P for Profit: How Grammarly created a $13 billion business by leveraging the English language!
Small things can create a big impact. That's exactly what the story of Grammarly symbolizes. The simple grammar checking software with humble beginnings has leveraged the English language to create a multi-billion dollar business - all the while helping 30 million users with their sloppy writing skills every single day! This is despite the fact that the upstart had to compete with goliaths like Microsoft & Google with billions of users already using their services. Despite such well known services with integrated spell & grammar check, none seem to be providing a complete & comprehensive service like Grammarly does. So how did an upstart beat the likes of Microsoft & Google to become one of the the most exciting & fastest growing startups in the world that analyzes 14 trillion words every single year ? This is the insane story of how Grammarly leveraged our sloppy writing skills to create a $13 billion business!
P for Profit!
In this episode, Bhavjeet and Anirudh talk about the English language & some interesting business opportunities around it. Check out the different ideas in the episode:
Grammarly was launched in 2009 by three Ukrainian entrepreneurs - Max Lytvyn, Alex Shevchenko & Dima Lider, with the goal of helping people with their poor grammar skills. For the co-founders of Grammarly, developing writing applications is not a new thing. A few years earlier, Max Lytvyn & Alex Shevchenko had created MyDropBox, a plagiarism check service for universities. The service had over 800 universities in North America as paying customers before it was acquired by Blackboard in 2007. As soon as the two year non-compete clause ended, the duo teamed up with Dima Lider to launch Grammarly in 2009. Initially, the software was aimed at helping English language students write better. The product was aimed to be sold to universities - a market they understood well due to their previous venture. However, once the software was publicly launched, it quickly became evident that students & faculty weren’t the only ones interested in using Grammarly. Nearly 50% of the users signing up for the service were from outside academia!
This led the company to pivot in 2011, nearly two years later after the service was initially launched. Grammarly shifted its focus from an enterprise model to a customer facing business model, while expanding the target market for its writing software beyond just academia to include all people who use English in their daily lives. Over 1.5 billion people across the globe use the English language, out of which more than 1.1 billion people are non native English language speakers who are not adept at the language and need a software like Grammarly to help improve their writing skills for things like resumes, emails or technical papers. This repositioning of the product helped Grammarly achieve product-market fit. Today, although students make up 25% of the software’s user base, the majority of Grammarly’s users are professionals like lawyers, consultants, bloggers & marketers. However, achieving product-market fit did not mean that the company had become a breakout success.
It took Grammarly nearly six years to turn a scrappy garage startup into a global, mainstream success story. In 2015, the company released its first free browser extension - and the user growth took off! This in turn helped Grammarly secure $110 million in funding the same year. By 2019, Grammarly was valued at a billion dollars. In November 2021, Grammarly raised $200 million in funding, valuing the company at a whopping $13 billion, making the company the tenth most valuable privately held company in the US! Today, the writing software analyzes 14 trillion words in over 20 languages every year, helping 30 million people write better, every single day! Although the concept behind Grammarly isn’t unique, although the industry is notoriously difficult to enter due to giants like Microsoft & Google, the company was still able to do it right like Grammarly. By utilizing a freemium model coupled with sophisticated AI algorithms, coupled with personalization & a roster of ancillary writing tools, Grammarly has created a business empire that helps people write better everyday!