As its mourning Demolition will demonstrate the path, Duolingo is not mission-oriented, it is mission-obsessed.
Co-founders Luis von Ahn and Severin Hacker never wanted to charge consumers to access Duolingo content, which was believed to be in the company’s culture. In the year to work at Duolingo, you had to be comfortable joining a company in Pittsburgh that was not meant to make money. The startup, filled with education enthusiasts and mission-driven employees, became the “very college pizza vibes” Gina Gothiluff, former VP of marketing at Duolingo, described. Everyone was against making and structuring money – some employees even threatened to leave if Duolingo ever charged users one percent.
“One thing that recruited me was the talent that we could kill two birds with one stone,” she said, referring to Duolingo’s original translation-service business model as we talked in part one of this EC-1 . “It was clearly tied to Luis’s thinking and reCAPTCHA and it was magical and fantastic.”
Free bills cannot be paid, but it came with a valuable upside: development. By 2017, Duolingo will have 200 million users, which was the goal of Double Von Ahen when he first appeared to the public on the TechNunch Discharge Stage.
Duolingo launched, stating that it would never advertise, subscribe or in-app purchases – which are now present on the platform. Today, Duolingo has a simple freemium business model that is remarkably unconventional. It has a free version with all its learning content, and it charges a membership of $ 6.99 per month for paid features such as unlimited hearts, no advertising, and progress tracking. Many other revenue streams are also developing, such as language proficiency testing.
As we will find out, Duolingo’s path from anti-business rebel to traditional consumer membership is complex, full of twists and turns. While Duolingo never wanted to look like other EdTech companies, as we saw in Part Two with its product strategy, it turns out that evolving from college pizza vibes meant that it would have to take a page from its peers .
Business speaks only one language: Money
“They were users and in Silicon Valley, the notion was that if you had users, you could turn anything into money,” said Bing Gordon, a Klin Perkins Cuffield & Byers (KPCB) partner who founded Duolingo in 2014 Led the $ 20 million series. .
“It wasn’t very controversial back then, at least with investors,” von Ahn said. “It became controversial for us when we raised a ton of money, and we were still not making much money.”
While the company’s investors were relatively lenient in the early years, patience was beginning to run thin. In June 2015, Duolingo raised a $ 45 million Series D round led by Laila Sturdy of Google Capital (later Capital GR), valuing the company at $ 470 million. Due to Duolingo’s growth and engagement numbers he invested, but confronted von Ahn with some direct advice.
“He said to me, ‘Look, it worked for you to continue to make checks bigger and bigger than venture capital,” Von Ahn said. “‘But this is the last time it works for you … if you’re trying to woo people, there’s nothing bigger than you [at Google]The next time the funds were raised on Sand Hill Road, Duolingo would not be valued at all – it would also survive.
Looking back, Sturdy said she always had “confidence that they would come up with the revenue model”, due to the passionate and organic users of Duolingo.
When a startup chooses to raise venture capital, it sets itself on a heavily-rooted course. Suddenly, success is not simply defined as cash-flow with long-lasting business. This is some sort of exit, and a big one at that. While Duolingo used the venture as a lifeline to fund its product development, the venture also came with pressure to become a billion-dollar company, or more. And that meant increasing revenue, not increasing busyness.
Von Ahn says that his conversation with Sturdy has actually changed his mindset about money. After Google’s investigation found Duolingo’s bank account breached, he and the hacker began thinking of ways to make Duolingo a monetary success because it was an educational one.
“It was clear that Louis was not a commercial trend, he had a cultural focus and a deep focus on learning,” Gordon said. “[When we invested] Duolingo speculated that it was on the verge of revenue growth, and it turned out that it was not on the verge of revenue growth. “
What Gordon perceives was an ignition of Duolingo’s demonetization efforts in the past. Translation, which helped two of Ego’s previous startups when not applied to language-learning services, and the company secured just two customers before ending the service. Business partnerships, such as speaking to drivers in Brazil to certify and certify a relationship with Uber, did not fire.