Many of you know Chegg as being one of the first online textbook rental companies. Jim Safka, former CEO of Ask.com became the CEO of Chegg in early June. With Safka now on board, that freed up some time for Chegg co-founder Osman Rashid to focus on other ventures.
Specifically, Rashid is trying out a new venture called Kakai. Kakai has even raised $1.1 million according to an SEC filing. Kakai is currently in stealth mode, but they describe themselves as a brand for “portable electronic devices for receiving, displaying, reading and playing electronically published materials,” according to paidContent.
Rashid remains as Chegg’s Chairman and Kakai may actually be linked to Chegg. Considering that Chegg is textbook rental and Kakai is possibly developing an e-book reader, there may be a way to connect the two that we don’t know about yet.
One of Chegg and Kakai’s angel investors is Eric Di Benedetto. Another Kakai co-founder is Babur Habib, a previous manager at consulting firm Exponent. Habib has about 8 years of experience in electronics technology which will be instrumental for the development of an e-reader.
Jim Safka stepped down as the CEO of Ask.com in the middle of last month and will now be moving to another online company, Chegg.com. When Safka stepped down from InterActiveCorp’s search engine company, he said that he wanted to work on something smaller and more local-based. Chegg is an online textbook rental service that was started in 2003.
The textbooks rent for a much cheaper price than what it costs to buy it on Chegg. The company raised about $27 million in funding so far from Gabriel Venture Partners, Maples Investments, Kleiner Perkins, and Foundation Capital. The first round was $2.2 million and the second round was about $25 million.
Osman Rashid, Chegg’s co-founder will step down from being CEO and will take the chairman position.
Chegg (also known as Chicken & Egg) has found themselves viciously chasing after college book stores for competition. Chegg is fighting its competition so intensely that Gabriel Venture Partners and a previous investor of Chegg, Mike Maples decided to arm Chegg with $2.2 million in funding. College professors have the power to increase or decrease the market for textbooks and prices for new editions of books could cost $100 or more. This is why Chegg is becoming popular among college students all over the nation.
Chegg allows students to buy/sell other school-related items for free as well. The market for textbooks and school-related items is $11 billion in revenues. “If we can take just 5% of that market, we’ll be very happy,” stated Rick Bolander, member of the Chegg Board and Gabriel Venture Partners co-founder.
From a business standpoint, Chegg is facing direct competition from the eBays, the Amazons, and the Half.coms type of websites that are also out there. Bolander mentioned that Chegg’s distinctive feature is that they cater to locals. “Everyone from Google (GOOG) to Yahoo! (YHOO) and MSN (MSFT) is going local, and that is an area of strength for us,” stated Bolander.
In order for users to join, a university e-mail address is required (to prevent spam). Fortunately, I still have access to my university account, so I decided to check out the software. Here is what the internal UI looks like:
