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Chegg: Rebelling Against the Textbook Racket

Jim Safka listened to his customers and they led him to business success.

The university book store is a controversial place. It addresses the student need for textbooks. The problem is that the books are often unaffordable, the new editions unnecessary and the millions of pages, a hub for undesirable waste.

The startup online textbook rental company, Chegg.com, may well be the perfect foil for the university book store business model. Based on the disruptive model first developed by Netflix.com, Chegg has brought rentals to a more specific customer: the starving college student.

According to Chegg CEO Jim Safka, the business model is disruptive because it's the first of its kind in the textbook world and it tends exactly to the customers need. Unlike many businesses, Chegg.com has been tailored specifically to fit the customer. But Chegg wasn't always a textbook-only shop.

When Chegg launched in 2007, founders Osman Rashid and Aayush Phumbhra wanted to create a college exclusive answer to Craigslist. However, over time they found a trend in their sales. "Over 90 percent of the volume was on textbooks," Safka says. So, Chegg chugged along in a new direction.

It would seem that changing tracks seems to be the best decision they ever made both for the company and for students. Now the textbook rental startup serves students on at universities across the nation, helping them save students 65-85 percent on textbooks. They've continued along the custom-made for the customer track for the past year by reaching out to students directly.

For instance, in late August, if you were lucky enough to be an early-to-campus USC student, you might have passed the "Cheggurrito truck" between 10 p.m. and 2 a.m., where student volunteers and Chegg staff were handing out free burritos as promotional tools. Later, Safka and crew set up shop early one morning at Vieta Café in downtown L.A. They handed out 16-ounce cups of coffee in an effort to connect with customers and encourage students to sign-up at Chegg.com on their on-site computers.

Students have bought into Chegg's model, volunteering to promote Chegg to their friends or even dress up in the big, yellow chicken suit as Chegg's mascot, Shelly. Safka believes the experiential marketing gives his crew important insight into what students want.

"We love going to campuses because we love to sit with students and interact with people and just understand: what can we do better?" Safka says adding, "Customers have all the answers."

As a result of student input, Chegg has implemented the "Rent-A-Book, Plant-A-Tree" program as a part of their overall model in which Chegg.com plants a tree for every textbook rented.

"It just makes sense," Safka says. "We're not heavy-handed environmentalists, but the truth is, over 4 million trees are destroyed every year to manufacture a textbook."

Students like the environmental angle, and Chegg's primary goal is to give students what they want. "Students have taken on [Chegg's brand] as their own," Safka says. "It's their brand."

"Any time you can solve a problem that's emotional," he adds, "you have a chance to build a brand that's just loved."

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