With the help of its “unhinged” green owl mascot, Duolingo has become the world’s most popular language learning app. Matt Skaruppa, Duolingo’s CFO, recently appeared on Morning Brew’s After Earnings podcast to discuss the company’s formula for growing its user base and how it’s using AI to improve language learning.
This interview has been edited for length and clarity.
With the likes of Google Translate able to translate human language in real time, do people need to learn languages anymore?
Absolutely, we do. When we ask our users, they say they’re using it for economic advancement, for school, for an upcoming trip, all of these reasons. And when they use Duolingo, they’re also bettering themselves and feeling better about how they’re spending their time on their phone.
You’ve been able to learn a language without an app since printed books have come into existence. The problem isn’t that it’s hard to do that; it’s that you need to stay motivated and stay engaged, and that’s what we feel like we figured out.
Let’s talk about the way the technology Duolingo has developed has changed the way people learn, specifically with respect to how you’re innovating in using AI.
When [CEO] Luis [von Ahn] founded Duolingo, in many ways, he wanted to make our app as effective as interacting with a human tutor. And we think AI will ultimately allow us to get closer to that, to scale our high-quality education and share it with everyone in the world, because AI helps us replicate what a good teacher does. A good teacher helps you learn material, stay engaged, know where your weaknesses are, where your gaps are, so that you can focus on those things and get better. We use [AI] for placement…making your lessons just the right amount of difficulty that it keeps you learning but keeps you coming back.
[There’s been] nearly a fourfold increase in your subscriber base in a relatively short period of time. Talk to us about how you achieved that.
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When we went public, some of the investor questions were, as they often are, how big is the market? I think now we’ve proven to folks that it is a very large market and we can grow really rapidly into it. The way we do that is primarily through…making the app more engaging. We run hundreds of A/B tests or experiments where we segment our users, give some portion of them a change in the app, and for the other portion we leave the app the same and we see if it drives more engagement.
We have always been an organic growth story. The app is really fun. People like using it, they like talking about [characters like] Lily, and when they tell their friends, their friends use the app and we grow by word of mouth. We’ve been able to supplement that with a really innovative social-first media strategy. Through content that we create, we attach Duolingo in some way to the zeitgeist, and we put it on TikTok or Instagram Reels or YouTube Shorts…without trying to sell Duolingo.
When you look at some of the Street research on you, folks…are not completely there yet in terms of your monetization strategy. What would you say to them?
In our first shareholder letter [this year], we said that our growth for monetization was going to come from…continuing to innovate and expand on our core mechanics to drive free-to-pay conversion. We think there’s tons of room to do that. You grow users, which are growing nicely, and then you convert more of them to paid. To do that, we’ve added two really exciting vectors. The first one is the family plan. Now up to 20% of our subscribers are on a family plan. And then the [other] thing is an AI tier called Duolingo Max. We’ve just now started rolling it out more broadly around the world, so we will have more data for investors and for analysts over the coming six to 12 months.