#68 Lilt CEO Spence Green on Predictive Translation and the AI Agency’s Roadmap

SlatorPod #68: Insights on AI in the Language Industry

Introduction to SlatorPod and Guest Speaker

• The episode features Spence Green, CEO of Lilt, a leading AI agency in the language industry.

• Lilt transitioned from a technology company to a major player in the language sector over six years, securing significant VC funding from firms like Sequoia and Red Point.

Discussion Topics for Today

• The hosts plan to discuss the ProAct legislation in the US and its potential impact on the language industry.

• TransPerfect's quarterly results will be highlighted, along with developments in voice synthesis and media localization.

Apple’s Podcast Platform Update

• Apple is launching a new podcast subscription service that allows creators to monetize their content, moving away from an open-source model.

• This change could significantly alter how podcasts are distributed and monetized, potentially affecting creators' revenue streams.

TransPerfect Quarterly Results Overview

• TransPerfect reported Q1 revenues exceeding $230 million, marking a 21% increase compared to previous quarters.

• The growth indicates strong organic performance without acquisitions; this aligns with broader trends suggesting a boom in the language services market.

Sector-Specific Growth Insights

• Key business units such as gaming and media localization showed notable growth; travel and tourism sectors are also recovering.

TransPerfect and the Language Industry Landscape

Current Trends in Travel and Translation Demand

• Discussion on TransPerfect's GlobalLink, highlighting its significance despite not being a standalone product. The speaker notes that travel retail is currently uncertain regarding who is traveling and how it affects translation demand.

• Mention of a potential summer surge in travel due to mutant viruses, reflecting concerns about future restrictions as businesses reopen.

• Anticipation of strong results from RWS based on TransPerfect's performance, with an emphasis on the difference between trading updates and full financial results.

Legislative Changes Impacting the Language Industry

• Introduction of the PRO Act by House Democrats aimed at facilitating union organization and collective bargaining for employees, raising questions about employee rights.

• Explanation of the PRO Act's intent to clarify what it means to be an employee versus a contractor, which could have implications for language service providers.

• The ALC (Association of Language Companies) is actively monitoring these legislative changes, seeking exemptions for knowledge-based industries similar to past legislation affecting gig workers.

International Comparisons: UK Legislation

• Inquiry into whether similar legislation in the UK has impacted services jobs like those in California concerning Uber drivers' treatment.

• Uncertainty expressed about immediate impacts on professional services jobs due to existing political priorities; previous tax system reviews are noted as barriers to change.

Innovations in Synthetic Video Technology

• Introduction of Synthesia, a synthetic video avatar startup known for creating lifelike avatars capable of speaking multiple languages using typed content instead of traditional recording methods.

Overview of AI Video Generation and Media Localization

Response to Beta Launch

• The company has experienced overwhelming user response since launching in beta, now boasting thousands of users and significant traction.

• They emphasize the ability to input multilingual content into their system, allowing avatars to speak multiple languages without needing extensive infrastructure for recording or actors.

Cost and Complexity of Video Production

• Current video production is described as costly, complex, and unscalable, requiring various resources like students, actors, cameras, and post-production efforts.

• A notable example includes an advertisement featuring Snoop Dogg for Just Eat, showcasing their capability in creating engaging content with avatars.

Marketing Strategies

• The company collaborates with high-profile figures like Snoop Dogg and David Beckham for marketing purposes.

• Concerns about deep fakes are raised; while some may find the technology appealing, others question its authenticity in certain contexts.

ZOO Digital's Financial Performance

• ZOO Digital is a UK-based media localization company that recently raised its financial forecasts by $1.5 million for the fiscal year ending March 2021.

• Their expected EBITDA is projected at $44.5 million—more than double from the previous year—indicating strong growth potential in cloud dubbing services.

Industry Trends and New Ventures

• The market is recovering as new title productions resume following lockdown restrictions in Hollywood.

• Björn Lifvergren has launched LinQ Media after co-founding BTI Studios; he aims to provide a boutique service amidst industry consolidation concerns.

Insights on Market Positioning

Boutique Style Localization Services

Emphasis on Client-Centric Approach

• The company aims to provide a boutique-style service, focusing on close collaboration with clients at a local level.

• This approach emphasizes customer-led premium services, contrasting with larger companies that claim similar offerings but may not prioritize them as highly.

• The founder's passion for the industry is evident, having returned after two decades, suggesting a deep commitment rather than seeking retirement.

Founders' Motivation and Seed Funding

Continuation of Localization Efforts

• The title of their initiative reflects an ongoing commitment to localization, indicating that the founders believe there is still significant work to be done in this field.

• All three founders were previously successful executives at BTI Studios and decided to collaborate again after realizing they weren't finished with their mission.

• They successfully raised a small seed round of funding from both themselves and external investors.

Introduction to Spence Green and Lilt

Transitioning into Entrepreneurial Ventures

• Spence Green is introduced as the CEO of Lilt, marking his first entrepreneurial journey after several years in the industry.

• There is anticipation around discussing Lilt's growth and technology, highlighting Spence's previous positive experiences with their tech solutions.

Background of Spence Green

Journey into Translation Technology

• Spence recounts meeting Florian at various conferences over the years, establishing a history between them since 2016 when Lilt was first covered as a promising company.

• Both he and his co-founder have backgrounds in research focused on machine translation, which initially drew them into the language translation space.

Impactful Opportunities in Language Translation

Addressing Information Access Barriers

• Their motivation stems from recognizing language as a barrier to information access for non-English speakers; thus, they pursued graduate studies to tackle this issue.

Evolution from Machine Translation Research

From Theory to Practical Application

• They realized that while machine translation systems can predict translations, they cannot verify accuracy—critical for business cases like publishing.

Tech Implementation at Scale

Interactive Machine Translation Systems

• Initially developed within an academic context, Lilt’s technology focuses on interactive machine translation designed for human interaction—a concept dating back to the late sixties.

Engineering Challenges in Language Technology

Key Engineering Issues in Deployment

• The speaker discusses the engineering challenges faced when deploying a system that enhances speed and accuracy for users, highlighting that previous research prototypes had not successfully demonstrated these capabilities.

• Two main functionalities of the system are emphasized: self-training through user interaction and real-time prediction during typing. This raises issues of synchronization among multiple users and maintaining low latency (around 200 milliseconds).

• The use of public cloud infrastructure allows for multi-regional deployment, which is crucial for responsiveness and global updates, presenting an ongoing engineering challenge.

• Achieving a globally consistent learning system while ensuring fast performance across various regions has been a significant focus over the past five years.

Team Composition and Dynamics

• The speaker reflects on the complexity of building machine translation systems, noting that while neural network approaches have broadened participation, there remains a level of "black magic" involved in their successful implementation.

• The core team consists of about 15 researchers based in San Francisco and Berlin who develop the foundational technology, supported by an engineering team focused on application infrastructure.

• As Lilt transitioned to becoming a service provider, they expanded their team to include sales professionals knowledgeable about language services within enterprises.

Integration of Services with Technology

• An interesting dynamic exists between software technology experts and those with domain knowledge in language services; monthly meetings foster collaboration between these traditionally separate groups.

• The transition from pure SaaS to incorporating service layers was driven by market dynamics, necessitating effective interaction between different business components despite operational differences.

Operational Challenges as CEO

• Managing a technology-enabled services business requires parallel development of processes and software; this dual approach can be challenging but offers significant operational leverage.

• Ensuring strong company culture becomes increasingly important as the organization grows; combating complacency while fostering innovation is highlighted as a key responsibility for leadership.

Understanding the Role of Automation in Localization and Translation

The Current State of Localization and Translation

• Discussion on the economic layer occupied by outsourced service providers, particularly in law and accounting, focusing on automation's potential to reduce costs.

• Inquiry into how localization and translation fit within this automated spectrum, questioning the extent of work still performed manually by Language Service Providers (LSPs).

Cost Dynamics in Translation Services

• Highlighting current pricing models where agencies charge around 20 cents per word, leading to significant costs for businesses (e.g., $60-$80 for a single page).

• Emphasis on the need to further reduce costs through technology to make translation services universally accessible.

Operational Challenges in Localization

• Identification of operational inefficiencies as a core problem that cannot be solved merely by hiring more translators due to their limited availability.

• Introduction of machine translation (MT) as a necessary technological solution for improving accessibility across languages.

Advances in Machine Translation Technology

• Recognition that transformer architecture remains dominant in machine translation and broader natural language processing since its introduction in 2017.

• Focus on domain adaptation improvements, with next-word prediction accuracy rising from 60% to 78%, indicating better support for human translators.

Scaling Solutions for Enterprise Localization

• Discussion on scaling solutions tailored for enterprise clients accustomed to traditional localization methods, emphasizing ease of integration with existing systems.

• Description of customer service structure designed to resemble traditional service providers while facilitating modern approaches.

Barriers to Innovation in Localization

• Exploration of risk mitigation as a primary focus among localization managers, which hinders adoption of new technologies and processes.

Elevating Conversations Around Global Customer Experience

• Advocacy for viewing language as an essential component of customer experience strategy, highlighting personalization's role in building customer loyalty.

Understanding Localization as a Strategic Element

The Importance of Customer Experience in Localization

• Digital experiences on the internet require a strategic approach to customer experience, considering all touchpoints such as websites, apps, and support interactions.

• Localization is often viewed merely as an operational function rather than a strategic one that integrates various business components.

Elevating Localization within Enterprises

• Language Service Providers (LSPs) can help elevate localization by advocating for localization leaders to gain access to executive discussions.

• Transforming the perception of localization from vendor management to a strategic enabler focused on customer experience and growth is essential.

Building a Business Case for Localization

• Presenting data-driven business cases that highlight the impact of localization on growth can shift perceptions within enterprises.

• A prototype product developed by the research team connects website analytics with engagement metrics across languages, demonstrating strong results even in unexpected scenarios.

Trends in Quality Expectations and Machine Translation

• Companies are increasingly recognizing the need for high-quality localized content, moving away from generic translations towards more nuanced language use.

• The rapid improvement of machine translation (MT) technology coincides with rising quality expectations from companies regarding brand voice and copy editing standards.

Opportunities for Growth in Language Services

• There is significant potential for language service providers as businesses seek more precise and preferred translations rather than acceptable ones.

Perception of Venture Capital in the Language Industry

Investment Trends and Opportunities

• Historically, there has been less investment in the language industry, but recent years have seen an increase in venture capital and private equity interest.

• The goal of Lilt is to catalyze change towards making all products and services available in every language, which requires significant capital beyond what they have raised so far.

• The growth of the business indicates a need for more companies and investments to drive this change within the language sector.

• There is a notable increase in investor interest due to a tech-enabled thesis that recognizes enterprises' challenges with adopting new technologies.

• More examples of successful machine learning companies are helping investors develop their theses about localization businesses.

Features Supporting Multilingual Accessibility

• Lilt's roadmap includes key developments aimed at enhancing multilingual capabilities directly within enterprise systems rather than relying on middleware solutions.

• A shift from needing large translation management systems (TMS) to integrating multilingual support directly into existing business systems has occurred over the past decade.

• Lilt has expanded its integrations significantly, now offering around 30 to 40 connectors to facilitate easier access to language services for companies undergoing digital transformation.

Innovations in Quality Assurance

• To address bottlenecks in content production, Lilt has developed an "auto review" feature that automates grammatical error correction traditionally handled by human reviewers.

• This innovation aims to streamline the review process while maintaining quality, especially important when internal stakeholders make adjustments during reviews.

• Capturing insights from these adjustments is crucial for improving future translations and ensuring brand voice consistency across languages.

Future Outlook for the Language Industry

Impact of the Pandemic on Digital Transformation

Shift Towards Online and Digital Experiences

• The pandemic has prompted many companies to enhance their online and digital experiences, recognizing the need to communicate with customers in their own language.

• There has been a noticeable increase in strategic conversations among businesses regarding digital initiatives aimed at improving customer engagement.

• Companies outside traditional tech hubs, such as Silicon Valley, are also pivoting towards establishing comprehensive online presences.