Germany’s Duolingo competitor Babbel sets its sights on the US
Language learning service Babbel is one of Berlin’s quiet startup success stories. While it was once on the brink of shutting down, today it’s a thriving company with hundreds of employees who work in a sprawling office in the middle of Berlin — and it’s the market leader in large parts of Europe. Unlike competitors like Duolingo, though, Babbel is a paid service. You can get a free trial, but after that you have to pay up if you want to keep using it. It also puts a stronger emphasis on carefully built lessons over the more algorithmic approach of Duolingo.
Now that it has a lead in much of Europe, the company is setting its sights on the large U.S. market. To do this, one of the company’s co-founders, Thomas Holl, moved to New York in 2015 to set up the company’s U.S. office. At the beginning of this year, it also hired Julie Hansen as its U.S. CEO, who will take over from Holl the lead of the company’s U.S. operations. Hansen is the former COO and president of Business Insider.
“I joined Babbel because I felt that it was a great product and a great company with a mission that I completely bought into,” Hansen told me — but she also was quick to add that while Babbel is definitely mission-driven, it’s not something the founders wear on their sleeves. Instead, it’s just part of the company’s DNA. “And we have a strong product — it’s actually better than its competitors,” she noted. “That hard work of making a great product has been done.”
While she also acknowledged that language learning is different from the media business, she stressed that her background was originally in consumer products and Babbel, in her view, is also in the content business.
Now, it’s about bringing that product to a market that is very different from the European market — and that competes with a free product that currently has much of the mindshare. Babbel also once started out as a free product, but it wasn’t able to scale that model. As the company’s co-founder and CEO Markus Witte told me a few weeks ago, advertising simply didn’t bring in the money the team needed to stay afloat. As a last-ditch effort before having to shut down the company, Babbel started charging its users.
Having ads in an educational app presents some fundamental issues that go beyond monetization. While Duolingo also monetizes through other means — by offering certificates, for example — one of its main vehicles for keeping the service free is through advertising. Those ads, however, are designed to pull you out of the app. Duolingo recently launched a subscription plan that lets you pay to remove ads, but the Babbel team argues that ads are simply not the right way to monetize a language learning service.
Hansen tells me that the U.S. market is already Babbel’s second-biggest market, but it’s lagging behind Central Europe by a wide margin. “It’s the first inning for us in the U.S., but we can get there,” she said.
To do this, she is currently building out the U.S. team and executing an aggressive marketing campaign that includes everything from TV to online ads, as well as ads in podcasts and even direct mail campaigns. While it may seem odd to see an ad for a language learning app on TV, Hansen notes that this is actually working quite well for the company. Babbel mostly runs these ads on news channels, where the audience tends to be relatively educated and hence more likely to be interested in its product. It’s also putting a strong emphasis on the Hispanic market in the U.S., where there is a strong demand for its English classes.
Indeed, as Hansen noted, besides the large English as a second language market, motivations for learning new languages tend to be different in the U.S. than in Europe. In the U.S., people often want to learn new languages in order to travel, as a self-improvement project or to reconnect with their heritage, for example.
“Our product is the best for them,” Hansen said, and noted that the company employs hundreds of teachers and linguists to create its lesson. Indeed, nobody at Babbel I talked to was shy to bring up Duolingo, which in Babbel’s mind is too focused on algorithms and unrealistic scenarios to be useful as a language learning tool (something the Duolingo team would surely dispute). “We have not built a game or a thing we translate over and over, but a product that builds on learning methodologies and that we built specifically with your language in mind,” Hansen said. “When people understand that the product works better — which we’ve proven — that’s really powerful.”