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italki.com Puts Language Immersion Online
 Eric Pang has been in China for more than three years and has been involved with several Internet startup companies. He came to China after working on e-commerce development at Target (NYSE:TGT) and consulting Asian companies on the U.S. market. He joined Shanghai-based italki.com as president and chief operating officer in May 2008. With a permanent staff of 15, italki.com bills itself as "language learning 2.0," the way to bring the immersion experience to Internet users around the world. JLM recently sat down with Mr. Pang to discuss the italki model and doing global business in China.
JLM: When did italki.com launch?
Eric Pang: italki went live in December 2006. Our founders, one American and one local Chinese, knew that immersion is the most effective way to learn a foreign language and that the Internet was the perfect way to deliver this experience. They coupled this with Web 2.0 concepts such as collaborative content and social networking to create a really unique learning model. We’re really excited about our newest service, a Languages Marketplace where students can find quality teachers for the language they’re studying, which was officially launched just a month ago.
JLM: How many languages does your site cover?
Pang: Users can find resources and language exchange partners to help them learn over 100 languages. In addition, we effectively leverage our user base to help translate our site, which can currently be read in 18 languages, the most in our industry.
JLM: How do you generate revenue and get new users?
Pang: Our revenue model is driven by the italki Languages Marketplace. To date our focus has been on building a large and vibrant community and becoming the best place on the Internet to find everything one could need to learn a language. We believe that a large number of our users will take their language learning to the next level and engage a teacher. The immersion experience which we provide via online language exchange, combined with a teacher’s structured program is the key to mastery.
For user growth, our members are passionate and dedicated to language learning so the largest driver of our growth has been word of mouth. We’ve also been lucky to receive a lot of positive press and blogger coverage from all over the world.
JLM: Can you talk more about your Languages Marketplace?
Pang: Right now it’s a C2C [consumer-to-consumer] model, where individual teachers set their own curriculum, availability and prices. Students can select between professional teachers or tutors, who are performance-rated by our community. It’s a great enabler, since students aren’t limited to the teaching resources in the city they live in, and teachers from places big and small can earn some income. Students can find the teacher that best fits their needs, whether it be to help with their university study or before they go on a trip to a new country. We’re working on improving and bringing additional services to the Languages Marketplaces as well.
JLM: What's the size of your user base so far?
Pang: Right now we have over 450,000 registered members from all over the world. Our users are in 200 countries and evenly spread, with about 20% from China, 15% from Western Europe, 20% from North America, 20% from South America, 15% from Eastern Europe/Russia and 10% from Middle East/Africa.
JLM: Is there something special about Shanghai, or could you be operating this business from anywhere in the world?
Pang: I think there are a couple of benefits of operating out of Shanghai. One is that our development costs are much lower than our competitors. Secondly, with Shanghai being such a cosmopolitan city, we can draw on the international community here to help with localization.
JLM: Aside from your cost position, what distinguishes your company from other online education communities?
Pang: The italki community. We are different than other players in that our investors and founders are language teachers and students and understand teachers and students’ pain. This is borne out by the superior stickiness of our users, many of which have been with us since the beginning.
JLM: Talking about SNS functionality, have you thought of cooperating with domestic sites like Xiaonei.com?
Pang: We haven't done anything official with Xiaonei.com or other China-based social networks. Part of the challenge in our business is that we need to maintain a language supply/demand balance. Partnering with Xiaonei.com would certainly bring us many Chinese users, but without enough speakers of other languages to give them a useful exchange experience these users would soon leave. Still, with the vast potential of the China market, we are looking into ways to tap into it while still maintaining a positive and valuable user experience for everyone.
JLM: Have you seen any changes in language popularity over the last couple of years?
Pang: English has always been on top, but, over the past couple of years, we have seen Chinese and Arabic experiencing the fastest growth. Russian and Portuguese are also growing quickly.
JLM: In terms of the current market, do you think education is performing better than other sectors?
Pang: We are definitely seeing strength in education what with the recent IPO of Rosetta Stone and the acquisition of Wall Street English. Education is among the strongest sectors in the market.
JLM: Do you think there will be more consolidation in your web space?
Pang: Absolutely. There are a lot of smaller players in the space that just don't have the user base to remain competitive. We have already seen consolidation, and some competitors simply going out of business. We are very well-situated in the industry.
JLM: Can you say anything about stickiness? How long do users remain part of the community, or do they hop from one language to another?
Pang: The italki site is very sticky with a large number of our registered users logging in every month, week and even day. While it’s difficult to comment on the entire user life cycle because we are so young, there's definitely a hardcore set of users that stay on the site and set themselves up as resident experts like editors on Wikipedia. Plus, we have the social network aspects, so people come back to learn about different cultures or practice their language skills even if they are advanced students.
JLM: Are you thinking of adding more social networking functions to your site?
Pang: Yes, community development is a big part of our plans. One of the strengths of our company is that we have highly involved and active members. The social networking functions keep the site fun and alive for them.
JLM: Can you talk about the challenges you face running a global business from China?
Pang: Challenges include dealing with many different currencies and the closed nature of some countries’ financial systems. Also, as a global company, sometimes it’s hard to find people that understand international site design, marketing and PR requirements.
JLM: italki raised $150,000 in its first round of angel funding. Has your company raised any more funds since then?
Pang: italki is currently fundraising.
JLM: Do you have any plans going forward?
Pang: Partnership is the watchword going forward. With my own background of coming from the brick-and-mortar world to the web, I think there is real opportunity for us to partner with and complement offline learning institutions, from language learning centers to universities. In addition we look forward to partnering with online players from product and application developers to content providers.
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