How Two Ukrainians created English Spell Check Service Valued at $100 mln

Grammarly, is well-known abroad. Western sources rank it among the most effective engineering companies in Ukraine. Domestically the project’s operation is less noticeable. The speech of Brad Hoover, the project’s chief executive officer, at IDCEE conference was perhaps the first time Grammarly had made a general public appearance. Meanwhile, today the service users total 4 million people worldwide. The founders of the company consider their product to be the best proofreading web-service in the world, while venture investor and the most influential uanet figure Yevgeny Sysoev estimates Grammarly at a minimum of $100 mln. The service helps to construct grammatically correct English texts, check them for plagiarism and correct faulty speech patterns. More details on creation of Grammarly to be found in the history of the company at AIN.UA.

War with Plagiarism 

Grammarly founders met while studying at International Christian University, one of the first educational institutions on the territory of Ukraine, where classes were held in English and lecturers were native Americans. It was during Shevchenko and Lytvyn’s training that the idea of the first start-up – to check the students’ texts for plagiarism – leaped into their minds. They noticed that most students downloaded essays and research papers from the Internet. It was the year 2000, Internet in Ukraine was only gaining popularity and it was not immediately obvious to the professors that the work might have been actually plagiarized.

In 2004 Alex Shevchenko went to Toronto to get his Master’s Degree. It was there that he created My Dropbox service. According to Alex, he wrote the software component of the product practically single-handedly and the company then consisted of three people: Max Lytvyn, system administrator and himself. Later the company expanded: 10-15 people were working on the project in Ukraine, with 5-6 of them staying in Toronto.

 

Co-founder of Grammarly Alex Shevchenko

Co-founder of Grammarly Alex Shevchenko

My Dropbox checked the essays for plagiarism and immediately attracted attention of many world universities – they were ready to pay for such service. Since then all students’ papers at the universities, which became Shevchenko and Lytvyn’s clients, were “run” through this program and checked for ingenuity. At the time the technology was brand new: except My Dropbox only one Californian company was working at suchlike projects. By the year 2007 the client base of the product had expanded to 800 universities and about 2 mln students. Today 95% of American educational institutions are using similar services. In 2007 the founders decided to sell the project to Blackboard Inc. Company which was at the time the global leader among educational platforms. Alex refuses to comment on the transaction amount, but claims that it was relatively small.

The Birth of Grammarly

One of the conditions set forth by Blackboard at the purchase of the program was the demand that Max Lytvyn should be working for the company for two subsequent years to ensure complete integration of the two systems, meanwhile the second project founder should not be engaged in conceptually similar business. The day when this two-year term ended, Max packed his things, flew from Washington to Toronto, and just several days later the partners launched a new project – Grammarly. The initial plan was to create another technology for the universities, a technology that would help to teach English to students. “We still had many friends at the universities, besides, unlike Ukrainian, western educational institutions are open for new technologies,” says Alex.

Grammarly team on vacation in Georgia this year

Grammarly team on vacation in Georgia this year

Soon the partners realized that sales are slow and universities may take as long as several years to come to the decision on purchasing the program. Grammarly founders then decided to abandon the enterprise-model and to sell the program directly to the end user. Concurrently with this, Max and Alex decided to change the target audience as well as the service concept, and to sell the service to all customers who use English in everyday life rather than only to English language learners. Running ahead of the story, we should mention that they managed to keep the student-customers as well. Unlike the previous project, Grammarly did not become a compulsory part of education, but is actively used by students and teachers, many of whom promote the systems at their universities.

To create the company, Grammarly founders used the money, raised after the sale of the previous project; they decided not to attract outsider investors. “Our objective was to focus on the problem solution rather than on money search and investor attraction”, Shevchenko says.

How Service Works

Grammarly is a commercial web-service that helps to create texts according to all English language rules. The program in real-time operation mode helps to track grammar and syntax errors, as well as word choice and style mistakes. Besides, the program explains the impropriety of the word choice and suggests an error-free variant. Grammarly products are easy to use: you just paste any paragraph of an English text into online-form on the website or set plug-in for your browser; the spell check then works in Gmail, Facebook and other services. The algorithm will highlight the potential errors in the text and will suggest corrections, so that the customers might make a conscious choice as to whether to correct the error and, if so, in what way.

Grammarly had to face a difficult task, since similar problem for many years has been in the focus of attention of the top brains of Google and Microsoft, companies, which have at their disposal practically unlimited financing and human resources. “To enter this market was quite a risky undertaking”, Alex admits. At the time, it was unbelievably difficult to handle the problem technically, that was why Grammarly’s main idea was to understand how customers’ feedback and cloud technologies may be used to check grammar. Alex explains Microsoft’s mistake in terms of their failure to resolve the problem of the system’s inadequacy. For instance, grammar check tool in Microsoft Office does not always track misprints and often shows mistakes where there none.

The second project founder Max Lytvyn

The second project founder Max Lytvyn

“We managed to turn our weak point into a strong one”, Shevchenko relates. “Our system was not perfect, so we added the option of taking a vote on the correctness/incorrectness of the rectification; this helped to reduce the negative effect of the errors. Grammarly, as we see it today, is exclusively the result of our customers’ contribution”. Thus, at each new check the service referred to the cloud “knowledge base” and gradually these responses resulted in formulation of over 250 main rules and several dozens of thousands of specific ones. Within the first six months the partners have been engaged in creating and refining the product, rather than in actively attracting new users. The emphasis was laid on creating a program for as wide a range of users as possible, aside from just students. About two billion people may be viewed as potential service customers, since it is this number of people that is reported to speak the English language or study it.

As far as language rules are concerned, Grammarly is universal to the extent possible. The rules, used by the service, are universal for both the English language and its American and other variants. The founders chose not to touch upon either any debatable issues or slang, since Shevchenko and Lytvyn would hate to see Grammarly as a service for Grammar Nazi. For instance, if the user enters ‘gonna’ instead of ‘going to’, the program will not correct the text, but would merely suggest that a comma might have been omitted.

A $100 million Company

Initially, a small team of linguists in North America and several Ukrainian developers have been working over the task. The team has been expanding with time: today about 70 employees are working in Grammarly office in Kyiv and 14 more – in San-Francisco. Tasks division is traditional enough for companies of such kind: development department is situated in Kiev, while US collaborators deal with sales and marketing.

Grammarly is used today by about 4 mln people all over the world. In fact, 60-70% of the service users are the residents of English-speaking countries and the so-called native speakers. “About two billion people all over the world are using spelling check services and we would like them to become our customers’, Alex says.

The service makes money on subscription; subscription monthly fee comes up to $30. A 7-day free trial version has appeared recently; it differs from the pay version in the quantity of language rules, since only 150 out of 250 check versions are being made use of. The founders do not specify the company’s profit and the percentage of pay users.

Yevgeny Sysoev, managing partner of the Ukrainian venture fund AVentures Capital, is quite knowledgeable of Grammarly financial gains. “This is the most successful company within its market. In 2012 they earned about $10 mln, and in 2014 this figure may well reach $20 mln”, Sysoev says. According to him, such companies are estimated in 5-10 annual turnovers. Sysoev, thus, considers that at the moment Grammarly is worth no less than % 100 million.

Grammarly office in Kyev

Grammarly office in Kyev

Now the partners are working hard to attract new users and to associate American and Ukrainian offices to the utmost in order to make them feel as a team. “Our objective is two billion people all over the world who either speak English or learn it”, Shevchenko says. As far as possible association of offices is concerned, last year marketing and sales managers from San-Francisco came on a short visit to Kiev after which the project international team went on vacation to Turkey. Rotation of the company’s divisions is also being planned this year. “It is very important from the point of view of communication as well as realization who you are working with over the sea”, Alex believes. In Ukraine, Grammarly is also well-known as an organizer of frontend-developers meetings. Besides, the project founders consider the possibility of partnership with major corporations; though at the time they deliver no specifics in this direction.

Experts leave open the possibility that very soon Grammarly’s financial success and steady growth will claim the attention of global IT-market giants interested in the development of language technologies. According to business incubator GrowthUP founder Denys Dovhopoly, “Grammarly is not unique, but has considerable practical application; in future the company may be taken over by office application developers such as Google or Microsoft”.

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