Our perspective

Duolingo: From Early Monetization to IPO and Beyond

Laela Sturdy & Alex Nichols
27 Jul 2021
Our Duolingo Journey: From Early Monetization to IPO And Beyond

Huge congratulations to Luis, Severin and the entire Duolingo team on becoming a publicly traded company on the Nasdaq.

By CapitalG investors Laela Sturdy and Alex Nichols.

We met Duolingo co-founders Luis Von Ahn and Severin Hacker in early 2015. In our first meeting with the founders, I don’t think we talked about a single metric.

Instead, we discussed their vision for Duolingo: to become the company that makes high-quality education accessible to every person across the globe, regardless of where they live and how much money they possess. It was immediately clear that Duolingo’s mission was Luis and Severin’s vocation, as well as their avocation. As a college professor and passionate educator himself, Luis cared deeply about building a product that was not only fun and engaging, but also highly effective in helping users learn. We knew immediately that Duolingo was the type of company that we’d be thrilled to partner with. With a suitcase full of inspiration, we took the redeye back from Pittsburgh to San Francisco (the first of many PIT-SFO flights over the years!) and signed the term sheet to lead Duolingo’s Series D.

Luis, Severin, and the Duolingo team have always stayed true to their north star of delivering high quality learning that is engaging and free. Along the way, they have also built a strong and enduring business. They’ve demonstrated to the world that it is possible to do well while also doing good. By experimenting with many approaches while never compromising on their mission, the company has found incredible success with its subscription offering. Subscribers have grown from 0% of MAUs in 2017 to 5% in Q1 2021. In addition to the core language learning app, the team has seen breakout success with additional products such as the Duolingo English Test, which scaled from 17K tests in 2019 to 344K in 2020 ($1 to $15M of revenue year-over-year). We know this is just the beginning.

Duolingo is also one of the best examples of product-led growth we’ve ever seen. Experimentation has always been core to the company. “Test Everything” is a key operating principle, which means they have A/B tested everything from animated skill icons to optimal gamification levers that make learning fun. Continuous testing has resulted in steady improvement of the product experience and engagement metrics. This experimentation mindset has enabled the company to reach 500 million registered users and 40 million MAUs with minimal marketing spend. In fact, its marketing has been the best kind: strong word of mouth driven by global love for the product.

We’ve been bullish on Duolingo as not only a great company, but also a company doing great things, so much so that we’ve supported them throughout their journey, including doubling down on our commitment by leading their Series F in 2019.

Partnering with Luis, Severin, and the rest of the Duolingo team has been one of my greatest personal and professional joys over the past many years. They embody everything you hope for in founders and humans! They are visionary, kind, brilliant, and constantly learning; they are magnets for world-class talent and possess incredible grit and determination in pursuit of their goals. We are thrilled to be Duolingo’s partners, and can’t wait to see what the team accomplishes next.

Special thanks to Derrick Chow for his contributions to this article.

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