Chegg: A 'green' alternative to buying college textbooks

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>> Sumi Das: College textbooks cost a lot to own, yet they're a must for all students. That's where Chegg comes in. The Silicon Valley startup has created an online service which rents textbooks to students for only the time they need them. Once they're finished using them, the books are returned via UPS free of charge. Here to tell us more about Chegg is Dan Rosensweig, CEO of the company. Dan, thanks for joining me today.

>> Dan Rosensweig: Thanks for having me. I'm excited to be here.

>> Sumi Das: Chegg is a different model from when I went to school, so tell us how this works. Basically, you rent the books and then you can send them back and you don't have to pay for the shipping?

>> Dan Rosensweig: Yeah our mission is very simple which is safe kids time, save them money, help them get smarter. So the business of Chegg really started as a textbook rental company which is traditional print textbooks. We take the risk, we buy the books. Many of them are new. I think 65% of the books that we buy are new. Students come into the website, their iPhone, their iPad, whichever way they can take a picture of the ISBN, sent it to us and we'll tell them what the book would cost new, what it would cost used, and what it would cost to rent. And we're substantially cheaper. The book can get there in 1 day, 2 days, 3 days, whatever kind of shipping that they want.

>> Sumi Das: When you say substantially cheaper, so can you give us some numbers?

>> Dan Rosensweig: Sure, if a if a book would normally cost the student new $120 but $120 book to a student might be $80 used or $100 used and we'll rent it for $45 or $50.

>> Sumi Das: Okay.

>> Dan Rosensweig: And so we price ourselves as a discount to the used market. So we're always substantially cheaper than them and you know it's it's a very difficult process to do. We try to make it look very easy but we have to pick the right books, we have to have the right catalog, we want it to be as big as possible. Students come in, seamless, you get it, get the price, takes no time at all to order it and we can get it to you in a couple of days or even faster if you want to. And then all you do is put it in the nice orange Chegg box, ship it back at the end of the semester. If you want to extend the period of time that you use it, you can, and if you want to own it at the end you can also do that and we deduct the cost of the rental and so we just, and we try to make it super easy for people who are under great stress.

>> Sumi Das: This is also a greener alternative to buying textbooks outright because you're re-using books first of all and you also do something neat which is plant a tree for every student that rents books for you.

>> Dan Rosensweig: Every time you rent, we plant a tree and we've become, I believe, the largest tree planter in the United States in just a few years and we don't, you know we're a private company so we don't share our numbers but suffice it to say we're approaching over 4 million trees planted. . .

>> Sumi Das: Um hum.

>> Dan Rosensweig: so that gives you a sense of the scale and the take-up of Chegg but also the kind of good that we do. And we pay for that and, and the students really reward us for that and it's because they're very conscious of saving money, trying to get their education but also doing something good for the environment.

>> Sumi Das: Chegg made recent news by partnering with brick and mortar stores on college campuses.

>> Dan Rosensweig: Right.

>> Sumi Das: So tell us about that partnership. So you don't necessarily have to get your books through UPS then.

>> Dan Rosensweig: Well we try to make it as easy as we can so wherever there's a bookstore that wants to partner with us and offer a rental program, we can do it on their website, we can do it on their website and in the store.

>> Sumi Das: Um hum.

>> Dan Rosensweig: We give them a percentage of the transactions so we can incent them. . .

>> Sumi Das: Right.

>> Dan Rosensweig: to be able to make. . .

>> Sumi Das: 'cause otherwise they might be losing out on business right?

>> Dan Rosensweig: Yes, exactly. We're not trying to put the bookstores out of business or anybody out of business. We're just trying to acknowledge the fact that at this point on on many campuses in this country that the cost of books is 25% of the cost of tuition and many of the schools and the bookstores are are catching onto this so we've had over 40 partners just in the last year and that's gonna keep growing and and we're excited to work with people that see this value proposition.

>> Sumi Das: So I imagine that there are some challenges to running this business. You have to make sure that you have the inventory you need. You have to make sure that you can handle the busy seasons which I would think are the beginning of the semester and maybe the end of the semester when you're getting all the books returned. How do you handle those challenges and are there any other ones that I'm missing?

>> Dan Rosensweig: Yeah there are a number of challenges. We have to pick the right catalog. We have to make sure that the books that we buy we can actually get a return on those books over a period of time.

>> Sumi Das: Um hum.

>> Dan Rosensweig: We have to be able to make sure that we can instantly change prices to be market competitive. We have to make sure that the books arrive on time and they come back on time, but we've also added course rank which was a bunch of really smart students at Stanford. They had figured out a way to make services easier for students to plan their schedules, see which friends were in their classes, to be able to hook up with other people and find the cheapest way, easiest way, rate professors. And so when we bought it it had, it was on 30 campuses. Now it's on 600 and it's got over 125,000 students that are actively using it. So the challenge is keeping up with the needs of the students and of course the ultimate challenge is gonna be transitioning from the current model into the digital model and that's one we've been working on for a while and we're really excited about it and we're looking forward to it.

>> Sumi Das: Kindles? E-books?

>> Dan Rosensweig: Well I think the reality is, digital is inevitable. We've been preparing every day in terms of figuring out all the content, all the services that students need or would benefit from and all the formats that they would want. And then so we've got some exciting things coming out later this year that we're not yet prepared to talk about but you will see us evolve with the needs of the student always. So as the student needs more things, we will provide more things and and that's a worthwhile challenge.

>> Sumi Das: Dan Rosensweig, CEO of Chegg, thank you so much for joining us today.

>> Dan Rosensweig: Thank you for having me.

>> Sumi Das: For Smart Planet, I'm Sumi Das. Thanks for watching. music

==== Transcribed by Automatic Sync Technologies ====