In a recent analysis of the company's April IPO, Bullmark.com analyst Bill Martin said, "The desire, not to mention need, to learn other languages in a global economy means the company is looking at a potentially huge market." But Martin noted that the fact that "the company principally targets consumers represents the greatest risk to its business given consumer caution at present."
Tom Adams, Rosetta Stone's multi-lingual chief executive met with DailyFinance to discuss the company's recent IPO, the toughest language he's ever learned, and an upcoming offering that will allow for peer-to-peer learning and interaction with a language coach.1. What advice would you give to those who may be intimidated about learning a new language?
Well, the reality is we've all learned a new language successfully and we do it as children. It was natural -- we used our own wits to figure out the language and we learned the language in a way where we can use it and it became second nature.
The [Rosetta Stone] experience is all online as well as on a CD-ROM. And you'll experience successful language learning in the first few minutes of interacting with the program. And obviously that's just the basics. But over time if you learn more, you'll progress into having conversations first within the interactive format of the computer. And then over time as we roll out our extension of the offering in the online socialization module, you'll be also able to practice with native speakers
2. Please tell me more about the online socialization module?
What we're going to roll out is an opportunity to practice using VOIP technologies and allow you to practice with a native speaker and an employee of Rosetta Stone who is a conversation coach.
In addition to that, we're going to provide you with the opportunity to connect with peers where you'll be able to do an exchange where you can practice your Spanish, let's say, and then the person you're practicing with can then practice their English.3. What are the top languages that your clients are learning with your product?
Rosetta Stone got started in the school business and for schools the number one offering is actually English [which helps] children of immigrants to the U.S. The second one is Spanish and that's the most important language for individual learners.
In addition to Spanish, for individuals we see a big demand for European languages like French and German and Italian. We've actually seen growing demand for Chinese and Arabic.
4. What was the hardest language for you to learn?
Chinese is very hard because it has four different tones: a formal tone, a rising tone, a flat tone and this kind of wave tone – like a word goes up and down -- to illustrate what that would mean. And so each tone affects the meaning of that sound and I found that really hard. I learned it after a while.
The other thing obviously with Chinese is the writing. But Chinese is pretty easy, quite frankly, from the grammatical perspective -- very regular. It's not like French which is very irregular or Arabic which is very complex.
5. How important of a role do you see Rosetta Stone playing as we continue to live in a more global marketplace?
We think that language is something that can change the world. If people are learning different languages, they will inevitably learn about different cultures and we think that that is very positive for society at large.
6. Why did you decide to go public during a virtually dead IPO market?
We were brave, but we were brave based on a very solid foundation. Sometimes companies are going public to raise capital because they need it to just keep going and this was not a case of this. We are cash-flow positive and plan on being cash-flow positive for a long time.
And we felt that the IPO was going to be very positive for the company and for the branding perspective and establishing in everyone's minds that Rosetta Stone means business in this space. We also wanted to open up the opportunity to the larger engagement with some of the big [federal agencies] and companies that we've worked with or hoped to work with.