• November 26, 2014

Moving Beyond Textbook Rentals to 'Student Hub'

From Textbook Rentals to 'Student Hub' 1

Noah Berger

Dan Rosensweig

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close From Textbook Rentals to 'Student Hub' 1

Noah Berger

Dan Rosensweig

Dan Rosensweig wants to reimagine the textbook and the campus bookstore and online tutoring­—and he wants them all to be delivered through his Web site.

That site is called Chegg. If professors haven't heard of it, it's likely their students have, as a place to get cheap textbooks, especially via rental. But Mr. Rosensweig, the company's CEO, says Chegg is built to cover every step in the college process, extending its reach to high school, through college, and into postgraduate life.

Mr. Rosensweig has guided Chegg to acquire companies that would help it do this—businesses dealing with tutoring, note-taking, and course-ranking. Like Facebook's social graph or LinkedIn's professional graph, the goal for Chegg, Mr. Rosensweig said, is to create a "student graph," a map of its users' information, interests, connections, and relationships with each other.

Its marketing message emphasizes a students-first attitude, telling them that they—not professors or administrators or campus bookstores—should be the architects of their college experience. Mr. Rosensweig isn't shy about explaining how Chegg can pivot from helping students get textbooks to helping them find a college, pick out classes, and graduate on time.

THE INNOVATOR: Dan Rosensweig, Chegg

THE BIG IDEA: An upstart Web site known for textbook rentals is poised to expand into other student markets.

"We know more about you than anybody," he says. "And we have your credit card. Our reach has become very large, and we've become a very powerful platform."

Chegg's creators did not originally intend for its reach to be so wide. Founded in 2001 by a handful of Iowa State University undergraduates, the business started as a Craigslist-style Web site called cheggpost.com. In 2005 the company became Chegg Inc., and soon introduced its first textbook-rental service, textbookflix.com (originally billed as the Netflix of textbooks).

The goal over the next five years was to become "Number 1 in textbook rentals." In 2010 that goal was so entwined with the company's identity that Chegg sent a notice of trademark infringement to another textbook-rental Web site that claimed to be No. 1. Later that year Mr. Rosensweig became CEO.

Mr. Rosensweig, 52, also didn't always plan on creating a "student graph," although he has always had an interest in education, he says; his mother was a schoolteacher in Scarsdale, N.Y. After graduating from Hobart and William Smith Colleges, he got his first job with a company selling word processors door-to-door in Manhattan. Just hours after he started, the company laid off his entire division.

He then went to Ziff Davis, a media company, where he stayed for 15 years, working his way up from persuading small computer stores to carry the publisher's computer magazines, through the circulation department, to associate publisher of PC Magazine. In 1998 he became president of ZDNet and merged the company with CNET, another online source of information-technology news. From 2002 to 2006 he was chief operating officer of Yahoo.

He briefly tried early retirement but then became CEO of Activision Publishing's Guitar Hero division. That job only lasted about a year. As a music fan (he says he's seen Bruce Springsteen in concert 64 times), Mr. Rosensweig enjoyed the work, he says, but something was missing: "My customer wasn't the Guitar Hero player. It was Wal-Mart."

When he was approached by Chegg, in 2009, he saw an opportunity to work for a company that dealt directly with consumers. His two daughters were also approaching college age, a factor that he says helped him make the decision to accept Chegg's offer.

"It was really interesting to do it at a time when it's important to my kids and to the country," Mr. Rosensweig says. "Higher education was under tremendous pressure, and I thought if I can make life more affordable to students, then I wanted to take that chance."

Mr. Rosensweig and the people he hired—who include former employees of Google, Netflix, and Facebook—moved quickly to push Chegg further than its textbook-rental roots. "Save time, save money, and get smarter" became the message, he says. The company slowed the expansion of its textbook division and focused on connecting students to one another and to colleges, and on offering tutoring and studying services.

Chegg acquired six higher-education companies in just over a year and created several mobile apps. This year it began looking into free textbooks, in a partnership with OpenStax College, run by Rice University, and the Twenty Million Minds Foundation, a backer of open-source textbooks.

While Chegg is increasingly popular with college students, the company's growth has not created many fans among traditional textbook sellers, according to the National Association of College Stores. "When a student rents or buys from their college store, the money they spend is going to pay local people's salaries, and often in the case of a college store that worker is a fellow student," says Charles Schmidt, the group's director of public relations. "In addition, a portion of the cost paid is returned to the university and comes back to benefit students in the form of scholarships and reduced fees, something that can't be said of money spent with a large corporation based half a continent away."

Nothing Chegg is doing is entirely new, Mr. Schmidt adds, noting that college bookstores have offered textbook rentals since as long ago as the 1860s. Nearly all of the association's 3,000 members, he adds, themselves offer rental programs with savings similar to Chegg's.

But, while Mr. Rosensweig maintains that textbook rentals are still a large and important part of Chegg, the company has expanded beyond that business, to become a "student hub." Chegg is competing not just with textbook stores but also with publishers, tutoring programs, even school counselors, he says.

Soon, he says, "I think you'll see us working with MOOCs. I think you'll see us working with mentorships and helping students find jobs and internships."

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