Chegg

Chegg, Inc.
Type of business Public
Traded as NYSE: CHGG
Russell 2000 Component
Founded July 2005 (2005-07)
Headquarters Santa Clara, California, U.S.
Founder(s) Aayush Phumbhra
Osman Rashid
Josh Carlson
Key people Dan Rosensweig
(Chairman, President, & CEO)
Andrew Brown
(CFO)
Robin Tomasello
(Vice President & Controller)
Industry Education
Online retailing
Products Online textbook rental
eTextbooks
Homework help
Course scheduling & review
Scholarships via Zinch
Revenue Increase US$ 255.07 million (2017)
Operating income Increase US$ -18.97 million (2017)
Net income Increase US$ -20.28 million (2017)
Total assets Increase US$ 446.93 million (2017)
Total equity Increase US$ 391.06 million (2017)
Employees 893 (2017)
Website Chegg.com
[1]

Chegg, Inc. is an American education technology company based in Santa Clara, California, that used to specialize in online textbook rentals (both in physical and digital formats), and has moved into homework help, online tutoring, scholarships and internship matching. It is meant to help students in high school and college. It also owns citation services EasyBib, Citation Machine, BibMe, and Cite This For Me. The company was created in the United States by three Iowa State University students in 2001 and was founded by entrepreneur Aayush Phumbhra.[2] The name Chegg is a portmanteau of the words chicken and egg, based on the founders' experience after graduating from college; they could not land a job without experience, but could not get experience without a job.[3]

History

In 2001, Josh Carlson, Mike Seager, and Mark Fiddelke created the precursor to the business called Cheggpost.com, a Craigslist-type classified service for college students at Iowa State University. Aayush Phumbhra, who attended Iowa State University and was an avid Cheggpost.com user, approached Carlson in late 2003 with the idea of taking the company national. Phumbhra mentioned the service to a friend, Osman Rashid, who saw potential in the idea, joined as chief executive officer to help fund the company in 2005, and formally launched Chegg, Inc., which was incorporated in August. Carlson remained until February 2006 and then left to pursue other interests. In April 2006, Chegg found some initial investors, including Sam Spadafora, Mike Maples, and others. The co-founders quit their regular jobs to focus on Chegg full-time. They tested services, acquired three college classifieds businesses, and publicized Chegg via campus campaigns at SUNY Canton and word-of-mouth. In summer 2007, the firm launched "textbookflix.com", which used a textbook rental model modeled after Netflix.[4] Rashid and Phumbhra decided to switch the "textbookflix" name to "Chegg.com" in December 2007. According to a company spokesperson, Chegg rented its two millionth book in 2010.[5]

IPO

Chegg began trading shares publicly on the New York Stock Exchange on November 13, 2013. According to the San Jose Business Times, the IPO raised $187.5 million and gave it an initial market cap of about $1.1 billion.[6]

Ingram partnership

In August 2014, Chegg entered into a strategic partnership with Ingram Content Group to transfer ownership of both current and new textbook inventory to Ingram, equaling approximately 10% of Chegg’s anticipated textbook volume for the Fall 2014 semester. The partnership is a significant change in direction for Chegg and reduces the overhead costs of handling storage and direct shipping.[7]

In February 2015, Chegg announced that it would deepen its partnership with Ingram by making them responsible for purchasing 100% of textbook inventory. Chegg continues to market the books to students directly, as well as control pricing and catalog selection, while Ingram handles distribution, logistics and warehousing of the books. The intention of the strategic move is to cut costs and work towards 100% digital revenue.[8]

In April 2017, Pearson partnered with Chegg to make higher education textbooks more affordable. This partnership operated on a "rental only" business model.[9]

Acquisitions and investments

  • 2010: CourseRank, a service that allows students to review courses and plan their courses for upcoming semesters;[10] Cramster, a provider of online homework help and textbook solutions;[11] Notehall, an online marketplace for purchasing or selling class notes.[12]
  • 2011: Student of Fortune, an online tutorial marketplace for homework help;[13] Zinch, a service that matches high school students to college recruiters;[14] Flux Software Co./3D3R, a mobile app development firm.[15]
  • 2014: Campus Special, a coupon distribution service for promoting deals for local businesses to nearby students and campuses;[16] InstaEDU, an online tutoring service;[17] Internships.com, a division of CareerArc Group LLC and the largest student-focused internship marketplace.[18]
  • 2016: Imagine Easy Solutions, the parent company of bibliographic services like EasyBib and BibMe as well as Imagine Easy Academy and Imagine Easy Scholar products.[19]
  • 2017: Math42
  • 2018 WriteLab and StudyBlue

2018 Data Breach

In September 2018 Chegg discovered a data breach the previous April . The breach includes the loss of user names, hashed passwords, addresses and e-mails but not financial data [20].

Board of directors

As of December 31, 2017, the board of directors consists of:[1]

Business model

It is estimated that in 2009, college students spent an average of $667 on their textbooks.[21] A second estimate was $1,000 per year,[22] with signs that textbook prices were increasing faster than inflation.[22] Moreover, some college bookstores would offer to buy back the used books for a fraction of their original price.[2]

The founders began noticing the trend of online rental from the success of services like Netflix.[23] Consequently, in the summer of 2007, Rashid and Phumbhra re-positioned the company along the lines of Netflix as a way to rent textbooks to students.[2][24] Since Chegg had little money initially, when an order came in Rashid would buy the book using a credit card and have it shipped to the student until automation came later.[25] At one point, with a huge volume of traffic on his credit card, his credit card firm suspected fraud, but Rashid was able to persuade the credit supplier to extend credit using multiple numbers of cards.[23]

Books normally rent around half the retail price; for example, a macroeconomics textbook priced at $122 at a college bookstore would rent for $65 at Chegg.[23] But savings varied from book to book.[26]

Stories in campus newspapers helped spread the idea. One senior at Arizona State University calculated he would spend about half as much renting books than buying them for one semester.[23] The idea clicked. In 2008, the firm hired the former chief executive of Match.com, Jim Safka, to run the firm.[23] In 2008, revenues were about $10 million; in 2009, revenues in January alone were $10 million, according to Safka.[27] The firm has raised additional capital from venture capitalists. The company also started a campus representative program, which paid the enrolled college students per referral for purchases made by other college students.[23]

In January 2009, USA Today reporter Julie Schmit described Chegg as a "leader" in the "burgeoning arena of college textbook rentals."[24] The firm had 55 customer service reps at that point.[24]

Since many textbooks become out-of-date quickly, often replaced with new versions, a key to profitability will be how long a book can be re-rented, or recycled; in the market for rental cars, for example, firms such as Hertz and Avis buy new cars but sell them after about a year or two of service. But what is the useful life of a rented book? "The market can be tricky," said market analyst Kathy Mickey, because professors must use the same books for several semesters in order for book-rental companies to make money on the programs.[28]

Competitors

The college textbook market has a variety of competitors. While the main source of books for college students is college bookstores, there are an increasing number of options.[24] Bookseller Barnes & Noble, which owns 636 college bookstores, began its own textbook rental program in January 2010, largely patterned along the lines of Chegg's service. One report is that Barnes & Noble will rent books at about 42% of their original price, on average.[21] Students can also rent textbooks from their college bookstore or online, with orders shipped to their college bookstore for pickup, according to one Associated Press report.[21]

The U.S. Congress set aside $10 million to encourage college bookstores to rent textbooks,[28] so bookstores are starting an up rental programs as well. Follett Higher Education Group started up a rental program in 2009.[28]

Wall Street Journal reporter Peter King compared several options for textbook rentals in April, 2009.[29] He compared firms such as BookRenter.com, Campus Book Rentals, Chegg, and Textbooks.com which sells textbooks online but offers a guaranteed buyback later, making these books "quasi-rentals".[29] King compared offerings related to an expensive accounting textbook[30] and noted some confusion with book packages, with return labels differing from the firms which had been ordered from; figuring out that the original sources were Campus Book Rentals and Chegg required matching the shipping tracking orders with the email invoices.[31] A Chegg spokesperson said the firm sometimes uses "strategic partners" such as eCampus.com if a particular book isn't in its warehouse, but the reporter wondered whether the use of third party suppliers might cause confusion when books needed to be returned at the end of the semester.[32] Chegg was the "most expensive rental" and charged sales tax.[32] The least expensive alternative was Textbooks.com, although this firm required an upfront expense of $117.50; King surmised the upfront payout would mean college students had less money available during the semester.[32] In all cases, books had to be returned by the deadline to make the cost savings worthwhile.[33] The online alternatives were substantially better than buying the book from the college bookstore and selling it back to that bookstore at the end of the semester.[34] In a test using a different book, Chegg had the lowest price, while other firms did not even carry the book.[35] Textbooks.com, according to the report, does not offer buyback chances to all books it sells.[35]

Other competitors include Perlego, Rafter, Warehouse Deals, and Apex Media.[36][37]

As for Chegg's online tutoring platform, Chegg Tutors (formerly InstaEDU), there are several competitors, including Varsity Tutors, TutorMe, Skooli, Nerdify and Tutor.com.[38]

Finances

One report is that the firm first received $2.2 million in financing in January 2007, led by Mike Maples (through Maples Investments, now called Floodgate Fund) and Gabriel Venture Partners. In August 2008, Oren Zeev is believed to have invested $4.7 million,[39] then with Primera Capital, led the Series B round of $7 million, which included participation from prior investors Gabriel Venture Partners and Mike Maples.[40] One source suggests the firm raised $57 million in November 2009.[41] In 2010, the company raised $75 million from Ace Limited.[42] Another suggests total equity financing since inception, as of January 2010, is in the range of $150 million, primarily from venture capital funding.[43] Investors include Foundation Capital, Insight Venture Partners, Kleiner, Perkins, Caufield & Byers, Pinnacle Ventures, and TriplePoint Capital.[43]

Green marketing promotion

Chegg has an arrangement with American Forests' Global Releaf Program such that every book rented or sold means that one tree is planted. The firm claims that over five million trees have been planted.[44][45]

See also

References

  1. 1 2 "US SEC: Form 10-K Chegg, Inc". U.S. Securities and Exchange Commission. Retrieved March 3, 2018.
  2. 1 2 3 Miguel Helft (July 4, 2009). "We Rent Movies, So Why Not Textbooks?". The New York Times. Retrieved 2010-01-26.
  3. ↑ Miguel Helft (July 4, 2009). "We Rent Movies, So Why Not Textbooks?". The New York Times. Retrieved 2010-01-26. ... calculated that his bill for books that semester would have been $334 with Chegg, far less than the $657 he paid. ...
  4. ↑ Newsweek
  5. ↑ Openhomework
  6. ↑ "Chegg stock stumbles after IPO tops targets".
  7. ↑ "Chegg Strikes Distribution Partnership With Ingram Books, Announces 15% Boost In Earnings From Digital Services".
  8. ↑ "Chegg and Ingram Content Group Announce Agreement in Principle Setting Chegg on Path Towards 100% Digital Revenue".
  9. ↑ "Pearson to partner with Chegg on textbook rentals | The Bookseller". www.thebookseller.com. Retrieved 2017-09-26.
  10. ↑ "Chegg's First Acquisition: CourseRank".
  11. ↑ "Exclusive: Chegg Buys Cramster".
  12. ↑ "SEC filing cracks the egg on Chegg's Notehall purchase".
  13. ↑ "Chegg acquires Student of Fortune".
  14. ↑ "Chegg Buys Zinch in Another Move Toward a "Social Education Platform"".
  15. ↑ "Chegg Acquires Software Company Flux / 3D3R, SEC Filing Reveals".
  16. ↑ "Chegg Acquires Student Deals Platform Campus Special".
  17. ↑ "Online Tutoring Center InstaEDU Acquired By Chegg For $30 Million".
  18. ↑ "Chegg Acquires Internships.com".
  19. ↑ Lardinois, Frederic. "Chegg acquires Imagine Easy Solutions, the company behind EasyBib, BibMe and Citation Machine". TechCrunch. Retrieved 2017-05-06.
  20. ↑ "CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934". Security and Exchange Commission. Retrieved 29 September 2018.
  21. 1 2 3 Associated Press (2010-01-11). "Barnes & Noble starts textbook rentals". San Jose Mercury News. Retrieved 2010-01-26. ... Bookseller Barnes & Noble is launching a textbook rental program for college students, making it the newest entrant in a growing field. ...
  22. 1 2 Peter King (April 23, 2009). "A Textbook Case of Renting Books". Wall Street Journal. Retrieved 2010-01-26.
  23. 1 2 3 4 5 6 Miguel Helft (July 4, 2009). "We Rent Movies, So Why Not Textbooks?". The New York Times. Retrieved 2010-01-26. ... the inspiration was Netflix. ...
  24. 1 2 3 4 Julie Schmit (2009-01-12). "Chegg CEO Rashid applies Netflix concept to textbooks". USA Today. Retrieved 2010-01-26.
  25. ↑ Miguel Helft (July 4, 2009). "We Rent Movies, So Why Not Textbooks?". The New York Times. Retrieved 2010-01-26. ... They would buy the book using Mr. Rashid’s American Express card and have it shipped to the student. ...
  26. ↑ Miguel Helft (July 4, 2009). "We Rent Movies, So Why Not Textbooks?". The New York Times. Retrieved 2010-01-26. ... how many times a given book can be rented. The savings can vary from book to book. ...
  27. ↑ Miguel Helft (July 4, 2009). "We Rent Movies, So Why Not Textbooks?". The New York Times. Retrieved 2010-01-26. ... Jim Safka, a former chief executive of Match.com and Ask.com who was recently recruited to run Chegg, ...
  28. 1 2 3 Associated Press (2010-01-11). "Barnes & Noble starts textbook rentals". San Jose Mercury News. Retrieved 2010-01-26. ... because Congress last year set aside $10 million to provide grants for college bookstores to start rental programs...
  29. 1 2 Peter King (April 23, 2009). "A Textbook Case of Renting Books". Wall Street Journal. Retrieved 2010-01-26. To see how the process works, we ordered textbooks from three rental companies: BookRenter.com, Campus Book Rentals and Chegg; and one textbook seller, Textbooks.com, which doesn't rent books, but offers guaranteed buybacks on some texts, making those books a quasi-rental.
  30. ↑ Peter King (April 23, 2009). "A Textbook Case of Renting Books". Wall Street Journal. Retrieved 2010-01-26. We decided to check prices and availability ...
  31. ↑ Peter King (April 23, 2009). "A Textbook Case of Renting Books". Wall Street Journal. Retrieved 2010-01-26. ... Only by matching the shipping tracking numbers with our email invoices could we figure out these were the books we ordered from Campus Book Rentals and Chegg.
  32. 1 2 3 Peter King (April 23, 2009). "A Textbook Case of Renting Books". Wall Street Journal. Retrieved 2010-01-26. A Chegg spokeswoman later told us the company sometimes uses "strategic partners" if the book isn't in its warehouse. ...
  33. ↑ Peter King (April 23, 2009). "A Textbook Case of Renting Books". Wall Street Journal. Retrieved 2010-01-26. With book seller Textbooks.com, the book has to be returned by a set deadline to get the guaranteed buyback. ...
  34. ↑ Peter King (April 23, 2009). "A Textbook Case of Renting Books". Wall Street Journal. Retrieved 2010-01-26. In contrast, buying a used copy at the ASU bookstore costs $125.25. Subtracting the bookstore's estimated buyback price of $55 would leave us with a net cost of $70.25.
  35. 1 2 Peter King (April 23, 2009). "A Textbook Case of Renting Books". Wall Street Journal. Retrieved 2010-01-26. ... We did a spot check of prices for the "Norton Field Guide to Writing" (list price, new: $48), which is widely assigned for English composition courses. Chegg would rent it for $9.99 for 60 days. ...
  36. ↑ https://www.insidehighered.com/news/2013/08/16/amazon-restricts-students-bringing-certain-textbook-rentals-across-state-lines#sthash.OT8HiQCk.dpbs
  37. ↑ http://tech.eu/profiles/13690/perlego-e-books/
  38. ↑ "The Best Online Tutoring of 2016 | Top Ten Reviews". TopTenREVIEWS. Retrieved 2016-12-29.
  39. ↑ http://www.themarker.com/technation/1.2098573
  40. ↑ Savitz, Eric. "Chegg Raises Another $25 Million In Venture Funding". Forbes. Retrieved 2017-11-01.
  41. ↑ "Book rental company Chegg raises $57M". San Jose Business Journal. November 19, 2009. Retrieved 2010-01-26. Online textbook rental company Chegg.com Inc. said Thursday it raised $57 million in a fourth round of funding. ...
  42. ↑ "Chegg adds another $75M to textbook rental cash pile | VentureBeat". venturebeat.com. Retrieved 2017-11-01.
  43. 1 2 PR Newswire (2010-01-26). "Chegg.com Secures $112 Million to Fund Explosive Growth in Online Textbook Rentals". Reuters. Retrieved 2010-01-26. Chegg.com ... announced today that it has successfully closed $57 million Series D equity funding,...
  44. ↑ "Ecofriendly". Chegg.com.
  45. ↑ "Global Relief: Ecofriendly". AmericanForests.org.
This article is issued from Wikipedia. The text is licensed under Creative Commons - Attribution - Sharealike. Additional terms may apply for the media files.