If the thought of Chegg gives you PTSD during your school days, I may have good news for you: A company known for renting out textbooks and homework help is running on fumes. Chegg’s stock is down a whopping 99% since its peak in 2021, wiping out $14.5 billion in value, and the company has lost half a million paid subscribers. After revenue has been declining quarter after quarter, there are doubts that it will be able to continue paying its debts.
Chegg should be familiar to most people who have attended college in recent years. It started in the 2000s to rent books and later expanded to online study guides, and eventually to a platform with pre-written answers to common homework questions.
Unfortunately, the introduction of ChatGPT all but destroyed Chegg’s entire business model. The company has for years paid thousands of contractors to write answers to questions for every major study, which is a labor-intensive process—and there’s no guarantee they’ll have an answer to your question. As we know, ChatGPT on the other hand has pretty much infiltrated the entire internet, and is likely to see any historical question you might throw at it.
As i The Wall Street Journal According to reports, the launch of ChatGPT saw readers drop their $20 a month Chegg subscription in favor of the chatbot:
Although Chegg has built its own AI products, the company is struggling to convince customers and investors that it still has an advantage in the market that ChatGPT has raised.
“It’s free, it’s fast, and you don’t really have to worry if there’s a problem or not,” says Jonah Tang, an MBA candidate at Point Loma Nazarene University in San Diego, about the benefits of using ChatGPT for homework help. over Chegg.
A survey of college students by investment bank Needham found that 30% intended to use Chegg this semester, down from 38% in the spring, and 62% planned to use ChatGPT, up from 43%.
It’s unclear exactly what Chegg can do to stop the bleeding at this point. The company laid off 441 workers over the summer, a quarter of its workforce. It’s trying to target what the new CEO describes as “curious readers” by offering comprehensive AI-assisted answers and live advice.
The saddest thing is perhaps that, according to the Journalworkers actually requested resources in 2022 to develop AI tools for automated responses. The company has seen a huge increase in demand during the crisis when learning where virtual and the company needs to generate answers to questions quickly.
Chegg’s leaders declined a request to start building AI tools until ChatGPT was released, but even so some insiders were worried about the chatbot’s tendency to make incorrect responses.
But as a tool like Wikipedia, it’s clear that readers are willing to accept some risk for fun. Readers are told not to trust Wikipedia, but many use it anyway and go to the references section to pick up citations. Of course, chatbots like ChatGPT don’t have a concept of subject matter like math, they just guess the words needed to form a sentence that makes sense. They will return visible responses by deception it’s ok but it’s not. It’s like having the calculator right 50% of the time. In some subjects like history, chatbots are better, but the answers have to be double-checked.
Maybe Chegg can work harder to help people understand this? It seems most readers don’t care, and the clock is running out on Chegg.
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