Duolingo: The Smartest Business Model in Education Technology

Duolingo: The Smartest Business Model in Education Technology

Everybody wants to learn an exotic foreign language, and be good at it for what it’s worth. And yet, the foreign language learning platforms on the web have never really picked up. That is, until the arrival of Duolingo.

Business Model in Education Technology

Duolingo was started by Luis von Ahn in 2011. The company, headquartered in Pittsburgh, provides gamified language lessons that make learning fun and easy. You can work the lessons to fit it into your schedule. Memorise a new word when you’re stuck in traffic, or two new ones as you whip up dinner, for example. But the brand’s best feature is that it is free, offering users a premium, world-class experience at zero investment.

Von Ahn grew up in Guatemala, the son of entrepreneurs who ran the country’s largest candy brand, Tropical Candy. But he never craved an entrepreneurial path. It was in 1996 when he moved to the United States to pursue his B.S. at Duke University, that he unleashed his entrepreneurial savvy. After his B.S., von Ahn earned a PhD at Carnegie Mellon, and it was during this time that he became involved in several projects. His work began being consumed by millions of people, and he developed a technique that the world now knows as crowdsourcing.

Vo n Ahn’s best-known achievement to date has been CAPTCHA. You’ve probably encountered CAPTCHA numerous times while signing up for a website or creating an online account; it is the series of wavy letters and numbers that you are asked to type into a box to move to the next page. After working at Google for a few years, von Ahn followed a calling inspired by his childhood in Guatemala. A poor country where only the privileged have access to quality education, von Ahn decided to create a way for people to have access to education wherever they are. And the foremost step was by learning a universal language on the internet.

Duolingo is based on a single premise: that there are 1.2 billion people in the world who are continually trying to learn a foreign language. It was this number that the brand used to establish its monetisation strategy. Duolingo’s business model is one of the smartest in the technology space. The company does not charge users for course content. And because the company invests so heavily in interface and course quality, 30% of Duolingo’s users continue to use the app a week after signing up.

As a young brand, Duolingo’s real money came from translation. The company would identify pages on the internet with inadequate or non-existent translated versions, say an English Wikipedia page without a Spanish equivalent. The app would then feed sentences from these pages for multiple users to translate. For users, this would count as practice. A backend software would then sift through various translations of words in the sentence to pick a combination that fit best. Duolingo charged clients between 5 and 20 cents per word for translation, far less than the price a professional translator would have charged. In 2015, however, the brand changed course in terms of monetisation.

Duolingo felt that it was moving away from its main offering by milking its translation feature. Plus, as the business grew, the team realised that they would have to invest in quality control to maintain the sanctity of translations. It was in 2015 that Duolingo adopted a new monetisation strategy, by introducing a new app, called the Duolingo Test Center. The app aimed to give users a level playing field to demonstrate their language skills, without having to pay exorbitant amounts on language proficiency tests like the TOEFL or the IELTS.  Duolingo priced its test at $20, one-seventh of the price you’d pay for an existing test.

The Duolingo technology stack is hosted by a nginx Web Server and the platform is supported by an Amazon CloudFront Content Delivery Network. Its Monitoring layer contains Rollbar and its Communications layer is composed of Google Apps and Slack. The stack also includes Mixpanel as part of its Analytics engine while WebPack powers its BuildTools layer. Amazon SES is employed for email. It’s a given that the company has invested heavily in technology. But the language space doesn’t need huge capital. With technologies such as Pinlearn, a turnkey framework that allows lightning-fast setup, small and medium-sized businesses are claiming their share of the market by spending about 100 times less on the launch. Pinlearn’s tech stack is composed of:

  • Laravel 5.3 (PHP).
  • Agular JS 1.
  • Mysql
  • Redis cache.
  • NGINX web server.
  • SSL.
  • JQuery.
  • Bootstrap.

Duolingo has spent little to none on marketing since its inception. It has always leveraged its engagement with users for word-of-mouth traffic. When you have 150 million users aged between 7 and 95, that’s quite something. Von Ahn is modeling the marketing approach of Duolingo on that adopted by Microsoft many decades ago; minimal marketing and maximum results. Von Ahn does, however, believe in furthering reach by growing a following. For instance, in April 2011, he delivered a TED talk about CAPTCHA that was watched by 2 million people. This is a great strategy for new-age businesses to emulate. With the money saved on technologies like Pinlearn, you can set aside a reasonable budget for digital marketing campaigns.

Language is increasingly being used as a ticket to a better life across the globe. It’s no wonder then, that a plethora of brands have entered the online education software space. Rosetta Stone gives direct competition to Duolingo, but it is a paid service. The website offers three downloadable packages, with varying benefits, priced at €192.50, €238 and €279.30. Similarly, Babbel, a German language learning platform follows a subscription model for its language courses. It gives customers the option to choose amongst a monthly, three-monthly, six-monthly and an annual plan. The higher the plan value, the better the value for money. Babbel also offers a 20-day money-back guarantee, in a bid to win the confidence of users.

In a slightly different approach, British online course learning platform Busuu is the largest, first-of-its-kind social network for language. The platform connects learners with native speakers, engaging them in real conversations. Busuu comes in two formats; the free version offers flash cards, writing exercises and corrections from native speakers and the premium version comes equipped with quizzes, grammar exercises, offline mobile apps and a vocabulary trainer, in addition to myriad other features. Busuu provides plans for 1 month, 6 months, 12 months and 24 months, priced at $9.99 per month, $9.49 per month, $5.83 per month and $5.41 per month respectively.

The online language landscape is so vast that it will take years to fully capitalise on the opportunities available. Customising the app to fit the learner’s language and scaling the language offerings available provide infinite permutations for entrepreneurs to venture. With the world shrinking, thanks to the internet, language barriers need to be broken. And online language learning could be the solution.

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