Chegg, once a leading platform for students needing homework help, is facing a severe crisis. The rise of OpenAI’s ChatGPT has led to a massive drop in Chegg’s value, users, and workforce. Here’s how it all unfolded:
- Chegg’s Decline:
- Chegg’s stock has fallen 99% since its 2021 peak, erasing $14.5 billion in value.
- Over half a million subscribers have left the platform.
- 441 employees (25% of its workforce) were laid off.
- Impact of ChatGPT:
- ChatGPT offers instant, free answers, outperforming Chegg’s subscription model.
- A survey revealed 62% of college students plan to use ChatGPT, while only 30% will stick with Chegg.
- GPT-4, OpenAI’s model, consistently provided better answers than Chegg’s experts.
- Chegg’s Missteps:
- Employees suggested using AI earlier but were ignored by leadership.
- After ChatGPT’s launch, Chegg underestimated its threat due to perceived inaccuracies.
- Chegg launched “Cheggmate” with OpenAI, but it failed to gain traction and was abandoned.
- Chegg’s Current Efforts:
- The company partnered with Scale AI to develop over 24 AI systems for academic use.
- Under new CEO Nathan Schultz, Chegg now offers AI-assisted answers and live counseling sessions.
Chegg is trying to adapt to the changing edtech market, but free AI tools like ChatGPT continue to dominate. Its future depends on convincing students and investors that it can still provide value.
