The business of language learning with Babbel co-founder Markus Witte | Found Podcast

Company Overview

• Babbel is a language learning platform that offers lessons, online classes, games, and podcasts to teach users new languages.
• It was founded in 2007 by four co-founders who met while working in the music software industry.
• The company initially focused on creating a usable and functional vocabulary trainer.
• In 2009, Babbel adapted its product to work on mobile devices and introduced a subscription-based business model.

Challenges and Success

• Fundraising was challenging for Babbel in the early days due to its location in Berlin and investors' unfamiliarity with the subscription model.
• Babbel achieved cash flow positivity by 2011 with a small amount of funding and has remained lean by design, relying on revenue from users rather than investor capital.
• Babbel's success began with coverage in TechCrunch in 2008, which led to a surge in users.

Evolution of Babbel

• Babbel evolved from a vocabulary trainer to a comprehensive language learning platform by incorporating lesson plans, user feedback, and a multi-modal approach to learning.
• The company recognized the importance of providing a safe environment for learners to practice speaking and gradually progress from app-based learning to real-world conversations.
• AI has revolutionized Babbel by assisting teachers in lesson creation, understanding user needs, and enhancing speech recognition.

Leadership Transition

• Marcus Dom, co-founder of Babbel, stepped down as CEO in late 2018 due to personal reasons and a desire for self-discovery.
• The successor, who was initially hired as CMO, showed great potential and interest in the company's mission, making him the ideal choice to take over as CEO.
• All four co-founders remain involved in the company as meaningful shareholders, demonstrating their continued alignment and trust in each other.

Future Plans

• The decision to postpone the IPO in 2021 was made due to deteriorating market conditions, and the company is likely to remain private for the foreseeable future.
• The company's success will be measured by the amount of learning success delivered to users through product evolution using AI and other innovations.
• Maintaining and evolving the inclusive and diverse culture within the company is also a key priority.