We Rent Movies
"The NY Times reports that using Netflix as a business model, Osman Rashid and Aayush Phumbhra founded Chegg, shorthand for "chicken and egg," to gather books from sellers at the end of a semester and renting — or sometimes selling — them to other students at the start of a new one. Chegg began renting books in 2007 before it owned any, so when an order came in, its employees would surf the Web to find a cheap copy. They would buy the book using Rashid's American Express card and have it shipped to the student. Eventually, Chegg automated the system. "People thought we were crazy," 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 and this year, Chegg surpassed that in January alone. "The model is clever," says Yannis Bakos, associate professor of management at the Stern School of Business at New York University. "If they execute well, it will be an accomplishment." Savings can vary from book to book. A macroeconomics textbook that retails for $122 was available on Chegg for $65 for one semester; an organic chemistry title retailing for $123 was offered for $33. Those kinds of savings are turning students into fans. "Word of mouth," says Safka, "has put wind in the company's sails.""