Transcript

Advice Line with Luis von Ahn of Duolingo

Free .txt

0:09 Hello and welcome to the advice line on how I built this lab. Guy Raj. This is the place where we help try to solve your business challenges. Each week, I'm joined by a legendary founder, a former guest on the show who will help me try to help you. And if you're building something and you need advice, give us a call and you just might be the next guest on the show. Our number is 1-800-433-1298. Send us a one-minute message that tells us about your business and the issues or questions that you'd like help with.

0:43 You can also send us a voice memo at hibt at id.wondery.com, and make sure to tell us how to reach you. And also don't forget to sign up for my newsletter. It's full of insights and ideas from the world's greatest entrepreneurs. You can sign up for free at gyros.com. and we'll put all this info in the podcast description. All right. Let's get to it. Joining me this week is Luis Von Aan. He's the co founder and CEO of Duolingo. Luis, uh, it's great to have you back on the show. Great to be here, guy.

1:14 You were first on how I built this. back in twenty twenty. We will put a link in uh in the podcast description for any of you who have missed that episode, because it's so good. Really one of the best ever. In that conversation at least we talked about uh your childhood in Guatemala like your early love for math. I think

1:33 a lot of people were kind of stunned to hear about this. You were instrumental in helping to develop a technology called CAPTCHA, which is of course those annoying um sort of characters that you have to read to confirm that you are a human. Thank you for protecting the internet. Um you you became a professor at Carnegie Mellon and then Uh you got a MacArthur genius grant, you worked at Google for a bunch of years, and then you walked away to start Duolingo in twenty eleven, and we told that whole story in the show. It's such a good story. Um your company, Duolingo, has just exploded since we spoke. I think about a year after our interview you guys went public, um in in twenty twenty one. Correct. And today you've got a b uh a market cap of um like thirteen billion dollars. And you're still in Pittsburgh. That's right. We're still in Pittsburgh.

2:15 It's just an incredible story. Um Luis, before we get to um some of our callers, I I I'd l love to just kinda catch up on where we left off, because I think when we spoke, Duolingo was valued like a billion dollars, which of of course was already amazing. As I mentioned now. about thirteen billion. You've grown so much, you've got nine hundred employees. Tell me a little bit about How you had to adjust.

2:39 as a leader of a rapidly growing, expanding company and brand, what's changed for you? Yeah, I mean every year of my job is a little different, which is something that I like. I mean, we you know, we started uh almost fourteen years ago and since we last spoke, like you said, we became a publicly traded company. That makes my job a little different. First of all, I have to be a lot more careful about what I say about the future, which was not the case before. I've had to really learn that. For us, I think it's been really positive being a publicly traded company because our stock has done well, but but really I think it has

3:13 also made us operate a lot better. Um I like to use this analogy that you know when you're a private company, nobody's really looking at how you operate. So it's as if you had a house and never had any guests. Usually That means that you're not forced to clean all that much. But if you're a publicly traded company, you have a lot of guests. So basically really forces you to make sure that all your processes are are very, you know, well structured and everything.

3:36 The other thing that changes with when you're publicly traded companies, your forecast starts really mattering. We have to have forecasts that are really precise. And I actually really like it. I mean, now we really know it doesn't make sense to hire five hundred people next year because that will make us very unprofitable. And so I think we've done very well in that respect. One of the things I I recently in my newsletter I wrote about the idea of a sort of ignoring the shiny new object. And in your space there's a lot of competition. There's a lot of companies that that came after you, some that were around before you. And I wonder how

4:06 much you I mean uh of course you guys have a pretty strong position, if not the dominant position in in this space, but there's obviously AI is is coming into in play and that's gonna be really significant, increasingly significant. But the other thing is Some of these competitors also offer, you know, video uh with a live person, for example, or different ways of learning language. Do you guys look at that and say, Well, we should really compete in in all of these spaces, or do you sort of tend to focus on what you're doing well and you kind of stay in your lane? We don't really look at what competitors, particularly in language learning, are doing too much. Um

4:43 you know, for one, if you take all people who are learning languages on mobile apps, ninety percent of them are using Dual Angle. Wow. So so that's one thing. But the other thing is we we mainly compete for is time. And so for us, what we look at is we look at what Instagram's doing, we look at what mobile games are doing, we look at what TikTok's doing,'cause those are real competitors. Um and the reality is we are losing. We are we are losing against TikTok and Instagram. They are significantly larger than we are. What we wanna do is we really want to teach you a language and we wanna teach it to you well.

5:14 Now. Interestingly, with live humans, by the way, uh this is one of the funniest things that that I've ever seen. When you talk to people who are learning a language and you ask them, What do you want to do? The most common answer is like, Yeah, I want to talk to live humans. Like that's that's what they tell you. Yep. And we've said, Okay, so if you tell us that if Duolingo had live humans, you would use it. You know, they tell you, Yes, of course I would use it. You even ask, would you pay for it? And they say, Sure, I would pay for it. And then you n ask the next question is an amazing you ask, would you do it right now? And invariably the answer is no, not right now. Uh, it's just turns out that talking to people in a language that you're not comfortable with, like ninety percent of people don't want to do that.

5:49 I think that's so interesting. It's an important point'cause you can apply this across categories, right? Which is to say that Market research, especially sort of um you know, surveys. are not always reliable. And I I make I've made this analogy before. When I when I first pilot episodes, we ran it through panels of people and universally hated the show. This is like ten years ago. Hated the show, and yet here we are, right, ten years later. And I think that that the point is so right because people will say, Yeah, of course I want a person

6:21 But but then when it comes down to it, they want the convenience of being able to interact with a language learning uh you know platform whenever they want. And it it just makes a lot of sense that you get this kind of data, but your response is not to go and do it, but to say, you know, actually We don't think what people are telling us is actually True.

6:40 Yeah, I mean this is In the history of Duolingo. been one of the most amazing lessons that I that I've had. our users or users in general, people don't really know what they want. Um they'll tell you all kinds of things, but you what you have to look at this.

6:56 not their words, but their actions, like their behavior. Just turns out people prefer playing mobile games than talking to the to other people. They may not tell you that, but it just turns out that's the case. Um, Luis, let's take some calls and find out what people need help with. What do you think? Let's do this. All right, let's bring in our first caller. Welcome to the advice line. You're on with Luis Van An from Duolingo. Tell us uh your name, where you're calling from, and a little bit about your business.

7:19 Hi Guy and Louise. Uh my name is Steph Crim and I'm calling in from Chicago, Illinois. I am the founder and the keeper of a business called Good Things Vending. We take Full size snack vending machines, refurbish them, customize them, and stock them with local artwork, vintage and nostalgia items.

7:40 And try to bottle a little bit of all that our city has to offer. In an automated Vending machine. That's awesome. Steph, thanks for calling in congrats on on starting this business. Cause you know, now vending machines are getting at least in the US, they've been cool in in like Asia for a long time, but they're getting cool to go to airports and you see people selling electronics and and cosmetics and cupcakes and all kinds of things. So these are just vending machines that might ordinarily sell like

8:06 Packets of lays. But you've refurbis them and they and you can get like one of a kind things in them. Yeah, exactly. So The I very much agree with you. I think vending is having a moment. My machines are not those high tech machines that you see at the airport.

8:22 Our machines are refurbished machines that may have been in a municipal basement or in a school cafeteria. We fix them up so that they are compatible with a credit card reader, and then we have an artist paint them and we stock them with local artwork. So stickers, pins, patches, whatever you make, if we can shrink it down and drop it from about four feet, we'll put it in the vending machine. Wow. How many of these machines do you have or and they're all all around the Chicago area right now? Yes, yeah. So we launched the first one in twenty twenty one. And now we are up to seven machines with the eighth one going out next week. And are they inside

8:58 Like where are they located? They're in other businesses. So I am utilizing the community that's already been built around a spot. So I want to put myself in places like the popular local brewery or the conservatory around the corner. We love hospitality spaces, we love City landmarks, we love community buildings.

9:20 That's awesome. And and tell me a little bit about how much does it cost? Like does each product cost? So right now everything in the machine is twenty dollars and under. The goal is to keep it super accessible. But it's definitely a higher price item than you'd usually see in a vending machine. Bigger profit margins. uh still economy of scale, like it's still about the number of machines that I can get out there. But last year for the first time we broke a hundred thousand dollars in gross revenue. And in quarter one of twenty twenty five we're up fifty three percent from quarter one of twenty twenty four.

9:51 And that's without factoring in additional revenue streams. We just have a new website launched with a web store that will eventually have some of these artist goods on it. Exploring some of those other areas. Awesome. Okay, before I bring in Luis, um tell us what your pain point is. What's your question for us? Absolutely. So There's been a growing interest, both in vending machines and specifically in the model that I've been building.

10:16 And as good things vending grows, we're receiving opportunities that Exceed our current capacity. How do we decide when to say yes and scale quickly, hiring and expanding to meet demand versus saying not yet? Risk losing those opportunities, but maybe taking the time to build more sustainably. What framework or decision making strategies would you recommend?

10:38 All right, good questions. Um, Luis, I'd love to bring you in. First of all, any questions for for Steph? This sounds really interesting. Um, you know, s these are artists. Some of them may have social media presence. Do you use their social media presence to boost up where the machines are, et cetera? Yeah, that's I mean a big part of it is community weaving. The idea is that we can all amplify each other. If you know that this brewery gets folks who are like loving Chicago things and then you put Objects for makers who are making Chicago things. It sort of has a natural harmony between those audiences, and there's a desire to amplify each other. I will say that the vending machine part of it has done a lot for us on social media. We

11:16 had a few like natural videos go viral, which has brought a a decent size audience to us, so now we're getting to kind of platform artists. as well, which has been really joyful. That's great. I mean that's a really good positive feedback loop because you can just uh, you know, get get more people to post on social media, and then your social media gets more popular and then That's a whole

11:36 uh feedback loop. So I I love that. Yeah. Yeah. Steph, what tell us a little bit about your goals here. I mean I you started this in twenty nineteen. You had the first machine twenty twenty one and now you're You're approaching eight machines in Chicago. But what's your if you could like look out in five or ten years What do you want this business to be? Yeah, I mean, it's such a good question and one that I wish that I had a clear answer to. I built this out of a love for community and art and

12:02 vending machines and didn't really think that it would catch this kind of wave, but I'm not super attracted to the idea of franchising, like for what that would mean for my life, for how I would have to operate. But there's so much interest in folks who want to sort of take this business model and bring it someplace else. I think for me I want to share the knowledge and I'd love to Build a business that can sustain here and create exposure for artists in Chicago. I don't want to be doing

12:29 the biggest possible thing. I always want to be able to be Connected to the community that got me involved in this in the first place, which is the creative community, the hospitality community. So whatever comes next, I'd like it to be something that allows me to have the job that I want selfishly. You know, I wanna be able to To enjoy. putting weird stuff in vending machines.

12:49 Yeah. Uh Luis, I I'm curious to get your take on this,'cause I don't think that that this is an either or choice. I think you could uh I think that that she could do both uh you know work with a community and artisans and and sort of the hospitality space, but still think about this as a business. I mean this is a this is a model that is replicable. It's not easy to replicate because you have the connections, the context, and you're creating these amazing, beautiful machines with great things in them. And to me it seems like an interesting thing to think about if people are coming to you and saying, Hey Steph, I wanna do this in New York. I wanna do this in Los Angeles to say, Okay, well Let's set up a you know, a a division. I'll help you set up a franchise of my business.

13:33 And you can take it there. Anyway, Luis, I I I've been curious uh to get your take on that. Yeah, I I agree that it having uh you know, it it really makes you operate pretty differently and and understand things better if you have a second city. You know, it's this is true with restaurants, this is true with a lot of things. As soon as you open your second city, you kinda start understanding a lot better what your business really is. You know, what is just Chicago and what is your business. So you know, I I I would really recommend that if it's taking traction. Another question that I have is are you working on this just by yourself? I mean, I have one contract worker, um, Dave, who's been incredible and like restocks machines for me, but I think my hesitation with going to other states is that I really think that what makes good things vending exceptional is that really earnest connection to community. There's like also tons of locations in Chicago that want like I can't keep up with the one in Chicago.

14:24 That makes a lot of sense. But just in general, I would say I have seen people It just happened to me too. Sometimes I'm just a little afraid of the unknown. And it may not be another city, but just uh you know, this is why I asked about uh if you're working with other people, it seems like you you're at a point where you could hire another full time person. And just

14:43 They can worry about just the mechanics of it all. And then you can start really thinking about how exactly you want to expand because all of that takes time, thinking how you want to expand. If you say, okay, maybe it's just Chicago needs a lot more places. Okay, well, that's a That's a thought. Another thought that I had. If you are in a position where People are asking you. But you cannot quite deliver on all the requests.

15:08 First of all, that's an excellent position to be in. It's way better than the other position where nobody wants their machines. Um so so that's an excellent position, but y you know, you can really start Trying to do things when there's scarcity on your end. You can say, like, well, okay, you know what? I have so many requests that at this point I'm asking that if you want the machine in your place You gotta pay.

15:27 You just gotta pay a thousand bucks. I'm making up. I don't know if a thousand dollars is the right number at all. But you just got you gotta pay this to to locate it there because there's just too much demand. Or there's like a wait list and then you can even make it a whole thing, you know, it's just like it just reminds me of kind of fancy restaurants where all these people are trying to buy to really get themselves in the wait list or whatever. So you can if you have a a scarce resource, you can you can really do that. I'm gonna double down on on this, Luis, because I think this is exactly right. I think you should focus less on what's in the mach right now for for a brief period of time and focus more on how you can expand the machines, right? And so Um you mentioned that you have somebody working with you part time and you know, your revenue is still fairly modest. So

16:09 I imagine that you might be nervous about bringing on somebody full time. There may be an opportunity to try something a little bit um unorthodox here, which is, you know, maybe look at some of the business schools in in the area, Northwestern or Chicago, and see if there might be somebody from one of those places who who would be willing to come and work with you um for you know a percentage of your business to help you grow it, knowing that they weren't gonna make a lot of money initially, but that there's a spark here. That's the first thing I would think about doing. The second thing is I would really look at the data. Luis mentioned, I mean, his business is so data driven and so many decisions are made

16:48 or not made because of the data they're g that they're getting in. I mean I would think about Adding artisanal foods snacks that all other people in Chicago are making. I mean try different things out and see what's working because I think that you have an opportunity to really measure you know, what kind of sticks with people. I think um we have food in one of our machines. It was a location request.

17:13 Um, something that we're definitely like looking to expand a bit more. I will say that one of the advantages of my product spread is that it's a higher profit margin. Nothing expires, which is massive. So I think that there are some things that make me hesitate on food. like logistically, but we are Finding that there is some interest. Yeah. Yeah, I think like moving in the direction of trying to find folks who maybe have that business education.

17:36 would be very helpful. And also, as Luis, as you mentioned, I mean the the idea of getting people who want these machines in their stores to help finance them, right? I mean I mean you think about how, you know, a lot of times when developers are looking to uh attract a great c store, you know, like an Apple store that's gonna attract a lot of people, right? Or a Chick-fil-A or a brand that just brings a lot of foot traffic, they will give those brands, those businesses massive deals because they want to attract other businesses into that mall or whatever it might be, you you might want to think about what you're doing in a similar way. I mean it you're you are A premium product is fun, it's interesting, you're attracting makers and you know people who go to maker fairs and also startup people and

18:20 When they know, when they see your vending machine in a cool bar or a a shop, they know that that is a cool store, which already has an impact on the you know, sort of the perceived value of supporting that place. It's very interesting. I Like from it sounds like less from a monetary direction, like not getting them to buy in as a source of income, but more as a Prestige component, like you gotta buy in if we're gonna

18:45 Move. Is that the thought? Can I interrupt with one thing that just kinda reminded me of something? When we started duolingo, I can best describe us as communists.

18:55 We did not want to make money. Nobody in the company wanted to make money and it was thought of as a as an evil thing. The reality and what we have found is I think we're still like that, but we have found that A lot of times with things like when I said like you can get people to pay a thousand dollars to put your machine there, et cetera, is not necessarily so much about making money and and it doesn't have to be a bad thing. It's like that can fund the rest of your operations to actually let you have more of these machines, but also if these places are are willing to put in the money

19:26 For something that means they care. And that that's a way to suss out how much this place actually cares about having your machine versus a place that just doesn't care all that much. Yeah. I think that would give you better results. So it's not necessarily about like we're just or at least I'm not necessarily trying to tell you, Oh, just just squeeze everybody and make as much money as possible. No, I don't I it's it's not like that. And I think I I'm I'm noticing a little bit of early duolingo in your in your thinking, which we were like, No, no, no, don't worry. I'm not really trying to make money. I listened to your episode and I was like, when does being precious get in the way of the goal? Like very much I feel that way. But I think some of it is on a practical level too. Like if somebody

20:06 I think that a lot of our best locations, because being put in a good location makes more money than anything else that we can do. A lot of those locations are not locations that can. afford anything. I think the only other thing that like Itches at the back of my brain is if it's not my business, if it's not good things mending. My interest isn't representing every artist community in every city, but a vending machine could do that in every city and could do it. How to move through that sort of part of the interest and that part of the business where folks are showing a high level of interest in

20:38 sort of like replicating or building their own version. Yeah, I mean I I think in in general my inclination would be to just make the the best possible thing I can in Chicago and then If it's good enough, it'll j it'll just get copied.

20:53 Yeah. I mean it'll it'll just happen. Yeah. Kind of relieving advice, honestly. I'd love that. I'm Steph Crim, the brand is called Good Things Vending. Thanks for calling in. Good luck.

21:02 Thank you. Thanks for having me on. Appreciate y'all. Good luck. Thank you. Thank you, thank you. Yeah, I uh every time I'm I'm like walking through an airport, I'm like Do I need a pair of uh noise cancelling headsets from that vending machine? Like I have to end up with one. I I look I'm looking at it and I'm like, you know you know what I mean? Like there is something to it. But it's a cool idea and I've seen different kinds of versions of this. And it's like there's a this kind of Venn diagram of like people go to maker fairs and craft fairs and

21:30 That's a critical mass of a pu community. I mean, there's a lot that I can see happening with something like this. W in addition to that I I really love That Steph wants to elevate Chicago.

21:42 Wants to elevate the arts. In my experience, that type of business usually is a lot more successful. even if early if the founder is not necessarily all that much into making money, et cetera, they end up making more money than the ones that are where the founder's like I just wanna make money. There's something to be said about somebody who really cares about about their community and and what they're doing.

22:04 Stay with us, because after the break, we'll talk to another founder working to take their business to the next level. That's after the break. I'm Guy Raz and you're listening to the advice line. Right here on how I built this lab. Welcome back to the advice line on how I built this lab. I'm Guy Raz, and my guest today is Duolingo founder Luis Von Aan. Uh Luis, let's take another call. Let's do this. Hello, welcome to the advice line, you are on with Luis Van

22:46 from Duolingo Welcome. Please tell us your name, where you're calling from, and uh a little bit about your business. Sure, hey guy, hey Luis, uh my name is Blair Hasty calling in from Atlanta, Georgia. My business uh I found it is called Bear. Uh Bear is a design driven brand creating high-end tech accessories that blend thoughtful design with durable precision craftsmanship. We use uh premium materials like merino wool felt, machined metals, and fine leather, avoiding disposable plastics to ensure longevity and sustainability. And our first product, Tame is a minimalist cable organizer for um Apple MacBook users. Got it. Okay, well welcome to the show, Blair. You design products that are

23:24 Accessories for For phones and computers? Correct. So right now we're focusing on Apple accessories. Uh my my background is industrial design, so I've been doing this for twenty plus years. So we have uh Tame, which is uh simple cable wrap for MacBook products. Cable wrap for the for what? For the the charging cable. Okay, okay, gotcha. Okay, yeah. So it uh it very easily wraps uh it kind of in encapsulates the uh the charging block for the the computer itself. And then the other product is uh it's called Tot. Uh that one actually um is is we're having a little bit of issues with that. So uh but it's the idea is that it is uh sling bag for Apple's Vision Pro headset. It's uh it's a fairly bulky headset, so it requires an external battery pack. Right.

24:11 Which normally people would put in their pockets, I guess. Right. Or hold it. It's like a little bag that holds the battery pack. Yep. The idea was for people who either have too much in their pockets or like women who oftentimes don't have pockets. The Issue I kind of alluded to earlier was I think Apple Has experienced some uh some vision. No. It's no secret. I'm I'm looking at a photo of this and uh on your website and so your thing is all about design. Using merino wool and leather and nice metal. And these are your two kind of

24:44 Uh before I bring in Luis, tell me what your questions are. Sure. Um so I originally came in uh to this thinking that my biggest challenge was how to stand out in the crowded market, but I've realized that my real challenge is about making sure that I'm focused on the right product in the first place. So Tame was meant to launch alongside uh Tote. Which was expected to be the momentum for the brand, but when Tote didn't happen, it's not really uh uh taking off like we had expected. So uh Tame is left standing on its own as the hero product for the brand, which is a role that it was never meant to play. So the question is When you have multiple ideas but limited resources, how do you decide which one is worth pursuing and how do you validate whether it is a real market demand for uh before investing too much?

25:28 All right. Luis Van This is uh Time to bring you in. I mean that's a that's a very hard question in general. I will say a couple of things. Um We have learned a duolingo. We've had we've been burned by similar things by in fact the identical company as you

25:46 I'll tell you the story that happened. I m we had Apple really try to get us to do an app for the Apple watch. And they tell you, Oh, you know, these are gonna sell like crazy. Don't worry. If you do it, they're gonna sell like crazy. They always say that. What we've learned. is not to bet on these

26:04 very new products'cause you really never know if they're going to work. So uh it's not that Apple Watch didn't work. Apple Watch ended up working, but what didn't work was apps on Apple Watch. There's just Yes. That's just not a thing. I they aren't. I barely use them. I really barely use them. Yeah. It's just they tried to make them a thing. They're not a thing. But there was no way to know beforehand because Apple swore to God they were going to be a thing. Um and so we've learned we make products for established platforms. You know, sometimes that people are like, Oh you wanna be you want to be there early. I don't think you do. I mean, in especially in the type of business that you're in, you don't need to be the first ever

26:45 Carrier of a certain product or whatever. You you just need to be one that stands out because you have really amazing materials, et cetera. So I just for one, I would definitely not bet on new products. I think that was my my struggle early on going into this. I I kind of was w going back and forth weighing the benefit of uh you know do you go after the mass market or do you try to go after the smaller market, which is a little more niche, but you can be a uh you know a big fish in a small pond, essentially. So that was kind of the the two I I chose uh apparently a little bit poorly, but uh

27:19 I'm looking to to pivot and to readjust some of the strategy around some of those things. Yeah, I mean I think that There is no I'm I'm gonna hear from people, but I just don't believe in saturated markets. I really don't. And we've had Episode after episode after episode that's proved this to be correct. Liquid death entered a three hundred billion dollar market. Water. Who would be stupid enough to go into water that's dominated by Coke and Danone and Pepsi? Well

27:46 Mike Caesare was selling a better brand. You know, he was he was selling monster style, you know, energy drink things that looked like beer, but it was just water in a can. Say what you want about it, but he entered a a very crowded market and he proved that there's always an opportunity.

28:03 But what I tend to find, I think that there's something to this idea of really leaning in. locally and starting local. I mean, you're in Atlanta. It's a majorly important place with, you know, important companies like UPS and Coca-Cola and Delta. But aside from that, there is a m a growing, thriving tech community. There's a lot of creatives there and Is there a way For you to start sort of start to try and find that wormhole. initially into the creative community in Atlanta who are like, oh what's that? You know, what's that cool merino wool?

28:37 case you have around your iPhone or that cool bag that you're using made out of merino wool and leather or That to me is a really interesting way to at least start and to see if you can gain traction and then get feedback from people on what they want. No, I think that's that that makes a lot of sense. Starting at Atlanta is is first of all really cool. Thank you. Um because it's such a cool city.

28:58 But really, I mean a lot of these Uh you know what you're doing the the accessories, they're a bit like fashion. And I think the way to get these things Off the ground. Is to start with

29:11 with kind of the artists or the hipsters or the you know, the people that are that are maybe not very wealthy or but they're just the cool people that everybody wants to emulate. And if the cool young hip people are wearing these I think that's kinda how these things Take off. Yeah. Yeah, I mean this is this is the story with Instagram, Luis. I mean they they they launched by making it available only to photographers for the first like s like

29:36 M two months. Just a a thousand photographers that they identified and said, Hey, will you play with this? Yeah. You're trying to find creatives, you're trying to find like first movers and I think that that's where the opportunity is gonna be. Awesome. Yeah, I would sell some of them in Goodwill somehow. A lot of these people buy their stuff in Goodwill and then everybody wants to. I don't know about that. Don't listen to that piece of advice. Don't go to Goodwill.

30:00 But it's interesting because you do have something differentiated, right? You are in a s quote unquote crowded space, but merino wool, I don't think a lot of people are d using that to make cases. There's some leather, but not that much. It's mostly hard plastic. So I feel like there's some opportunities here to work with the material you have that can really differentiate what what you're putting out there. Well, glad you identified the material'cause that's obviously you know, obviously sustainable materials, but also higher end materials that uh can stand out in in the category that we're putting these products in. And and I really do Uh like your idea, Louis, about uh see what we can do to get these and some products in the hands of some

30:36 you know, influential people. And one of the other things that I uh I'm trying to uh explore is this idea of scent branding, which is trying to own every part of the unboxing experience. So that includes. what you smell when you literally take the product out of the box, which is a coffee latte uh scent that is applied to the inside of the packaging. I don't know if you've noticed this, but a lot of times when people open brand new products, especially like tech products they're they're tend to have like a plasticky kind of uh factory smell. Yeah. It's still a work in progress, but also trying to think through long term how we can start to build a brand apart from just the look and the feel of it.

31:13 I I I'm just gonna be honest with you. It's interesting. It's definitely threw me for a little bit of a curve here. Yeah. Um, but I think that that your energy should be focused on what products appeal to people. What designs appeal to people. That's really where you can smell things interesting, but I'm not sure that's gonna be the game changer, but that's my j I might be wrong. I might just have critiqued a billion dollar idea. Blair, you're such a designer. You just remind me of all our designers. I keep telling them like guy, I'm like, just concentrate on the right thing. And they're like, no, no, no, no. But look at how this was made. But you know what? I think that some of the best ideas come from this type of stuff. Um, so you know, I I keep at it. But you are such a designer. Oh, thank you so much. I I I really appreciate that. That's a compliment.

32:10 Blair good luck. The brand is called Bair B A I R. Um ching on man. Good luck. We'll follow we'll follow up with you. Thanks, guy. Thanks, Luis. I really appreciate it. Uh thanks for taking the time. Thank you. Thank you. Do you have a do y you must have a a nice case on your phone? No, it's not a particularly nice case on my phone. I have it here. I mean it's a case. Because I tried it I tried it without a case for a while and it just keeps breaking. So I have just a random case I bought at at the Apple store when I bought my iPhone.

32:39 Yeah. They do these things where they change the size of the iPhone by like a millimeter each time. And Now that we previous case doesn't work. Alright, we're gonna take another quick break, but we'll be right back with another caller. Stay with us, I'm Guy Roz, and you're listening to the Advice Line.

32:57 right here on how I built this lab. Welcome back to the advice line on how I built this lab. I'm Guy Raz, and today I'm taking your call with Luis von An from Duolingo. Uh Luis, let's let's get back into it and take another call. Let's do this. Hello, welcome to the advice line. You are on with Luis Funon and me. Uh please tell us your name, where you're calling from and uh a little bit about your business. Hi, I'm so happy to be here. I'm Stephanie Carlson. I am

33:38 in Carmel, Indiana, which is just north of Indianapolis. I founded Nature's better landscapes in two thousand sixteen after raising four children. My intent was to teach people how to build, plan, and grow their own gardens, but somehow it evolved. Into biophilic design, which is the practice of bringing nature indoors. And today, fast forward almost nine years. And we offer interior and exterior landscape design, build, installation, and maintenance services, creating designs inspired by nature.

34:08 Got it. Okay, so um I'm assuming what you're talking about are like those like plant walls you see inside of stores and and is that what you do? Living walls, moss walls. We also do interior plantscapes. We designed green spaces, bringing nature indoors to create hip healthier, happier places. And tell me about how this business started. I was just gonna help people design gardens. So I all my kids, every year we planted a garden and it was fun. It was great to eat your own food. We love making salad out of our gardens. So I was like, Okay, they're all grown up. I need a new baby. I might as well start a business. So I started nature's fired landscapes thinking I was going to teach people how to grow gardens, build their beds, ha design, and then it just evolved as

34:49 We were doing this, someone would say, Hey, can you do this? uh oh, I have an office, can you do this? And during twenty twenty, when everybody was going home, the plant business really blew up and Everybody was wanting plants in their homes. And once people went back to work, biophilic design became very, very popular because the one way you can encourage people to come back to work is to make their space prettier and more attractive.

35:13 That's awesome. I mean, I love I'm looking at your website and I love those like walls of moss or Ferns or f plants. They're so cool. Every time I see one, I'm like, I want one in my house, but I it's just it's too complicated. But tell me a little bit about how the business is doing. I mean are are you guys Um making money is it challenging right now or what's going on? So we've done actually really well. We've had some great opportunities um to do exterior landscaping in um, you know, we've done some apartment buildings, some Medi areas, some rooftops. Uh, we also did the Bicentennial Unity Plaza here in for the Pacers in Indianapolis. We do do moss walls in homes. So that's an option for you. All right. And this all in in the in the Indianapolis area.

35:55 Well, we've been in Chicago. We've been in Noxville? We've gone to New York, but must most of it's in Indianapolis, but I do want to grow into some other areas. How many people do you have working for you right now? I have five right now. So um When I have something that I know my staff can't handle. I

36:12 Bring in my subcontractors. Tell us what you before I bring in Luis, what what's your question for us, say, what's your pain point? Okay, so right now we have grown so much. We are almost at a million dollars in revenue. Amazing. Congrats. Thank you. And I want to get there this year and maybe a little bit over, but I need more people. But I need to know how to pay those people. So we have great revenue. We don't have a great profit.

36:35 'Cause the costs are high. I mean, I'm looking at the quality of what you put out there and I can cannot imagine how ex not how expensive, but how but but how much it costs you. Right, and they're not easy. I mean when you do the moss wall designs, the fabrication is very t very challenging. And I mean we have so much demand and there's so many opportunities for us to go and get and it's har y we just can't get it all because we don't have enough people and I'm really scared of of burning out the good people I have because I have to be really respectful of their time and their abilities.

37:06 So I'm at a point where I need more people. And I need to figure out how to pay those people. Do I do it through loans? Do I take some more money out of my savings? Because I know if I have the people, we'll get the business. Luis, please. I have one quick question. I assume you've thought of this, but

37:22 Can you not charge more? That's what we're working on too. We are gonna start charging more. And actually, I think this is kind of how I viewed it. I wanted the job so badly that I just wanted to make sure they were happy with the price, but now I need to start charging more because if you look at our website and our Instagram, we have created some Just I'm so excited with what we've created. Beautiful projects. And we are have a have a portfolio and a personality and a brand now that people trust.

37:46 I mean in general I think you really want to make sure that you have A good business and a good business is good profit. I've had to learn this the hard way from our CFO. I didn't really understand that before. But really, If you can charge more, you should just do that.

38:02 Uh, because that that will solve most of your problems. I mean, otherwise, yeah, you can get loans, you can get all that. And I I I wouldn't be against you getting a loan. That would be perfectly fine, but if you can do it without loans or without any of that. That would be much better. Yeah, I mean it's uh also I I would think that in a business like yours, you could probably charge enough where your profit margin exceeds fifty percent. Yes. Because m so much of the value that you bring isn't in the actual plants or moss, it's in your brain. It's in the design.

38:34 of the science. And that's not something that is easily replicated, right? So I would think that that pricing is the first For sure. Because you wanna be able to have enough cash flow where

38:47 you can fulfill all the demand, right? You need other people. On your payroll. Um and probably what what do you I mean To have a full time employee, I mean, if you're including benefits and other things, you're probably looking at

39:01 At least fifty, sixty grand a year probably for a starting person, right? Yeah. Yeah, and I wanna pay them well. They do they work hard and they deserve to be paid well and that will keep them Loyal. to my company. So I'm looking for other revenue streams too. Like we're

39:16 Maybe gonna do a plant shop. We're looking at a plant cafe, we're looking at, you know, maybe renting our space activities after hours. So we're I'm kinda looking at other Revenue streams.

39:29 'Cause a lot of times we'll have You know, it's not consistent revenue. We may have a great month, bring in a hundred thousand dollars and then you know, thirty days later someone hasn't paid. And I'm

39:40 doing whatever I can to keep the cash flow going. Uh w what is your worry about taking out a loan? I mean you've got a business, you've got a business model, you've got an established track record. I'm I'm assuming at this point in l in your life you might even have property, maybe you've got a house or something. So You're in a better position to get an SBA loan than somebody who's, you know, twenty two, who's who's got no assets and is just starting out, right? It's just harder to get. Right. What's what would be your reluctance to take a an SBA loan? You know what I think I'm kinda very serious about looking into the SBA loan? Uh the rates was one of the things.

40:14 But it would help me grow. Yeah, it would give you more cash. Louise? I mean, yeah, I I think getting alone makes a lot of sense. I'm still stuck on the idea that Yeah, pricing is such an interesting thing. A a lot of times people think that the lower price will just sell more. And and it's probably a little more volume, that's probably true, but

40:32 Especially for businesses like yours, I think you can just set your own price and just say, Look, we're high end. I mean this is similar with things like contractors or or a lot of times art installations. There's There the range of things like art installations, which I would think plants can be thought of as art installations. The range is insane. I mean you can get it from fifty dollars to you can get fifty thousand dollars. I just I I can imagine that you can probably increase your price and that would make you even more desirable. And you just tell people we are you're paying for quality. We are the highest quality.

41:04 I think you wanna get to a position where your profit margins are high. And I think maybe hiring another person so that I can spend more time on estimating and we're really doubling down on marketing too. Uh marketing and sales. or what we're really doubling down on this year to get to that. higher profit margin.

41:21 I think a lot of a lot of times a mistake a lot of entrepreneurs make at the beginning, and I I count myself among them, and I think Luis you count yourself among them too, is that we really undervalue what we're offering. I mean if if I told you, Luis, in twenty twelve Right when you started Duolingo. That people would pay sixty bucks a year. for this product. You would have been like what?

41:41 Oh, for sure. And by the way, this is the thing that our CFO keeps telling us. The reality is it's not even sixty bucks a year. I mean we can charge a hundred and fifty and people will pay it. The girl. Yeah. Well, we're getting more world known, which is nice and Yeah, I think I definitely have to raise my prices and just put a value sticker on it.

41:56 That would help a lot because then immediately your margins are good. And then you can afford to hire, et cetera. By the way, how I'm just thinking like I don't know, m I I just for some reason in my mind I keep thinking of music. Do any of these walls have music coming out of them? No, but that'd be a great idea. In fact, we'd we're playing with the scent idea that Blair mentioned of adding scents along with the plants into these offices. Coffee. Coffee scents. Coffee scents. Coffee scents. Coffee. You can have coffee plates. To make the place smell good at the same time. They are enjoying their plants. But maybe like you could add a you could add a waterproof speaker as part of your price and say, Hey, you know, we also for triple the price for triple the price we put in. There'll be nature sounds, birds. That actually's not

42:42 Bad idea. Like and it's subtle. That is a really good idea. So when the students are studying in the mechanical engineering building over at U of I They're getting this extra Um I'm telling you, do that. I wanna know if you I wanna I wanna find out if you can do that. Um Stephanie Carlson, the brand is called Nature Spire. Good luck. Thanks for calling in. Thank you. It's been great. Love talk talking with you.

43:05 Thank you, thank you. I I've always seen those. I'm like it'd be so cool to have that in my house, but then I'm worried that it's gonna drip on the floor, but I'm sure there's like there there are all these redundancies put in, right, to prevent that. Yeah, we have we have a few plant walls here at Duolingo and it it it works. And they're they're beautiful. Does music come uh No, no, they don't have music. I I like that idea. Yeah.

43:25 But You know, I'm really hoping Stephanie will just uh Next time she shows up to give a quote, she just Doubles. Yeah.

43:33 Whatever she was gonna say, just double it. Yeah. I bet you some people will say yes. I agree. I agree. Um Luis, I you know, I've asked everyone who comes to the show a version of this and I and it's still every time Um it's all I'm always

43:46 surprised and amazed at the answer, but now that you I mean you came in when you started Duolingo. He had a lot of experience. He'd worked at Google, MacArthur uh fellowship. I mean you would d a lot of things going in the right direction for you, but Um but n nothing to say hey I now start a tech company and that's gonna be valued thirteen million dollars is gonna transform how people learn languages.

44:09 If you could now go back to twenty twelve when you were starting that and you could sort of give yourself advice. What would you what what do you think would have been helpful for you to know back then? Oh, a number of things. Uh certainly we took too long to monetize. I mean we didn't we did not start monetizing until twenty seventeen. So it's five years in. I would have told myself monetized a little sooner than that. And again, it's not because it's so much about making money. It's because it really allowed us to um fulfill our mission. When we started making money, we were also able to invest more in teaching more people. It took me a long time to realize that there are certain shortcomings that I have.

44:47 That are okay and that You know, I I just always kept trying to be like, No, I gotta be good at this and this and this and this and this and this. And the reality is Yes, you should always try to be better at everything, but there's some stuff that you're just kinda never gonna be great at. And what you do is you just hire people who are great at that and let them do that. So most everybody in my executive team is excellent at something that I'm really bad at.

45:09 And I am now. Fully okay and not apologetic about the fact that for example I am just not very interested or good at finance. I'm just not. And at some point you realize you should get the right person to do the right job.

45:23 Makes a lot of sense. Uh Luis Fanon. co founder of Duolingo and the CEO of Duolingo. Thanks so much for for joining us. Thank you, Guy. By the way, if you haven't heard Luis's original High Built this episode, um, you've gotta go back and check it out. It's so good. Uh, and here's one of my favorite moments from that interview.

45:41 You know, I was feeling good. I I thought, Okay, well we can continue raising money for a while. And at some point we raise money from Google, uh capital G is one of their investment arms. Um partner from that firm sat me down and she said.

45:57 Nobody else will invest in this company if you don't figure out how to make money. You know, you're not gonna find a bigger fool. Hm. We're the biggest four. And that's when we that's when we started kind of freaking out and try to figure out how we're gonna make money.

46:11 Thanks so much for listening to the show this week. Please make sure to check out my newsletter. You can sign up for it for free at gyroz.com. Each week it's packed with tons of insights from entrepreneurs and my own observations and experiences, interviewing some of the greatest entrepreneurs ever. And if you're working on a business and you'd like to be on this show, send us a one-minute message that tells us about your business, the issues, or questions you'd like help with. and hopefully we can help you with them and make sure to tell us how to reach you. You can send us a voice memo at HIBT at ID.wondery.com or call us at 1800-433-1298.

46:55 and leave a message there, and we'll put all this in the podcast description as well. This episode was produced by Catherine Cypher with music composed by Ramtina Rablui. It was edited by Casey Herman, and our audio engineer was Cena Lafredo. Our production staff also includes Alex Chung, John Isabella, Elaine Coates, JC Howard, Iman Maani, Chris Massini, Carrie Thompson, Neva Grant, and Sam Paulson. I'm Guy Raz and you've been listening to how I built this.