Chegg.com: Rent A Text Book

We Rent Movies, So Why Not Textbooks?

Excerpt:

Osman Rashid and Aayush Phumbhra, the co-founders of Chegg.com, a company that rents textbooks to college students.

When the two entrepreneurs started Chegg, then called CheggPost, in 2003, they envisioned a sort of Craigslist for college campuses, a network of university-based Web sites where students would buy and sell everything from used mattresses to textbooks. Like most Internet start-ups of that time, the plan was to make money from advertising.

It didn’t turn out that way. CheggPost gained some traction on a handful of campuses but didn’t take off. Still, the experience offered a few valuable lessons.

Mr. Rashid noticed that a majority of the traffic on the site was from students looking for used textbooks. With textbooks being the largest expense for students, after tuition and room and board, and with their cost soaring, that wasn’t surprising.

Yet the Craigslist model didn’t work. When classes ended in the spring, sellers couldn’t find many buyers online and sold their used books to the college store, often for pennies on the dollar. By the time students migrated back to campus in the fall, willing online sellers were few and far between.

So, in 2007, Mr. Rashid and Mr. Phumbhra went back to the drawing board and came up with the idea of renting books. At the time, Silicon Valley venture capitalists were focused on content, social networks and other businesses that could be supported by advertising, so finding investors wasn’t easy.

“People thought we were crazy,” Mr. Rashid said.

Now, as Chegg prepares for its third academic year in the textbook rental business, the business is growing rapidly. Jim Safka, a former chief executive of Match.com and Ask.com who was recently recruited to run Chegg, said the company’s revenue in 2008 was more than $10 million. This year, Chegg surpassed that in January alone, Mr. Safka said.

Comment: Official site: Chegg.com