Skip to content
The Twenty Minute VCThe Twenty Minute VC

Duolingo Co-Founder, Severin Hacker: How AI Impacts the Future of Work and Education

Severin Hacker is the Co-Founder and CTO of Duolingo, the world’s most downloaded education app with over 100 million monthly users. Since its 2021 IPO, Duolingo has reached a market cap of $20BN. The company has raised over $183M from top-tier investors including CapitalG, Kleiner Perkins, Union Square Ventures, NEA, Ashton Kutcher, and Tim Ferriss. Severin is also an active angel investor, with standout bets including Decagon, one of the fastest-growing AI-native dev shops globally. ---------------------------------------------- In Today’s Episode We Discuss: 00:00 Intro 01:07 Duolingo’s AI Pivot: What “AI-First” Actually Means 02:58 The 12-Year Bottleneck Duolingo Crushed with AI 14:05 Will Duolingo Have More or Fewer Engineers in 5 Years? 16:16 Will AI Kill the CS Degree? 25:33 Is AI Integration Causing Margin Pressure at Duolingo? 39:10 Chess in Duolingo 43:28 Would Duolingo Open a Physical School? 57:24 Which Conventional Rules Are Worth Following? 01:04:19 How Do You See Competition and Value Distribution in EdTech? 01:06:30 Do You Think Europe Is Becoming Irrelevant? 01:16:26 Two Biggest Mistakes Duolingo Made 01:22:16 Why Union Square Was the Only VC to Say Yes 01:24:18 The Real Value of Tier 1 VCs (Even at Worse Terms) 01:29:10 If Duo Were Private Today, Would You Still Go Public? 01:34:30 Quick-Fire Round 01:35:53 Duolingo’s Secret Sauce: What Investors Always Get Wrong ----------------------------------------------- Subscribe on Spotify: https://open.spotify.com/show/3j2KMcZTtgTNBKwtZBMHvl?si=85bc9196860e4466 Subscribe on Apple Podcasts: https://podcasts.apple.com/us/podcast/the-twenty-minute-vc-20vc-venture-capital-startup/id958230465 Follow Harry Stebbings on X: https://twitter.com/HarryStebbings Follow Severin Hacker on X: https://twitter.com/severinhacker Follow 20VC on Instagram: https://www.instagram.com/20vchq Follow 20VC on TikTok: https://www.tiktok.com/@20vc_tok Visit our Website: https://www.20vc.com Subscribe to our Newsletter: https://www.thetwentyminutevc.com/contact ----------------------------------------------- #20vc #harrystebbings #severinhacker #duolingo #founder #chess #languagelearning #llm #edtech #openai #ai

Severin HackerguestHarry Stebbingshost
May 19, 20251h 56mWatch on YouTube ↗

EVERY SPOKEN WORD

  1. 0:00 – 1:07

    Intro

    1. SH

      You should always try to raise money from the best tier one VCs, even if the terms are slightly worse, because there's so much signaling. It's harder to raise three million than it is to raise 100 million. But I can guarantee you, Duolingo would not have been able to raise any money in Europe. You know, we had $0 revenue for the first five years.

    2. HS

      How much was the series A?

    3. SH

      Three million at, uh, 15. Yeah. I think we only had one offer. It was ... or back to university.

    4. HS

      Ready to go? Severin, I'm so excited for this, dude. I had Luis on six or seven years ago, and I've heard so many great things before this show from Mayumi Bang, from KP, Brad and Albert from USV, many others. So thank you so much for doing this.

    5. SH

      Thank you. Thank you for having me.

    6. HS

      Dude, I would love to start though with basically the news of the day. Um, I don't like the, you know, the whole context of, like, tell me your life story in normal podcast intros.

  2. 1:07 – 2:58

    Duolingo’s AI Pivot: What “AI-First” Actually Means

    1. HS

      Uh, Duolingo came out as being AI first the other day. And I really just wanted to start with, what does that mean and what does that not mean? So people have a clear understanding.

    2. SH

      Okay. So maybe taking a step back. Why did we start Duolingo? Like, what is our mission? So Duolingo's mission is to provide the best education and make it universally available. That's why Luis and I started this company. Okay? And from day one, if you think about it, if you wanna build the best education, um, in the past, the best education was only available to the, the richest people, the kings, the heads, you know, the private tutors for their kids. And, and, you know, that was the, the way to learn, the most efficient way. And by the way, this is still true today. If you wanna become the best tennis player, you hire a one-on-one tennis coach. Okay? Now-

    3. HS

      You actually, you actually see this. I remember there was a US Open final, I think it was, and the two female players in the final were both daughters of billionaires.

    4. SH

      Uh, yeah. (laughs)

    5. HS

      Yeah.

    6. SH

      Yeah, exactly. So, so, you know, they get the one-on-one tutor. And when we started Duolingo, we saw the, the potential of technology to do this, but for everyone, right? So we can't all afford these one-on-one tutors. That's, it's too expensive. Um, but with technology, there's a way we believe that anyone can have access to a, the equivalent of a one-on-one tutor, this, with the same efficacy. And that's why we started Duolingo. So technol- ... Duolingo was, from day one, was technology first. And, you know, back then, it was g- you know, software, we called it software. Uh, now we call it AI. Um, so in a way, not much has changed, except AI, as we now call it, has become a lot better.

  3. 2:58 – 14:05

    The 12-Year Bottleneck Duolingo Crushed with AI

    1. SH

    2. HS

      Totally get you. And so take me to that discussion then, where you're inside the room with Luis and the board, and you decide, "Okay, we need to fundamentally change how we do everything and reshape the organization of this company towards being an AI-driven company."

    3. SH

      This has been, you know, going on for the last two and a half years. So we were one of the launch partners of OpenAI when they first launched GPT-4, and we immediately saw the, the potential of this technology to help our mission, right?

    4. HS

      What was it that you saw that gave you such optimism?

    5. SH

      Uh, so we had, we had early access, and we saw you could really use ... I mean, I don't know. Eh, when you first had access to it, it was im- impressive. It was like a, uh, an iPhone moment. It was like you just realize, "This is the future. We're gonna use this everywhere." That was my first personal impression. And then it's like, the second question is like, how do you use this at Duolingo? And the first thing we realized is this can really help us accelerate content production. Okay? So in, in the past, it would always take us a long time to produce new courses, right? So, uh, it requires a lot of, you know, effort to, to create these courses. But then with AI, there's, there's the potential that you can just pump out a lot of these courses all at once. In fact, we just did that. Uh, you know, it, it took us, I think, 12 years to, to, to build the first 100 courses or so. And now, within one year, we built another 148 courses. That was just not possible. It would have taken us decades to build this.

    6. HS

      Can I be really, but kind of weirdly granular? How are you using AI to then 12x content creation within Duolingo?

    7. SH

      Yeah. I mean, there's still ... By the way, there's still a lot of, uh, human in the loop.

    8. HS

      Mm-hmm.

    9. SH

      Um, so for example, the curriculum design, that's all human made. It's like h- you know, how, h- how do you structure the course? That's all human made. But then, you know, inside Duolingo, there's a lot of these, uh, short sentences, right? It's like, um, y- you know, the, the ones you see in, in, in the lessons. And those are now produced with, with AI. And, and there's also this, this, this concept of, uh, viability. You, you wanna introduce new words one at a time, and you can, you know, give these constraints to the AI, say, "Create a sentence that uses these words and doesn't use any of the other words, and only uses these grammar concepts." And it can do that. So that, that's kind of the magic, and, and that's how we've been able to generate the, kind of the, the sentence content within these courses. Okay.

    10. HS

      With respect on the curriculum design, when you look at completion rates of students and you have the data that you have, in six months, would it not be better to let AI do curriculum design knowing all of the completion rates, success rates, uh, satisfaction rates, NPS scores, to actually build that curriculum itself?

    11. SH

      That's, that's a great question. I think the, the industry is definitely moving that way. Um, there is, you know, one of the most amazing things about Duolingo is we have this massive user base. Like we're by far the largest learning platform out there, by far. Uh, order of mag- orders of magnitude. And we see how people learn. It's like the largest school. You know, like we see, uh, usually in, in education, the, these audits were done with, you know, 20 to 30 students. We have hundreds of millions. And, and that's just, that's allows us to look at, okay, does this curriculum design work versus A, you know, this versus that. And, and we can use that data to improve the curriculum-

    12. HS

      Yeah.

    13. SH

      ... design itself. But not only that, so, you know, right now, we still have these, these, these courses, and you know, your curriculum is the same as mine. But really, I think the future is gonna be quite different where we say like, "Hey, you know, you might be interested in, in rugby, and, uh, you have a trip planned to..." I don't know, France. I think France also is, is big into rugby. And, you know, you, you could, you could then custom design a course just for you that uses exactly the vocabulary you want to use when you go to France. And, you know, it could be completely different from mine. It's like, why do we even create this batch on the, on the back end? Like why don't we create it on the fly when you need it? Like when you open the app, it's like this sentence is custom designed for you, every single exercise.

    14. HS

      So personalization is the-

    15. SH

      Personalization.

    16. HS

      ... future of education in your mind?

    17. SH

      I believe, and I think that's part of the reason why these one-on-one tutors are so, um, so good, right? So because they, they, they know where you are. They're really good at assessment. Uh, you know, think of the tennis coach again. Uh, they're really good at assessment. They know where you are. They know where you need to go, and they're very good at giving you the feedback. And they also know kind of your interests and, you know, like maybe how you differ from other players.

    18. HS

      Totally get you and agree. I was actually watching Zuck last night on an interview, and he was saying the future of content is not passive consumption of videos like we have today. It's the interactivity where you will talk to the video, and suddenly, the fitness trainer will actually say, "Oh, no, you should have 12 grams of protein, not eight grams of protein." And it's that interactivity that will drive it. How do you think about personalization balanced with interactivity in the future of content, in the future of education? Like to what extent is it multimodal? You know, the thing I love about Duolingo that makes me sound weird as anything is I'm walking around London, and then I'm going, "Bruno es americano." (laughs) And yeah, it's, it's multimodal. It's me, my voice playing back. It's me typing. There's many different modes.

    19. SH

      Yeah, yeah, yeah. I think it, it's gonna be multimodal, uh, 100%. There is, we have this feature inside the app called Video Call with Lilly, so you can, you know, call Lilly. Lilly's one of our characters. She's the one with the, the purple hair.

    20. HS

      Yeah.

    21. SH

      And, and it, it is, she, she's not a, she's not a one-on-one tutor. She, she, she's more like a friend and, but she remembers stuff. So she remembers, for example, that, you know, that I like cooking. She knows where I live, et cetera, et cetera. So she, she personalizes in that way, but it's full conversation, right? So you learn by conversing with an AI friend. And I think that's gonna be super important. Um, now, there's always, like these, these modalities. Like sometimes, you know, there's, not in every moment, uh, you know, you, you can't talk in every moment, right? So sometimes you're, uh, in the subway, you don't wanna use, um, audio.

    22. HS

      Yeah. How has the way that you build internally in Duolingo changed with AI? What tools do you use? How has it changed cadence? How has that changed?

    23. SH

      We use AI in, in three ways at, at Duolingo. Number one is content generation, and that's where we've seen, you know, the biggest success. It's, it's just completely changed it, like how we produce content. Um, this is the learning content. Number two is features, AI features that you previously couldn't build. So this is, again, this Video Call with Lilly. It's a interactive conversation with an AI bot, right? That, two years ago or three years ago, you couldn't build. Now you can do it. And it's actually the thing that, you know, was, was lacking in the product. If you ask our users like, "What's missing in Duolingo?" It's like this conversational piece, like speaking. I wanna get better at speaking. And, and now we, we can do this, and it's a really, really, really powerful feature, and it's, you know, we, we s- great adoption with this, uh, Video Call with Lilly feature. So that's number two. And I think there's more to, to be done there, so both making this feature better, but then also maybe there's, there's new AI features that, you know, we can now build. And the third is, is kind of overall productivity improvements across the company. So that's, uh, software engineers using Cursor, that is using AI for customer support.

    24. HS

      Uh, do you mandate Cursor? Do you say, "Hey, we prefer you to use this or this"? How do you do that?

    25. SH

      We don't mandate. Duolingo is surprisingly, uh, egalitarian and, and, and bottom-up, and we just say, "Use AI tool or use whatever makes you more productive," and we pay for it. Uh, you can use Cursor. You can use, um, ChatGPT. You can use, uh, the Copilot. And, and then we see what people actually use.

    26. HS

      Where is AI... You said, kind of LMS are amazing at language. Absolutely. Where is AI much better than people think, and where is it not as good as people think and actually has quite a lot of room to improve?

    27. SH

      You know, early on, uh, the, the, there were a lot of these, uh, hallucinations, the AI making stuff up. Now, I think they have gone down, A, number one. But then also number two, for us, it's-... not a problem if they hallucinate, because we teach languages. As long as the language is correct, grammatically correct, it is okay, you know, if it makes up a historical fact. It's not, we're, we don't teach history. (laughs) You know, it's like, the hallucinations are not a problem for our, our use case.

    28. HS

      I bet you have users that are like, "No, it was 1914, not 1916."

    29. SH

      Yeah, yeah, we don't go that far into it. (laughs)

    30. HS

      (laughs) But when you have so many users, you're like, there's always one.

  4. 14:05 – 16:16

    Will Duolingo Have More or Fewer Engineers in 5 Years?

    1. SH

      base.

    2. HS

      Do you think you will have more or less software engineers in five years' time at Duolingo?

    3. SH

      That's a great question, and, you know, if you had asked me a year ago, I would have said 100% more. Now I'm a little bit less certain. But I think two things will change. So in a way, what these AI tools do is they lower the, the entry level, like the entry bar, like to get into software engineering, right? So, um, you know, your mom can maybe build a, an app with Lovable or something like that.

    4. HS

      She has done. Yeah.

    5. SH

      Um, right? Oh, yeah, right, so, so there you go. So, and then the other thing it does, it just lowers the cost of lines of code, of software, right? So production, producing software. And then there's the Jevons paradox which says, you know, if you, l- the cost of a good goes down, you will actually have more demand for it. Um, and, and I can, I, I also believe some of this will be true, so I think there will be a lot more people writing apps. Um, whether they will actually touch the code or not, I'm not sure. And then I think the second thing is like, related to this, is are we gonna call them software engineers or what are we gonna call them? You know? Uh, one thing we see is, inside Duolingo, we have t- the, the three biggest functions within Duolingo are product, engineering and design. Okay, tho- those compose probably about 80%, 70% to 80% of our, um, workforce. But with AI you can see that there's maybe like a, a, a, a new role, kind of a product engineer designer. Like one person who can do all of these roles to a certain, you know, degree. Like, they, they can build a, they can build a prototype and then maybe at some point they need to hand it off to an actual software engineer or an actual designer. But, but I think that's, that's gonna be part of the future. So I think it's gonna be more software, a lot more software, a lot more people creating software. Um, whether we're gonna call them software engineers or not, I'm not sure. And then I think there's gonna be this convergence of, of roles, of product engineering and design.

  5. 16:16 – 25:33

    Will AI Kill the CS Degree?

    1. SH

    2. HS

      So for everyone coming out of university today or contemplating university courses today and who are told, "Ah, CS in five years' time, it's not gonna be worth it," so do you still see immense value in CS as a principle and a mind- like, mindset?

    3. SH

      I th- (sighs)

    4. HS

      If I was your little brother, and I'm 18, okay? And I'm like, you know, "Help me Severin, should I do CS at university?" What would you say?

    5. SH

      So I did my CS, uh, degree, uh, yes, it's now quite a while ago, and we, they d- they don't actually teach you coding. You know, people think like, oh, CS means coding. Um, but CS is actually, uh, w- what, what they teach is kind of the fundamentals of, of not even software engineering but like how computers work, and then, uh, you know, like computer science is kind of applied mathematics. Okay, so I do believe there's still a lot of value in, uh, thinking logically, which is something that the best CS, um, courses teach you, right? So, so if, if you go, you know, studies at university, they, they don't teach you, you know, Java or Python, and they shouldn't. I think that that's actually, th- that, that is, that part is gonna go away. Like all the details of, of, you know, actual coding, but the, the fundamentals of, um, thinking about problems, it's problem-solving. I think that will still be valuable.

    6. HS

      And so should I do it?

    7. SH

      I would say for the next five years, probably still a good, good investment.

    8. HS

      (laughs)

    9. SH

      (laughs) Yeah. Uh, you know, like, there, there's a, there's like... Okay, so, so if you, if you extrapolate. Okay, so once we have full AGI-

    10. HS

      Mm-hmm.

    11. SH

      ... okay, we, we no longer have jobs. Uh, nobody has to work anymore. Uh, we have UBI, et cetera. It's like kind of the, you know, the, the paradise. Um-

    12. HS

      Do you actually buy that?

    13. SH

      Uh, I believe that's gonna happen. Um, again, the, the big question is when, when is it, it's gonna be... I don't think it's gonna be next five years. It's not gonna be. Maybe it's gonna be next 10 years if, if you really see a broad adoption of these technologies. More likely, maybe 20 years or so. Um, but in, in that world, it's like, what is gonna be valuable then, right? So in that world, what I think is like, you know, today, in the US, if you, if you run into a stranger at the Mm-hmm. ... conference or something, the first question is usually, "What do you do?"

    14. HS

      Always.

    15. SH

      But in a, in, in this, this, uh, in this, in this future world, the, the first question might be like, "What are your hobbies?" (laughs) You know? Like, because we don't have jobs anymore. So, so all, everything is gonna be like, um, uh, about not work, right? So it's like-

    16. HS

      I, I, I do just question it though. I think we can, 'cause quite often get a little bit overexcited, and it's like, you know, when you had the agricultural revolution, it's like, "Oh, my God, we had a hundred people in the field, and now we have this combine harvester. We have one person driving it. We're all gonna have no jobs. Oh, my God, we have computers and calculators. What are accountants gonna do and people gonna do when we have..." We always find a next thing to do. The idea that society will live in this UBI lack of utility like state, I, I hope is not true.

    17. SH

      Yeah. I, I, I don't, I don't know how, um, how it, how it's gonna play out, obviously. Uh, but I, uh, but I, I think the other thing that is interesting about this is, this is more on a, on a philosophical note, is, you know, if you, if you just, um, uh, ask people, you know, "Do you like your job?" Uh, everybody here, you know, you can ask anyone here, they all love their job. You love your job. I'm sure you love your job.

    18. HS

      Yeah.

    19. SH

      Right? You would do it for less money, um, more or la- mostly-

    20. HS

      Dude, I did it for free for years.

    21. SH

      You would do it for free, right?

    22. HS

      Yeah, I would. I literally-

    23. SH

      But, but also, I love, I love my job.

    24. HS

      ... I get paid to hang out with amazing people.

    25. SH

      It's like-

    26. HS

      Like, are you kidding me? Yeah.

    27. SH

      So, so for, for, for, for, you know, for us, it's, it's, it's not just income, right? It's, it's purpose. We, we derive purpose from our job. Uh, but for a lot of people, the job is just, they do it for, for the income. They don't derive purpose from it. And, and then I think, you know, we are, in, in, in this, uh, the people that derive purpose from their job, who work the most, et cetera, you know, the, the tech people and, and, and the investors and all, all of these people, um, close to the AI revolution, I think we are most afraid of it, because we feel we might lose our purpose. And I think that, that's the- that's why, why we are sometimes not optimistic about, about this future world.

    28. HS

      It's funny. I had Jason Lenkin, who's a very famous SaaS investor, on the show recently, and he said, "The hard thing is with young people, they just don't wanna work. Like, fundamentally, they don't wanna work. And AI is as good as they are at sales, at marketing, whether you're an SDR, whether you're a social media content creator for memes or GIFs or, I don't know, whatever it is." Like, actually, uh, and so in 12 months, we're gonna see huge, huge unemployment in this kind of lower level tech employee, and it's go- it's, it's gonna happen. Do you think that's true?

    29. SH

      I'm not sure. So, so here's another thing. Um, so, the, the, the general consensus is that these AI tools are really good for senior software engineers or staff level software engineers, right? So because they, they, um, you know, they have been trained, and now they can use AI and they become much more productive. They're now a 10X engineer. And, and then, uh, they can, you know, AI... The, the, the general consensus is that AI can do the, the job of an entry-level engineer or an intern or someone like that. Therefore, let's stop hiring entry-level engineers and only hire senior engineers. But I think that's a mistake, and, and we're actually not doing that at Duolingo. We still hire from universities! And one of the reasons is that we believe that people that grow up with these tools and, you know, start using these tools early will become much better at using them. Um, so in a way, yes, they're, they're, um-

    30. HS

      Why is that? Because young people have more plastic minds to new tools and new processes? What, what's the thinking behind that?

  6. 25:33 – 39:10

    Is AI Integration Causing Margin Pressure at Duolingo?

    1. SH

      Mm-hmm.

    2. HS

      Can I ask you, when you think about offering it to more people and then also the implementation of, you mentioned, like the features that you have. Uh, implementing AI across the Duolingo product suite, it costs money. At the end of the day, you, you have to pay OpenAI for a lot of these features, and a lot of companies are. Do you see margin degradation by offering AI across the full product suite? Because you're not charging more, but you are having an additional cost out to a model provider.

    3. SH

      Terms of margins, it's interesting. So as I explained before, there's these three use cases at Duolingo. Number one is the content generation. So c- content generation is, is just, um... it, it, it's, it's good for margins, right? So, so you, um-

    4. HS

      Phenomenal for margins.

    5. SH

      Yeah. So... and, and it's also like you do... it's a one-off, um, thing. You generate the content, then it's done, right? And then number two is these AI features, like video call with Lilly, where you actually have a, a unit cost, right? So now you have... you directly interact with a LLM on the backend and you have to pay for that API call, right? So there's an actual unit cost there. And then there's, there's, uh, you know, you have to make that viable. So right now, video call with Lilly is, is in our... so we have three tiers. We have, um, you know, the free tier, there's super, and there's max. And it's mostly in our max, the higher tier subscription, uh, because of that reason, right? So, so we, we would like to give this to everyone, but the reality is today, there's a unit cost to, to AI, and therefore it's in our higher tier subscription.

    6. HS

      Got you. How-

    7. SH

      We believe all of these costs will come down. So the one... you know, the, the, the batch, uh, processing cost has already come down. There's a lot of competition there. And then in the, um, the kind of the real-time models, multi-model, there's also gonna be... we hope there's gonna be a lot of competition. Cost will come down. Um, eventually, I think we'll be able to give this to a lot more people or almost everyone.

    8. HS

      Wait, when you think about like model relationships, you, you mentioned obviously being early access with OpenAI. How do you think about the, the flexibility of moving between models with different, uh, generations of model, with different specialties of model? Um, do you think you will have relationships with five model providers? Or do you think it's like, "Oh, no, we're tied to OpenAI?"

    9. SH

      There, I think there's gonna be a lot of competition. And then in, in more specialized use cases, uh, like the, um, uh, like the visual models or, uh, for us, you know, audio is, is very interesting, multi-models. There's, there's less competition, and you can see that there could be companies that, that keep, uh, a lead. Um, and, you know, for example, for, for our voices we also work with ElevenLabs. And, and they're just amazing, uh, models, amazing voices. And, you know, I, I can see that, that might be harder to just, you know, uh, replace with one or the other model.

    10. HS

      When I hear you say about like ElevenLabs there, or Decagon there, or even think about Duolingo, the thing that I am struck with is, ah, but OpenAI are gonna do that. And I just love to go to the moment where I think Duolingo's stock actually took a hit, and I never talk about like public market prices, so don't worry, we're not going there. But I think it actually took a hit when there was the concern that OpenAI and ChatGPT would move into language learning very significantly. Can you take me to the internal discussion around, "Oh, shit, are ChatGPT and OpenAI going to move into the application layer for language learning?"

    11. SH

      Okay. So when ChatGPT came out, one of the first killer use cases for it was homework cheating, for the lack of a better term.

    12. HS

      Mm-hmm.

    13. SH

      Okay? So if you were in the homework cheating business, that was devastating. Uh, that was really bad. Um, so, so some of our... I'm not gonna name them, but like some of the other comp- companies in... (laughs) you know, th- they call themselves education but they're really more like in the homework cheating business, um-

    14. HS

      I love this homework cheating. I've never heard of this sector of the economy before.

    15. SH

      (laughs)

    16. HS

      But-

    17. SH

      So-

    18. HS

      ... okay, let's roll with it. The homework cheating business.

    19. SH

      Yeah. So, so they, they s- they struggled with that. And then, and then I think there was actually a, a similar thing where people said, "Oh, well, you know, Duolingo is in education, um, therefore they're gonna be, you know, disrupted." And, and obviously the, the opposite, uh, is, is true because we're not in the homework cheating business. We're in the language learning business, or, you know, the, the general education, actually teaching you a new...... things, business. And that's completely different. So, and then, the other thing that, that I think you see happening in, in, in the public markets, and, and this, my only comment about this, is, like, there's, um, a bifurcation of the, of the market into, is this an AI winner or is this an AI loser? And I think, by mistake, we were first put into the, into the, the, the AI loser category, and now it changed to, like, "Oh, no, Duolingo's gonna be an AI winner." And there's lots of tailwind from AI. And, you know, I, I outlined some of this.

    20. HS

      So there was never a concern for you internally? You never had a call with Luis where you were like, "Oh, shit. Is Sam gonna do this?"

    21. SH

      W- Well, you know, I, I, I think n- nobody is, is stopping them. So, but, so, so, so, the ... And I assume here you mean, like, OpenAI or ChatGPT building a really good language tutor? Right. So-

    22. HS

      100%. I'd be like, you know what? Yeah, like, can they take away a lot of your very, very casual users by doing a very simplistic, chat-with-a-friend, choose-your-language?

    23. SH

      Yeah. So, so, th- that, that's definitely, uh, you know, somewhat of a, uh, of a concern. I think there's, there's a, a bunch of things to be said about that. Um, so first of all is, what is the hardest part a- about learning a language?

    24. HS

      Uh, I would say the discipline.

    25. SH

      Yes. So it's, it's the actual motivation.

    26. HS

      Mm-hmm.

    27. SH

      And, you know, by the way, this, this is one of the key insights of Duolingo. It's like... And we've been sharing this with the entire world for the last 10 years and still nobody seems to believe us. And so the hardest part is motivation. Okay? And Duolingo is, because it's so gamified, it, it, it's really good at this. It's, it's, it's a motivation engine. I call it the motivation engine. And it really gets you to do this. It really gets you to come back every day and, and do Duolingo. And if you stick to it and you, you know, do, do the hard material, you will actually learn a language. That is the, the power of Duolingo. And, in general, people underestimate how important that is. So if you wanna build something that is, you know, as good as Duolingo, you have to solve this somehow. Okay? And then also the, the, the, uh, the, you know, Duolingo is, if you ask our users, "What would you do if Duolingo went away?" They never mention any of our language learning competitors. They say, "Oh, I'd sp- spend more time on social media."

    28. HS

      Mm.

    29. SH

      Okay? So the, the hyper-casual users, they love Duolingo because it's so motivating. Okay? So that, that's one thing. And then the second thing is, like, if I was Sam Altman, you know, (laughs) uh, I would go after the, the big trillion-dollar companies. Like, why go, go into, you know, language learning when you can go into search or social media? Like, those are the, you know, the, the big, big markets.

    30. HS

      Well, if you were sitting there as Sam today, you're thinking there's kind of a couple of cool areas which are winners. There's chat, which we already own, right? Chat interface. Uh, there's two, which is customer support, which I think they'll buy someone very soon. There's coding, which they've obviously just bought someone. And then I'd say language learning is the fourth. As you said, it's so perfectly... I mean, LLMs, it's kind of in the name. It is so perfectly aligned to the use case of what they are best at. It's not a stretch.

  7. 39:10 – 43:28

    Chess in Duolingo

    1. SH

      main app.

    2. HS

      Can you talk to me about chess? How did the chess come about? We mentioned it outside, and it was a great story. How did chess come about? And, and talk to me about that.

    3. SH

      Yeah. Chess, chess is a, is a interesting one because, you know, is it, is it really education? Uh, you know, it helps you think. I mean, we, we had this discussion-

    4. HS

      Mm-hmm.

    5. SH

      ... before, uh, about, you know, should you still study computer science? I think chess is similar in the way that it helps you think, helps you think logically. Um, and so we believe it, it, it fits the, within the mission of Duolingo. That's number one. And then it was, uh, two people who were just super passionate about chess. And it's like, "Hey, let's, let's try to build a chess course." And we were already-

    6. HS

      Two people internally?

    7. SH

      Internally, yeah, yeah. And we were not convinced, uh, at first. But this is another thing-

    8. HS

      Why were you not convinced?

    9. SH

      We, well, we're like, well, you know, this is, this is just a game. We, we don't wanna build just a game, right? Like, there needs to be some educational aspect. Be- that, that's al- always a, a, uh, y- you know, a, a trade-off between, okay, are you just a game or are you, uh, an educational game? Or are you just, you know, a textbook, boring experience? So you have to ha- you know, find, find the balance between the two. And we don't want it just a game. So with chess, it's different. Like, so chess is, is not, you know, like a, a racing game or something. Chess is like, you know, it helps you think. So that's why, why we're good with it. But then, um, it's like, well, you know, how does this fit into the tree? Like, how do, uh, you know, the, sorry, the, the path? How does this look inside Duolingo? Can we make it fit into the Duolingo design language and all that? So that, that's another concern. Um, but then there's again, that's super interesting and, um, uh, uh, I wanna share a story. So, so the two of them, they built this prototype with AI. Okay? So they built it, the, the, there's a, a PM, and a designer. And the PM, he has some engineering background, so he knows how to think logically. (laughs)

    10. HS

      (laughs)

    11. SH

      Um, but, but he hadn't written much code before, uh, you know, before Duolingo or at Duolingo. So, but he was able to build this first version just using Cursor, and, and, and a bunch of AI tools. And, and the prototype is what convinced us that we should do this. You know, if it had just been a, a Figma design, we probably was like, "Ah, you know, uh, maybe, maybe not." But the prototype was so good that it convinced everyone. It's like, "Yeah, let's build this."

    12. HS

      What was it about the prototype that was so good? It was fun? It was progressive in terms of mindset? What it w-

    13. SH

      Y- e- e- you could play it and it, it just felt like this, this belongs inside the app. You know, it's like when, when, when you just see a screen it's like, "Uh, yeah, maybe." You have to kind of imagine it. Uh, versus if you have the prototype, it's like, "Well, this feels, looks and feels like Duolingo." Um, and, and then the, the other thing is like because of AI, again, we were able to build this within nine months. This is the fastest we ever created a, a new course.

    14. HS

      What do you not have ... Sorry, nine months from start to finish?

    15. SH

      Yeah.

    16. HS

      Wow. And normally it would be-

    17. SH

      ... well, you know, uh, years.

    18. HS

      What do you not have that you would love to have in terms of activity?

    19. SH

      On-

    20. HS

      Like, and you... Uh, so you, you said that you've added languages, you've added maths, you've added music, and now we have chess. What's the next one that you'd love to have?

    21. SH

      So for me right now, I think the, the... What I'm most passionate about is the, the social aspect of the app. You know, I think we have this leaderboard mechanic, um, but I think we have this... We now have this ma- massive user base, and we have all this brand love. People love Duolingo. And I feel like we... there's a- we're- there's an untapped potential of connecting the people that are on Duolingo. Um, I don't know how to do it (laughs) so, um, but I'm, I'm very What would that look like?

    22. HS

      ... interested in that.

    23. SH

      Sorry, Duo- Duo Social? Duo Date? Uh, uh (sighs) um, f-

    24. HS

      'Cause Duo Date's not a terrible idea.

    25. SH

      (laughs)

    26. HS

      It's not.

    27. SH

      Well, uh, yeah. I don't know. It, it, it could be, could be something like that. It could be, you know, learning together. Um, but it could also be... Uh, I don't know. I, I think there's just a lot of untapped potential that there's not that many apps that

  8. 43:28 – 57:24

    Would Duolingo Open a Physical School?

    1. SH

      have our size of user base.

    2. HS

      Would you ever open a physical school? And I know that sounds completely counter what Duolingo's all about, but having, in New York, a branded amazing experience where people could go for a week, meet the owl, sit with people in their leaderboard, and build that community play that is really special and different.

    3. SH

      It's a good question. So not sure about that, uh, directly. But one thing that is interesting about education is... Okay, so there's K-12 and then there is higher ed, universities, college, et cetera. And one thing that is interesting when, when people talk about education, we always assume it's the instruction. It's like, you know, here's skill, I learned this skill, and now I go from A to B, right? That, that's kind of like how we think of education. But higher ed, for example, is actually more than that. It's like, it's... Going to college, it, it's three things. It is the actual instruction. It's the actual teaching. It's actually the, the learning of new skills. Okay, that's number one. But then there is also the degree, uh, the cre- credentials, right? So, uh, university says, "Harry, you got a degree. You, um, you know, successfully finished this, this, uh, this course, and you can put this on your, on your LinkedIn or resume." And, and then an employer can say, "Oh, yeah, I guess, you know, um, Harry did, uh, take this computer science class, and therefore we can hire them as a engineer." So that's credentials, number two. Very important, because otherwise, you would always have to prove again that you know something, right? But that's what it... That's the, the purpose of the degree. And number three is the social aspect. So a lot of people, uh, meet their, you know, their, their partner at the... at, at, at the university. And, you know, it's their, their friendship network. So most companies that look inside at tech, they just focus on number one. But I think if you really wanna... let's say, if you really wanna disrupt the Harvards of the world, you have to solve all three. Um, that's one thing. By the way, w-

    4. HS

      Do you want to disrupt-

    5. SH

      On the number two-

    6. HS

      ... the Harvard?

    7. SH

      No. So we... Well, we wanna achieve our mission. That, that's, that's why we started this company, okay?

    8. HS

      But by achieving your mission, are you not disrupting Harvard?

    9. SH

      Well, yeah.

    10. HS

      (laughs)

    11. SH

      (laughs) We would be. Um, but one thing, uh, uh, on, on the second thing. So we have not solved the, the social thing, right? Okay. This is what higher ed does. We have not solved, solved the social thing. But on the number two, the credentials, one thing we're also very passionate about is, is the Duolingo score. I'm not sure if you, if you've noticed it within Duolingo, but we now give you a score, like how good you are at, at this language. And, and we want this to become the way people talk about language proficiency. So it's like, "Hey, my Duolingo score is 61 in French." And then people know, "Okay, I guess you can have a... this kind of conversation," et cetera, et cetera. So, so we're getting into the credentials or the degree aspect of it with this score, so.

    12. HS

      It's actually pretty helpful the amount of times where people say, "Oh, do you speak French?" And you're like, "Uh, a l- a little bit." And it'd be helpful to say like, "Oh, I'm actually a 40." And they're like, "Okay, not really. He's stupid," (laughs) you know?

    13. SH

      (laughs)

    14. HS

      Or whatever it is. Do you know what I mean? It's like quantifies it a lot more easily. Can I ask you? You men- and this is kind of jumping around, but you mentioned like the push notifications element. Does that make a difference still? We have so many push notifications. With the oversupply of push notifications, are you like, "Ah, that was ruined, it was good," or not?

    15. SH

      Still makes a huge difference. And, and we know because whenever the service goes down that sends the push notifications, you can see the dip.

    16. HS

      Really?

    17. SH

      Yeah, yeah, yeah, 100%. It's, it's, it's huge. It's massive, yeah.

    18. HS

      Wow.

    19. SH

      Yeah. Um, going back to the other, the other-

    20. HS

      Yeah.

    21. SH

      So, so there was the higher ed, three things. For K-12, there's also, you know, people also, "Okay, you know, like, my kids, um, they, they, they go to school to learn things." But again, it's not just the learning. In fact, you know, a lot of K-12 is childcare (laughs) you know? And, and so even if you solve one aspect of it, like let's say you have an AI tutor that is really, really good, you still need to solve the, the, the childcare, um, problem. And, you know, it, it, it... It's unlikely that people will just go to... or to a school without any humans, without any teachers, and just use apps and then, you know, go home. That just... Uh, or that we would have some sort of Optimus, you know, in, in a school. I think there's... a lot of it, uh, needs to be done by humans still. And, and by the way, the other thing is like... So, I do believe that the AI tutors will become really, really, really good. And it's, it's gonna be the way most people learn most things in the future. I, I do believe that.... however-

    22. HS

      What does the future of schools look like then, with that? Is it, like, 10 children sitting in a class with AI tutors?

    23. SH

      Uh, I, I think that there's still gonna be this, this human element of, "What do I need to learn?" Kind of guidance and coaching and motivation. So guidance, coaching, and also, "Why should I learn this?" It's like, an AI will never tell you, like, why you should learn this. It's like, the, they'll help you learn it, but it's not gonna tell you, you know, "Why should you learn this? Why is this important?"

    24. HS

      Do you know what I wish you had? I'm sorry. You have leaderboards, which is like social status or social mechanics that drive motivation and incentives. I, I'm sure you've studied this. I have 'cause I'm a loser. Um, it's financial incentives and it's actually when you offer someone money, they are much less likely to do something. When you take money away from them, they are much more likely to do it. Basically, the fear of losing is much more than the gain of winning. And I wish that Duolingo had this, for every day you don't do your streak, we'll take a committed amount off you. Say I commit to 100 pounds a day. Fuck, dude, I would do that.

    25. SH

      (laughs) You would do that?

    26. HS

      Like, uh, yeah, 100%.

    27. SH

      (laughs)

    28. HS

      100%.

    29. SH

      You know, you, you, you could, you can, you can just give me the money whenever you lose your streak. (laughs) Um, no, no-

    30. HS

      That would be the best sidekick,

  9. 57:24 – 1:04:19

    Which Conventional Rules Are Worth Following?

    1. SH

    2. HS

      I, I, I love that in terms of the creativity that comes from the constraints. Can I ask you, you mentioned about the not having PMs, and actually, if all the biggest companies have them, maybe there's something to it. And it makes me think of this, like, conventional rules are conventional for a reason sometimes. What conventional rules do you find are conventional for a reason, one? And then what one conventional rule do you find, "What the fuck? That, that's just the way it's been, but it's not right."

    3. SH

      Well, first of all, I, I would say you should always, not always, but every now and then, especially when there's a big technology shift like now, you should question all of these assumptions, right? Like, uh, you know, how you build companies. I think it, it just we're in the middle of this massive transformation. You can build companies with probably 10 times fewer, uh, em- employees. Um, so, so that, that, that convention is, is, is, uh, you know, uh, completely overthrown, uh, uh. Uh, you know, that you need to hire a lot of people. Um, that's one thing. Uh, I would say, you know, (laughs) early on there was like a f- uh, this is, this is going back. It's not a, not a great answer. But, um, there was like this, this belief that you can run a completely flat organization, right? No, no managers. Um, no hierarchies. No levels. And I think that's not really possible. Uh, at a certain scale, you need to have managers or layers, or you need to have some sort of hierarchy. You need to have some sort of, um, career progression and stuff like that. I think that, uh, you know, the, the oldest organization in the world, the, the Catholic Church that is still around, it's very hierarchical. And, and I think there's probably some, some reason for it. Yeah.

    4. HS

      Does that not go against founder mode and Louis sitting in the product reviews? And when you think about managers or managers and layers, and the diffusion of kind of knowledge and power that comes with those layers, does that not go against the man- founder mode?

    5. SH

      Uh, yeah. Uh, uh, I think the, it's always this, this w- how do you strike the balance, right, between the two?

    6. HS

      What do you still do today that you don't think you should do?

    7. SH

      Uh... (laughs)

    8. HS

      So like, for me, I li- you know, I listen to every single show we do. And I... yeah, yeah, 10 years in. Why? It's 'cause it's my product. I'm not shipping product that is not perfect.

    9. SH

      You know, I'm actually quite good at, at, at delegating things and, and kind of, like, uh, self-awareness of what I'm good at, what I'm bad at, what I like, what I don't like, what is beneficial to the company and what is not beneficial. So that's also why my role has always changed. And one of my, one of my principles is, reduce, automate, delegate. But the-

    10. HS

      Can you walk me through that? So-

    11. SH

      Yeah. So the, the, the main idea is, uh, really, you know, maybe like once a month, once a quarter, so really think about, like-... does this need to be done, at all? You know, what happens if you don't do it, if you just don't do it? Is it the end of the world or is it, is there a actual, uh, negative effect? Um, so that's number one. A- and particular, what happens if I don't do this? What happens? Okay. And number two is, what you cannot reduce, what you cannot remove. Uh, let's say you decide, "Okay, this action needs to be done." Then the second question is like, can I automate it? Like, now again with AI, it's a lot easier. Like, can I automate this part of my job? Uh, can I use, uh, ChatGPT to, to do this, um, report, or answer this question, or... So that's the second... And, uh, that's, you know, self-injury, that's very natural. It's like, "Okay, can we build a tool that does this for me or the company or whatever?" Um, so, and then what you can't automate, uh, you delegate. Okay. So that I, I try to delegate to, um, other people in Dork. And (laughs) you know, I've handed off most of the day-to-day engineering to our head of engineering. She's really good with this. I'm, I'm now a little bit out of the, uh, out of the weeds, and I'm thinking more... Right now actually, I'm only focused on two things. One is like, this, this question is with AI. Like, what's gonna happen? Like, what, what is the future look like in, you know, uh, in our space? What is the implications for Duolingo? What actions do we need to take? That's number one. I probably spend 80% of my day thinking and acting on this, this AI question. And number two is, is, is more M&A. Um, and, and it's, it's r- relates to the, the first question. It's M&A, like, you know, what companies should we buy? Um, where do we invest, uh, outs- e- externally? And, and that's, that's basically all, all I do right now.

    12. HS

      Where have you not invested that you would like to invest?

    13. SH

      Uh, we did make a bunch of acquisitions. Um...

    14. HS

      How many have you made?

    15. SH

      Not that many. Four or five.

    16. HS

      Any lessons from doing that? It's hard. I remember having ............................ on from Lightspeed, the payments provider, um, in .......................... And I... they've done like 18, and there was a lot of lessons there. (laughs)

    17. SH

      You know, you know, it's actually m- very interesting. So one insight, and i- in hindsight it's, it's kind of obvious. But, you know, they say, like, "Wh- what is the best predictor of, uh, two founders working out?" Like, you know, they're actually, uh, they're not gonna get into a fight and, uh, founder conflict. And the number one, uh, thing to look for is have the two founders worked before they started this, this company. Like, have they worked together? Um, for, for example, Luis and I, we had been working, uh, together on, you know, research for two years prior to starting Duolingo. So... And it... By the way, it's not the same a- as friendship. So it's like, you can know someone for a very long time, but they might be very different at work. So, you know, prior work experience, um, of working together. That is number one. And with M&A it's the same thing, I actually think. It's... Do you have prior experience working with this company? Yes or no? So I would say that's the number one advice is like, "Have you worked with them before?"

    18. HS

      Do you incorporate with the-

    19. SH

      And, and it doesn't have to be like... So this was a, you know, customer, uh, vendor relationship. It can also be a, an investment relationship.

    20. HS

      Do you do Duolingo ventures? Do you invest early?

    21. SH

      We just made some minority investments, but it, it's, it's, it's not a lot.

    22. HS

      It's always with a view to buy, essentially.

    23. SH

      Uh, we have to figure this out. (laughs)

  10. 1:04:19 – 1:06:30

    How Do You See Competition and Value Distribution in EdTech?

    1. SH

    2. HS

      (laughs) Uh, uh, it's a competitive space. Um, you know, I've, I've seen many competitors. I remember, I think you came pretty close doing a round in Practica. Um, how do you view the competitive landscape today and the distribution of value across it? Is it like Uber and Lyft where Uber takes 90% and everyone else takes 10%, and that's Duo and everyone else? Is it a much more distributed value kind of dispersion? What does that look like?

    3. SH

      In consumer it's much more, uh, winner take all, kind of, like, um, mechanic. So we've been now running this for 12 years. I would say every single year there was one or two companies that grow really fast in language learning. One or two. And inevitably, they go down again. And what happened is they, they used venture money or some other funding to grow through paid acquisition. So they spent it on, you know, Facebook ads, uh, Google ads, and, and they go really fast. But ultimately, the only thing that matters in our space is retention. So if you... You can spend as much money as you want, if you don't have retention it's a leaky bucket. All these people are gonna leave. And so we're not... Now when you see one of those, we're not scared, because we've seen this play out a million times. So the one company I'm scared of is one that has higher retention than Duolingo.

    4. HS

      What's the day retention number that matters to you?

    5. SH

      Of the, you know, millions and millions of people that use Duolingo daily, how many come back tomorrow?

    6. HS

      Got you. How-

    7. SH

      And, and, and... You know, all of these correlate with each other. So if you're, uh, current user retention is very high, you also have very high D7 retention, you also have very high D30 retention. But you get a data point every single day.

    8. HS

      That was absolutely fascinating. It reminds me of Alex Schultz who says exactly the same thing on like, "Retention, retention, retention." So I totally get

  11. 1:06:30 – 1:16:26

    Do You Think Europe Is Becoming Irrelevant?

    1. HS

      you there. I, I, I do wanna ask before we move into a quick fire, um, you're European. Uh, you are also based in New York. When you look at Europe today-I sit here and I'm very aware of our fading into irrelevance, which is why we do things like Project Europe. How do you think about Europe? Are we fading into irrelevance? And how do you see that having the perspective of being a European in the US?

    2. SH

      Uh, I- I'm very conflicted internally. Y- you know, I- I want Europe not to fade into irrelevance, of course. Um, however, if you asked me, you know, if- if- if a young founder, European founder came to me and said, "Hey, I have this brilliant idea of how to use AI," or, like, uh, a new model or something like that, "What should I do?" Uh, I'd say, "100% go to Silicon Valley. 100%. Uh, you- you absolutely maximize your chance of..." And by the way, you know, this is, this is-

    3. HS

      Why? Why?

    4. SH

      I- it's just the environment is so much stronger. It's just like, it- it just... And I- I can say this because we- we built Duolingo in Pittsburgh. We're not a Silicon Valley company. We don't have an office in Silicon Valley. And we- we succeeded despite not being in Sil- Silicon Valley. And- and by the way, there's also pros of not being in Silicon Valley and- and we can talk about this. But I can guarantee you Duolingo would not have been able to raise any money in Europe. You know, we had $0 revenue for the first five years. Zero. There's- there's no European investor who would have invested. Not in Switzerland, not anywhere in Europe. In fact, in the US-

    5. HS

      Do you think that's true today? And I'm not being rude, dude. You're a really smart guy. You came out of great institutions. Lewis, I know, is a super smart guy too, out of great institutions. There's so much money in Europe now. Dude, I'll give you a term sheet today-

    6. SH

      (laughs)

    7. HS

      ... when you were, but just the two of you coming in with-

    8. SH

      I- I think it has changed to a degree, but it's still... You need to look at what it is the most ambitious people and- and- and, you know, the- the founders, where- where did they go? And- and, you know, it's- it's a little bit sad because in- in Europe I see a lot of European founders and I often think, like, "How successful would they be if they had stayed in Europe?" And I think for most of them, I would say, "Mm, best maybe half as successful," or maybe sometimes 0%. Uh, you know, like, I- and I- I would like to change that. I would like to change that. I mean, that's why, you know-

    9. HS

      (laughing)

    10. SH

      ... I- I invest in- in European VCs. I invest, uh, you know, I'm part of the Project Europe. Uh, we need to change that because... (laughs)

    11. HS

      How do you think then about Synthesia, about Eleven Labs, about some incredi- lovable in Sweden being built from Europe?

    12. SH

      That is great. I think for... And, you know, uh, they- they- they should deserve all of our support.

    13. HS

      (laughs)

    14. SH

      And, you know, the- the- the- the- the- the sad part is also I think in, you know, in Silicon Valley is like being a tech founder is- is- is really, you know, you're- you're mostly a good person. Now, of course, there's also... (laughs) Uh, it's- it's- it's aspiring, right? So- so people want to be that. I think a lot of- a lot of people in Europe you're just, like, you're kind of like, "Why are you doing this?" Like, "Why? Why?" You know like... Or- or- or they- they- they look at it as like, "Oh, yeah, you know, they're just doing it for the money," or, uh, there's this suspicion, uh, almost of- of, uh, you- you can't be too successful or you can't be... You shouldn't be too ambitious. And- and I think that- that is very, uh, detrimental to the- the European startup ecosystem.

    15. HS

      You shared an insight with me before that I'd never thought about, about having offices in San Francisco as a non-SF HQed company. What was that insight and how did it lead to your not wanting to have an office in SF?

    16. SH

      Yeah. So Duolingo does not have an office in Silicon Valley or anywhere in California and the reason is (laughs) when- when we thought about opening one, and of course all of our investors they said, "Oh, you've got to open a SF office." And we in fact did go to SF and we looked at office space and we were this close to opening an office in SF. But before we pulled the trigger, we asked a bunch of founders who had companies that were headquartered outside of the S- outside of Silicon Valley and then opened an office in- in Silicon Valley and we asked them, "What do you think? It was good decision, bad decision?" And all of them said, "Worst single decision ever." And I said, "Why?" And they said, "Well, you know what happens is it- it creates this internal, uh, funnel of your best employees moving from your HQ to Silicon Valley," which by itself is not a problem. The problem is then they get recruited away by the, whatever the hot Silicon Valley company is at the time. You know, like it could be Airbnb or Uber at the time, maybe now it's OpenAI or Anthropic, and you basically create a hiring funnel for Sil- Silicon Valley and you- you lose your- your talent. And that was also, like, new to me and then it was like, "No, no, let's not do that."

    17. HS

      I love that. I hadn't thought about that at all. And so you will not do an office in SF?

    18. SH

      Nope.

    19. HS

      Do you think I would be more successful if I was in SF? I know that's an unfair question to ask, but it's something that I've always been told, Severin, for years and years. "You have to. You have to. Why are you in London?"

    20. SH

      Uh, let's see. As a founder, I would say 100%. As, um...

    21. HS

      Let me tell you my rationale and you can see if you think I'm right and you can call bullshit on me. Like, in SF, I'm competing against Peter Fenton, Marc Andreessen, Vinod Khosla, Eli Gill, the Collisons, Daniel and Nat Friedman. I- I rate myself. I buy my product. But that is a fucking hard market. And Marc Andreessen getting you round to his house for breakfast on a Saturday morning and brol...In Europe, there's probably two good VCs.

    22. SH

      Yeah. Y- you know, by the way, so I (laughs) I, uh, I started angel investing with very similar thesis in Pittsburgh because it was like, there's no one other than me and Luis. (laughs) You know? It's like, I, I... But, but then, you know, a lot of those, uh, companies eventually moved to Silicon Valley, um, so... But yeah, that was, that was exactly my, my investment thesis in, in Pittsburgh. But I... So I, as... I think as an investor, it's not clear. As an investor and, you know, doing this show, I think it's, it's not clear because you... Again, yeah, I think the... this is much less crowded. You can really become the, the, the top, you know, investor that founders wanna work with in Europe. I think, I think that, that... I agree. But I was, I was explaining this as a, as a founder, if you wanna start a business, an AI business, and you have this crazy idea, would you stay or not? I would, I would move.

    23. HS

      You know, when someone's-

    24. SH

      But, but that's exactly the problem. Like, how can we change that? You know, part of the problem... This, this is a little, uh, um... Not, not, not obvious, not obvious, is part of the problem is that it's so easy to move to Silicon Valley. It's like, it's actually... If you, if you have, you know, a good degree and, um, y- you know, you can raise money, etc., the US is actually really good at, you know, getting its brains, uh, to come to Silicon Valley. And in a way, the best thing that could happen to, to Europe is if the US, US made it really hard to immigrate for, for founders. You know, if they, if they made it really hard, if they restricted immigration, such that you, you know, people like me couldn't, couldn't move there anymore, then, well, I, I would build it here. And what I would do first, it would... Let's first change the environment here to make it easier for startups to succeed, right? Because right now, there, there's also n- no pressure from, from, you know, the industry to change the regulation to, uh, y- you know, make it easier to start companies, because I can just go, I can just... I can vote with my feet.

    25. HS

      What would you change about Europe? Is it the regulation? Is it the level of capital? Is it the mindset that we tell young people? All of the above, obviously.

    26. SH

      All of, all of the above. All of the above.

    27. HS

      But is there one?

    28. SH

      Uh, regulation is, is definitely hurting. Uh, the regulation, um, is definitely hurting. I think there is... And then there's country-specific things.

    29. HS

      I always fall back to no great entrepreneur was stopped by regulation, though. Which is like, Travis wasn't stopped by regulation with Uber, uh, Elon with SpaceX wasn't stopped by... Regulation does not inhibit the greatest entrepreneurs.

    30. SH

      Um...

  12. 1:16:26 – 1:22:16

    Two Biggest Mistakes Duolingo Made

    1. SH

    2. HS

      If you could go back to the early days of Duolingo and do something differently, what would you do?

    3. SH

      Oh, yeah. So I would say, uh,, and we're pretty open about this, I think that the two mistakes we've made at Duolingo, they were not fatal, but... (laughs)

    4. HS

      Obviously. (laughs) 20 million monthly pay-

    5. SH

      But, but I would say the two big, big ones were, one, we, we waited too long with monetization. So we just didn't take it seriously enough early on, and we were, like, operating under this business model of let's just raise more money. Like, our business model, people, people ask, "What's your business model?" "Oh, it's, like, venture capital." (laughs)

    6. HS

      (laughs)

    7. SH

      So, uh... And eventually, we did take it seriously. And, you know, we're very good at, at this now. Um, you know, we have this internal, uh, concept of the Green Machine. It's like you, you run a lot of experiments, see what works, and then double down. And that's what we did with monetization. It's, it's, you know, super good now. But we waited, we just waited for too long.

    8. HS

      Was that because of naivety? Was that because of a push for user growth and engagement?

    9. SH

      A combination. So it was also like the, the investors, they didn't push us to monetize early, which is... You know, it was always counterintuitive to me. It's like, "Why don't they ask for monetization?"

    10. HS

      But I never would because I'd want engagement and I'd want user behavior and I'd want habit forming. Don't fucking put a paywall in front of them.

    11. SH

      Yeah. And then, you know, our investors, they also invested in, in Twitter and, and, and some of these... And, and for, for those platforms it was always the right decision just grow users first, grow users first. So that's what we did. So number one is we knew we could always grow users first. I mean, we could always grow users more. Number two is we knew we could always raise more money. (laughs) And, and I think the other one was our mission, right? So, so our mission is to provide the best education and make it universally available, and for a long time, we didn't know how to build a business model that is compatible with this mission, right? So, uh, for a long time it's like, well, we just have to... You know, everything has to be free. But then we realized, no, no, no, what really matters is that we don't exclude people. Like, we want to be inclusive. We, we don't, um... There's... You should be able to learn everything that is on Duolingo without a bank account. And it's still true today. In fact, you know, most of our users do not pay Duolingo. It's... They use the free tier. And that's actually another thing I'm, I'm very proud of. It's like, it's not just, you know, a great business, but it's, it's a great business with a great purpose. Um, so... But that, that's also, like, why we probably waited for a little bit too long. So, you know, we should have started two years earlier.Number two is wha- we, uh, (laughs) we also waited for too long hiring more senior managers. So we just ... For, you know, up, up, up until 30 employees or so, it was completely flat. It was, uh, uh, (laughs) a, a lot of people from new grad. It was pretty chaotic.

    12. HS

      I, that goes against everything everyone says to me on the show. Everyone always eschews or, like, you know, says, "Don't hire the senior manager. If they've been there, done it before, the playbook's not transferrable. You want youngsters that you bring up through the ranks, um, they wanna be involved more in the weeds and hands-on. Beware of the manager."

    13. SH

      Y- you know, again, there's like a, you have to strike the right balance. You cannot run a thousand-person company with all new grads.

    14. HS

      (laughs)

    15. SH

      (laughs) You need, you need a little bit of both. By the way, today, it's still like, Dueling is a very, uh, young organization. So we, we, like, we still hire a lot of people directly from, from university.

    16. HS

      You mentioned you always knew that you could raise more money. I love that. What was the business model? Venture capital. Harry's like, "Thank God I still have a job." Um, but when you think about the fundraising that you did, what was the hardest?

    17. SH

      Of, uh, series A?

    18. HS

      Talk to me about that.

    19. SH

      Uh, so, so we, we started as a research project at, uh, Carnegie Me- Mellon University, and the belief was, oh, this, it's these two academics. Mi- Luis was a professor, and I was his PhD student. It's these two academics and, and, and (laughs) they're gonna build something that's not gonna make any money, and they're gonna sell to Google. Okay? And then that, that was kind of the belief. And by the way, that, that belief lasted until we actually made money. (laughs)

    20. HS

      (laughs)

    21. SH

      Except for like five years, the first five years.

    22. HS

      (laughs)

    23. SH

      It's like, "Oh yeah, they're, they're, you know, these like, these, these two researchers, and they're gonna build this, this thing, and uh, they're eventually gonna sell, you know, they're not, not, not gonna become a public company or anything." And that was one reason. And then I think it was just ... This was 2011. Um, we, we had a, we raised on a prototype, uh, and there was a website. And-

Episode duration: 1:56:41

Install uListen for AI-powered chat & search across the full episode — Get Full Transcript

Transcript of episode B9sEJurtZIU

Get more out of YouTube videos.

High quality summaries for YouTube videos. Accurate transcripts to search & find moments. Powered by ChatGPT & Claude AI.

Add to Chrome