Should Chegg prioritize expanding its textbook rental service or focus on growing its online tutoring platform?

Introduction

The trade-off we're examining today is whether Chegg should prioritize expanding its textbook rental service or focus on growing its online tutoring platform. This decision is crucial for Chegg's future growth and market positioning. I'll analyze both options, considering their potential impacts on users, revenue, and long-term strategy. Let's dive into the key aspects of this trade-off to determine the best path forward.

Step 1

Clarifying Questions (3 minutes)

• Context: I'm thinking Chegg's current market position might influence this decision. Could you share how our textbook rental and online tutoring services are performing relative to competitors?

Why it matters: Helps assess the growth potential and competitive landscape for each option. Expected answer: One service outperforming the other or both performing similarly. Impact on approach: Would prioritize the stronger service or suggest a balanced approach if equal.

• Business Context: Based on our revenue model, I'm assuming both services contribute significantly to our bottom line. How do their current revenue contributions compare?

Why it matters: Informs the financial impact of prioritizing one service over the other. Expected answer: Breakdown of revenue percentages for each service. Impact on approach: Would influence resource allocation and risk assessment in the recommendation.

• User Impact: Considering our user segments, I'm curious about the overlap between textbook renters and tutoring users. What percentage of our users engage with both services?

Why it matters: Helps understand potential cross-selling opportunities and user behavior. Expected answer: A moderate overlap, perhaps 30-50%. Impact on approach: High overlap might suggest integrating the services more closely.

• Technical Feasibility: Given our current tech stack, I'm wondering about the scalability of each platform. Are there any significant technical limitations for expanding either service?

Why it matters: Identifies potential roadblocks or advantages in implementation. Expected answer: Some limitations exist but are manageable. Impact on approach: Would factor into the timeline and resource requirements for each option.

• Resource Allocation: Thinking about our team structure, how are our product and engineering resources currently split between these two services?

Why it matters: Helps assess the feasibility of shifting focus without major reorganization. Expected answer: Resources are somewhat evenly split or slightly favoring one service. Impact on approach: Would influence the ease of pivoting resources to the prioritized service.