ChatGPT affecting Chegg, importance of user onboarding and Treepz's pivot
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The shares of Chegg - the edtech company that provides homework help, digital textbooks, online tutoring, and other student services - fell last week after it announced its financial results for Q1 2023.
In actual sense, Q1 was a strong quarter for Chegg, as it met its revenue targets. Its total revenue was $188 million, driven by Subscription Services revenue of $168 million.Â
So why did its shares fall? In its earning call, the companyâs executive noted that ChatGPT is impeding its ability to acquire new customers, which has serious implications for its future growth. According to the CEO, âIn the first part of the year, we saw no noticeable impact from ChatGPT on our new account growth and we were meeting expectations on new sign-ups. However, since March we saw a significant spike in student interest in ChatGPT. We now believe itâs having an impact on our new customer growth rate.â
Chegg is probably the first company to acknowledge the commercial impact of AI in the education and learning industry. If you are wondering how AI will lead to job loss, this is how it is going to play out. Lower growth will lead to shrinking revenue and contribute to the inability of companies to hire or retain employees.Â
Chegg was clear in its statement that ChatGPT did not affect its retention rate. Students who are already using Chegg probably understand its value and will continue to use it. But, convincing new subscribers to pay for subscriptions, when ChatGPT is accessible for free and can solve complex maths problems, is going to be a difficult task.
This impact is not just for edtechs companies like Chegg, but other content and learning platforms using the subscriptions model. Sal Khan, the CEO of Khan Academy, gave a TED talk on this recently.
Chegg is stepping up its game too. It recently launched CheggMate, in partnership with OpenAI. CheggMate leverages the large language model of ChatGPT, which was fed with its in-house proprietary data and learning resources that it has developed over the last 13 years. Students will be able to access these resources in a conversational manner just like ChatGPT.Â
In the next few years, I expect to see more applications like this that build ChatGPT on top of internal proprietary content. Your paywall isnât going to help much. There are shreds of evidence that ChatGPT can poach content behind the paywall, except if you want to sacrifice SEO.
The biggest winner here will be ChatGPT because it is powering the revolution towards a conversational internet. So donât be surprised to hear that ChatGPT has just raised an additional $300million, valuing the company at between $27 billion and $29 billion.
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Why onboarding is the most crucial part of your growth strategy? When people talk about growth, they usually assume the discussion is about getting more people to your product. When we really dig into growth problems, we often see that enough people are actually coming to the products. The real growth problems start when people landâŚand leave. They donât stick. This is an onboarding problem. Greylock
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đ¤ What else is happening in tech?Â
Treepz, an African mobility startup has pivoted into a car-sharing marketplace that allows car owners to rent their vehicles.
Kenya is scaling digitisation with QR code offerings. Here is what you should know.
Bolt unveils The Bolt Outternship program - designed to help women kick-start their careers in tech future in Nigeria. Apply here.Â
Nigerian payment service provider Nomba has raised $30 million in a pre-Series B.Â
Tarabut Gateway, the leading open financial platform in the Middle East and North Africa (MENA), received $32 million in Series A
Nigeriaâs Fedi raises $17 million in series a round to build out bitcoin chat app for communities.Â
Shopify is cutting 20% of staff and selling the logistics arm of its business
Accelerate Africa (A2) by Future Africa prepares early-stage African founders for global scale. Apply here
If you are an African entrepreneur creating a solution to a health product distribution challenge in Africa, you should apply for i3 Program. Details here
Thatâs all for today.Â
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