You have no idea what you're talking about and clearly have never actually seen financials of a business like DuoLingo.
:) My list of clients when I was still working at a firm include many tech companies ranging in size from vastly unprofitable startups to multi-billion dollar public companies, in industries including robotics, hardware, SaaS, PaaS/IaaS, biotech, media tech, aviation, and clean tech.
A number of YC startups were clients, including some that are still actively discussed on these forums today. At least one of the Groupon, LivingSocial, etc., cohort was a client...
DuoLingo is NOTHING like that. People pay a subscription for a service that uses software as its delivery mechanism. COGS is simple for them -> hosting + customer service. COGS is very different for Groupon and LivingSocial.
DuoLingo's hosting costs should be low. But content development costs should be included in COGS (being pedantic: COGS doesn't apply to non-inventory business activities, so we should be using the term COR instead). Content development and customer service aren't cheap.
And of course, gross margins are irrelevant if you're constantly blowing past your revenue numbers by overspending on "product development" (i.e., the tech side). History is littered with companies who claimed to have great "gross margins" but died because they overspent on "product development."
> History is littered with companies who claimed to have great "gross margins" but died because they overspent on "product development."
Please do tell.
> DuoLingo's hosting costs should be low. But content development costs should be included in COGS (being pedantic: COGS doesn't apply to non-inventory business activities, so we should be using the term COR instead). Content development and customer service aren't cheap.
I agree with you here, except for specifics. Do we know how much content costs? (ps, once you create content for a language it can scale infinitely - as opposed to having teachers in a classroom who can't). We don't know how much customer service costs / personnel they have, BUT it is part of COGS (as per their definition) so its impossible to qualify that hosting "should be lower" unless you know their specific hosting costs.
:) My list of clients when I was still working at a firm include many tech companies ranging in size from vastly unprofitable startups to multi-billion dollar public companies, in industries including robotics, hardware, SaaS, PaaS/IaaS, biotech, media tech, aviation, and clean tech.
A number of YC startups were clients, including some that are still actively discussed on these forums today. At least one of the Groupon, LivingSocial, etc., cohort was a client...
DuoLingo is NOTHING like that. People pay a subscription for a service that uses software as its delivery mechanism. COGS is simple for them -> hosting + customer service. COGS is very different for Groupon and LivingSocial.
DuoLingo's hosting costs should be low. But content development costs should be included in COGS (being pedantic: COGS doesn't apply to non-inventory business activities, so we should be using the term COR instead). Content development and customer service aren't cheap.
And of course, gross margins are irrelevant if you're constantly blowing past your revenue numbers by overspending on "product development" (i.e., the tech side). History is littered with companies who claimed to have great "gross margins" but died because they overspent on "product development."