WEBVTT - Babbel Makes a Splash in AI-Assisted Language Learning

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business

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<v Speaker 1>Week with Carol Masser and Tim Steneveek on Bloomberg Radio.

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<v Speaker 2>That Apple's big event last week, a lot of the

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<v Speaker 2>focus was, of course, around the iPhone. It makes sense,

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<v Speaker 2>it's the most important products for Apple. What got my

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<v Speaker 2>attention and this is what I talked to my wife about,

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<v Speaker 2>like the next day, the new translation function on the AirPods.

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<v Speaker 2>It's so cool, so it automatically translates words that are

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<v Speaker 2>spoken to the wear and then the user can then

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<v Speaker 2>speak back and show the translation live on an iPhone

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<v Speaker 2>to another person. We live in the future, Carol.

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<v Speaker 3>I mean, it's really amazing. It's like, okay, so if

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<v Speaker 3>you don't have a language, sometimes you feel lost in

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<v Speaker 3>a country. But this really kind of makes it very

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<v Speaker 3>easy to communicate with other folks.

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<v Speaker 2>So it raises a question about how we're going to

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<v Speaker 2>use language in the future. And in fact, on that

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<v Speaker 2>day we saw DUELINGO shares they were up as much

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<v Speaker 2>as six percent. Then Apple showed off the new feature,

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<v Speaker 2>the stock fell. So someone I'm sure who watches this closely.

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<v Speaker 2>Tim Allen, he CEO of Babble, the language learning platform,

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<v Speaker 2>He joins us from Berlin. Tim, good to have you

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<v Speaker 2>with us. How are you.

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<v Speaker 4>I'm good, Thank you for having me. I really appreciate it.

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<v Speaker 2>Yeah, congratulations on the new gig. I'm curious how you

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<v Speaker 2>watch the tech in the space, And I know you

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<v Speaker 2>have some really interesting stuff that you and the team

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<v Speaker 2>are doing around AI, But how do you watch the

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<v Speaker 2>tech coming from Apple or Alphabet that are now offering

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<v Speaker 2>this real time translation? Does it make it so we're

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<v Speaker 2>not going to need to learn languages in the future.

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<v Speaker 5>You know, language learning is the oldest software known demand,

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<v Speaker 5>so it's not going anywhere. What I love about what

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<v Speaker 5>Apple and Google have done is it actually generates more

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<v Speaker 5>interest in the space. So what we find interesting, especially

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<v Speaker 5>on our product Babble, is when users or learners go

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<v Speaker 5>to take a trip or go into a foreign country,

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<v Speaker 5>they actually come back and they're more interested in learning

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<v Speaker 5>the language. So we see all of this as a

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<v Speaker 5>tailwind because we think that ultimately, you know, I think

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<v Speaker 5>the technology is really cool as well, Right, it's so

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<v Speaker 5>interesting put in the AirPods you can go from one

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<v Speaker 5>to the other. But what people will then do is

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<v Speaker 5>adopt and go, oh, I really want to get.

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<v Speaker 4>Into the language. I really want to belong to the language.

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<v Speaker 2>That's happening right now because it volume well, So Tim,

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<v Speaker 2>I get that that's happening right now because that technology

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<v Speaker 2>isn't widespread. But I can just imagine in a few years,

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<v Speaker 2>you know, we won't even need maybe won't even need

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<v Speaker 2>another device. We'll have it just it'll be a wearable

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<v Speaker 2>and then it'll be even more seamless. Do you see

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<v Speaker 2>that continuing to drive demand.

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<v Speaker 5>What's interesting about that is, like I think, short of

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<v Speaker 5>a neural implant, people are going to always be learning languages, right,

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<v Speaker 5>so that at a universal language. Those are the two things

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<v Speaker 5>that could disrupt the market. So what will end up

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<v Speaker 5>happening is that the iPhone when it came out, everyone

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<v Speaker 5>declared the death of language learning. Right because you could

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<v Speaker 5>hold up your phone you could do the same translation

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<v Speaker 5>that the air pods are offered today. Even a wearable

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<v Speaker 5>can do it. The difference is that people actually want

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<v Speaker 5>to live and breathe inside of the language. In fact,

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<v Speaker 5>we just launched a part of our new technology that

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<v Speaker 5>that explores AI that brings both the pedagogy and the

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<v Speaker 5>human learning aspect of it together with AI called Babbill

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<v Speaker 5>Speak and what that does. It allows people to actually

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<v Speaker 5>practice the language of learning with with an AI coach

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<v Speaker 5>and AI tuner, so there's pre defined conversations you can

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<v Speaker 5>practice with. It does small corrections, but we see this

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<v Speaker 5>as a compliment. We see this as a way for

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<v Speaker 5>people to actually learn and accelerate the transmission of the language.

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<v Speaker 5>I think the new technologies are really going to allow

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<v Speaker 5>for dabbling inside of the language. It's going to be

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<v Speaker 5>great on the go, it's going to be great for

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<v Speaker 5>those one time use cases, but people will always want

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<v Speaker 5>to learn and live inside of a language themselves.

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<v Speaker 3>How do you view them more generally? Tim kind of

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<v Speaker 3>the landscape of learning apps With the introduction of GPT five,

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<v Speaker 3>we saw the team create a custom language learning app

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<v Speaker 3>in minutes during the demos. I mean, it's kind of

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<v Speaker 3>amazing how quickly all this is happening and how quickly

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<v Speaker 3>you can do things. Do you view AI products like

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<v Speaker 3>this is a real competitive threat and what can you

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<v Speaker 3>do to keep your user base and sustain growth?

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<v Speaker 4>Yeah? I watched the same demonstration.

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<v Speaker 5>It was a cool friendshipp that they had created. It

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<v Speaker 5>has limitation?

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<v Speaker 4>Is it correct?

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<v Speaker 3>Are you like, oh my god, this is going to

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<v Speaker 3>be what was difficult for us?

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<v Speaker 4>What was cool?

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<v Speaker 5>No, definitely not in Oh my God, it was a

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<v Speaker 5>cool because it was created so quickly. And what I

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<v Speaker 5>think is so cool about it is people are starting

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<v Speaker 5>to learn on demand. What the difference is though, is

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<v Speaker 5>I think that people will want pedagogy, they'll want lessons,

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<v Speaker 5>they'll want content, They'll want to be able to actually

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<v Speaker 5>know that they're getting a trusted guide through the language

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<v Speaker 5>learning process. Large language models, as you know, are good

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<v Speaker 5>at many things, they're good everywhere. They've been declaring for

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<v Speaker 5>now almost two years that they're going to take away

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<v Speaker 5>all of the jobs and you know, just really disrupt

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<v Speaker 5>all the markets. But I think what ends up happening

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<v Speaker 5>is when you start to get into really narrow spaces

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<v Speaker 5>such as language learning, people want to know that they

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<v Speaker 5>have a real lesson plan, that they have really the

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<v Speaker 5>transmission of the language in a way that's going to

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<v Speaker 5>adapt to them. And that's what we think AI is

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<v Speaker 5>going to empower. Inside of babble, we think it's really

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<v Speaker 5>going to allow for the personalization of your individual learning plan.

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<v Speaker 5>But with the content, the pedagogy, the transmission, so you

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<v Speaker 5>retain you're able to speak it, you feel fluent and

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<v Speaker 5>you actually feel comfortable with it. So I think from

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<v Speaker 5>a build perspective, it's really interesting. We look at it

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<v Speaker 5>as a tool to really help facilitate and go to

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<v Speaker 5>market a lot faster. I think for a transmission and

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<v Speaker 5>a trusted content, it'll actually end up being niche markets

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<v Speaker 5>with real players such as ourselves.

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<v Speaker 3>All right, So the truth will probably be in usage

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<v Speaker 3>or the stickiness. And I'm assuming then you're signing up

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<v Speaker 3>more and more people. You're very enthusiastic amid all of

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<v Speaker 3>this potential competition. So give us an idea of customers, usership,

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<v Speaker 3>people sticking to the platform. Give us some metrics.

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<v Speaker 5>We're growing, we're going on, we have large demand. In fact,

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<v Speaker 5>September is one of our larger months. Just give it

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<v Speaker 5>back to school and back to office after the summertime

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<v Speaker 5>that in New Year's as you can tell, the New

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<v Speaker 5>Year's resolutions tend to be really heavy periods for us.

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<v Speaker 5>What I could say is we have millions of subscribing customers.

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<v Speaker 5>We're signing up thousands every single day. Demand has not

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<v Speaker 5>waned on this side of the equation. We're really excited

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<v Speaker 5>about the future. I actually get more excited about more

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<v Speaker 5>of the players showing interest and actually saying, hey, look

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<v Speaker 5>this is cool. Understand a language. Play with a language.

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<v Speaker 5>But when you want to go really learn a language,

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<v Speaker 5>go to the providers you trust to, such as TAMU.

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<v Speaker 3>Say millions, it'd be great if you get one millions,

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<v Speaker 3>a lot different than ten million or twenty million. So

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<v Speaker 3>just give us an idea if you could. And how

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<v Speaker 3>much is corporate versus kind of individual? And what are

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<v Speaker 3>folks paying for a subscription? And how long do they

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<v Speaker 3>stay with you?

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<v Speaker 4>Yeah?

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<v Speaker 5>I know probably have over two thousand business clients b

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<v Speaker 5>to be clients. So I can tell you that we

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<v Speaker 5>just signed Inner Miami Football Club. They're using it for

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<v Speaker 5>their players, their coaches, their teams in order to teach

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<v Speaker 5>them the languages and what they need to be. We've

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<v Speaker 5>created a custom content for them as well, which gets

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<v Speaker 5>really exciting. But I can tell you it's millions of

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<v Speaker 5>consumer customers, and I can tell you it's more than

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<v Speaker 5>one million, and it's more than two million, and it's

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<v Speaker 5>more than three million, so it goes on up from there.

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<v Speaker 4>Yeah.

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<v Speaker 3>So and what do people pay corporate versus individuals? Yeah?

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<v Speaker 5>Yeah, so on individuals, there's a variety of packages as

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<v Speaker 5>you can imagine there's a variety of price points. We

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<v Speaker 5>have a lifetime price point that we can that users

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<v Speaker 5>can subscribe for a life and they get all of

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<v Speaker 5>the features and all of the things that we actually

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<v Speaker 5>upsell to and then you know, there's monthly plans. It

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<v Speaker 5>is the normal subscription model for what users want from

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<v Speaker 5>any moment of time.

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<v Speaker 3>All right, but give me an idea. So Tim wants

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<v Speaker 3>to learn what language Spanish? Spanish?

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<v Speaker 2>Practice my Spanish better.

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<v Speaker 3>He just wants to kind of learn Spanish, So give

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<v Speaker 3>us an idea. So he signs up, and what would

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<v Speaker 3>you be paying, like on a monthly basis or if

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<v Speaker 3>you wanted the lifetime yes?

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<v Speaker 5>Yeah, yeah, So if Tim you came to the site

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<v Speaker 5>and signed up and downloaded the app, you could pay

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<v Speaker 5>one hundred and ninety nine for the lifetime and then

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<v Speaker 5>there's also discuts available, as all good subscription sides have.

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<v Speaker 4>But then there's the monthly fee.

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<v Speaker 5>Of twenty nine ninety nine that you could be paying

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<v Speaker 5>as well.

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<v Speaker 2>So okay, so why could do one nine nine for life? Yeah,

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<v Speaker 2>that's a lot less expensive than competitors such as do

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<v Speaker 2>a Lingo, which is you know that plus sum I

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<v Speaker 2>think per year.

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<v Speaker 3>So no catch, come on, no catch, So Tim signs up.

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<v Speaker 3>I mean, and that's provided you stick around. No, I'm

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<v Speaker 3>not trying to say, but right like, you've got to

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<v Speaker 3>be around, right yeah.

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<v Speaker 5>I look, with any languaeing, there has to be a

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<v Speaker 5>real commitment to it and you have to actually practice

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<v Speaker 5>and utilize it.

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<v Speaker 3>Right.

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<v Speaker 4>But we see the.

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<v Speaker 5>Life happens right the families. You know, I have kids.

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<v Speaker 5>I'm learning German right now. Right, I've moved to Berlin

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<v Speaker 5>for the job. I knew very little German altogether. But

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<v Speaker 5>what I could tell you is I have life come up,

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<v Speaker 5>the kids have school, the kids have activities. I will

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<v Speaker 5>pick up, I will put down. I will pick up

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<v Speaker 5>and put down. But the one nine nights of life.

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<v Speaker 2>Okay, interesting. We I'm curious about do a lingo in

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<v Speaker 2>the competition that you see there. I'm wondering if you've

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<v Speaker 2>considered moving outside of languages. We we use dual linguo

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<v Speaker 2>at home, but more so for chess and reading with

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<v Speaker 2>our kids. I don't know if it works, but it's great.

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<v Speaker 2>The six year old has fun than we do for

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<v Speaker 2>Spanish right now.

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<v Speaker 4>Yeah.

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<v Speaker 5>Yeah, you hit the core market there, which is the

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<v Speaker 5>games are great and the great learning transmission, especially for

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<v Speaker 5>the younger audiences. Right now, our specialty is language learning,

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<v Speaker 5>where we're we really focus on that, we folks, on

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<v Speaker 5>the transmission of language learning. We want to make sure

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<v Speaker 5>that you have the most effective means in order to

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<v Speaker 5>go from a zero to one conversation. And the way

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<v Speaker 5>we look at that is you feel confident walking into

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<v Speaker 5>a room and being able to know that you're speaking

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<v Speaker 5>the language in which you're looking to speak. So we

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<v Speaker 5>focus all of our linguistics, all of our teachers, all

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<v Speaker 5>of the human centric pieces, and then we actually use

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<v Speaker 5>AI as the tool to facilitate that in order to

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<v Speaker 5>help make that happen faster. So that Will Speak is

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<v Speaker 5>a good example of that, where we continue to allow

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<v Speaker 5>you to practice speaking, continue to allow you the conversations,

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<v Speaker 5>but we're hyper focused there. We really think that the

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<v Speaker 5>games are going to leave to other people. We're focused

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<v Speaker 5>on the languages you are.

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<v Speaker 3>Okay, So that's a note like moving outside of languages.

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<v Speaker 5>Okay, Yeah, languages are sweet spot when it.

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<v Speaker 3>Comes to the AI spend and something we talk about

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<v Speaker 3>a lot, right, I'm curious about what you guys are spending.

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<v Speaker 3>What are you spending it on? Is it on engineering talent.

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<v Speaker 3>Is a data centers, is it content? Is it something else?

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<v Speaker 5>Yeah, we've be cashful Positives twenty eleven. It's a private company,

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<v Speaker 5>so we're not out there raising capital. We are well funded.

0:10:03.040 --> 0:10:05.640
<v Speaker 5>We're doing very well. Where we reinvest on our capex

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<v Speaker 5>is we look for engineers, we're looking on AI talent,

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<v Speaker 5>We're looking at the infrastructure. We're investing in what's going

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<v Speaker 5>to actually transmit and actually forward the future. We actually

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<v Speaker 5>think that this is an exciting time to be really

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<v Speaker 5>looking at product features with our proprietary data set and

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<v Speaker 5>our proprietary motes that we have inside of our ecosystem.

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<v Speaker 5>You know, we have hundreds of millions of lessons completed

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<v Speaker 5>a year. That's very rich data to be taking into

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<v Speaker 5>proprietary llms and data models and really working inside of

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<v Speaker 5>the AI to work towards the most effective product in

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<v Speaker 5>terms of transmitting the language.

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<v Speaker 2>Are you at this point able to use AI to

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<v Speaker 2>create language courses? Are you able to use AI to

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<v Speaker 2>do what humans used to do in recent years?

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<v Speaker 5>We actually married the two. You know, where the real

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<v Speaker 5>sweet spot was is not in removing people from creating

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<v Speaker 5>the languages. It's facilitating the people to create the languages,

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<v Speaker 5>so we do. Just to answer your question directly, we

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<v Speaker 5>do use AI. We use it with the human centric piece.

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<v Speaker 5>We've always found that our linguists and are also our

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<v Speaker 5>teachers are the best to formulate all of the content

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<v Speaker 5>so it can transmit better than anyone else and more effective.

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<v Speaker 5>And so what we find is we marry the human

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<v Speaker 5>with the AI tools. So we're using the blend of

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<v Speaker 5>both goals. We haven't replaced jobs in order just to

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<v Speaker 5>replace jobs.

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<v Speaker 3>All right, I've got one really really important last question

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<v Speaker 3>for you, Tim, how's the German going? Sure, how's the

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<v Speaker 3>German going?

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<v Speaker 5>You know, I'm be Schinzpec and de Deutsch, so it's

0:11:30.000 --> 0:11:33.240
<v Speaker 5>using my Babbel every day, very little, but I'm learning

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<v Speaker 5>very slowly.

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<v Speaker 2>So okay, maybe next time he's on we do the

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<v Speaker 2>interview in German, we get Matt Miller in here.

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<v Speaker 5>Oh I'm on, I'm game.

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<v Speaker 3>Matt would definitely do that really really well. All right, Tim,

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<v Speaker 3>thanks so much fun to talk with you and get

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<v Speaker 3>some time and hear what you guys are doing, especially

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<v Speaker 3>when it comes to AI to incorporate and get in

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<v Speaker 3>Tim Alan, chief executive officer of Babbel, joining us from Berlin, Germany,