Founded in 2007 by Markus Witte and Thomas Holl, Babbel is a platform that helps people learn languages in a way that’s practical for real-life situations. What started as a team looking to build something in the music space ended up becoming a 450-person strong company developing one of the fastest-growing language-learning apps with over one million paying customers, as of early 2016. The same year this milestone was announced, Babbel was also named the most innovative education company worldwide, and 48th most innovative overall.
With offices in Berlin and New York, Babbel offers customized programs for learning 14 languages on its web and mobile app. We recently caught up with Markus—Babbel’s CEO—who talked candidly about the trials and tribulations of building up the company, finding the right monetization strategy and why working for your customers is the most important thing.
With several language-learning apps out there right now, how is Babbel’s approach different from its competitors?
We really care about you being able to learn a language with it, which sounds completely trivial but there’s more to it. When we started, we made all the mistakes I can see in the marketplace. We thought we could just solve this as a tech problem but we found out that’s not the case. People have been learning languages for quite a long time and we can’t just ignore these thousands of years of knowledge. On the other hand, we can’t just take that knowledge and bring it online. We tried both: The first one, then the other and both failed miserably.
One thing that’s always been important for us is to speak to actual users, and get data from out there. Of course, for online and mobile, what you do is you track everything that people do and optimize on that. It’s what everyone does and kind of trivial. But if you stop there, then you help people get better at your app, which is just a game then. If you don’t check if they’re actually able to speak the language, whether they are having real life conversations, then you’re not optimizing the right thing.
Babbel’s subscription-based business model also stands out from the rest. Can you talk about why you chose to go this route?
We originally planned to monetize with more than one model and use advertising. But at the point when we needed to bring advertising into the product, we thought, ‘Wait, this isn’t going to work because if we have ads, then somebody needs to click on them otherwise they don’t monetize.’ We needed to build a product that did both: Help you learn a language and makes you click on apps. Since we didn’t even know how to build a product that you can learn a language with, how would that even work for us? And if that would have worked, then today we’d be a publisher working for advertisers – they would be our customers. The language-learners would have just been a resource that we used, which we didn’t want. We wanted to work for our learners.
In 2016, Fast Company named Babbel as one of the world’s most innovative companies. What does the word ‘innovation’ mean to you?
For us, innovation relates to what I said earlier and that’s learning from failure. Trying things out. Our approach has always been to work with the question instead of working with the answer. It’s a fundamentally different approach. It’s harder to market, actually, because if you say we have this great magical tech solution, everyone’s like, ‘Oh Yeah!’ But the magical tech solution might not fit to what the actual problem is. For us, the problem is that people want to speak a foreign language. So how can we solve that using current technologies? We’re trying different things, new approaches. Many of them fail. We tried community and that failed miserably. Intuitively, we thought that you probably want to learn French from a real French person, that’s way more fun. In reality, it just didn’t work. We tried other things that didn’t work. But some of things we tried also did work. And that’s innovation.
Last year, Babbel launched a brand campaign alongside renowned creative ad agency Wieden+Kennedy, which included two TV spots. How did this brand campaign fit into Babbel’s broader expansion plans?
So this brand effort we made relates very much to the maturity of the company and the maturity of our markets in Europe. We reached 50 to 80% brand awareness in our European markets, which is very close to a household brand. When we get to a point where almost everybody knows us, it’s important that we care more about how people see us. So we asked Wieden+Kennedy whether they could help us better articulate what we do as a product through our marketing and communications. We’ve done TV advertising before – it’s one of the marketing channels that work for us, which was kind of a surprise. When we started, we only did advertising through Google search and then we tried display marketing—that worked as well—and then we just decided to try TV even though we thought it might fail, but it didn’t.
It’s been 10 years since the founding of Babbel. What are the three biggest entrepreneurial lessons you’ve learned from building up the company?
First: Work for your customers, not for your investors. Make sure you’re never working for your investors. Especially in the young Berlin scene, a lot of it is about how can you get the next investment round. If that’s your first priority, why would you build a company? The value of a company is nothing else than the value you bring to your customers. Everything else is just a bubble that you don’t want, or shouldn’t want. Second: Don’t solve problems that you don’t have. It sounds trivial but almost every young startup team I’ve met is solving problems they don’t have or trying to solve something that might happen in the future. “We’ll add another language to our e-commerce website in a year and we’re already starting with it,” they say… But why? Or they’ll say, “We’re building in a payment systems, but we’re still free.” Why? Why would you build stuff like that? Thirdly, what I personally believe, which is not universal, is to start with the problem – not the answer. Be willing to throw overboard your solution at any time.