A lot has changed for Duolingo. The language learning company launched nearly a decade ago on the Disrupt stage with no monetization plans. Today, that scrappy app has matured into a well-known consumer brand and a business that makes a ton of money. This growth fueled the startup’s recent decision to go public, which is rare for a consumer edtech company.
CEO and co-founder Luis von Ahn returned to TechCrunch Disrupt this year to explain how the sophistication of public markets impacts the company’s strategy. Armed with fresh capital from the IPO and attention from the public markets, Duolingo is drawing its line on what’s next and what’s never going to be on its roadmap.
Part of becoming a listed company is opening yourself up to critique from the public markets, which are full of investors rooting for viable businesses that know how to make money and appreciate in value. But what happens if optimizing for money isn’t what a company wants to do?
Duolingo’s early days were defined by an allergy to monetization because its mission was to scale free education. When the company eventually introduced monetization through subscriptions, it didn’t paywall any learning content. Instead, its subscription product is built around enhancing the user experience — from avoiding advertisements altogether to allowing for unlimited mistakes. Today, about 95% of Duolingo’s users consume the product for free.
Von Ahn defended the idea that Duolingo may be tempted to begin paywalling learning features for its subscription service now that it’s in the eye of retail investors.
“We’ve drawn a pretty hard line on that,” he said. “If we wanted to make more money in the short-term, we could probably start paywalling things, but I think that would stifle our growth.” While Duolingo may be leaving money on the table by monetizing only a small subset of users, he feels it’s the free users who do the job of marketing by spreading the app through word of mouth.
Duolingo’s self-imposed boundaries mean the company has to find new, revenue-generating projects. Currently, the business is experimenting with reintroducing enterprise contracts, to potentially up-skill employees within organizations using its app. It’s also revamping its Duolingo for Schools product, which gives language teachers the ability to visualize how their students are practicing different languages, as well as a family plan.
Ultimately, Von Ahn believes that paywalling learning content could become a “slippery slope” for the business. “If we start charging for some aspects of language learning, eventually we’re just gonna charge for everything,” he said. “So we just draw the line… things that are great for learning we just don’t charge for.”
Maintaining this tricky balance between mission and monetization requires Duolingo to constantly decide if a new feature is worth the investment. One of the company’s newer ambitions is to establish a proficiency standard that can be recognized by institutions, which would help learners standardize their comprehension while letting Duolingo grow its market share.
This is a fitting new bet for the company, as it wants to change the way language aptitude is defined. “When somebody asks you how much French you know, the two most common answers are, ‘I am intermediate’ or ‘I took four years of high school French’,” Von Ahn said. “What we want is for people to say I’m a Duolingo 65.”
Duolingo has worked in the accreditation space before. The Duolingo English Test, which accounts for 10% of its revenue, is an online exam that students can use to prove their comprehension of the language when applying to college. The test is accepted by over 4,000 universities worldwide. Von Ahn said that the company wants to eventually combine the app and the test so that a user can go through their daily exercises and see an estimated score.
“I think if we’re able to do that, we’re going to be in a pretty defensible position worldwide,” Von Ahn said. “If everybody just starts using Duolingo to refer to how much language they know.”
Despite the impressive vision and pre-existing university relationships, establishing a proficiency standard will not be easy. Duolingo currently can’t make users fluent in a language using its app. It also can’t single-handedly help a new English speaker learn to pass its own Duolingo English Test. The company knows it needs to put more work into the efficacy of its app, and has its largest team dedicated to that exact purpose, Von Ahn said.
But the co-founder was clear that Duolingo will never become a place to go for the deepest language learning. “I just don’t think that edtech companies are going to be able to disrupt [the college degree from Oxford] anytime soon,” he said. “I think you can get a lot of accreditation without having to go to a university that will be enough for you to get a job, and I think that will start happening within Duolingo.”
It’s a nod to where he thinks Duolingo’s best efforts are spent long-term: Helping folks get to a proficient — but perhaps not extremely fluent — state of language learning.
“We’re not interested in teaching people from zero to becoming a Pulitzer Prize winner in that language,” Von Ahn said. “We are interested in getting people to be good enough to be able to get a knowledge job in that language, or to attend a university like Stanford. To us, that’s good enough.”
Von Ahn’s words suggest that, despite the Duolingo English Test, the startup isn’t looking to expand into becoming the go-to credential for proof that someone knows a language. It’s somewhat of a surprise, since it feels natural that the company would want to eventually get more sophisticated in what it teaches as time goes on.
Von Ahn pushed back on that framing. “I think for the vast majority of people, that’s just not what they’re interested in,” he said. “If your English is good enough for you to get a job in that language — you could probably perfect it by reading a lot of literature. The return on investment is probably not great for us.”
The bounds of the app, in Von Ahn’s eyes, will architect its expansion into different subjects.
While only a small percentage of Duolingo’s team is working on projects beyond the language learning app, Von Ahn did address how his company plans to grow past its flagship product. For example, the company has a literacy app for kids, and is currently working on a math app for elementary school children. These are potential monetization opportunities, but it also has to help users hit a solid level of comprehension without trying to go the accreditation route.
“The types of things that we can teach are things that require a lot of repetition to learn,” Von Ahn said. “From geography to elementary physics, there’s a lot that we can do.” However, Duolingo is unlikely to add, he added, short-term skills like Photoshop or more complex subjects like philosophy.
“Maybe we’ll get to that 20 years from now, but in the next two to three years, it’s just unlikely,” he said.
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