Busuu

Matchmaking Model






Busuu

Busuu operates a matchmaking business model, in which a user who would like to learn a language is connected with another user who speaks that language but is also looking to learn the language of the other user. Founded in 2008, Busuu has more than 50m users globally and operates through both a website and a mobile app. The Busuu website is “social”: it encourages users to interact with each other in their native languages via messaging and video-chats in order to practice, exchange knowledge and learn from each other. The website also contains standardised learning units. Users are given free access to the “marketplace” but can also pay for premium access to interactive courses for 12 languages and private video tutoring with certified tutors. This is an example of a “freemium” product business model that Busuu operates alongside its marketplace match maker business model. This write-up will focus on the marketplace business model.

HISTORY

Busuu is named after the language Busuu, spoken by only a small number of people in Cameroon. Busuu was founded by Adrian Hilti and Bernhard Niesner in 2008. The company spent around a year developing the website, and ended the “beta” version of the site in February 2009, transitioning to the site and infrastructure. In October 2012, PROFounders Capital and a group of private investors invested €3.5m in Busuu, after the company wan several awards between 2009 and 2012, including the Tech Crunch award for Best Education Startup. Exact numbers of Busuu’s current employees were unavailable in public sources, but the company’s LinkedIn profile lists the company size as between 11 and 50 employees.

CUSTOMERS – WHO THEY ARE:

Busuu serves two different customer groups:

Individuals: Busuu’s marketplace matchmaking business model connects users who want to learn a language with other Busuu users who are native speakers of that language. Users can learn from each other because each is the native speaker of the language the other wishes to learn (e.g., a native English speaker who wants to learn French connects with a native French speaker who wants to learn English). Individual users tend to be looking to refresh their language skills or learn a new language, but do not want to commit to a course neither in terms of time nor money. They seek a way to learn “on the go” and have easy access to the Internet.

Companies: Busuu services are available to companies, an offering which provides considerable cost savings vs. these institutions having to build and provide their own online language courses. This is particularly interesting for SMEs, with limited budgets for learning and development. In some cases, Busuu will tailor its services to the company’s needs, which is an example of a work-for-hire business model.

ENGAGEMENT – VALUE CREATION PROPOSITION (INCLUDING NETWORK EFFECTS):

Busuu’s overall value proposition is to connect language learners with each other, and to give them access to learning material in order to facilitate language learning and provide a low-cost and flexible solution for studying a foreign language.

Users of the marketplace-based website is free, where users access basic learning tools (e.g., dictionaries), interact with each other via instant messaging and video chats, and access a limited number of learning units. These users benefit from interacting with others and practising their language skills. The website does not require a commitment to the learning process hence suiting users that prefer flexibility in terms of time and location. Free grammar lessons are also available for users to read.

In the product business model that Busuu operates alongside its marketplace matchmaker business model, more detailed grammar lessons, tutorials, and videos can only be accessed through Premium monthly membership.

DELIVERY – THE VALUE CHAIN:

Users register for free on the Busuu website or app, choose their native language and the language they want to learn and can start interacting with each other: the basic idea behind Busuu is that users exchange knowledge and help each other in learning their preferred language. Busuu’s algorithms connect users with opposite language demands (e.g., native English speaker wanting to learn Italian can be connected to a native Italian speaker wanting to learn English), and the various training material for the free and paid versions are created in-house by certified teachers.

MONETIZATION – VALUE CAPTURE:

Premium users pay a subscription plan to access additional learning material (£11.69 for one month, £7.50 /month for six months, £4.50 / month for twelve months and £3.75 /month for 24 months). Companies pay premium subscription in order to offer Busuu services to their employees. Bulk discounts are available for corporations and universities, based on the number of users.

Sources:

Financial Times, ‘Language App for the always on the phone’ http://www.ft.com/cms/s/0/ec5ca87e-f262-11e3-9e59-00144feabdc0.html?siteedition=uk#axzz3Ze7vkU5L

Busuu website: https://www.busuu.com/enc/about

Crunchbase website: https://www.crunchbase.com/organization/busuu

Venturebeat website: http://venturebeat.com/2012/10/21/busuu/

Wikipedia: https://en.wikipedia.org/wiki/Busuu

LinkedIn: https://www.linkedin.com/company/busuu-com

Disclaimer:

Written by Daniela Sazio and edited by James Knuckles under the direction of Prof Charles Baden-Fuller, Cass Business School. This case is designed to illustrate a business model category. It leverages public sources and is written to further management understanding, and it is not meant to suggest individuals made either correct or incorrect decisions. © 2016

Published 20 April 2016



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