vs the daughter of, father of, wife of etc. Think of Sir Isaac Newton, what’s he remembered for? The fundamental genesis of value of any investment I sponsor is about the founders and their ability to translate their idea into a massive entity or movement which impact the lives of millions in business or billions of consumers those businesses serve. So I always start by challenging myself with ‘what are these founders capable of & what impact are they going to have on this planet?’

Our Unbabel Founders view

In the case of the founding team: Vasco, Joao, Hugo & Bruno. Were they put on this planet to transform the world we live in by solving this universal but complex issue? Can they drive down the cost of translation, drive up the speed and make translation universally available in systems? Can they do this at scale? Can they build a massive business?

Well we’re going to find out, but my answer is yes. Of course we’ll need some help and luck on the way but you can stack these odds in your favour!

  • Are they smart enough? Yes and it’s not just the 6 Phd’s, the papers and the patents.
  • Are they creative enough? Yes and it’s not just their thinking
  • Can they evolve themselves 2x faster? Yes. No question
  • Can they lead, inspire and attract game changers? Definitely yes, yes and yes.

And often overlooked: are they patient on the one hand, thinking things through; but aggressive on the other and hate losing as they earn the right to compete and scale?

The answer to this last one was simple. Having spent many days working with them on their business model, witnessing the the speed of change and the growth they are delivering. Picking up on their API for their Zendesk customers they’re already consuming millions of data points, with a rapid growth curve; their quality estimation algorithm is running super hot and is best in class; and they are well on their way to having a market share > 20% with enterprise customers adopting in their droves. My 20 years of experience knows how a rare beast this ease – low cost to acquire, low sales friction, high adoption enterprise sales cycles and 50% QoQ growth just on the Zendesk API.

So put simply, I could not be more excited to be working with this team. It feels like a privilege.

Posted by Chris Tottman, Partner at Notion Capital.

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