Christian Arno (pictured), 32, had been teaching for just two weeks when he gave up.
As part of his languages degree, he’d been sent to an Italian university to work as a teaching assistant. But “I really wasn’t a very good teacher. I didn’t have the patience.” So he became a web entrepreneur instead. “It was 1999 and everyone was talking about the dotcom bubble.” Rather than teach, he spent his placement year setting up an online translation service. He was fluent in French, Italian and English, and his contacts could help out with other languages. Jos Shepherd, a “techie friend”, set up the site. The firm, TGV, was born.
Despite a “terrible-looking website”, it got off to a good start.
“In those days Yahoo dominated the search engines and for some reason we came up in their results.” TGV provided Arno with “some beer money”, but looming exams and a return to Oxford University meant he “didn’t really try to grow the business”.
Upon graduating he faced a choice. “It was either: get a ‘proper job’ like my friends or try and make a success of the site.”
He opted for the latter and moved back to his parents’ house in Aberdeen to focus on the business, helped by a lucky trade he’d made while in Italy.
He had invested £500 in internet firm Knowledge Management Software. The shares soared in the tech boom and he sold them for £15,000. “It was enough for me to get the business going and not worry about earning money for a while.” He re-launched as Lingo24 and gave Shepherd a 20% stake in exchange for a new site.
By then Google was replacing Yahoo as the dominant search engine. Arno realised he had to climb up its rankings. “I taught myself search-engine optimisation techniques and gradually got up there.” His customers ranged from desperate students needing last-minute help to oil and gas firms in Aberdeen.
By 2002, sales had hit £43,000. “That doesn’t sound a lot but the profit margin was good as I had very low costs.” Arno used the sales to hire better translators. “There is a big difference between a student and a professional.” It paid off when a large travel agency brought him business worth hundreds of thousands of pounds. This paid for a “hub” in New Zealand “that made us a truly 24-hour company”. Sales grew fast, hitting the £1m mark in 2006.
But in 2007, Google judged that Lingo24 had “broken one of its rules”. It pushed the firm further down its rankings. Sales fell and Arno was forced to cut staff. Desperate for new business he hired a sales team and began targeting trade shows.
This return to traditional marketing paid off. Sales recovered, while Lingo24 also benefited from the rise of China. “There has been a dramatic increase in demand for Mandarin translation.” Setting up a Chinese base wasn’t easy. “I was a bit naive. I hired someone I thought I could trust. It turned out he was a convicted murderer. In the end he stole lots of money from us.”
But Arno went on to make a success of the Chinese hub. Lingo24 now has bases in seven countries and individualised websites in 65. Last year sales were £5m.
Arno now plans to combine online marketing with translation. “We can help firms find a low-cost way to sell to foreign countries.” That could prove popular.
How We Turned Around Our Internet Flop
In IT, the line between the right and wrong product can be very fine.
In 2008, Aneesh Varma and old school friend Manav Gupta “were sure that the mobile internet was going to take off ”. They wanted to develop a program that would transfer digital content between PCs, laptops and phones. Varma quit his job with investment bank JP Morgan in London and Gupta quit his post with Hewlett Packard in China. They used their combined savings of £100,000 to contract software engineers and office space in China. “Between his technology contacts in China and my business contacts in London we had a great combination,” says Varma. However, they also had the wrong product.
After just five months they realised “we couldn’t make a product that could handle all of the data and was simple to use. Also the companies we visited were not convinced that their customers would want to use it.” Disheartened, the pair pulled the plug and pondered what to do with “a good team of engineers and important contacts with big companies”.
Their break came with a tip-off that American TV channel The Food Network wanted to develop a content aggregator, “a program on their website that would allow their customers to share family photos, history and details”. As this new product shared similarities with their failed program, the pair agreed to take it on. The money from it kept the firm afloat for a few more months and gave FabriQate a new direction. “I realised our technology and expertise could be used to build ‘social media type’ platforms for firms.” A media frenzy was a big help. “Companies were worried about missing out and prepared to spend.” The pair began to approach more companies, offering to build content-sharing platforms for their websites. As they won more projects, they took on more staff.
Then came the financial crisis.
Luckily, it helped them. “Big firms slashed their R&D
budgets because they didn’t want the risk of failed projects – instead they outsourced the innovation to smaller, cheaper companies like us.” By the end of 2009 sales hit £250,000, which was reinvested in more developers. “It might not sound like a lot but it ’s not a very capital- intensive business.” One example of what they could do was the creation of website sections that showed videos of bands before taking buyers to a site selling concert tickets.
By 2010 the infrastructure of the internet was improving fast. “We had always wanted to concentrate on mobile internet but our ambition was hampered by connection limitations.” But as smartphones increased and became more advanced, FabriQate offered mobile social media platforms. A loyalty card smartphone application for fast-food firm Kentucky Fried Chicken worked a treat. “It ’s so much more sophisticated than a paper loyalty card and makes KFC money because they can use it to understand their customers and boost sales.”
As more firms jumped on the social media bandwagon, sales began to rocket. FabriQate added branches in India and China – a slew of new buyers including American broadcaster Fox followed.
Last year the firm’s sales topped £3m and it now employs 43 people.
Looking “to go to the next stage”, they are in talks with investors. “Mobile internet has a great future. We hope to take advantage.”