The Path to an IPO: How Duolingo Went Public

Okay, so first of all, the idea of going public—for example, last time we talked, I don't know exactly what was going on six years ago in my head, but the idea of going public then just seemed so foreign, like that's never going to happen. I wasn't thinking about that. Once we figured out our revenue and that we could make a lot of revenue, the first time this was really discussed was in a meeting with one of our board members, his name is Bing Gordon. Bing is a legendary guy in Silicon Valley, very famous, says a lot of crazy stuff—a lot of really good crazy stuff, but sometimes just really crazy stuff. He was sitting there and we were talking about our revenue, and he said, 'Look, you're going to make this much revenue next year, you're going to make that much revenue the year after that, and then you're going to go public.' And we were like, 'What? Are you completely... really? You can do that? You could just go public? That's a thing?' And he's like, 'Yeah, why not?' And that's kind of where it clicked. We were like, 'Okay, maybe,' and we started thinking about it. Then when we got to the point where we were basically breaking even—which happened, Bing talked about that maybe the year after, we were already breaking even or roughly breaking even; it was not exactly working, we were pretty close—we were like, 'Oh, maybe we should consider going public.' And the first step if you're going to go public is you need a CFO. Maybe you can go public without a CFO, but it seems like a really bad idea. Don't do that. Generally ill-advised. So, step one is you need a CFO that actually knows how to take you public. A lot of people advise hiring a CFO that has taken a company public. That is hard for many reasons: one, there's not very many such people; secondly, CFOs are highly paid, and when you go public, you get paid a lot as a CFO, so many of these people are very rich and don't want to work for you anymore. So, it's a very limited pool of people who have taken a company public once. We interviewed some people with good experience, but what we ended up doing for CFO is not take somebody who had taken a company public, but someone who knew finance, came from Goldman Sachs, but we maximized for intelligence and grit. That was a really good move for us, and it worked out.

Ah, it's just, you know, I think a lot of it has to do with references. This Matt that we hired, we knew a few people that knew him, and every reference was just—and they were true. The thing is, they were truly—they'll tell you like, 'Oh, Matt Garupa is like the hardest working, most and also most honest guy I've ever met.' And to me, the words honest and CFO just don't go together that much. I don't know if I had a bias, but then we hired a guy that is the most honest guy; sometimes we call him the Boy Scout because he's just a good guy. And so we hired Matt. By the way, the other thing with Matt is he was going to be based in New York right before COVID. We hired Matt, his first day was maybe a month before COVID, probably February of 2020. He was going to be based in New York, but we're headquartered in Pittsburgh with an office in New York with about 100 people. He knew he had to travel to Pittsburgh. On his first day, he shows up with a deck—like 10 slides—with his travel plans for the next two years. He had pie charts, a fraction of time he was going to spend in Pittsburgh, New York, on the plane—like all this stuff, a massive analysis like a consultant would do. He says, 'This is my travel schedule for the next two years,' and I'm like, 'Wow, I would have never done anything like this, but we hired the right person.' He must have spent hours and hours on this, and then poor guy, COVID came, and that travel plan went down the drain; he just didn't have to travel. But anyways, you hire a CFO—that's the first thing. Then, for me, what really mattered was: is our revenue predictable? Are our finances predictable? If your finances are not predictable, you should not go public; you're going to have a real bad time. So, you want to know that your finances are predictable, and by predictable, I mean you need to be able to predict your finances a year out and be within three percent. So, you need pretty good forecasting. And you have to have a path to real profitability. If you don't have either of those, I would say, I would not go public; you're just having a really bad time. The other thing to say about having gone public: I'm very happy we did. The company operates better. I think of it as like when nobody visits you in your house, you don't have to clean all that much—it's not a very clean house if nobody visits. You live like a slob. But if there's going to be a visit, you're like, 'Oh, I got to clean up once a quarter.' Well, it's not once a quarter because now we're under constant scrutiny. Basically, the process of going public forced us to do all these things much better. There were all these processes that were not well set up or we didn't even have a process, and it's like, 'No, we're going to go public now, so we have to have a process.' At this point, our house is pretty clean because we get visits all the time. And the thing about living in a clean house is you feel good about it; it's just better. So, I'm very happy that we went public.