Lessons from Duolingo: English rules

There’s been a lot said, some of it on the pages of Fortune India, about the rise of regional languages in India after decades of English dominating public discourse. It is increasingly being argued that talking in the most familiar language makes business sense.

But in a country with 23 “recognised” languages (and dozens more that are spoken, but have no script, as well as scores of dialects), what’s the one language that unites them all? So far, that’s been English.

Luis von Ahn, founder of language-learning app Duolingo, assumed that English was a language all Indians were familiar with. It was the language that mobile phones were based on. “Anywhere in the world, we assume that if your phone is in English, you don’t need to learn English because it is the default language,” von Ahn says.

So, when Duolingo came to India in 2011, it offered users a chance to learn French, Spanish, German, and the like. As it did in most other countries, English was tucked away in the “More languages” tab. Except, von Ahn and his team found, Indian users wanted to learn English on Duolingo. “The aspiration to learn English is the most important determinant at the entry level even for ‘blue-collar’ jobs that come with higher salaries or status,” says Krishnan Ganesh, a strategic investor and entrepreneur who sold online-education delivery business TutorVista to Britain’s Pearson in 2011.

In India, the offline markets are populated with successes of books like Rapidex English Speaking Course that have run into reprints since the ’80s. In Chennai, the Vivekananda Institute attempted English fluency training centres under the Veta banner, which had the backing of SAIF Partners until it was merged with T.I.M.E. (Triumphant Institute of Management Education, Hyderabad).

Moving these courses online, and then to an app, seems intuitive. Which is why it’s puzzling that von Ahn and his team didn’t figure it out till well after they entered India. But once they got it, it was fixed quickly and simply, by moving English to a “featured language”. The percentage of adopters shot up from 50% to 80% of the user base here.

Phase two for Duolingo in India is to promote—and monetise—its English Test Center app. Internationally, Duolingo floated this idea of a smartphone-based, simple, cheap, and intuitive test for non-native English speakers back in 2014. This was its bid to disrupt TOEFL (Test of English as a Foreign Language) and IELTS (International English Language Testing System). These are universally-accepted certification tests that are mandatory for college admissions in the U.S. Displacing them is not easy because students have trust in these tests built over decades. Step one, then, was to get U.S. universities to accept this as a valid alternative to tests like TOEFL.

Ganesh, who has three ed-tech startups in his Growth Story fund, says this accreditation is vital, especially to students from India. While students and parents here are obsessed with education, their budget is focussed on where they see a tangible outcome. “The degree has to be recognised. To get into Ivy League institutes, the acceptance of Duolingo certification is vital. Otherwise, it is very difficult to extract money from parents who are understandably concerned about the tangible outcome—whether the universities will recognise the Duolingo certification. There is a legitimacy issue,” he explains.

So far, Duolingo has managed to get the buy-in of a few departments at Harvard University, even as it is in talks with 12 of the top universities to start accepting the Duolingo English Test as proof of English proficiency. “But it’s not just one or two institutes—every institute must accept Duolingo for users to take this certification seriously,” Ganesh says.

Sid Talwar, co-founder of venture capital fund Lightbox Ventures, and board member of ed-tech startup Embibe, notes that Duolingo, a language-learning app, is getting distracted by the demands of ed-tech. “It’s not like buying an iPod online—this is the most important test of your life, and unfortunately, most people who take the exam are not going to get in. You have to be able to convince them, and want them to succeed,” he says.

Pricing is an area where von Ahn is pushing the right buttons. He wants to price the English test at $20 against the $160 for TOEFL. (The English Test Center is at $50) His bet is that those who don't make it on the English Test Center app will go back to the Duolingo learning app to improve their skills. So the engagement stays high or deepens either way.

Even as Duolingo tries to establish itself as the go-to place for English language training, its techies are working on tweaking the app so it can function even with poor connectivity. Duolingo has a five-member team in Pittsburgh to tackle how to make the app lighter and, therefore, more viable in a low-bandwidth and feature-phone environment. “We have never had to do this for any other country,” says the 38-year-old von Ahn, who sold his previous venture reCAPTCHA to Google in 2009.

Duolingo has raised $83.3 million from Google Capital, Union Square Ventures, KPCB (Kleiner Perkins Caufield & Byers), and NEA (New Enterprise Associates), and actor Ashton Kutcher.

Von Ahn says Duolingo’s technology built for India will pave the way to grow in Africa, where connectivity environments are also bad. Venture capital and angel investment database CB Insights noted in a report this May that the ed-tech industry is becoming increasingly global, with the U.S. share of ed-tech deals falling to 60% in 2015, down from 80% in 2011, as Britain, India, and China took more ed-tech financings.

In this context, as Duolingo competes for capital with China’s language learning apps 51Talk and TutorGroup, India becomes essential for it to show market share, especially if there is a segment that wants to learn English in large numbers. “If you were looking for the top 5% in India until now, they had decent Internet connections,” Von Ahn says. “But with 100 million devices active in the past year, now you see the larger population—not just in the biggest cities, not just English-educated people. We want to focus on the broader market of people that want to learn English.”