“I’ve logged over 2 million miles. I have developed a very deep appreciation for not only languages but the culture that is behind the language and what it takes to be successful,”  said Mike Elchik, co-founder of free online language learning platform WeSpeke, in a recent interview.  Elchik formed a business by  generalizing from his own experience. “As I was traveling the world, I saw that there was a way to take what I had experienced every day, whether I was on the street of Paris, Tokyo or Shanghai. I was envisioning that you could move the exchange that might happen on the street on line. And have two highly compatible people help each other to learn a language.”

So Elchik and his co-founder Jaime Carbonell, Director of The Language Technologies Institute at Carnegie Mellon University refined the old-fashioned, in-person  “language exchange”  and gave it a technological engine.  It was apparent to the founders that  the language exchange routine -- involving  learning language with a partner by each speaking his or her own native language half the time -- was a natural social network application. Elchik explains, “Think it as a form of crowdsourcing, using other humans in order to achieve your goal of learning and practicing language.”  Language exchange conversations may still take place over a cup of coffee, but it is with native speakers on different continents who speak through text chat, audio chat, video chat or sending a question to be answered off line to accommodate time zone differences.

The money part

In language exchanges, no money changes hands between the pairs learning the language. “Our core belief is that language learning should be free. And much like in the physical world when you are on the street in Paris and ask for directions, no one sticks out their hand and says give me a Euro,”  says Elchik, although he went on to clarify that they do have a business model: they expect to earn money by advertising and micro payments for specialized content.

  • Advertising revenue. “So we are in fact, charging money -- just not in the traditional way for this market.  When you bring two people together and you are speaking about sports and soccer, for example, the underlying monetization that is coming into play is advertising on both the web and the mobile platforms, which we are doing now.”  WeSpeke has started selling advertising on the site. Although the company did not disclose information about their revenue rates,  in general, CPMs  are typically low for advertising that is displayed within or linked to user generated content --  even if the advertiser has a richer than usual snapshot of the users. Therefore, any significant revenue will have to come through volume, which is yet to be proven.
  • Micro payments for content.  Unbundled content is the other planned revenue stream, although they have not yet started selling this.  “Much like what is happened in the music industry where consumers can buy a single song and aren’t forced to buy the entire album. So just think of a user being able to purchase just a chapter or a section for a specific need. It’s a commodization of content as opposed to selling the higher value, higher premiums that most consumers don’t actually consume – much like music.”

In February, WeSpeke rolled out a new customizable feature it calls its “Notebook."  “This allows our users to capture relevant content (e.g. Apps, Games, PDF’s, URL’s, digital textbooks, etc.) to personalize their language acquisition,” wrote Elchik in an email follow up. “Think of a vocabulary list and phrase book that is unique and customized to a user’s interests; both personal and professional.  This content (e.g. verb conjugation tables) then serves as a guide and in support of an exchange (text, audio or video) with another user.”

Beyond its obvious functionality for language learning, the Notebook serves two business purposes for WeSpeke:

  • Deters switching. It adds a “switching cost” for customers going to other services for language learning, as their personalized cheat sheets are resident on WeSpeke. As Elchik says, “It makes WeSpeke ‘sticky’ in that the language learners knowledge asset is stored on our site for access and practice.”
  • Helps develop micro payment products. “The Notebook is going to help us do the product development for what we are going to sell. It is giving us all the data from the market as to how the consumers will consume snippets, as opposed to books. For example, you may have a phrase that you may want to learn, and it would be nice that you could click on that phrase and have an audio file associated with that.”

Customer acquisition sweet spots

Customer acquisition  has come from many of the usual sources: paid ads, organic search and  Facebook ads and editorial.  But it's been outreach to school and university communities of foreign language teachers that has been particularly effective for WeSpeke. Elchik estimates that course-related users are about 20% of their registered users.“The education segment has been our market entry strategy that has responded very nicely to our platform. When you give teachers a free resource that allows them to custom design a curriculum where their students can actually practice the language with natives and ask questions about the culture, the whole experience is much better."  In addition there is a multiplier effect.  “So when a teacher signs up, we get the entire classroom, or an entire course or a department to commit. That can be anywhere from five to 500 people immediately.”

WeSpeke is an additive, rather than a competitive product with almost all other language learning methods. Elchik says “We view WeSpeke as complementing. In fact I can tell you that our users are using other methods in advance of coming over to WeSpeke or as a gateway into WeSpeke when they register. WeSpeke is a global platform that allows you to connect with other humans and take advantage of those other methods and put them to practice.  And what we’ve done is we have layered a pedagogical framework over top of the exchange. So now when you are going back and forth with somebody,  all the things that you may say to somebody like can you say that again or can you write that down?”

Other notable successful customer acquisition methods, says Elchik, include paid advertising on social networks.  They “mine the social networks like Facebook and where there are communities of people that are interested and define themselves by languages and culture.” In particular, customers who are acquired through LinkedIn, Elchik believes will be particularly important. “They are professionals who better understand the value proposition of languages, where a high school student or a university student may be working just for academic ambitions. But a person in LinkedIn will be working off of wanting to improve economically, in order to  get a job or to get a promotion from having language skills.”