Rosetta Stone, the 26-year-old language learning company, has been quietly reinventing itself, and the company’s growing Seattle outpost is increasingly playing a significant role in that transformation.
The downtown Seattle office of the publicly traded, Arlington, Va.-based company has expanded to 30 people over the past year. That’s a small portion of Rosetta Stone’s 700 worldwide employees, but the company has been making a series of key hires in Seattle as it adapts to a new era of the cloud and mobile devices.
“Most people, when you ask them about Rosetta Stone, they have some nostalgic feeling about the yellow box and the CD,” said Matt Hulett, the Seattle tech veteran who joined the company just over a year ago as its president of language, based out of the Seattle office. “I want people to know that we’re back, that we’re a digital SaaS product that’s vibrant, and we’re going to be growing.”
Within the company’s language business, Rosetta Stone has teams that sell subscription products to enterprises, nonprofits, K-12 schools, universities and government agencies, as well as a consumer-facing language learning division. The company’s other main division focuses on literacy, through Lexia, a Boston company that Rosetta Stone acquired in 2013 for $22.5 million.
The current office isn’t Rosetta Stone’s first foray into Seattle. The company acquired Livemocha, a Seattle-based online language community, for $8.5 million in 2013, and shut down the service in 2016. Livemocha was founded by by serial entrepreneur Shirish Nadkarni, who was inspired to launch the startup after seeing Rosetta Stone’s boxes at the airport and asking, “Why in the world is that service not on the Internet?”
Rosetta Stone has since made that shift to the world of subscription services and mobile apps, and its next big push will focus on international growth. The company is announcing Tuesday morning that Jerry Huang, former chief operating officer of Chinese English learning company iTutorGroup, has joined Rosetta Stone as senior vice president for international expansion of the language division, based out of the Seattle office.
Hulett, who is currently working on learning Spanish as a second language, said he believes the international potential is significant. In the U.S., a second language is often valued, but not always considered necessary. But in other parts of the world, it’s a must-have, and it’s not uncommon for people to speak several languages.
“The biggest opportunity is outside of United States and we’re going to be investing there,” Hulett said, pointing to the Asia-Pacific region in particular as a large opportunity to serve language learners.
Huang is one of several key hires the company has made in recent months to bolster its executive ranks.
- Christine Chambers, vice president of finance, joined Rosetta Stone from RealNetworks and also worked previously for the Bill Melinda Gates Foundation.
- Roya Salehi, vice president of literacy customer success, has been an executive at education companies Achieve3000 and Kaplan;
- Greg Spils, vice president of product for the language division, worked at Microsoft, Amazon, Rhapsody and Shazam before joining Rosetta Stone in March;
- Dan Holmes, senior vice president of global sales and marketing, spent 14 years at research and consulting powerhouse Gartner.
The shift from yellow boxes and CDs to subscription services has also changed the company’s financial picture. In 2017, Rosetta Stone reported $184.6 million in revenue, down from $194 million the year before and $217.6 million in 2016. Even so, Rosetta Stone has narrowed its losses in that time, posting a net loss of $1.5 million last year, from a loss of $27.5 million the year before.
A shift to shorter-term subscriptions in the company’s iOS and Android apps is improving customer demographics, said Rosetta Stone CEO John Hass on a conference call with analysts, discussing the company’s 2017 results. “With a 100 percent subscription business, we will build both a larger renewal base and deferred revenues, creating a business with greater predictability,” he said at the time.
Major competitors cited by Rosetta Stone in its regulatory filings include Pimsleur, Duolingo, Living Language, Babbel, McGraw-Hill Education, Berlitz, Pearson’s and many others.
Without disclosing the company’s product roadmap, Hulett said Rosetta Stone is deep into artificial intelligence. He did mention that the company is working on speech recognition that makes it easier for people to sound like native speakers.
“We’re the only language learning company that I’m aware of that has its own speech recognition technology, where we actually can get you speaking like a native speaker and you speak confidently, you don’t sound ridiculous,” Hulett said.
Hulett has more than 20 years of experience in tech, spanning roles at Expedia, RealNetworks’ GameHouse division, Pioneer Square Labs, TINYpulse and others. He’s been a part of turnarounds for startups and held leadership roles at big companies. He returned to the Seattle area three years ago after serving as CEO of Internet retailer ClickBank in Boise, Idaho.
In addition to its name recognition and loyal following, Rosetta Stone has a larger sense of purpose, Hulett said. The company’s Lexia products in particular can help kids improve their reading skills. This hits home for Hulett, who is dyslexic and knows how hard it can be to learn.
He recalled a moment shortly after he started working at Rosetta Stone, when an Uber driver overheard him talking with his mom about the company and his new role. As the ride ended, the driver shook Hulett’s hand with tears in his eyes and said that Rosetta Stone had solved his child’s reading problem.
“We’re a public company, earnings are quarterly, and we’ve got to hit numbers,” Hulett said, “but there’s a higher calling for why we’re doing this.”