How Chegg Found A Textbook Rental Goldmine In A College Classifieds Haystack

Chegg rents a million textbooks a year and employs 150 people. But it was originally Cheggpost.com, a service providing free classified ads to college students. Choosing among categories like computers, electronics, furniture, housing, and textbooks, students posted ads for everything from bicycles to free kung fu lessons to want ads for a "hamster sitter." But it was the buying and selling of textbooks that was the most popular feature of the site. Profitability was hampered by the seasonality of college life, however, with traffic heaviest at the beginnings and ends of semesters.

So the company tried an experiment. It bought 2,000 textbooks and started a textbook rental site, textbookflix.com—so domain-named because its two founders thought of their new business as Netflix for books. It didn't take long for them to recognize there was more money in renting textbooks than running classifieds, so they moved full-bore into their new adopted business model.

Whence the name Chegg? It's shorthand for "chicken and egg," alluding to the challenge students face when they graduate and start looking for work. They can't get hired without experience, but can't gain experience without a job.

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