Growing a Two-Person Team Into a $1 Billion Success

How CEO and Co-Founder Phil Shawe took TransPerfect from a dorm room venture into a thriving business with over 10,000 employees.

TransPerfect may be one of the world’s leading translation services companies, but CEO Phil Shawe describes its beginnings as a “school project gone awry.” He started the venture alongside his partner at the time, Liz Elting, whom he met at New York University Business School. The pair identified a market opportunity for more efficient, client-friendly translation services, and the pieces promptly fell into place. Today, the company has more than 10,000 employees and has enjoyed 33 years straight of top-line revenue growth.

The company’s startup tale has featured more ups and downs than most, complete with a tense court battle that resulted in a relocation to Puerto Rico. But it’s also full of lessons about the importance of taking advantage of new technologies rather than fearing them—something particularly pertinent for current times. 

Shawe early in his career

   RIGHT PLACE, RIGHT TIME

The initial idea to start a translation company arose after Elting worked for a leading translation company and discovered she couldn’t deliver consistently to clients. There was a need for a firm in the sector that could work backward, fitting the customer’s requirements into its workflow instead of imposing its own processes.

It was perfect timing for Shawe, who realized he preferred an entrepreneurial path. While working at a bank to pay his way through college, he noticed: “We had two floors of people in New York City working on these decisions for two or three years when it seemed like you could say just give a couple of us a map and some pins and we’ll figure it out for you in an afternoon.”

Luckily for him, his graduation came at a time when globalization and technology were entering a golden age. It was the perfect opportunity to revolutionize the translation industry.

Shawe and Elting aimed to make a customer-centric foreign language translation services company that could fulfill client requirements better than the competition, and they quickly found success thanks to a solid network of highly skilled translators. 

Shawe recalls an early project that involved working with geologists to translate technical material for opening a gold mine in Russia. Before AI and the internet were mainstream, finding the few people in the world with the right language and technical skills was no easy task, and TransPerfect emerged to fill the gap.

Shawe credits his success to his well-rounded job experience

   SECRETS BEHIND IMPRESSIVE GROWTH

One of TransPerfect’s greatest achievements is that it has consistently grown every year.

Shawe puts a lot of this success down to the fact he has done every job along the way. “There’s only a few jobs, the high-level IT and maybe accounting jobs, that I literally couldn’t do myself,” he says. “So I think that was very key in the phases where we’re growing the company.”

One place where TransPerfect stands apart is its determination to build up its staff. Many people on the management team have been with the company for 15 to 25 years, partly due to incentive structures that aim to retain them and help them succeed within the firm.

TransPerfect also promotes from within. As well as benefiting the company, this has a positive impression on clients and stakeholders. Shawe recalls that when he was seeking the financing to buy out his partner, he noticed: “When everybody went around the room and our manager stated their titles and how long they’d been at the company, it gave the bank great comfort that they were working with people that had been working together on average for 20 years.”

He also attributes some success to the diversity of customers. The firm services different industries and no client makes up more than 5% of revenue, yet they also put a lot of effort into maintaining the customers they have.

Salespeople play a key role in this. Shawe noticed that some companies have a commission structure that converts clients into house accounts after three years, meaning a salesperson is incentivized to lose the customer and then sell to them again rather than retain them. TransPerfect takes a different approach.

“People think about high-growth companies as pounding phones, doing business development activities, going to trade shows, and hitting the streets,” he says. “And that is all very important. But I would say the most important thing if you really want to run a high-growth business is to not lose your customers, or to lose them at a far lower rate than your competitors.”

Shawe speaking at a recent conference

   EMBRACING TECHNOLOGICAL CHANGE

Perhaps the biggest lesson from TransPerfect’s fast growth is the way it has been able to adopt and embrace new technology. 

“If there’s a faster way and a better way, we need to be bringing those solutions to the customers and, if not, someone is going to come over the top of us and steal our customer because they’re going to be offering those solutions,” he says.

While technology was only just beginning to become relevant for the translation industry when TransPerfect started, $350 million of its billion-dollar revenue now comes from technology-enabled services. 

The company’s adeptness at embracing technology was made possible by its dedication to always listen to what its customers are saying. Shawe recalls that, at one point, TransPerfect discovered its customers were having problems with their e-discovery providers. This inspired the company to get into e-discovery services—fast forward to today, and TransPerfect is one of the world’s largest providers in this space.

Similarly, while Shawe says AI has been trying to put the firm out of business for 10 years, TransPerfect is using it to do more for customers. “They’re always going to want more languages or more services or more project management,” he says. Neural machine translation and generative Al have proven to be especially valuable tools.

TransPerfect is now getting engagements that nobody expected since so many AI applications start and end with language and the use of language to make things more efficient.

For instance, by helping customers develop translation memory databases, TransPerfect can help clients translate more efficiently—meaning they’re paying less and less over time.

This is taking the company from a provider of language solutions to a technology solutions company. 

Shawe with the TransPerfect team

   TALES FROM PUERTO RICO

The company’s story would be incomplete without including some of the drama that came along the way. Shawe and his partner founded TransPerfect in Delaware, leading to consequences later down the line. 

“One thing people don’t know when they start a company in Delaware is they give up their constitutional right to have their disputes handled in front of a jury, to submit to a juror, to submit to Delaware as a jurisdiction, and must submit to a bench trial of kind of an all-powerful chancellor,” Shaw says.

His partner wanted to leave the corporation without an illiquidity or a minority investor discount, and obtained an order to dissolve the company and sell it by auction, resulting in a huge battle with the Delaware Chancery Court.

To avoid bad tax consequences, the best solution was to move the business operations to Puerto Rico. It was a decision made with just eight days left in the 2018 tax year, and involved an eye-watering $250 million spend on attorneys. But the silver lining is the Puerto Rico way of life.

“It’s a healthier lifestyle,” he says. “Nine months out of the year, it’s got the greatest weather in the world. It’s got a month where you have to worry about hurricanes and it’s got three months where it’s too hot. But I can’t say enough good things about Puerto Rico and the really smart bilingual staff here.”

   ADVICE FOR OTHERS

Taxes and weather aside, Shawe has some salient advice for future entrepreneurs. He advises leaders to learn to take responsibility, and to resist the temptation of directing blame toward clients or the company.

“If there has to be a tough decision made or somebody has to work the weekend and you have to make that call, you should own that call,” he says.

As for his future plans, there’s no sign of TransPerfect slowing down anytime soon. After moving from a translating business to a technology-based company, Shawe’s next step is to move into consulting.

After supplying most of the software in the world used for translation and global communication by large corporations, Shawe found that “we have so much expertise in language and Al we actually have found ourselves bidding against McKinsey and Accenture for consulting projects.”

Not bad for a business that started in a college dorm room.

Phil Shawe

CEO | TransPerfect

Age
55

Residence
Puerto Rico

Education
New York University

Early Career
Chemical Bank in New York

Philanthropy & Causes
The V Foundation for Cancer Research


TransPerfect

Founded
1992

Headquarters
NYC

Employees
10,000+