hi everybody recently I did a podcast with the sharks of shark T India in that episode Vinita and bres mentioned something very very important on how they spot an extraordinary business and an extraordinary entrepreneur Vinita said that to build a sustainable business you need to find a huge Target addressable market and R said that the rarest breed of entrepreneurs are the ones who don't just have a smart brain but also have a big heart to solve a critical problem I think G brain is available in less quantity but is available but great brain with big heart as a combination is unique and this is what turned people like Jack Mah into one of the most legendary entrepreneurs in the world and while I was pondering over this idea we saw the massive fall of e companies all across the world after enjoying two years of hyper growth when everything went online the Indian ech startups had to learn some tough lessons in 2022 at Tech firm by is battling massive Financial Wars losses balloon 1. 8x from 4564 CR rupees in fi21 to 8,245 CR rupees in fy22 with leader learning CR fund or super learn shutting shop etex account for close to 50% of the 18,000 plus layoffs at the Indian startups this year that's about 9,000 drops cut and if you remember when digging deeper into why ettech companies in India are failing we found that the slow poison for these ette companies is nothing but their customer acquisition cost so so if you sell a product for 3,000 rupees and you have to spend 2,000 Rupees as in 66% of the cost only into marketing it is very difficult to make a profit and this is exactly what happened to these giant ettech companies where they spent so much money on marketing that to sell a single course worth 10,000 rupees they spent 20 30 or sometimes even 50,000 Rupees into just customer acquisition and this is what led to thousands of crores in losses and eventually the failure of some of of the biggest attech companies in the country and this is when I realized that the key to cracking the edtech market is not customer acquisition but customer retention and while I was doing this research for think school I found something absolutely stunning you know my best friend mayure is by far the most insincere guy I have ever met other than myself he and I never completed assignments on time we were always late to college and we barely passed our engineering exams but surprisingly last week I discovered that Mayu is learning a new language using an app and he has been doing the exercises for 180 consecutive days without missing a single day and this is not because May is a changed person but because the app that he was using was by design making him complete the exercises and when I checked the stats I found a gold mine of product design which every at tech company must use to scale their business this app that I'm talking about is called du lingo du lingo the largest on online language learning platform in the world I just wanted to do a project that was related to my passion which has always been educational offering 100 courses across more than 40 languages large numbers of users actually learning something on dualingo uh that that's very motivating with more than 74 million monthly active users this year du lingo had about 10 million active users and was the number one education app in the world I would say our biggest achievement since we got on the on the fourth list and also since we hit a billion dollar valuation and if you've ever looked a foreign language there is a high chance that you've used it or perhaps you've used it for foreign language testing or at least you've seen its popular Green Owl mascot Duo right dual lingo was started in 2011 by a computer science professor and a student with a mission to make education free and accessible to people worldwide and today with over 800 million downloads and 2 million test takers all across the world it is safe to say that it is a company that has changed the phase of language learning and testing forever and they made this possible possible by hacking its learning design to such an extent that while the top language learning apps in the world had a total app download of 26. 7 million in January 2024 dualingo alone stood at 16.
3 million downloads in January alone so dual lingo alone has more downloads than its next 10 competitors combined and if you look at its retention rate it is absolutely stunning duolingo's retention rate is so high that it's more than the best performing games in the world like Candy Crush and Royal match and now they're using this model to solve even bigger education problems from English proficiency testing to teaching math and even music so if you want to design legendary products and crack the code to customer attention please take notes from this episode so if this is very clear to you let's dive into this case study and understand how on Earth did the designers of dual lingo crack the code to Learners engagement how are they using this model to solve other challenges in the language learning ecosystem today and most important shortly what are the lessons that we need to learn from the incredible product design of du lingo this is a story that dates back to 1997 when a young boy named LS Juan an went to the United States for higher education and while studying in America he spotted a brilliant business opportunity in the foreign language learning Market he observed that learning a language is far less complicated than learning physics or computer science secondly he observed that foreign languages have a huge Target addressable Market of more than 1 billion people and most of them want to learn English but out of these only a small fraction could offer the $500 traditional teaching offered by the existing companies and third and most importantly he learned that learning a foreign language is one of the easiest ways to get a salary hike at a job for example if you work as a waer and you learn English you can immediately be promoted in a hotel and get a 30% hike in your salary so in 2012 Lou and his student Severin created a product named du lingo to teach foreign languages for free now you see a lot of attech companies come out with courses and Educational Tools but they have one big problem which can be represented with this diagram this challenge is that if the course has to provide value it has to be difficult but if the course is difficult then it causes frustration to the students because they not able to complete the exercises and then the students procrastinate or leave the course Al together at the same time if it's too easy then the course will become too boring and then it will be called as a basic course so the key to cracking the atch market is to design a product with a golden recipe to push the intellect of the Learners at the same time it must be motivating enough to prevent Learners from procrastinating so it has to strike the perfect balance between the challenge in the course and the skill level of the students on top of that if you've taken a free course then you would know that more than 50% of the people who sign up for a free course never actually completed but if you look at dual lingo their share of retained users in October 2023 was 68% Which is higher than brainley and Babel in fact dual lingo has such a high retention rate that its retention rate is more than Royal match which stands at 66% and Candy Crush which stands at 64% so the question is with a free product how did dual lingo achieve such an extraordinary engagement well the answer to this lies in this model called the hooked model written by neral in his book hooked this model says that to get a customer engaged with you you must build a habit forming product and here's how duolingo's design is strategically made to keep you hooked this model consists of a four-step framework a Trigger action variable reward and investment let's start with the trigger trigger is basically a nudge to action so if you see an ad the nudge over here is this click here button and the buy now button in case of WhatsApp or Instagram and external trigger comes in the form of push down notifications or a beep all these triggers push you to open the app right well just like that dual lingo uses three unique strategies firstly their push notifications come from different personas for example the apps mascot Duo has a playful and encouraging tone whereas Lily is more like a sassy teenager secondly using Ai and data analysis they found that the best time to send these notifications is exactly 24 hours after the users's last session so if you were free at 9:00 p. m. yesterday there is a very high probability that you'll be free at 9:00 p.
m. today and that is when du lingo will send you a notification and if you use fin shots app you will see that even fin shots uses the same technique where they send you or they ask you to send their notifications at the exact same time thirdly dual lingo will stop sending you notifications after 7 Days of inactivity and you know what before they stop sending you the notifications they will send you a passive aggressive notification like this now now I don't know if you sense this but this notification is almost like our mothers taunting us for not doing our work and guess what using these personified guilt tripping notifications du lingo was able to attract a large number of people to come back to the app and start doing their exercises and cherry on the cake because of these funny mom like notifications the Green Owl mascot of dual lingo started becoming a meme sensation on the internet and soon enough their marketing team embraced this meme culture and started using it for their ads the dualingo bird when you haven't practiced in 2 days beg for your life in Spanish dualingo I missed a Spanish lesson today please don't kill me y'all really be testing my patience this is how dualingo successfully used the first part of the hooked model the trigger to regularly bring people to the app if this is very very clear to you let's move to the second part of the hook model which is action this is nothing but the smallest action that a customer does in anticipation of a reward in case of Instagram the act of opening the app going to the DMS or replying to the DMS is the action in Du lingo case the action is the act of opening the app and completing a 3 minute lesson on language learning then we come to the third stage which is the reward and this is where the magic of addictive learning comes in and the secret to this comes from a 1948 experiment you know in 1948 a psychologist named DrBF Skinner conducted an experiment where he placed two rats in two different boxes equipped with a liver and a food dispenser in the first iteration when the rats press the liver the food would be dispensed immediately so this was a regular reward pattern where once the liver was pressed the food was given but in the second experiment instead of giving the food every time the rat pressed the lever he gave them food in an unpredictable pattern for example sometimes a rat would be given a reward after pressing the lver two times sometimes after three times sometimes after 10 times similarly the quantity of trees was also very very variable where sometimes he would get a a small treat sometimes he would get a large treat and unlike the mice that received the same treat every time the mice that received variable rewards got addicted to pressing the liver again and again and again and when the same experiment was tried with pigeons the result was even crazier while one pigeon tapped the button 2. 5 times per second for 16 continuous hours another pigeon tap the button 87,000 times over the course of 14 hours this is how addictive the variable reward pattern is and this is when BF Skinner realized that if a subject is given rewards in an unpredictable pattern then the subject will do the action way more frequently in anticipation of the unpredictable reward and a classy example of the same was Google pay's scratch card sometimes when you scratched it you would get 10 rupes sometimes people would get 100 rupees as cash back but soon enough if you remember Google pay stopped giving you rewards as frequently as it did but even then we would still scratch it with a tiny hope hope that we might get some reward this is the power of variable reward and if you look at du lingo This Is How They applied it when you complete a lesson you don't get a badge or a streak you get experience points for example you get 10 XP and then this gets built up and finally contributes to a day streak and if you accomplish a certain number of tasks or stay consistent for a certain number of days then you even get a badge this is your reward for completing the exercises and just like a casino they also have a sound effect that activates the reward centers in our brain to keep us engaged in the app this is the third stage of the hook model which is variable reward and then comes the final stage which is investment now if you know the ik effect you would know that when we voluntarily invest efforts time or money into a product that product automatically becomes more valuable to us for example in spite of not using Facebook for years you still haven't deleted your Facebook account right why because you've invested a lot of your time to build a network of 5,000 friends so even though you'll never talk to these 5,000 friends the effort that you invested in that account prevents you from deleting the account so in spite of it being very less useful because of your investment you still have your Facebook account and just like that if you look at dual lingo they've introduced a combination of multiple features that make a user psychologically invest into the app the first feature is a streak and if you've used Snapchat you would know what a streak is in case of dual lingo for every day that you use dual lingo app the app rewards you with a streak and just like Snapchat even if you miss a single day your streak will come down to zero now the beauty of psychology is that even if you have a streak of 1,000 days there aren't any tangible rewards like a car or a bike or cash it's just that because you've put in your efforts and time into maintaining the streak The Streak by itself becomes more and more valuable with time and if you look at the result of this simple gamification feature it will blow your mind as of 2023 du lingo cloged 3 million daily active users that had a streak for more than 365 days so do you realize what this means 3 million people are regularly using dual lingo every single day similarly they have a feature called the league so just like in games while doing the exercises each dual lingo user gains experience points and as they gain more and more experience they compete on a leaderboard called a league this board consists of 30 random participants who use the app around the same time so again the more experience you earn the higher your rank goes so each Sunday a weekly League begins and by the end of that week if you stand amongst the top 10 people you advance to the next league and in total there are 10 such leagues from bronze to silver to gold to Pearl to obsidian to Diamond so the better you do the higher up you go and if you reach the final Diamond League you are eligible for an entry into the the diamond league tournament which again has quarterfinals semi-finals and finals and you know what's even more surprising just like there are rewards for Good Deeds there are even many punishments for bad Deeds for example if you rank among the bottom five people on your 30% leaderboard you are demoted to a lower Rank and if you continue having low engagement you are brought all the way back to the lowest rank from where you can again climb your way up so do you realize after spending hours into something it is very difficult for someone to not try and upgrade this is how ladies and gentlemen du lingo has perfected the use of positive and negative feedback such that Learners are motivated to push themselves and not be lazy and here's where the hook of the hook model gets complete where du lingo starts with a trigger which is their push notification and reminder makes the Learners take an action this action is taken in anticipation of a reward which is their experience points streak and leaderboard and eventually it leads to a psychological investment with which further leads to a trigger for learning which then brings back users to the app again this is how du lingo has worked on every aspect of the hook model to turn language learning into a habit forming exercise and today du lingo has grown to offer courses on over 40 languages ranging from English Spanish Hindi to even Telo and Latin in fact in 2016 the team of dual lingo expanded their business model to solve another pressing problem and this is a very very big gap that even you can capitalize on and here's where like r agal mentioned the big hard Factor comes into play you see in India Asia Africa and South America there are millions of students who go abroad to study or to find better employment opportunities from India alone more than 1.
3 million students went abroad for studies in 2022 and over 50% of the Indian applicants still prefer English speaking countries as their first choice to study abroad so they primarily go to us UK Canada or Australia right now in India and all these countries that are I just mentioned an English proficiency test is often mandatory for international students to get admission into University programs and two of the most common widely accepted tests are toel and is now if you look at these tests they have three visible problems the first problem is the cost problem and if you look at tol and is it will cost you anywhere between 16 to 17,000 Rupees to apply for these tests and this is a fairly High sum for an average Indian but this is not the only cost that you incur you can send the scores for free to only five colleges and after that for each additional University it will cost you another 250 rupees this increases the total cost to apply by a large large extent secondly the test centers are in limited cities across the country so for students who live in smaller towns they need to take a trip to the nearest destination for just this one exam and this situation is even more bad in Africa and Central and South America in fact the founder Lis himself faced a problem with inperson test when he was planning to go to the US to study from his home country of Guatemala even he had to give his Toof fill but for this single exam he was forced to travel to another country just to take this exam and if you look at the situation in India you will see that there are only 78 test centers for is whereas the number of is takers is estimated to be around 1. 3 to 1.
