Crains New York - January 14, 2013 - (Page 14)

SMALL BUSINESS Startups break language barriers New York’s diverse talent pool attracts firms to burgeoning translation field BY MAGGIE OVERFELT F or two years, growth at Terena Bell’s languageservices firm, In Every Language, wasn’t occurring at the rate she wanted. But things changed last May, when she opened a Brooklyn office of the profitable sixemployee company. Tapping New York’s multilingual talent pool, Ms. Bell was able to take on much more work translating marketing, packaging and research materials for Fortune 500 corporations at the Louisville,Ky.-based firm, founded in 2005. Ms. Bell, whose clients have in- cluded firms such as Walt Disney Parks and Resorts and the Mr. Clean brand,says the company is on track to achieve its second-highest year in revenue, now under $5 mil- lion annually. “We couldn’t have grown if we didn’t open in New York, a hotbed for people who do what we do,” she said. Known as both a cultural melting pot and tech hotbed, New York City is reaping the benefits of a surge in the increasingly tech-enabled international language-services market, a $34 billion industry on track to grow 12% this year, according to Cambridge, Mass.-based research firm Common Sense Advisory. PROJECTED INCREASE in the number of translators in the U.S. from 2006 to 2013 24% Source: U.S. Department of Labor Mobile options Made up mainly of corporations that sell translation software or services,the field is dominated by established firms like TransPerfect, a $300 million translation services provider in Manhattan that made Crain’s list of fastest-growing companies in 2012. It’s also attracting startups.New York is now home to at least a half- dozen language-services firms, according to Common Sense Advisory.“Being in New York City,with its proximity to other like-minded tech companies, has many advantages,” said Nataly Kelly,author of the book Found in Translation:How Language Shapes Our Lives. One big plus is the ability to find engineers. “Wall Street’s problems of the last few years have probably helped nonfinancial companies in the city get more of the talent that otherwise would have been attracted to the outsize salaries,” said Don DePalma,Common Sense Advisory’s founder. Certainly, any new language- services firm must,according to Mr. DePalma, “convince prospects that they’re superior to alternatives such as the lowest-price bidder or free services such as Google Translate or Microsoft Translator.” However, many startups are sidestepping direct competition by offering solutions focused on easing the laborious translation process— which usually involves a team of human interpreters handling hundreds of documents. A new wave of such firms is mak- ing it more efficient for businesses to break down language barriers in emerging markets in Asia, South America and Northern Europe, where there’s been an explosion in mobile computing. These startups are peddling solutions like Webbased services that enable users to dial up translators on their smartphones or dashboards that allow companies to drastically cut the time it takes to translate websites into dozens of dialects. Lucrative market Smartling, a four-year-old mid- town firm, helps clients like Nokia more efficiently manage translations of websites and all their intricate code. Its first customers were Web 2.0 companies like Foursquare, but today the 55-employee firm is chasing a more lucrative market: global enterprises.Firms like Kodak make up about 20% of its client base. Many use its services to launch and translate trade-show websites and other international hubs. Smartling’s founder and CEO, Jack Welde, said that revenue is increasing by 50% each quarter. The company has raised $9 million in GOING GLOBAL: Smartling’s Jack Welde is pursuing multinational corporate clients for his firm, which translates websites. venture funding. One advantage of being New York-based, says Mr. Welde, has been 100% retention of its 36 engineers, who speak 12 different languages. “Our diverse, multicultural and multilingual team reflects the nature of this city,” he said.  SMALL BUSINESS newsletter, go to www.crainsnewyork.com/smallbiz. To sign up for Crain’s Gap buy signals growth in retail M&A market Intermix purchase comes as industry seeks ways to boost customer base BY ADRIANNE PASQUARELLI Retail consolidation is back in style. Mass-market clothier Gap Inc.’s recent $130 million purchase of contemporary fashion chain Intermix is just the latest in a string of arranged industry marriages. “Different types of companies are getting into the acquisition mix and creating some interesting pairings,” said Alison Jatlow Levy, a retail strategist at consulting firm Kurt Salmon. Following a lackluster holiday season and years of stunted growth, stores are grasping for new strategies to expand their global presence and attract new consumers.Sales during the crucial holiday shopping period increased only 0.7% this past year compared with 2011—the smallest gain in four years—according to a SpendingPulse report released by MasterCard Advisors.In 2011,sales rose 2% for the same period over 2010. Though private-equity firms had been big retail buyers in the early part of the last decade, retailers are now looking to spur their own growth through acquisitions. In addition to Gap’s buying Intermix, Tokyo-based Fast Retailing Co. Ltd., the parent of Uniqlo, recently 14 | acquired a majority stake in upscale denim label J Brand. Teen retailer Aéropostale Inc.acquired Canadian e-commerce company GoJane.com this past fall to bolster its online operation. Climate is right Such purchases are an easy growth strategy for larger retailers that have exhausted their own global store fleet and need to beef up revenue through other corridors. Brand acquisitions, however, don’t always work out.Liz Claiborne Inc. has spent the past few years unloading all but three of its 40 brands, acquired during a 1990s shopping spree that bloated the company and Crain’s New York Business | January 14, 2013 loaded it down with debt. In fact, it sold off its namesake and is now known as Fifth & Pacific Cos. Likewise,Kellwood Co.,which owns Sag Harbor and Rebecca Taylor, among other labels, faced near-bankruptcy in 2009 after piling up huge debt during the recession. Still, the current environment is once again right for retail consolidation as larger companies like Gap look to grow without oversaturating the market and smaller firms look for financial white knights. Retail experts say that an acqui- sition by a larger retail rival is preferable for most brands, since privateequity investors usually have a strict growth strategy that includes an exit MASS MARKET WEDS CLASS ACT Gap Inc. just purchased smaller rival Intermix deadline. Additionally, private-equity firms often burden firms with debt that can be difficult to overcome. Linens ’n Things liquidated in 2008, three years after a $1.3 billion acquisition by Apollo Management,for example.Conversely, large retailers, which are attuned to the demands of the industry, have more realistic expectations and are more interested in long-term gains. “Private-equity companies gen- erally want to exit their investment in five years or less, and that puts tremendous pressure on the [retail] founders to grow on a schedule that may not line up with the economy and consumer palate,”said Kim Vernon, chief executive of consultancy Vernon Co. “If I were a brand today, I would go to a strategic acquisition.” Gaining a foothold For Gap, the advantages of buy- ing Intermix this month are clear. The San Francisco-based retail giant gains a foothold in the designerdriven, higher-end world—a new category for the $14.5 billion firm. Five years ago, Gap made a similar move into uncharted territory with its $150 million acquisition of activewear brand Athleta. Twenty-year-old Intermix, on the other hand, can use the global reach of Gap, which has stores in 90 countries, to expand internationally and to venture into its own privatelabel business. The transaction also gives the smaller company,which reportedly generated sales of about $125 million in 2011, an edge over longtime rival Scoop, another New York-based chain,with 13 locations. “This is an opportunity for Intermix to get to the next level,” said Michael Londrigan, chairman of the fashion merchandising department at LIM College. He noted that Intermix should remain a separate entity,though.“If they start trying to utilize Gap for merchandising and design for Intermix, that would be a mistake,” he said. Similarly, the $290 million purchase of 80% of Los Angeles-based J Brand last month was just a drop in the bucket for $11.8 billion Fast Retailing, but it gives the larger company an increased exposure in denim. Though Fast Retailing also owns ‘If I were a brand today, I would go to a strategic acquisition’ Theory and Comptoir des Cotonniers, it still has not made great inroads with American sportswear and could use the increased U.S.exposure. “Fast Retailing is gaining a prod- uct expertise in a category they haven’t nailed the way they’ve nailed cashmere,”said Ms.Vernon.Meanwhile, J Brand, like Intermix, gains more marketing and distribution muscle.  buck ennis vs http://www.crainsnewyork.com/smallbiz http://www.GoJane.com http://www.Advisors.In

Table of Contents for the Digital Edition of Crains New York - January 14, 2013

Crains New York - January 14, 2013
In the Boroughs
In the Markets
The Insider
Business People
Opinion
Greg David
Small Business
Report: Real Estate
The List
Classifieds
New York, New York
Source Breakfast
Out and About
Snaps

Crains New York - January 14, 2013