8/14/2023 0 Comments Teampaper snapSince long before ChatGPT came on the scene, Brown has said the holy grail for Chegg has been generating content with algorithms to reduce tens of millions of dollars in labor and licensing costs. The prospect of using AI to create the content students and other learners want isn't new to the company either. AI programs also help route subscribers’ academic questions to appropriate experts among Chegg’s over 150,000 contractors, most of them in India. “We could see whether a suggestion we gave actually made the writing more fluent, whether the text was better or worse with what we were suggesting,” says Ramirez, who now runs AI-based writing helpers Rephrasely and Paraphrase Tool. Since late 2018, it has used free, open-sourced models developed by OpenAI to help offer grammar and composition suggestions to students in a writing aid feature and to score the quality of internal documents, according to Ramirez, the former director of Chegg’s writing aid. The idea that AI might change or challenge those services has been on Chegg executives’ minds for years. Students can save time, money, and perhaps their grades by “Chegging it” instead of hiring tutors, going deep into books, or knocking on professors’ doors. Chegg went on to make a series of acquisitions that created a highly profitable array of services, including language courses, months-long skills training for corporate workers, and a math problem solver. ![]() “We made ourselves competitive long enough that we could transition,” says Ben Van Roo, a Chegg vice president at the time who now runs generative AI vendor Yurts AI. Its founders quickly moved on to other ventures, but it has survived by repeatedly reshaping its business, riding out a pricing war with Amazon over textbook rentals a decade ago, and then shifting away from that money-losing business. Undergraduates and high schoolers who might have paid Chegg as little as $16 a month for practice exams and term paper feedback quietly opted for ChatGPT instead-the free, fast, and cool new kid on the block.Ĭhegg was founded in 2005 by college students to rent textbooks. It reignited the AI excitement just as students in the US and some other countries began taking spring exams. And even after the bot’s debut, Chegg saw no cause for alarm, because data showed that the chatbot wasn’t luring away the 8 million paying subscribers to human-generated study guides and homework help.īut the sirens went off in March, when OpenAI unleashed GPT-4, its most powerful model yet. The company’s chief operating officer, Nathan Schultz, says executives had bet in a recent five-year plan that an experience like ChatGPT wouldn’t be possible until at least 2025. Interviews with two current and five former Chegg executives, along with three other former employees, indicate the company had considered the potential for AI to supplant its services but figured it would not manifest soon. What happened next shows a company that had tried to keep up with advances in AI getting blindsided by the rapid pace at which consumers have embraced experimental but capable tools such as ChatGPT-a position that many companies may find themselves in if the recent torrent of generative AI development continues. ![]() And just weeks after OpenAI launched ChatGPT last November, a source familiar with the exchange says, one Chegg executive had the bot write an email to Rosensweig urging him to develop a ChatGPT rival. Outside advisers flagged similar concerns. ![]() ![]() Matthew Ramirez, a product leader who left Chegg two years ago, says he even advised CEO Dan Rosensweig in 2020 that generative AI would be the bus that ran down Chegg if it didn’t prepare itself. But long before Chegg became an index case for the disruptive force of ChatGPT, its top brass had heard plenty of warnings about the threat and opportunity of generative AI.įor years, on afternoon walks outside Chegg’s Silicon Valley headquarters, former executives say they had discussed someday slashing costs by tapping AI programs to replace an army of instructors that answer student questions and draft flashcards. Investors were surprised when the online education company Chegg last month revealed that ChatGPT was hurting subscriber growth-the company lost half of its market value overnight.
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