How Duolingo Built a $700 Million Company Without Charging Users: Connecting the Dots


Hatched by Glasp

Aug 23, 2023

3 min read


How Duolingo Built a $700 Million Company Without Charging Users: Connecting the Dots

In the world of consumer behavior and business models, there are various approaches that companies take to succeed. Two examples of such approaches are highlighted in the articles "NTTコムウェア C+ | モノ消費から、コト消費。そしてトキ消費へ ~コト消費では満たされなくなった消費者たち~" and "How Duolingo Built a $700 Million Company Without Charging Users". While these articles discuss different industries and companies, they share common points that can be connected to provide valuable insights.

One common point is the shift from traditional consumption patterns to more experiential and participatory consumption. In the first article, the concept of "トキ消費" (toki-shohi) is introduced, which refers to a form of consumption characterized by non-reproducibility, participation, and contribution. Consumers no longer seek satisfaction solely from material possessions or experiences; they want to actively engage and contribute to the products or services they consume. This aligns with the approach taken by Duolingo, as discussed in the second article. Duolingo saw the need for affordable language education and tapped into the hundreds of millions of people who wanted to learn a new language but couldn't afford expensive software. By providing a platform that allowed users to learn a language while also contributing to the translation of web content, Duolingo created a participatory and engaging experience for its users.

Another common point is the importance of understanding and leveraging the size of the market. In the case of Duolingo, the founders recognized the huge pool of people around the world who were motivated to learn English but couldn't afford existing programs. This insight allowed them to lay the foundation for Duolingo's success by targeting a large market and beta testing their idea to understand what resonated with users. Similarly, the concept of "トキ消費" in the first article acknowledges that consumer behavior is shifting and there is a need to understand and cater to the demands of a new type of consumer. By recognizing and tapping into these market trends, companies can position themselves for success.

The articles also highlight the importance of innovation and evolution in business models. Duolingo started with a business model focused on testing and crowdsourcing, which allowed them to provide a free language learning app. However, the need to monetize prompted them to evolve their business model and expand their services around education, leading to new monetization strategies. This demonstrates the importance of constantly assessing and adapting business models to meet the changing needs of consumers and the market.

To further connect these insights and provide actionable advice, here are three key takeaways:

  • 1. Go after a large market: Look beyond what others are already doing and consider real problems that affect a large number of people. By targeting a large market, you can lay the foundation for success and tap into untapped potential.
  • 2. A/B test everything and track results: Experimentation and data-driven decision-making are crucial for success. Constantly test and adjust your strategies based on the results you observe. Use analytics tools to tie data and actions to specific users, allowing for more targeted and effective decision-making.
  • 3. Don't be afraid to evolve your business model: Stay open to change and innovation. Assess the value proposition of your product and its time to value. Consider the potential market value and be willing to adapt your business model to meet the evolving needs of your market.

In conclusion, these articles provide valuable insights into consumer behavior, business models, and innovation. By connecting the common points and incorporating unique ideas and insights, we can glean actionable advice for companies looking to succeed in today's rapidly changing market.

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