How does DuoLingo make Money & Understanding DuoLingo Business Model

Evaluating DuoLingo Business Model & How does DuoLingo make Money – UE Analysis

How does DuoLingo make Money
How does DuoLingo make Money

DuoLingo is one of my favorite apps on the phone.  I don’t have many apps, but I have DuoLingo (that says it enough)!  It is based on one of the foremost principles that I stand by through, Free Education for All! No one should have to pay for any basic level education and DuoLingo Business Model just nails it right through the chest with this principle.

About DuoLingo, Funders, Founders and Facts

Duolingo is a free platform that includes a language-learning website and app, as well as a digital language proficiency assessment exam. Duolingo offers all its language courses free of charge. As of 2016, the website and app offer language courses across 23 languages.  The app is available on iOS, Android and Windows 8 and 10 platforms with about 200 million registered users across the world.

DuoLingo Founders:  Luis von Ahn (he is damn famous and irritating at the same time – read more below about him) and Severin Hacker (Luis’s student).

DuoLingo Funding: Close to about $80 Million in multiple tranches from  Union Square Ventures, Ashton Kutcher’s firm, A-Grade Investments and Kleiner Caufield & Byers and the last Series D round of investment led by Google Capital.

DuoLingo Business Model

DuoLingo Business Model is basically NOTHING!  They basically charge ZERO fees from users to learn any language.  Neither are they charging the schools or the universities in third world countries that are using DuoLingo to teach English to the students.

Then why the heck this post?

Just because I like the core principle behind it?  Absolutely not!  It is based on a very clever business model example called “Social Network Business Model”  In my analysis on WhatsApp I had outlined a very subtle statement “If you are not paying for the product, You’re the product” – Do you remember this?

That is the underlying principle of the DuoLingo Business Model.   Let’s see this in the next section, but what about Luis?  Wasn’t he supposed to be irritating and famous at the same time?

But what about Luis?  Wasn’t he supposed to be irritating and famous at the same time?

Yes, He is!

Do You remember the below stupid screen from anywhere?

Business Model of DuoLingo
Business Model of DuoLingo

Chances are, you actually do remember this and are used to seeing this every now and then on some websites that require you to prove that you are not a bot!  This was created by Luis von Ahn!

Ok! I get it, he is irritating, but why is he famous?

He is famous because of the underlying principle behind the captcha business model.  The idea behind this was: Earlier people used to do stupid math tests to prove that they were not bots, but answer to math were already known to mankind and the computer systems, and it struck to Luis that why waste precious man-hours in reinventing the wheel, so the pre-digitized books which had some mis-scanned words, which were not machine readable were given out as Captcha’s to be solved so that the man hours can be put to good use.  In this tech, one word is machine known and the other is not known to the machine (we dont know which is which) – So the machine will figure out whether or not you are a bot!

This tech was licensed (and later took over by) Google for their automation part and later merged with ReCaptcha.  This is why he is famous – How he used crowdsourced information to reduce manual labor by book digitization companies.  Thus he is also referred to as – Father of Modern Crowdsourcing.

DuoLingo Business Model from Crowdsourcing

Building on to the above DuoLingo business model WILL have 2 Primary Business lines from Crowdsourcing as follows:

  1. Translation Services to Content Heavy Companies: BuzzFeed, CNN and others use DuoLingo users to translate all of their content.
  2. Document Translation Services: For Corporates, others requiring Document translation services.

DuoLingo Business Model from the Users

Business Model of DuoLingo is very smart from the perspective of utilizing the user’s spare time that they are engaging in learning and putting that to work for self gain. Consider the example of the Prisoners of the Jail doing social work from which the Jail makes money to sustain operations. (Shawshank Redemption 🙂 )

How does DuoLingo make Money

DuoLingo Business Model
DuoLingo Business Model

How does DuoLingo make Money from Content Translation is as follows:

Consider this, you are using DuoLingo and you suddenly come across the phrase to be translated into Spanish from English – “Top 25 Horror Movies of all time” – then BuzzFeed is paying DuoLingo to get their content converted to Spanish and DuoLingo’s algorithm is splitting that content to multiple smaller chunks and distributing amongst decent experienced learners and then collating that back and giving the final proof-read version to BuzzFeed and others!

This model is heavily dependent on making the app so intuitive that the user is coming back again and again – gaining more experience with the language and translating more and more for DuoLingo.

How does DuoLingo make Money from Document Translation

Consider this, you are using DuoLingo and you suddenly come across the phrase to be translated into Spanish from English – “The area measured XYZ Sq Yards” – then some corporate is paying DuoLingo to get their document converted to Spanish and DuoLingo’s algorithm is splitting the text of that document to multiple smaller chunks and distributing amongst decent experienced learners and then collating that back and giving the final proof-read version to the same corporate!

The business model here is clear; pricing and arbitrage – The service will be free for users and thus DuoLingo can charge anything from the client (which is way-way low as compared to the professional translators).  The arbitrage that arises from the cost of servers and other overheads vs the revenue from translation services will be the gain for DuoLingo.

Intelligent, isn’t it?  MIT thinks so!

How does DuoLingo make Money from Online Tests

Well, this may be the only straightforward revenue line that DuoLingo must have thought of!  How does DuoLingo make money from Tests is exactly how IELTS and TOEFL make money from the candidates – But scale it to 100 times in volume and cheaper by 90% in Value.

DuoLingo will eventually replace these tests and make money from the same as well because it is working towards acceptability in major countries as an alternative to these two cumbersome and costly tests.  (DuoLingo’s $20 vs IELTS/TOEFL for $150-$200).

How does DuoLingo Work

How does DuoLingo Work
How does DuoLingo Work

How does DuoLingo Work is purely a matter of Gamification, where the content to be portrayed is converted into small games and the user has some fun while learning and playing it the same time.  This ensures that the user comes back more often for learning the language while having fun to form the basis of DuoLingo business Model.

Disclaimer: DuoLingo Business Model, How does DuoLingo make Money is the interpretation of the author.  Please use the information at your own discretion.  Direct copying not allowed under DMCA.  Please ask for explicit written permission before copying content.

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6 Comments

  1. They also appear to have added display advertising into the mix with interstitial 300×250 ads after each lesson in the app. While non-intrusive, the fallout rate appears to be fairly high which could limit returns in this area.

  2. If a user loses his “streak” then there is an option to buy back into it and reinstate the level at which it was lost. I had a 200 day streak, for some weird reason lost it (which I dispute), was offered the chance to repair it with a fee of $9.99 which I couldn’t do at the time and now, although I want to do it, I cannot find the offer anywhere! They are impossible to reach and ask questions of. This seems like small potatoes as far as earnings are concerned but it is certainly frustrating for the user.

    1. Hi Phyllis

      This is news to me.. I could not find this anywhere in their T&C nor could I find it while mystery shopping.. Thanks for the info. Will include this in the post after some research on this.. 🙂

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