CHEGG’s Dan Rosensweig, teaches rivals a lesson about customer service

Dan Rosensweig says institutions are failing people.

“Why are college prices allowed to go up as much as they have? Why isn’t the curriculum expanded? Why isn’t there a responsibility to help a person get a job if they get a degree from your school? Why do 43 per cent of students in the US not get a degree but end up taking on debt?” So demands Dan Rosensweig, the boss at CHEGG.

If you have not yet heard of CHEGG, you will. The $10bn American online education disrupter sees Australia as the next big opportunity. CHEGG aims to revolutionise vocational education, something this country is surely crying out for. “CHEGG wants to be part of the solution and students love us for it,” enthuses Rosensweig. “And that is why our growth rate is 60 per cent year-over-year even though the company is over 10 years old.”

CHEGG’s name came from the chicken and egg problem of not being able to get a job without experience, or experience without a job. The business that started by ripping into the overpriced textbook market by offering rentals is now a hub of online student services with over three million subscribers. The NYSE-listed giant makes money and its share price has surged 120 per cent this year.

Dan Rosensweig has been at the helm for just over a decade. The Springsteen devotee and self-described beneficiary of the American dream has a Silicon Valley pedigree: COO at Yahoo, CEO of Guitar Hero, president of CNET and a position as a significant tech investor.

He drove the company’s shift to the online platform, which is centred around CHEGG study. Google gives answers, but this is personalised help with learning how to solve problems step by step. “CHEGG was built to bet on the inevitable, which was that more people were going to have to learn more often, were going to need to learn on demand, have it be more affordable and frankly we’re going to need more help. You can watch videos, you can do expert Q&A, you can get tutoring for as little as 50c a minute, you can do step-by-step solutions. We have over 40 million questions in our data bank; we answer over 17 million new questions a year that have never been asked before.”

The business model relies on students paying for the service. In the US, 87 per cent of students know CHEGG by name.

This year, along came COVID-19. Rosensweig says that from about March 15, the company’s global presence simply exploded. “When schools got shut down, students went online to get help because they couldn’t get any support on campus, from friends, they couldn’t get tutors, or go to the professors, and they found us and have become incredible subscribers.”

The CHEGG chief says ­international business is now showing up in the group’s earnings, helping it grow 50 per cent year-on-year organically and by 62 per cent in revenue for the recent second quarter. At the results, the company’s guidance was raised. In the second half of the year, Rosensweig expects growth of 45 per cent year-on-year.

There are ambitious plans for Australia, its second-largest overseas market after Canada and bigger than Britain. “Our plans for Australia are to localise the content: obviously we don’t have to translate it, but what we are looking for is an increasing amount of content that is relevant for the Australian market in particular.” CHEGG’s Q&A network of over 70,000 experts that can answer a question in less than four hours (if it hasn’t already been asked and answered), will be accelerated to cover Aussie content.

At Yahoo, Rosensweig started the mentoring program. What CHEGG does, he says, is to level the playing field on learning. At a time of growing inequality from COVID-19, it is a potent message. “Most young people, they get stuck on a certain issue, and we get them unstuck. They consume over 200 pages a semester of what we do, they use us on average more than once a week, so we have become the scalable, on-demand learning platform for everybody else who doesn’t have the money or the wherewithal to have a parent pay for tutoring. This is people learning on their own and it has been wonderful.”

CHEGG’s approach to data and privacy is also student-customised. “We do not hold credit cards,” says Rosensweig, “so a student’s credit card cannot be stolen, which is one of the things they worry about the most. On the privacy of data, we do not really have much information about the student, because they just register and sign up. All we really have access to is what it is they are studying, and we protect that, as you can imagine. Data is really a currency of the future and you lose all of your currency if you don’t protect it.”

CHEGG is taking full advantage of the status quo of tired curricula in the West. Take your pick as to why the system is unable to reform itself: from politics to woke pressures, unions, ineffective funding and little link to employers, the end result is clear. “That’s what parents and business people understand,” Rosensweig agrees. “They understand that the curriculum is outdated.”

Just under a year ago, CHEGG bought the career accelerator Thinkful, a coding bootcamp offering courses from digital marketing to UX and software engineering. While not everyone ends up as an engineer, Rosensweig is convinced that people of all ages looking for jobs today need to understand the new communication platforms. “How to use Salesforce, how to use Office, how to advertise on Facebok or TikTok if that’s what it is, they need to understand how to use Adobe if they’re going to be anything in the creative world,” Rosensweig says.

Once acquired, he cut the price of Thinkful’s signature five-month course from $US8000 to $US5000, doubled the curriculum and increased the value of scholarships on offer to $US3m.

What education policymakers should take note of is the work Rosensweig and his team have put into pricing and “de-risking” the learning investment for students, with a vocational commitment to results. “If it costs nothing, people won’t take it seriously: they have to have skin in the game,” he explains.

“But if we can offer a living stipend — even though you don’t have to go anywhere, you’re learning from your house — we can say ‘for two weeks you can take it and if you don’t want to take it after that, you pay us nothing’. If we can say that you take it and you don’t get a job within six months in that space, you don’t have to pay us at all, that’s as fair as you can get: lowering the price, de-risking it and saying if it didn’t work, you don’t have to pay. That is the way CHEGG has built its brand.

“We are student-first: not what does the institutions want, not what does mum and dad want, it is what does the student want and need to master a subject and accelerate their career, pay down their debt and start to accumulate wealth and knowledge and experience.

“That is why I am still here after nearly 11 years and that is why CHEGG is taking off: because institutions continue to fail people.”