The Remarkable Growth Story of Grammarly: From Startup to Unicorn
Grammarly, a name synonymous with writing assistance, achieved the rare milestone of becoming a unicorn—a privately held company valued at $1.3 billion—just eight years after its founding. What’s even more impressive? They did it entirely self-funded, without external investment, for most of their journey.
Here’s how two Ukrainian entrepreneurs turned their vision into a billion-dollar global success.
The Origin: Solving a Specific Problem
In 2002, Alex Shevchenko and Max Lytvyn developed MyDropbox, a paid plagiarism detection program. Their primary market was universities, offering a tool to address academic integrity issues.
By focusing on solving a niche, high-value problem, they quickly found success. Over the next six years, they grew their client base to 800 universities.
2008: Enter Grammarly
Looking to expand beyond plagiarism detection, the founders launched Grammarly in 2008. The product featured an easy-to-use WYSIWYG (What You See Is What You Get) editor with premium spell-checking capabilities. Users could copy and paste their text into the editor for grammar and style checks.
Key Moves:
- They targeted their existing university clients, upselling Grammarly as an additional tool for students and faculty.
- They actively sought customer feedback to refine and enhance the product.
The Results:
By 2010, Grammarly had:
- 300,000 student users.
- Partnerships with 250+ universities.
- Established itself as a trusted tool in the academic world.
The Growth Begins: Revenue Milestones and New Features
In 2012, Grammarly’s focus on providing a high-quality product paid off, generating $10 million in revenue.
By 2013, they pivoted their strategy: Instead of bringing users to Grammarly’s platform, they decided to bring Grammarly to wherever people write.
What They Did:
- Released Word and Outlook plugins, allowing users to integrate Grammarly into their existing workflows.
- Differentiated themselves from traditional tools like Microsoft Word by offering advanced features like contextual spelling, grammar, and style suggestions.
The Results:
- A staggering 2,326% revenue growth since 2009.
- Over 3 million registered users.
The Freemium Revolution: Browser Extensions
In 2015, Grammarly adopted a freemium model, launching free extensions for Google Chrome and Safari browsers. The strategy worked: the freemium offering attracted millions of users, who then converted to premium subscriptions for advanced features.
In 2016, they expanded their reach further with a free Firefox browser plugin.
The Results by 2017:
- Over 8 million active users of their free Chrome extension.
- Millions of paid subscribers, driving consistent revenue growth.
The Unicorn Moment
Grammarly’s steady growth and user-first approach culminated in 2017, when the company raised $110 million at a valuation of $1.3 billion. Despite being self-funded until this point, this investment allowed Grammarly to scale even faster and expand its product capabilities.
Key Factors in Grammarly’s Success
- Solving a Specific Problem:
Starting with plagiarism detection, they targeted universities with a clear, valuable solution. - Customer-Driven Iteration:
Consistent feedback from users helped refine and expand Grammarly’s features. - Freemium Model:
Offering free browser extensions enabled massive adoption, creating a funnel for premium upgrades. - Expanding Integration:
By going where users write—browser extensions, Word, Outlook—Grammarly became indispensable for everyday tasks. - Differentiation:
Grammarly offered features beyond basic grammar checks, focusing on context, style, and tone, setting it apart from competitors.
Today’s Grammarly
Grammarly continues to be a leader in writing assistance, helping millions of users worldwide. Its journey from an academic tool to a billion-dollar company serves as a case study in solving real-world problems, leveraging customer feedback, and embracing innovative growth strategies.
Source: Product Habits, Inc.