Chegg, an online education company run by former Yahoo! executive Dan Rosensweig announced that its performance has been hampered by students using Chat GPT instead of Chegg’s services. Richard Waters reports in the Financial Times:
Dan Rosensweig has been around the tech industry long enough to recognise an important platform shift when he sees one. As chief operating officer of Yahoo, he held one of the top posts in the consumer internet when the iPhone launched the mobile computing revolution.
This week, Rosensweig found himself in the middle of another tech upheaval. Online education company Chegg, where he is the chief executive, had the distinction of becoming the first company to report a hit to its business from generative artificial intelligence, as some students turned to smart chatbots for answers rather than subscribe to its own services.
Pointing to experience from previous big tech shifts, the former Yahoo boss was quick to claim that incumbents such as Chegg stand to be big winners from transformative new technologies like this — provided they act quickly enough to co-opt them for their own use.
Wall Street decided that this sounded like wishful thinking and wiped nearly 50 per cent from Chegg’s stock price in a day. But does Rosensweig have a point?
The answer will be of great interest to executives in many other industries. The online education market looks like being the first to be disrupted by generative AI. It certainly won’t be the last.
Incumbents like Rosensweig like to point to their customers and brands as assets that can help them withstand disruptive newcomers, which often use a new technology to launch free but undifferentiated services. The cash flow from existing businesses can also put them in a stronger financial position than disrupters, at least when the venture capital pouring into new fads such as generative AI dries up.
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