The Art of Navigating Tradeoffs

Balancing user engagement, revenue growth, and educational value as a PM at Duolingo

At its core, the art of product management is the art of navigating tradeoffs. At consumer subscription software companies in particular, a tradeoff PMs often navigate is identifying where their product should lie on the “freemium” spectrum.

The Freemium Spectrum

Some companies offer almost all of their service for free, and focus on growing a large user base before converting a small subset to paying users. Other products offer a very limited free experience, and force the user to pay up much sooner. Each strategy has strengths and weaknesses; the optimal approach depends on a given company’s unique product and market.

Generally, making more of a product free will boost user growth and engagement, but a lower percentage of users will convert to paying subscribers. On the other hand, making more of a product paywalled will turn some free users away and hurt engagement, but a higher percentage of users will pull out their wallet.

On Duolingo’s Monetization team, we spend a lot of time thinking about this tradeoff. Duolingo lands more on the “free” side of the spectrum. The company’s mission is to “develop the best education in the world and make it universally available.” Operationally, this means we have a principle to never charge for any learning content; all of Duolingo’s 100+ language courses are fully accessible to our learners for free. Our premium offering, Duolingo Plus, provides improved convenience and personalization with no ads, unlimited “hearts”, and extra features like the option to test out of and skip individual levels on demand.

The Product Tradeoff Triangle

A few weeks into starting at the company, I learned Duolingo PMs have to navigate more tradeoffs than just the simple engagement vs. monetization binary. Beyond balancing user growth and revenue growth, there is a third factor that we are responsible for — how well does the Duolingo app actually teach? Many companies have a social mission that PMs are aware of, but as an EdTech company, educational impact is a core objective that PMs work towards at Duolingo. In fact, the product area with the most teams at the company is the Learning Area — which focuses exclusively on making the app teach better.

There are definitely synergies between educational value, engagement and monetization. Improving the educational value of the app will help us retain more free users and also help us convert more paying subscribers. However, there are also times at which these north stars conflict.

In my first few weeks, one of my tasks was to analyze the results from an A/B experiment the Monetization team had run. The experiment added a new in-app promotion for the Duolingo Plus feature that allows learners to test out of and skip levels. The data showed that the change was increasing subscription revenue! Excited about these results, my recommendation was to launch the change to all users. Before launching, we checked with some adjacent product teams to make sure everything looked okay.

To our dismay, we realized promoting our Plus feature was cannibalizing a similar feature that learners have access to for free: if a learner completes two perfect lessons in a row, they may be given the choice to automatically skip ahead to the next level. The reasoning behind this is to ensure learners are always learning at a difficulty level appropriate for them. The issue at hand was that our Plus promotion was often being shown to learners before they got the chance to ace two lessons, meaning traffic was being redirected from the free feature to the paid feature.

After a discussion with senior leadership, we ultimately decided the small increase in revenue was not worth preventing our learners from learning at the right difficulty level for free. As we often say at Duolingo, it’s all about “taking the long view”.

While we ended up not launching the change, I learned an important lesson in the process. As a PM, it is critically important to understand how the features and metrics you own interact with features and metrics owned by other teams at the company. This requires a high-level awareness of your company’s roadmap and strategic tradeoffs, but also a more technical grasp of how the features your team builds may affect others in the codebase. The latter point is especially important at mobile companies where several teams share limited elbow room to implement features within the app’s user interface.

Recommendations for Early Career PMs

I’ll conclude with three relevant recommendations for aspiring PMs and PMs early in their career:

1. Seek out companies with complex product tradeoffs. Since navigating tradeoffs is an essential part of the PM skillset, look for environments that force you to develop that muscle early in your career. Apply to companies that deal with interesting tradeoffs beyond just “user growth vs. monetization”. EdTech companies, and other companies with a clear social mission, are good choices here. As a personal aside, it’s also just more motivating to work at a company with a meaningful mission 🙂. Other options to consider here are platform companies that manage complex two-sided marketplaces.
2. Demonstrate your awareness of product tradeoffs. While exploring the industry and interviewing for roles, show that you understand the importance of managing tradeoffs. While cold emailing a PM, ask about how their company balances the tradeoff between Objective X and Objective Y. While doing a product case interview, identify a couple guardrail metrics you think could be affected by the feature at hand. Demonstrating this type of thinking will exhibit product sense beyond your years.
3. Set yourself up to avoid product tunnel vision. In your first few weeks starting a new product role, make it a priority to learn about other teams’ mandates, what metrics they focus on, and what their roadmap looks like. Schedule 1:1s with PMs from other teams or ask to shadow their team meetings, and take good notes. Later on, when you’re writing product documents, brainstorming new ideas, or analyzing metrics, you can ask yourself questions like what information would Team X be interested in here? or how would this affect what Team Y is currently working on?

Being able to smartly navigate tradeoffs can make or break a company’s success. Don’t discount it as an essential part of your PM repertoire.