If thinking about Chegg gives you PTSD to the days when you were in school, I might have some good news for you: The company known for textbook rentals and homework help is running on fumes. Cheggâs stock is down a whopping 99% since its highs in 2021, erasing $14.5 billion in value, and the company has lost half a million paid subscribers. After revenue keeps dropping quarter after quarter, there are doubts it will be able to continue paying its debts.
Chegg should be familiar to most people who have been to college in recent years. It started out in the 2000s renting out textbooks and later expanded into online study guides, and eventually into a platform with pre-written answers to common homework questions.
Unfortunately, the launch of ChatGPT all but annihilated Cheggâs business model. The company for years paid thousands of contractors to write answers to questions across every major subject, which is quite a labor intensive processâand thereâs no guarantee they will even have the answer to your question. ChatGPT, on the other hand, has ingested pretty much the entire internet and has likely seen any history question you might throw at it.
Granted, some of Cheggâs fall can be attributed to a subsiding of the pandemic lockdowns, when learning went virtual and the company needed to produce more answers. But as the Wall Street Journal reports, there does seem to be a correlation between the launch of ChatGPT and students dropping their Chegg subscriptions:
Though Chegg has built its own AI products, the company is struggling to convince customers and investors it still has value in a market upended by ChatGPT.
âItâs free, itâs instant, and you donât really have to worry if the problem is there or not,â Jonah Tang, an M.B.A. candidate at Point Loma Nazarene University in San Diego, said of the advantages of using ChatGPT for homework help over Chegg.
A survey of college students by investment bank Needham found 30% intended to use Chegg this semester, down from 38% in the spring, and 62% planned to use ChatGPT, up from 43%.
Itâs unclear what Chegg can do to stem the bleeding at this point. The company laid off 441 employees over the summer, a quarter of its workforce. Itâs trying to target what the new CEO describes as âcurious learnersâ by offering more comprehensive AI-assisted answers as well as live counseling.
Whatâs perhaps most sad is that, according to the WSJ, employees actually asked for resources in 2022 to develop AI tools for automating answers in order to address the huge influx in new demand. Cheggâs leaders denied the request to start building AI tools until ChatGPTâs release, but even then some internally werenât worried because of the chatbotâs propensity to make up incorrect answers.
But, as with a tool like Wikipedia, students are willing to accept some risk because of the convenience. Students are told not to trust Wikipedia, but most use it anyway and head to the references section to grab citations. Of course, chatbots like ChatGPT have no concept of a subject like math; theyâre just guessing the words necessary to make a sentence that sounds right. They will return answers that look deceptively correct but arenât. Itâs like having a calculator thatâs right 50% of the time. For subjects like history, chatbots are somewhat better, but answers should be double-checked.
Maybe Chegg could work harder to help people understand this? It seems like most students donât care, though, or find that ChatGPT is good enough at sending them in the right direction, and the clock is running out for Chegg.
