The Exchanges

Q Okay. So this is all great, but we haven't talked about one big thing and that office behind you is not free in San Francisco. How do you make money?

A So it's a freemium business model. Uh, so the vast majority of our users use the product for free, uh, and have a great product experience. We have an ads model to help offset the costs of that for the free users. And then we have subscription products that are very low price subscriptions for both students and teachers that upgrade you into more features. So, uh, our Quizlet plus product, which is our most popular student product is 20 dollars a year. That's a year, not a month. So less than two dollars a month. And with that, you get more advanced features. Obviously you get ads free, you get offline on our mobile apps. But you also get some advanced creation features that allow you to create and customize the content a little bit more towards you. And then we also have a teacher offering that's 35 dollars a year that includes all of those features and gives the teachers some additional, uh, statistics tracking and, and allows them to organize their students into classes and that sort of thing.

AI assessment note: “So it's a freemium business model. Uh, so the vast majority of our users”

Q Yeah. I was very close to Virginia tech with the guys that created Koofers. And I remember them launching a flashcard app to basically help people. And they just, they could never get Uh, like the network effect, the velocity to kind of take off. What have you done to make that work? The flywheel gets you spinning.

A Yeah, so Quizlet has been around for over a decade now, actually going on 12 years, and all of the growth has been really organic and viral, and there's basically two things that have happened there. One is word of mouth sharing. So, you know, you, me, and 25 of our closest friends are sitting in the same lecture hall at university, or sitting in the same, you know, high school class, and let's say you're that diligent student, you're, you know, you're studying for the test two weeks ahead of time, I'm that kind of slacker crammer that goes the night before, Your Quizlet content is perfect for me. It's exactly why I need to study because we're taking the same test.

AI assessment note: “all of the growth has been really organic and viral, and there's basically two things”

Q And, and, and why? Well, I mean, I know once you're on the, you're either kind of, Stay bootstrapped and do bootstrap, but once you're on the train, you have to kind of keep raising. So maybe why is a bad question, but why raise another twenty million?

A Well, so it was really to go after the opportunity, right? The opportunity is so massive and we've, we've amassed this very large user base, this massive content base, which are two key assets. But then third is we have more study data on how real people are studying and learning than anyone else on the planet, right? We do Over a billion learning transactions per week, and so a learning transaction is, I ask you a question, you give, Quizlet asks you a question, you give Quizlet an answer, and then Quizlet gives you feedback. So we've got literally billions and billions of data points on how people learn, what the most effective, effective and efficient paths are. And so where we're really directing our efforts going forward, and the reason we, uh, we push to raise some additional funding to scale the efforts, obviously the international expansion that I talked about, but then also Really building up our, our data science and machine learning capabilities to create, uh, this AI based tutor. And so what we're, the longer term vision of what we're doing is taking all of that data in this great user platform and building an AI based tutor that will help anyone learn anything.

AI assessment note: “the reason we, uh, we push to raise some additional funding to scale the efforts”

Q Is this reflecting itself though in your number? I'm curious if it actually reflects itself in your numbers though.

A It absolutely is. You know, we've been around long enough now that we can see cohorts and we can look at users who, you know, signed up and first started using Quizlet in sixth grade. And then when they graduate, graduated into high school, they took us with them. And then they use Quizlet all through high school and they go to, they go to college. They take it with them. They go to graduate school. They take it with them. They go to the professional world, whether that be, you know, more white collar type professions, you know, doctors, lawyers, nurses, et cetera, or more, you know, vocational or blue collar type professions. So we're actually watching people as they age up through Quizlet, continue to take Quizlet along. And I think that's the That's a big differentiator between us and what I would call most ed tech companies. So I differentiate Quizlet's a consumer learning company, not an ed tech company.

AI assessment note: “It absolutely is. You know, we've been around long enough now that we can see cohorts”

Q Okay. It's hard for, it's hard for me to say, guys, listen, listen, what he's saying though, if we can't quantify this, right?

A No, no, I, I hear you, but, uh, my, my advice to, uh, to your, to your viewers, to your listeners would be, you definitely need to know those metrics. You need to look at your, uh, your, you know, at every step in the funnel. So we look at, uh, a free user who comes to us in a logged out state. So a lot of users first discover us, as I said, through SEO or through some, a friend sharing a link, and we actually give them a great preview experience logged out. Then we look at conversion to logged in. So now we know who you are. Then we look at activation. And what we call activation is Okay. You've used the product once, or you've used us to study one thing. How do we become part of your regular study habits? And then we look at active from an active user to a paid user. And we don't actually try to, you know, I think an important point is understanding your cohorts of users. We don't try to monetize elementary school kids. Like my goal isn't to try to get 20 dollars out of, of course, greater. Um, but we look at them through that life cycle and say, okay, as we, as you progress with us, You know, when you're moving into from your sophomore year in high school under junior year of high school, that's a really big turning point. When you go to college, you just raise the stakes, right? When you're in graduate school, it's a whole different ball game than when you're an undergrad. …

AI assessment note: “you definitely need to know those metrics. You need to look at every step”

Q Okay. And what have you guys scaled to in terms of total kind of students and teachers using you on a paid account? I think you said five million or sorry, you said half of college students.

A Yeah. So we're now over thirty million users using us, uh, actively studying on the platform on a monthly basis. And that number is growing rapidly, you know, 50% plus year on year. Uh, and we're seeing a lot of expansion internationally. So Quizlet's been around the U S and has been used throughout the U S and grown virally. And just, you know, really when I started on, we started pushing for international expansion. So we've localized the product into 19 different languages at this point and now making it available globally. And so we're seeing triple digit growth outside the U S. Um, you know, for example, uh, last year in Brazil, we saw 350% year on year growth, uh, as we made the product available in Portuguese and started doing some marketing there. So We're really seeing pretty rapid user adoption.

AI assessment note: “we're now over thirty million users using us, uh, actively studying on the platform”