Building the app for language learning with 10M users

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Hi, this is Vitaly, and I welcome you to the new season of the SubHub podcast! In this episode, we’re talking with Dima Zaruta, the founder of EasyTen. In my memory, EasyTen was the first application in the CIS that came up with a unique concept of language learning and began to monetize the app with subscriptions, which, in fact, saved the business. This is a rather personal episode to me, because EasyTen was my first place of work, and Dima is the person who took me there, for which I am very grateful.

Listen to the episode in Russian or read the most interesting parts below in English.

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Easyten: The story of creation

Vitaly Davydov: Today’s episode is very special because EasyTen is a company that’s close to me and you were the person who hired me for the first time. I’d like to talk about how this company appeared in general. The most interesting thing to start with is how you came to create a mobile application in general because your story is pretty unusual.

Dmitry Zaruta: Yes. I am a doctor by training, a maxillofacial surgeon. The idea of EasyTen appeared when I was doing my residency training in Moscow, at the Central Research Institute of Dental and Maxillofacial Surgery. Even back then, I felt that medicine didn’t really work for me, I mean, I really liked studying, but the practice, perhaps, turned out to be something that wasn’t my cup of tea – I just didn’t feel happy doing that job. But I always loved computers, since I was a kid. I’d reinstall Windows for myself almost every weekend, disassemble and assemble my computers, and even earn money with web design while studying at the medical university. When I graduated, I decided: “That’s it, stop playing these games already, it’s time to do serious things, it’s time to work as a surgeon,”. But there still remained that itchy feeling in the back of my head, and different ideas kept coming – I even had a notebook with ideas of what I’d like to actually work on and bring to life but none of them somehow captivated me that much.

The idea of EasyTen came up when I was studying the Czech language. I was learning it in order to confirm my medical diploma in the European Union. I can’t say that there was much progress, so I’d complain to my girlfriend that it seemed to be useless. And she was like, “Learn at least 10 words a day, you’ll make some progress eventually.” And I thought, “Hmm, that’s a good idea.” I didn’t learn Czech in the end, quickly abandoned it, but the next day after the conversation, I remember, in the staff room, I circled my phone with a pencil and drew some interface that became the first version of EasyTen.

Vitaliy: It was the legendary interface. So, the whole thing really happened because you were simply told: “Learn 10 words a day,” and it led to a whole new company?

Dmitry: Yes.

Vitaly: How did you learn to design? You said that you created websites, and then drew the first interface of the application. This is a bit unusual for me because I can’t intersect it with medicine in any way. I’ve got acquaintances who are into medicine, and they aren’t super confident with computers, to be honest, not to mention advanced tools for graphic or interface design. Where did you learn it?

Dmitry: This is some kind of passion I’ve always had – interfaces and everything related to the visuals. That is, Back at school I saved up money for a huge book on Photoshop, it was five centimeters thick and I studied it from cover to cover. Then I took up photography but more than photography I loved photo editing. Then I just began to notice that my vision was somehow set to a special level, so I could easily point out even minor inconsistencies in animation or graphics. As for programming, I guess I had general knowledge and maybe could read some code, but I couldn’t code myself.

Vitaly: Then the main question is who actually created the app? I mean, you made the interface and probably acted as a product manager, but who did all the coding? How did you find people for this job and what year was it? I mean the workflow is simple for the 2020s, but back then it wasn’t that clear, I believe.

Dmitry: I don’t remember the exact year, but I can say in iPhone generations – I had a plastic iPhone 3G at the time. I guess it was no more than a year since the App Store had launched. There was no job market for app-making, but there were a lot of enthusiasts. So I found my first programmer Nikita on a forum of a website dedicated to Apple devices. He was passionate about making iOS apps, so I shared my ideas with him and we got down to business.

As for what happened next – we made all the classic development and startup mistakes. Had to spend 7 months on development instead of 1 planned. We also found a back-end developer Kirill, so there were 3 of us. I couldn’t pay the guys much, but still rented a flat for them, where I’d live as well from time to time. I think we lived on Subway sandwiches only, as the place was around the corner.

We initially decided to create the app for the Chinese market because of the high population and their willingness to study English. We localized the app and even found a Chinese guy who agreed to do the marketing part. But we had no analytics, the only thing we had was the App Store data on purchases. We were selling our app for $1 a month, it wasn’t like a subscription, you just paid for one month. So a month after the release we learned that we received only $10.

Vitaly: Enough for a couple of Subway sandwiches.

Dmitry: Yes, and this made me want to dig deeper and try to understand what was wrong and how we could improve. I had to meet many people, hear many stories, and learn a lot. At that time I began to develop a wooden design for the interface. As skeuomorphism was trending, we wanted to make a good-looking wooden interface for the app, at least we thought it would help the app look better. Nikita also brought a few friends in so there were 5 of us. 

Some time later we released a new version of the app for the Russian market. It wasn’t a huge economic success, but the app was well-received, it was eye-catching and memorable. It really stood out among the rest of the apps. I later learned that our sort of competitor Lingualeo, who we looked up to, felt envious of our success and was actually trying to catch up with us. So this app became our trademark, which made it easy to visit conferences and meetups. It also eventually got us entrance to the “Free” accelerator, where we were praised for the app but scolded for the unit economics which we had trouble with.

Vitaly: Did you know anything about the unit economics before?

Dmitry: My parents were entrepreneurs, so I was surrounded by words like “revenue”, “margin”, “net cost”, etc. since my childhood. On the intuitive level, I knew the formula was simple – you spend X amount of money and you need to earn more than X. Plus I knew that you’d always have operational expenses, and expenses regarding the unit economy as well – how much you spend to make one product or to promote it and how much you earn from one customer. We got some help at “Free”, we were in good standing with them and even showed some growth, but the economics still wasn’t positive. 

However, I was absorbed with the idea of redesigning the app once again. I thought it was the way to improve the economics, which turned out to be a mistake, but still, we even managed to hire new people to implement this idea. We somehow managed to take a round after the accelerator, which wasn’t easy. So we had the money for 1-1,5 years and our main goal was to reach the cost recovery. I’m very much grateful to the “Free” accelerator for showing me how things should be done. We later got to “500”, but I didn’t seem to learn much new there. The only thing they were really good at was fundraising, how to present yourself and pitch the product.

On 500 startups and growth

Vitaly: Tell us more about how you got in “500” and when your app started to finally be profitable.

Dmitry: First the app got profitable and then we joined “500”. When we left the accelerator, we released a new version of the app somewhere in November. This version featured an onboarding for new users, which I had high hopes for. Back then apps didn’t have any onboarding, so I thought that such a support would be helpful for the initial user experience. This approach did improve the activation numbers, but the unit economics still looked far from perfect. I was getting stressed out as we had the money for 2-3 months left, I already left medicine with no way of return, and in the IT sphere, I still didn’t know what I really represented. It felt like if the app didn’t succeed, it was all over for me. 

But somewhere about that time, Apple presented new auto-recurring subscriptions for apps. Without hesitation, we thought it was exactly what we needed, as we had a good conversion rate to the first purchase, and much worse to the second, as our users had to do this manually. It felt like a really strong hypothesis that should boost retention and the economics in general. I was very much inspired by the design of the Ultimate Guitar app back then and even borrowed a few ideas for the paywall, especially the “trial + subscription” option. So we had an onboarding and found the right place to fit the paywall in so that the “money talk” with the user would be natural.

We released this at the beginning of January and got the following revenue numbers:

December – $700

January – $4000

February – $20000

March – $110000

The funny thing was that in March we were running out of money and I was hoping to cover everything with the payment from Apple that was due around that time. But no funds arrived from Apple on the payment day. It was less than a week before I was to pay the salary but I could only see the money on the App Store account, and not on the bank one. Apple support didn’t respond, and no information on the web – we didn’t know what was happening. 

I somehow managed to find Tim Cook’s email address and send him a letter saying “Our company is almost bankrupt”, and so on. One day later I got an email from their finance department saying our bank was under sanctions and they couldn’t send the money to that account. Through some connections, I managed to get us an account in a new bank within one day, with the promise from us to provide all the documents later. So I sent the letter with our new account info and the next day we got the money. It was Friday and I was about to go on my 2-week vacation, so I’m really grateful we managed to work everything out on the last day, so I paid the salary and got to spend my vacation in peace. 

Vitaly: So it means that if it wasn’t for subscriptions and eventual growth, it could be the end of the app? What year was it?

Dmitry: Yes, it was 2014-2015.

Vitaly: I personally have the feeling that EasyTen is the first company that showed that the app market is actually a market, where you can buy, sell, and create any app you want. How did you feel when all the growth happened and you bootstrapped from $10/month to more than $100000/month?

Dmitry: It’s hard to distinguish between how I feel now and how I did back then. On the one hand, I feel a little relieved, but on the other hand, as I recall all the steps I made, I see that I was working in a state of intense anxiety, probably because of the fear of failing and losing everything. Initially, the motivation was to survive and earn some money and then it turned into “do everything not to lose what you’ve got now”. Both of these motivations come from the point of fear.

Vitaly: So the stress is still there even today? Was there a time when you realized the company was doing great and you could relax and take it easy?

Dmitry: Yes, the stress is still here. The moment I realized things were good was when I had to close my next company. I had to do this because it wasn’t profitable, but I didn’t worry and instead finally felt that it was time to have some rest, as things were going not that bad overall. But it was 3-4 years after the events we’re talking about.

Projects after EasyTen

Vitaly: Your app became successful so much that it was being copied and used as an example by many other companies. When did you decide to move on and try something new?

Dmitry: The growth of EasyTen soon hit a plateau where further marketing activity would highly increase the user acquisition cost. That means investing 2 times more money would not have brought us 2 times more revenue, but at the same time, it would have lowered our ROI. Perhaps there were mechanisms we could use to work this out but I guess we didn’t have enough experience or maybe even willingness to focus on that, especially knowing that we had got much hate from the business community and our users for using the subscription model and free trial. 

I took it personally, so I wanted to prove that I could make a product that would be using a more obvious and less tricky business model. We knew that it was all about retention rate, which was actually low for most of the educational apps, EasyTen included. It turned out that the better your app works as an educational tool, the worse it reflects on your business. The user would drop the app in 2 cases: They either reached the study level they wanted or simply gave up. So your goal is to either constantly supply them with more and more new content or just teach them poorly. It’s just like Tinder – their goal is to keep you in the app as long as possible and make you pay for the subscription, they don’t really care if you manage to find a partner. So simply learning 10 words in the EasyTen app seemed not enough.

So we decided to make a new product with the focus on retention. The first website-product was Upmind – a platform for studying languages that looked like Instagram with funny pictures and videos that had translations. The idea was to entertain yourself with funny content and learn languages at the same time. It was the time we joined 500 startups. We planned to go there with EasyTen but during the accelerator, we came up with Upmind. But it didn’t show higher figures, even though the retention rate was 2 times higher than in EasyTen. And at the same time, we realized that we were making basically a competitor for our previous app with the same business model, so we had to close it.

There I realized EasyTen was a clear business for me that I didn’t want to be involved in on the operational level. So we restructured it and started paying dividends. After that, I created a new company called Cognitica where we were making an educational mobile game. The game is called Words Up, it’s still in the App Store, and I’m proud of it. I invested there a lot and currently, I’m the only shareholder. It generates about $3000 a month, so I’ll reach the profit level around 2040 or so. It’s a great free-to-play game with the “match 3” logic that shows long-term retention (30-day) 10 times higher than EasyTen.

Such retention was high, but still a bit lower than the hit games in the store, that’s why the app wasn’t that successful. We couldn’t find the right marketing channel or niche to be able to acquire new users cheaply enough, and competing with the top titles for Facebook traffic seemed unreasonable. At that time I felt I was burning out without even noticing it, so I decided to close this company as well. Though the app is still there, and even 3 years later people still find it organically and enjoy it. I guess with closing Cognitica I parted ways with mobile apps and languages with no willingness to come back in the near future.

Current projects and plans

Vitaly: So what are you busy with right now?

Dmitry: I started a new business with new partners about 6 months after closing Cognitica. We’ve been engaged in different projects, but currently, we’re focused on a generative AI service for the B2B segment, like a co-pilot for B2B sellers. The product is still being shaped but we’ve already got a few clients.

I transitioned from mobile B2C to B2B because my co-founder has had a lot of experience in this field and I couldn’t miss the opportunity to use it. Plus, I also wanted to try to work in B2B as it feels like providing more value to the people. You get to work directly with clients and see how your product makes them happier. But I think my B2C experience helps me better navigate this business on a systematic level, like automating and scaling certain things we made for a specific client or making a clear and simple onboarding. I think my design skills also come in handy in the B2B segment, as usually people struggle with UI/UX here. 

Vitaly: Where’s the balance between providing value and getting money? Sometimes you can do something not that useful for the people but earn a lot, or you can do something extremely useful and don’t earn that much.

Dmitry: That’s right. I don’t think there’s a right or wrong balance for me here. We’re now trying to check the value of our product as soon as possible. If the client is not willing to pay, then the value is not that high. But if the client feels that your product will help them earn much more and much easier, they’re more than happy to pay for your service. In this case, the value and the money are one and the same.