Long read: Good, free, fun: The simple formula that has made Duolingo a daily habit for millions

The popular perception is that apps & online courses are helping smart people get better equipped with technical skills eg. big data analytics, AI, etc. In India, this perception has in part been created by the craze to get kids to learn coding early in life. The reality is that the internet is even more effective at helping blue collar workers acquire skills which boost their earnings and their employment prospects. If anybody associated with skilling & job creation in India is reading 3 longs & shorts, we would request them to study this piece and Duolingo’s pedagogy closely; we believe that this model can be immensely useful in upskilling jobseekers in India. As Natalia Guerrero of the BBC explains beautifully:

“Perhaps no app has mastered user loyalty quite like Duolingo, the gamified language-learning platform 34 million people a day can’t put down…Duolingo seemed to be everywhere. I heard from a friend who was celebrating her 800-day Spanish practice streak on the app. I read about a journalist from The Guardian who became addicted to learning Italian. A Sri Lankan waitress in Brooklyn switched from English to Spanish when she heard my mother and I speaking, crediting Duolingo for her skills.

But my deep interest in the world’s most downloaded language-learning app truly began last year when I saw first-hand its significant impact on new migrants to the US, a country undergoing one of the largest migration waves of the decade. At some point in their long journeys, Duolingo becomes an essential tool for these people on the move.

John Jairo Ocampo, a former bus driver from Colombia, recalls struggling to find work in his first days in the US in 2023, when a boss at a construction site in New York City explained simply, “More English, more money.” He used Duolingo to learn. Now, the family lives in Indianapolis, and John’s wife is using the app to get along better at her job in an elementary school kitchen; she says her boss is using it, too, to learn Spanish.”

Duolingo’s success is the result of a well thought out strategy hatched by the firm’s CEO, Luis von Ahn (who is the inventor of the “Captcha” test that websites use to test if you are human and not a boot), and CTO, Severin Hacker. Ms Guerrero writes: “So when non-native English speakers Von Ahn and Severin Hacker, Duolingo’s CTO and co-founder, started their company in 2012, they knew that learning languages, and in particular learning English, has the potential to change people’s lives. “This is why we’ve worked really hard to keep Duolingo free, because we want to give access to education to everybody.””

So how does Duolingo make money? Ms Guerrero lays out the firm’s potent revenue model: “To maintain the promise of an open and free app, Von Ahn and Hacker developed a hybrid business model that combines ad-supported access and “freemium” elements, while also offering a paid subscription with extra benefits, like an ad-free experience and a family plan. And it worked. “The main way in which we grow is by word of mouth, so people tell their friends,” he says. One such word of mouth moment came from Bill Gates, who said in a Reddit chat back in 2015 that he regretted not speaking more languages and had tried Duolingo.

In the intervening years the app has found its way onto many, many screens. According to Duolingo’s shareholders letter, in 2023 the company’s revenue was $531m and the forecast for the full-year 2024 is $731m. Roughly 8% of Duolingo users pay for a subscription, contributing to 80% of the company’s revenue. Meanwhile, the vast majority, 90%, use the free version and see ads, which account for only 8% of the earnings…

Today, Duolingo serves 34 million daily users worldwide and employs 850 people across six cities: Detroit, Seattle, Berlin, Beijing, New York, and their headquarters in Pittsburgh, where you can discover the company’s culinary spin-off, Duo’s Taqueria. This global presence affirms the company’s accelerated growth. In October 2024, Duolingo’s market capitalisation was $12.27bn, a significant rise from 2022, when its market cap was $2.85bn.”

Duolingo’s successful revenue model is an outcome. The underlying driver of its success is its gamification of something that has historically been seen as painful & arduous, namely learning new languages. To understand how Luis von Ahn has gamified learning languages we suggest you read Natalia Guerrero’s article in full. Here is a hint from Luis von Ahn: “Gamification is probably the most important thing. We try to turn the whole thing into a game, but we try to use storytelling. From the beginning, I wanted to have a mascot. I thought that it would make the whole thing more accessible. And having it doing weird things online really helps. But it’s not like it started in one day. This is an evolution. It all works together to create a brand that people love. Most of the [features] we have now, we got to by trial and error. We’ve tried too many things that didn’t work. The ones that are now there is because we tried them, and they did work.”

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