DUOLINGO - Learn a language for free. Forever.

Understanding the Product

Let's see what problems does Duolingo solve

The below table extensively shows the pain points Duolingo has solved along with the impact on our users:-

Let's see what internet reviews reveal about Duolingo:

Let's understand the product flow ⬇️

Deep-dive into Duolingo's features and what it has to offer

Points worth noting:

• The Family Plan allows up to 6 family members to share a premium subscription for a discounted price.
• Duolingo ABC is a separate app for young children to learn English literacy, accessible with a Premium or Family Plan subscription.
• Duolingo Super is currently in beta testing and only available to some Premium users.

Some cool insights about Duolingo that you might not find on internet easily:

1. Duolingo has been a standout among recent tech IPOs, with shares increasing by approximately 50% since its IPO in July 2021. Duolingo's valuation pre-IPO was $2.4 billion, which accelerated to over $6 billion in 2021. However, the tech selloff hit the company in 2022, dropping its value below $3 billion
2. The company's culture is a huge part of its success as a public company, with a focus on its mission and principles.
3. Duolingo has made its first official acquisition, an animation studio called Gunner, and plans to do more acquisitions in the future.

Understanding the Users

Ideal Customer Profiles:

After speaking to fairly 7-8 people from various fields, some personas (non-fictional) were created out of which the below ICPs were made:

ICP 1

ICP - 2

ICP - 3

ICP- 4

Based on above framework, the below prioritisation has been explained:

Prioritization Reasoning:

• ICP-2: The Career-Focused Learner is prioritized for the following reasons:
• • High value to user: Language skills are directly linked to career advancement and professional development.
  • Medium ease of adoption: Driven by strong motivation to learn for professional reasons.
  • High frequency of use: Likely to engage with the app regularly to achieve their goals.
  • Medium appetite to pay: Willing to invest in their professional development, making them more receptive to premium features.
  • Medium CAC: Targeting this group may require more focused marketing efforts, but the potential ROI is significant.
• ICP-4: The Budget-Conscious Traveler is also worth considering, despite their lower frequency of use:
• • Medium value to user: Language skills enhance travel experiences and cultural immersion.
  • High ease of adoption: Practical, travel-focused features can attract them quickly.
  • Low frequency of use: Usage may be concentrated around travel periods, but potential for re-engagement with new trips.
  • Low appetite to pay: Sensitive to price, but can be addressed with freemium models and budget-friendly options.
  • Low CAC: Can be reached through partnerships with travel blogs, airlines, or hostel networks.

Additional Considerations:

• ICP-1: The Casual Learner has high ease of adoption and low CAC, but their lower frequency of use and appetite to pay make them less of a priority for immediate monetization. However, they could be a valuable source of long-term engagement and potential upsells.
• ICP-3: The Tech-Savvy Socializer presents an opportunity for innovation and differentiation, but their lower value to user and appetite to pay might require a longer-term strategy to monetize effectively.

Here's how Duolingo could tackle its unengaged Ideal Customer Profiles (ICPs) by offering targeted, science-backed solutions

1. Identify and Segment Unengaged ICPs:

• Analyze user data to identify groups displaying low engagement and retention.
• Segment them based on demographics, learning goals, and reasons for non-engagement (e.g., lack of time, repetitive exercises, limited motivation).

2. Develop ICP-specific Learning Paths:

• Design focused learning journeys tailored to each segment's pain points and goals.
• Offer specialized courses for specific needs like business English, travel conversation, or exam preparation.
• Incorporate bite-sized lessons and gamified challenges for busy learners.

3. Leverage Science-backed Techniques:

• Partner with research institutions and experts to design learning methods based on memory retention, spaced repetition, and motivation science.
• Integrate features like adaptive learning that adjust difficulty based on performance.
• Use gamification elements with clear rewards and progress tracking to boost motivation.

4. Showcase the Effectiveness:

• Conduct internal studies and partner with academic institutions to quantify the benefits of Duolingo's new approaches for specific ICPs.
• Share these results transparently to build trust and demonstrate the app's efficacy in addressing their needs.
• Feature user testimonials and success stories showcasing how Duolingo improved their language skills and achieved their goals.

Examples:

• "Just 10 minutes of daily practice on Duolingo's Business English course can increase your workplace communication confidence by 18%, according to a study by Stanford University."
• "Our Travel Spanish path, with its focus on practical phrases and dialogues, can improve your conversation skills by 25% in just 4 weeks, as demonstrated by a pilot study with real travelers."

Understanding the market

Let's take a deep dive into five popular language learning apps: Duolingo, Babbel, Memrise, Busuu, and Rosetta Stone.

TAM SAM SOM of Duolingo

TAM (Total Addressable Market):

• Estimate: $40 billion
• Based on:
• • Number of language learners (source link)
  • Average annual expenditure: Expense on language learning resources like costs associated with traditional methods like classroom courses and private tutors, as well as digital solutions like Duolingo were also considered.

SAM (Serviceable Addressable Market):

• Estimate: $15 billion
• Based on:
• • Target segment: Not everyone learning a language falls within Duolingo's target market. I focused on casual and self-directed learners, as Duolingo's user experience and freemium model cater to this segment well which is approx 75%
  • Language coverage: Duolingo offers a wide range of languages, significantly increasing its addressable market compared to apps focused on specific languages. Its current offerings cover a substantial portion of global language learning demand.
  • Accessibility: Duolingo's freemium model makes it accessible to a wider audience, especially in regions with lower disposable income. This further expands its reach within the target segment.
  • Articles
  • • https://www.researchgate.net/publication/42794357_Mobile_language_learning_now_and_in_the_future (Estimate 75% of learners are self-directed)
    • https://investors.duolingo.com/ (Information on language coverage)
    • https://researchportal.helsinki.fi/en/persons/lauri-ahonen (Insights on freemium model's accessibility)

SOM (Serviceable Obtainable Market):

• Estimate: $5 billion
• Based on:
• • Current user base: While Duolingo boasts over 500 million registered users, not all of them are active or paying subscribers. We considered a fraction of this base as potential customers within the SAM.
  • Market share: Duolingo's current market share among language learning apps is estimated at around 35%. This indicates potential for growth, but also acknowledges the presence of competitors.
  • Brand recognition and user experience: Duolingo's strong brand recognition and positive user experience give it an edge in attracting new users and converting existing ones to paying subscribers. This contributes to its potential share of the obtainable market.
  • Source Links:
  • • https://investors.duolingo.com/events/event-details/duolingo-second-quarter-2023-earnings-call (Covers active users and subscriber conversion)
    • https://medium.com/@abhishekreliable23/language-learning-app-market-size-growth-forecast-2023-2030-3d41b2a6490c (Estimates 35% market share)
    • https://usabilitygeek.com/ux-case-study-duolingo/ (Positive user experience insights)

So at what stage does Duolingo really stand?

Overall, Duolingo is an established company and a major player in the market but calling Duolingo purely in "early scaling" or "matured" doesn't fully capture its nuanced position. Here's why:

Although revenue and user acquisition rates have slowed, Duolingo continues to experiment with new features and explore untapped markets, preventing it from settling into complete maturity. Conversely, the slowing growth and increasingly competitive landscape nudge it beyond the pure early scaling phase. This unique position presents both challenges and opportunities. To navigate this middle ground successfully, Duolingo will need to adapt to the changing market dynamics while effectively leveraging its existing strengths and innovative spirit. Only then can it ensure continued success and solidify its position as a leader in the evolving language learning landscape.

Hence I'd lean towards late-stage early scaling.

Content Loops:

User-generated content:

1. Duolingo Diaries: Users share language learning journeys and tips on TikTok and Instagram Reels.
2. Flow: User creates video or post, tags #DuolingoDiaries, content is curated and reposted on Duolingo channels.
3. Distribution: Social media channels, Duolingo app homepage.

Brand-generated:

1. Duo Duels: Teams compete using Duolingo skills, streamed on Twitch and YouTube.
2. Flow: Teams sign up, practice on Duolingo, compete in live-streamed challenges, winners featured on Duolingo channels.
3. Distribution: Twitch, YouTube, Duolingo app push notifications.

Curated content:

1. Language Learning Playlists: Partner with podcasts and bloggers to create Duolingo-integrated playlists.
2. Flow: Podcast/blogger creates playlist based on specific language learning goal, integrates Duolingo lessons, listeners/readers find playlist on Duolingo app.
3. Distribution: Duolingo app, partner channels.

Paid Ads:

CAC:LTV ratio: Duolingo should aim for CAC < LTV (e.g., CAC < $20, LTV > $50).

Marketing pitches:

Casual Learner: "Skip boring lessons, have fun while learning! Play your way to fluency with Duolingo's challenges and rewards."

Career-Focused Learner: "Boost your career prospects. Speak English confidently with Duolingo's personalized courses for professionals."

Tech-Savvy Socializer: "Unlock a world of new friends and experiences. Learn languages with Duolingo's AR challenges and interactive features."

Budget-Conscious Traveler: "Travel smarter, not harder. Master essential phrases and avoid tourist traps with Duolingo's travel-focused learning paths."

Channel prioritization:

• Casual Learner: TikTok, Instagram Reels
• Career-Focused Learner: LinkedIn
• Tech-Savvy Socializer: Twitch, YouTube
• Budget-Conscious Traveler: Travel blogs, budget airline websites

Example ad for Casual Learner on TikTok:

• Video: Show young people having fun learning Spanish with Duolingo's interactive challenges, dancing to catchy language lessons.
• Headline: "Learn Spanish while dancing? ¡Sí, señor! Duolingo makes it fun!"
• Call to action: "Download Duolingo and start your language learning adventure today!"

Product Integrations:

1. Travel Apps: Offer in-app Duolingo lessons tailored to the user's travel destination, with relevant phrases and cultural insights.
2. Flow: User plans trip on travel app, app recommends destination-specific Duolingo lessons, user learns essential phrases before travel.
3. Example integration: Duolingo integrated with booking platforms like Booking.com or Tripadvisor.
4. Productivity Apps: Add a "Quick Learn" feature within productivity apps like Todoist or Asana, allowing for short Duolingo practice sessions during downtime.
5. Flow: User completes task in productivity app, receives Duolingo prompt for a quick language learning session, reinforces vocabulary related to the task.
6. Example integration: Duolingo feature embedded within Todoist or Asana to-do lists.
7. Social Media: Enable language exchange features within social media platforms, connecting Duolingo users for real-time conversation practice.
8. Flow: User opens social media platform, sees Duolingo "language buddy" feature, connects with other users for conversation practice.
9. Example integration: Language exchange feature built into Duolingo profiles on Facebook or Instagram.

Referral:

1. Bragworthy feature: Gamified progress, streaks, leaderboards, and fun learning methods.
2. Platform currency: "Lingots" used for in-app purchases or exclusive rewards like virtual badges or early access to features.
3. Trigger points: Completing milestones, reaching streaks, recommending Duolingo to friends on social media.
4. Discovery & communication: In-app banners, personalized referral messages, social media prompts.
5. Sharing mechanisms: Social media, messaging apps, QR codes within the app.
6. Tracking & incentives: Dedicated "Refer & Earn" page with gamified tracking and bonus rewards for top referrals

Reference articles / Source Links

https://www.theseus.fi/bitstream/handle/10024/227032/Thesis.pdf?isAllowed=y&sequence=2 (page 26)

https://investors.duolingo.com/news-releases/news-release-details/duolingo-reports-62-dau-growth-44-revenue-growth-and-stronger#:~:text=Duolingo%20Reports%2062%25%20DAU%20Growth,Year%20Guidance%20%2D%20Duolingo%2C%20Inc.