In a world where artificial intelligence is rapidly evolving, a classic David vs. Goliath battle is unfolding. On one side, we have the seasoned giant, Chegg, a long-time academic ally. On the other, the nimble and cunning newcomer, ChatGPT, an AI-powered chatbot that’s quickly becoming the go-to study buddy.
Is Chegg, the trusty textbook rental service turned homework helper, still relevant in an era where AI can effortlessly provide answers to complex questions? Or will it be relegated to the history books, a relic of the pre-AI age?
As ChatGPT continues to learn and grow, can Chegg adapt and evolve to stay ahead of the curve? Or will it be forced to play catch-up, struggling to keep pace with the relentless march of technological progress?
TL;DR
- AI is rapidly changing the education landscape.
- ChatGPT is a powerful AI tool that can provide instant answers to questions.
- Chegg must adapt to stay relevant in the age of AI.
- The future of education will be shaped by AI.
In a world rapidly transforming under the influence of artificial intelligence (AI), businesses are scrambling to stay relevant. And as it turns out, Chegg—the once-thriving online education company—is facing one of the most disruptive shifts in its history. Chegg, which was once synonymous with online homework help, now finds itself caught in the storm stirred up by AI giants like ChatGPT. Will Chegg be able to adapt and reinvent itself, or is it bound to become a relic of the past?
The Rise and Fall: Chegg’s Glory Days and the ChatGPT Effect
For many years, Chegg was a lifesaver for students who needed quick answers or a bit of help with assignments. Its subscription model gave access to expert assistance and resources for up to $19.95 a month. With the transition to virtual learning during the pandemic, Chegg’s user base and stock value soared. But this success didn’t last long.
Enter ChatGPT. Launched as a free, versatile AI chatbot by OpenAI, ChatGPT turned the tide almost overnight. Students could now ask ChatGPT their questions—no subscription needed, no hassle, just instant answers. Chegg’s model was suddenly outdated, and its value plummeted as subscribers fled for this faster, cheaper alternative. Since then, Chegg has lost over half a million subscribers, and its stock, which once reached a record high, has fallen by 99% from early 2021. In just a few years, the company saw nearly $14.5 billion of its market value erased.
Chegg’s Response to the AI Revolution
Seeing this massive shakeup, Chegg knew it had to act fast. Dan Rosensweig, Chegg’s CEO of over a decade, took action to try to recapture student loyalty. Unfortunately, Rosensweig’s leadership couldn’t withstand the blow from ChatGPT’s popularity. He retired, leaving the helm to Chegg veteran Nathan Schultz, who promptly made a series of big changes. Schultz laid off 441 employees (about a quarter of the workforce) and began exploring international markets and other services, hoping to expand Chegg’s reach beyond simple homework solutions.
Schultz didn’t stop there. To win back students, he pivoted Chegg’s focus toward a specific group of “serious learners”—students who, ideally, wouldn’t be content with quick chatbot answers. Chegg began offering more extensive educational resources and even counseling services to distinguish itself from ChatGPT. Schultz emphasized Chegg’s unique position to provide reliable, in-depth answers and human support. But the looming question remains: Is this enough?
Students Speak: Why ChatGPT Is a Favorite
Students have clear reasons for preferring ChatGPT over Chegg. “It’s free, it’s instant, and you don’t have to worry about the availability of answers,” says Jonah Tang, an MBA student at Point Loma Nazarene University. ChatGPT provides quick responses without monthly fees, making it accessible to anyone with an internet connection.
According to a recent survey by Needham, a significant 62% of students planned to use ChatGPT for their studies this semester, up from 43% in spring, while only 30% said they’d stick with Chegg. This shift has caught the attention of investors, analysts, and, naturally, Chegg’s competitors, who see these trends as a sign of structural changes in the online education space.
Chegg’s AI Journey: Enter Cheggmate, Exit Cheggmate
Chegg wasn’t going to let ChatGPT steal the show without a fight. In a twist of irony, Chegg joined forces with OpenAI, the very creators of ChatGPT, to develop a new service called Cheggmate. The goal was to leverage GPT-4, the backbone of ChatGPT, combined with Chegg’s database of millions of study answers to create a supercharged educational tool. The idea sounded promising: a hybrid of Chegg’s extensive educational content and AI’s speed and adaptability.
However, as testing continued, Cheggmate didn’t perform as expected. In a shocking May earnings call, Rosensweig admitted that ChatGPT was eating into Chegg’s subscriber base faster than anticipated. The stock took a sharp nosedive, falling by 48% in a single day. Realizing that Cheggmate wasn’t the silver bullet, Chegg distanced itself from the project, announcing new plans to build AI solutions across different academic subjects in collaboration with Scale AI.
Schultz even joked about tossing Cheggmate “off a building,” making it clear that Chegg’s future would no longer rest on a single AI product. Instead, the company shifted to creating AI-driven features that could be embedded throughout its entire platform.
The Reality of AI Competition in Education
Chegg isn’t the only company grappling with AI’s entrance into education. Other platforms, many of which were once dismissed as “plagiarism hubs,” have also faced scrutiny. A study from the University of Illinois found that students in introductory programming courses overwhelmingly turned to ChatGPT instead of services like Chegg for answers. AI chatbots are now handling academic questions with unprecedented efficiency, a reality that Chegg and others can’t ignore.
Chegg has taken measures to combat cheating and misuse on its platform, stating that it works with universities to uphold academic integrity. However, the perception of Chegg as a tool for cheating has been hard to shake, particularly when faster and “smarter” AI tools are available.
My Take: Chegg’s Dilemma and a Possible Path Forward
Here’s my perspective: Chegg isn’t going down without a fight, but it certainly has its work cut out. The convenience, speed, and affordability of AI tools like ChatGPT have redefined what students expect from educational resources. Chegg’s attempts to innovate—while admirable—may still fall short without a distinct and valuable edge.
To survive, Chegg should consider redefining itself in a way that even AI can’t touch. Why not offer niche, interactive tutoring sessions or tailor personalized learning paths based on individual needs? These would be services that a free chatbot can’t easily replace. By doubling down on personalization, in-depth guidance, and human interaction, Chegg might just carve out a new niche in a crowded AI-dominated field.
Moreover, Chegg has an opportunity to become a platform known for accountability and quality. Chatbots, as fantastic as they are, can sometimes produce incorrect answers or oversimplify complex concepts. By setting a high standard of quality, Chegg could become a trusted partner for students who want more than just a quick answer.
What’s Next for Chegg?
Chegg still has a fighting chance, but it’s clear that the company needs to differentiate itself in ways that resonate with today’s students. Schultz’s pivot to target “serious learners” could be a step in the right direction, but Chegg will need to go beyond academic assistance to capture lasting loyalty. Perhaps it’s time to focus on unique value propositions—mentorship, mental health resources, or even exclusive educational content crafted by experts in various fields.
Conclusion: Will Chegg Find Its Footing?
In the grand scheme of things, Chegg’s struggle is symbolic of a broader shift in how technology reshapes traditional industries. As students rely more on AI for learning, companies that adapt to these changing demands will thrive, while those that don’t risk becoming obsolete.
Chegg’s journey from a simple message board to a global education provider is impressive, but its future now hinges on bold innovation. If Chegg can redefine itself as a unique, high-value educational platform, it might just pull through. But one thing’s for sure—AI is here to stay, and Chegg’s next moves will determine whether it remains a leader in online education or fades into history.
