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Case Study: Duolingo, a story of pivoting, experimenting and reinventing your business model to teach the world new languages for free

Today I want to tell you what CAPTCHA and Duolingo have in common.

CAPTCHA, that box you tick to verify that you’re not a robot, started as a string of squiggly characters developed by a prof. Manuel Blum.

But it was his PhD student, Luis von Ahn, who came up with the idea of using CAPTCHA to use humans to help machines learn how to read.

Following his clever philosophy of using technology (and a little bit of fun) to harness tiny bits of time and energy from people worldwide and make them collectively useful, von Ahn helped The New York Times digitalise its entire archive and later created Duolingo.

At a glance, Duolingo looks like any other Silicon Valley app, funded by venture capital, using ads to make money and gamification to keep users hooked.

But that would be judging the book by its cover.

Duolingo is the story of reinventing a business model while figuring out the best ways to keep teaching languages (for free) and relying on those same users to improve instruction quality.

Testing & building revenue streams

  • Duolingo started its life as a translation app with a promise to get crowds of users studying English to translate English passages into their native languages. By 2012, after having brought only two customers (CNN & Buzzfeed) to sign up, the idea was dropped for good.
  • In 2014 the app turned Freemium, and with no revenue coming in, the founders turned to venture capital to improve the quality of instructions provided by Duolingo. Then in 2017, Duolingo introduced ads followed by an ad-free subscription.
  • In 2016 Duolingo introduced DET, at a $49 alternative to TOEFL, the English proficiency exam that costs $215 for international students applying to universities.

Go where your users are

  • PR is Duolingo’s most compelling growth engine. Duolingo uses imaginative new marketing tactics to get media coverage and increase word-of-mouth. In addition to offering instructions in little-spoken tongues like Hawaiian, Navajo and Gaelic, you can also improve your conversational skills in High Valyrian from Game of Thrones and Klingon from StarTrek. These PR tactics cement their position as the world’s most popular language-learning app.
  • Duolingo also maintains a consistent design aesthetic across all its digital touchpoints. Doing this makes it easy for its two very different audiences 1) English speakers learning a foreign language for things like work, travel and heritage, and 2) non-English speakers learning English for primarily work-related purposes to relate to the brand.

Stay true to your product promise

  • Duolingo’s next-day retention rate is 55% – which is no small feat. Duolingo achieved that by carefully selected and smartly utilised strategies learned over the years – including insights from gaming companies to keep users learning more.
  • Duolingo pivoted its business model to focus on making learning fun and serving people who couldn’t afford to pay hundreds of dollars upfront. Doing this opened the app to opportunities their competitors couldn’t pursue.
  • Finally, and this one is my favourite, Duolingo’s product marketers meticulously focus on metrics that actually improve user engagement. And that’s easier said than done. At Duolingo, all product improvements impact their #1 metric: Getting people to learn more, not less. The marketing team at Duolingo use different funnels to see how various features are helping people got further ahead or not from an education standpoint.

Key lessons:

  1. Do not be afraid to evolve.
  2. Be the first to go where your customers are and revenue will follow.
  3. There’s nothing more important than delivering on your product promise.

Undoubtedly, it’s a lot easier for an app to do it than a multi-million dollar industrial equipment.

But regardless of your size, by becoming intentional about learning from your customers and experimenting with your business model, you can make essential changes that will push your company forward without losing sight of your original mission.

Further reading:
How Luis Von Ahn turned countless hours of mindless activity into something valuable. //BusinessInsider
Duolingo revenue & usage statistics (2021). //BusinessofApps
Game of tongues: How Duolingo built a 700 million business with its addictive language learning app. //Forbes
Achieving growth without advertising. //MailChimp
Duolingo adapts social strategy to reach bilingual users. //a.list
Duolingo's excellent user retention strategies. //BetterMarketing
Duolingo built 700 million company without charging users. //ProductHabits
Gina Gotthilf on growing Duolingo to 200 million users. //Intercom
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