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2:28

This is Matt Russell and today we are breaking

2:30

down Duolingo. It's

2:32

hard to find someone who doesn't see

2:34

the opportunity to build new technology businesses

2:37

around education, but it's equally

2:39

hard to find existing success

2:41

stories in education technology or

2:43

edtech. Enter Duolingo,

2:46

the learning app built on

2:48

language learning that is increasingly

2:50

expanding into other territories like

2:52

math and music. My

2:54

guest is Tyha Nguyen from

2:57

Bailey Gifford. You should

2:59

assume that most of our guests own the

3:01

businesses that they are covering on business break-ins.

3:04

But it's important to mention here

3:06

that Tyha works for Bailey Gifford's

3:08

positive change strategy. They invest

3:11

for returns, but also for the

3:13

impact on society. And

3:15

while I personally try to avoid

3:17

casting judgment on how businesses earn

3:19

their profits, we have certainly covered

3:21

some businesses that are deemed to

3:23

be world-class at raising prices.

3:26

Duolingo seems to stand out in a different

3:28

way. Founder Luis Menon

3:31

is constantly looking for ways to make

3:33

this accessible and free to use for

3:36

many people around the world while

3:38

also finding reasonable ways to monetize

3:40

and make this a profitable longer-term

3:42

business. It's always difficult

3:44

to find that balance between

3:46

your customers, your employees, and

3:48

your shareholders. And Duolingo

3:50

has adjusted its business model over

3:52

time to ensure that that can happen. Ty

3:55

and I covered the fascinating founder story behind Duolingo.

3:58

We cover how Duolingo is a business model. The

4:00

Guy succeeded in a largely offline

4:02

market how they approach monetization. And.

4:05

How they plan to expand from year. When.

4:07

We do these breakdowns. We often find

4:09

some parallels to other businesses we cover,

4:11

but this seems you're so interesting. You.

4:13

Have a tam expansion story that maybe

4:16

isn't quite the size of Uber, but

4:18

has some similarities. Stuber. You. Have an

4:20

organic growth story that feels like tinder

4:22

were. so much of this is happening

4:24

to word of mouth rather than through

4:26

pay acquisition. And. Similar in many

4:28

great start ups, you have a founder

4:30

that build something. I was incredibly important

4:33

to him to please enjoy This Breakdown:

4:35

Do and I'm. I'm

4:38

excited for Duolingo today, and while

4:40

I would group it in this

4:42

new wave of technology companies, there's

4:44

a lot that stands out from

4:46

both the financial standpoint, the growth

4:49

sandpoint. It's a fascinating story. So

4:51

excited a jump right into it.

4:53

And. I thought. It's. A. increasingly.

4:56

Well, no name by I think there's

4:58

still a percentage of our audience that

5:00

isn't familiar with Duolingo quite yet, so

5:02

maybe we could just start with the

5:05

one minute short description of Duolingo For

5:07

those unfamiliar with the business and the

5:09

product itself, Doing. That is

5:11

not yet to become a household name

5:13

but for people who are lending languishes.

5:16

I'm sure that they all have

5:18

heard of Dillinger. It's the company

5:20

isn't most same as for it

5:22

languished lining up that offers over

5:24

a hundred and twenty different courses

5:26

since the founding in twenty laps

5:28

and the have been over five

5:30

hundred million dollars and doing that

5:32

it constantly ranked as the most

5:34

downloaded off in the education touch.

5:36

Agree globally that dealing with set

5:38

up with have brought and listen

5:40

and just teasing languishes. They want

5:42

to develop that best education in

5:44

the world and make it universally.

5:46

Available. That is why today in

5:49

addition to languishes, people can actually

5:51

learn literacy. Massive. Nice it with

5:53

feeling that. Yes, You

5:55

mention the mission there And one of

5:57

the most interesting things about this best.

6:00

It is it founder and the founding

6:02

story, so I want to get into

6:04

that if we could share that. Right

6:06

off the top I think the history

6:08

here. It's not a long history, but

6:10

the founder has quite the interesting pass.

6:12

So maybe you could share? A bit odd that. I

6:14

always find goes founding story fascinating

6:17

and the it all started with

6:19

the Saudi the see old least

6:21

one on keep grew up in

6:23

Watermelon which is a poor country

6:26

in Central America. And. He

6:28

was fortunate to be born in an

6:30

upper middle class family and with given

6:32

the best education for his parents. And.

6:34

That made him really appreciate

6:37

the importance of education in

6:39

improving people's lives. But

6:41

at the same time he always thought

6:43

that education could be among the principal

6:45

sources of inequality. The most privileged people

6:47

can get the best education in the

6:49

world, but the poor and may not

6:51

even get the basic schooling. Say.

6:54

He believes that people should have

6:56

an equal access to education because

6:58

list of their wealth and his

7:00

whole fight is nothing short of

7:03

impressive. He came to the U S. For.

7:05

An undergraduate degree in movies at

7:07

Duke University and later a Phd

7:10

in computer science that can email

7:12

and and before doing though he

7:14

was actually a note from he

7:16

genius inventions Qatar which I'm sure

7:19

the audience here and know that

7:21

a while about he could be

7:23

annoying task. That. Distinguishes between the

7:25

humans and bought. That pop

7:27

up when you log in and internet website.

7:30

An interesting the that although cops

7:32

I was really popular and was

7:35

really useful. He started thinking that

7:37

it actually wasted a lot of

7:39

people's time and he estimation mounted

7:42

choose something like five hundred thousand

7:44

hours a day that people wasted

7:46

on typing those letters say he

7:49

reinvented recaptcha with the same goal

7:51

but with a twist to hundred

7:53

hours into something useful the letter

7:56

that people have to try that

7:58

actually work and from. And

8:01

so use I would complete the security

8:03

tax. Why? Helping be the

8:05

time, the books for the Internet Archive and

8:07

I think the Which Chenier. The. So

8:09

later he saw that recapture business to

8:12

Google along with now the game that

8:14

he invented for a tens of millions

8:16

of dollars. An hour

8:18

so heard a story that he got

8:21

and personal phone call from Bill Gates.

8:23

That offer him a job at

8:25

Microsoft but he refused. Not that

8:27

many people were turned out on

8:29

offer from Bill Gates. By support

8:31

is because he just wanted to

8:34

work in academia and be a

8:36

professor in computer science and devote

8:38

his entire life she education and

8:40

that is until he met one

8:42

of he's Pst students' names several

8:44

hacker. They were both fascinate about

8:46

education and had his from believe

8:48

in equal access to education so.

8:51

That's why. Duolingo with powdered. And

8:53

the reason that they started with

8:56

languishes it because Louis ones to

8:58

deliver the highest possible impact. There.

9:00

Are nearly two billion people

9:02

in the world? lending languishes,

9:05

and for lots of people,

9:07

learning a language can unlock

9:09

tremendous economic opportunity, especially. For.

9:11

English A lots of people in

9:14

developing countries would know English that

9:16

can double. that's potentially income. But.

9:18

Beyond that, That. Also benefits

9:20

or of unlocking new experience or

9:23

of beauty deeper a connection with

9:25

family and friends from new languishes.

9:28

I remember least one say

9:30

that. Dealing. To okay peace

9:32

geography but the impact of that

9:34

will be quite limited and. For.

9:37

That reason they wouldn't piss

9:39

geography. But recently they expanded

9:41

chew things like literacy, music,

9:44

And math, And you can imagine the

9:46

impact of reducing illiteracy rate in the

9:48

world. Even just bought a couple of

9:51

the scientists could be quite enormous. Absolutely.

9:54

I loved the idea of

9:56

wasting people's time and finding

9:58

a way. Give it back

10:01

in really taking tasks that would otherwise

10:03

be viewed as inconsequential and a necessary

10:05

evil and turning them into a very

10:08

productive activities. And I think a lot

10:10

of what we're doing when we are

10:12

performing their capture and recaptcha tests actually

10:14

have a lot of impact that we

10:17

don't necessarily tie it to. But.

10:19

That has evolved quite interestingly. and

10:21

that story I think is beautiful

10:23

obviously because it comes again from

10:26

a personal mission to drive changed,

10:28

so I'd like to transition a

10:30

bit into the language learning market.

10:33

As. I was growing up. The infomercials

10:35

for the Reset A Stone were widely

10:38

available, and that was kind of the

10:40

one vendor that I knew of well

10:42

besides the private tutoring market I guess.

10:44

But maybe you can give an overview

10:46

of what that market looks like today,

10:48

some sense of how it's evolved over

10:51

time, and any players that you think

10:53

are relevant in that market. Is.

10:55

So many she thought with the

10:57

size of the market. Language.

11:00

Learning is a very big markets.

11:02

As I mentioned earlier, there are

11:04

nearly two billion people in the world

11:06

learning languages and a very interesting

11:08

and speak to me that that

11:10

could be some degree of dynamism in

11:12

the market in the scene because

11:14

of the ease of access and affordability

11:17

that feeling Go brings about. they

11:19

can actually open up their learning

11:21

market. And. Duolingo conducted a

11:23

survey in Twenty Twenty One

11:25

and they found out that

11:27

almost eighty percent of the

11:29

Duolingo users in the Us.

11:31

When. Not learning a language when they

11:34

begin using dealing as. Say.

11:36

It's really talks about that idea

11:38

of eating met something really easy

11:40

and fun and accessible than a

11:42

lot more people would use. In

11:44

terms of the. Structure.

11:47

Of the market. The majority of

11:49

it is still have like so

11:51

most people would lend languishes by

11:53

attending classes, schools or a language

11:56

center is. I guess that

11:58

the online learning wind over the of

12:00

lie learning from the accessories. A test.

12:03

Because. It's cheaper, it's more convenient.

12:05

It's accessible from almost every way.

12:08

But. What is? Even more interesting

12:10

is that the. Duolingo

12:12

also have the potential to win

12:14

over the of like handle from

12:16

the content prospectus because in the

12:19

of lie world owners would receive

12:21

the same curriculum from textbook from

12:23

the t shirts. Unless. They

12:25

hello one to one human tude or. The

12:28

on the other hand dueling go through

12:30

date her in machine learning could truly

12:32

believe her personal life curriculum. That

12:34

fit to London ability and it is

12:37

something that really interesting that we can

12:39

talk more later in our conversation. That

12:41

what I mean is that Duolingo can

12:44

really bring that one to one human

12:46

Tudor experience to every lerner at a

12:48

fraction of the cost of the oath

12:50

lie world. For. Having say

12:52

that I should they're still aspect that

12:54

duolingo is not yet comparable to the

12:56

off my world especially when it comes

12:58

to be best of the content. So.

13:01

The are currently only pisses people

13:03

blow to intermediate levels and speaking

13:05

and writing exercise is still quite

13:08

limited. It is something that the

13:10

company is very aware earth and

13:12

they can continue to invest very

13:15

heavily on to improve their teaching

13:17

effectiveness. Can. I ask when

13:19

you say low to intermediate levels,

13:21

do you have a way of

13:23

putting context around that? If I

13:25

were to think of someone having an

13:27

intermediate level understanding of the English

13:29

language, where would you put them into

13:32

society or in the workforce, how

13:34

far could back at you and just

13:36

adding context around what that would

13:38

mean? Savvy intermediate level understanding. Until

13:41

Indo uses an international scale

13:43

of like bush certifications and

13:45

in that you would have

13:47

levels from a one A

13:49

to be one Btc one

13:51

features. A one is the

13:53

most basic to life. He too is

13:56

kind of the advanced level and right

13:58

now dealing gold pieces. To

14:00

the lab or be to aimed at

14:02

the wish but most of the language

14:04

courses are still quite basic but the

14:07

aim is to not to teach people

14:09

to the advanced level because louis things

14:11

that as gonna be diminishing machine or

14:13

be current. What? They one is

14:15

to be able to teach people to

14:18

the level that they can get a

14:20

job with that like which skill they

14:22

did and at piece people so that

14:24

the students become like a plush read

14:27

are being per to ride beautiful each

14:29

if not the purpose and so yeah

14:31

that's why I say that most is

14:33

basically intermediates and they are trying but

14:35

with English which is the most maligned

14:38

languish in the world and I'm Irish

14:40

they the most important in terms of

14:42

improving career and potential earnings. They trying.

14:44

To put in more advanced. Content.

14:47

Into the courses. That. Makes a

14:49

lot of sense. Okay, I. Think you

14:51

described a bit in terms about

14:53

the existing market where that offline

14:55

market is still so large. I

14:57

think it's very interesting when you

15:00

have examples of businesses that expand

15:02

their markets. I think Goober being

15:04

one of the best examples. Simply

15:06

looking at the taxi market was

15:08

not enough because Uber truly did

15:10

take that market and multiply. It

15:12

seems like Duolingo is doing something

15:14

similar here when you mentioned eighty

15:16

percent of users or not previously

15:18

learning a language. can you talk

15:20

about that? Growth. Story

15:22

Because to go from zero and

15:24

there is an existing playing field

15:26

in terms of competitors. How did

15:28

they successfully turn on the business

15:30

and then turn on growth such

15:32

that they've gotten these users and

15:34

all that you mention in terms

15:36

of app downloads. What was the

15:38

secret to their success? There. I

15:41

think maybe to set the scene for

15:43

that, Let's talk about what met feeling

15:45

though differentiated in the first place, what

15:48

makes it stand out in the very

15:50

crowded language learning. As Alves say, it's

15:52

the company always believed that the hardest

15:54

part of learning a new languished he

15:57

to stay motivated and to keep the

15:59

study Go. Because. Learning a new

16:01

language is hard. like a lot of time. people

16:03

just want to give up. So.

16:05

Julian Go has a very strong

16:07

game is occasion approach to keep

16:10

people engaged. Issue. On which

16:12

course easy fi to be like a

16:14

a mission in wish learners would have

16:16

to unlock lessons in people. So.

16:18

They must do sufficiently well in one

16:20

lesson before proceeding to the next. And.

16:23

That how the bring down in Nashua

16:25

competitiveness. In individuals. That. Also

16:27

lot of features that a borrowed

16:29

from the gaming world that said

16:31

he not currency be remaining lies

16:34

or how boost etc. A.

16:36

Lot of the as I'll there are

16:38

more focused on grammatical rules. But.

16:40

Feeling though simplicity, light lessons and

16:43

methods of intuitive learning is really

16:45

make it easy and fun for

16:47

people to thirty. So.

16:50

You use duolingo. You would know

16:52

about their distinctive feature cold Streak.

16:54

Which. Is so many consecutive days that people

16:57

are learning with the duolingo. and

16:59

views a nice that strict then district will

17:01

be reset. And Ashley people

17:03

are obsessed about that shit and

17:06

many share their strict. On.

17:08

Social media as a problem achievement

17:10

and millions of users today half

17:12

streak longer than a year. And.

17:14

The Fisa lay not really keep

17:16

the Englishman. Going which is

17:18

something very hard in the

17:20

educational category. And like Netflix for

17:23

a spotify which is like and at him and.

17:25

And. Be fi game is the case In

17:28

another he French feature of duolingo is

17:30

that it is free to learn. Yes,

17:32

You can learn entirely. With.

17:35

Duolingo with up paying for anything

17:37

and other competitors allow you to

17:39

access to their lessons through subscription

17:41

And because of this freemium model

17:43

Chilling Go has been able to

17:45

grow really fast because of when's

17:47

the product a free to use.

17:49

People are more willing to give

17:52

it a try and the without

17:54

is that today Duolingo had over

17:56

ninety percent say of the Global

17:58

Online Language Learning Month. The active

18:00

users with a thing is quite impressive.

18:03

And so that has a. City contracts

18:05

the bed but I think if

18:07

you asked about what makes dealing

18:10

go growth really really fast then

18:12

I would actually be which should

18:14

be factors. So. The first

18:16

thing is they protocol let strategy.

18:19

Louis views is always that customer will

18:21

stay with you for your product. So.

18:24

Investing in poodle is really important.

18:27

About seventy percent of the employees

18:29

are working in engineering productive all

18:31

in the and divide and or

18:33

the product species from the design

18:36

of the buttons you when and

18:38

way the I displayed on be

18:40

up. A very well thought out

18:42

and methodologically tested. So. Dealing

18:45

go a very famous for they

18:47

ab testing for every product launch.

18:50

On. Average They run about five hundred

18:52

a be tasked per quarter and

18:54

that really shows how the Fisa

18:56

gonna affect in Dishman. Piecing

18:58

efficiency or a monetization and three

19:00

thought of that is the very

19:02

good products that just attract users

19:04

and people may look at dealing

19:06

girl and thing that is is

19:08

just a little cued up, but

19:10

actually there's quite a lot of

19:12

sophistication. Be high, the technology. And.

19:15

Other reason he the freemium model which

19:17

I mentioned earlier if it's three more

19:19

people are willing to try to on.

19:22

Lastly, I think dueling. Though it's very

19:24

good at social marketing. They don't spend

19:26

a lot on marketing but their marketing

19:29

is so bases and. They

19:31

really know how to hop

19:33

into koshering humor to create

19:35

interest. So. Everyone using

19:37

duolingo would know about them. Must

19:39

Court! The aggressive green our

19:42

names you old gilding go uses

19:44

do you have as a protagonist

19:46

she Bill Clinton Wish can be

19:48

a bit silly and stupid. But.

19:51

That's still in it. makes people remember and

19:53

talk about so that you can find a

19:56

lot of meetings on the internet about you

19:58

own based on the messages that. He

20:00

will send algae people watch me

20:02

my them to take the lessons

20:04

every day. So the Braun has

20:06

becomes really strong because of that

20:09

social marketing and I remember laughing

20:11

a lot when I saw x

20:13

photos of Duel dressing up as

20:15

a Bobby because duolingo was referencing

20:17

the Barbie movie. and in Math

20:19

for. Appeared at each movie

20:21

premier. Which. Is really plan. Or

20:24

recently they just spend about seven hundred

20:26

thousand dollars on a five second Super

20:28

Bowl at. But receive over

20:31

six hundred million impressions on social media.

20:33

Wish. I thing is super efficient. Yeah,

20:36

it's truly a fascinating example

20:38

where game if occasion is

20:41

used for. But. I would

20:43

consider a very good cause here. In terms

20:45

of education, And taking something

20:47

like education which can be very dry. And.

20:50

Painful and turning it into something fun

20:52

where it sounds great to be idealistic

20:54

about that stuff. it's very rare that

20:56

you see the case he can realistically

20:58

do that, or they seem to be

21:00

achieving that. Quite. Well, one of

21:02

the data points that I read at

21:04

i don't know how up to date

21:06

it is now is that ninety percent

21:08

of new users were organically acquired. Which.

21:11

Is a metric that the only

21:13

other app that I can think

21:15

of that was anywhere close to

21:17

that or in the same ballpark

21:19

was Tinder which again had this

21:21

organic, natural explosion and growth story.

21:23

Would you attribute that mostly to

21:25

the social dynamics of people wanting

21:27

to post their streaks and wanting

21:29

to talk about it on social

21:31

media? Another areas where it becomes

21:33

a social status game. Is

21:35

there anything else that you think was playing

21:37

into that organic growth without having to spend

21:39

a ton on paid marketing? As

21:42

mentioned earlier, I think it's first meet

21:44

all because of the product. The project

21:46

is just. Thirty. Get. An

21:48

easy belief and he's because once you

21:50

have put out that he good it

21:53

makes people wanting should using it and

21:55

then recommending it she their friends and

21:57

family and couple with that is that.

22:00

Very efficient social marketing.

22:02

So. They created a marketing

22:04

never with the intention to

22:06

make people subscribe more to

22:08

dealing go, but always with

22:10

the intentions of making people

22:12

wanting to talk about it

22:14

and so. As you mention,

22:17

the people should keep talking about. Julian,

22:19

go on social media posting their

22:21

achievement or I just talking about

22:23

how silly the message the green

22:25

our has sent them to remind

22:27

him to take a lesson so.

22:30

The. Combination of the proto and

22:32

efficiency of the social marketing

22:34

has. Created. That social

22:37

bust and allow them to acquire

22:39

users in fashion organic way. Before.

22:41

We transition of it and terms of the

22:44

business model in terms of the market size.

22:46

Had a you mentioned the beginning. There's two

22:48

billion. In the world that

22:50

are interested in learning a new

22:53

language in terms of the existing

22:55

market, you have any sense of

22:57

the online versus off line market

22:59

and just the existing size of

23:02

those today or just the general

23:04

share is really. Hard to get

23:06

a precise estimate. I've seen the

23:08

loss of number of being thrown

23:10

say Dylan Wish markets. I. Was

23:13

offline and online estimated speed over

23:15

a hundred billion us dollars. Online

23:17

Learning is the fastest growing market

23:19

segment within that it was projected

23:21

to grow from about twelve billion

23:23

in twenty nine keen to about

23:26

fifty billion dollars in twenty minutes

23:28

and a But I think the

23:30

main point here is that he

23:32

these very last market especially when

23:34

comparing to dealing those parents high

23:36

of about six hundred million dollar

23:38

and urine rate. Yes,

23:41

They have a lot of share in

23:43

the existing market and a lot of

23:45

share in what could be a growing

23:47

market to game in the future. That

23:49

way that out nicely on the business

23:51

model you mentioned. It is a freemium

23:53

model which I think was. Very.

23:56

In vogue at a point in time

23:58

and it's become more challenging for people

24:00

to fix this out with subscription businesses,

24:02

not everyone seeing the conversion rates they

24:04

would like to see when going from

24:06

freemium to offering a premium tear. Can

24:08

you talk a little bit about that evolution over

24:10

time and how they've done about it? Maybe

24:13

it's fourth talking about the evolutions

24:15

I'm feeling though it sounds before

24:17

tossing on the evolution of money

24:19

citation because it would have you

24:21

understand and appreciate the money citations

24:24

evolution of the business so different

24:26

versions of dealing do is nothing

24:28

like a nice the experience of

24:30

recapture at in still be idea

24:32

of crossing into Louis might so

24:34

dealing though actually started with of

24:37

web based products and that's how

24:39

people learn a language by translating

24:41

the what's in. It. So.

24:44

Clumsy to have. People wanting to learn

24:46

a new language. On the

24:48

other side, you have website firms

24:50

and others who won to transmit

24:52

their content into multiple languages as

24:55

quickly and cheaply as possible. So,

24:57

and Native Spanish, A girl who

24:59

wants to learn English. Could.

25:01

Be given a sentence from an

25:03

English website a translated into Spanish

25:05

and duolingo would hop users to

25:08

practice new worth. They. Stumble

25:10

your coin through examples and

25:12

sauce cart. And to pay for

25:14

the bill. Dealing. With so

25:16

that users generated translation to paying

25:18

for me and white keeping it

25:20

free for the liners. But

25:22

they didn't get a heard of success

25:24

with this translation service and they were

25:27

a beverage you get only to claim

25:29

his feet and Cnn. And

25:31

if room that remember in Twenty

25:33

Eleven when the company was founded.

25:36

The website remained the dominant platform

25:38

that pick up. With. Built

25:40

on. But. The idea of a

25:42

mobile app has started emerging. So.

25:45

Dealing go at that time was

25:47

thinking about building a companion. That

25:49

and they. Actually hired to

25:51

intern to start beating an app

25:54

prototype and that posts as really

25:56

forced them to thing much more

25:58

strategically about what. The ugly they

26:01

want to offer. They estimate. And

26:03

the interns actually came up with the idea

26:05

of this huge tree users with a look.

26:08

To make progress. Feel. And

26:10

that is why Julie Co was

26:12

redesigned and became the during though

26:15

that we know today and for

26:17

the most part of the company

26:19

history they didn't focus on one

26:21

is ization most people came to

26:23

work for dealing go because of

26:25

the company mission so to some

26:27

expand monetization so like a seem

26:29

to them and is not until

26:31

they faith. Great. Pressure of

26:33

from investors to make money and

26:36

Louis himself rely.for them to achieve

26:38

the mission that they want to

26:40

chief they would need to build

26:43

lasting profitable business. And

26:45

deceit when they started to think about

26:47

how they can make money from give

26:49

up. And. The came up with

26:51

the subscription model that we have today

26:53

that you can use it for free

26:55

bush if you one to remove advertising

26:57

or you want to get access to

27:00

some of the fun gaming Fifa to

27:02

have you learned a bit faster than

27:04

you pay for the subscription. But.

27:06

You can see that from the

27:08

original model though translation service to

27:10

the subscription model today, they really

27:13

stay true to their mission of

27:15

making free education. One thing

27:17

is that they would never task for

27:19

education content. Of quite easy

27:22

for companies to just. One.

27:24

Bought users with the advertising

27:26

and make the experience was

27:28

so that. People. Subscribe but

27:30

that is not how they gonna do

27:33

it because. He thinks it. Is.

27:35

Gonna do today. the business in the long term.

27:38

So. I think that given the pressure of

27:40

being a public company, it being a boat

27:42

is so profit and growth. The

27:44

fact that they could resist the temptation

27:47

to make easy money is really admirable.

27:49

Yeah. I'm not one typically

27:52

judge negatively in terms of how

27:54

businesses make money. But.

27:56

There's something I will say that's admirable

27:58

about the original approach, even trying to

28:00

work with businesses that were essentially funding

28:02

away for people to learn and evolving

28:04

that over time and and seeing the

28:07

different things he could try out. What

28:09

does that split look like today? Just

28:11

in terms of that different revenue buckets,

28:13

I know there's a third that we

28:15

haven't gotten to yet, terms of assessments.

28:17

But between as subscriptions and then to

28:19

the extent that assessments are mature a

28:21

revenue item, What is the split in

28:23

those buckets? Say. Dealing

28:26

Don't like money? Eat fruits, resources.

28:28

And he mentioned the first and the

28:30

biggest part a suit subscription which is

28:33

about see quarters of the total revenue.

28:35

And. The rest could be advertising

28:37

revenues in up prices revenues and

28:39

inglis past that of occasion revenue.

28:42

wish our roughly equal to each

28:44

other at is how the businesses

28:46

mail. And do have some sense in

28:48

terms of the user base. That. Number

28:50

is quite large and terms of

28:52

seventy five percent of revenue is

28:55

coming from subscriptions. Ah, what percentage

28:57

of users are. Converted

28:59

to. Subscribe.

29:01

Paying users. In. The most

29:03

recent quarters, they disclosed that they

29:05

have nearly ninety million monthly active

29:08

users and close to thirty million

29:10

daily active users. And of

29:12

those users, nearly seven million of

29:14

them are paying subscribers today. and

29:16

that he compared to just over

29:18

two million at the time of

29:20

the Ip old in Summer Twenty

29:22

twenty one. about four percent of

29:24

the monthly active users. A piece.

29:27

Hot. Today it's close to eight percent

29:29

say that had been increasing and I

29:32

think if you think about the growth

29:34

rate in the numbers of monthly active

29:36

users might not number even more impressive

29:38

because your denominator is growing rapidly as

29:41

well. Is. Really interesting that people

29:43

often ask the management team what

29:45

she they think gonna be the

29:48

ceiling for a D p penetration

29:50

because you have businesses life forty

29:52

five who get. Close. To

29:54

or more than a half of

29:56

them uses actually paying for the

29:59

service and. The company would often

30:01

come by and say the honestly they don't

30:03

know they don't really know what the ceiling

30:05

nice You have businesses like fumble when she

30:07

narrow the dating apps could have about ten

30:10

percent of the uses paying for the service

30:12

and they are on the upper hand. You

30:14

would have spotify say they think that they

30:17

may a cheap some way in the middle

30:19

but honestly they don't know what it is.

30:21

As long as they continue to deliver the

30:23

value to the subscriber than they think that

30:26

more people would be willing to pay for

30:28

it. And what is the

30:30

cost of a subscription for doing. It

30:32

varies based on different reasons and

30:35

also it depends whether you subscribe

30:37

monthly or annually or whether use

30:39

of Cry as a standalone users

30:41

or as part of the family

30:43

packaged But today and and you

30:45

a planned in the Us I

30:47

think costs about eighty to ninety.

30:50

Dollars annually which is really cheap

30:52

compared to the price you have

30:54

to pay to go to Languish.

30:57

Center. Yeah. And

30:59

one session with the Wind

31:01

was tutor and you can

31:03

get an annual subscription when

31:05

you think about the user

31:07

base today. And how

31:09

that's evolved. I think there's different

31:11

ways of framing this for lot

31:13

of these businesses. Whether it's cohorts

31:16

who initially com in, how long

31:18

do users typically remain paying members?

31:20

Is this something where once they

31:22

achieve a certain level, they will

31:24

turn off of the app? Is

31:26

it something that they are continuously

31:28

using? Is there any segmentation in

31:30

terms of the audience based that

31:32

you find particularly helpful? We.

31:34

Don't get that granularity for. I think

31:36

it's interesting to think about food and

31:38

actually use dealing goats. So most people

31:41

use dealing though because they want to

31:43

learn you languished. Explicitly English. half

31:45

of the youth of today learn English.

31:48

And the motivations for them are

31:50

married. And learn because they

31:52

want to have a career development. Some

31:54

simply want to learn to connect to

31:56

friends and family. There are people who

31:58

simply want to learn. I'm worse

32:00

before they holiday to a foreign

32:02

country some mild languish enthusiast who

32:05

just love learning but they're also

32:07

people who are influenced by trend.

32:09

so duolingo say that after sweet

32:11

game if you remember the popular

32:13

korean that for drama they actually

32:15

saw despite in the number of

32:18

people wanting to learn Korean. So.

32:21

I guess it given that you

32:23

have such a very nice of

32:25

users knowing exactly. When

32:27

people. Terminate. Is.

32:29

Quite tricky. For

32:32

people like who are languish and tds

32:34

as soon as they finish one course

32:36

they could move to the next because

32:38

they just keep wanting to learn new

32:40

thing. For. People who are

32:42

a lot more serious about

32:45

learning to have a better.

32:47

Career. Prospects I'm doing go say that

32:49

the to finished or of the contents and

32:52

should be very good at it. It could

32:54

take them a couple of years. So

32:57

it is really varies but. I

33:00

think the more interesting. Questions.

33:03

You ask Aura to think about

33:05

less. Why more people are paying

33:07

to use duolingo? Despite. The

33:09

fact that they can learn it for free

33:11

I always find intriguing that. And one

33:14

of the questions that we have. When. We

33:16

first invested in dealing go either if

33:18

the free products and really did. Why

33:20

would people pay. And. Affect

33:22

us today. They're nearly six billion

33:24

people subscribe and the company say

33:26

that the first reason is because

33:28

a lot of people still do

33:30

not want to see appetizing even

33:33

though advertising and not that intrusive

33:35

second aid because the subscription is

33:37

really cheap. He people use duolingo

33:39

intensively. So they have observed

33:41

that people tend to subscribe to

33:44

duolingo. One duolingo become a dirty

33:46

habit. Because. The price per minute

33:48

of englishman would be very low if

33:50

the user. The part

33:52

reason is that they have been

33:54

developing more valuable features that subscribers

33:56

good value. Last thing which I

33:58

find really interesting. People.

34:00

Love dearly. Go and actually want to

34:02

support the company's mission. So.

34:04

Supporting dealing goes missing. A free education

34:07

is actually listed as one of the

34:09

benefit of the subscription. And. Dealing

34:11

out have not found any sophisticated

34:13

pot to among pit users other

34:16

than simple things like they tend

34:18

to use more expensive phone they

34:20

leave you know wix, euro. Area

34:22

was in a richer countries and

34:24

they use duolingo a lot so

34:27

in a way. During. Those

34:29

sort of created this Robin Hood model

34:31

way the rich people actually pay for

34:33

the poor a once you get access

34:35

to better education and I think that

34:37

is. Very. Amazing. Absolutely.

34:40

One. Of the segments of the

34:43

business but I found particularly interesting

34:45

just in terms of the opportunity

34:47

that opens up his the assessment

34:50

and certification side of the business.

34:52

It seems like Duolingo is

34:54

now actually being recognized as

34:56

a assessment of record as

34:58

a certificate that has some

35:00

validation and is accepted broadly

35:02

and firms of the workforce.

35:05

Can you talk about that mission?

35:07

to have all the and develop

35:09

the assessment line and the assessment

35:11

business and how that's gone and

35:14

the expectations for the future. They're.

35:16

Just. Say in Pilati teaching. Billie

35:19

Joe has the. English

35:21

certification be some. The

35:24

market isn't of money to nights edition

35:26

or test like that fulfils and I.

35:29

But. Those tests have several limitations.

35:32

The. Fight is that they require candidates to

35:34

go to the past century which are

35:36

often located olympics Cds and candidate often

35:38

have to book month in a plan

35:40

to attend the test. The second is

35:43

that to test his several hours long.

35:45

And it can. Take like two days

35:48

when different sections. The. Authorities that

35:50

they are very expensive. They usually

35:52

costs. Two. Hundred to three hundred

35:54

dollars. The tests. So. Dealing

35:56

though is disrupting the market by

35:58

offering an online. That.

36:00

Candidate can hack in the comfort

36:03

of their own homes cars only

36:05

forty nine dollars and replied only

36:07

an hour. And. The reason

36:09

that it can be that short

36:11

compared to the to decent is

36:13

because duolingo use his computer a

36:15

daft his test. As opposed

36:17

to traditional six to improve. What

36:20

it means either as the trinity

36:22

to move to the test the

36:24

question is given to them are

36:26

determined by the responses to the

36:28

previous station so they wouldn't waste

36:30

time on persons that are far

36:32

below or far boss They proficiency

36:34

level like in the traditional test.

36:37

And today that has has been accepted

36:39

by nearly four thousand universities in the

36:41

Us, including the top Ivy League school,

36:44

and they also accepted by the Irish

36:46

governments as part of the visa process

36:48

for the immigrants. In. Total

36:51

there are about ten million in

36:53

must have. Been. Taken every

36:55

year. so at a forty nine

36:57

dollar protests even think that the

36:59

market site is about five hundred

37:01

million dollars that is not lashed.

37:03

And that is not exciting in

37:05

itself. but I think the test

37:07

is important to help during those.

37:10

Increase. The credibility and a half

37:12

the doing go become the standard

37:14

of the markets and more interesting

37:16

li is to get people to

37:18

learn through dealing though because if

37:20

you think about it than the

37:22

market for selling powerful and I'll

37:24

practice Mateos and training low notes

37:26

for the time he multiple follow

37:29

larger than the market For the

37:31

testing itself, this can be quite

37:33

an important avenue to get people.

37:35

To. Come in and learn with duolingo. I

37:38

think that's such an interesting point in

37:40

terms of the prep market being larger

37:43

than the market itself and probably the

37:45

case for many standardized tests, but he

37:47

earlier point I could easily see. That.

37:49

Market size also being something that

37:52

expands when you have a tool

37:54

like duolingo really breaking barriers and

37:56

I certainly from the corporate side

37:58

of things would not mind paying

38:01

for candidates to participate in that

38:03

test. Or you can see that evolving

38:05

in a variety different ways. I think it's just

38:07

such an interesting point in terms of. How

38:10

they've built an expanded into an area

38:12

that maybe is not obvious, but can

38:14

have all types of positive ripple effects.

38:17

As. You were describing the test and

38:19

it's a dynamic test. I think it

38:21

gets into the dna of this business,

38:23

which is. Machine. Learning A

38:25

I driven well before it was

38:27

as popular as it is today.

38:30

So can you talk about how

38:32

they've incorporated be dynamic learning process

38:34

by using a I? Whatever it

38:36

is about Ai that their incorporating

38:38

into their model and how you

38:40

expect that to evolve in the

38:42

future as well. Dealing with.

38:44

Have been using I for a

38:46

long time even before all the

38:48

excitement about a I recently with

38:50

over a billion exercises completed every

38:52

day on doing though they are

38:54

a person lovely street date her

38:56

to develop a I models she

38:58

loved it uses more engaged and

39:00

to teach them better. As

39:03

an example they develop an

39:05

Ai model cool but green

39:07

to predict the probability that

39:09

any liner will answer as

39:11

if an exercise correctly duolingo

39:13

he's is by plane predictions

39:15

to adaptively construct lesson. Way.

39:18

X x if I it just right

39:20

or liner in front of the difficulty.

39:23

So. They thing that eighty percent

39:25

of answering a nexus I currently

39:27

is about right. That would

39:30

have increased investment because if you

39:32

give users the too easy you

39:34

to this a core exercises. Then

39:36

that would either more than

39:38

four frustrate of so that

39:40

the way as I mentioned

39:42

earlier the lessons unduly girls actually

39:45

personal life based on the liners

39:47

preseason sea level. And

39:49

recently with the more rapid development of

39:51

a I Feeling Go has partner with

39:54

open A I'd and launched a new

39:56

subscription fee or could you will much.

39:59

About in com It generated a I

40:01

features. One of the

40:03

species that I find really interesting

40:05

his role play in which users

40:07

can have a real time conversations

40:09

with dealing Go Powered by generated

40:11

by I stood there would be

40:13

i'm different plot developments and check

40:15

the to users. So. That

40:17

users can emerge in different real

40:19

life situations and improve their conversation

40:22

with skills. For. Example: asking for

40:24

direction or ordering a cafe in the

40:26

street a perry and if they are

40:28

stuck at any point in the conversation

40:31

then they will be suggest that words

40:33

and phrases to continue and at the

40:35

end of the conversation during our would

40:37

give them score based on the variety

40:39

of the worst they use or areas

40:42

that they can improve in the future.

40:44

And. Where they once you improve this

40:47

offering further east too much the

40:49

difficulty of of the conversations. To.

40:51

The use of level of proficiency

40:53

and also to reduce latency of

40:55

the A responses. And. With

40:57

their generated a I louise belief

41:00

that duolingo can piece better than

41:02

a human shooter. And. As

41:04

the cost of language training model continues

41:06

to go down at some point they

41:08

hope to be able to defeat a

41:11

I features to lower subscription fee or.

41:13

And. Even to the free users so that

41:15

everyone can benefit from the power of ai.

41:18

It's one of the better use

41:20

cases that I can think of

41:23

when it comes to. I think

41:25

there's often, particularly in the financial

41:27

market some frustration when trying to

41:29

use the new Ai features for

41:31

factual information, but the social dynamics

41:33

and the advancements that have taken

41:35

place when it comes to the

41:37

social interaction with a I is

41:39

completely different and then hearing how

41:41

that can be used. For.

41:43

User in real world scenarios is just

41:46

such a natural way to take the

41:48

tools and put them into practice. So.

41:50

I love hearing about that. I

41:52

want to get into that cost

41:54

dynamics that are associated with building

41:56

those models, but maybe we can

41:58

just start from. Top on the

42:01

financial side of things and get into

42:03

the financial model a bit. He talked

42:05

about the revenue lines in the different

42:07

pockets. This is one of the unique.

42:10

New. Sas. Companies.

42:13

That is actually Gap profitable, so it

42:15

stands out in a sea of other

42:17

businesses that have been heavily investing and

42:19

growth. Very interesting here. so maybe you

42:21

can just describe the margin profile. Or

42:24

however, you would think about the income

42:26

statement when it comes to duolingo and

42:28

how you frame that financial model equation

42:30

for them. I. Think you're right.

42:33

I think the business really stands out

42:35

in some self being able to go

42:37

really fast and being profitable at the

42:40

same time. And if you think about

42:42

the structure of the business then he

42:44

should be very profitable. They make over

42:47

seventy percent margin. Most. Of

42:49

the costs of revenues are platform fees

42:51

paid to Google Play than Apple stores

42:53

for having they ask. The. Because

42:55

operating expense for them or

42:57

indeed. Which. Has been around

43:00

forty percent of revenues because. They.

43:02

Continue to invest heavily in products,

43:05

Not system in which is awesome and

43:07

but sales and marketing and be safe

43:10

in minimal because most of the growth

43:12

is organic and with a mild and

43:14

they don't have to spend a lot

43:17

on that to acquire users so a

43:19

steady space is could be a thirty

43:21

forty percent operating margin between it and

43:24

actually when we looked at kinda which

43:26

has a similar subscription model. Than.

43:28

That be than it has achieved over forty

43:31

percent. Operating. Margin. Say

43:33

Duolingo should be able to to get

43:35

that at some point of the subject

43:37

generated process of the net income level

43:39

into any twenty three which is a

43:42

very big achievement. But. That.

43:44

Isn't as I actually have been very

43:46

class generators for quite a long time

43:48

and they're free. cash flow mustn't have

43:50

been close to part. Percent. And

43:52

I know. The. Dynamic With many

43:55

of these businesses, you have a free

43:57

cash law but you do have this

43:59

survey Compensation. The. Stop a suspense which

44:01

is not. Cash flow by

44:03

is viewed certainly as an expense.

44:05

To many it is an expense.

44:08

How. Do you think about that as an

44:10

investor just with the dynamics of being a

44:12

big piece of the equation? How big is

44:14

it for duolingo? And is there any expectation

44:16

in terms of how that line item will

44:18

evolve over time? He. Or than you

44:20

are right that stock based compensation

44:23

had been hide a common ways

44:25

foreign companies especially in the Us

44:27

to pay for the employees. The

44:29

be doing those. That. Uses have

44:32

made compensation that had been coming down

44:34

as a percentage of the revenues because

44:36

the company has been growing pretty fast.

44:39

And we've factor that in terms of

44:41

the dilution for the shareholders of the

44:43

long term. but as I say, they

44:45

have been able to generate. Profits.

44:48

of the net income level in Twenty twenty

44:50

three and we think that over the long

44:52

term is should be profitable business as well

44:54

as east get lavished. And

44:57

on the line items.

44:59

From. A revenue standpoint you mentioned again,

45:02

math and music being another potential

45:04

area of growth for them. To.

45:06

Have some sense of what that represents

45:09

today in terms of whether how many

45:11

subscribe users are actually using it for

45:13

math and music, Whether it's mostly people

45:15

that have used it for language that

45:17

are then learn on math a music.

45:20

Anything about those two areas of growth.

45:22

Math. And music are still very

45:25

early and they probably wouldn't contribute

45:27

to revenues for the next few

45:29

years doing day currently at the

45:32

space of product development to. Attract.

45:34

Users inches to be a more content.

45:37

And then you're right that most people

45:39

today's youth and music. Because.

45:41

The use during go for languished

45:43

and my music and now integrated

45:46

into the flagship language course. So

45:48

it's is all day India that

45:50

people can cost like. Interestingly, I

45:52

read an article recently about why

45:55

the Uk has a problem with

45:57

Max and lots of students as.

46:00

Cool! The Not fans of my they

46:02

skate of numbers and as a result

46:04

they struggle with basic math concepts in

46:06

their adult life. So if dealing Go

46:09

can apply the same method of teaching

46:11

languished to my she make it for

46:13

many dating when I think it could

46:16

be very exciting and impactful and the

46:18

company actually believe that there will be

46:20

a wide audience for months including both

46:23

students and lifelong adult learners. and they've

46:25

also believe that their prime concern sign

46:27

language learning so they one should be.

46:30

Synonymous with education, Not just language,

46:32

and it is about a unique

46:34

weight of piecing. So. Learning

46:36

something with the dealing goes away

46:38

in how they marketing their brian.

46:41

I. Think. Of Math is kind of

46:43

an extension of language. it's own language in

46:45

many ways and music in a similar way

46:47

so will be very interesting. The monitor how

46:50

that evolution goes. As. You mentioned

46:52

they seem to be having success.

46:54

Educating. People that are interested

46:57

in the education but maybe not. Historically.

47:00

Keen to go through the exercise

47:02

in the painful process of what

47:04

education typically entails. He begs.

47:06

The question of when duolingo

47:08

potentially become more featured in

47:10

classrooms and universities is that

47:12

something that happened? I would

47:14

think about it being something

47:16

that mostly users are using

47:18

on their own free time,

47:20

but it does feel like

47:23

something that if leveraged by

47:25

traditional. Education and the existing industry

47:27

could make it even stronger. So as

47:29

that been a goal, Has that been

47:31

something that they've seen any success with?

47:33

Where does that's? an. Interesting.

47:35

I used to ask at the management

47:37

team that questions. Whether they would

47:40

consider fall into schools or selling to

47:42

governments or Ngl This and shots and

47:44

they say that they have that discussion

47:46

early on in the history of the

47:48

company but they ended up choosing to

47:50

go down the route of direct to

47:53

consumer because that would allow them to

47:55

grow a lot faster and and being

47:57

very customer centric issue to their Dna.

48:00

And that would allow them to really

48:02

have a close relationship with a customer

48:04

and incorporating over the feedback. and I

48:06

do. They ab testing. Which. I

48:08

talk about earlier having say that

48:10

a lot of schools in the

48:13

Us actually using dealing go for

48:15

free. Forty percent of foreign language

48:17

teacher is in the U N

48:19

K, twelve school actually use dealing

48:21

don't indexes room informed and there

48:23

are more people in the Us

48:26

learning languishes on duolingo. been there

48:28

a foreign language learner in or

48:30

Us high school combine? Which.

48:32

I think it increases. Three

48:34

companies decide. Yeah. I

48:36

guess you can have that type of adoption

48:39

without making it a direct mission to have

48:41

that type of adoption. And. It

48:43

seems like it's been the case with his business

48:45

since the start. Just. Organic Word of

48:47

Mouth can just be one of the most

48:49

incredible drivers of business growth, and probably the

48:51

best driver business growth. So. Much fun

48:54

going on here within this business and

48:56

by they approach things. Are there any

48:58

other interesting dynamics when you think about.

49:01

The. Growth story and the growth opportunity

49:03

would stand out to me is I

49:05

would have thought they could have just

49:07

continue to lean into the language market.

49:09

It's clear that they're already expanding with

49:12

math and music into a broader education,

49:14

so they're certainly going after a lot

49:16

and not necessarily just continuing on one

49:18

specific. Road. They're already

49:20

branching in a few different directions. Think

49:23

I'm a least. One say that. They

49:25

not gonna exhaust of things that they

49:27

can peace anytime soon so I think

49:30

they would continue to think about what

49:32

they can peace in the Fisher using

49:34

the mobile apps p Say that he

49:36

would love to be able to teach

49:38

people. Coding. But they something

49:40

really quite difficult to be done on

49:42

a mobile phone. But. Yeah, I

49:44

think in the next five years or so

49:46

I think it's gonna be about. Languish.

49:49

Continues to deepen the languished

49:51

market terms of having more

49:53

content that are relevant for

49:56

people and achieve that missions

49:58

or piecing people. They are

50:00

able to get a job with that

50:03

skill and also beauty. I'll be an

50:05

audience for math in music. And

50:07

starting to think about all they can

50:09

manipulate those users. So I think in

50:11

the next five years. I would

50:13

see that is how they growth. Think. One

50:16

very interesting thing for me

50:18

to wash the business is

50:20

how they can continue to

50:22

advance their technology. So. That

50:24

they can peace people better because one

50:26

of be question but I had in

50:28

the early days of investing in Duolingo

50:30

is that they are have been doing

50:32

a fantastic trap of engaging people and

50:35

making people wanting to come back and

50:37

the line with dealing go. But do

50:39

they really peace people effectively and I

50:41

think with the help of technology they

50:43

would be able to do that. Says

50:46

the I example is something that I'd.

50:48

Mention early and feel really excited about.

50:51

Just. On that point in general do

50:53

you think that they are largely seeing

50:55

success teaching people? I think a certification

50:58

certainly felt like that was some form

51:00

of validation or credibility, but when you

51:02

think about the effectiveness of the product

51:04

you have any sense. Obviously once you

51:06

get into game with occasion many of

51:09

these things can be used as part

51:11

learning. but a lot is the interest

51:13

in the gaming side of things but

51:15

and he general opinion on their in

51:18

terms of where they stand today in

51:20

terms of the effectiveness. And how much better

51:22

can get? Internally the companies

51:24

have three most important med fix

51:26

that they mourn it, Her wishes

51:28

to eat Desmond, the effectiveness of

51:30

a Pc and monetization and a

51:32

lot of times you with see.

51:35

that would be trade off. Between.

51:37

Either engagement and monetize Asian or

51:40

Englishman and effectiveness of the Pc.

51:42

But they once make sure that they

51:45

have a birch and balances things right.

51:47

And I think in terms of. Fishing.

51:50

Effectiveness. To. Your question. There

51:52

have been quite a bit are of

51:55

Gap in different courses that they have.

51:57

So some of the flagship courses like

51:59

Learning. Earnest and Friends

52:01

from a list for example. I

52:03

really get that have been a

52:06

lot of resources being put into

52:08

developing the contained and having different

52:10

forms are planning for you though

52:12

it's so usually I read reviews

52:14

of the internet and find all

52:17

that people are really like the

52:19

offer but their courses for example

52:21

which I tried like. Learning.

52:24

Chinese from English hasn't been

52:26

that good. So they have

52:28

been quite a bit of inconsistency

52:30

between the different courses that they

52:32

offer us, and they are very

52:34

aware of that, but there's limited

52:36

resources that they can put into

52:38

everything so they can to prioritize

52:40

based on the popularity of the

52:42

Languishes. And how many

52:44

people actually using. The. Course.

52:47

It's helpful to get a sense like

52:49

that of where there might be still

52:52

opportunity to improve on the existing product

52:54

and how they go about prioritizing. As.

52:56

You think about risks to this

52:58

business? I think we've touched on

53:00

what differentiates them from competition. There

53:02

are certainly other start ups in

53:04

the space. There are the incumbents,

53:07

there is the offline market. Is

53:09

there anything that happening when it

53:11

comes to the competition that you

53:13

view as a threat to duolingo?

53:15

specifically? Yet. So I

53:17

think you are right that there's always

53:19

been competition. But when I think about

53:21

the risk for this business, competition is

53:24

not the first thing that came up

53:26

to my mind. I don't mean to

53:28

say that they wouldn't be competitive. price

53:30

of I think. With the

53:32

positions of the company today. And.

53:35

Having people coming to them organic

53:37

me and Duolingo become synonymous with

53:39

language teaching. It's gonna be quite

53:41

difficult for someone to com mean

53:44

and attract users. Provided. That

53:46

they continue to focus to develop

53:48

the best product. What? Worries me

53:50

the most. A when it comes to

53:53

the business A the T and risk.

53:55

Dealing Go today is many times larger

53:58

than it was in the past. And

54:00

has attracted many talents to com working

54:02

for them. But Luis

54:04

remains the key architect be high.

54:06

The company is still very much

54:08

involved in all the decisions about

54:10

products. That is good

54:12

thought. It raises the slight concerned

54:14

about the still ability of the

54:16

business because if he has to

54:18

control everything than does up potentially

54:21

slow down the business or and

54:23

as the company gets bigger and

54:25

he cannot discern everything so whether

54:27

they have sufficient best in the

54:29

management teams from it the right

54:31

decisions to still balancing that profitability

54:33

and growth to staying. True.

54:35

To their missions of providing free education

54:38

to people, I would say that it

54:40

is more concerned. Than from

54:42

the competitions and point. Yeah.

54:45

Certainly see throughout the research and

54:47

his conversation today seems like a

54:49

very important piece to this puzzle.

54:51

I did find it interesting the

54:54

management team owns a large percentage

54:56

of tears. I think still over

54:58

fifteen percent is owned by the

55:00

founders, which shows that dedication and

55:02

alignment with a business. But to

55:04

your point, there can be. Positives

55:07

and negatives and drawbacks when it comes to

55:09

scaling. Sometimes when it comes to the dynamics.

55:11

In. The world of Ai it seems like

55:14

a tool that they are very much

55:16

leveraging and will benefit them as they

55:18

incorporated. Are there any threats? When.

55:20

You think about a I am just all

55:22

the different things that are happening now with

55:24

our own ability to take this episode and

55:26

have it translated. Is. For really

55:28

incredible in terms of the advancements that have

55:30

been taking place. but. How. Do you

55:32

view a I either as a major tailwind

55:35

to the synthetic to become a headwind had

55:37

you frame that. I. Think is

55:39

So far the only now have been

55:41

a fantasy three of ai. That

55:43

people may concern whether a I would

55:45

be developed through a point where we

55:48

no longer need to learn new language

55:50

because we can just have real time

55:52

conversations in different languages so I can

55:54

sit in Vietnamese and you can understand

55:56

because that would be a real time

55:58

since. listening to. This for example

56:01

I think it is possible, but

56:03

I guess that learning a new

56:05

languish brings a different perspective in

56:07

terms of understanding more about the

56:09

kosher and the people that come

56:11

from that culture. and shoot language

56:13

learning it can. Build.

56:16

Human connection in or beep away.

56:18

So maybe even if the technology

56:20

allows us to do that this

56:22

they would demand for people to

56:24

learn new languages. But yeah, we'll

56:26

see. Interesting scenario to think

56:28

about her had a very least for

56:30

sure. What? It has been. An

56:33

incredible conversation about the very wholesome

56:35

business. Not a word that I

56:37

would typically use, but it seems

56:39

like the mission feals through and

56:41

truly aligned with the founder who

56:43

has found his life's work. When

56:45

you think about the lessons that

56:47

you can pull away from duolingo

56:49

and a specific example and apply

56:51

elsewhere, What key lesson stand out.

56:54

I think send me or with they

56:56

to think. Say investing in ethics

56:58

has not been easy for investors and

57:01

a lot of investor consider attack as

57:03

a great Yeah it does a lot

57:05

of reasons for that but it gets

57:07

one of the reason could be because

57:09

of the tricky bruins of missile, a

57:11

monetary base and. Education is

57:13

often treated as a public good

57:15

and it's not easy to make

57:18

money from Education especially for an

57:20

attack company where out as often

57:22

have a big mission and one

57:24

shoe, lower costs and improve access

57:26

to people. But. At the

57:28

same time, they have to generate

57:30

profits in return to satisfy like

57:33

holders including shareholders and their own

57:35

employees. So. Not many

57:37

companies can achieve both of those objectives.

57:39

I think doing goes so far has

57:41

proven that they either way to do

57:44

that. Although it is too early days

57:46

so I think what we need to

57:48

see a here is a trusted management

57:50

team who you really committed not to

57:52

fall for the short term profits. And

57:55

forget the mission somewhere down the line

57:57

when things turn difficult. and a

57:59

bit. Harder to even for Our investment

58:01

in duolingo is the track on. The

58:04

management team. Especially louise.

58:06

Another lesson is that.

58:09

Product. Really matters. I mean

58:11

that sounds really trivial. Bought it

58:13

could be easily forgotten. Many investor

58:15

it must lead the early venture

58:18

capital people who gave money to

58:20

dealing though because they believe is

58:22

Louis and believe in the products

58:24

that he created rather than necessary

58:26

seeing a clear path of how

58:28

the lingo wouldn't make money. It

58:30

is to believe that as long as you

58:32

have a good product that brings valued customer

58:35

of and somewhere down the line you with

58:37

I'd always make money from it. And

58:39

and he's not to say that other things

58:41

like sales and marketing do not matter what

58:43

I do think that they come after the

58:45

put. And for a successful

58:47

business, I would want to see them

58:49

being obsessed about products and always wanting

58:52

to make a product better and bring

58:54

more value to the uses. I

58:56

think it's an excellent point to close out

58:58

on and something. Throughout. The conversation we

59:01

talked about the social media strategy and the

59:03

status dynamics but at the end of the

59:05

day if the product isn't great than all

59:07

that engagement doesn't necessarily mean much so it

59:10

has been fascinating Tie: I really enjoyed Bring

59:12

Down Duolingo and this is one of those

59:14

companies where I do some research and I

59:16

just know that I will be watching this

59:19

one and think it's to such an interesting

59:21

case study to follow for years to com.

59:23

So thank you very much for joining up

59:25

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59:28

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