In 2013 VerbalizeIt, human-powered translation service founded by Ryan Frankel and Kunal Sarda, was on the top of the world. VerbalizeIt was emerging as a star of the popular show “Shark tank” with 20,000 new customers downloading the app within 72 hours of the season finale. Thanks to the show VerbalizeIt also received founding offers from Mark Cuban ($250,000 for 25 percent of equity) and Kevin O’Leary ($250,000 for 20 percent). Why was Verbalize so appealing? The app leveraged the power of translators scattered across the globe to provide accurate translation and to match the speed of google translate. Ryan came up with the idea of VerbalizeIt when he got food poisoning in China and could not communicate with a pharmacist to get the necessary medication. To learn the full story see the pitch Ryan made to investors in 2013.
Disruption leveraging the crowds
VerbalizeIt disrupted the market for translation services. Prior to its launch customers had three choices. One was to use online services such as google translate. Online resources were free and provided instant service, but often lacked accuracy, cultural intelligence and failed to account for local dialect. Second were professional agencies that provided high quality translations but charged high prices and took time to process a request. Finally, one could hire a freelance translator online or offline, however that required time and effort to find the right person and agree on a price. VerbalizeIt came in between. Thanks to leveraging the crowds VerbalizeIt was able to provide accurate translations almost instantly, at a fraction of the cost translation agencies would charge.
VerbalizeIt is a two-sided platform. On one end there is a curated community of over 19,000 translators speaking 150 languages and dialects. On the other, there are customers who submit jobs to be done through the online platform. The customer can upload a file ($0.17 per word), send a video ($15.15 per minute) or just call ($1.75 per minute) and get instant translation. The process is seamless (see chart below). For example, with a document a customer uploads a file to the online system and receives an instant quote. After submitting, the file is being translated instantly and sent to the customer after being reviewed by one more translator. The platform creates value by allowing customers to get an accurate translation in a cheaper and faster way, on the other hand it allows thousands of freelancers to monetize their skills. VerbalizeIt also captures value by charging transaction fees from each translation that is being performed (35%-45% of the fee charged).
Curating the supply side
VerbalizeIt got the supply side right. From the onset of the platform, the supply of freelancers with language skills looking for an extra buck has been abundant. To ensure quality, each translator has to apply to the community and only 10 percent of applicants are invited to join the platform. This allows VerbalizeIt to control the size the supply so that translators are not discouraged by lack of job postings. In addition, the platform assesses performance of translators based on a 360-degree feedback loop from community leadership and customers.
The demand was not as easy as founders thought in the beginning. When launched in 2013, VerbalizeIt was intended to serve customers who require ad-hoc translation when traveling as well as for business. Daily rates averaged $1.50 per minute for retail customers and 27 cents per word for businesses. However, as company learnt revenue coming from ad-hoc travelers was not sufficient to sustain the community of dedicated translators. In fact, the cost of acquiring the customer was not covered by the value retail customers would bring to the business.
Hence, in 2015 VerbalizeIt decided to pivot into serving business customers with repeat translation needs. With the seed financing of $830,000 from FG Angels it seeks to establish language expertise in 50 industries and become the leader in the space. So far the company boasts Vimeo, TripAdvisor, Estee Lauder Companies and Yamaha among its clients. In the future the platform hopes to have the necessary momentum before competitors such as Transfluent, Smartling Inc., Gengo Inc gain traction.