The world of AI is undeniably dominated by U.S.-based giants like Microsoft, Google, and OpenAI, but could Europe have its own contender to lead in this space through a focus on vertical markets and specialist AI agents?
At a recent session at SaaStr, I got a closer look at one of the most promising European AI startups: Germany’s DeepL. With its impressive growth in the AI-driven translation market, the question is: can DeepL emerge as the category leader for AI in Europe? Let’s dive into the key insights shared during the discussion between Jarek Kutylowski, DeepL’s founder, and Johan Butting, partner at Visionaries Club, an early-stage venture capital firm.
The Start of DeepL: A European Advantage
Jarek Kutylowski kicked off the session with a statement that set the tone: “Everything is possible in Europe – we just have to believe it.” That declaration caught the audience’s attention, making it clear that DeepL was not just aiming for success—it was positioning itself as a potential leader in the AI space, right from Europe.
Founded in 2017, DeepL began as a research and tech-focused company driven by Jarek’s passion for machine translation. Having completed a PhD in the field, Jarek was keenly aware of the commercial opportunity that AI-powered language translation presented.
Being based in Cologne, a city at the crossroads of multiple European languages like Dutch, French, Flemish, and English, the team naturally understood the nuances of multilingual communication, giving them a distinct advantage, particularly against any US-based competitor. As a result, they were well-positioned to tackle a problem that is deeply embedded in European business culture.
From Research to Business: DeepL’s Breakthrough
The breakthrough came soon after the launch of DeepL’s first service in August 2017. It quickly became clear that while there was interest in a product-led growth (PLG) approach, the strongest use cases for DeepL’s AI translation tools were in sales-led growth (SLG) with enterprises. Specifically, businesses needed a reliable way to maintain an online presence in multiple languages—a challenge DeepL solved in an effective and cost-efficient manner.
What made DeepL’s proposition so compelling was that it eliminated the need for companies to hire in-house translators or rely on costly translation agencies. Instead, AI-powered translation provided a faster, more accurate, and scalable solution. The product’s strength was so evident that DeepL didn’t need to spend much on marketing—the early adopters spread the word, creating a powerful, organic growth engine.
However, this shift from PLG to SLG meant that DeepL needed to build out a dedicated salesforce. Enterprise customers come with specific demands, long sales cycles, and different expectations, so catering to them became a key focus for the company.
The Challenge of Competing with Giants
One of the biggest challenges DeepL faces, of course, is competing with tech behemoths like Microsoft and Google, whose products dominate the AI landscape. DeepL, however, has something the giants don’t: a clear focus on vertical integration and specialization. Jarek emphasized that businesses are “super confused” about how to effectively adopt AI, making the opportunity for a focused, application-specific solution even more appealing. DeepL’s expertise in translation fills a particular need in a way that broader, more general AI tools can’t.
According to Jarek, AI startups can compete with the likes of Microsoft and Google by being laser-focused on specific use cases. Instead of trying to solve every problem, they can zero in on one, making the solution so specialized and effective that it resonates with customers.
The Importance of Evolving and Aligning the Team
One critical takeaway from the discussion was how important it is for a startup to evolve constantly. As a founder, Jarek emphasized the need to think about the business 24/7 and be ready to adapt as the market changes. Success requires a complete team, and that team must be able to handle areas outside of the founder’s expertise. Moreover, change isn’t easy—humans are naturally resistant to it—but it’s essential to stay ahead.
DeepL’s journey so far reflects the importance of aligning the entire company around a core customer need. This alignment is particularly crucial in a competitive space where businesses are constantly evolving. The entire team, especially the tech team, needed to understand why selling to enterprises was so different from serving PLG customers. Enterprise sales involve long cycles, detailed “check-box” requests, and a completely different level of customer engagement. Without this understanding, DeepL might have been overwhelmed by the competition.
DeepL’s Path Forward: Staying Research-Heavy
Looking ahead, Jarek envisions DeepL remaining research-intensive to stay competitive. While AI translation has made tremendous strides, there is still much room for improvement. Research is crucial, especially in a field as unpredictable as AI, where “no one knows” exactly where things are headed.
To stay on the cutting edge, DeepL will continue to invest heavily in research, dedicating 10% of its workforce to AI research. This investment in innovation is essential, as the company looks to not just maintain its position in the translation industry but expand into other applications of AI over time.
The Big Question: Can DeepL Compete with Microsoft and Google?
The elephant in the room was the question on everyone’s mind: Can DeepL compete with Microsoft, Google, and other tech giants?
Jarek’s answer was clear: yes, there is always a way to compete. By focusing on a vertical integration strategy and homing in on a specific customer need, DeepL can differentiate itself from the broader AI players. Businesses are overwhelmed by the idea of adopting AI, and there’s an opportunity for DeepL to lead the way in translating this complex technology into something practical and usable.
The Future of DeepL: Re-thinking the Company
When asked about the company’s trajectory over the next five years, Jarek admitted that predicting the future is incredibly challenging in the AI space. However, what he can say for certain is that DeepL’s focus on research will remain crucial, and the company will need to continually educate customers on how to use their products effectively. Additionally, as the market evolves, DeepL may even need to rethink its company structure to stay competitive.
Can DeepL Be Germany’s ‘Second SAP’?
There’s a growing sentiment that DeepL has the potential to become Germany’s next big tech success story, much like SAP became a global leader in enterprise software. DeepL has built a strong user base, and as one audience member put it, “It’s way better than Google.”
The key takeaway? DeepL has a solid chance of becoming a major AI category leader. By focusing on a specific, high-value application—language translation—DeepL is tapping into a real customer need that could reshape expectations for AI in business. In a sense, it’s following the same path that the early days of IT took: creating dedicated hardware and software solutions for specific tasks before the inevitable unbundling. The future of AI may very well look similar—specific AI solutions developed for particular needs, driven by the same kind of focus that DeepL is demonstrating today.
A New Era for AI in Europe
As Europe continues to grapple with the growing influence of American tech giants, DeepL’s story is an inspiring reminder that innovation can come from anywhere. By carving out a niche in the AI landscape, DeepL has positioned itself as a contender for the top spot, not just in Europe, but globally. Whether or not it becomes the next “SAP of AI” remains to be seen, but one thing is clear: DeepL has the vision, the talent, and the focus to make a significant impact on the AI industry.