Memento Mori: Why the Chegg IPO is Not About Textbooks
About 80% of the revenue still comes from renting textbooks, which might seem a bit outdated with everyone talking about tablet deployments and digital textbooks.
Though heavily funded and with more than 225,000 digital textbooks in its library, the startup was sold for pennies on a dollar to Intel Education last week.
With the Internet and tablet devices, publishers themselves can now go directly for the students through digital products. There is no need for physical bookstores or other middlemen to distribute the textbooks. Also professors are now able to sell their own textbooks directly to students.
This IPO is not so much about the current business of renting physical textbooks but about the time after paper-based textbooks. Chegg apparently does not see a future with publishers or professors by their side, and they will probably choose more direct sales channels in order to balance out sinking margins.